G.R. No. 75271-73 June 27, 1988 CATALINO N. SARMIENTO vs. THE HON. JUDGE ORLANDO R.

TUICO Two basic questions are presented in these cases, to wit: 1. Whether or not a return-to-work order may be validly issued by the National Labor Relations Commission pending determination of the legality of the strike; and 2. Whether or not, pending such determination, the criminal prosecution of certain persons involved in the said strike may be validly restrained. The first issue was submitted to the Court in G.R. No. 77567, to which we gave due course on July 1, 1987. 1 The case arose when on May 7, 1986, petitioner Asian Transmission Corporation terminated the services of Catalino Sarmiento, vice-president of the Bisig ng Asian Transmission Labor Union (BATU), for allegedly carrying a deadly weapon in the company premises. 2 As a result, the BATU filed a notice of strike on May 26, 1986, claiming that the ATC had committed an unfair labor practice. 3 The conciliatory conference held on June 5, 1986, failed to settle the dispute. The ATC then filed a petition asking the Ministry of Labor and Employment to assume jurisdiction over the matter or certify the same to the NLRC for compulsory arbitration. 4 Noting that the impending strike would prejudice the national interest as well as the welfare of some 350 workers and their families, the MOLE issued an order on June 3, 1986, certifying the labor dispute to the NLRC. 5At the same time, it enjoined the management from locking out its employees and the union from declaring a strike or similar concerted action. This order was reiterated on June 13, 1986, upon the representation of the ATC that some 40 workers had declared a strike and were picketing the company premises. 6 Proceedings could not continue in the NLRC, however, because of the acceptance by President Aquino of the resignations of eight of its members, leaving only the vice-chairman in office. 7 For this reason, the MOLE, on September 9, 1986, set aside the orders of June 9 and 13, 1986, and directly assumed jurisdiction of the dispute, at the same time enjoining the company to accept all returning workers. 8 This order was itself set aside on November 24,1986, upon motion of both the BATU and the ATC in view of the appointment of new commissioners in the NLRC. The MOLE then returned the case to the respondent NLRC and directed it to expeditiously resolve all issues relating to the dispute, "adding that the union and the striking workers are ordered to return to work immediately." 9 Conformably, the NLRC issued on January 13, 1987 the following resolution, which it affirmed in its resolution of February 12, 1987, denying the motion for reconsideration: CERTIFIED CASE No. NCR-NS-5-214-86, entitled Asian Transmission Corporation, Petitioner versus Bisig ng Asian Transmission Labor Union (BATU), et al., Respondents.Considering that the petitioner, despite the order dated 24 November 1986 of the Acting Minister, "to accept all the returning workers" continues to defy the directive insofar as 44 of the workers are concerned, the Commission, sitting en banc, resolved to order the petitioner to accept the said workers, or, to reinstate them on payroll immediately upon receipt of the resolution. It is these orders of January 13 and February 12, 1987, that are challenged by the ATC in this petition for certiorari and are the subject of the temporary restraining order issued by this Court on March 23, 1987. 10 The second issue was raised in G.R. Nos. 75271-73, which we have consolidated with the firstmentioned petition because of the Identity of their factual antecedents. This issue was provoked by three criminal complaints filed against the petitioning workers in the municipal trial court of Calamba, Laguna, two by the personnel administrative officer of the ATC and the third by the Philippine Constabulary. The first two complaints, filed on July 11 and July 15, 1986, were for "Violation of Article 265, par. 1, in relation to Article 273 of the Labor Code of the Philippines."11 The third, filed on July 17, 1986, was for coercion. 12 In all three complaints, the defendants were charged with staging

an illegal strike, barricading the gates of the ATC plant and preventing the workers through intimidation, harassment and force from reporting for work. Acting on Criminal Case No. 15984, Judge Orlando Tuico issued a warrant of arrest against the petitioners and committed 72 of them to jail although he later ordered the release of 61 of them to the custody of the municipal mayor of Calamba, Laguna. 13 The petitioners had earlier moved for the lifting of the warrant of arrest and the referral of the coercion charge to the NLRC and, later, for the dismissal of Criminal Cases Nos. 15973 and 15981 on the ground that they came under the primary jurisdiction of the NLRC. 14 As the judge had not ruled on these motions, the petitioners came to this Court in this petition for certiorari and prohibition. On August 12, 1986, we issued a temporary restraining order to prevent Judge Tuico from enforcing the warrant of arrest and further proceeding with the case. 15 This order was reiterated on September 21, 1987, "to relieve tensions that might prevent an amicable settlement of the dispute between the parties in the compulsory arbitration proceedings now going on in the Department of Labor," and made to apply to Judge Paterno Lustre, who had succeeded Judge Tuico. 16 That is the background. Now to the merits. It is contended by the ATC that the NLRC had no jurisdiction in issuing the return-to-work order and that in any case the same should be annulled for being oppressive and violative of due process. The question of competence is easily resolved. The authority for the order is found in Article 264(g) of the Labor Code, as amended by B.P. Blg. 227, which provides as follows: When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely affecting the national interest, such as may occur in but not limited to public utilities, companies engaged in the generation or distribution of energy, banks, hospitals, and export- oriented industries, including those within export processing zones, the Minister of Labor and Employment shall assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Minister may seek the assistance of lawenforcement agencies to ensure compliance with this provision as well as such orders as he may issue to enforce the same. The justification of the MOLE for such order was embodied therein, thus: Asian Transmission Corporation is an export-oriented enterprise and its annual export amounts to 90% of its sales generating more than twelve (12) million dollars per year. The corporation employs three hundred fifty (350) workers with a total monthly take home pay or approximately P1,300,000.00 a month. Any disruption of company operations will cause the delay of shipments of export finished products which have been previously committed to customers abroad, thereby seriously hampering the economic recovery program which is being pursued by the government. It wig also affect gravely the livelihood of three hundred fifty (350) families who will be deprived of their incomes. This Office is therefore of the opinion that a strike or any disruption in the normal operation of the company will adversely affect the national interest. It is in the interest of both labor and management that the dispute be certified for compulsory arbitration to National Labor Relations Commission.

WHEREFORE, this Office hereby certifies the labor dispute to the National Labor Relations Commission in accordance with Article 264(g) of the Labor Code, as amended. In line with this Certification, the management is enjoined from locking out its employees and the union from declaring a strike, or any concerted action which will disrupt the harmonious labor-management relations at the company. 17 There can be no question that the MOLE acted correctly in certifying the labor dispute to the NLRC, given the predictable prejudice the strike might cause not only to the parties but more especially to the national interest. Affirming this fact, we conclude that the return-to-work order was equally valid as a statutory part and parcel of the certification order issued by the MOLE on November 24, 1986. The law itself provides that "such assumption or certification shall have the effect of automatically enjoining the intended or impending strike. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout." The challenged order of the NLRC was actually only an implementation of the above provision of the Labor Code and a reiteration of the directive earlier issued by the MOLE in its own assumption order of September 9, 1986. It must be stressed that while one purpose of the return-to-work order is to protect the workers who might otherwise be locked out by the employer for threatening or waging the strike, the more important reason is to prevent impairment of the national interest in case the operations of the company are disrupted by a refusal of the strikers to return to work as directed. In the instant case, stoppage of work in the firm will be hurtful not only to both the employer and the employees. More particularly, it is the national economy that will suffer because of the resultant reduction in our export earnings and our dollar reserves, not to mention possible cancellation of the contracts of the company with foreign importers. It was particularly for the purpose of avoiding such a development that the labor dispute was certified to the NLRC, with the return-to-work order following as a matter of course under the law. It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to his job together with his co-workers so the operations of the company can be resumed and it can continue serving the public and promoting its interest. That is the real reason such return can be compelled. So imperative is the order in fact that it is not even considered violative of the right against involuntary servitude, as this Court held in Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills. 18 The worker can of course give up his work, thus severing his ties with the company, if he does not want to obey the order; but the order must be obeyed if he wants to retain his work even if his inclination is to strike. If the worker refuses to obey the return-to-work order, can it be said that he is just suspending the enjoyment of a right and he is entitled to assert it later as and when he sees fit? In the meantime is the management required to keep his position open, unable to employ replacement to perform the work the reluctant striker is unwilling to resume because he is still manning the picket lines? While the ATC has manifested its willingness to accept most of the workers, and has in fact already done so, it has balked at the demand of the remaining workers to be also allowed to return to work. 19 Its reason is that these persons, instead of complying with the return-to-work order, as most of the workers have done, insisted on staging the restrained strike and defiantly picketed the company premises to prevent the resumption of operations. By so doing, the ATC submits, these strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly replaced. The Court agrees.

The records show that the return-to-work order was first issued on June 3, 1986, and was reiterated on June 13, 1986. The strike was declared thereafter, if we go by the criminal complaints in G.R. Nos. 75271-73, where the alleged acts are claimed to have been done on June 9,1986, and July 15,1986. These dates are not denied. In fact, the petitioners argue in their pleadings that they were engaged only in peaceful picketing, 20 which would signify that they had not on those dates returned to work as required and had decided instead to ignore the said order. By their own acts, they are deemed to have abandoned their employment and cannot now demand the right to return thereto by virtue of the very order they have defied. One other point that must be underscored is that the return-to-work order is issued pending the determination of the legality or illegality of the strike. It is not correct to say that it may be enforced only if the strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to maintain the status quo while the determination is being made. Otherwise, the workers who contend that their strike is legal can refuse to return to their work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill. Worse, they win also claim payment for work not done, on the ground that they are still legally employed although actually engaged in activities inimical to their employer's interest. This is like eating one's cake and having it too, and at the expense of the management. Such an unfair situation surely was not contemplated by our labor laws and cannot be justified under the social justice policy, which is a policy of fairness to both labor and management. Neither can this unseemly arrangement be sustained under the due process clause as the order, if thus interpreted, would be plainly oppressive and arbitrary. Accordingly, the Court holds that the return-to-work order should benefit only those workers who complied therewith and, regardless of the outcome of the compulsory arbitration proceedings, are entitled to be paid for work they have actually performed. Conversely, those workers who refused to obey the said order and instead waged the restrained strike are not entitled to be paid for work not done or to reinstatement to the positions they have abandoned by their refusal to return thereto as ordered. Turning now to the second issue, we hold that while as a general rule the prosecution of criminal offenses is not subject to injunction, the exception must apply in the case at bar. The suspension of proceedings in the criminal complaints filed before the municipal court of Calamba, Laguna, is justified on the ground of prematurity as there is no question that the acts complained of are connected with the compulsory arbitration proceedings still pending in the NLRC. The first two complaints, as expressly captioned, are for "violation of Art. 265, par. 2, in relation to Art. 273, of the Labor Code of the Philippines," and the third complaint relates to the alleged acts of coercion committed by the defendants in blocking access to the premises of the ATC. Two of the criminal complaints were filed by the personnel administrative officer of the ATC although he vigorously if not convincingly insists that he was acting in his personal capacity. In view of this, the three criminal cases should be suspended until the completion of the compulsory arbitration proceedings in the NLRC, conformably to the policy embodied in Circular No. 15, series of 1982, and Circular No. 9, series of 1986, issued by the Ministry of Justice in connection with the implementation of B.P. Blg. 227. 21 These circulars, briefly stated, require fiscals and other government prosecutors to first secure the clearance of the Ministry of Labor and/or the Office of the President "before taking cognizance of complaints for preliminary investigation and the filing in court of the corresponding informations of cases arising out of or related to a labor dispute," including "allegations of violence, coercion, physical injuries, assault upon a person in authority and other similar acts of intimidation obstructing the free ingress to and egress from a factory or place of operation of the machines of such factory, or the employer's premises." It does not appear from the record that such clearance was obtained, conformably to the procedure laid down "to attain the

industrial peace which is the primordial objectives of this law," before the three criminal cases were filed. The Court makes no findings on the merits of the labor dispute and the criminal cases against the workers as these are not in issue in the petitions before it. What it can only express at this point is the prayerful hope that these disagreements will be eventually resolved with justice to all parties and in that spirit of mutual accommodation that should always characterize the relations between the workers and their employer. Labor and management are indispensable partners in the common endeavor for individual dignity and national prosperity. There is no reason why they cannot pursue these goals with open hands rather than clenched fists, striving with rather than against each other, that they may together speed the dawning of a richer day for all in this amiable land of ours. WHEREFORE, judgment is hereby rendered as follows: 1. In G.R. No. 77567, the petition is DENIED and the challenged Orders of the NLRC dated January 13, 1986, and February 12, 1986, are AFFIRMED as above interpreted. The temporary restraining order dated March 23, 1987, is LIFTED. 2. In G.R. Nos. 75271-73, the temporary restraining order of August 12,1986, and September 21, 1986, are CONTINUED IN FORCE until completion of the compulsory arbitration proceedings in the NLRC. No costs. It is so ordered. SARMIENTO VS TUICO 162 SCRA 676 (1988) FACTS: Asian Transmission Corp (ATC) terminated the services of Catalino Sarmiento, VP of the Bisig ng Asian Transmission Labor Union (BATU), for allegedly carrying a deadly weapon in the company premises. BATU filed a notice of strike, claiming that ATC had committed an unfair labor practice. ATC, then, filed a petition asking the Ministry of Labor and Employment (MOLE) toassume jurisdiction over the matter or certify the same to NLRC for compulsory arbitration. MOLE issued an order certifying the labor dispute to NLRC. At the same time, it joined the management from locking out its employees and the union from declaring a strike or similar concerted action. Proceedings could not continue in the NLRC, however, because of the acceptance by Pres. Aquino of the resignations of 8 of its members, leaving only the vice-chairman in office. MOLE set aside the previous orders and directly assumed jurisdiction of the dispute, at the same time, enjoined the company to accept all returning workers. This order was later set aside upon motion of both BATU and ATC in view of the appointment of new commissioners in NLRC. MOLE then returned the cases to NLRC and directed it to expedite the resolution of all issues relating to the dispute. Conformably, NLRC issued on Jan 13, 1987 a resolution, which it affirmed in its resolution of Feb 12, denying the motion of reconsideration. Three criminal complaints were filed against the workers, two by the personnel administrative officer of ATC and the third by Philippine Constabulary. The first two complaints were for ―Violation of Art 265 par 1, in relation to Art 273 Labor Code. The third was for coercion. In all 3 complaints, the defendants were charged with staging an illegal strike, barricading the gates of the ATC plant and preventing the workers through intimidation, harassment and force from reporting for work. Respondent Judge Orlando Tuico issued a warrant of arrest against the petitioners and committed 72 of them to jail although he later ordered the release of 61 of them to the custody of the mayor of Calamba. The petitioners had earlier moved for the lifting of the warrant of arrest and the referral of the coercion charge to NLRC and later, for the dismissal of the criminal cases on the ground that they came under the primary jurisdiction of the NLRC. ISSUES; W/N A RETURN TO WORK ORDER MAY BE VALIDLY ISSUED BY NLRCPENDING DETERMINATION OF THE LEGALITY OF THE STRIKE; W/N SUCHDETERMINATION, THE CRIMINAL PROSECUTION OF CERTAIN PERSONSINVOLVED IN THE SAID STRIKE MAY BE VALIDLY RESTRAINED

HELD: The authority for the order is found in Art 264(g) Labor Code, as amended by BP blg. 227, which provides: When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely affecting the national interest, such as may occur in but not limited to public utilities, companies engaged in the generation or distribution of energy, banks, hospitals, and export oriented industries, including those within export processing zones, MOLE shall assume jurisdiction over the dispute and decide it or certify the same to the commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption order. If one has already taken place at the time of assumption or certification, all striking our locked out employees shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The minister may seek the assistance of law-enforcement agencies to ensure compliance with this provision as well as such orders as he may issue to enforce the same. There can be no question that MOLE acted correctly in certifying labor dispute to NLRC, given the predictable prejudice the strike might cause not only to the parties but more especially to the national interest. Thus, the return to work order was equally valid as a statutory part and part of the certification order issued by MOLE on Nov 24, 1986 The challenged order of NLRC was actually only an implementation of the above provision of the Labor Code and a reiteration of the directive earlier issued by MOLE in its own assumption order of Sept 9, 1986. It must be stressed that while one purpose of the return to work order is to protect the workers who might otherwise be locked out by the employer for threatening or waging the strike, the more important reason is to prevent impairment of the national interest in case the operations of the company are disrupted by a refusal of the strikers to return to work as directed. More particularly, it is the national economy that will suffer because of the result an reduction in our export earnings and our dollar reserves, not to mention possible cancellation of contracts of the company with foreign investors. It is also to emphasize that the return to work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker‘s will. Returning to work in this situation is not a matter of option but of obligation. The suspension of proceedings in the criminal complaints filed is justified on the ground of prematurity as there is no question that the acts complained of are connected with the compulsory arbitration proceedings still pending in NLRC. The 3 criminal cases should be suspended until the completion of the compulsory arbitration proceedings in the NLRC, conformably to the policy embodied in Circular no.15, series of 1982 and Circular no. 9, series of 1986, issued by the Ministry of Justice in connection with the implementation of BP 227. These circulars require fiscals and other government prosecutors to first secure clearance of MOLE and/or Office of the President before taking cognizance of complaints for preliminary investigation and filing in court of the corresponding informations of cases arising out of or related to a labor dispute, including allegations of violence, coercion, physical injuries, assault upon a person in authority and other similar acts of intimidation, obstructing the free ingress to and egress from a factory or place of operation of the machines of such factory, or the employer‘s premises. It does not appear from the record that such clearance was obtained, conformably to the procedure laid down to attain the industrial peace which is the primordial objects of this law.

G.R. Nos. 95494-97 September 7, 1995 LAPANDAY WORKERS UNION vs. NATIONAL LABOR RELATIONS COMMISSION Petitioner Lapanday Agricultural Workers' Union (Union for brevity) and petitioners-workers of Lapanday Agricultural and Development Corporation and CADECO Agro Development Philippines, Inc., seek to reverse the consolidated Decision dated August 29, 1990, 1rendered by public respondent National Labor Relations Commision, declaring their strike illegal and ordering the dismissal of their leaders. The background of the case: Private respondents are sister companies engaged in the production of bananas. Their agricultural establishments are located in Davao City. On the other hand, petitioner Lapanday Workers' Union (Union) is the duly certified bargaining agent of the rank and file employees of private respondents. The Union is affiliated with the KMU-ANGLO. The other petitioners are all members of the Union. The records show that petitioner Union has a collective bargaining agreement with private respondents, covering the period from December 5, 1985 to November 30, 1988. A few months before the expiration of their CBA, private respondents initiated certain management policies which disrupted the relationship of the parties. First, on August 1, 1988, private respondents contracted Philippine Eagle Protectors and Security Agency, Inc., to provide security services for their business premises located in Lapanday, Bandug, Callawa, Davao City, and Guising, Davao Del Sur. Their contract also called for the protection of the lives and limbs of private respondents' officers, employees and guests within company premises. The Union branded the security guards posted within the company premises as private respondents' "goons" and "special forces." It also accused the guards of intimidating and harassing their members. Second, private respondents conducted seminars on Human Development and Industrial Relations (HDIR) for their managerial and supervisory employees and, later, the rank-and-filers, to promote their social education and economic growth. Among the topics discussed in the seminar were the mission statement of the company, corporate values, and the Philippine political spectrum. The Union claimed that the module on the Philippine political spectrum lumped the ANGLO (Alliance of Nationalist and Genuine Labor Organization), with other outlawed labor organizations such as the National Democratic Front or other leftist groups. These issues were discussed during a labor-management meeting held on August 2, 1988. The labor group was represented by the Union, through its President, petitioner Arquilao Bacolod, and its legal counsel. After private respondents explained the issues, the Union agreed to allow its members to attend the HDIR seminar for the rank-and-filers. Nevertheless, on August 19 and 20, the Union directed its members not to attend the seminars scheduled on said dates. Earlier on, or on August 6, 1988, the Union, led by petitioners Arquilao Bacolod and Rene Arao, picketed the premises of the Philippine Eagle Protectors to show their displeasure on the hiring of the guards. Worse still, the Union filed on August 25, 1988, a Notice of Strike with the National Conciliation and Mediation Board (NCMB). It accused the company of unfair labor practices consisting of coercion of employees, intimidation of union members and union-busting. 2 These were the same issues raised by the Union during the August 2, 1988 labor-management meeting. On August 29, 1988, the NCMB called a conciliation conference. The conference yielded the following agreement:

(1) Union officers, including the officials of KMU-ANGLO, and the Executive Director of the NCMB would attend the HDIR seminar on September 5, 1988; and (2) A committee shall convene on September 10, 1989, to establish guidelines governing the guards. The Union officials did attend the September 5, 1988 seminar. While they no longer objected to the continuation of the seminar, they reiterated their demand for the deletion of the discussion pertaining to the KMU-ANGLO. With the apparent settlement of their differences, private respondents notified the NCMB that there were no more bases for the notice of strike. An unfortunate event brake the peace of the parties. On September 8, 1988, Danilo Martinez, a member of the Board of Directors of the Union, was gunned down in his house in the presence of his wife and children. The gunman was later identified as Eledio Samson, an alleged member of the new security forces of private respondents. On September 9, 1988, the day after the killing, most of the members of the Union refused to report for work. They returned to work the following day but they did not comply with the "quota system" adopted by the management to bolster production output. Allegedly, the Union instructed the workers to reduce their production to thirty per cent (30%). Private respondents charged the Union with economic sabotage through slowdown. On September 14, 1988, Private respondents filed separate charges against the Union and its members for illegal strike, unfair labor practice and damages, with prayer for injunction. These cases were docketed as Case Nos. RAB-11-09-00612-888 and RAB No. 11-09-00613-88 before Labor Arbiter Antonio Villanueva. On September 17, 1988, petitioners skipped work to pay their last respect to the slain Danilo Martinez who was laid to rest. Again, on September 23, 1988, petitioners did not report for work. Instead, they proceeded to private respondents' office at Lanang, carrying placards and posters which called for the removal of the security guards, the ouster of certain management officials, and the approval of their mass leave application. Their mass action did not succeed. In a last ditch effort to settle the deteriorating dispute between the parties, City Mayor Rodrigo Duterte intervened. Dialogues were held on September 27 and 29, 1988 at the City Mayor's Office. Again, the dialogues proved fruitless as private respondents refused to withdraw the cases they earlier filed with public respondent. On October 3, 1988, a strike vote was canducted among the members of the Union and those in favor of the strike won overwhelming support from the workers. The result of the strike vote was then submitted to the NCMB on October 10, 1988. Two days later, or on Ootober 12, 1988, the Union struck. On the bases of the foregoing facts, Labor Arbiter Antonio Villanueva ruled that the Onion staged an illegal strike. The dispositlve portion of the Decision, dated December 12, 1988, states: COMFORMABLY WITH ALL THE FOREGOING, judgment is hereby rendered: a) Declaring the strike staged by respondents (petitioners) to be illegal; b) Declaring the employees listed as respondents in the complaint and those mentioned in page 21 to have lost their employment status with complainants Lapanday Agricultural and Development Corporation and Cadeco Agro Development Philippines, Inc.; and

c) Ordering respondents (petitioners in this case) to desist from further committing an illegal strike. Petitioners appealed the Villanueva decision to public respondent NLRC. It also appears that on December 6, 1988, or before the promulgation of the decision of Arbiter Villanueva, the Union, together with Tomas Basco and 25 other workers, filed a complaint for unfair labor practice and illegal suspension against LADECO. The case was docketed as Case No. RAB-11-1200780-88. On even date, another complaint for unfair labor practice and illegal dismissal was filed by the Union, together with Arquilao Bacolod and 58 other complainants. This was docketed as Case No. RAB-11-12-00779-88. These two (2) cases were heard by Labor Arbiter Newton Sancho. Before the NLRC could resolve the appeal taken on the Villanueva decision in Case Nos. RAB-11-0900612-88 and RAB-11-09-00613-88, Labor Arbiter Sancho rendered a decision in the two (2) cases filed by the Union against private respondents LADECO and CADECO (Case Nos. RAB-11-12-00779-88 and RAB-11-12-00780-88). The Sancho decision, dated October 18, 1989, declared LADECO and CADECO guilty of unfair labor practices and illegal dismissal and ordered the reinstatement of the dismissed employees of private reapondents, with backwages and other benefits. Significantly, the Sancho decision considered the refusal of the workers to report for work on September 9, 1988, justified by the circumstance then prevailing, the killing of Danilo Martinez on September 8,1988. Private respondents appealed the Sancho decision, claiming, among others, that labor arbiter Sancho erred in passing upon the legality of the strike staged by petitioners since said issue had already been passed upon by the Regional Arbitration Branch and was still on appeal before the NLRC. Considering that the four (4) cases before it arose from the same set of facts and involved substantially the same issues, the NLRC rendered a consolidated decision, promulgated August 29, 1990, upholding the Villanueva decision in Case Nos. RAB-11-09-00612-88 and RAB-11-09-00613-88. The dispositive portion of the assailed NLRC decision states: WHEREFORE, premises considered, a new judgment is entered in the four consolidated and above-captioned cases as follows: 1. The strike staged by the Lapanday Agricultural Workers Union is hereby declared to be (sic) illegal; 2. As a consequence thereof, the following employees-union officers are declared to have lost their employment status with Lapanday Agricultural Development Corporation and CADECO Agro Development Philippines, to wit: Arguilao Bacolod, Jose Erad, Fernando Hernando, Eldie Estrella, Cerelo Dayag, Lucino Magadan, Rene Arao, Eduardo Poquita, Juanito Gahum, Emilio Magno, Perlito Lisondra, Gregorio Albaron, Abraham Baylon, Dionosio Trocio, Tomas Basco and Rosario Sinday; 3. However, the individual respondents (union members), being merely rank-and-file employees and who merely joined the strike declared as illegal, are ordered reinstated but without backwages, the period they were out of work is deemed the penalty for the illegal strike they staged; 4. Ordering Lapanday Workers' Union, its leaders and members, to desist from further committing an illegal strike; and 5. Dismissing the complaint for unfair labor practice, illegal suspension and illegal dismissal filed by the Lapanday Workers Union (LWU)-ANGLO and its members, for lack of merit.

SO ORDERED. Petitioners fileds motion for reconsideration. It did not prosper. Hence, the petition. Petitioners now claim that public respondent NLRC gravely abused its discretion in: a) declaring that their activities, from September 9, 1988 to October 12, 1988, were strike activities; and b) declaring that the strike staged on October 12, 1988 was illegal. The critical issue is the legality of the strike held on October 12, 1988. The applicable laws are Articles 263 and 264 of the Labor Code, as amended by E.O. No. 111, dated December 24, 1986. 3 Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111, provides: (c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file anotice of strike or the employer may file, notice of lockout with the Ministry at least 30 days before the intended date thereof. In cases of unfair labor practice, the notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the 15-daycooling-off period shall not apply and the union may take action immediately. xxx xxx xxx (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct of secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven (7) days before the intended strike or lockout subject to the cooling-off period herein provided. Article 264 of the same Code reads: Art. 264. Prohibited activities. — (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. xxx xxx xxx . . . . Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided that mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. (emphasis ours).

A strike is "any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute." 4 It is the most preeminent of the economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. Undeniably, strikes exert some disquieting effects not only on the relationship between labor and management but also on the general peace and progress of society. Our laws thus regulate their exercise within reasons by balancing the interests of labor and management together with the overarching public interest. Some of the limitations on the exercise of the right of strike are provided for in paragraphs (c) and (f) of Article 263 of the Labor Code, as amended, supra. They Provide for the procedural steps to be followed before staging a strike — filing of notice of strike, taking of strike vote, and reporting of the strike vote result to the Department of Labor and Employment. In National Federation of Sugar Workers (NFSW) vs. Overseas, et al., 5 we ruled that these steps are mandatory in character, thus: If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not the waiting periods so specifically and emphatically prescribed by law, the purposes (hereafter discussed) far which the filing of the strike notice and strike-vote report is required cannot be achieved. . . . xxx xxx xxx So too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor General — . . . The submission of the report gives assurance that a strike vote has been taken and that, if the report concerning it is false, the majority of the members can take appropriate remedy before it is too late. The seven (7) day waiting period is intended to give the Department of Labor and Employment an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members. The need for assurance that majority of the union members support the strike cannot be gainsaid. Strike is usually the last weapon of labor to compel capital to concede to its bargaining demands or to defend itself against unfair labor practices of management. It is a weapon that can either breathe life to or destroy the union and its members in their struggle with management for a more equitable due of their labors. The decision to wield the weapon of strike must, therefore, rest on a rational basis, free from emotionalism, unswayed by the tempers and tantrums of a few hotheads, and firmly focused on the legitimate interest of the union which should not, however, be antithetical to the public welfare. Thus, our laws require the decision to strike to be the consensus of the majority for while the majority is not infallible, still, it is the best hedge against haste and error. In addition, a majority vote assures the union it will go to war against management with the strength derived from unity and hence, with better chance to succeed. InBatangas Laguna Tayabas Bus Company vs. NLRC, 6 we held: xxx xxx xxx The right to strike is one of the rights recognized and guaranteed by the Constitution as an instrument of labor for its protection against exploitation by management. By virtue of this right, the workers are able to press their demands for better terms of employment with more energy and persuasiveness, poising the threat to strike as their reaction to employer's intransigence. The strike is indeed a powerful weapon of the working class. But precisely because of this, it must be handled carefully, like a sensitive explosive, lest it blow up in the workers' own hands. Thus, it must be declared only after the most thoughtful consultation among them, conducted in the only way allowed, that is, peacefully, and in every case conformably to reasonable regulation. Any violation of

the legal requirements and strictures, . . . will render the strike illegal, to the detriment of the very workers it is supposed to protect. Every war must be lawfully waged. A labor dispute demands no less observance of the rules, for the benefit of all concerned. Applying the law to the case at bar, we rule that strike conducted by the union on October 12, 1988 is plainly illegal as it was held within th seven (7) day waiting period provided for by paragraph (f), Article 263 of the Labor Code, as amended. The haste in holding the strike prevented the Department of Labor and Employment from verifying whether it carried the approval of the majority of the union members. It set to naught an important policy consideration of our law on strike. Considering this finding, we need not exhaustively rule on the legality of the work stoppage conducted by the union and some of their members on September 9 and 23, 1988. Suffice to state, that the ruling of the public respondent on the matter is supported by substantial evidence. We affirm the decision of the public respondent limiting the penalty of dismissal only to the leaders of the illegal strike. especially the officers of the union who served as its major players. They cannot claim good faith to exculpate themselves. They admitted knowledge of the law on strike, including its procedure. They cannot violate the law which ironically was cast to promote their interest. We, likewise, agree with the public respondent that the union members who were merely instigated to participate in the illegal strike should be treated differently from their leaders. Part of our benign consideration for labor is the policy of reinstating rank-and-file workers who were merely misled in supporting illegal strikes. Nonetheless, these reinstated workers shall not be entitled to backwages as they should not be compensated for services skipped during the illegal strike. IN VIEW WHEREOF, the petition is dismissed for failure to show grave abuse of discretion on the part of the public respondent. Costs against the petitioners. SO ORDERED. LAPANDAY WORKERS UNION, ET AL. vs. NLRC FACTS: Private respondents are sister companies engaged in the production of bananas. Their agricultural establishments are located in Davao City. On the other hand, petitioner Lapanday Workers' Union (Union) is the duly certified bargaining agent of the rank and file employees of private respondents. The Unionis affiliated with the KMU-ANGLO. The other petitioners are all members of the Union. Petitioner Union has collective bargaining agreement with private respondents, covering the period f r o m D e c e m b e r 5 , 1 9 8 5 t o N o v e m b e r 3 0 , 1 9 8 8 . A few months before the expiration of their CBA, private respondent initiated certain management policies whichdisrupted the relationship of the parties. Issues were discussed during a labor-management meeting held on August 2, 1988. After private respondents explained the issues, the Union agreed to allow its memberst o a t t e n d t h e H D I R s e m i n a r f o r t h e r a n k - a n d - f i l e r s . Nevertheless, on August 19 and 20, the Union directed its members not to attend t h e s e m i n a r s s c h e d u l e d o n s a i d dates. Earlier on, or on August 6, 1988, the Union, led by petitioners Arquilao Bacolod and Rene Arao, picketed the premises of the Philippine Eagle Protectors to show their displeasure on the hiring of the guards. Worse still, the Union filed on August 25, 1988, a N o t i c e o f S t r i k e w i t h t h e N a t i o n a l C o n c i l i a t i o n a n d Mediation Board (NCMB). It accused the compan y o f unfair labor practices consisting of coercion of employees, intimidation of union members and union-busting. The NCMB called a conciliation conference. Witht h e a p p a r e n t s e t t l e m e n t o f t h e i r d i f f e r e n c e s , p r i v a t e respondents notified the NCMB that there were no more bases for the notice of strike. D a n i l o M a r t i n e z , a m e m b e r o f t h e B o a r d o f Directors of the Union. The gunman was later identified as E l e d i o S a m s o n , a n a l l e g e d m e m b e r o f t h e n e w s e c u r i t y forces of

private respondents. On September 9, 1988, the day after the killing, m o s t o f t h e m e m b e r s o f t h e U n i o n r e f u s e d t o r e p o r t f o r work. They returned to work the following day but they did n o t c o m p l y w i t h t h e " q u o t a s y s t e m " a d o p t e d b y t h e management to bolster production output. Allegedly, the Union instructed the workers to reduce their production to t h i r t y p e r c e n t ( 3 0 % ) . P r i v a t e r e s p o n d e n t s c h a r g e d t h e Union with economic sabotage through slowdown. On September 14, 1988, Private respondents filed separate charges against the Union and its member for i l l e g a l s t r i k e , u n f a i r l a b o r p r a c t i c e a n d d a m a g e s , w i t h prayer for injunction. On October 3, 1988, a strike vote was conducted among the members of the Union and those in favor of the strike won overwhelming support from the workers. The result of the strike vote was then submitted to the NCMB on October 10, 1988. Two days later, or on October 12,1988, the Union struck. Labor Arbiter Antonio Villanueva ruled that the Union staged an illegal strike. ISSUES: Whether or not the strike staged on October 12,1988 was illegal. HELD: Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111, provides: xxx. In every case , the union or the employer shall furnish the Ministry the results of the voting at least seven(7) days before the intended strike or lockout subject to the cooling-off period herein provided. We rule that strike conducted by the union on October 12,1988 is plainly illegal as it was held within the seven (7)day waiting period provided for by paragraph (f), Article263 of the Labor Code, as amended. The haste in holding the strike prevented the Department of Labor and Employment from verifying whether it carried the approval of the majority of the union members. It set to naught an important policy consideration of our law on strike . Considering this finding, we need not exhaustively rule on the legality of the work stoppage conducted by the union and some of their members on September 9 and 23, 1988.Suffice to state, that the ruling of the public respondent on the matter is supported by substantial evidence. We affirm the decision of the public respondent limiting the penalty of dismissal only to the leaders of the illegal strike especially the officers of the union who served as its major players. They cannot claim good faith to exculpate themselves. They admitted knowledge of the law on strike, including its procedure. They cannot violate the law which ironically was cast to promote their interest.W e , l i k e w i s e , a g r e e w i t h t h e p u b l i c r e s p o n d e n t t h a t t h e union members who were merely instigated to participate in the illegal strike should be treated differently from their leaders. Part of our benign consideration for labor is the policy of reinstating rankand-file workers w h o w e r e m e r e l y misled in supporting illegal strikes. Nonetheless, these reinstated workers shall not be entitled to backwages as they should not be compensated for services skipped during the illegal strike.

[G.R. No. 145496. February 24, 2004] STAMFORD MARKETING CORP. vs. JOSEPHINE JULIAN For review on certiorari is the Court of Appeals’ Decision, dated April 26, 2000, in CA-G.R. SP No. 53169, as well as its Resolution, dated October 11, 2000, denying the petitioners’ Motion for Reconsideration. The Court of Appeals modified the Resolution, dated August 27, 1998, of the National Labor Relations Commission (NLRC)-First Division which, in turn, dismissed the petitioners’ appeal from the decision of Labor Arbiter Ramon Valentin C. Reyes in three (3) consolidated cases, namely: (1) Josephine Julian, et al. vs. Stamford Marketing Corp. (NLRC NCR Case No. 00-11-08124-94); (2) Philippine Agricultural, Commercial and Industrial Workers Union, et al. vs. GSP Manufacturing Corp., et al. (NLRC NCR Case No. 00-03-02114-95); and (3) Lucita Casero, et al. vs. GSP Manufacturing Corp., et al. (NLRC NCR Case No. 00-01-10437-95). The instant controversy stemmed from a letter sent by Zoilo V. De La Cruz, Jr., president of the Philippine Agricultural, Commercial and Industrial Workers’ Union (PACIWU -TUCP), on November 2, 1994, to Rosario A. Apacible, the treasurer and general manager of herein petitioners Stamford Marketing Corporation, GSP Manufacturing Corporation, Giorgio Antonio Marketing Corporation, Clementine Marketing Corporation, and Ultimate Concept Phils., Inc. Said letter advised Apacible that the rank-and-file employees of the aforementioned companies had formed the Apacible Enterprise Employees’ Union-PACIWU-TUCP. The union demanded that management recognize its existence. Shortly thereafter, discord reared its ugly head, and rancor came hard on its wake. Josephine Julian, et al. vs. Stamford Marketing Corp. NLRC NCR Case No. 00-11-08124-94 On November 9, 1994, or just a day after Apacible received the letter of PACIWU-TUCP, herein private respondents Josephine Julian, president of the newly organized labor union; Jacinta Tejada, and Jecina Burabod, board member and member of the said union, respectively, were effectively dismissed from employment. Without further ado, the three dismissed employees filed suit with the Labor Arbiter. In their Complaint, the three dismissed employees alleged that petitioners had not paid them their overtime pay, holiday pay/premiums, rest day premium, 13th month pay for the year 1994, salaries for services actually rendered, and that illegal deduction had been made without their consent from their salaries for a cash bond. For its part, herein petitioner Stamford alleged that private respondent Julian was a supervising employee at the Patrick’s Boutique at Shoemart (SM) Northmall. In October 1994, when she was four (4) to five (5) months pregnant, the management of SM Northmall asked her to go on maternity leave, pursuant to company policy. Julian was then directed to report at Stamford’s Head Office for reassignment. She was also asked to submit a medical certificate to enable the company to approximate her delivery date. Julian, however, allegedly failed to comply with these directives and instead, ceased to report for work without having given notice. Stamford then allegedly asked Tejada to take over Julian’s position, but the former inexplicably refused to comply with the management directive. Instead, like Julian, she abandoned her work with nary a notice or an explanation. As to Burabod, petitioner Giorgio Antonio Boutique (Giorgio) averred that she was employed as one of its sales clerks at its SM Northmall branch. When directed to report to the Giorgio branch at Robinson’s Galleria, she defiantly questioned the validity of the directive and refused to comply. Like Julian and Tejada, she then ceased to report for work without giving notice. Philippine Agricultural, Commercial and

Industrial Workers’ Union, et al. vs. GSP Manufacturing Corp. NLRC NCR Case No. 00-03-02114-95 On March 17, 1995, PACIWU-TUCP, filed on behalf of fifty (50) employees allegedly illegally dismissed for union membership by the petitioners, a Complaint before the Arbitration Branch of NLRC, Metro Manila. PACIWU-TUCP charged petitioners herein with unfair labor practice. The Complaint alleged that when Apacible received the letter of PACIWU-TUCP, management began to harass the members of the local chapter, a move which culminated in their outright dismissal from employment, without any just or lawful cause. It was a clear case of union-busting, averred PACIWUTUCP. GSP Manufacturing Corporation (GSP) denied the union’s averments. It claimed that it had verified with the Bureau of Labor Relations (BLR) whether a labor organization with the name Apacible Enterprises Employees’ Union was duly registered. It was informed that no such labor organization was registered either as a local chapter of PACIWU or of the Trade Union Congress of the Philippines (TUCP). GSP claimed that after unsuccessfully misrepresenting themselves, herein private respondents then started making unjustified demands, abandoned their work, and staged an illegal strike from November 1994 up to the filing of the Complaints. Petitioners then asked the private respondents to lift their picket and return to work, but were only met with a cold refusal. Lucita Casero, et al. vs. GSP Manufacturing Corp., et al. NLRC NCR Case No. 00-01-10437-95 This separate case was also filed by the dismissed union members (complainants in NLRC NCR Case No. 00-03-02114-95), against the petitioners herein for payment of their monetary claims. The dismissed employees demanded the payment of (1) salary differentials due to underpayment of wages; (2) unpaid salaries/wages for work actually rendered; (3) 13th month pay for 1994; (4) cash equivalent of the service incentive leave; and (5) illegal deductions from their salaries for cash bonds. Petitioner corporations, however, maintained that they have been paying complainants the wages/salaries mandated by law and that the complaint should be dismissed in view of the execution of quitclaims and waivers by the private respondents. The Labor Arbiter ordered the three cases consolidated as the issues were interrelated and the respondent corporations were under one management. After due proceedings, Labor Arbiter Ramon Valentin C. Reyes rendered a decision, the decretal portion of which reads as follows: WHEREFORE, premises all considered, judgment is hereby rendered in the respective cases as follows: A. NLRC NCR CASE NO. 00-11-08124-94 1. Holding the respondent guilty of unfair labor practice, and declaring complainants’ dismissals illegal; Ordering respondent to reinstate complainants to their former positions without loss of seniority rights and other benefits; Ordering the respondent to pay complainants their backwages from the date of their termination up to the date of this decision; Ordering the respondent to pay complainants their unpaid salaries, overtime pay, holiday and rest day premium, unpaid 13th month pay and reimbursement of the cash deposit deducted by the respondent from the salaries of complainants.

2.

3.

4.

B.

NLRC NCR CASE NO. 00-03-02114-95 1. 2. Declaring the strike conducted by complainants to be illegal; Declaring the officers of the union to have lost their employment status, and thus terminating their employment with respondent companies; Ordering the reinstatement of the complainants who are only members of the union to their former positions with respondent companies, without backwages, except individual complainants Cristeta De Luna, Luzviminda Recones, Eden Revilla, and Jinky Dellosa.

3.

C. 1. a. b. c. d. e.

NLRC NCR CASE NO. 00-01-10431[4]-95 Ordering respondents to pay individual complainants: salary differentials resulting from underpayment of wages unpaid salaries/wages for work actually rendered; 13th month pay for the year 1994; cash equivalent of the service incentive leave; illegal deductions in the form of cash deposits all in accordance with the computation submitted by the individual complainants. 2. Dismissing the complaint with regard to complainants Cristeta De Luna, Luzviminda Recones, Eden Revilla, and Jinky Dellosa.

All other claims are dismissed for lack of merit. The Research and Information Division, this Commission, is hereby directed to effect the necessary computation which shall form part of this Decision. SO ORDERED. UNIONS; UNFAIR LABOR PRACTICE; STRIKES; ILLEGAL DISMISSAL STAMFORD MARKETING CORP., ET AL. VS. JOSEPHINE JULIAN, ET AL. G.R. No. 145496. February 24, 2004 Facts: On November 2, 1994, Zoilo de la Cruz, president of the Philippine Agricultural Commercial and Industrial Workers’ Union (PACIWU-TUCP), sent a letter to Rosario Apacible, treasurer and general manager of Stamford Marketing Corporation, GSP Manufacturing Corporation, Giorgio Antonio Marketing Corporation, Clementine Marketing Corporation and Ultimate Concept Phils., Inc. The letter informed her that the rank-and-file employees of the said companies had formed the Apacible Enterprises Employee’s Union-PACIWU-TUCP and demanded that it be recognized. After such notice, the following three cases arose: In the First Case, Josephine Julian, president of PACIWU-TUCP, Jacinta Tejada and Jecina Burabod, a Board Member and a member of the said union, were dismissed. They filed a suit with the Labor Arbiter alleging that their employer had not paid them with their overtime pay, holiday pay/premiums, rest day premium, 13th month pay for the year 1994 salaries for services actually

rendered, and that illegal deduction had been made without their consent from their salaries for a cash bond. Stamford alleged that the three were dismissed for not reporting for work when required to do so and for not giving notice or explanation when asked. In the Second Case, PACIWU-TUCP filed, on behalf of 50 employees allegedly dismissed illegally for union membership by the petitioners, a case for unfair labor practice against GSP which denied such averments. GSP countered that the BLR did not list Apacible Enterprises Employee’s Union as a local chapter of PACIWU or TUCP. Thus, the strike that said union organized after the GSP refused to negotiate with them was illegal and that they refused to return to work when asked. The Third Case was filed for claims of the 50 employees dismissed in the second case. Petitioner corporations, however, maintained that they have been paying complainants the wages/salaries mandated by law and that the complaint should be dismissed in view of the execution of quitclaims and waivers by the private respondents. The Labor Arbiter ordered the three cases consolidated as the issues were interrelated and the respondent corporations were under one management. First Case: The dismissal was illegal and Stamford was ordered to reinstate the complainants as well as pay the backwages and other benefits claimed. It was held that the reassignment and transfer of the complainants were forms of interference in the formation and membership of a union, an unfair labor practice. Stamford also failed to substantiate their claim that the said employees abandoned their employment. It also failed to prove the necessity of the cash deposit of P2,000 and failed to furnish written notice of dismissal to any complainants. Further, it failed to prove payments of the amounts being claimed. Second Case: The strike was illegal and the officers of the union have lost their employment status, thus terminating their employment with GSP. GSP is however ordered to reinstate the complainants who were members of the union without backwages, save some employees specified. It was established that the union was not registered, and thus had staged an illegal strike. The officers of the union should be liable and dismissed, but the members should not, as they acted in good faith in the belief that their actions were within legal bounds. Third Case: GSP was ordered to pay each complainant their claims, as computed by each individual. All other claims were dismissed for lack of merit. The Labor Arbiter found petitioners liable for salary differentials and other monetary claims for petitioners’ failure to sufficiently prove that it had paid the same to complainants as required by law. It was also ordered to return the cash deposits of the complainants, citing the same reasons as in the First Case. On appeal, the NLRC affirmed the decision in the First and Third Cases, but set aside the judgment of the Second Case for further proceedings in view of the factual issues involved. On May 14, 1996, a Petition to Declare the Strike Illegal was filed which was decided in favor of Stamford, upholding the dismissal of the union officers. The officers made no prior notice to strike, no vote was taken among union members, and the issue involved was non-strikable, a demand for salary increases On elevation to the appellate court, it was ruled that the officers should be given separation pay, and that Jacina Burabod and the rest of the members should be reinstated without loss of seniority, plus backwages. It provided for the payment of the backwages despite the illegality of the strike because the dismissals were done prior to the strike. Such is considered an unfair labor practice as there was lack of due process and valid cause. Thus, the dismissed employees were still entitled to backwages and reinstatement, with exception to the union officers who may be given separation pay due to strained relations with their employers. Issues: (1) Whether or not the respondents’ union officers and members were validly and legally

dismisses from employment considering the illegality of the strike. (2) Whether or not the respondents’ union officers were entitled to backwages, separation pay and reinstatement, respectively. Held: (1) The termination of the union officers was legal under Article 264 of the Labor Code as the strike conducted was illegal and that illegal acts attended the mass action. Holding a strike is a right that could be availed of by a legitimate labor organization, which the union is not. Also, the mandatory requirements of following the procedures in conducting a strike under paragraph (c) and (f) of Article 263 were not followed by the union officers. Article 264 provides for the consequences of an illegal strike, as well as the distinction between officers and members who participated therein. Knowingly participating in an illegal strike is a sufficient ground to terminate the employment of a union officer but mere participation is not sufficient ground for termination of union members. Thus, absent clear and substantial proof, rankand-file union members may not be terminated. If he is terminated, he is entitled to reinstatement. The Court affirmed the ruling of the CA on the illegal dismissal of the union members, as there was non-observance of due process requirements and union busting by management. It also affirmed that the charge of abandonment against Julian and Tejada were without credence. It reversed the ruling that the dismissal was unfair labor practice as there was nothing on record to show that Julian and Tejada were discouraged from joining any union. The dismissal of the union officers for participation in an illegal strike was upheld. However, union officers also must be given the required notices for terminating employment, and Article 264 of the Labor Code does not authorize immediate dismissal of union officers participating in an illegal strike. No such requisite notices were given to the union officers. The Court upheld the appellate court’s ruling that the union members, for having participated in the strike in good faith and in believing that their actions were within the bound of the law meant only to secure economic benefits for themselves, were illegally dismissed hence entitled to reinstatement and backwages. (2) The Supreme Court declared the dismissal of the union officers as valid hence, the award of separation pay was deleted. However, as sanction for non-compliance with the notice requirements for a lawful termination, backwages were awarded to the union officers computed from the time they were dismissed until the final entry of the judgment.

ST. SCHOLASTICA'S COLLEGE vs. HON. RUBEN TORRES The principal issue to be resolved in this recourse is whether striking union members terminated for abandonment of work after failing to comply with return-to-work orders of the Secretary of Labor and Employment (SECRETARY, for brevity) should by law be reinstated. On 20 July 1990, petitioner St. Scholastica's College (COLLEGE, for brevity) and private respondent Samahan ng Manggagawang Pang-Edukasyon sa Sta. Eskolastika-NAFTEU (UNION, for brevity) initiated negotiations for a first-ever collective bargaining agreement. A deadlock in the negotiations prompted the UNION to file on 4 October 1990 a Notice of Strike with the Department of Labor and Employment (DEPARTMENT, for brevity), docketed as NCMB-NCR-NS-10-826. On 5 November 1990, the UNION declared a strike which paralyzed the operations of the COLLEGE. Affecting as it did the interest of the students, public respondent SECRETARY immediately assumed jurisdiction over the labor dispute and issued on the same day, 5 November 1990, a return-to-work order. The following day, 6 November 1990, instead of returning to work, the UNION filed a motion for reconsideration of the return-to-work order questioning inter alia the assumption of jurisdiction by the SECRETARY over the labor dispute. On 9 November 1990, the COLLEGE sent individual letters to the striking employees enjoining them to return to work not later than 8:00 o'clock A.M. of 12 November 1990 and, at the same time, giving notice to some twenty-three (23) workers that their return would be without prejudice to the filing of appropriate charges against them. In response, the UNION presented a list of (6) demands to the COLLEGE in a dialogue conducted on 11 November 1990. The most important of these demands was the unconditional acceptance back to work of the striking employees. But these were flatly rejected. Likewise, on 9 November 1990, respondent SECRETARY denied reconsideration of his return-to-work order and sternly warned the striking employees to comply with its terms. On 12 November 1990, the UNION received the Order. Thereafter, particularly on 14 and 15 November 1990, the parties held conciliation meetings before the National Conciliation and Mediation Board where the UNION pruned down its demands to three (3), viz.: that striking employees be reinstated under the same terms and conditions before the strike; that no retaliatory or disciplinary action be taken against them; and, that CBA negotiations be continued. However, these efforts proved futile as the COLLEGE remained steadfast in its position that any return-to-work offer should be unconditional. On 16 November 1990, the COLLEGE manifested to respondent SECRETARY that the UNION continued to defy his return-to-work order of 5 November 1990 so that "appropriate steps under the said circumstances" may be undertaken by him. 1 On 23 November 1990, the COLLEGE mailed individual notices of termination to the striking employees, which were received on 26 November 1990, or later. The UNION officers and members then tried to return to work but were no longer accepted by the COLLEGE. On 5 December 1990, a Complaint for Illegal Strike was filed against the UNION, its officers and several of its members before the National Labor Relations Commission (NLRC), docketed as NLRC Case No. 00-12-06256-90. The UNION moved for the enforcement of the return-to-work order before respondent SECRETARY, citing "selective acceptance of returning strikers" by the COLLEGE. It also sought dismissal of the complaint. Since then, no further hearings were conducted.

Respondent SECRETARY required the parties to submit their respective position papers. The COLLEGE prayed that respondent SECRETARY uphold the dismissal of the employees who defied his return-towork order. On 12 April 1991, respondent SECRETARY issued the assailed Order which, inter alia, directed the reinstatement of striking UNION members, premised on his finding that no violent or otherwise illegal act accompanied the conduct of the strike and that a fledgling UNION like private respondent was "naturally expected to exhibit unbridled if inexperienced enthusiasm, in asserting its existence". 2 Nevertheless, the aforesaid Order held UNION officers responsible for the violation of the return-to-work orders of 5 and 9 November 1990 and, correspondingly, sustained their termination. Both parties moved for partial reconsideration of the Order, with petitioner COLLEGE questioning the wisdom of the reinstatement of striking UNION members, and private respondent UNION, the dismissal of its officers. On 31 May 1991, in a Resolution, respondent SECRETARY denied both motions. Hence, this Petition for Certiorari, with Prayer for the Issuance of a Temporary Restraining Order. On 26 June 1991, We restrained the SECRETARY from enforcing his assailed Orders insofar as they directed the reinstatement of the striking workers previously terminated. Petitioner questions the assumption by respondent SECRETARY of jurisdiction to decide on termination disputes, maintaining that such jurisdiction is vested instead in the Labor Arbiter pursuant to Art. 217 of the Labor Code, thus — Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, the following cases involving all workers, whether agricultural or non-agricultural: . . . 2. Termination disputes . . . 5. Cases arising from any violation of Article 264 of this Code, including questions on the legality of strikes and lock-outs . . . In support of its position, petitioner invokes Our ruling in PAL v. Secretary of Labor and Employment 3 where We held: The labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary measures against its guilty employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is the holding of the strike but not the company's right to take action against union officers who participated in the illegal strike and committed illegal acts. Petitioner further contends that following the doctrine laid down in Sarmiento v. Tuico 4 and Union of Filipro Employees v. Nestle Philippines, Inc., 5 workers who refuse to obey a return-to-work order are not entitled to be paid for work not done, or to reinstatement to the positions they have abandoned of their refusal to return thereto as ordered. Taking a contrary stand, private respondent UNION pleads for reinstatement of its dismissed officers considering that the act of the UNION in continuing with its picket was never characterized as a "brazen disregard of successive legal orders", which was readily apparent in Union Filipro Employees v. Nestle Philippines, Inc., supra, nor was it a willful refusal to return to work, which was the basis of the ruling in Sarmiento v. Tuico, supra. The failure of UNION officers and members to immediately comply with the return-to-work orders was not because they wanted to defy said orders; rather, they held the view that academic institutions were not industries indispensable to the national interest.

When respondent SECRETARY denied their motion for reconsideration, however, the UNION intimated that efforts were immediately initiated to fashion out a reasonable return-to-work agreement with the COLLEGE, albeit, if failed. The issue on whether respondent SECRETARY has the power to assume jurisdiction over a labor dispute and its incidental controversies, causing or likely to cause a strike or lockout in an industry indispensable to the national interest, was already settled in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment. 6 Therein, We ruled that: . . . [T]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction. And rightly so, for, as found in the aforesaid case, Article 217 of the Labor Code did contemplate of exceptions thereto where the SECRETARY is authorized to assume jurisdiction over a labor dispute otherwise belonging exclusively to the Labor Arbiter. This is readily evident from its opening proviso reading "(e)xcept as otherwise provided under this Code . . . Previously, We held that Article 263 (g) of the Labor Code was broad enough to give the Secretary of Labor and Employment the power to take jurisdiction over an issue involving unfair labor practice. 7 At first glance, the rulings above stated seem to run counter to that of PAL v. Secretary of Labor and Employment, supra, which was cited by petitioner. But the conflict is only apparent, not real. To recall, We ruled in the latter case that the jurisdiction of the Secretary of Labor and Employment in assumption and/or certification cases is limited to the issues that are involved in the disputes or to those that are submitted to him for resolution. The seeming difference is, however, reconcilable. Since the matter on the legality or illegality of the strike was never submitted to him for resolution, he was thus found to have exceeded his jurisdiction when he restrained the employer from taking disciplinary action against employees who staged an illegal strike. Before the Secretary of Labor and Employment may take cognizance of an issue which is merely incidental to the labor dispute, therefore, the same must be involved in the labor disputed itself, or otherwise submitted to him for resolution. If it was not, as was the case in PAL v. Secretary or Labor and Employment, supra, and he nevertheless acted on it, that assumption of jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the ruling in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment, supra, will apply. The submission of an incidental issue of a labor dispute, in assumption and/or certification cases, to the Secretary of Labor and Employment for his resolution is thus one of the instances referred to whereby the latter may exercise concurrent jurisdiction together with the Labor Arbiters. In the instant petition, the COLLEGE in its Manifestation, dated 16 November 1990, asked the "Secretary of Labor to take the appropriate steps under the said circumstances." It likewise prayed in its position paper that respondent SECRETARY uphold its termination of the striking employees. Upon the other hand, the UNION questioned the termination of its officers and members before respondent SECRETARY by moving for the enforcement of the return-to-work orders. There is no dispute then that the issue on the legality of the termination of striking employees was properly submitted to respondent SECRETARY for resolution.

Such an interpretation will be in consonance with the intention of our labor authorities to provide workers immediate access to their rights and benefits without being inconvenienced by the arbitration and litigation process that prove to be not only nerve-wracking, but financially burdensome in the long run. Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by long-winded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. For, labor laws are meant to promote, not defeat, social justice (Maternity Children's Hospital v. Hon. Secretary of Labor ). 8 After all, Art. 4 of the Labor Code does state that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. We now come to the more pivotal question of whether striking union members, terminated for abandonment of work after failing to comply strictly with a return-to-work order, should be reinstated. We quote hereunder the pertinent provisions of law which govern the effects of defying a return-towork order: 1. Article 263 (g) of the Labor Code — Art. 263. Strikes, picketing, and lockouts. — . . . (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same . . . (as amended by Sec. 27, R.A. 6715; emphasis supplied). 2. Article 264, same Labor Code — Art. 264. Prohibited activities. — (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout . . . (emphasis supplied). Any worker whose employment has been terminated as consequence of an unlawful lockout shall be entitled to reinstatement with full back wages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike . . . (emphasis supplied).

3. Section 6, Rule IX, of the New Rules of Procedure of the NLRC (which took effect on 31 August 1990) — Sec. 6. Effects of Defiance. — Non-compliance with the certification order of the Secretary of Labor and Employment or a return to work order of the Commission shall be considered an illegal act committed in the course of the strike or lockout and shall authorize the Secretary of Labor and Employment or the Commission, as the case may be, to enforce the same under pain or loss of employment status or entitlement to full employment benefits from the locking-out employer or backwages, damages and/or other positive and/or affirmative reliefs, even to criminal prosecution against the liable parties . . . (emphasis supplied). Private respondent UNION maintains that the reason they failed to immediately comply with the return-to-work order of 5 November 1990 was because they questioned the assumption of jurisdiction of respondent SECRETARY. They were of the impression that being an academic institution, the school could not be considered an industry indispensable to national interest, and that pending resolution of the issue, they were under no obligation to immediately return to work. This position of the UNION is simply flawed. Article 263 (g) of the Labor Code provides that if a strike has already taken place at the time of assumption, "all striking . . . employees shall immediately return to work." This means that by its very terms, a return-to-work order is immediately effective and executory notwithstanding the filing of a motion for reconsideration ( University of Sto. Tomas v. NLRC). 9 It must be strictly complied with even during the pendency of any petition questioning its validity (Union of Filipro Employees v. Nestle Philippines, Inc., supra ). After all, the assumption and/or certification order is issued in the exercise of respondent SECRETARY's compulsive power of arbitration and, until set aside, must therefore be immediately complied with. The rationale for this rule is explained in University of Sto. Tomas v. NLRC, supra, citing Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 10 thus — To say that its (return-to-work order) effectivity must wait affirmance in a motion for reconsideration is not only to emasculate it but indeed to defeat its import, for by then the deadline fixed for the return to work would, in the ordinary course, have already passed and hence can no longer be affirmed insofar as the time element is concerned. Moreover, the assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes involving academic institutions was already upheld in Philippine School of Business Administration v. Noriel 11 where We ruled thus: There is no doubt that the on-going labor dispute at the school adversely affects the national interest. The school is a duly registered educational institution of higher learning with more or less 9,000 students. The on-going work stoppage at the school unduly prejudices the students and will entail great loss in terms of time, effort and money to all concerned. More important, it is not amiss to mention that the school is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth. Respondent UNION's failure to immediately comply with the return-to-work order of 5 November 1990, therefore, cannot be condoned. The respective liabilities of striking union officers and members who failed to immediately comply with the return-to-work order is outlined in Art. 264 of the Labor Code which provides that any declaration of a strike or lockout after the Secretary of Labor and Employment has assumed jurisdiction over the labor dispute is considered an illegal. act. Any worker or union officer who

knowingly participates in a strike defying a return-to-work order may, consequently, "be declared to have lost his employment status." Section 6 Rule IX, of the New Rules of Procedure of the NLRC, which provides the penalties for defying a certification order of the Secretary of Labor or a return-to-work order of the Commission, also reiterates the same penalty. It specifically states that non-compliance with the aforesaid orders, which is considered an illegal act, "shall authorize the Secretary of Labor and Employment or the Commission . . . to enforce the same under pain of loss of employment status." Under the Labor Code, assumption and/or certification orders are similarly treated. Thus, we held in Sarmiento v. Tuico, supra, that by insisting on staging the restrained strike and defiantly picketing the company premises to prevent the resumption of operations, the strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly replaced. We recently reiterated this stance in Federation of Free Workers v. Inciong, 12 wherein we cited Union of Filipro Employees v. Nestle Philippines, Inc., supra, thus — A strike undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as amended . . . The union officers and members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal act. Despite knowledge of the ruling in Sarmiento v. Tuico, supra, records of the case reveal that private respondent UNION opted to defy not only the return-to-work order of 5 November 1990 but also that of 9 November 1990. While they claim that after receiving copy of the Order of 9 November 1990 initiatives were immediately undertaken to fashion out a return-to-work agreement with management, still, the unrebutted evidence remains that the striking union officers and members tried to return to work only eleven (11) days after the conciliation meetings ended in failure, or twenty (20) days after they received copy of the first return-to-work order on 5 November 1990. The sympathy of the Court which, as a rule, is on the side of the laboring classes ( Reliance Surety & Insurance Co., Inc. v. NLRC), 13 cannot be extended to the striking union officers and members in the instant petition. There was willful disobedience not only to one but two return-to-work orders. Considering that the UNION consisted mainly of teachers, who are supposed to be well-lettered and well-informed, the Court cannot overlook the plain arrogance and pride displayed by the UNION in this labor dispute. Despite containing threats of disciplinary action against some union officers and members who actively participated in the strike, the letter dated 9 November 1990 sent by the COLLEGE enjoining the union officers and members to return to work on 12 November 1990 presented the workers an opportunity to return to work under the same terms and conditions or prior to the strike. Yet, the UNION decided to ignore the same. The COLLEGE, correspondingly, had every right to terminate the services of those who chose to disregard the return-to-work orders issued by respondent SECRETARY in order to protect the interests of its students who form part of the youth of the land. Lastly, the UNION officers and members also argue that the doctrine laid down in Sarmiento v. Tuico, supra, and Union of Filipro Employees v. Nestle, Philippines, Inc., supra, cannot be made applicable to them because in the latter two cases, workers defied the return-to-work orders for more than five (5) months. Their defiance of the return-to-work order, it is said, did not last more than a month. Again, this line of argument must be rejected. It is clear from the provisions above quoted that from the moment a worker defies a return-to-work order, he is deemed to have abandoned his job. It is

already in itself knowingly participating in an illegal act. Otherwise, the worker will just simply refuse to return to his work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill (Sarmiento v. Tuico, supra). Suffice it to say, in Federation of Free Workers v. Inciong, supra, the workers were terminated from work after defying the return-to-work order for only nine (9) days. It is indeed inconceivable that an employee, despite a return-to-work order, will be allowed in the interim to stand akimbo and wait until five (5) orders shall have been issued for their return before they report back to work. This is absurd. In fine, respondent SECRETARY gravely abused his discretion when he ordered the reinstatement of striking union members who refused to report back to work after he issued two (2) return-to-work orders, which in itself is knowingly participating in an illegal act. The Order in question is, certainly, contrary to existing law and jurisprudence. WHEREFORE, the Petition for Certiorari is hereby GRANTED. The Order of 12 April 1991 and the Resolution 31 May 1991 both issued by respondent Secretary of Labor and Employment are SET ASIDE insofar as they order the reinstatement of striking union members terminated by petitioner, and the temporary restraining order We issued on June 26, 1991, is made permanent. No costs. SO ORDERED.

ST. SCHOLASTICA’S COLLEGE VS. TORRES 210 SCRA 565GR. NO 100158 JUNE 29, 1992 FACTS: The Union and College initiated negotiations for a first ever CBA which resulted in a deadlock and prompted the union to file a notice of strike with the DOLE. Union declared a strike which paralyzed the operations of the College and public respondent Sec. of Labor immediately assumed jurisdiction over the labor dispute. Instead of returning to work, the union filed a motion for reconsideration of the return to work order. The college sent individual letters to the striking employees requiring them to return to work. In response union presented demands, the most important of which is the unconditional acceptance back to work of the striking employees. But these were rejected. Sec. of Labor denied the motion for reconsideration for his return to work order and sternly warned striking employees to comply with its terms. Conciliation meetings were held but this proved futile as the college remained steadfast in its position that any return to work order should be unconditional. The College manifested to respondent Sec. that the union continued to defy his return to work order. The College sent termination letters to individual strikers and filed a complaint for illegal strike against the union. The union moved for the enforcement of the return to work order before the Sec. The Sec. issued an order directing reinstatement of striking union members and holding union officers responsible for the violation of the return to work order and were correspondingly terminated. Both parties moved for the partial consideration of the return to work order.

Hence this petition. ISSUE: WON striking union members, terminated for abandonment of work after failing to comply with the return to work order of Sec. of labor, reinstated. HELD: The Labor Code provides that if a strike has already taken place at the time of assumption, all striking employees should immediately return to work. This means that a return to work order is immediately effective and executory, notwithstanding the filing of a motion for reconsideration. It must be strictly complied with even during the pendency of any petition questioning its validity. After all, the assumption and/or certification order issued in the exercise of the Sec.’s compulsive power of arbitration and until set aside, must therefore be complied with immediately. The college correspondingly had every right to terminate the services of those who chose to disregard the return to work order issued by the Sec. of Labor in order to protect the interest of the students who form part of the youth of the land.

SAN MIGUEL CORPORATIONvs. NATIONAL LABOR RELATIONS COMMISSION Before us is a petition for certiorari and prohibition seeking to set aside the decision of the Second Division of the National Labor Relations Commission (NLRC) in Injunction Case No. 00468-94 dated November 29, 1994,[1] and its resolution dated February 1, 1995[2] denying petitioner’s motion for reconsideration. Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng Manggagawa (IBM), exclusive bargaining agent of petitioner’s daily-paid rank and file employees, executed a Collective Bargaining Agreement (CBA) under which they agreed to submit all disputes to grievance and arbitration proceedings. The CBA also included a mutually enforceable no-strike no-lockout agreement. The pertinent provisions of the said CBA are quoted hereunder: ARTICLE IV GRIEVANCE MACHINERY Section 1. - The parties hereto agree on the principle that all disputes between labor and management may be solved through friendly negotiation;. . . that an open conflict in any form involves losses to the parties, and that, therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of the foregoing principle, the parties hereto have agreed to establish a procedure for the adjustment of grievances so as to (1) provide an opportunity for discussion of any request or complaint and (2) establish procedure for the processing and settlement of grievances. xxx xxx xxx

ARTICLE V ARBITRATION Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY and the UNION and/or the workers involving or relating to wages, hours of work, conditions of employment and/or employer-employee relations arising during the effectivity of this Agreement or any renewal thereof, shall be settled by arbitration through a Committee in accordance with the procedure established in this Article. No dispute, disagreement or controversy which may be submitted to the grievance procedure in Article IV shall be presented for arbitration until all the steps of the grievance procedure are exhausted. xxx xxx xxx

ARTICLE VI STRIKES AND WORK STOPPAGES Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of this Agreement. Section 2. The COMPANY agrees that there shall be no lockout during the term of this Agreement so long as the procedure outlined in Article IV hereof is followed by the UNION.[3] On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the National Conciliation and Mediation Board (NCMB) a notice of strike, docketed as NCMB-NCR-NS-04-180-94, against petitioner for allegedly committing: (1) illegal dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being performed by union members, (5) labor-only contracting, (6) harassment of union officers and members, (7) non-recognition of duly-elected union officers, and (8) other acts of unfair labor practice.[4] The next day, IBM filed another notice of strike, this time through its president Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2) labor-only contracting, (3) violation of CBA, (4) dismissal

of union officers and members, and (5) other acts of unfair labor practice. This was docketed as NCMB-NCR-NS-04-182-94.[5] The Galvez group subsequently requested the NCMB to consolidate its notice of strike with that of the Colomeda group,[6] to which the latter opposed, alleging Galvez’s lack of authority in filing the same.[7] Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to Dismiss, on the grounds that the notices raised non-strikeable issues and that they affected four corporations which are separate and distinct from each other.[8] After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that the real issues involved are non-strikeable. Hence on May 2, 1994, he issued separate letter-orders to both union groups, converting their notices of strike into preventive mediation. The said letter-orders, in part, read: During the conciliation meetings, it was clearly established that the real issues involved are illegal dismissal, labor only contracting and internal union disputes, which affect not only the interest of the San Miguel Corporation but also the interests of the MAGNOLIA-NESTLE CORPORATION, the SAN MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC. Considering that San Miguel Corporation is the only impleaded employer-respondent, and considering further that the aforesaid companies are separate and distinct corporate entities, we deemed it wise to reduce and treat your Notice of Strike as Preventive Mediation case for the four (4) different companies in order to evolve voluntary settlement of the disputes. . . . [9] (Emphasis supplied) On May 16, 1994, while separate preventive mediation conferences were ongoing, the Colomeda group filed with the NCMB a notice of holding a strike vote. Petitioner opposed by filing a Manifestation and Motion to Declare Notice of Strike Vote Illegal,[10] invoking the case of PAL v. Drilon,[11] which held that no strike could be legally declared during the pendency of preventive mediation. NCMB Director Ubaldo in response issued another letter to the Colomeda Group reiterating the conversion of the notice of strike into a case of preventive mediation and emphasizing the findings that the grounds raised center only on an intra-union conflict, which is not strikeable, thus: xxx xxx xxx

A perusal of the records of the case clearly shows that the basic point to be resolved entails the question of as to who between the two (2) groups shall represent the workers for collective bargaining purposes, which has been the subject of a Petition for Interpleader case pending resolution before the Office of the Secretary of Labor and Employment. Similarly, the other issues raised which have been discussed by the parties at the plant level, are ancillary issues to the main question, that is, the union leadership...[12] (Emphasis supplied) Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional grounds were set forth therein, including discrimination, coercion of employees, illegal lockout and illegal closure.[13] The NCMB however found these grounds to be mere amplifications of those alleged in the first notice that the group filed. It therefore ordered the consolidation of the second notice with the preceding one that was earlier reduced to preventive mediation.[14] On the same date, the group likewise notified the NCMB of its intention to hold a strike vote on May 27, 1994. On May 27, 1994, the Colomeda group notified the NCMB of the results of their strike vote, which favored the holding of a strike.[15] In reply, NCMB issued a letter again advising them that by virtue of the PAL v. Drilon ruling, their notice of strike is deemed not to have been filed, consequently invalidating any subsequent strike for lack of compliance with the notice requirement. [16]Despite this and the pendency of the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The

strike paralyzed the operations of petitioner, causing it losses allegedly worth P29.98 million in daily lost production.[17] Two days after the declaration of strike, or on June 6, 1994, petitioner filed with public respondent NLRC an amended Petition for Injunction with Prayer for the Issuance of Temporary Restraining Order, Free Ingress and Egress Order and Deputization Order. [18] After due hearing and ocular inspection, the NLRC on June 13, 1994 resolved to issue a temporary restraining order (TRO) directing free ingress to and egress from petitioner’s plants, without prejudice to the union’s right to peaceful picketing and continuous hearings on the injunction case.[19] To minimize further damage to itself, petitioner on June 16, 1994, entered into a Memorandum of Agreement (MOA) with the respondent-union, calling for a lifting of the picket lines and resumption of work in exchange of “good faith talks” between the management and the labor management committees. The MOA, signed in the presence of Department of Labor and Employment (DOLE) officials, expressly stated that cases filed in relation to their dispute will continue and will not be affected in any manner whatsoever by the agreement.[20] The picket lines ended and work was then resumed. Respondent thereafter moved to reconsider the issuance of the TRO, and sought to dismiss the injunction case in view of the cessation of its picketing activities as a result of the signed MOA. It argued that the case had become moot and academic there being no more prohibited activities to restrain, be they actual or threatened.[21] Petitioner, however, opposed and submitted copies of flyers being circulated by IBM, as proof of the union’s alleged threat to revive the strike.[22] The NLRC did not rule on the opposition to the TRO and allowed it to lapse. On November 29, 1994, the NLRC issued the challenged decision, denying the petition for injunction for lack of factual basis. It found that the circumstances at the time did not constitute or no longer constituted an actual or threatened commission of unlawful acts.[23] It likewise denied petitioner’s motion for reconsideration in its resolution dated February 1, 1995. [24] Hence, this petition. Aggrieved by public respondent’s denial of a permanent injunction, petitioner contends that: A. THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY INJUNCTION, THE PARTIES’ RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION AND NOT TO STRIKE. B. THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH IS THE ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID. C. THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE WITHOUT RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION WITHOUT EXPRESSING THE FACTS AND THE LAW ON WHICH IT IS BASED AND ISSUING ITS DENIAL FIVE MONTHS AFTER THE LAPSE OF THE TRO.[25] We find for the petitioner. Article 254 of the Labor Code provides that no temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity except as otherwise provided in Articles 218 and 264 of the Labor Code. Under the first exception, Article 218 (e) of the Labor Code expressly confers upon the NLRC the power to “enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith,

may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party x x x.” The second exception, on the other hand, is when the labor organization or the employer engages in any of the “prohibited activities” enumerated in Article 264. Pursuant to Article 218 (e), the coercive measure of injunction may also be used to restrain an actual or threatened unlawful strike. In the case of San Miguel Corporation v. NLRC,[26] where the same issue of NLRC’s duty to enjoin an unlawful strike was raised, we ruled that the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on non-strikeable grounds. Further, in IBM v. NLRC,[27] we held that it is the “legal duty and obligation” of the NLRC to enjoin a partial strike staged in violat ion of the law. Failure promptly to issue an injunction by the public respondent was likewise held therein to be an abuse of discretion. In the case at bar, petitioner sought a permanent injunction to enjoin the respondent’s strike. A strike is considered as the most effective weapon in protecting the rights of the employees to improve the terms and conditions of their employment. However, to be valid, a strike must be pursued within legal bounds.[28] One of the procedural requisites that Article 263 of the Labor Code and its Implementing Rules prescribe is the filing of a valid notice of strike with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of disputes,[29] this requirement has been held to be mandatory, the lack of which shall render a strike illegal.[30] In the present case, NCMB converted IBM’s notices into preventive mediation as it found that the real issues raised are non-strikeable. Such order is in pursuance of the NCMB’s duty to exert “all efforts at mediation and conciliation to enable the parties to settle the dispute amicably,” [31] and in line with the state policy of favoring voluntary modes of settling labor disputes.[32] In accordance with the Implementing Rules of the Labor Code, the said conversion has the effect of dismissing the notices of strike filed by respondent.[33] A case in point is PAL v. Drilon,[34] where we declared a strike illegal for lack of a valid notice of strike, in view of the NCMB’s conversion of the notice therein into a preventive mediation case. We ruled, thus: The NCMB had declared the notice of strike as “appropriate for preventive mediation.” The effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During the pendency of preventive mediation proceedings no strike could be legally declared... The strike which the union mounted, while preventive mediation proceedings were ongoing, was aptly described by the petitioner as “an ambush.” (Emphasis supplied) Clearly, therefore, applying the aforecited ruling to the case at bar, when the NCMB ordered the preventive mediation on May 2, 1994, respondent had thereupon lost the notices of strike it had filed. Subsequently, however, it still defiantly proceeded with the strike while mediation was ongoing, and notwithstanding the letter-advisories of NCMB warning it of its lack of notice of strike. In the case of NUWHRAIN v. NLRC,[35] where the petitioner-union therein similarly defied a prohibition by the NCMB, we said: Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not ULP, hence not “strikeable.” The refusal of the petitioners to heed said proscription of the NCMB is reflective of bad faith. Such disregard of the mediation proceedings was a blatant violation of the Implementing Rules, which explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting the proceedings.[36] The NCMB having no coercive powers of injunction, petitioner sought recourse from the public respondent. The NLRC issued a TRO only for free ingress to and egress from petitioner’s plants, but did not enjoin the unlawful strike itself. It ignored the fatal lack of notice of strike, and five months after came out with a decision summarily rejecting petitioner’s cited jurisprudence in this wise:

Complainant’s scholarly and impressive arguments, formidably supported by a long line of jurisprudence cannot however be appropriately considered in the favorable resolution of the instant case for the complainant. The cited jurisprudence do not squarely cover and apply in this case, as they are not similarly situated and the remedy sought for were different.[37] Unfortunately, the NLRC decision stated no reason to substantiate the above conclusion. Public respondent, in its decision, moreover ruled that there was a lack of factual basis in issuing the injunction. Contrary to the NLRC’s finding, we find that at the time the injunction was being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBM-NCR Council which led the union. These flyers categorically declared: “Ipaalala n’yo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket line.”[38] These flyers were not denied by respondent, and were dated June 19, 1994, just a day after the union’s manifestation with the NLRC that there existed no threat of commission of prohibited activities. Moreover, it bears stressing that Article 264(a) of the Labor Code [39] explicitly states that a declaration of strike without first having filed the required notice is a prohibited activity, which may be prevented through an injunction in accordance with Article 254. Clearly, public respondent should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike. Also noteworthy is public respondent’s disregard of petitioner’s argument pointing out the union’s failure to observe the CBA provisions on grievance and arbitration. In the case of San Miguel Corp. v. NLRC,[40] we ruled that the union therein violated the mandatory provisions of the CBA when it filed a notice of strike without availing of the remedies prescribed therein. Thus we held: x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for not complying with the grievance procedure provided in the collective bargaining agreement. . . (Citations omitted) As in the abovecited case, petitioner herein evinced its willingness to negotiate with the union by seeking for an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent however resorted to force without exhausting all available means within its reach. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike. As we said long ago: “Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved.”[41] As to petitioner’s allegation of violation of the no-strike provision in the CBA, jurisprudence has enunciated that such clauses only bar strikes which are economic in nature, but not strikes grounded on unfair labor practices.[42] The notices filed in the case at bar alleged unfair labor practices, the initial determination of which would entail fact-finding that is best left for the labor arbiters. Nevertheless, our finding herein of the invalidity of the notices of strike dispenses with the need to discuss this issue. We cannot sanction the respondent-union’s brazen disregard of legal requirements imposed purposely to carry out the state policy of promoting voluntary modes of settling disputes. The state’s commitment to enforce mutual compliance therewith to foster industrial peace is affirmed by no less than our Constitution.[43] Trade unionism and strikes are legitimate weapons of labor granted by our statutes. But misuse of these instruments can be the subject of judicial intervention to forestall grave injury to a business enterprise.[44] WHEREFORE, the instant petition is hereby GRANTED. The decision and resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and SET ASIDE. Petitioner and private respondent are

hereby directed to submit the issues raised in the dismissed notices of strike to grievance procedure and proceed with arbitration proceedings as prescribed in their CBA, if necessary. No pronouncement as to costs. SO ORDERED.

G.R. No. 82511 March 3, 1992 GLOBE-MACKAY CABLE AND RADIO CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION For private respondent Imelda L. Salazar, it would seem that her close association with Delfin Saldivar would mean the loss of her job. In May 1982, private respondent was employed by Globe-Mackay Cable and Radio Corporation (GMCR) as general systems analyst. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. Sometime in 1984, petitioner GMCR, prompted by reports that company equipment and spare parts worth thousands of dollars under the custody of Saldivar were missing, caused the investigation of the latter's activities. The report dated September 25, 1984 prepared by the company's internal auditor, Mr. Agustin Maramara, indicated that Saldivar had entered into a partnership styled Concave Commercial and Industrial Company with Richard A. Yambao, owner and manager of Elecon Engineering Services (Elecon), a supplier of petitioner often recommended by Saldivar. The report also disclosed that Saldivar had taken petitioner's missing Fedders airconditioning unit for his own personal use without authorization and also connived with Yambao to defraud petitioner of its property. The airconditioner was recovered only after petitioner GMCR filed an action for replevin against Saldivar. 1 It likewise appeared in the course of Maramara's investigation that Imelda Salazar violated company reglations by involving herself in transactions conflicting with the company's interests. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed to inform her employer. Consequently, in a letter dated October 8, 1984, petitioner company placed private respondent Salazar under preventive suspension for one (1) month, effective October 9, 1984, thus giving her thirty (30) days within which to, explain her side. But instead of submitting an explanations three (3) days later or on October 12, 1984 private respondent filed a complaint against petitioner for illegal suspension, which she subsequently amended to include illegal dismissal, vacation and sick leave benefits, 13th month pay and damages, after petitioner notified her in writing that effective November 8, 1984, she was considered dismissed "in view of (her) inability to refute and disprove these findings. 2 After due hearing, the Labor Arbiter in a decision dated July 16, 1985, ordered petitioner company to reinstate private respondent to her former or equivalent position and to pay her full backwages and other benefits she would have received were it not for the illegal dismissal. Petitioner was also ordered to pay private respondent moral damages of P50,000.00. 3 On appeal, public respondent National Labor Relations, Commission in the questioned resolution dated December 29, 1987 affirmed the aforesaid decision with respect to the reinstatement of private respondent but limited the backwages to a period of two (2) years and deleted the award for moral damages. 4 Hence, this petition assailing the Labor Tribunal for having committed grave abuse of discretion in holding that the suspension and subsequent dismissal of private respondent were illegal and in ordering her reinstatement with two (2) years' backwages. On the matter of preventive suspension, we find for petitioner GMCR. The inestigative findings of Mr. Maramara, which pointed to Delfin Saldivar's acts in conflict with his position as technical operations manager, necessitated immediate and decisive action on any employee closely, associated with Saldivar. The suspension of Salazar was further impelled by th.e

discovery of the missing Fedders airconditioning unit inside the apartment private respondent shared with Saldivar. Under such circumstances, preventive suspension was the proper remedial recourse available to the company pending Salazar's investigation. By itself, preventive suspension does, not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the company's property pending investigation any alleged malfeasance or misfeasance committed by the employee. 5 Thus, it is not correct to conclude that petitioner GMCR had violated Salazar's right to due process when she was promptly suspended. If at all, the fault, lay with private respondent when she ignored petitioner's memorandum of October 8, 1984 "giving her ample opportunity to present (her) side to the Management." Instead, she went directly to the Labor Department and filed her complaint for illegal suspension without giving her employer a chance to evaluate her side of the controversy. But while we agree with the propriety of Salazar's preventive suspension, we hold that her eventual separation from employment was not for cause. What is the remedy in law to rectify an unlawful dismissal so as to "make whole" the victim who has not merely lost her job which, under settled Jurisprudence, is a property right of which a person is not to be deprived without due process, but also the compensation that should have accrued to her during the period when she was unemployed? Art. 279 of the Labor Code, as amended, provides: Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages , inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. 6 (Emphasis supplied) Corollary thereto are the following provisions of the Implementing Rules and Regulations of the Labor Code: Sec. 2. Security of Tenure. — In cases of regular employments, the employer shall not terminate the services of an employee except for a just cause as provided in the Labor Code or when authorized by existing laws. Sec. 3. Reinstatement. — An employee who is unjustly dismissed from work shall by entitled to reinstatement without loss of seniority rights and to backwages ." 7 (Emphasis supplied) Before proceeding any furthers, it needs must be recalled that the present Constitution has gone further than the 1973 Charter in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Given the pro-poor orientation of several articulate Commissioners of the Constitutional Commission of 1986, it was not surprising that a whole new Article emerged on Social Justice and Human Rights designed, among other things, to "protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good."8 Proof of the priority accorded to labor is that it leads the other areas of concern in the Article on Social Justice, viz., Labor ranks ahead of such topics as Agrarian and Natural Resources Reform, Urban Land Roform and Housing, Health, Women, Role and Rights of Poople's Organizations and Human Rights. 9 The opening paragraphs on Labor states

The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits is may be provided by law. 10 (Emphasis supplied) Compare this with the sole.provision on Labor in the 1973 Constitution under the Article an Declaration of Principles and State Policies that provides: Sec. 9. The state shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and employers. The State shall ensure the rights of workers to self-organization, collective baegaining, security of tenure, and just and humane conditions of work. The State may provide for compulsory arbitration. 11 To be sure, both Charters recognize "security of tenure" as one of the rights of labor which the State is mandated to protect. But there is no gainsaying the fact that the intent of the framers of the present Constitution was to give primacy to the rights of labor and afford the sector "full protection," at least greater protection than heretofore accorded them, regardless of the geographical location of the workers and whether they are organized or not. It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who substantially contributed to the present formulation of the protection to labor provision and proposed that the same be incorporated in the Article on Social Justice and not just in the Article on Declaration of Principles and State Policies "in the light of the special importance that we are giving now to social justice and the necessity of emphasizing the scope and role of social justice in national development." 12 If we have taken pains to delve into the background of the labor provisions in our Constitution and the Labor Code, it is but to stress that the right of an employee not to be dismissed from his job except for a just or authorized cause provided by law has assumed greater importance under the 1987 Constitution with the singular prominence labor enjoys under the article on Social Justice. And this transcendent policy has been translated into law in the Labor Code. Under its terms, where a case of unlawful or unauthorized dismissal has been proved by the aggrieved employee, or on the other hand, the employer whose duty it is to prove the lawfulness or justness of his act of dismissal has failed to do so, then the remedies provided in Article 279 should find, application. Consonant with this liberalized stance vis-a-vis labor, the legislature even went further by enacting Republic Act No. 6715 which took effect on March 2, 1989 that amended said Article to remove any possible ambiguity that jurisprudence may have generated which watered down the constitutional intent to grant to labor "full protection."13 To go back to the instant case, there being no evidence to show an authorized, much less a legal, cause for the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but ay well, to full backwages." 14 The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is, in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary meaning of the word "reinstate" is "to restore to a state, conditione positions etc. from which one had been removed" 15 and in the latter, to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her "whole."

Sadly, the avowed intent of the law has at times been thwarted when reinstatement has not been forthcoming and the hapless dismissed employee finds himself on the outside looking in. Over time, the following reasons have been advanced by the Court for denying reinstatement under the facts of the case and the law applicable thereto; that reinstatement can no longer be effected in view of the long passage of time (22 years of litigation) or because of the realities of the situation; 16 or that it would be "inimical to the employer's interest; " 17 or that reinstatement may no longer be feasible; 18 or, that it will not serve the best interests of the parties involved; 19 or that the company would be prejudiced by the workers' continued employment; 20 or that it will not serve any prudent purpose as when supervening facts have transpired which make execution on that score unjust or inequitable 21 or, to an increasing extent, due to the resultant atmosphere of "antipathy and antagonism" or "strained relations" or "irretrievable estrangement" between the employer and the employee. 22 In lieu of reinstatement, the Court has variously ordered the payment of backwages and separation pay 23 or solely separation pay. 24 In the case at bar, the law is on the side of private respondent. In the first place the wording of the Labor Code is clear and unambiguous: "An employee who is unjustly dismissed from work shall be entitled to reinstatement. . . . and to his full backwages. . . ." 25 Under the principlesof statutory construction, if a statute is clears plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plain-meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by, the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. 26 The legislature is presumed to know the meaning of the words, to:have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute. 27 Verba legis non est recedendum, or from the words of a statute there should be no departure. Neither does the provision admit of any qualification. 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. A few examples, will suffice to illustrate the Court's application of the above principles: where the employee is a Vice-President for Marketing and as such, enjoys the full trust and confidence of top management; 28 or is the Officer-In-Charge of the extension office of the bank where he works; 29 or is an organizer of a union who was in a position to sabotage the union's efforts to organize the workers in commercial and industrial establishments; 30 or is a warehouseman of a non-profit organization whose primary purpose is to facilitate and maximize voluntary gifts. by foreign individuals and organizations to the Philippines; 31 or is a manager of its Energy Equipment Sales. 32 Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwisey reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. 33 Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. 34

Here, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee. Hence, this does not constitute an exception to the general rule mandating reinstatement for an employee who has been unlawfully dismissed. On the other hand, has she betrayed any confidence reposed in her by engaging in transactions that may have created conflict of interest situations? Petitioner GMCR points out that as a matter of company policy, it prohibits its employees from involving themselves with any company that has business dealings with GMCR. Consequently, when private respondent Salazar signed as a witness to the partnership papers of Concave (a supplier of Ultra which in turn is also a supplier of GMCR), she was deemed to have placed. herself in an untenable position as far as petitioner was concerned. However, on close scrutiny, we agree with public respondent that such a circumstance did not create a conflict of interests situation. As a systems analyst, Salazar was very far removed from operations involving the procurement of supplies. Salazar's duties revolved around the development of systems and analysis of designs on a continuing basis. In other words, Salazar did not occupy a position of trust relative to the approval and purchase of supplies and company assets. In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As we have held countless times, while loss of confidence or breach of trust is a valid ground for terminations it must rest an some basis which must be convincingly established. 35 An employee who not be dismissed on mere presumptions and suppositions. Petitioner's allegation that since Salazar and Saldivar lived together in the same apartment, it "presumed reasonably that complainant's sympathy would be with Saldivar" and its averment that Saldivar's investigation although unverified, was probably true, do not pass this Court's test. 36 While we should not condone the acts of disloyalty of an employee, neither should we dismiss him on the basis of suspicion derived from speculative inferences. To rely on the Maramara report as a basis for Salazar's dismissal would be most inequitous because the bulk of the findings centered principally oh her friend's alleged thievery and anomalous transactions as technical operations' support manager. Said report merely insinuated that in view of Salazar's special relationship with Saldivar, Salazar might have had direct knowledge of Saldivar's questionable activities. Direct evidence implicating private respondent is wanting from the records. It is also worth emphasizing that the Maramara report came out after Saldivar had already resigned from GMCR on May 31, 1984. Since Saldivar did not have the opportunity to refute management's findings, the report remained obviously one-sided. Since the main evidence obtained by petitioner dealt principally on the alleged culpability of Saldivar, without his having had a chance to voice his side in view of his prior resignation, stringent examination should have been carried out to ascertain whether or not there existed independent legal grounds to hold Salatar answerable as well and, thereby, justify her dismissal. Finding none, from the records, we find her to have been unlawfully dismissed. WHEREFORE, the assailed resolution of public respondent National Labor Relations Commission dated December 29, 1987 is hereby AFFIRMED. Petitioner GMCR is ordered to REINSTATE private respondent Imelda Salazar and to pay her backwages equivalent to her salary for a period of two (2) years only. This decision is immediately executory. SO ORDERED.

OSMALIK S. BUSTAMANTE vs. NATIONAL LABOR RELATIONS COMMISSION On 15 March 1996, the Court (First Division) promulgated a decision in this case, the dispositive part of which states: "WHEREFORE, the resolution of the National Labor Relations Commission dated 3 May 1993 is modified in that its deletion of the award for backwages in favor of petitioners, is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall be paid to petitioners from the time of their illegal dismissal on 25 June 1990 up to the date of their reinstatement. If reinstatement s no longer feasible, a one-month salary shall be paid the petitioners as ordered in the labor arbiter's decision, in addition to the adjudged backwages. Private respondent now moves to reconsider the decision on grounds that (a) petitioners are not entitled to recover backwages because they were not actually dismissed but their probationary employment was not converted to permanent employment; and (b) assuming that petitioners are entitled to backwages, computation thereof should not start from cessation of work up to actual reinstatement, and that salary earned elsewhere (during the period of illegal dismissal) should be deducted from the award of such backwages. There is no compelling reason to reconsider the decision of the Court (First Division) dated 15 March 1996. However, we here clarify the computation of backwages due an employee on account of his illegal dismissal from employment. This court has, over the years, applied different methods in the computation of backwages. The first labor relations law governing the award of backwages was Republic Act No. 875, the Industrial Peace Act, approved on 17 June 1953. Sections 5 and 15 thereof provided thus: "Sec. 5. Unfair Labor Practice Cases.(c) x x x. If, after investigation, the Court shall be of the opinion that any person named in the complaint has engaged in or is engaging in any unfair labor practice, then the Court shall state its findings of fact and shall issue and cause to be served on such person an order requiring such person to cease and desist from such unfair labor practice and take such affirmative action as will effectuate the policies of this Act, including (but not limited to) reinstatement of employees with or without back-pay and including rights of the employees prior to dismissal including seniority. x x x (underscoring supplied) Sec. 15. Violation of Duty to Bargain Collectively. - x x x. Any employee whose work has stopped as a consequence of such lockout shall be entitled to back-pay. (underscoring supplied)" In accordance with these provisions, backpay (the same as backwages) could be awarded where, in the opinion of the Court of Industrial Relations (CIR) such was necessary to effectuate the policies of the Industrial Peace Act.[1] Only in one case was backpay a matter of right, and that was, when an employer had declared a lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee, it also had the implied power of mitigating (reducing) the backpay where backpay was allowed.[2] Thus, in the exercise of its jurisdiction, the CIR increased or diminished the award of backpay, depending on several circumstances, among them, the good faith of the employer,[3]the employee's employment in other establishments during the period of illegal dismissal, or the probability that the employee could have realized net earnings from outside employment if he had exercised due diligence to search for outside employment.[4] In labor cases decided during the effectivity of R.A. No. 875, this Court acknowledged and upheld the CIR's authority to deduct any amount from the employee's backwages,[5] including the discretion to reduce such award of backwages by whatever earnings were obtained by the employee elsewhere during the period of his illegal dismissal.[6] In the case of Itogon-Suyoc Mines, Inc. v. Sañgilo-Itogon Workers' Union,[7] this Court restated the guidelines for deternination of total backwages, thus: "First. To be deducted from the backwages accruing to each of the laborers to be reinstated is the total amount of earnings obtained by him from other employment(s) from the date of

dismissal to the date of reinstatement. Should the laborer decide that it is preferable not to return to work, the deduction should be made up to the time judgment becomes final. And these, for the reason that employees should not be permitted to enrich themselves at the expense of their employer. Besides, there is the 'law's abhorrence for the double competition'. Second. Likewise, in mitigation of the damages that the dismissed respondents are entitled to, account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. We are prompted to give out this last reminder because it is really unjust that a discharged employee should, with folded arms, remain inactive in the expectation that a windfall would come to him. A countrary view would breed idleness; it is conductive to lack of initiative on the part of a laborer. Both bear the stamp of underdesirability." From this ruling came the burden of disposing of an illegal dismissal case on its merits of determining whether or not the computation of the award of backwages is correct. In order not to unduly delay the disposition of illegal dismissal cases, this Court found occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, et al.[8] to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). This ruling was grounded upon considerations of expediency in the execution of the decision. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic, reasonable and mutually beneficial solution" and "thus obviates the twin evils of idleness on the part of the employees and attrition and undue delay in satisfying the award on the part of the employer".[9] However, Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year, 11 months and 15 days which represented the remainder of the prescriptive period after deducting the period corresponding to the delay incurred by the employee in filing the complaint for unfair labor practice and reinstatement. Justice Teehankee opined that: "… an award of back wages equivalent to three years (where the case is not terminated sooner) should serve as the base figure for such awards without deduction, subject to deduction where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary damages where there are aggravating circumstances (e.g. oppression or dilatory appeals) on the employer's part."[10] The proposal on the three-year backwages was subsequently adopted in later cases, among them, Feati University Club (PAFLU) v. Feati University (No. L-31503, 15 August 1974, 58 SCRA 395), Luzon Stevedoring Corporation v. CIR (No. L-34300, 22 November 1974, 61 SCRA 154), Danao Development Corporation v. NLRC (Nos. L-40706 and L-40707, 16 February 1978, 81 SCRA 487), Associated Anglo-American Tobacco Corporation v. Lazaro (No. 63779, 27 October 1983, 125 SCRA (463), Philippine National Oil Company - Energy Development Corporation v. Leogardo (G.R. No. 58494, 5 July 1989, 175 SCRA 26). Then came Presidential Decree No. 442 (the Labor Code of the Philippines) which was signed into law on 1 May 1974 and which took effect on 1 November 1974. Its posture on the award of backwages, as amended, was expressed as follows: "ART. 279. Security of tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his back wages computed from the time his compensation was was withheld from him up to the time of his reinstatement. (underscoring supplied)." Under the abovequoted provision, it became mandatory to award backwages to illegally dismissed regular employees. The law specifically declared that the award of backwages was to be computed from the time compensation was withheld from the employee up to the time of his reinstatement. This nothwithstanding, the rule generally applied by the Court after the promulgation

of the Mercury Drug case,[11] and during the effectivity of P.D. No. 442 was still the Mercury Drug rule. A survey of cases from 1974 until 1989, when the amendatory law to P.D. No. 442, namely, R.A. No. 6715 took effect, supports this conclusion. In the case of New Manila Candy Workers Union (Naconwa-Paflu) v. CIR (1978),[12] or after the Labor Code (P.D. No. 442) had taken effect, the Court still followed the Mercury Drug rule to avoid the necessity of a hearing on earnings obtained elsewhere by the employee during the period of illegal dismissal. In an even later case (1987)[13] the Court declared that the general principle is that an employee is entitled to receive as backwages all the amounts he may have received from the date of his dismissal up to the time of his reinstatement. However, in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level, the award of backwages equivalent to three (3) years, without qualification or deduction, was nonetheless followed in said case. In a more direct approach to the rule on the award of backwages, this Court declared in the 1990 case of Medado v. Court of Appeals[14] that "any decision or order granting backwages in excess of three (3) years is null and void as to the excess". In sum, during the effectivity of P.D. 442, the Court enforced the Mercury Drug rule and, in effect, qualified the provision under P.D. No. 442 by limiting the award of backwages to three (3) years. On 21 march 1989, Republic Act No. 6715 took effect, amending the Labor Code. Article 279 thereof states in part: "ART. 279. Security of Tenure.- . . . An employee who 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." (underscoring supplied) In accordance with the above provision, an illegally dismissed employee is entitled to his full backwages from the time his compensation was withheld from him (which , as a rule, is from the time of his illegal dismissal) up to the time of his actual reinstatement. It is true that this Court had ruled in the case of Pines City Educational Center vs. NLRC (G.R. No. 96779, 10 November 1993, 227 SCRA 655) that "in ascertaining the total amount of backwages payable to them (employees), we go back to the rule prior to the Mercury Drug rule that the total amount derived from employment elsewhere by the employee from the date of dismissal up to the date of reinstatement, if any, should be deducted therefrom."[15] The rationale for such ruling was that, the eraning derived elsewhere by the dismissed employee while litigating the legality of his dismissal, should be deducted from the full amount of backwages which the law grants him upon reinstatement, so as not to unduly or unjustly enrich the employee at the expense of the employer. The Court deems it appropriate, however, to reconsider such earlier ruling on the computation of backwages as enunciated in said Pines City Educational Center case, by now holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.[16] In other words, the provision calling for "full

backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Index animi sermo est.[17] Therefore, in accordance with R.A No. 6715, petitioners are entitled to their full backwages, inclusive of allowances and other benefits or their monetary equivalent, from the time their actual compensation was with held from them up to the time of their actual reinstatement. As to reinstatement of petitioners, this Court has already ruled that since reinstatement is no longer feasible, because the company would be unjustly prejudiced by the continued employment of petitioners who at present are overage, a separation pay equal to one-month salary granted to them in the Labor Arbiter's decision was in order and, therefore, affirmed in the Court's decision of 15 March 1996. Furthermore, since reinstatement in this case is no longer feasible, the amount of backwages shall be computed from the time of their illegal termination on 25 June 1990 up to the time of finality of this decision.[18] ACCORDINGLY, private respondent's Motion for Reconsideration, dated 10 April 1996, is DENIED. SO ORDERED.

JAIME D. VIERNES vs. NATIONAL LABOR RELATIONS COMMISSION Before us is a petition for certiorari seeking to annul the decision promulgated by the National Labor Relations Commission (NLRC) on July 2, 1992 in NLRC CA No. L-000384-92,[1] and its resolution dated September 24, 1992 denying petitioners’ motion for reconsideration. The factual background of this case, as summarized by the Labor Arbiter, is as follows: Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment of wages and claim for indemnity pay against a common respondent, the Benguet Electric Cooperative, Inc., (BENECO for short) represented by its Acting General Manager, Gerardo P. Versoza. Complainants’ services as meter readers were contracted for hardly a month’s duration, or from October 8 to 31, 1990. Their employment contracts, couched in identical terms, read: You are hereby appointed as METER READER (APPRENTICE) under BENECO-NEA Management with compensation at the rate of SIXTY-SIX PESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day from October 08 to 31, 1990. x x x. (Annex ‘B’, Complainants’ Joint Position Paper)

The said term notwithstanding, the complainants were allowed to work beyond October 31, 1990, or until January 2, 1991. On January 3, 1991, they were each served their identical notices of termination dated December 29, 1990. The same read: Please be informed that effective at the close of office hours of December 31, 1990, your services with the BENECO will be terminated. Your termination has nothing to do with your performance. Rather, it is because we have to retrench on personnel as we are already overstaffed. x x x. (Annex ‘C’, CJPP)

On the same date, the complainants filed separate complaints for illegal dismissal. And following the amendment of said complaints, they submitted their joint position paper on April 4, 1991. Respondent filed its position paper on April 2, 1991. It is the contention of the complainants that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. On the other hand, the respondent invokes Article 283 of the Labor Code in defense of the questioned dismissal.[2] On October 18, 1991, the Labor Arbiter rendered a decision, the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered: 1. Dismissing the complaints for illegal dismissal filed by the complainants for lack of merit. However in view of the offer of the respondent to enter into another temporary employment contract with the complainants, the respondent is directed to so extend such contract to each complainant, with the exception of Jaime Viernes, and to pay each the amount of P2,590.50, which represents a month’s salary, as indemnity for its failure to give complainants the 30-day notice mandated under Article 283 of the Labor Code; or, at the option of the complainants, to pay each financial assistance in the amount of P5,000.00 and the P2,590.50 above-mentioned. 2. A. Respondent is also ordered: To pay complainants the amount representing underpayment of their wages:

a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, Francisco Bayuga, Arthur Oribello, Buenaventura de Guzman, Jr., Robert Ordoño, Bernard Jularbal and Leodel Soriano, P1,994.25 each; b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each. B. To extend to complainant Jaime Viernes an appointment as regular employee for the position of meter reader, the job he held prior to his termination, and to pay him P2,590.50 as indemnity, plus the underpayment of his wages as above stated. C. To pay P7,000.00 as and for attorney’s fees.

No damages. SO ORDERED.[3] Aggrieved by the Labor Arbiter’s decision, the complainants and the respondent filed their respective appeals to the NLRC. On July 2, 1992, the NLRC modified its judgment, to wit: WHEREFORE, premises considered, judgment is hereby rendered modifying the appealed decision by declaring complainants’ dismissal illegal, thus ordering their reinstatement to their former position as meter readers or to any equivalent position with payment of backwages limited to one year and deleting the award of indemnity and attorney’s fees. The award of underpayment of wages is hereby AFFIRMED. SO ORDERED.[4] On August 27, 1992, complainants filed a Motion for Clarification and Partial Reconsideration.[5] On September 24, 1992, the NLRC issued a resolution denying the complainants’ motion for reconsideration.[6] Hence, complainants filed herein petition. Private respondent BENECO filed its Comment; the Office of the Solicitor General (OSG) filed a Manifestation and Motion in Lieu of Comment; public respondent NLRC filed its own Comment; and petitioners filed their Manifestation and Motion In Lieu of Consolidated Reply. Public respondent NLRC, herein petitioners, and private respondent filed their respective memoranda, and the OSG, its Manifestation in 1994. Pursuant to our ruling in Rural Bank of Alaminos Employees Union vs. NLRC,[7] to wit: …in the decision in the case of St. Martin Funeral Homes vs. National Labor Relations Commission, G.R. No. 130866, promulgated on September 16, 1998, this Court pronounced that petitions for certiorari relating to NLRC decisions must be filed directly with the Court of Appeals, and labor cases pending before this Court should be referred to the appellate court for proper disposition. However, in cases where the Memoranda of both parties have been filed with this Court prior to the promulgation of the St. Martin decision, the Court generally opts to take the case itself for its final disposition.[8] and considering that the parties have filed their respective memoranda as of 1994, we opt to resolve the issues raised in the present petition. The parties raised the following issues:

1. Whether the respondent NLRC committed grave abuse of discretion in ordering the reinstatement of petitioners to their former position as meter readers on probationary status in spite of its finding that they are regular employees under Article 280 of the Labor Code. 2. Whether the respondent NLRC committed grave abuse of discretion in limiting the backwages of petitioners to one year only in spite of its finding that they were illegally dismissed, which is contrary to the mandate of full backwages until actual reinstatement but not to exceed three years. 3. Whether the respondent NLRC committed grave abuse of discretion in deleting the award of indemnity pay which had become final because it was not appealed and in deleting the award of attorney’s fees because of the absence of a trial-type hearing. 4. Whether the mandate of immediately executory on the reinstatement aspect even pending appeal as provided in the decision of Labor Arbiters equally applies in the decision of the National Labor Relations Commission even pending appeal, by means of a motion for reconsideration of the order reinstating a dismissed employee or pending appeal because the case is elevated on certiorari before the Supreme Court.[9] We find the petition partly meritorious. As to the first issue: We sustain petitioners’ claim that they should be reinstated to their former position as meter readers, not on a probationary status, but as regular employees. Reinstatement means restoration to a state or condition from which one had been removed or separated.[10] In case of probationary employment, Article 281 of the Labor Code requires the employer to make known to his employee at the time of the latter’s engagement of the reasonable standards under which he may qualify as a regular employee. A review of the records shows that petitioners have never been probationary employees. There is nothing in the letter of appointment, to indicate that their employment as meter readers was on a probationary basis. It was not shown that petitioners were informed by the private respondent, at the time of the latter’s employment, of the reasonable standards under which they could qualify as regular employees. Instead, petitioners were initially engaged to perform their job for a limited duration, their employment being fixed for a definite period, from October 8 to 31, 1990. Private respondent’s reliance on the case of Brent School, Inc. vs. Zamora,[11] wherein we held as follows: Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee’s right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. [12] is misplaced. The principle we have enunciated in Brent applies only with respect to fixed term employments. While it is true that petitioners were initially employed on a fixed term basis as their employment contracts were only for October 8 to 31, 1990, after October 31, 1990, they were allowed to continue working in the same capacity as meter readers without the benefit of a new contract or agreement or without the term of their employment being fixed anew. After October 31,

1990, the employment of petitioners is no longer on a fixed term basis. The complexion of the employment relationship of petitioners and private respondent is thereby totally changed. Petitioners have attained the status of regular employees. Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, or a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. In De Leon vs. NLRC,[13] and Abasolo vs. NLRC,[14] we laid down the test in determining regular employment, to wit: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.[15] Clearly therefrom, there are two separate instances whereby it can be determined that an employment is regular: (1) The particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; or (2) if the employee has been performing the job for at least a year. Herein petitioners fall under the first category. They were engaged to perform activities that are necessary to the usual business of private respondent. We agree with the labor arbiter’s pronouncement that the job of a meter reader is necessary to the business of private respondent because unless a meter reader records the electric consumption of the subscribing public, there could not be a valid basis for billing the customers of private respondent. The fact that the petitioners were allowed to continue working after the expiration of their employment contract is evidence of the necessity and desirability of their service to private respondent’s business. In addition, during the preliminary hearing of the case on February 4, 1991, private respondent even offered to enter into another temporary employment contract with petitioners. This only proves private respondent’s need for the services of herein petitioners. With the continuation of their employment beyond the original term, petitioners have become full-fledged regular employees. The fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Since petitioners are already regular employees at the time of their illegal dismissal from employment, they are entitled to be reinstated to their former position as regular employees, not merely probationary. As to the second issue, Article 279 of the Labor Code, as amended by R.A. No. 6715, which took effect on March 21, 1989, provides that an illegally dismissed employee is entitled to 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. Since petitioners were employed on October 8, 1990, the amended provisions of Article 279 of the Labor Code shall apply to the present case. Hence, it was patently erroneous, tantamount to grave abuse of discretion on the part of the public respondent in limiting to one year the backwages awarded to petitioners. With respect to the third issue, an employer becomes liable to pay indemnity to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the

requirements of due process.[16] The indemnity is in the form of nominal damages intended not to penalize the employer but to vindicate or recognize the employee’s right to procedural due process which was violated by the employer.[17] Under Article 2221 of the Civil Code, nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. We do not agree with the ruling of the NLRC that indemnity is incompatible with the award of backwages. These two awards are based on different considerations. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. [18] On the other hand, the award of indemnity, as we have earlier held, is meant to vindicate or recognize the right of an employee to due process which has been violated by the employer. In the present case, the private respondent, in effecting the dismissal of petitioners from their employment, failed to comply with the provisions of Article 283 of the Labor Code which requires an employer to serve a notice of dismissal upon the employees sought to be terminated and to the Department of Labor, at least one month before the intended date of termination. Petitioners were served notice on January 3, 1991 terminating their services, effective December 29, 1990, or retroactively, in contravention of Article 283. This renders the private respondent liable to pay indemnity to petitioners. Thus, we find that the NLRC committed grave abuse of discretion in deleting the award of indemnity. In Del Val vs. NLRC,[19] we held that the award of indemnity ranges from P1,000.00 toP10,000.00 depending on the particular circumstances of each case. In the present case, the amount of indemnity awarded by the labor arbiter is P2,590.50, which is equivalent to petitioners’ one-month salary. We find no cogent reason to modify said award, for being just and reasonable. As to the award of attorney’s fees, the same is justified by the provisions of Article 111 of the Labor Code, to wit: Art. 111. Attorney’s fees – (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered. (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorney’s fees which exceed ten percent of the amount of wages recovered. As to the last issue, Article 223 of the Labor Code is plain and clear that the decision of the NLRC shall be final and executory after ten (10) calendar days from receipt thereof by the parties. In addition, Section 2(b), Rule VIII of the New Rules of Procedure of the NLRC prov ides that “should there be a motion for reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be executory after ten calendar days from receipt of the resolution on such motion.” We find nothing inconsistent or contradictory between Article 223 of the Labor Code and Section 2(b), Rule VIII, of the NLRC Rules of Procedure. The aforecited provision of the NLRC Rules of Procedure merely provides for situations where a motion for reconsideration is filed. Since the Rules allow the filing of a motion for reconsideration of a decision of the NLRC, it simply follows that the ten-day period provided under Article 223 of the Labor Code should be reckoned from the date of receipt by the parties of the resolution on such motion. In the case at bar, petitioners received the resolution of the NLRC denying their motion for reconsideration on October 22, 1992. Hence, it is on November 2, 1992 that the questioned decision became executory. WHEREFORE, the petition is partially GRANTED. The decision of the National Labor Relations Commission dated July 2, 1992 is MODIFIED. Private respondent Benguet Electric Cooperative, Inc. (BENECO) is hereby ordered to reinstate petitioners to their former or substantially equivalent position as regular employees, without loss of seniority rights and other privileges appurtenant thereto, with full backwages from the time of their dismissal until they are actually reinstated. The amount of P2,590.50 awarded by the labor arbiter as indemnity to petitioners is REINSTATED. Private

respondent is also ordered to pay attorney’s fees in the amount of ten percent (10%) of the total monetary award due to the petitioners. In all other respects the assailed decision and resolution are AFFIRMED. Costs against private respondent BENECO. SO ORDERED.

ROWELL INDUSTRIAL CORPORATIONHON. COURT OF APPEALS and JOEL TARIPE This case is a Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to set aside the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No. 74104, entitled, Rowell Industrial Corp., and/or Edwin Tang v. National Labor Relations Commission and Joel Taripe, dated 30 September 2004 and 1 April 2005, respectively, which affirmed the Resolutions 3 of the National Labor Relations Commission (NLRC) dated 7 June 2002 and 20 August 2002, finding herein respondent Joel Taripe (Taripe) as a regular employee who had been illegally dismissed from employment by herein petitioner Rowell Industrial Corp. (RIC), thereby ordering petitioner RIC to reinstate respondent Taripe with full backwages, subject to the modification of exonerating Edwin Tang, the RIC General Manager and Vice President, from liability and computing the backwages of herein respondent Taripe based on the prevailing salary rate at the time of his dismissal. The NLRC Resolutions reversed the Decision4 of the Labor Arbiter dated 29 September 2000, which dismissed respondent Taripe's complaint. Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of consumer products, e.g., foods, paints, among other things. Respondent Taripe was employed by petitioner RIC on 8 November 1999 as a "rectangular power press machine operator" with a salary of P223.50 per day, until he was allegedly dismissed from his employment by the petitioner on 6 April 2000. The controversy of the present case arose from the following facts, as summarized by the NLRC and the Court of Appeals: On [17 February 2000], [herein respondent Taripe] filed a [C]omplaint against [herein petitioner RIC] for regularization and payment of holiday pay, as well as indemnity for severed finger, which was amended on [7 April 2000] to include illegal dismissal. [Respondent Taripe] alleges that [petitioner RIC] employed him starting [8 November 1999] as power press machine operator, such position of which was occupied by [petitioner RIC's] regular employees and the functions of which were necessary to the latter's business. [Respondent Taripe] adds that upon employment, he was made to sign a document, which was not explained to him but which was made a condition for him to be taken in and for which he was not furnished a copy. [Respondent Taripe] states that he was not extended full benefits granted under the law and the [Collective Bargaining Agreement] and that on [6 April 2000], while the case for regularization was pending, he was summarily dismissed from his job although he never violated any of the [petitioner RIC's] company rules and regulations. [Petitioner RIC], for [its] part, claim[s] that [respondent Taripe] was a contractual employee, whose services were required due to the increase in the demand in packaging requirement of [its] clients for Christmas season and to build up stock levels during the early part of the following year; that on [6 March 2000], [respondent Taripe's] employment contract expired. [Petitioner RIC] avers that the information update for union members, which was allegedly filled up by [respondent Taripe] and submitted by the Union to [petitioner] company, it is stated therein that in the six (6) companies where [respondent Taripe] purportedly worked, the latter's reason for leaving was "finished contract," hence, [respondent Taripe] has knowledge about being employed by contract contrary to his allegation that the document he was signing was not explained to him. [Petitioner RIC] manifest[s] that all benefits, including those under the [Social Security System], were given to him on [12 May 2000].5 On 29 September 2000, the Labor Arbiter rendered a Decision dismissing respondent Taripe's Complaint based on a finding that he was a contractual employee whose contract merely expired. The dispositive portion of the said Decision reads, thus: WHEREFORE, premises considered, judgment is hereby rendered declaring this complaint of [herein respondent Taripe] against [herein petitioner RIC] and Mr. Edwin Tang for illegal dismissal DISMISSED for lack of merit. However, on ground of compassionate justice, [petitioner RIC and Mr. Edwin Tang] are hereby ordered to pay [respondent Taripe] the sum of PHP5,811.00 or one month's salary as

financial assistance and holiday pay in the sum of PHP894.00, as well as attorney's fees of 10% based on holiday pay (Article 110, Labor Code).6 Aggrieved, respondent Taripe appealed before the NLRC. In a Resolution dated 7 June 2002, the NLRC granted the appeal filed by respondent Taripe and declared that his employment with the petitioner was regular in status; hence, his dismissal was illegal. The decretal portion of the said Resolution reads as follows: WHEREFORE, premises considered, [herein respondent Taripe's] appeal is GRANTED. The Labor Arbiter's [D]ecision in the above-entitled case is hereby REVERSED. It is hereby declared that [respondent Taripe's] employment with [herein petitioner RIC and Mr. Edwin Tang] is regular in status and that he was illegally dismissed therefrom. [Petitioner RIC and Mr. Edwin Tang] are hereby ordered to reinstate [respondent Taripe] and to jointly and severally pay him full backwages from the time he was illegally dismissed up to the date of his actual reinstatement, less the amount of P1,427.67. The award of P894.00 for holiday pay is AFFIRMED but the award of P5,811.00 for financial assistance is deleted. The award for attorney's fees is hereby adjusted to ten percent (10%) of [respondent Taripe's] total monetary award. 7 Dissatisfied, petitioner RIC moved for the reconsideration of the aforesaid Resolution but it was denied in the Resolution of the NLRC dated 20 August 2002. Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure before the Court of Appeals with the following assignment of errors: I. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT MISINTERPRETED ARTICLE 280 OF THE LABOR CODE AND IGNORED JURISPRUDENCE WHEN IT DECIDED THAT [RESPONDENT TARIPE] IS A REGULAR EMPLOYEE AND THUS, ILLEGALLY DISMISSED. II. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED [EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY LIABLE FOR MONETARY CLAIMS OF [RESPONDEN TARIPE]. III. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED PAYMENT OF MONETARY CLAIMS COMPUTED ON AN ERRONEOUS WAGE RATE. 8 The Court of Appeals rendered the assailed Decision on 30 September 2004, affirming the Resolution of the NLRC dated 7 June 2002, with modifications. Thus, it disposed WHEREFORE, the Resolutions dated [7 June 2002] and [20 August 2002] of [the NLRC] are affirmed, subject to the modification that [Edwin Tang] is exonerated from liability and the computation of backwages of [respondent Taripe] shall be based on P223.50, the last salary he received. 9 A Motion for Reconsideration of the aforesaid Decision was filed by petitioner RIC, but the same was denied for lack of merit in a Resolution10 of the Court of Appeals dated 1 April 2005. Hence, this Petition. Petitioner RIC comes before this Court with the lone issue of whether the Court of Appeals misinterpreted Article 280 of the Labor Code, as amended, and ignored jurisprudence when it affirmed that respondent Taripe was a regular employee and was illegally dismissed. Petitioner RIC, in its Memorandum,11 argues that the Court of Appeals had narrowly interpreted Article 280 of the Labor Code, as amended, and disregarded a contract voluntarily entered into by the parties.

Petitioner RIC emphasizes that while an employee's status of employment is vested by law pursuant to Article 280 of the Labor Code, as amended, said provision of law admits of two exceptions, to wit: (1) those employments which have been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employment; and (2) when the work or services to be performed are seasonal; hence, the employment is for the duration of the season. Thus, there are certain forms of employment which entail the performance of usual and desirable functions and which exceed one year but do not necessarily qualify as regular employment under Article 280 of the Labor Code, as amended. The Petition is unmeritorious. A closer examination of Article 280 of the Labor Code, as amended, is imperative to resolve the issue raised in the present case. In declaring that respondent Taripe was a regular employee of the petitioner and, thus, his dismissal was illegal, the Court of Appeals ratiocinated in this manner: In determining the employment status of [herein respondent Taripe], reference must be made to Article 280 of the Labor Code, which provides: x x x Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. [Respondent Taripe] belonged to the first category of regular employees. The purported contract of employment providing that [respondent Taripe] was hired as contractual employee for five (5) months only, cannot prevail over the undisputed fact that [respondent Taripe] was hired to perform the function of power press operator, a function necessary or desirable in [petitioner's] business of manufacturing tin cans. [Herein petitioner RIC's] contention that the four (4) months length of service of [respondent Taripe] did not grant him a regular status is inconsequential, considering that length of service assumes importance only when the activity in which the employee has been engaged to perform is not necessary or desirable to the usual business or trade of the employer. As aptly ruled by [the NLRC]: "In the instant case, there is no doubt that [respondent Taripe], as power press operator, has been engaged to perform activities which are usually necessary or desirable in [petitioner RIC's] usual business or trade of manufacturing of tin cans for use in packaging of food, paint and others. We also find that [respondent Taripe] does not fall under any of the abovementioned exceptions. Other that (sic) [petitioner RIC's] bare allegation thereof, [it] failed to present any evidence to prove that he was employed for a fixed or specific project or undertaking the completion of which has been determined at the time of his engagement or that [respondent Taripe's] services are seasonal in nature and that his employment was for the duration of the season."12 Article 280 of the Labor Code, as amended, provides: ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been

determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. [Emphasis supplied] The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories, namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.13 Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular employees by years of service.14 The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year.15 The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an employment contract with a fixed period. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is nothing essentially contradictory between a definite period of employment and the nature of the employee's duties.16 What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status. Management has rights which should also be protected.17 In the case at bar, respondent Taripe signed a contract of employment prior to his admission into the petitioner's company. Said contract of employment provides, among other things: 4. That my employment shall be contractual for the period of five (5) months which means that the end of the said period, I can (sic) discharged unless this contract is renewed by mutual consent or terminated for cause.18 Based on the said contract, respondent Taripe's employment with the petitioner is good only for a period of five months unless the said contract is renewed by mutual consent. And as claimed by petitioner RIC, respondent Taripe, along with its other contractual employees, was hired only to meet the increase in demand for packaging materials during the Christmas season and also to build up stock levels during the early part of the year. Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must, nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security of tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter.19

In the present case, it cannot be denied that the employment contract signed by respondent Taripe did not mention that he was hired only for a specific undertaking, the completion of which had been determined at the time of his engagement. The said employment contract neither mentioned that respondent Taripe's services were seasonal in nature and that his employment was only for the duration of the Christmas season as purposely claimed by petitioner RIC. What was stipulated in the said contract was that respondent Taripe's employment was contractual for the period of five months. Likewise, as the NLRC mentioned in its Resolution, to which the Court of Appeals agreed, other than the bare allegations of petitioner RIC that respondent Taripe was hired only because of the increase in the demand for packaging materials during the Christmas season, petitioner RIC failed to substantiate such claim with any other evidence. Petitioner RIC did not present any evidence which might prove that respondent Taripe was employed for a fixed or specific project or that his services were seasonal in nature. Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which the terms are prepared by only one party and the other party merely affixes his signature signifying his adhesion thereto is called contract of adhesion. 20 It is an agreement in which the parties bargaining are not on equal footing, the weaker party's participation being reduced to the alternative "to take it or leave it."21 In the present case, respondent Taripe, in need of a job, was compelled to agree to the contract, including the five-month period of employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe signed the employment contract with a fixed term of five months willingly and with full knowledge of the impact thereof. With regard to the second guideline, this Court agrees with the Court of Appeals that petitioner RIC and respondent Taripe cannot be said to have dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. As a power press operator, a rank and file employee, he can hardly be on equal terms with petitioner RIC. As the Court of Appeals said, "almost always, employees agree to any terms of an employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications."22 Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed term employment contract, it can be safely stated that the aforesaid contract signed by respondent Taripe for a period of five months was a mere subterfuge to deny to the latter a regular status of employment. Settled is the rule that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. 23 Given the foregoing, this Court agrees in the findings of the Court of Appeals and the NLRC that, indeed, respondent Taripe, as a rectangular power press machine operator, in charge of manufacturing covers for "four liters rectangular tin cans," was holding a position which is necessary and desirable in the usual business or trade of petitioner RIC, which was the manufacture of tin cans. Therefore, respondent Taripe was a regular employee of petitioner RIC by the nature of work he performed in the company. Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor Code, as amended, because it was not proven by petitioner RIC that he was employed only for a specific project or undertaking or his employment was merely seasonal. Similarly, the position and function of power press operator cannot be said to be merely seasonal. Such position cannot be considered as only needed for a specific project or undertaking because of the very nature of the business of

petitioner RIC. Indeed, respondent Taripe is a regular employee of petitioner RIC and as such, he cannot be dismissed from his employment unless there is just or authorized cause for his dismissal. Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, notice and hearing.24 And in case of employees' dismissal, the burden is on the employer to prove that the dismissal was legal. Thus, respondent Taripe's summary dismissal, not being based on any of the just or authorized causes enumerated under Articles 282,25 283,26 and 28427 of the Labor Code, as amended, is illegal. Before concluding, we once more underscore the settled precept that factual findings of the NLRC, having deemed to acquire expertise in matters within its jurisdiction, are generally accorded not only respect but finality especially when such factual findings are affirmed by the Court of Appeals;28hence, such factual findings are binding on this Court. WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals dated 30 September 2004 and 1 April 2005, respectively, which affirmed with modification the Resolutions of the NLRC dated 7 June 2002 and 20 August 2002, respectively, finding herein respondent Taripe as a regular employee who had been illegally dismissed from employment by petitioner RIC, are hereby AFFIRMED. Costs against petitioner RIC. SO ORDERED.

AVELINO LAMBO vs. NATIONAL LABOR RELATIONS COMMISSION This is a petition for certiorari to set aside the decision[1] of the National Labor Relations Commission (NLRC) which reversed the awards made by the Labor Arbiter in favor of petitioners, except one for P4,992.00 to each, representing 13th month pay. The facts are as follows. Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorney’s fees. After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims. The dispositive portion of the Labor Arbiter’s decision reads: WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the complainants to have been illegally dismissed and ordering the respondents to pay the complainants the following monetary awards: AVELINO LAMBO I. BACKWAGES P64,896.00 13,447.90 1,399.30 4,992.00 9,984.00 P94,719.20 VICENTE BELOCURA P64,896.00 13,447.90 1,399.30 4,992.00 11,648.00 P96,383.20 = P191,102.40 19,110.24 P210,212.64 ====== or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED TWELVE AND 64/100 (P210,212.64). All other claims are dismissed for lack of merit. SO ORDERED.[2] On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found that petitioners had not been dismissed from employment but merely threatened with a closure of the business if they insisted on their demand for a “straight payment of their minimum wage,” after petitioners, on January 17, 1989, walked out of a meeting with private respondents and other

II. OVERTIME PAY III. HOLIDAY PAY IV. 13TH MONTH PAY V. SEPARATION PAY TOTAL

Add: 10% Attorney’s Fees GRAND TOTAL

employees. According to the NLRC, during that meeting, the employees voted to maintain the company policy of paying them according to the volume of work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay. The dispositive portion of its decision reads: WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new one entered ordering respondents to pay each of the complainants their 13th month pay in the amount of P4,992.00. All other monetary awards are hereby deleted. SO ORDERED.[3] Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work. The petition is meritorious. First. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify.[4] Petitioners belong to the first category, i.e., supervised employees. In determining the existence of an employer-employee relationship, the following elements must be considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct.[5] Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.[6] In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term “wage” is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations.[7] Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship. Indeed, the following factors show that petitioners, although piece-rate workers, were regular employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2) petitioners worked for private respondents throughout the year, their employment not being dependent on a specific project or season; and, (3) petitioners worked for private respondents for more than one year.[8] Second. Private respondents contend, however, that petitioners refused to report for work after learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their (petitioners’)

dismissal for conduct unbecoming of employees. In support of their claim, private respondents presented the affidavits[9] of Emmanuel Y. Caballero, president of the union, and Amado Cabañero, member, that petitioners had not been dismissed by private respondents but that practically all employees of the company, including the members of the union had asked management to terminate the services of petitioners. The employees allegedly said they were against petitioners’ request for change of the mode of payment of their wages, and that when a meeting was called to discuss this issue, a petition for the dismissal of petitioners was presented, prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal against private respondents on January 17, 1989, even before all employees could sign the petition and management could act upon the same. To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of an employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment.[10] Mere absence is not sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore.[11] Private respondents failed to discharge this burden. Other than the self-serving declarations in the affidavits of their two employees, private respondents did not adduce proof of overt acts of petitioners showing their intention to abandon their work. On the contrary, the evidence shows that petitioners lost no time in filing the case for illegal dismissal against private respondent. This fact negates any intention on their part to sever their employment relationship. [12] Abandonment is a matter of intention; it cannot be inferred or presumed from equivocal acts.[13] Third. Private respondents invoke the compromise agreement,[14] dated March 2, 1993, between them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00, petitioner absolved private respondents from liability for money claims or any other obligations. To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction.[15] However, considering that the Labor Arbiter had given petitioner Lambo a total award ofP94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly unconscionable. As we have held in another case,[16] the subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the workers’ legal rights.[17] An employee who is merely constrained to accept the wages paid to him is not precluded from recovering the difference between the amount he actually received and that amount which he should have received. Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay, separation pay and attorney’s fees, corresponding to 10% of the total monetary awards, in favor of petitioners. As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering that petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989,[18] the Labor Arbiter correctly applied the rule in the Mercury Drug case,[19] according to which the recovery of backwages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess.[20] The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioners’ dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year.[21]

The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate basis.[22] These awards are based on the following computation of the Labor Arbiter: AVELINO LAMBO I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. P 64.00/day x 26 days 1,664.00/mo. x 36 mos. 13th Mo. Pay: P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00 = = P 59,904.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 Jan. 17/86 - April 30/87 = 15 mos. & 12 days = (15 mos. x 26 days + 12 days) = 402 days *2 hours = 25% 402 days x 2 hrs./day = 804 hrs. P 32.00/day ÷ 8 hrs. 4.00/hr. x 25% 1.00/hr. + P4.00/hr. = 5.00/hr. x 804 hrs. = May 1/87-Sept. 30/87 = P 4,020.00 = =

4 mos. & 26 days = (4 mos. x 26 days + 26 days) = 130 days 130 days x 2 hrs./day = 260 hrs.

P 41.00/day ÷ 8 hrs. 5.12/hr. x 25% 1.28/hr. + P5.12/hr. = 6.40/hr. x 260 hrs. = Oct. 1/87-Dec. 13/87 =

= =

P 1,664.00

2 mos. & 11 days = (2 mos. x 26 days + 11 days) = 63 days 63 days x 2 hrs./day = 126 hrs.

P

49.00/day ÷ 8 hrs. 6.12/hr. x 25%

= =

1.53/hr. + P6.12/hr. = 7.65/hr. x 126 hrs. = P963.90

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days = (13 mos. x 26 days + 2 days) = 340 days 340 days x 2 hrs./day = 680 hrs. P 64.00/day ÷ 8 hrs. 8.00/hr. x 25% 2.00/hr. + P8.00/hr. = 10.00/hr. x 680 hrs. = P6,800.00 P13,447.90 = =

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs P 32.00/day x 200% 64.00/day x 12 days 32.00/day x 12 days 32.00/day x 30% 9.60/day x 8 days = May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs P 41.00/day x 200% 82.00/day x 3 days 41.00/day x 3 days 41.00/day x 30% 12.30/day x 3 days Oct. 1/87 - Dec. 13/87 = 1 RH P 49.00/day x 200% 98.00/day x 1 day 49.00/day x 1 day = = = P98.00 (49.00) 49.00 = = P246.00 = (123.00) P123.00 = = 36.90 159.90 = = P768.00 = (384.00) = 76.80 460.80 P384.00

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs P 64.00/day x 200% 128.00/day x 9 days = = P1,152.00

64.00/day x 9 days 64.00/day x 30% 19.20/day x 8 days

=

(576.00) P 576.00 = = 153.60 729.60 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs. P 64.00/day x 26 days 1,664.00/yr. x 3 yrs. = = 4,992.00

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs. 1,664.00/mo. x 6 yrs. = 9,984.00 P94,719.20 ====== VICENTE BELOCURA I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. Same computation as A. Lambo II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 Same computation as A. Lambo III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 Same computation as A. Lambo IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 Same computation as A. Lambo V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs. P1,664.00/mo. x 7 yrs. = TOTAL AWARD OF VICENTE BELOCURA 11,648.00 P96,383.20 ===== SUMMARY AVELINO LAMBO VICENTE BELOCURA I. BACKWAGES II. OVERTIME PAY III. IV. HOLIDAY PAY 13TH MO. PAY P64,896.00 13,447.90 1,399.30 4,992.00 P64,896.00 13,447.90 1,399.30 4,992.00 4,992.00 1,399.30 13,447.90 P64,896.00

TOTAL AWARD OF AVELINO LAMBO

V.

SEPARATION PAY

9,984.00 TOTAL P94,719.20

11,648.00 P96,383.20 = P191,102.40

ADD: 10% Attorney’s Fees GRAND TOTAL

19,110.24 P 210,212.64 =======

Except for the award of attorney’s fees in the amount of P19,110.24, the above computation is affirmed. The award of attorney’s fees should be disallowed, it appearing that petitioners were represented by the Public Attorney’s Office. With regard to petitioner Avelino Lambo, the amount of P10,000.00 paid to him under the compromise agreement should be deducted from the total award of P94,719.20. Consequently, the award to each petitioner should be as follows: AVELINO LAMBO I. BACKWAGES II. OVERTIME PAY III. IV. V. HOLIDAY PAY 13TH MONTH PAY SEPARATION PAY P64,896.00 13,447.90 1,399.30 4,992.00 9,984.00 P Less TOTAL GRAND TOTAL 94,719.20 10,000.00 P96,383.20 P181,102.40 ======
vvvvvvvvvv

VICENTE BELOCURA

P 64,896.00 13,447.90 1,399.30 4,992.00 11,648.00

P84,719.20

WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and another one is RENDERED ordering private respondents to pay petitioners the total amount of One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed above. SO ORDERED.

G.R. No. 79869 September 5, 1991 FORTUNATO MERCADO vs. NATIONAL LABOR RELATIONS COMMISSION Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations Commission (NLRC) dated 8 August 1984 which affirmed the decision of respondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting the award of financial assistance to petitioners, and the resolution of the respondent NLRC dated 17 August 1987, denying petitioners' motion for reconsideration. This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and 13th month pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. Niño Realty Incorporated, with Regional Arbitration Branch No. III, National Labor Relations Commission in San Fernando, Pampanga. 1 Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment; and that, during the period of their employment, petitioners received the following daily wages: From 1962-1963 1963-1965 1965-1967 1967-1970 1970-1973 1973-1975 1975-1978 1978-1979 — P7.00 — — — — — — — P1.50 P2.00 P3.00 P4.00 P5.00 P5.00 P6.00

Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her regular employees and instead averred that she engaged their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the number of workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production and/or sugar cane production, after which they would be free to render services to other farm owners who need their services. 2 The other private respondents denied having any relationship whatsoever with the petitioners and state that they were merely registered owners of the land in question included as corespondents in this case. 3 The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent farm workers and therefore entitled to the benefits which they pray for. And corollary to this, whether or not said petitioners were illegally dismissed by private respondents. Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners were not regular and permanent workers of the private respondents, for the nature of the terms and conditions of their hiring reveal that they were required to perform phases of agricultural work for a definite period of time after which their services would be available to any other farm owner. 4 Respondent Labor Arbiter deemed petitioners' contention of working twelve (12) hours a day the whole year round in the farm, an exaggeration, for the reason that the planting of lice and sugar cane does not entail a whole year as reported in the findings of the Chief of the NLRC Special

Task Force. 5 Even the sworn statement of one of the petitioners, Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were hired only as casuals, on an "on and off" basis, thus, it was within the prerogative of private respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work had been completed by them. 6 Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the complaint by the petitioners who are related to one another, either by consanguinity or affinity, was the filing of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to private respondent, Aurora Cruz regarding said criminal case. 7 In his affidavit, Jesus David stated under oath that petitioners were never regularly employed by private respondent Aurora Cruz but were, on-and-off hired to work and render services when needed, thus adding further support to the conclusion that petitioners were not regular and permanent employees of private respondent Aurora Cruz. 8 Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and 1978-1979 may be properly considered since all the other money claims have prescribed for having accrued beyond the three (3) year period prescribed by law. 9 On grounds of equity, however, respondent Labor Arbiter awarded petitioners financial assistance by private respondent Aurora Cruz, in the amount of Ten Thousand Pesos (P10,000.00) to be equitably divided among an the petitioners except petitioner Fortunato Mercado, Jr. who had manifested his disinterest in the further prosecution of his complaint against private respondent. 10 Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners questioned respondent Labor Arbiter's finding that they were not regular and permanent employees of private respondent Aurora Cruz while private respondents questioned the award of financial assistance granted by respondent Labor Arbiter. The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with the modification of the deletion of the award for financial assistance to petitioners. The dispositive portion of the decision of the NLRC reads: WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby modified in that the award of P10,000.00 financial assistance should be deleted. The said Decision is affirmed in all other aspects. SO ORDERED. 11 Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8 August 1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987. 12 In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that petitioners are not regular and permanent employees of private respondents based on the terms and conditions of their hiring, for said findings are contrary to the provisions of Article 280 of the Labor Code. 13 They submit that petitioners' employment, even assuming said employment were seasonal, continued for so many years such that, by express provision of Article 280 of the Labor Code as amended, petitioners have become regular and permanent employees. 14 Moreover, they argue that Policy Instruction No. 12 15 of the Department of Labor and Employment clearly lends support to this contention, when it states: PD 830 has defined the concept of regular and casual employment. What determines regularity or casualness is not the employment contract, written or otherwise, but the

nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. If not, then the employment is casual. Employment for a definite period which exceeds one (1) year shall be considered re for the duration of the definite period. This concept of re and casual employment is designed to put an end to casual employment in regular jobs which has been abused by many employers to prevent socalled casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. This new concept should be strictly enforced to give meaning to the constitutional guarantee of employment tenure. 16 Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider them as casual workers since they have been doing all phases of agricultural work for so many years, activities which are undeniably necessary, desirable and indispensable in the rice and sugar cane production business of the private respondents. 17 In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as aimed by respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence presented by the parties and also by the Chief of the Special Task Force of the NLRC Regional Office and, therefore, in accordance with the rule on findings of fact of administrative agencies, the decision should be given great weight. 18 Furthermore, they contend that the arguments used by petitioners in questioning the decision of the Labor Arbiter were based on matters which were not offered as evidence in the case heard before the regional office of the then Ministry of Labor but rather in the case before the Social Security Commission, also between the same parties. 19 Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it has long been settled that findings of fact of administrative agencies if supported by substantial evidence are entitled to great weight. 20 Moreover, it argues that petitioners cannot be deemed to be permanent and regular employees since they fall under the exception stated in Article 280 of the Labor Code, which reads: The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 21 (emphasis supplied) The Court resolved to give due course to the petition and required the parties to submit their respective memoranda after which the case was deemed submitted for decision. The petition is not impressed with merit. The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the Government is that the findings of fact made therein are respected, so long as they are supported by substantial evidence, even if not overwhelming or preponderant; 22 that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of the evidence; 23 that the administrative decision in matters within the executive's jurisdiction can only be set aside upon proof of gross abuse of discretion, fraud, or error of law. 24

The questioned decision of the Labor Arbiter reads: Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of both parties, it is our well-discerned opinion that the petitioners are not regular and permanent workers of the respondents. The very nature of the terms and conditions of their hiring reveal that the petitioners were required to perform p of cultural work for a definite period, after which their services are available to any farm owner. We cannot share the arguments of the petitioners that they worked continuously the whole year round for twelve hours a day. This, we feel, is an exaggeration which does not deserve any serious consideration inasmuch as the plan of rice and sugar cane does not entail a whole year operation, the area in question being comparatively small. It is noteworthy that the findings of the Chief of the Special Task Force of the Regional Office are similar to this. In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners were only hired as casuals, on-and-off basis. With this kind of relationship between the petitioners and the respondent Aurora Cruz, we feel that there is no basis in law upon which the claims of the petitioners should be sustained, more specially their complaint for illegal dismissal. It is within the prerogative of respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work has been completed by them. We are of the opinion that the real cause which triggered the filing of this complaint by the petitioners who are related to one another, either by consanguinity or affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz against Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979, according to Jesus David, Zone Chairman of the locality where the petitioners and respondent reside, petitioner Fortunato Mercado, Sr. asked for help regarding the case of his son, Reynaldo, to talk with respondent Aurora Cruz and the said Zone Chairman also stated under oath that the petitioners were never regularly employed by respondent Aurora Cruz but were onand-off hired to work to render services when needed. 25 A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case are ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed by the National Labor Relations Commission. The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been applied in their case presents an opportunity to clarify the afore-mentioned provision of law. Article 280 of the Labor Code reads in full: Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee

with respect to the activity in which he is employed and his employment shall continue while such actually exists. The first paragraph answers the question of who are employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season 26 as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit. The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause that it immediately follows. 27 Thus, it has been held that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to the statute itself or to other sections thereof. 28 The only exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself as a whole. 29 Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers to prevent called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. 30 WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs. SO ORDERED.

HACIENDA FATIMA vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers have served them for several years already. Hence, they are regular -- not seasonal -- employees. The Case Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001 Decision of the Court of Appeals[1] (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads: “WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED.” [2] On the other hand, the National Labor Relations Commission (NLRC) Decision, [3] upheld by the CA, disposed in this wise: “WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally dismissed. Respondents are herebyORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from September 1991 until reinstated. Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages.”[4] The Facts The facts are summarized in the NLRC Decision as follows: “Contrary to the findings of the Labor Arbiter that complainants *herein respondents+ refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants’ persistence and dogged determination in going back to work. “Indeed, it would appear that respondents did not look with favor workers’ having organized themselves into a union. Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement which stipulated among others that: ‘a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days. ‘b) The management will give priority to the women workers who are members of the union in case work relative x x x or amount[ing] to gahit and [dipol] arises. ‘c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.

‘d) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority. However, in case the said workforce would not be enough, the management can hire additional workers to supplement them. ‘e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and ‘f) The union will immediately lift the picket upon signing of this agreement.’

“However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises. “Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides: ‘Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union officials and members; ‘Whereas parties to the present dispute agree to settle the case amicably once and for all; ‘Now therefore, in the interest of both labor and management, parties herein agree as follows: ‘1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers; ‘2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a Memorandum of Agreement entered into by and between the parties last January 4, 1990; ‘3. That herein parties can use other employment references in support of their respective claims whether or not any or all of the listed 36 union members are employees or hacienda workers or not as the case may be; ‘4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration; ‘5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)” “Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows: ‘The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received their 13th month pay. The following are deemed not considered employees: 1. 2. Luisa Rombo Ramona Rombo

3. 4.

Bobong Abrega Boboy Silva

‘The name Orencio Rombo shall be verified in the 1990 payroll. ‘The following employees shall be reinstated immediately upon availability of work: 1. 2. 3. 4. 5. 6. Jose Dagle Rico Dagle Ricardo Dagle Jesus Silva Fernando Silva Ernesto Tejares 7. 8. 9. 10. 11. 12. Alejandro Tejares Gaudioso Rombo Martin Alas-as Jr. Cresensio Abrega Ariston Eruela Sr. Ariston Eruela Jr.’

“When respondents again reneged on its commitment, complainants filed the present complaint. “But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of ‘refusing to work and being choosy in the kind of work they have to perform’.”[5] (Citations omitted) Ruling of the Court of Appeals The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal. The appellate court found neither “rhyme nor reason in petitioner’s argument that it was the workers themselves who refused to or were choosy in their work.” As found by the NLRC, the record of this case is “replete with complainants’ persistence and dogged determination in going back to work.”[6] The CA likewise concurred with the NLRC’s finding that petitioners were guilty of unfair labor practice. Hence this Petition.[7] Issues Petitioners raise the following issues for the Court’s consideration: “A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year. “B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, xxx, and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco,Bacolod-Murcia, and Gaco, xxx.

“C. Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC’s conclusion that private respondents were illegally dismissed, that petitioner*s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages.”[8] Consistent with the discussion in petitioners’ Memorandum, we shall take up Items A a nd B as the first issue and Item C as the second. The Court’s Ruling The Petition has no merit. First Issue: Regular Employment At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions.[9] Questions of fact are not entertained.[10] The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. [11] Factual questions are for labor tribunals to resolve.[12] In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court. Contrary to petitioners’ contention, the CA did not err whe n it held that respondents were regular employees. Article 280 of the Labor Code, as amended, states: “Art. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. “An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist.” (Italics supplied) For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents -- with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva -- repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable. In Abasolo v. National Labor Relations Commission,[13] the Court issued this clarification: “*T+he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held:

“The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. xxx xxx xxx

“x x x *T+he fact that *respondents+ do not work continuously for one whole year but only for the duration of the x x x season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed.”[14] The CA did not err when it ruled that Mercado v. NLRC[15] was not applicable to the case at bar. In the earlier case, the workers were required to perform phases of agricultural work for a definite period of time, after which their services would be available to any other farm owner. They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every season for several years, are considered the latter’s regular employees for their respective tasks. Petitioners’ eventual refusal to use their services -- even if they were ready, able and willing to perform their usual duties whenever these were available -- and hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter. The Court finds no reason to disturb the CA’s dismissal of what petitioners claim was their valid exercise of a management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented immediately after respondents had organized themselves into a union and started demanding collective bargaining. Those who were union members were effectively deprived of their jobs. Petitioners’ move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code. “Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause.”[16] In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees. Second Issue: Unfair Labor Practice The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows: “Indeed, from respondents’ refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their hacienda —a clear interference in the right of the workers to self-organization.”[17] We uphold the CA’s affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme

Court.[18] Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence.[19] Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis.[20] The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages.[21] WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.

G.R. No. 85519 February 15, 1990 UNIVERSITY OF STO. TOMAS vs. NATIONAL LABOR RELATIONS COMMISSION The herein private respondent Dr. Basilio E. Borja was first appointed as "affiliate faculty" in the Faculty of Medicine and Surgery at the University of Sto. Tomas (UST for short) on September 29, 1976. In the second semester of the school year 1976-77 he was appointed instructor with a load of twelve (12) hours a week. He was reappointed instructor for the school year 1977-78 with a load of nine (9) hours a week in the first semester and two (2) hours a week in the second. On June 10, 1978 he was appointed as Instructor III for the school year 1978-79. His load for the first semester was eight (8) hours a week, and for the second semester, seven (7) hours a week. On March 19, 1979 Dean Gilberto Gamez observed that Dr. Borja should not be reappointed based on the evaluation sheet that shows his sub-standard and inefficient performance. 1 Nevertheless in view of the critical shortage of staff members in the Department of Neurology and Psychiatry Dr. Gamez recommended the reappointment of Dr. Borja, after informing the latter of the negative feedbacks regarding his teaching and his promise to improve his performance. Thus on July 27, 1979 he was extended a reappointment as Instructor III in the school year 1979-80. He was given a load of six (6) hours a week. In all these appointments he was a part time instructor. At the end of the academic year, it appearing that Dr. Borja had not improved his performance in spite of his assurances of improvement, his reappointment was not recommended. In July, 1982 he filed a complaint in the National Labor Relations Commission (NLRC for short) for illegal dismissal against the UST. After the submission of the pleadings and due proceedings the labor arbiter rendered a decision on July 19, 1984, the dispositive part of which reads as follows: WHEREFORE this Office finds in favor of the complainant. The respondents (sic) university are hereby ordered to effect the immediate reinstatement of complainant to his former position with full backwages, rights and benefits appertaining thereto. Respondent university is likewise ordered to pay the complainant the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00) as and by way of moral damages and another 1 0% of the gross amount due him, and as and by way of attorney's fees. Respondents are hereby ordered to effect this decision immediately. 2 The UST appealed therefrom to the NLRC which in due course rendered a decision on September 30, 1988, modifying the appealed decision as follows: WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED with a modification limiting the backwages to three (3) years without qualification or deduction, computed at P660.00 per month, ordering respondents to pay complainant P100,000.00 as and for actual or compensatory damages, ordering respondents to pay complainant P300,000.00 as and for moral damages, and further ordering them to pay complainant P100,000.00 as and for exemplary damages. Finally, respondents are ordered to pay to complainant the sum of ten (10%) percent of the total sum due as and for attorney's fees. 3 Hence the instant petition for certiorari and prohibition with a prayer for the issuance of a writ of preliminary injunction and restraining order that was filed by the UST and its officers wherein it is alleged that the public respondent NLRC committed the following errors: I

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED SERIOUS REVERSIBLE ERRORS OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION AND/OR LACK OR EXCESS OF JURISDICTION IN FINDING THAT BASILIO E. BORJA ACQUIRED TENURE, THE SAID FINDING BEING CLEARLY CONTRARY TO THE EVIDENCE AT HAND AND DEVOID OF BASIS IN LAW. II THE HONORABLE NLRC COMMITTED A SERIOUS AND REVERSIBLE ERROR AND GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT THE SERVICES OF BASILIO E. BORJA HAD BEEN CONSTRUCTIVELY TERMINATED, HIS APPOINTMENT HAVING MERELY LAPSED IN ACCORDANCE WITH ITS TERMS AS ACCEPTED BY THE COMPLAINANT-APPELLEE BORJA. III THE HONORABLE NLRC COMMITTED A SERIOUS AND GRAVE ERROR IN AFFIRMING, ALBEIT REDUCING THE AWARD OF THE HONORABLE LABOR ARBITER A QUO OF CLEARLY EXCESSIVE, UNJUST, UNCONSCIONABLE AND SHOCKING MORAL DAMAGES OF P300,000.00 AND IN AWARDING MOTU PROPIO EXEMPLARY DAMAGES IN THE AMOUNT OF P100,000.00 IN GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO EXCESS OF JURISDICTION. 4 The petition is impressed with merit. In the questioned decision of the public respondent NLRC it found that private respondent had earned to his credit eight (8) semesters or four (4) academic years of professional duties with the UST and that he has met the requirements to become a regular employee under the three (3) years requirement in the Manual of Regulations for Private Schools. The appealed decision is correct insofar as it declares that it is the Manual of Regulations for Private Schools, not the Labor Code, that determines the acquisition of regular or permanent status of faculty members in an educational institution, but the Court disagrees with the observation that it is only the completion of three (3) years of service that is required to acquire such status. According to Policy Instructions No. 11 issued by the Department of Labor and Employment, "the probationary employment of professors, instructors and teachers shall be subject to standards established by the Department of Education and Culture." Said standards are embodied in paragraph 75 of the Manual of Regulations for Private Schools, to wit: 75. Full time teachers who have rendered three consecutive years of satisfactory service shall be considered permanent." (Emphasis supplied) The legal requisites, therefore, for acquisition by a teacher of permanent employment, or security of tenure, are as follows: 1) the teacher is a full time teacher; 2) the teacher must have rendered three (3) consecutive years of service; and 3) such service must have been satisfactory. Now, the Manual of Regulations also states that "a full-time teacher" is "one whose total working day is devoted to the school, has no other regular remunerative employment and is paid on a regular monthly basis regardless of the number of teaching hours" (Par. 77); and that in college, "the nominal teaching load of a full-time instructor shall be eighteen hours a week" (par. 78).

It follows that a part-time member of the faculty cannot acquire permanence in employment under the Manual of Regulations in relation to the Labor Code. Hence, the crucial question is whether or not the private respondent was a full-time or parttime member of the faculty during the three (3) years that he served in the petitioner-university's College of Medicine. Stated otherwise, the question is (1) whether or not the said respondent's "total working day ..... (was) devoted to the school" and he had "no other regular remunerative employment" and was "paid on a regular monthly basis regardless of the number of teaching hours;" and/or (2) whether or not his normal teaching load was eighteen (18) hours a week. It cannot be said that respondent's total working day was devoted to the school alone. It is clear from the record that he was practising his profession as a doctor and maintaining a clinic in the hospital for this purpose during the time that he was given a teaching load. In other words, he had another regular remunerative work aside from teaching. His total working day was not, therefore, devoted to the school. Indeed, his salaries from teaching were computed by the respondent Commission itself at only an average of P660.00 per month; he, therefore, had to have other sources of income, and this of course was his self-employment as a practising psychiatrist. That the compensation for teaching had to be averaged also shows that he was not paid on a regular monthly basis. Moreover, there is absolutely no evidence that he performed other functions for the school when not teaching. All things considered, it would appear that teaching was only a secondary occupation or "sideline," his professional practice as a psychiatrist being his main vocation. The record also discloses that he never had a normal teaching load of eighteen (18) hours a week during the time that he was connected with the university. The only evidence on this equally vital issue was presented by the petitioner through the affidavit of Dr. Gilberts Gamez who was the dean of the medical school during the time material to the proceedings at bar. His sworn declaration is to the effect that as "affiliate faculty" member of the Department of Neurology and Psychiatry from September 29,1976, private respondent had no teaching functions: that in fact, when he was appointed in September, 1976, classes for the first semester were already nearing their end; that as "affiliate faculty" he was merely an observer acquainting himself with the functions of an instructor while awaiting issuance of a formal appointment as such; that in the school year 1977-78 he had a teaching load of nine (9) hours a week in the first semester and two (2) hours a week in the second semester; that in the school year 1978-1979 he had a load of eight (8) hours a week in the first semester and seven (7) hours a week in the second semester; that in the school year 1979-1980 he had a load of six (6) hours a week in each semester. This evidence does not appear to have been refuted at all by the private respondent, and has inexplicably been ignored by public respondent. No discussion of this particular point is found in the decisions of the Labor Arbiter or the NLRC. The private respondent, therefore, could not be regarded as a full- time teacher in any aspect. He could not be regarded as such because his total working day was not devoted to the school and he had other regular remunerative employment. Moreover, his average teaching load was only 6.33 hours a week. In view of the explicit provisions of the Manual of Regulations above-quoted, and the fact that private respondent was not a full- time teacher, he could not have and did not become a permanent employee even after the completion of three (3) years of service. Having found that private respondent did not become a permanent employee of petitioner UST, it correspondingly follows that there was no duty on the part of petitioner UST to reappoint private respondent as Instructor, the temporary appointment having lapsed. Such appointment is a matter addressed to the discretion of said petitioner. The findings, therefore, of the public respondent NLRC that private respondent was constructively terminated is without lawful basis. By the same token, the order for reinstatement of private

respondent with backwages plus an award of actual or compensatory, moral and exemplary damages must be struck down. WHEREFORE, the petition is hereby GRANTED. The questioned orders of public respondent NLRC dated September 13, 1988 and public respondent labor arbiter Bienvenido S. Hernandez dated July 19,1988 are hereby SET ASIDE and another judgment is hereby rendered DISMISSING the complaint of private respondent, without pronouncement as to costs. SO ORDERED.

G.R. No. L-48494 February 5, 1990 BRENT SCHOOL, INC. vs. RONALDO ZAMORA The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor Code, 2 as amended,3 have anathematized "fixed period employment" or employment for a term. The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971. 5 Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract." However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre protested the announced termination of his employment. He argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer , and his employment had lasted for five years, he had acquired the status of a regular employee and could not be removed except for valid cause. 6 The Regional Director considered Brent School's report as anapplication for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. The Director pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. 7 Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed except for just cause, and expiration of the employment contract was not one of the just causes provided in the Labor Code for termination of services. 10 The School is now before this Court in a last attempt at vindication. That it will get here. The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did not come into effect until November 1, 1974, some three years after the perfection of the employment contract, and rights and obligations thereunder had arisen and been mutually observed and enforced. At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that—

In cases of employment, without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee, whichever is longer, a fraction of at least six months being considered as one whole year. The employer, upon whom no such notice was served in case of termination of employment without just cause, may hold the employee liable for damages. The employee, upon whom no such notice was served in case of termination of employment without just cause, shall be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice. There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also enumerated what it considered to be just causes for terminating an employment without a definite period, either by the employer or by the employee without incurring any liability therefor. Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided that — In cases in which the contract of employment does not have a fixed period, any of the parties may terminate it, notifying the other thereof one month in advance. The factor or shop clerk shall have a right, in this case, to the salary corresponding to said month. The salary for the month directed to be given by the said Article 302 of the Code of Commerce to the factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When Article 302 (together with many other provisions of the Code of Commerce) was repealed by the Civil Code of the Philippines, Republic Act No. 1052 was enacted avowedly for the precise purpose of reinstating the mesada. Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom. It is plain then that when the employment contract was signed between Brent School and Alegre on July 18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso v. Victorias Milling Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on December 29, 1983. 14 TheThompson case involved an executive who had been engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as regards whom, the following pronouncement was made: What is decisive is that petitioners (teachers) were well aware an the time that their tenure was for a limited duration. Upon its termination, both parties to the employment relationship were free to renew it or to let it lapse. (p. 254)

Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it terminates on the expiration of such period." 16 "A contract of employment for a definite period terminates by its own terms at the end of such period." 17 The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." The asserted objective to was "prevent the circumvention of the right of the employee to be secured in their employment as provided . . . (in the Code)." Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite period." And Article 319 undertook to define "employment without a fixed period" in the following manner: 18 An employment shall be deemed to be without a definite period for purposes of this Chapter where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a fixed term or period would be valid where the employee "has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer." The definition seems a non sequitur. From the premise — that the duties of an employee entail "activities which are usually necessary or desirable in the usual business or trade of the employer the" — conclusion does not necessarily follow that the employer and employee should be forbidden to stipulate any period of time for the performance of those activities. There is nothing essentially contradictory between a definite period of an employment contract and the nature of the employee's duties set down in that contract as being "usually necessary or desirable in the usual business or trade of the employer." The concept of the employee's duties as being "usually necessary or desirable in the usual business or trade of the employer" is not synonymous with or identical to employment with a fixed term. Logically, the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be "that which must necessarily come, although it may not be known when." 19 Seasonal employment, and employment for a particular project are merely instances employment in which a period, where not expressly set down, necessarily implied. Of course, the term — period has a definite and settled signification. It means, "Length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of time which has an influence on an obligation as a result of a juridical act, and either suspends its demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar notion of a period, in the context of a contract of employment, takes no account at all of the

nature of the duties of the employee; it has absolutely no relevance to the character of his duties as being "usually necessary or desirable to the usual business of the employer," or not. Subsequently, the foregoing articles regarding employment with "a definite period" and "regular" employment were amended by Presidential Decree No. 850, effective December 16, 1975. Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The article 22 now reads: . . . Probationary employment.—Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged in a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by (a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now reads: . . . Regular and Casual Employment.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties , an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to he casual if it is not covered by the preceding paragraph:provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been added, to wit: "The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties . . ." The clause would appear to be addressed inter alia to agreements fixing a definite period for employment. There is withal no clear indication of the intent to deny validity to employment for a definite period. Indeed, not only is the concept of regular employment not essentially inconsistent with employment for a fixed term, as above pointed out, Article 272 of the Labor Code, as amended by said PD 850, still impliedly acknowledged the propriety of term employment: it listed the "just causes" for which "an employer may terminate employment without a definite period," thus giving rise to the inference that if the employment be with a definite period, there need be no just cause for termination thereof if the ground be precisely the expiration of the term agreed upon by the parties for the duration of such employment. Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa Bilang 130, 24to eliminate altogether reference to employment without a definite period. As lastly amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may

terminate an employment for any of the following just causes: . . . " BP 130 thus completed the elimination of every reference in the Labor Code, express or implied, to employment with a fixed or definite period or term. It is in the light of the foregoing description of the development of the provisions of the Labor Code bearing on term or fixed-period employment that the question posed in the opening paragraph of this opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on this account be accorded legitimacy? On the one hand, there is the gradual and progressive elimination of references to term or fixedperiod employment in the Labor Code, and the specific statement of the rule 25 that— . . . Regular and Casual Employment.— The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties , an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph:provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. 26Under the Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment will all that it implies does not appear ever to have been applied, Article 280 of the Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity, without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these officials," . . . may lose their jobs as president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another did not re-elect them." There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But

where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in . . . (his) employment?" As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences were never intended by a legislative measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid all objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28 Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences. That s a principle that does back to In re Allen decided oil October 27, 1903, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results. That is a strong argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that the construction placed upon the statute by the appellants would lead to an absurdity is another argument for rejecting it. . . ." 29 . . . We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction that such intent of spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter would result in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute. 30 Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the

President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held: Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination. The interpretation that the notice is only a reminder is consistent with the court's finding in Labajo supra. ... 32 Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied. WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs. SO ORDERED.

G.R. No. L-77629 May 9, 1990 KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY vs. HON. FRANKLIN M. DRILON Before us are two consolidated petitions for certiorari filed by the above-named petitioner union (hereinafter referred to as KILUSAN-OLALIA, for conciseness) and individual complainants therein, to wit (a) G.R. 77629, which seeks to reverse and set aside the decision, dated November 13, 1986, 1 and the resolution, dated January 9, 1987, 2respectively handed down by the two former Ministers of Labor, both rendered in BLR Case No. NS-5-164-86; and (b) G.R. No. 78791, which prays for the reversal of the resolutions of the National Labor Relations Commission, dated May 25, 1987 3and June 19,1987 4 issued in Injunction Case No. 1442 thereof. Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective bargaining agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and General Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986. Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal of the aforementioned CBA, some members of the bargaining unit formed another union called "Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture (KILUSAN-OLALIA)." On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in Regional Office No. IV, Ministry of Labor and Employment (MOLE), docketed as Case No. RO4-OD-M-415-86. 5 KIMBERLY and (UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion of the so-called contractual workers whose employment with KIMBERLY was coursed through an independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters. Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 with the Bureau of Labor Relations, docketed as BLR Case No. NS-5164-86, 6 charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal of union members (KILUSAN-OLALIA); (2) non-regularization of casuals/contractuals with over six months service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) nonpayment of minimum wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendency of a petition for certification election. This was later amended to withdraw the charge of coercion but to add, as new charges, the dismissal of Roque Jimenez and the non-payment of backwages of the reinstated Emerito Fuentes . 7 Conciliation proceedings conducted by the bureau proved futile, and KILUSAN-OLALIA declared a strike at KIMBERLY's premises in San Pedro, Laguna on May 23, 1986. On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdiction over the labor dispute. On May 30, 1986, finding that the labor dispute would adversely affect national interest, then Minister Augusto S. Sanchez issued an assumption order, the dispositive portion whereof reads: Wherefore, premises considered, immediately upon receipt of this order, the striking union and its members are hereby enjoined to lift the picket and remove all obstacles to the free ingress to and egress from the company premises and to return to work, including the 28 contractual workers who were dismissed; likewise, the company is directed to resume its operations immediately thereafter and to accept all the employees back under the same terms and conditions of employment prevailing prior to the industrial action. Further, all issues in the notice of strike, as amended, are hereby assumed in this assumption order, except for the representation issue pending in Region IV in which the Med-Arbiter is also enjoined to decide the same the soonest possible time. 8

In obedience to said assumption order, KILUSAN-OLALIA terminated its strike and picketing activities effective June 1, 1986 after a compliance agreement was entered into by it with KIMBERLY. 9 On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case (RO4-OD-M-4-1586), issued an order 10 declaring the following as eligible to vote in the certification election, thus: 1. The regular rank-and-file laborers/employees of the respondent company consisting of 537 as of May 14, 1986 should be considered qualified to vote; 2. Those casuals who have worked at least six (6) months as appearing in the payroll months prior to the filing of the instant petition on April 21, 1986; and 3. Those contractual employees who are allegedly in the employ of an independent contractor and who have also worked for at least six (6) months as appearing in the payroll month prior to the filing of the instant petition on April 21, 1986. During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEUPTGWO) on the ground that they are not employees, of KIMBERLY but of RANK. It was agreed by all the parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated and subject to challenge proceedings. The certification election was conducted on July I., 1986, with the following results: 11 1. KILUSAN-OLALIA = 246 votes 2. (UKCEU-PTGWO) = 266 votes 3. NO UNION = 1 vote 4. SPOILED BALLOTS = 4 votes 5. CHALLENGED BALLOTS = 64 votes ———— TOTAL 581 votes On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count Challenged Votes" 12 on the ground that the 64 workers are employees of KIMBERLY within the meaning of Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting that there is no employer-employee relationship between the casual workers and the company, and that the med-arbiter has no jurisdiction to rule on the issue of the status of the challenged workers which is one of the issues covered by the assumption order. The med-arbiter opted not to rule on the protest until the issue of regularization has been resolved by MOLE. 13 On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-16486, 14 the disposition wherein is summarized as follows: 1. The service contract for janitorial and yard maintenance service between KIMBERLY and RANK was declared legal; 2. The other casual employees not performing janitorial and yard maintenance services were deemed labor-only contractual and since labor-only contracting is prohibited, such employees were held to have attained the status of regular employees, the regularization being effective as of the date of the decision;

3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as the exclusive bargaining representative of KIMBERLY's employees; 4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered; 5. Roque Jimenez was ordered reinstated without backwages, the period when he was out of work being considered as penalty for his misdemeanor; 6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes with backwages was declared as already final and unappealable; and 7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983. On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization of contractual workers, the appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letter dated November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation of the November 13, 1986 decision but only with respect to the regularization of the casual workers. 16 On December 11, 1986, KILUSAN-OLALIA filed a motion for reconsideration questioning the authority of the Minister of Labor to assume jurisdiction over the representation issue. In the meantime, KIMBERLY and UKCEU-PTGWO continued with the negotiations on the new collective bargaining agreement (CBA), no restraining order or junctive writ having been issued, and on December 18, 1986, a new CBA was concluded and ratified by 440 out of 517 members of the bargaining unit. 17 In an order dated January 9, 1987, former Labor Minister Franklin Drilon denied both motions for reconsideration filed by KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the new CBA executed between KIMBERLY and UKCEU-PTGWO was signed. On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in this Court docketed as G.R. No. 77629, seeking to set aside the aforesaid decision, dated November 13, 1986, and the order, dated January 9, 1987, rendered by the aforesaid labor ministers. On March 25, 1987, this Court issued in G.R. No. 77629 a temporary restraining order, enjoining respondents from enforcing and/or carrying out the decision and order above stated, particularly that portion (1) recognizing respondent UKCEU-PTGWO as the exclusive bargaining representative of all regular rank-and-file employees in the establishment of respondent company, (2) enforcing and/or implementing the alleged CBA which is detrimental to the interests of the members of the petitioner union, and (3) stopping respondent company from deducting monthly dues and other union assessments from the wages of all regular rank-and-file employees of respondent company and from remitting the said collection to respondent UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled, "In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the Department of Labor and Employment, Manila, 19 In its comment, 20 respondent company pointed out certain events which took place prior to the filing of the petition in G.R. No. 77629, to wit: 1. The company and UKCEU-PTGWO have concluded a new collective bargaining agreement which had been ratified by 440 out of 517 members of the bargaining unit; 2. The company has already granted the new benefits under the new CBA to all its regular employees, including members of petitioner union who, while refusing to ratify the CBA nevertheless readily accepted the benefits arising therefrom;

3. The company has been complying with the check-off provision of the CBA and has been remitting the union dues to UKCEU-PTGWO 4. The company has already implement the decision of November 13, 1986 insofar as the regularization of contractual employees who have rendered more than one (1) year of service as of the filing of the Notice of Strike on May 7, 1986 and are not engaged in janitorial and yard maintenance work, are concerned 5. Rank Manpower Company had already pulled out, reassigned or replaced the contractual employees engaged in janitorial and yard maintenance work, as well as those with less than one year service; and 6. The company has reinstated Roque Jimenez as of January 11, 1987. In G.R. No. 78791, the records 21 disclose that on May 4, 1987, KILUSAN-OLALIA filed another notice of strike with the Bureau of Labor Relations charging respondent company with unfair labor practices. On May 8, 1987, the bureau dismissed and considered the said notice as not filed by reason of the pendency of the representation issue before this Court in G.R. No. 77629. KILUSAN-OLALIA moved to reconsider said order, but before the bureau could act on said motion, KILUSAN-OLALIA declared a strike and established a picket on respondent company's premises in San Pedro, Laguna on May 17, 1987. On May 18, 1987, KIMBERLY filed a petition for injunction with the National Labor Relations Commission (NLRC), docketed as Injunction Case No. 1442. A supplement to said petition was filed on May 19, 1987. On May 26, 1987, the commission en banc issued a temporary restraining order (TRO) on the basis of the ocular inspection report submitted by the commission's agent, the testimonies of KIMBERLY's witnesses, and pictures of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the ground of lack of jurisdiction. Immediately after the expiration of the first TRO on June 9, 1987, the striking employees returned to their picket lines and reestablished their barricades at the gate. On June 19, 1987, the commission en banc issued a second TRO. On June 25, 1987, KILUSAN-OLALIA filed another petition for certiorari and prohibition with this Court, docketed as G.R. No. 78791, questioning the validity of the temporary restraining orders issued by the NLRC on May 26, 1987 and June 19, 1987. On June 29, 1987, KILUSAN-OLALIA filed in said case an urgent motion for a TRO to restrain NLRC from implementing the questioned orders. An opposition, as well as a reply thereto, were filed by the parties. Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion for the issuance of a writ of preliminary injunction when the strikers returned to the strike area after the second TRO expired. After due hearing, the commission issued a writ of preliminary injunction on July 14, 1987, after requiring KIMBERLY to post a bond in the amount of P20,000.00. Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No. 78791 a second urgent motion for the issuance of a TRO by reason of the issuance of said writ of preliminary injunction, which motion was opposed by KIMBERLY. Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early resolution 23 filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had terminated its strike and picketing activities and that the striking employees had unconditionally offered to return to work, although they were refused admission by KIMBERLY. By reason of this supervening development, the petition in G.R. No. 78791, questioning the propriety of the issuance of the two temporary restraining orders and the writ of injunction therein, has been rendered moot and academic.

In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the respondent Secretary of Labor and/or the former Minister of Labor have acted with grave abuse of discretion and/or without jurisdiction in (1) ruling on the issue of bargaining representation and declaring respondent UKCEUPTGWO as the collective bargaining representative of all regular rank-and-file employees of the respondent company; (2) holding that petitioners are not entitled to vote in the certification election; (3) considering the regularization of petitioners (who are not janitors and maintenance employees) to be effective only on the date of the disputed decision; (4) declaring petitioners who are assigned janitorial and yard maintenance work to be employees of respondent RANK and not entitled to be regularized; (5) not awarding to petitioners differential pay arising out of such illegal work scheme; and (6) ordering the mere reinstatement of petitioner Jimenez. The issue of jurisdiction actually involves a question of whether or not former Minister Sanchez committed a grave abuse of discretion amounting to lack of jurisdiction in declaring respondent UKCEU-PTGWO as the certified bargaining representative of the regular employees of KIMBERLY, after ruling that the 64 casual workers, whose votes are being challenged, were not entitled to vote in the certification election. KILUSAN-OLALIA contends that after finding that the 64 workers are regular employees of KIMBERLY, Minister Sanchez should have remanded the representation case to the med-arbiter instead of declaring UKCEU-PTGWO as the winner in the certification election and setting aside the medarbiter's order which allowed the 64 casual workers to cast their votes. Respondents argue that since the issues of regularization and representation are closely interrelated and that a resolution of the former inevitably affects the latter, it was necessary for the former labor minister to take cognizance of the representation issue; that no timely motion for reconsideration or appeal was made from his decision of November 13, 1986 which has become final and executory; and that the aforesaid decision was impliedly accepted by KILUSAN-OLALIA when it demanded from KIMBERLY the issuance of regular appointments to its affected members in compliance with said decision, hence petitioner employees are now stopped from questioning the legality thereof. We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the regularization of the 64 casual workers, which fact is not even disputed by KILUSAN-OLALIA as may be gleaned from its request for an interim order in the notice of strike case (BLR-NS-5-164-86), asking that the regularization issue be immediately resolved. Furthermore, even the med-arbiter who ordered the holding of the certification election refused to resolve the protest on the ground that the issue raised therein correctly pertains to the jurisdiction of the then labor minister. No opposition was offered by KILUSAN-OLALIA. We hold that the issue of regularization was properly addressed to the discretion of said former minister. However, the matter of the controverted pronouncement by former Minister Sanchez, as reaffirmed by respondent secretary, regarding the winner in the certification election presents a different situation. It will be recalled that in the certification election, UKCEU-PTGWO came out as the winner, by garnering a majority of the votes cast therein with the exception of 64 ballots which were subject to challenge. In the protest filed for the opening and counting of the challenged ballots, KILUSAN-OLALIA raised the main and sole question of regularization of the 64 casual workers. The med-arbiter refused to act on the protest on the ground that the issue involved is within the jurisdiction of the then Minister of Labor. KILUSAN-OLALIA then sought an interim order for an early resolution on the employment status of the casual workers, which was one of the issues included in the notice of strike filed by KILUSAN-OLALIA in BLR Case No. NS-5-164-86. Consequently, Minister Sanchez rendered the questioned decision finding that the workers not engaged in janitorial and yard maintenance service are regular employees but that they became regular only on the date of his decision, that is, on November 13, 1986, and, therefore, they were not entitled to vote in the certification election. On the

basis of the results obtained in the certification election, Minister Sanchez declared UKCEU-PTGWO as the winner. The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance service, became regular employees of KIMBERLY. We find and so hold that the former labor minister gravely abused his discretion in holding that those workers not engaged in janitorial or yard maintenance service attained the status of regular employees only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote in the certification election and choose their rightful bargaining representative. The Labor Code defines who are regular employees, as follows: Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary not withstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or under the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph:Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. The law thus provides for two. kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be regular employees fall under the second category. These are the mechanics, electricians, machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons It is not disputed that these workers have been in the employ of KIMBERLY for more than one year at the time of the filing of the Petition for certification election by KILUSANOLALIA. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law. That the first stated position is the situation contemplated and sanctioned by law is further enhanced by the absence of a statutory limitation before regular status can be acquired by a casual employee. The law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular employee with respect to the activity in which he is employed. The law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. Obviously, where the law does not distinguish, no distinction should be drawn.

The submission that the decision of November 13, 1986 has become final and executory, on the grounds that no timely appeal has been made therefrom and that KILUSAN-OLALIA has impliedly acceded thereto, is untenable. Rule 65 of the Rules of Court allows original petitions for certiorari from decisions or orders of public respondents provided they are filed within a reasonable time. We believe that the period from January 9, 1987, when the motions for reconsideration separately filed by KILUSAN-OLALIA and KIMBERLY were denied, to March 16, 1987, when the petition in G.R. No. 77629 was filed, constitutes a reasonable time for availing of such recourse. We likewise do not subscribe to the claim of respondents that KILUSAN-OLALIA has impliedly accepted the questioned decision by demanding compliance therewith. In the letter of KILUSANOLALIA dated November 24, 1986 24 addressed to the legal counsel of KIMBERLY, it is there expressly and specifically pointed out that KILUSAN-OLALIA intends to file a motion for reconsideration of the questioned decision but that, in the meantime, it was demanding the issuance of regular appointments to the casual workers who had been declared to be regular employees. The filing of said motion for reconsideration of the questioned decision by KILUSAN-OLALIA, which was later denied, sustains our position on this issue and denies the theory of estoppel postulated by respondents. On the basis of the foregoing circumstances, and as a consequence of their status as regular employees, those workers not perforce janitorial and yard maintenance service were performance entitled to the payment of salary differential, cost of living allowance, 13th month pay, and such other benefits extended to regular employees under the CBA, from the day immediately following their first year of service in the company. These regular employees are likewise entitled to vote in the certification election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial and yard maintenance service, which form part of the 64 challenged votes, should be opened, counted and considered for the purpose of determining the certified bargaining representative. We do not find it necessary to disturb the finding of then Minister Sanchez holding as legal the service contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and yard maintenance service, which is supported by substantial and convincing evidence. Besides, we take judicial notice of the general practice adopted in several government and private institutions and industries of hiring a janitorial service on an independent contractor basis. Furthermore, the occasional directives and suggestions of KIMBERLY are insufficient to erode primary and continuous control over the employees of the independent contractor. 25 Lastly, the duties performed by these workers are not independent and integral steps in or aspects of the essential operations of KIMBERLY which is engaged in the manufacture of consumer paper products and cigarette paper, hence said workers cannot be considered regular employees. The reinstatement of Roque Jimenez without backwages involves a question of fact best addressed to the discretion of respondent secretary whose finding thereon is binding and conclusive upon this Court, absent a showing that he committed a grave abuse in the exercise thereof. WHEREFORE, judgment is hereby rendered in G.R. No. 77629: 1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open and count the 64 challenged votes, and that the union with the highest number of votes be thereafter declared as the duly elected certified bargaining representative of the regular employees of KIMBERLY; 2. Ordering KIMBERLY to pay the workers who have been regularized their differential pay with respect to minimum wage, cost of living allowance, 13th month pay, and benefits provided for under the applicable collective bargaining agreement from the time they became regular employees.

All other aspects of the decision appealed from, which are not so modified or affected thereby, are hereby AFFIRMED. The temporary restraining order issued in G.R. No. 77629 is hereby made permanent. The petition filed in G.R. No. 78791 is hereby DISMISSED. SO ORDERED.

CEBU MARINE BEACH RESORT, OFELIA PELAEZ AND TSUYOSHI SASAKI vs. NATIONAL LABOR RELATIONS COMMISSION Probationary employees need strong protection from the exploitation of employers since they are usually the lowliest of the lowly and the most vulnerable to abuses of management, who would rather suffer in silence than risk losing their jobs.[1] At bar is a petition for review on certiorari seeking to reverse and set aside the Decision[2] dated November 5, 1999 and Resolution[3] dated April 18, 2000 of the Court of Appeals in CA-G.R. SP No. 54548, entitled “Cebu Marine Beach Resort, Ofelia Pelaez, and Tsuyoshi Sasaki vs. The Honorable National Labor Relations Commission (Fourth Division), Ric Rodrigo Rodriguez, Manulita Villegas, and Lorna G. Igot”. The facts as borne by the records are: Cebu Marine Beach Resort (herein petitioner company), a single proprietorship owned by Victor Dualan, commenced its operations sometime in January, 1990 with the recruitment of its employees, including Ric Rodrigo Rodriguez, Manulita Villegas and Lorna G. Igot, respondents. On the last week of March, 1990 when Japanese tourists began arriving at the resort, petitioner company became fully operational. Inasmuch as the beach resort was intended to cater principally to Japanese tourists, respondents had to undergo a special training in Japanese customs, traditions, discipline as well as hotel and resort services. This special training was supervised by Tsuyoshi Sasaki, also a petitioner. During a seminar conducted on May 24, 1990, petitioner Sasaki suddenly scolded respondents and hurled brooms, floor maps, iron trays, fire hoses and other things at them. In protest, respondents staged a walk-out and gathered in front of the resort. Immediately, petitioner Sasaki reacted by shouting at them to go home and never to report back to work. Heeding his directive, respondents left the premises. Eventually, they filed with the Regional Arbitration Branch at Cebu City a complaint for illegal dismissal and other monetary claims against petitioners. On May 28, 1990, petitioner company, through its acting general manager, Ofelia Pelaez, also a petitioner, sent letters to respondents requiring them to explain why they should not be terminated from employment on the grounds of abandonment of work and failure to qualify with the standards for probationary employees. In due course, the Labor Arbiter rendered a Decision dated March 23, 1993 dismissing respondents’ complaint but directing them to immediately report back to work. On appeal, the National Labor Relations Commission (NLRC), in its Decision dated June 28, 1994, reversed the Labor Arbiter’s Decision, declaring that the respondents were dismissed illegally and ordering their reinstatement with payment of full backwages from May 24, 1990 up to their actual reinstatement or in lieu thereof, the payment of their respective separation pay (equivalent to one month salary) from May 24, 1990 up to the date they were supposed to be reinstated, as well as attorney’s fees (equivalent to 10% of the total monetary award). On February 28, 1995, the NLRC issued a Resolution declaring that the backwages shall correspond only to the period from May 24, 1990 (the date of their dismissal) until March 23, 1993 (when they were ordered reinstated by the Labor Arbiter), subject to the deduction of their earnings from other sources during the pendency of the appeal. On March 22, 1995, petitioners filed with this Court a petition for certiorari, prohibition and injunction with prayer for the issuance of a temporary restraining order. Pursuant to our ruling in St. Martin’s Funeral Home vs. NLRC,[4] we referred the petition to the Court of Appeals for its appropriate action and disposition.

On November 5, 1999, the Court of Appeals rendered its Decision affirming with modification the Decision and Resolution of the NLRC. The dispositive portion reads: “WHEREFORE, the Decision, dated June 28, 1994, and the Resolution dated February 28, 1995, both issued by the public respondent, are hereby AFFIRMED with the following modifications: the backwages should be computed from the date of the dismissal of private respondents until the finality of this Decision without deduction from earnings during the pendency of the appeal and the award of separation pay must be equivalent to one-half month’s salary for every year of service commencing likewise on the date of the dismissal of private respondents until the finality of this Decision. The petition is dismissed. Costs against petitioners. “SO ORDERED.” From the said Decision, petitioners filed a motion for reconsideration, but was denied. Hence, this petition for review on certiorari. Petitioners contend that the Appellate Court committed a serious error when it unilaterally extended the 6-month probationary employment contracts of the respondents by awarding them full backwages, or in lieu of their reinstatement, when it ordered payment of their separation pay computed from the time of their dismissal up to the finality of its Decision. The sole legal issue for our Resolution is whether respondents were illegally dismissed from employment by petitioner company. We hold that the Court of Appeals did not err when it ruled that respondents were illegally dismissed from the service. It is settled that while probationary employees do not enjoy permanent status, they are entitled to the constitutional protection of security of tenure. Their employment may only be terminated for just cause or when they fail to qualify as regular employees in accordance with reasonable standards made known to them by their employer at the time of engagement, and after due process.[5] Here, petitioners terminated respondents’ probationary employment on the grounds of abandonment and failure to qualify for the positions for which they were employed. On this point, we quote with approval the findings of the Court of Appeals, thus: “x x x. It is undisputed that Mr. Sasaki made an utterance t o the effect that private respondents should go home and never come back to work for the company again. Such utterance is tantamount to a dismissal. Its meaning is also clear and unmistakable no matter which accent was used by Mr. Sasaki. Considering further that Mr. Sasaki was in charge of the training of the private respondents, his words carry authority and conviction. Even assuming for the sake of argument that Mr. Sasaki was never vested with the power of dismissal, the petitioner company ratified Mr. Sasaki’s acts. When petitioner company sent a strongly worded memorandum to private respondents asking them to explain why their services should not be terminated for failure to live up to the company’s expectations, it showed intention to terminate. x x x: “x x x “The subsequent issuances of the memos were, as rightly interpreted by the public respondent, merely an afterthought to escape the legal liability arising from the illegal termination of the private respondents’ services. x x x: “x x x “The next three reasons adduced by the petitioners sought to prove the existence of a just cause for the dismissal of private respondents, which is, abandonment. We are not convinced. The fact that

private respondents never came back to work despite the issuance of the memoranda by the petitioner does not support the allegation of abandonment. x x x.” Indeed, we find no indication that respondents have shown by some overt acts their intention to sever their employment in petitioner company. To constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the employer-employee relationship. Clearly, the operative factor is still the employer’s ultimate act of putting an end to his employment. Here, respondents did not report back for work because they were warned by petitioner Sasaki not to return. But immediately, they filed with the Labor Arbiter’s Office a complaint for illegal dismissal. It is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who takes steps to protest his dismissal cannot by logic be said to have abandoned his work.[6] That respondents failed to qualify for their positions, suffice it to state that at the time they were dismissed, they were still in a “trial period” or probationary period. Being in the nature of a “trial period,” the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment which obviously were made known to him.[7] To reiterate, in the case at bar, far from allowing the respondents to prove that they possessed the qualifications to meet the reasonable standards for their permanent employment, petitioners peremptorily dismissed them from the service. On another tack, petitioners’ argument that the Appellate Court’s award of full backwages and separation pay in effect unilaterally extended respondents’ 6 -month probationary employment is bereft of merit. In Philippine Manpower Services, Inc. vs. NLRC,[8] we held that “absent the grounds for termination of a probationary employee, he is entitled to continued employment even beyond the probationary period.” On a similar note, our ruling in Lopez vs. Javier[9] is quite explicit, thus: “x x x, probationary employees who are unjustly dismissed from work during the probationary period shall be entitled to reinstatement and payment of full backwages and other benefits and privileges from the time they were dismissed up to their actual reinstatement, conformably with Article 279 of the Labor Code, as amended by Section 34 of Republic Act No. 6715, which took effect on March 21, 1989: ‘x x x 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.’” Verily, respondents who were unjustly dismissed from work are actually entitled to reinstatement without loss of seniority rights and other privileges as well as to their full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement.[10] However, the circumstances obtaining in this case do not warrant the reinstatement of respondents. Antagonism caused a severe strain in the relationship between them and petitioner company. A more equitable disposition, as correctly held by the NLRC, would be an award of separation pay[11] equivalent to at least one month pay, or one month pay for every year of service, whichever is higher,[12] in addition to their full backwages, allowances and other benefits.

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals dated November 5, 1999 and April 18, 2000 are hereby AFFIRMED WITH MODIFICATION in the sense that, in lieu of reinstatement, respondents are awarded separation pay equivalent to at least one month pay, or one month pay for every year of service, whichever is higher; and their full backwages, other privileges and benefits, or their monetary equivalent during the period of their dismissal up to their supposed actual reinstatement. Costs against petitioners. SO ORDERED.

G.R. No. 80609 August 23, 1988 PHILIPPINE LONG DISTANCE TELEPHONE COMPANY vs. THE NATIONAL LABOR RELATIONS COMMISSION The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who had been dismissed for cause as found by the public respondent. Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated from the service. 2 She went to the Ministry of Labor and Employment claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's decision declared: WHEREFORE, the instant complaint is dismissed for lack of merit. Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outhide the premises of respondent company and that their act of giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must be given one month pay for every year of service as financial assistance. 3 Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the above- quoted award as having been made with grave abuse of discretion. In its challenged resolution of September 22, 1987, the NLRC said: ... Anent the award of separation pay as financial assistance in complainant's favor, We find the same to be equitable, taking into consideration her long years of service to the company whereby she had undoubtedly contributed to the success of respondent. While we do not in any way approve of complainants (private respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her favor. 5 The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law. In the case of the private respondent, she has been awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead of deterring corruption. For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with the company for ten years. In support of this position, the Solicitor General cites the cases of Firestone Tire and Rubber Company of

the Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for cause but were nevertheless allowed separation pay on grounds of social and compassionate justice. As the Court put it in the Firestone case: In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However, considering that Lariosa had worked with the company for eleven years with no known previous bad record, the ends of social and compassionate justice would be served if he is paid full separation pay but not reinstatement without backwages by the NLRC. In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay for his 11 years of service with the company. In Soco, the employee was also legally separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings but he was just the same granted one-half month separation pay for every year of his 18year service. Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for preferring certain dealers in violation of company policy but was allowed separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss of confidence because of her failure to account for certain funds but she was awarded separation pay equivalent to one-half month's salary for every year of her service of 15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he had instigated labor unrest among the workers and had serious differences with them, among other grounds, but he was still granted three months separation pay corresponding to his 3-year service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service was held validly terminated for lack of confidence and abandonment of work but he was nonetheless granted three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed three employees who had been dismissed after they were found guilty of misappropriating company funds. The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. 13 The cases above cited constitute the exception, based upon considerations of equity. Equity has been defined as justice outside law, 14 being ethical rather than jural and belonging to the sphere of morals than of law. 15 It is grounded on the precepts of conscience and not on any sanction of positive law. 16 Hence, it cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub- topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. The Court notes, however, that where the exception has been applied, the decisions have not been consistent as to the justification for the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow

workers in the Engineering Equipment case were both awarded separation pay notnvithstanding that the first cause was certainly more serious than the second. No less curiously, the employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service, but in Filipro the award was two months separation pay for 2 years service. In Firestone, the emplovee was allowed full separation pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month separation pay for every year of her 15year service. It would seem then that length of service is not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal. The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should be re-examined. It is time we rationalized the exception, to make it fair to both labor and management, especially to labor. There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause. But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified. We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee. 17 WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is AFFIRMED in totoexcept for the grant of separation pay in the form of financial assistance, which is hereby DISALLOWED. The temporary restraining order dated March 23, 1988, is LIFTED. It is so ordered.

Jenny Agabon vs NLRC This petition for review seeks to reverse the decision[1] of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00. Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 [2] until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims [3] and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. The dispositive portion of the decision states: WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of: 1. 2. Jenny M. Agabon Virgilio C. Agabon P56, 231.93 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999. Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabon’s 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR. SO ORDERED.[4]

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence. [5] Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. The dispositive portion of the decision reads: WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioner’s money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997,

and 1998, as well as their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabon’s 13th month pay for 1998 in the amount of P2,150.00. SO ORDERED.[6] Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7] Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a “pakyaw” basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.[8] Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work.[9] In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondent’s manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case.[10] It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals.[11] However, if the factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.[12] Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners’ dismissal was for a just cause. They had abandoned their employment and were already working for another employer. 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.[13] 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. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.[14] It is a form of neglect of duty, hence, a just cause for termination of employment by the employer.[15] 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.[16] In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.[17] In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his job. We should apply that rule with more reason here where petitioners were absent because they were already working in another company. The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct [19] and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.[20] After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed. The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of notice. – In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and (c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employee’s last known address. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability. In the second and third situations where the dismissals are illegal, Article 279 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 the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for noncompliance with the procedural requirements of due process . The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employee’s last known address. [21] Thus, it should be held liable for non-compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National Labor Relations Commission.[22] 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,[23] we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried to pacify him. We concluded that reinstating the employee and awarding backwages “may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe.”[24] We further held that: Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment. However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.[25] The rule thus evolved: 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, the rule on the extent of the sanction was changed. We held that the 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. The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. Serrano was confronting the practice of employers to “dismiss now and pay later” by imposing full backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states: ART. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by

this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine. To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of what is fair and right and just. [26] It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10. [27] Breaches of these due processrequirements violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Constitutional due process 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. In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid cause but the employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the gravity of the omission committed by the employer. In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was not given due process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and attorney’s fees. Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission,[30] which opinion he reiterated in Serrano, stated: C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in terminating the services of the employee, the employer must be deemed to have opted or, in any case,

should be made liable, for the payment of separation pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the twopart due process requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps would be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay, nominal damages to the employee. x x x.[31] After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences. This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy. 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.[32] Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact abandoned. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor selfdestruction of the employer.[33] It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about “the greatest good to the greatest number.”[34]

This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances. Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labormanagement relations and dispense justice with an even hand in every case: We have repeatedly stressed that social justice – or any justice for that matter – is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike, according to the mandate of the law.[35] Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor, as management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. 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, as ruled in Reta v. National Labor Relations Commission.[36] The indemnity to be imposed should be stiffer to discourage the abhorrent practice of “dismiss now, pay later,” which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.[37] As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The Court, after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employee’s one month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the employee’s right to statutory due process which was violated by the employer.[39] The violation of the petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances.[40] Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners’ holiday pay, service incentive leave pay and 13th month pay. We are not persuaded. We affirm the ruling of the appellate court on petitioners’ money claims. Private respondent is liable for petitioners’ holiday pay, service incentive leave pay and 13 th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents – which will show that overtime, differentials, service incentive leave and other claims of workers have been paid – are not in the possession of the worker but in the custody and absolute control of the employer. [41] In the case at bar, if private respondent indeed paid petitioners’ holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed. [42] Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon’s 13 month pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same[43] so as “to further protect the level of real wages from the ravages of world-wide inflation.”[44] Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit:
th

(f) “Wage” paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece , or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee…” from which an employer is prohibited under Article 113[45] of the same Code from making any deductions without the employee’s knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon’s 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabon’s thirteenth month pay for 1998 in the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners’ Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabon’s thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process. No costs.

Felix Perez vs Philippine Telegraph and Telephone Company Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in PT&T’s Shipping Section, Materials Management Group. Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping Section, respondents formed a special audit team to investigate the matter. It was discovered that the Shipping 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. On September 3, 1993, petitioners were placed on preventive suspension for 30 days for their alleged involvement in the anomaly.[1] Their suspension was extended for 15 days twice: first on October 3, 1993[2] and second on October 18, 1993.[3] On October 29, 1993, a memorandum with the following tenor was issued by respondents: In line with the recommendation of the AVP-Audit as presented in his report of October 15, 1993 (copy attached) and the subsequent filing of criminal charges against the parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby dismissed from the service for having falsified company documents.[4] (emphasis supplied)

On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal dismissal.[5] They alleged that they were dismissed on November 8, 1993, the date they received the above-mentioned memorandum. The labor arbiter found that the 30-day extension of petitioners’ suspension and their subsequent dismissal were both illegal. He ordered respondents to pay petitioners their salaries during their 30-day illegal suspension, as well as to reinstate them with backwages and 13th month pay. The National Labor Relations Commission (NLRC) reversed the decision of the labor arbiter. It ruled that petitioners were dismissed for just cause, that they were accorded due process and that they were illegally suspended for only 15 days (without stating the reason for the reduction of the period of petitioners’ illegal suspension).[6] Petitioners appealed to the Court of Appeals (CA). In its January 29, 2002 decision,[7] the CA affirmed the NLRC decision insofar as petitioners’ illegal suspension for 15 days and dismissal for just cause were concerned. However, it found that petitioners were dismissed without due process.

Petitioners now seek a reversal of the CA decision. They contend that there was no just cause for their dismissal, that they were not accorded due process and that they were illegally suspended for 30 days. We rule in favor of petitioners.

RESPONDENTS FAILED TO PROVE JUST CAUSE AND TO OBSERVE DUE PROCESS

The CA, in upholding the NLRC’s decision, reasoned that there was sufficient basis for respondents to lose their confidence in petitioners[8] for allegedly tampering with the shipping documents. Respondents emphasized the importance of a shipping order or request, as it was the basis of their liability to a cargo forwarder.[9] We disagree. 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.[10] Other than their bare allegations and the fact that such d ocuments 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. [11] Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination.[12] However, in General Bank and Trust Co. v. CA,[13] we said: [L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.

The burden of proof rests on the employer to establish that the dismissal is for cause in view of the security of tenure that employees enjoy under the Constitution and the Labor Code. The

employer’s evidence must clearly and convincingly show the facts on which the loss of confidence in the employee may be fairly made to rest.[14] It must be adequately proven by substantial evidence.[15] Respondents failed to discharge this burden. 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.[16] 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. The labor arbiter and the CA correctly found that respondents failed to comply with the two-notice requirement for terminating employees. Petitioners likewise contended that due process was not observed in the absence of a hearing in which they could have explained their side and refuted the evidence against them. There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires: ART. 277. Miscellaneous provisions. — x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. (emphasis supplied)

The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him:[17] Section 2. Security of Tenure. — x x x (d) In all cases of termination of employment, the following standards of due process shall be substantially observed: For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. (iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (emphasis supplied)

Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of an employee? Can the apparent conflict between the law and its IRR be reconciled? At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the administrative regulations implementing it.[18] The authority to promulgate implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute.[19] As such, it cannot amend the law either by abridging or expanding its scope.[20] Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given “ample opportunity to be heard and to defend himself.”Thus, the opportunity to be heard afforded by law to the employee is qualified by the word “ample” which ordinarily means “considerably more than adequate or sufficient.”[21] In this regard, the phrase “ample opportunity to be heard” can be reasonably interpreted as extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b). Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua

non for compliance with the due process requirement in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation between the employer and the employee. The “ample opportunity to be heard” standard is neither synonymous nor similar to a formal hearing. To confine the employee’s right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The “very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.”[22] The standard for the hearing requirement, ample opportunity, is couched in general language revealing the legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit. Significantly, 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 a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. An employee’s right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof. A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy.[23] “To be heard” does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. [24] Therefore, while the phrase “ample opportunity to be heard” may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal “trial -type” hearing, although preferred, is not absolutely necessary to satisfy the employee’s right to be heard. This Court has consistently ruled that the due process requirement in cases of termination of employment does not require an actual or formal hearing. Thus, we categorically declared in Skipper’s United Pacific, Inc. v. Maguad:[25] The Labor Code does not, of course, require a formal or trial type proceeding before an erring employee may be dismissed. (emphasis supplied)

In Autobus Workers’ Union v. NLRC,[26] we ruled: The twin requirements of notice and hearing constitute the essential elements of due process. Due process of law simply means giving opportunity to be heard before judgment is rendered. In fact,there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard. xxx xxx xxx A formal trial-type hearing is not even essential to due process. It is enough that the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present supporting evidence on which a fair decision can be based. This type of hearing is not even mandatory in cases of complaints lodged before the Labor Arbiter. (emphasis supplied)

In Solid Development Corporation Workers Association v. Solid Development Corporation ,[27] we had the occasion to state: [W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employer’s decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. In separate infraction reports, petitioners were both apprised of the particular acts or omissions constituting the charges against them. They were also required to submit their written explanation within 12 hours from receipt of the reports. Yet, neither of them complied. Had they found the 12-hour period too short, they should have requested for an extension of time. Further, notices of termination were also sent to them informing them of the basis of their dismissal. In fine, petitioners were given due process before they were dismissed. Even if no hearing was conducted, the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. (emphasis supplied) Our holding in National Semiconductor HK Distribution, Ltd. v. NLRC[28] is of similar import: That the investigations conducted by petitioner may not be considered formal or recorded hearings or investigations is immaterial. A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy. It is deemed sufficient for the employer to follow the natural sequence of notice, hearing and judgment.

The above rulings are a clear recognition that the employer may provide an employee with ample opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully afforded a chance to respond to the

charges against him, adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written. 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[29] or where company rules or practice requires an actual hearing as part of employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point of law. This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably implements the “ample opportunity to be heard” standard under Article 277(b) of the Labor Code without unduly restricting the language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that “*a+ll doubts in the implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations shall be resolved in favor of labor.” In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases: (a) “ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c) the “ample opportunity to be heard” standard in the Labor Code prevails over the

“hearing or conference” requirement in the implementing rules and regulations . PETITIONERS WERE ILLEGALLY SUSPENDED FOR 30 DAYS

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.[30] In this case, petitioners contended that they were not paid during the two 15-day extensions, or a total of 30 days, of their preventive suspension. Respondents failed to adduce evidence to the contrary. Thus, we uphold the ruling of the labor arbiter on this point. 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.[31] 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.[32] 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.[33] WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 29, 2002 in CA-G.R. SP No. 50536 finding that petitioners Felix B. Perez and Amante G. Doria were not illegally dismissed but were not accorded due process and were illegally suspended for 15 days, is SET ASIDE. The decision of the labor arbiter dated December 27, 1995 in NLRC NCR CN. 1106930-93 is hereby AFFIRMED with the MODIFICATION that petitioners should be paid their separation pay in lieu of reinstatement.

Venancio Guerrero vs NLRC This is an original action for certiorari under Rule 65 of the Revised Rules of Court to annul the Decision of respondent National Labor Relations Commission (NLRC) [1] dismissing petitioners' complaints for illegal dismissal against R.O.H. Auto Products Phils., Inc. and its president, Goeff Kemp. The petitioners are former employees of respondent R.O.H. Auto Products Phils., Inc., a corporation engaged in the manufacture of automotive steel wheels. On March 24, 1992, members of the union in respondent company went on strike. The petitioners, however, did not participate in the strike. Respondent company allegedly sustained huge losses as the strike virtually paralyzed its operations. To prevent further losses, respondent proposed on April 22, 1992 to the non-striking employees a "financial assistance" in exchange for their resignation. Respondent company, nevertheless, assured them priority in hiring when positions of equal stature and compensation become available. On April 24, 1992, the petitioners availed of respondent company's offer. They signed individual Quit Claim and Release deeds upon receipt of their separation pay. On May 3, 1992, the strike ended. The operations in respondent company resumed and all the striking employees returned to their posts. The petitioners offered to re-assume their former positions but respondent company refused to admit them. They filed separate complaints for illegal dismissal. In a consolidated Decision dated June 29, 1993, Labor Arbiter Geobel A. Bartolabac dismissed the complaints for lack of merit, viz: WHEREFORE, premises considered, the above-entitled cases are now hereby dismissed for lack of merit. Respondents (sic) R.O.H. Auto Products Phils. Inc. is, however, ordered to pay each complainant an additional financial assistance equivalent to their one month salary.[2] This was affirmed by the NLRC in its Decision dated March 10, 1995.[3] Hence, this petition. The issue is whether petitioners were illegally dismissed. We rule in the affirmative. The law gives an employer the right to terminate the services of its employees to obviate or to minimize business losses. This right, however, may not be exercised arbitrarily or whimsically. Article 283 of the Labor Code lays down the conditions for the exercise of such rights, thus: Art. 283. Closure of establishment and reduction or personnel. -- The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof . In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (emphasis supplied)

The requisites for valid retrenchment under the foregoing provision are: (1) necessity of the retrenchment to prevent losses and proof of such losses; (2) written notice to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year or service, whichever is higher.[4] Considering the circumstances in the case at bar, we find that respondent company did not satisfy the legal requirements for valid retrenchment. First, respondent company did not present sufficient evidence to prove the extent of its losses. To justify the employees' termination of service, the losses must be serious, actual and real, and they must be supported by sufficient and convincing evidence. [5] The burden of proof rests on the employer.[6] Respondent company alleged that the strike paralyzed its operations and resulted in the withdrawal of its clients' orders. Respondent company, however, failed to prove its claim with competent evidence which would show that it was indeed suffering from business losses so serious as would necessitate retrenchment or reduction of personnel.[7] As we held in Lopez Sugar Corporation vs. Federation of Free Workers:[8] Lastly but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. In Garcia v. National Labor Relations Commission, the Court said: xxx But it is essentially required that the alleged losses in business operations must be prove[n]. 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. We reject respondent company's contention that it was not necessary to present proof of severity of the losses it sustained since petitioners were aware of the strike and its adverse effects on the company's operations. The rule is that not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses.[9] Second, respondent company failed to prove that retrenchment was necessary to prevent further losses. There is no showing in this case that respondent company has taken other measures to abate the losses it sustained because of the strike. Retrenchment must be exercised only as a last resort, considering that it will lead to the loss of the employees' livelihood. Retrenchment is justified only when all other less drastic means have been tried and found insufficient.[10] Respondent company did not also follow the proper procedure for retrenchment under Article 283. It did not give written notices to both the petitioners and the Department of Labor and Employment at least one (1) month prior to the retrenchment. Its purpose is to enable the proper authorities to ascertain whether retrenchment is being done in good faith and is not just a pretext for evading compliance with the just obligations of the employer to the affected employees. [11] This requirement is mandatory[12] as it is intended to protect the workers' right to security of tenure. The payment of "one (1) month salary in lieu of the notice" which was included in petitioners' separation pay cannot be considered as sufficient compliance with the requirement of the law.[13] Finally, petitioners' availment of the "financial assistance" given by respondent company did not estop them from questioning the legality of their separation from the company. When respondent company made the offer, petitioners were made to believe that the company would cease to operate for an indefinite period of time. Hence, petitioners were constrained to accept whatever relief the respondent company offered at that time. In De Leon vs. NLRC,[14] we held that "employees who

receive their separation pay are not barred from contesting the legality of their dismissal. The acceptance of those benefits (will) not amount to estoppel." IN VIEW WHEREOF, the assailed Decision is REVERSED and SET ASIDE. Respondents R.O.H. Auto Products Phils., Inc. and Goeff Kemp are hereby ordered to REINSTATE the petitioners without loss of seniority rights and with full backwages minus the amount received by them as "financial assistance" upon their separation.[15] No costs. SO ORDERED.

North Davao Mining Corporation vs NLRC Is a company which is forced by huge business losses to close its business, legally required to pay separation benefits to its employees at the time of its closure in an amount equivalent to the separation pay paid to those who were separated when the company was still a going concern? This is the main question brought before this Court in this petition for certiorari under Rule 65 of the Revised Rules of Court, which seeks to reverse and set aside the Resolutions dated July 29, 1993 [1] and September 27, 1993[2] of the National Labor Relations Commision[3] (NLRC) in NLRC-CA No. M-00139593. The Resolution dated July 29, 1993 affirmed in tow the decision of the Labor Arbiter in RAB-1 108-00672-92 and RAB- 11-08-00713-92 ordering petitioners to pay the complainants therein certain monetary claims. The Resolution dated September 27, 1993 denied the motion for reconsideration of the said July 29, 1993 Resolution. The Facts Petitioner North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset Privatization Trust (APT). As of December 31, 1990 the national government held 81.8% of the common stock and 100% of the preferred stock of said company.[4] 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 (P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31, 1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos, as shown by its financial statements audited by the Commission on Audit. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 day s’ 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 (30) days’ pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, 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 seperated employees for: (1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as computed by private respondent.[5] On May 6, 1993, respondent Labor Arbiter rendered a decision ordering petitioner North Davao to pay the complainants the following:

“(a) Additional separation pay of 17.5 days for every year of service; (b) Backwages equivalent to two (2) days a month times the number of years of service but not to exceed three (3) years; (c) Transportation allowance at P80 a month times the number of years of service but not to exceed three (3) years.” The benefits awarded by respondent Labor Arbiter amounted to P10,240,517.75. Attorney’s fees equivalent to ten percent (10%) thereof were also granted.[6] On appeal, respondent NLRC affirmed the decision in toto. Petitioner North Davao’s motion for reconsideration was likewise denied. Hence, this petition. The Parties’ Submissions and the Issues In affirming the Labor Arbiter’s decision, respondent NLRC ruled that “since (North Davao) has been paying its employees separation pay equivalent to thirty (30) days pay for every year of service,” knowing fully well that the law provides for a lesser separation pay, then such company policy “has ripened into an obligation,” and therefore, depriving now the herein private respondent and others similarly situated of the same benefits would be discriminatory.[7] Quoting from Businessday Information Systems and Services. Inc. (BISSI) vs. NLRC.[8] it said that petitioners “may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously than others.” It also cited Abella vs. NLRC,[9] as authority for saying that Art. 283 of the Labor Code protects workers in case of the closure of the establishment. To justify the award of two days a month in backwages and P80 per month of transportation allowance, respondent Commission ruled: “As to the appellants’ claim that complainants-appeallees’ time spent in collecting their wages at Tagum, Davao is not compensable allegedly because it was on official time can not be given credence. No iota of evidence has been presented to back up said contention. The same is true with appellants’ assertion that the claim for transportation expenses is without basis since they were incurred by the complainants. Appellants should have submitted the payrolls to prove that complainants-appellees were not the ones who personally collected their wages and/or the bus/jeep trip tickets or vouchers to show that the complainants-appellees were provided with free transportation as claimed.” Petitioner, through the Government Corporate Counsel, raised the following grounds for the allowance of the petition: “1. The NLRC acted with grave abuse of discretion in affirming without legal basis the award of additional separation pay to private respondents who were separated due to serious business losses on the part of petitioner. 2. The NLRC acted with grave abuse of discretion in affirming without sufficient factual basis the award of backwages and transportation expenses to private respondents. 3. There is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of the law.” and the following issues: “1. Whether or not an employer whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its employees separated by reason of such closure.

2. Whether or not 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. 3. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that these expenses were incurred.” The First Issue: Separation Pay To resolve this issue, it is necessary to revisit the provision of law adverted to by the parties in their submissions, namely Art. 283 of the Labor Code, which reads as follows: “Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or under-taking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.” (italics supplied) The underscored portion of Art. 283 governs the grant of seperation benefits “in case of closures or cessation of operation” of business establishments “NOT due to serious business losses or financial reverses x x x”. Where, however, the closure was due to business losses - as in the instant case, in which the aggregate losses amounted to over P20 billion - the Labor Code does notimpose any obligation upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. Even the public respondents, in their Comment[10] filed by the Solicitor General, impliedly concede this point. However, respondents tenaciously insist on the award of separation pay, anchoring their claim solely on petitioner North Davao’s long-standing policy of giving separation pay benefits equivalent to 30- days’ pay, which policy had been in force in the years prior to its closure. Respondents contend that, by denying the same separation benefits to private respondent and the others similarly situated, petitioners discriminated against them. They rely on this Court’s ruling in Businessday Information Systems and Services, Inc. (BISSI) vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial reverses, decided “as a retrenchment measure” to lay-off some employees on May 16, 1988 and gave them separation pay equivalent to one-half (½) month pay for every year of service. BISSI retained some employees in an attempt to rehabilitate its business as a trading company. However, barely two and a half months later, these remaining employees were likewise discharged because the company decided to cease business operations altogether. Unlike the earlier terminated employees, the second batch received separation pay equivalent to a full month’s salary for every year of service, plus a mid-year bonus. This Court ruled that “there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others. x x x” In resolving the present case, it bears keeping in mind at the outset that the factual circumstances of BISSI are quite different from the current case. The Court noted that BISSI continued to suffer losses even after the retrenchment of the first batch of employees; clearly, business did not improve despite such drastic measure. That notwithstanding, when BISSI finally shut down, it could well afford

to (and actually did) pay off its remaining employees with MORE separation benefits as compared with those earlier laid off; obviously, then, there was no reason for BISSI to skimp on separation pay for the first batch of discharged employees. That it was able to pay one-month separation benefit for employees at the time of closure of its business meant that it must have been also in a position to pay the same amount to those who were separated prior to closure. That it did not do so was a wrongful exercise of management prerogatives. That is why the Court correctly faulted it with “impermissible discrimination.” Clearly, it exercised its management prerogatives contrary to “general principles of fair play and justice.” In the instant case however, the company’s practice of giving one month’s pay for every year of service could no longer be continued precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over P20 billion. This could not be said of BISSI. In the case of North Davao, it gave 30-days’ separation pay to its employees when it was still a going concern even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment of such separation benefits. But when a business enterprise completely ceases operations, i.e., upon its death as a going business concern, its vital lifeblood -its cashflow literally dries up. Therefore, the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land. As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy a fact that is not controlled by management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all - although not required by law - and 12.5-days’ worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. As this Court held in Manila Trading & Supply Co. vs. Zulueta,[11] and reiterated in San Miguel Corporation vs. NLRC[12] and later, in Allied Banking Corporation vs. Castro,[13] “(t)he law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer.” At this juncture, we note that the Solicitor General in his Comment challenges the petitioners assertion that North Davao, having closed down, no longer has the means to pay for the benefits. The Solicitor General stresses that North Davao was among the assets transferred by PNB to the national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this government asset. He then concludes that “(i)t would, therefore, be incongruous to declare that the National Government, which should always be presumed to be solvent, could not pay now private respondents’ money claims.” S uch argumentation is completely misplaced. Even if the national government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence, a stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced.[14] From another angle, the national government is not the employer of private respondent and his co-complainants, so there is no reason to expect any kind of bailout by the national government under existing law and jurisprudence.

The Second and Third Issues: Back Wages and Transportation Allowance Anent the award of back wages and transportation allowance, the issues raised in connection therewith are factual, the determination of which is best left to the respondent NLRC. It is well settled that this Court is bound by the findings of fact of the NLRC, so long as said findings are supported by substantial evidence.[15] As the Solicitor General pointed out in his comment: “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 (p.109, Vol. 1, Record). Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: ‘Section 4. 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. (b) xxx xxx xxx.’

(Italics supplied) Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1, Record), the Regional Director, Regional Office No. XI, Department of Labor and Employment, Davao City, ordered petitioner NDMC, among others, as follows: ‘WHEREFORE, x x x. Respondent is further ordered to pay its workers salaries at the plantsite at Amacan, New Leyte, Maco, Davao del Norte or whenever not possible, through the bank in Tagum, Davao del Norte as already been practiced subject, however to the provisions of Section 4 of Rule VIII, Book III of the rules implementing the Labor Code as amended.’ Thus, public respondent Labor Arbiter Antonio M. Villanueva correctly held that: ‘From the evidence on record, we find that the hours spent by complainants in collecting sa laries at a bank in Tagum, Davao del Norte shall be considered 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 two (2) days in a month as prayed for.

‘Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days.’ (p. 10, Decision; p. 207, Vol. 1, Record) On the contrary, it will be petitioners’ burden or duty to present evidence of compliance of the law on labor standards, rather than for private respondents to prove that they were not paid/provided by petitioners of their backwages and transportation expenses.” Other than the bare denials of petitioners, the above findings stands uncontradicted. Indeed we are not at liberty to set aside findings of facts of the NLRC, absent any capriciousness, arbitrariness, or abuse or complete lack of basis. In Maya Farms Employees Organizations vs. NLRC,[16] we held: “This Court has consistently ruled that findings of fact of administrative agencies and quasi -judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon this Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record.” WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution by SETTING ASIDE and deleting the award for “additional separation pay of 17.5 days for every year of service,” and AFFIRMING it in all other aspects. No costs. SO ORDERED.

7

National Federation of Labor vs NLRC Before us is a special civil action for certiorari to set aside and annul two (2) resolutions of the National Labor Relations Commission[1] promulgated on April 24, 1996[2] and August 29, 1996[3]denying the award of separation pay to petitioners. The pertinent facts are as follows: Petitioners are bona fide members of the National Federation of Labor (NFL), a legitimate labor organization duly registered with the Department of Labor and Employment. They were employed by private respondents Charlie Reith and Susie Galle Reith, general manager and owner, respectively, of the 354-hectare Patalon Coconut Estate located at Patalon, Zamboanga City. Patalon Coconut Estate was engaged in growing agricultural products and in raising livestock. In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), which mandated the compulsory acquisition of all covered agricultural lands for distribution to qualified farmer beneficiaries under the so-called Comprehensive Agrarian Reform Programme (CARP). Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the Patalon Estate Agrarian Reform Association (PEARA), a cooperative accredited by the Department of Agrarian Reform (DAR), of which petitioners are members and co-owners. As a result of this acquisition, private respondents shut down the operation of the Patalon Coconut Estate and the employment of the petitioners was severed on July 31, 1994. Petitioners did not receive any separation pay. On August 1, 1994, the cooperative took over the estate. A certain Abelardo Sangadan informed respondents of such takeover via a letter which was received by the respondents on July 26, 1994. Being beneficiaries of the Patalon Coconut Estate pursuant to the CARP, the petitioners became partowners of the land.[4] On April 25, 1995, petitioners filed individual complaints before the Regional Arbitration Branch (RAB) of the National Labor Relations Commission (NLRC) in Zamboanga City, praying for their reinstatement with full backwages on the ground that they were illegally dismissed. The petitioners were represented by their labor organization, the NFL. On December 12, 1995, the RAB rendered a decision, the dispositive portion of which provides: "WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing complainants’ charge for illegal dismissal for lack of merit, but ordering respondents thru [sic] its owner-manager or its duly authorized representative to pay complainants’ separation pay in view of the latter’s cessation of operations or forced sale, and for 13th month differential pay in the amount, as follows, for: Names Abelardo Sangadan Luciano Ramos Nestor Tilasan Gregorio Tilasan Joaquin Garcia Separation Pay P23,879.06 43,605.24 19,726.18 25,955.50 7,267.54 13th Mo. Pay Diff. None P711.25 401.46 None 1,211.25 Total P23,879.06 44,316.49 20,127.64 25,955.50 8,478.79

Rogelio Sabaitan Castro Leonardo, Jr. Pilardo Potenciano Ronillo Potenciano Jovencio Bartolome Santiago Sabaitan Juanito Concerman George Tumilas Patrocinio Domingo Avelino Francisco Meliton Sangadan Alexander Geronimo Joaquin Geronimo Ramil Macaso Lamberto Joven Cristino Garina Sammy Gantaan Nacial Ustalan Edwin Ustalan Roland Potenciano Rody Concerman Elmer Domingo Aranquez Sangada Unding Boleng Eduardo Boleng Roberto Paneo Henry Sangadan

21,798.00 25,955.50 5,191.10 7,267.54 8,305.76 4,152.88 7,267.54 16,611.52 2,076.44 3,114.66 15,573.30 15,573.00 24,917.28 6,229.32 16,611.62 35,299.48 14,535.08 38,414.14 7,267.54 5,191.10 7,267.54 3,114.66 45,681.68 31,146.60 35,299.48 23,876.06 16,611.52 Total Benefits

1,211.25 63.10 911.25 None 477.25 1,011.25 611.25 1,011.25 1,011.25 1,211.25 392.50 None 1,211.25 861.25 1,011.25 849.65 961.25 79.95 1,011.25 911.25 691.25 1,211.25 711.25 None 759.30 911.25 1,011.25

23,009.25 26,018.60 6,102.35 7,267.54 8,783.01 5,164.13 7,928.79 17,622.77 3,087.69 4,325.91 15,965.80 15,573.30 26,128.53 7,090.57 17,622.77 36,149.13 15,496.33 38,494.09 8,278.79 6,102.35 7,958.79 4,325.91 46,392.93 31,146.60 36,058.78 24,787.31 17,622.77

P586,774.22

"FURTHER, complainants’ claim for Muslim Holiday, overtime pay and rest day pay should be dismissed for lack of merit, too."[5] Appeal was taken by private respondents to public respondent NLRC.[6] On April 24, 1996, the NLRC issued a resolution, the dispositive portion of which provides: "WHEREFORE, the decision appealed from is hereby modified in favor of the following findings: 1) Respondents are not guilty of illegally dismissing complainants. Respondents’ cessation of operation was not due to a unilateral action on their part resulting in the cutting off of the employment relationship between the parties. 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. 2) The award of 13th month pay differential is, however, Set Aside. Any award of 13th month pay differentials to complainants should be computed strictly based on their reduced pay, equivalent to six (6) hours work, Monday to Friday, pursuant to what the parties agreed in the November 18, 1991 Compromise Agreement." SO ORDERED.[7] Petitioners filed a motion for reconsideration which was denied by the NLRC in its resolution [8] dated August 29, 1996. Hence, this petition. The issue is whether or not an employer that was compelled to cease its operation because of the compulsory acquisition by the government of its land for purposes of agrarian reform, is liable to pay separation pay to its affected employees. The petition is bereft of merit. Petitioners contend that they are entitled to separation pay citing Article 283 of the Labor Code which reads: "ART. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year."

It is clear that 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 aforesaid article. When the Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at bench. Even assuming, arguendo, that the situation in this case were a closure of the business establishment called Patalon Coconut Estate of private respondents, still the petitioners/employees are not entitled to separation pay. The closure contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the part of the employer to close the business establishment as may be gleaned from the wording of the said legal provision that "The employer may also terminate the employment of any employee due to...".[9] The use of the word "may," in a statute, denotes that it is directory in nature and generally permissive only.[10] The "plain meaning rule" or verba legis in statutory construction is thus applicable in this case. 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.[11] In other words, 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. As earlier stated, the Patalon Coconut Estate was closed down because a large portion of the said estate was acquired by the DAR pursuant to the CARP. Hence, the closure of the Patalon Coconut Estate was not effected voluntarily by private respondents who even filed a petition to have said estate exempted from the coverage of RA 6657. Unfortunately, their petition was denied by the Department of Agrarain Reform. Since the closure was due to the act of the government to benefit the petitioners, as members of the Patalon Estate Agrarian Reform Association, by making them agrarian lot beneficiaries of said estate, the petitioners are not entitled to separation pay. The termination of their employment was not caused by the private respondents. The blame, if any, for the termination of petitioners’ employment can even be laid upon the petitioner -employees themselves inasmuch as they formed themselves into a cooperative, PEARA, ultimately to take over, as agrarian lot beneficiaries, of private respondents’ landed estate pursuant to RA 6657. The resulting closure of the business establishment, Patalon Coconut Estate, when it was placed under CARP, occurred through no fault of the private respondents. While the Constitution provides that "the State x x x shall protect the rights of workers and promote their welfare", that constitutional policy of providing full protection to labor is not intended to oppress or destroy capital and management. Thus, the capital and management sectors must also be protected under a regime of justice and the rule of law. WHEREFORE, the petition is DISMISSED. The Resolutions of the National Labor Relations Commission dated April 24, 1996 and August 29, 1996 are hereby AFFIRMED. No costs. SO ORDERED.

Chiang Kai Shek College vs Court of Appeals Assailed in this petition is the decision[1] of 12 October 2001, as well as the resolution[2] of 11 April 2002, of the Court Appeals in CA-G.R. SP No. 59996, which affirmed the decision[3] of 29 February 2000 of the National Labor Relations Commission (NLRC) declaring that Diana P. Belo was illegally dismissed as a teacher of petitioner Chiang Kai Shek College (CKSC). The controversy began on 8 June 1992, when Ms. Belo, a teacher of CKSC since 1977, applied for a leave of absence for the school year 1992-1993 because her children of tender age had no yaya to take care of them. The then principal, Mrs. Joan Sy Cotio, approved her application. However, on 15 June 1992, Ms. Belo received a letter dated 9 June 1992 of Mr. Chien Yin Shao, President of CKSC, informing her of the school’s existing policy; thus: Regarding your letter of request for leave of absence dated June 8, 1992, we would like to inform you of the existing policy of our school: (1) We could not assure you of any teaching load should you decide to return in the future. (2) Only teachers in service may enjoy the privilege and benefits provided by our school. Hence, your children are no longer entitled to free tuition starting school year 1992-1993.[4] Ms. Belo, nonetheless, took her leave of absence. On 8 July 1992, she learned that Laurence, one of her three children studying at the CKSC, was sent out of the examination room because his tuition fees were not paid. This embarrassing incident impelled Ms. Belo to pay, allegedly under protest, all the school fees of her children.[5] In May 1993, after her one-year leave of absence, Ms. Belo presented herself to Ms. Cotio and signified her readiness to teach for the incoming school year 1993-1994. She was, however, denied and not accepted by Ms. Cotio. She then relayed the denial to Mr. Chien on 17 May 1993. On 21 July 1993, she received the reply of Mr. Chien dated 1 July 1993 informing her that her confirmation to teach was filed late and that there was no available teaching load for her because as early as April 21 of that year, the school had already hired non-permanent teachers.[6] Adversely affected by the development, Ms. Belo filed with the Labor Arbitration Office a complaint for illegal dismissal; non-payment of salaries, 13th month pay, living allowance, teacher's day pay; loss of income; and moral damages. In his decision[7] of 18 October 1995, Labor Arbiter Donato G. Quinto, Jr., dismissed the complaint, reasoning that Ms. Belo was not dismissed but that there was simply no available teaching load for her. When in May 1993 she signified her intention to teach, the school had already acted on the applications or re-applications to teach of probationary teachers. The school’s policies, which were articulated in Mr. Chien’s letter of 9 June 1992 to Ms. Belo, were management prerogatives which did not amount to her dismissal. Said policies were also the consequences of her leave of absence and were not even questioned by her. The Labor Arbiter thus offered a Solomonic solution by directing the petitioners to give her a teaching load in the ensuing year 1996-1997 and the succeeding years without loss of seniority rights.[8] On appeal[9] by the private respondent, the NLRC reversed the decision of the Labor Arbiter. It considered as misplaced the Labor Arbiter’s utter reliance on Mr. Chien’s letter to Ms. Belo enunciating the questioned school policies. It reasoned that if the school policy was to extend free tuition fees to children of teachers in school, then the petitioners must have considered her “already not in school or summarily dismissed or separated the very moment *she+ applied for leave,” for, otherwise, her children would have been granted that privilege. Thus, it directed the petitioners to immediately reinstate Ms. Belo to her former position with full back wages from the time of her dismissal up to her actual reinstatement. It, however, dismissed Ms. Belo's prayer for moral and

exemplary damages and attorney's fees for lack of evidence that the petitioners acted in bad faith and malice. Their motion for reconsideration having been denied, [10] the petitioners filed a petition for certiorari with the Court of Appeals contending that the NLRC gravely abused its discretion amounting to lack of jurisdiction in (a) overturning the factual determination of the Labor Arbiter despite the fact that Ms. Belo stated in her Notice of Appeal that she was appealing only on a pure question of law; (b) holding that Ms. Belo was constructively dismissed by the petitioners despite the uncontroverted evidence that she was not illegally dismissed; and (c) granting Ms. Belo monetary awards. On 12 October 2001, the Court of Appeals found that far from abusing its discretion, the NLRC acted correctly when it ascertained that Ms. Belo was constructively dismissed. It declared as illegal, for being violative of Ms. Belo’s right to security of tenure, the school policy that a teacher who goes on leave cannot be assured of a teaching load. The school should have set aside a teaching load for her after the expiration of her leave of absence. It would have been a different story, one indeed ripe for termination of her employment, had Ms. Belo failed to report for work. As for the school’s contention that the NLRC was barred from resolving factual issues because of Ms. Belo's statement that she was appealing the case on a pure question of law, the Court of Appeals declared that such statement was a simple mistake in terminology, which is insufficient to deny an employee of her rights under the law. In its resolution dated 11 April 2002, the Court of Appeals denied the motion for reconsideration for lack of merit. Hence, on 11 June 2002,[11] petitioner CKSC and its president Mr. Chien filed the present petition. They claim that the Court of Appeals erred in affirming the NLRC decision which reversed the factual findings of the Labor Arbiter even if the said findings were amply supported by clear and uncontroverted evidence and had already attained finality, as Ms. Belo had appealed merely on a question of law. The Court of Appeals also erred in upholding the NLRC decision which failed to point out specifically the alleged particular portions of the records of the case, parties’ respective position papers, and pleadings, much less particular testimonial and documentary evidence, that warrant the patently erroneous and baseless conclusion that there was a “clear case of constructive dismissal.” The NLRC decision is in complete violation of Section 14, Article VIII of the Constitution, which provides: “No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the laws on which it is based.” Likewise, the C ourt of Appeals has not only completely and arbitrarily ignored and disregarded the facts and issues raised as an issue before it, but also decided on the illegality of the school’s policy, which was never raised before it or in any of the forums below. Anent the free tuition fee benefit extended to children of teachers in service in petitioner school, the same is a privilege granted not by law, but voluntarily by the said school. Hence, the petitioner school could determine the conditions under which said privilege may be enjoyed, such as, that only teachers in actual service can enjoy the privilege. Amidst the convolution of issues proffered by the petitioners, the only issue that needs to be determined and on which hinges the resolution of the other issues is whether the Court of Appeals erred in affirming the NLRC decision that Ms. Belo was constructively, nay, illegally dismissed and is, therefore, entitled to reinstatement and back wages. It must be noted at the outset that Ms. Belo had been a full-time teacher in petitioner CKSC continuously for fifteen years or since 1977 until she took a leave of absence for the school year 19921993. Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of employment and, therefore, be entitled to a security of tenure, the following requisites must concur: (a) the teacher is a full-time teacher; (b) the teacher must have rendered three consecutive years of service; and (c) such service must have been satisfactory.[12] Since Ms. Belo has measured up to these standards, she therefore enjoys security of tenure. The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due notice and hearing. [13]

We agree with the Court of Appeals that the NLRC did not commit any grave abuse of discretion in finding that Ms. Belo was constructively dismissed when the petitioners, in implementing their policies, effectively barred her from teaching for the school year 1993-1994. The three policies are (1) the non-assurance of a teaching load to a teacher who took a leave of absence; (2) the hiring of nonpermanent teachers in April to whom teaching loads were already assigned when Ms. Belo signified in May 1993 her intention to teach; and (3) the non-applicability to children of teachers on leave of the free tuition fee benefits extended to children of teachers in service. Case law defines constructive dismissal as a cessation from work because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.[14] When in the school year 1992-1993, the petitioners already applied to Ms. Belo’s children the policy of extending free tuition fee benefits only to children of teachers in service, Ms. Belo was clearly discriminated by them. True, the policy was made known to Ms. Belo in a letter dated 9 June 1992, but, this only additionally and succinctly reinforced the clear case of discrimination. Notably, petitioners’ statements of policies dated 13 March 1992 for the school year 199 2-1993 did not include that policy; thus: To : All Teachers and Staff of Chiang Kai Shek College

From : The President Pursuant to laws, rules and regulations promulgated by the proper government authorities of the Philippines, the following procedure are hereby issued for proper compliance of all concerned: 1. All teachers and staff who have rendered satisfactory service for a period of more than three (3) full consecutive years (e.g. those who started working in June, 1988 or before) are considered permanent employees and therefore need not re-apply for the forthcoming school year 1992-1993. 2. However, should any teacher or staff of permanent status wish to resign or to retire after this school year 1991-1992, he/she must file his/her written resignation or retirement application on or before March 28, 1992, so that the school will have sufficient time to make the necessary adjustments. Failure to file formal application on the part of the permanent employee shall be construed as consent to work for another school year. 3. All probationary employees (e.g. those who started working after June, 1988) who wish to continue their services in our school shall re-apply. Reapplications must be submitted on or before March 28, 1992. Failure to submit reapplication shall be construed as not interested to work for Chiang Kai Shek College in the coming school year 1992-1993. 4. All reapplications shall be acted upon and the decision of the administration will be conveyed to the employees concerned on or before April 21, 1992. [15] It can be argued that the extension of free tuition fees to children of teachers in service was an informal policy or custom. If it were so, there would have been no need to include this policy in the school’s written statement of policies dated 12 March 1993, which reads: To : All Teachers and Staff of Chiang Kai Shek College

From : The Office of the President Pursuant to laws, rules and regulations promulgated by the proper government authorities of the Philippines, the following procedure are hereby issued for proper compliance of all concerned:

1. All teachers and staff who have rendered satisfactory service for a period of more than three (3) full consecutive years (e.g. those who started working in June, 1989 or before) are considered permanent employees and therefore need not re-apply for the forthcoming school year 1993-1994. 2. However, should any teacher or staff of permanent status wish to resign, to retire, or to take a leave of absence after this school year 1992-1993, he/she must file his/her written application on or before March 27, 1993, so that the school will have sufficient time to make the necessary adjustments. Failure to file formal application on the part of the permanent employee shall be construed as consent to work for another school year. In accordance with our school policy, employees not in service are not entitled to any benefit extended by our school. 3. All probationary employees (e.g. those who started working after June 1989) who wish to continue their services in our school shall re-apply. Reapplications must be submitted on or before March 27, 1993. Failure to submit reapplication shall be construed as not interested to work for Chiang Kai Shek College in the coming school year 1993-1994. 4. All reapplications shall be acted upon and the decision of the administration will be conveyed to the employees concerned on or before April 21, 1993.[16] A cursory analysis of the petitioners’ statements of policies dated 13 March 1992 and 12 March 1993 reveals that the lists of policies are essentially the same. Both are addressed to all teachers and staff of petitioner school. However, the policy “that employees not in service are not entitled to any benefit extended by the school” was not listed in the written statement of policies dated 13 March 1992. The policy made its maiden appearance in petitioners’ statement of policies one year after or on 12 March 1993. It was, therefore, the policy of extending free tuition fees to children of teachers of the school, whether on service or on leave, which existed as a matter of custom and practice. That is why the school modified the privilege in written form. Thus, when the petitioners retroactively applied the modified written policy to Ms. Belo, they considered her already a teacher not in service. The NLRC was correct when it reasoned as follows: “*I+f the school policy is to extend ‘free tuition fees’ to children of teachers in school, then respondents *petitioners herein+ have considered *Ms. Belo+ ‘already not in school or summarily dismissed or separated the very moment the latter applied for leave.’ Otherwise, *her+ children should have been granted the ‘on-going’ privileges and benefits on free tuition fees, among others.” Ms. Belo was definitely singled out in the implementation of a future policy. This is grossly unfair and unjust. The petitioners did not take heed of the principle enshrined in our labor laws that policies should be adequately known to the employees and uniformly implemented to the body of employees as a whole and not in isolation. The continued employment of Ms. Belo was also rendered unlikely by the insistence of the petitioners in implementing the alleged policy that a teacher who goes on leave for one year is not assured of a teaching load. While this alleged policy was mentioned in Mr. Chien’s letter of 9 June 1992, it was not included in the school’s written statement of policies dated 13 March 1992. Hence, it was then a non-existent policy. When a non-existent policy is implemented and, in this case, only to Ms. Belo, it constitutes a clear case of discrimination. Even if the policy of non-assurance of a teaching load existed as a matter of practice and custom, it still glaringly contradicts petitioners’ written statement of policies dated 12 March 1993. Crystal clear therefrom is the fact that only permanent teachers who wished “to resign, to retire, or to take a leave of absence after the school year 1992-1993 must file their written application in March 1993.” Those who failed to file an application were expressly considered by the school as consenting to teach for the succeeding school year. Additionally, the petitioners did not require permanent teachers with satisfactory service to re-apply.

It, therefore, blows our mind why the petitioners would require Ms. Belo, a permanent teacher since 1977 with a satisfactory service record, to signify her intention to teach in March 1993. Plainly, the petitioners violated their avowed policies. Since Ms. Belo was not retiring, resigning or filing another leave of absence after the school year 1992-1993, the petitioners should have considered her as consenting to teach for the incoming school year 1993-1994. In fact, they should not have required her to re-apply to teach. In accordance with the written statement of policies dated 12 March 1993, only probationary teachers are required by the petitioners to re-apply in March. Failure of probationary teachers to re-apply in March is an indication of their lack of interest to teach again at the school. Petitioners’ invocation of the third policy – that of giving teaching assignments to probationary teachers in April – to justify their refusal to provide Ms. Belo a teaching load is, therefore, a lame excuse that rings of untruth and dishonesty. Patently clear is the illegal manner by which the petitioners eased out Ms. Belo from the teaching corps. Thus, the Court of Appeals’ justification in upholding the NLRC ruling attains an added judicial and logical sting: When respondent Belo reported for work after the termination of her one-year leave of absence, it was obligatory for petitioner school to give her a teaching load. It was improper for petitioner school to farm out subjects of respondent Belo to provisionary [sic] teacher [sic]. The petitioner school should have assumed that respondent Belo was returning for work after the expiration of her leave. It would have been a different story, if after the start of classes, respondent Belo failed to report for work, then the school had a right to institute the necessary proceeding for the termination of her employment.[17] Likewise, we do not find merit in petitioners’ assertion that the Court of Appeals should not have passed upon the illegality of the school policy of non-assurance of a teaching load, since the alleged illegality was never raised as an issue before the respondent court or in the forums below. As pointed out by the private respondent, that policy was part of the defense invoked by the petitioners in the Arbiter level, in the NLRC, and in the respondent court to the charge of illegal dismissal; and, hence, it must necessarily be passed upon and scrutinized. Besides, that policy is intimately intertwined with the main issue of whether Ms. Belo was illegally dismissed. We reject petitioners’ contention that “the NLRC decision failed to point out specifically the alleged particular portions of the records of the case, parties’ respective position papers, and pleadings, much less particular testimonial and documentary evidence, that warrant the patently erroneous and baseless conclusion that there is a clear case of constructive dismissal.” In fact, the NLRC considered the same policies that the petitioners insist as their bases for maintaining that Ms. Belo was not dismissed. It seems that the petitioners could only be persuaded if the reviewing bodies unearthed a document that explicitly states that Ms. Belo was being constructively dismissed. This phantom paper chase unveils the unsubstantiated and contrived claim of the petitioners. They need only to look, for example, at the letter dated 9 June 1992 to Ms. Belo. The “policies” therein stated are discernibly non-existent, or if existing as a matter of custom they grossly transgressed petitioner s’ formal written policies dated 13 March 1992 and 12 March 1993. Clear, therefore, is the fact that the written formal policies apply to all teachers and staff except Ms. Belo. Hence, there is no need to belabor the point that the NLRC decision clearly complied with the requirement expressed under Section 14, Article VIII of the Constitution. The decision speaks for itself. Suffice it is to say, this case is an exception to the general rule that the factual findings and conclusions of the Labor Arbiter are accorded weight and respect on appeal, and even finality. For one thing, the findings of the NLRC and the Labor Arbiter are contrary to each other; hence, the reviewing court may delve into the records and examine for itself the questioned findings.[18]

Further, we do not find merit in petitioners’ claim that Ms. Belo’s judicial admission that she was appealing on a “pure question of law” precludes the review and reversal of the Labor Arbiter’s factual finding that she was not illegally dismissed. Such claim is belied by the Notice of Appeal itself,[19] wherein Ms. Belo declared that she was appealing the decision of the Labor Arbiter to the NLRC “on a pure question of law and for being contrary to law and jurisprudence applicable [to] the case and the evidence on record, and rendered with grave abuse of discretion.”[20] Oddly, even the petitioners themselves maintain that to prove grave abuse of discretion, “it is necessary to bring out questions of fact.” Thus, in their own justification in resorting to both Rules 45 and 65 of the Rules of Court for the review and the nullification of the decision of the Court of Appeals, they contend: Clearly, petitioners’ remedy is two-fold – under Rule 45 and 65. Under Rule 45, only questions of law may be raised. Perhaps, respondents can now understand why petitioners have used both Rules 45 and 65. And this is simply because by invoking said two rules, they are not limited to raising questions of law, but they can raise both questions of fact and law. To show that grave abuse of discretion has been committed under Rule 65, it is necessary to bring out questions of fact , which was precisely done in the issues raised in page 2 of the petition….[21] Indeed, Ms. Belo questioned the legality of her dismissal and the denial of her monetary claims, as well as her claim for damages. Both are essentially factual issues, since their determination necessitates an evaluation of proof and not only a consideration of the applicable statutory and case laws. Basic is the distinction between legal and factual issues. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.[22] More importantly, the Labor Arbiter’s conclusions are baseless, bereft of any rational basis, unsupported by evidence on record, and glaringly erroneous. The decisions of the NLRC and the Court of Appeals are the ones in harmony with the evidence on record. In sum, we are convinced that Ms. Belo was unceremoniously and constructively dismissed by the petitioners without just cause and without observing the twin requirements of due process, i.e., due notice and hearing, in violation of the tenets of equity and fair play. Ms. Belo is, therefore, entitled to reinstatement and back wages in accordance with the questioned Cour t of Appeals’ and NLRC decisions. WHEREFORE, the petition is DENIED. The decision of 12 October 2001 and resolution of 11 April 2002 of the Court of Appeals in CA-GR. SP No. 59996 are hereby AFFIRMED. Costs against the petitioners. SO ORDERED.

Philippine Industrial Security Agency vs Percival Aguinaldo Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] of the Court of Appeals dated May 31, 2001 and its Resolution dated September 11, 2001 in CA-G.R. No. 62704, “PERCIVAL AGUINALDO, Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE INDUSTRIALSECURITY AGENCY CORP., and FAR EAST BANK AND TRUST COMPANY, Respondents.” On April 11, 1988, Philippine Industrial Security Agency Corporation (PISAC), petitioner, hired Percival Aguinaldo, respondent, as a security guard. He was assigned to secure the premises of Far East Bank & Trust Company (FEBTC) Branch in Santiago City. In 1993, he was promoted as Branch Head Guard.[2] On November 13, 1998, Ms. Remy Tumamao, petitioner’s roving personnel, caught respondent without headgear and smoking while on duty. Respondent explained his side in a Memorandum[3] dated November 14, 1998, thus: “This is in response with the inspection done last Friday November 13, 1998 at 10:30AM by Ms. Remy Tumamao of the Chief security office. I was not able to use my perching cap at that time because my hair is still wet. I was in complete attire before the incident but when I received an emergency call from our armor crew who, on that time has a cash transfer to Central Bank Tuguegarao Cagayan, I was informed that our armor car had a mechanical trouble. So even if it was raining, I called our Mechanic immediately residing beside our branch. Thank you for your kind consideration on this matter. SG. PERCIVAL AGUINALDO HEAD GUARD” On November 23, 1998, petitioner security agency issued a memorandum to respondent directing him to report to the FEBTC main office in Malabon City for investigation.[4] The following day, or on November 24, petitioner issued a Relief Order[5] ordering him to report to its head office for further clarification of his status, thus: “(Y)ou are hereby relieved from your post at FEBTC Br., Santiago City effective 24 November 1998. Report to PISACORP head Office for further clarification of your status. By order: x x x” Also on November 24, Antonio B. Banastas, Jr., Branch Head of FEBTC, Santiago City, wrote a Memorandum[6] to petitioner requesting the retention of respondent in the same office, thus: “MEMORANDUM: FOR: COL. MARCIAL CONACO, JR. ASSISTANT VICE PRESIDENT SECURITY OFFICE WAIVER OF RELIEVE ORDER TO SECURITY GUARD PERCIVAL AGUINALDO

S U B J E C T:

-------------------------------------------------------------------------------------This is relative to the spot inspection report of Ms. Remy Tumamao on November 13, 1998.

On the morning of November 13, 1998 our armoured car was on its way to deliver cash to Central Bank in Tuguegarao. At around 10:00 A.M., our armoured car personnel called up Mr. Aguinaldo and informed him that they incurred a mechanical trouble. Upon receiving the message, Mr. Aguinaldo went out to fetch or call a mechanic. Since it was raining on that morning, he did not wear his perching cap because his hair was still wet. It was during that moment when Ms. Tumamao saw him in the branch. In view of the degree of offense committed by our Security Guard, he should be given a written reprimand and not relieved from his post since this was his first offense. Mr. Aguinaldo has been with the branch for ten years, he is a person of good moral character and has performed his job above our expectations. In view of this, I would like to seek your approval for the retention of Mr. Aguinaldo. Thank you. (Sgd.) ANTONIO B. BANASTAS, JR. BRANCH HEAD” However, petitioner, in its letter[7] dated December 2, 1998, denied the above request, thus: “Please be advised that your request of retention at your former post (FEBTC Santiago) was denied. In view hereof, please report to Supervisor Lary Lopez for reassignment while you are reserved to the new bank branch that will soon to operate at Santiago. Please be guided accordingly. PEPITO C. NOVERAS Operations Officer” Forthwith, petitioner assigned respondent temporarily to FEBTC Malabon City Branch pending the opening of another Branch in Santiago City where according to said petitioner, he will be re-assigned. This prompted respondent to file with the Office of the Labor Arbiter, Tuguegarao, Cagayan a complaint for illegal dismissal and non-payment of separation pay with damages against petitioner. On November 3, 1999, Executive Labor Arbiter Ricardo Decision[8] dismissing respondent’s complaint for lack of merit. N. Olairez rendered a

On appeal, the National Labor Relations Commission (NLRC) rendered its Decision[9] dated March 29, 2000 reversing the appealed Decision, thus: “Did the Executive Labor Arbiter err in not ruling that the complainant was illegally dismissed from employment? Based on the memorandum dated December 2, 1998, respondent PISAC did not put the complainant on a floating status. Rather, it gave him a ‘new assignment’ as a reserved (security guard) for the new bank branch that was supposedly going to operate soon in Santiago. Clearly, what was given to him was a mockery of an assignment. There was no date given for his assumption of his ‘new’ post. There was no assurance that it would ever be realized. In fact, there is not even a single reference to the above-mentioned ‘new agreement’ in any of the pleadings of respondent PISAC. Respondent PISAC simply ignored every reference to the memorandum dated December 2, 1998 that the complainant made in his own pleadings. Respondent PISAC’s act of giving the complainant an assignment in the future amounts to an indefinite suspension. It is settled that an indefinite suspension is tantamount to a constructive

dismissal (Oriental Mindoro Electric Cooperative, Inc. vs. NLRC (246 SCRA 294). Under these circumstances, the complainant would ordinarily be entitled to reinstatement with full backwages (Article 279, Labor Code). However, since he prayed for separation pay in the complaint, he should be awarded separation pay in lieu of reinstatement and of course, full backwages. WHEREFORE, the decision is hereby REVERSED. Respondent Philippine Industrial Security Agency Corp. is hereby ordered to pay the complainant his full backwages from November 24, 1998 to the date of the finality of this decision and separation pay amounting to P59,400.00 (P5,400 x 11 years = P59,400.00). SO ORDERED.” On May 19, 2000, petitioner filed a motion for reconsideration. Surprisingly, it was granted by the NLRC in its Decision[10] dated August 29, 2000 thus: “WHEREFORE, the instant Motion for Reconsideration is GRANTED. Our Decision of 29 March 2000 is hereby RECONSIDERED and SET ASIDE. The 3 November 1999 Decision of Executive Labor Arbiter Ricardo N. Olairez dismissing the case is hereby REINSTATED. SO ORDERED.” Respondent then filed a motion for reconsideration but was denied by the NLRC in its Resolution[11] dated December 7, 2000. Hence, respondent filed with the Court of Appeals a petition for c ertiorari[12] under Rule 65 of the 1997 Rules of Civil Procedure, as amended. On May 31, 2001, the Appellate Court rendered its Decision [13] granting the petition and setting aside the Decision of the NLRC. In finding for respondent, the Appellate Court held: “The petition is impressed with merit. Petitioner claims that his reassignment to another post that was not yet open amounted to constructive dismissal. We agree. A constructive dismissal is a quitting because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay (Philippine Japan Active Carbon Corp. vs. NLRC, G.R. No. 83239, March 8, 1989). As further explained in Jarcia vs. NLRC (266 SCRA 97 [1997]): ‘In case of constructive dismissal, the employer has the burden of proving that the transfer and demotion of an employee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Failure of the employer to overcome this burden of proof, the employee’s demotion shall no doubt be tantamount to unlawful constructive dismissal.’ In the case at bar, petitioner was validly relieved from his post for violating a company policy. The petitioner did not contest this violation as he in fact admitted to committing it during the investigation, though with a valid and plausible explanation. What tarnishes the whole scene is the fact that after petitioner was relieved from his old post in Santiago City, Isabela, he was temporarily reassigned to the head office of private respondent PISA in Malabon, Metro Manila pending the opening of another bank in Isabela (Rollo, p. 60). This act is unfair and downright oppressive considering that petitioner, along with his family, is a long-time resident of Santiago City, Isabela. The transfer would mean that petitioner would be away from his family or that he would bring his

entire family to Manila entailing expenses. Further, it remains unclear if petitioner would be reassigned back to Isabela, as the said plan remains ambiguous for it is not clearly shown when the said reassignment would take place. In the Notice given to petitioner, it is stated that his reassignment to Manila is good for 179 days and maybe renewed after its expiration. We cannot give evidentiary weight to private respondent PISA’s claim that petitioner will be reassigned back to another branch in Isabela as no evidence to that effect was offered . While it is true that an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, layoff of workers and the discipline, dismissal and recall of workers (San Miguel Brewery Sales vs. Ople, G.R. No. 53515, February 8, 1989), and this right to transfer employees forms part of management prerogatives, the employee’s transfer should not be unreasonable, nor inconvenient, nor prejudicial to him. It should not involve a demotion in rank or diminution of his salaries, benefits and other privileges, as to constitute constructive dismissal (PT&T vs. Laplana, G.R. No. 76645, July 23, 1991). Hence, petitioner cannot be faulted for filing an illegal dismissal case. While the case does not directly fall under the traditional concept of ‘illegal dismissal’ case, We hold that it partakes of the nature of constructive dismissal. In Philippine Advertising Counselors, Inc. vs. NLRC, 263 SCRA 395 (1996) and Masagana Concrete Products vs. NLRC, 313 SCRA 576 (1999), the Supreme Court keenly made this observation, to wit: ‘Constructive dismissal, however, does not always involve such kinds of diminution, an act of clear discrimination, insensibility, or disdain by an employer may become so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.’ As explained earlier, this Court is fully aware of the right of management to transfer its employees as part of management prerogative. But like all rights, the same cannot be exercised with unbridled discretion. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic element of justice and fair play. However, private respondent Far East Bank cannot be held liable for petitioner’s backwages as it is not the employer of the petitioner. WHEREFORE, the petition is GRANTED. The NLRC Decision dated August 29, 2000 is hereby SET ASIDE. Private respondent PISA is hereby ordered to REINSTATE petitioner to his former position without loss of seniority rights and privileges and to PAY his backwages computed from the time the same were withheld from him.”[14] (Emphasis supplied) Petitioner filed a motion for reconsideration but was denied in a Resolution dated September 11, 2001.[15] Hence, the present recourse, petitioner ascribing to the Court of Appeals the following assignments of error: 1. The questioned Decision and Resolution of the Court of Appeals “are manifestly not in accord with law and established jurisprudence;” and 2. The petition is “dismissible outright for having been filed in violation of the Rule against forum shopping.”[16] Petitioner primarily contends that respondent’s re-assignment to Malabon City is only temporary, otherwise, he would have been placed in a “floating status.” Moreover, such re -assignment is a valid exercise of management prerogative done in good faith and with valid reason.

Respondent counters that the Court of Appeals correctly ruled that his re-assignment is “unfair and downright oppressive” and constitutes constructive dismissal. The “floating status” anticipated by petitioner is just imaginary and without any basis, as the move to transfer him to a new or other post is completely unnecessary. Besides, Mr. Banastas, strongly recommended his retention in FEBTC-Santiago City considering that he has been with the Santiago City Branch for ten years and has performed his job efficiently.[17] His transfer to Malabon City is tantamount to constructive dismissal. On the issue of forum-shopping, respondent contends that he filed only one petition for certiorari and that is with the Court of Appeals, docketed therein as CA-G.R. SP No. 62704. For his part, the Solicitor General submits that the Court of Appeals did not err in giving due course to respondent’s petition. First, the issue raised by petitioner is factual which necessarily calls for an examination of the evidence and is, therefore, not reviewable in a petition for certiorari. Second, there is no evidence on record showing that respondent indeed filed another petition for review. The petition must fail. Settled is the rule that findings of facts of the Court of Appeals are accorded respect, even finality, and will not be disturbed especially where such findings are supported by substantial evidence.[18] One of the exceptions, however, is when there is a variance between the findings of the NLRC and the Court of Appeals, as in this case. Jurisprudence recognizes the exercise of management prerogative. For this reason, courts often decline to interfere in legitimate business decisions of employers. [19] In fact, labor laws discourage interference in employers’ judgment concerning the conduct of their business.[20] In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to another – provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.[21] By transferring respondent to the Malabon City FEBTC Branch, petitioner resorted to constructive dismissal. A transfer amounts to constructive dismissal when the transfer isunreasonable, unlikely, inconvenient, impossible, or prejudicial to the employee,[22] as in this case. It is defined as an involuntary resignation resorted when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.[23] In constructive dismissal, the employer has the burden of proving that the transfer and demotion of an employee are for just and valid grounds, such as genuine business necessity. [24] The employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of salary and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive dismissal.[25] In the case at bar, petitioner failed to overcome this burden of proof. Foremost, respondent explained that he was in complete attire that morning. However, the bank personnel informed him that the FEBTC armor car, on its way to deliver cash to the Central Bank Office in Tuguegarao, incurred mechanical trouble. So he immediately went outside to fetch a mechanic. It was then raining, hence, he got wet – the reason why he was not wearing his perching cap. Under the circumstances, his failure to wear his perching cap is justified. Thus, he should not be held liable for any violation of office regulations which warrants his transfer to another work place. Second, the letter of Mr. Banastas recommending the retention of respondent in the FEBTC Santiago City Branch negates petitioner’s reasons in re-assigning the latter to the FEBTC Malabon City Branch. Service-oriented enterprises, such as petitioner's business of providing security services, generally adhere to the business adage that "the customer or client is always right". [26] Here, petitioner disregarded such aphorism.

Petitioner’s act manifests insensibility to the welfare of respondent and his family. Obviously, his transfer to Malabon City will be prejudicial to them economically and emotionally. Indeed, , petitioner’s action is in defiance of basic due process and fair play in employment relations. [27] Third, petitioner’s excuse in re-assigning respondent to Malabon City, pending the opening of another FEBTC Branch in Santiago City is unreasonable. The Appellate Court is correct in holding that there is no assurance that a new FEBTC Branch will be opened in Santiago City. In Blue Dairy Corporation vs. NLRC,[28] we ruled that: “x x x the managerial prerogative to transfer personnel must not be exercised with grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. x x x” WHEREFORE, the petition is hereby DENIED. The assailed Decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO ORDERED.

Superstar Security Agency vs NLRC This petition for review on certiorari seeks to reverse the decision of the public respondent National Labor Relations Commission setting aside the decision of the Labor Arbiter and ordering the reinstatement of private respondent with limited backwages of one (1) year. This is an opportune time to stress once again that the appropriate remedy to assail the decisions of the National Labor Relations Commission is through a petition forcertiorari under Rule 65 not Rule 45 of the Rules of Court. However, in the interest of justice, We shall treat this petition as a special civil action for certiorari (De Asis, et al. v. NLRC, G.R. No. 82478, September 7, 1989). The antecedent facts are as follows: On June 24, 1981, Filomena Hermosa (Hermosa, for short) was hired by petitioner Superstar Security Agency (Agency, for short) as a Security Guard with a daily salary of P37.00 and an emergency cost of living allowance of P510.00 per month. She was assigned to different detachments in premises owned by the Agency's clients such as the Supergarment Malugay Yakal (SMY) or Rustan Commercial Corporation Warehouse, Rustan Group of Companies consisting of Rustan Commercial Corporation (Cubao and Makati Detachments), Tourist Duty Free Shop (FTI Detachment, Hyatt, Hilton and Sheraton Detachments), and Rustan Supermarket Warehouse (Rockefeller Detachment). On February 1, 1985, the Agency placed Hermosa on a temporary "off-detail." On March 5, 1985, Hermosa filed a complaint for illegal dismissal. She claimed that she was unceremoniously dismissed on suspicion that she was the author of an anonymous report about the irregularities committed by her fellow lady security guards; that it was this precise reason why she was called to the headquarters by the Agency's Personnel Supervisor, Rafael Fermo; that, thereafter, Fermo threatened and directed her to keep any information regarding the matter to herself; that she was instructed not to report for duty at SMY effective February 1, 1985 as she would be given a new assignment; that she did as she was told but no new assignment came despite repeated follow-ups; and that instead, the Agency informed her that the cause of her temporary "off-detail" was the cost-cutting program of the Rustan Group of Companies and the refusal of Agency's clients to accept her allegedly due to poor performance, and lack of elementary courtesy and tact. Finally, Hermosa averted that she was denied due process in that she was neither informed of the alleged complaints against her nor afforded the opportunity to explain her side. Petitioners, on the other hand, claimed that Hermosa was relieved of her SMY post due to the costcutting program of its clients; that while she was on temporary "off-detail" since February 1, 1985, the Agency continued to look for an available assignment for her with the other detachments; that, however, the respective Security Directors of the said detachments signified their unwillingness to accept her because of her poor performance and undesirable conduct and behavior (Exhs. 6 to 13); that the Agency did not dismiss her at all; that Mr. Fermo did not receive any anonymous report of any irregularity committed by some security guards, hence, there was no basis for the supposed threat and instruction to complainant to be silent; that the Agency usually welcomes any report, if it exists, regarding the behavior of its personnel by conducting an inquiry thereon; that the Agency is committed to maintain the trust placed upon it by its clients as well as heed the latter's demands for good service; and that the complainant has been previously warned and reprimanded for breach or violation of the Agency's rules on discipline (Exh. 16 to 22). On April 7, 1986, the Labor Arbiter rendered a decision, to wit: WHEREFORE, pursuant to the above premises, the respondent Superstar Security Agency, Inc. is hereby ordered to pay the complainant the amount of P3,848.00 by way of separation pay. SO ORDERED. (Rollo, p. 26)

On appeal to the respondent National Labor Relations Commission, the aforesaid decision was set aside and a decision favorable to complainant was issued, as follows: WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE, and another one entered, ordering the respondents to reinstate the complainant to her former position without loss of seniority rights and other related benefits but with a limited backwages of one (1) year without deduction and qualification. SO ORDERED. (Rollo, pp. 20-21) Hence, this recourse. The sole issue presented for resolution is whether or not the petitioners are guilty of illegal dismissal (Memorandum of Petitioners, p. 6; Rollo, p. 71). We resolve the issue in the negative. The charge of illegal dismissal was prematurely filed. The records show that a month after Hermosa was placed on a temporary "off-detail," she readily filed a complaint against the petitioners on the presumption that her services were already terminated. Temporary "off-detail" is not equivalent to dismissal. In security parlance, it means waiting to be posted. (TSN, January 14, 1980, p. 35) It is a recognized fact that security guards employed in a security agency may be temporarily sidelined as their assignments primarily depend on the contracts entered into by the agency with third parties (Agro Commercial Security Agencies, Inc. v. NLRC, et al., G.R. Nos. 82823-24, July 31, 1989). However, it must be emphasized that such temporary inactivity should continue only for six months. Otherwise the security agency concerned could be liable for constructive dismissal under Article 287 (now Article 286) of the Labor Code (see Agro case, supra). We note that Hermosa's "off-detail" from SMY was due not to petitioners' machination but to a previous request of SMY which was reiterated by the management on January 29, 1985 (Exhibit "22," Records, p. 69). Moreover, the defenses raised by the petitioners, namely, their clients' cost reduction program and their refusal to accept the complainant's services do not appear to Us as a "scheme to camouflage (Hermosa's) illegal dismissal . . ." (NLRC decision, Records, p. 201). We simply cannot ignore the reality of the situation obtaining in this case. In the business world, companies which offer contracts for services cater to the whims and wishes of clients whether the same are reasonable or not. Clients are not expected to explain the reason for their demands while these companies are not only expected but also are bound to comply with their clients' directives. In the case at bar, We do not find it unusual for clients to resort to a cost-cutting program in view of the prevailing economic condition and then to manifest their preferences of people they want to work with in their establishments. Hermosa maintains that her temporary "off-detail" is a mere cover-up since petitioners failed to present evidence to support their clients' cost-cutting program. We do not think so. Petitioners are neither involved in their clients' businesses nor do they exercise control over the latter's business operations. They only provide security to their clients' establishments. Consequently, the Agency has no right at all to demand the reasons for their clients' action. Faced with its clients' negative reaction to Hermosa's detail, petitioners are practically powerless to disregard the position of its clients. To do otherwise would mean an end to petitioners' business relationship with them. Considering that it was only Hermosa among petitioners' employees who was affected by the clients' memoranda, it would be sheer foolishness for petitioners to press for Hermosa's detail to the detriment of its business. Justice, fairness and due process demand that an employer should not be penalized for situations where it had no participation or control (see M.F Violago Oiler Tank Trucks v. The National Labor Relations Commission, et. al., G.R. Nos. 56950-51, September 30, 1982, 117 SCRA 544 and A. Marquez v. Leogardo, Jr., G.R. No. 63227, March 15, 1984, 128 SCRA 244). Hermosa further argues that the clients' memoranda refusing her services are self-serving pieces of evidence since they contained a general statement of "undesirable conduct and behavior" which were secured after the complaint was filed. We are unconvinced. It must be borne in mind that at this point

Hermosa was still placed on temporary "off-detail." The fact that the clients' memoranda came after the complaint bolsters the petitioners' stance that they were indeed looking for an available post for Hermosa but their clients formally turned down its request. Such refusal was not without basis. The offer of exhibits of petitioners before the Labor Arbiter reveals reports on Hermosa's past misconduct like: (1) inspecting a bag containing purchased items of a Tourist Duty-Free Shop (TDFS) customer; flaring up and talking in a loud voice upon being informed that a customer without plane ticket was allowed to, purchase (TDFS) goods, both violative of (TDFS) rules and regulations; (2) reading magazines for sale and comics inside the store; (3) shouting at an employee of a client; (4) uttering unnecessary remarks while on duty which triggered a misunderstanding; and (5) wearing sexy shoes (sic) with an opening at the toes instead of the usual authorized shoes for lady security guards (Exh. "16," "17," "18", and "l 9," pp. 63-66). In the above infractions, the clients' respective Security Directors pursuant to an established practice took charge of the investigation and copies of the memorandum of the action taken thereon were furnished Hermosa and the Agency. Thus, the general statement of undesirable conduct and behavior need not be spelled out since petitioners already had information of Hermosa's previous misdemeanor. Hermosa denies that she committed the foregoing acts of misconduct. She claims that the "evidence were planned and fabricated to lend a semblance of legality to the cause of (her) dismissal." (memorandum of Petitioners, Rollo, p. 87). Hermosa's supposition is untenable. A study of the records reveals that other than her statement of denial, Hermosa did not present any corroborative evidence. Upon the other hand, the subject memoranda contained detailed reports on the incidents which would be difficult for petitioners to concoct. In the absence of a contrary evidence, the said memoranda are credible. Considering, therefore, the circumstances of this case, We are more inclined to sustain the Labor Arbiter's award of separation pay than reinstatement. As the Labor Arbiter aptly puts it: . . . (I)f by reason of complainant's justified placement under temporary off-detail no dismissal then could be spoken of, yet, by reason of subsequent events whereby she was rejected by the other detachments of the respondent Agency, it could be said that her continuing temporary off-detail has already become a permanent one. For this reason, there is a need to extend to the complainant separation pay equivalent to one (1) month pay for every year of service. (Decision of the Labor Arbiter, Rollo, p. 26) ACCORDINGLY, the decision of the NLRC dated October 30, 1987 is SET ASIDE and the decision of the Labor Arbiter dated April 7, 1986 is hereby REINSTATED. No costs. SO ORDERED.

Soliman Security Services vs Teresita Soliman Respondent Eduardo Valenzuela, a security guard, was a regular employee of petitioner Soliman Security Services assigned at the BPI-Family Bank, Pasay City. On 09 March 1995, he received a memorandum from petitioners relieving him from his post at the bank, said to be upon the latter’s request, and requiring him to report to the security agency for reassignment. The following month, or on 07 April 1995, respondent filed a complaint for illegal dismissal on the ground that his services were terminated without a valid cause and that, during his tenure at the bank, he was not paid his overtime pay, 13th month pay, and premium pay for services rendered during holidays and rest days. He averred that, after receiving the memorandum of 09 March 1995, he kept on reporting to the office of petitioners for reassignment but, except for a brief stint in another post lasting for no more than a week, he was put on a “floating” status.

Petitioners contended that the relief of respondent from his post, made upon request of the client, was merely temporary and that respondent had been offered a new post but the latter refused to accept it. Petitioners argued that respondent’s floating status for barely 29 days did not constitute constructive dismissal. On 31 July 1995, the Labor Arbiter, Ariel Cadiente Santos, arrived at a decision holding petitioners guilty of constructive dismissal and ordering the reinstatement of the complainant to his former position with full backwages from the date of his “dismissal” until his ac tual reinstatement; directing the Research and Information Unit to compute the various monetary benefits awarded to the complainant; and adjudging the payment, by way of attorney’s fees, of ten percent (10%) of all sums owing to the complainant. On 16 October 1998, petitioners filed an appeal to the National Labor Relations Commission (NLRC). On 11 November 1998, the NLRC issued an order directing petitioners to submit an affidavit to the effect that their appeal bond was genuine and that it would be in force and effect until the final disposition of the case. In his reply memorandum, dated 28 November 1998, respondent, asseverating that petitioners failed to deposit the required bond for the appeal, sought the appeal to be declared as not having been validly perfected. On 19 January 1999, petitioners submitted a manifestation and affidavit in compliance with the 11th November 1998 order of the NLRC.[1]Apparently satisfied, the NLRC, on 30 April 1999, gave due course to the appeal and rendered the presently assailed decision, reversing that of the Labor Arbiter, to wit: ‘WHEREFORE, the decision appealed from is hereby SET ASIDE. However, respondent *before the NLRC] is hereby ordered to pay complainant separation pay computed at one-half (1/2) month for every year of service, reckoned from date of employment on October 9, 1990 up to September 9, 1995, the date the complainant should have been redeployed.”[2] A motion for reconsideration, filed by herein private respondent Valenzuela, was denied by the NLRC. Valenzuela forthwith brought the matter up to the Court of Appeals. On the thesis that the only issue interposed was whether or not the NLRC committed grave abuse of discretion when it took cognizance of the appeal and reversed the decision of the Labor Arbiter despite the failure of herein petitioners to validly post the appeal bond, the appellate court responded in the affirmative, set aside the assailed decision of the NLRC and reinstated that of the Labor Arbiter. A motion to reconsider the decision was denied. In the instant recourse before this Court, petitioners claim that the Court of Appeals (Eleventh Division) has committed grave abuse of discretion amounting to lack or excess of jurisdiction in declaring petitioners to have failed in perfecting their appeal with the NLRC. This Court finds merit in the petition. Private respondent would posit that the appeal of petitioners to the NLRC should be considered to have been made on 19 January 1999 (when petitioner submitted, pursuant to the NLRC order, a statement under oath to the effect that the surety bond it had posted was genuine and confirmed it to be in effect until the final termination of the case) which was beyond the ten-day period for perfecting an appeal. The records before the Court would show, however, that an appeal bond was posted with the NLRC at the same time that the appeal memorandum of petitioners was filed on 16 October 1998. A certified true copy of the appeal bond [3] would indicate that it was received by the Commission on 16 October 1998, the date reflected by the stamp-mark thereon. The surety bond issued by the Philippine Charter Insurance Corporation bore the date of 14 October 1998 or two days before the appeal memorandum was seasonably filed on 16 October 1998. The Order,[4] dated 11 November 1998, of the NLRC categorically stated that “records *would+ disclose that the instant appeal [was] accompanied by a surety bond, as the Decision sought to be appealed involved a monetary award.” The NLRC, in fact, ordered petitioner to submit an affidavit to confirm that its appeal bond was genuine and would be in force and effect until the final disposition of the case. The

Commission’s declaration that the appeal was accompanied by a surety bond indicated that there had been compliance with Article 223[5] of the Labor Code. An appeal to the NLRC is perfected once an appellant files the memorandum of appeal, pays the required appeal fee and, where an employer appeals and a monetary award is involved, the latter posts an appeal bond or submits a surety bond issued by a reputable bonding company. [6] In line with the desired objective of labor laws to have controversies promptly resolved on their merits, the requirements for perfecting appeals are given liberal interpretation and construction.[7] The only issue on the merits of the case is whether or not private respondent should be deemed constructively dismissed by petitioner for having been placed on “floating status,” i.e., with no reassignment, for a period of 29 days. The question posed is not new. In the case of Superstar Security Agency, Inc., vs. NLRC,[8] this Court, addressing a similar issue, has said: “x x x The charge of illegal dismissal was prematurely filed. The records show that a month after Hermosa was placed on a temporary ‘off-detail,’ she readily filed a complaint against the petitioners on the presumption that her services were already terminated. Temporary ‘off -detail’ is not equivalent to dismissal. In security parlance, it means waiting to be posted. It is a recognized fact that security guards employed in a security agency may be temporarily sidelined as their assignments primarily depend on the contracts entered into by the agency with third parties (Agro Commercial Security Agencies, Inc. vs. NLRC, et al., G.R. Nos. 82823-24, 31 July 1989). However, it must be emphasized that such temporary inactivity should continue only for six months. Otherwise, the security agency concerned could be liable for constructive dismissal.”[9] Constructive dismissal exists when an act of clear discrimination, insensibility or disdain, on the part of an employer has become so unbearable as to leave an employee with no choice but to forego continued employment.[10] The temporary “off-detail” of respondent Valenzuela is not such a case. WHEREFORE, the instant petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE and the decision of the National Labor Relations Commission in NCR CN. 0402620-95 is REINSTATED. No costs. SO ORDERED.

G.R. No. 87051 February 7, 1991 ESCO HALE SHOE COMPANY, INC. vs. THE NATIONAL LABOR RELATIONS COMMISSION This is a petition for review on certiorari of a decision of the respondent National Labor Relations Commission which affirmed the respondent Labor Arbiter's decision ordering the petitioner Esco Hale Shoe Company, Inc. to pay private respondent Casimira B. Pedrosa the total amount of P23,534.83 representing retirement benefits, 13th month pay for 1986 and unpaid vacation/sick leave benefits. It appears that private respondent had been employed by the petitioner for forty nine (49) years commencing in 1937 as a shoe box maker until 1986 as a heel pad attacher. In 1982, having reached the age of sixty five (65), private respondent applied for retirement with the Social Security Commission and she received retirement benefits therefrom. Although she had already retired, private respondent continued working for the petitioner until November 1, 1986 when she was excluded by the petitioner from the regular work schedule. Private respondent, thereafter, demanded that she be retired from employment and/or be paid separation pay, but the petitioner refused despite repeated demands. Thus, on February 12, 1987, private respondent filed a complaint against the petitioner for violation of PD 851 and for payment of retirement benefits and/or separation pay and other claims. As defense, the petitioner argued that the only reason for the filing of the complaint is private respondent's baseless demand to be retired anew; that the petitioner has no separate retirement nor private benefit plan and all its employees, including the private respondent, are reported to the SSS for coverage; that private respondent had effectively retired from the petitioner in 1982 when she received retirement benefits from the SSS; and that all the other claims of private respondent, except vacation leave pay for the years 1985 and 1986 in the amount of P1,008.00, had been paid by the petitioner to her. Finding the employer's obligation to pay retirement benefits to its retiring employee separate and distinct from that of the SSS, the respondent Labor Arbiter rendered a decision, the dispositive portion of which reads: WHEREFORE, premises considered, respondent Esco Hale Shoe Company, Inc. and/or Elmer H. Cobb, as Owner and President, are hereby ordered to pay complainant Casimira B. Pedrosa the total amount of TWENTY THREE THOUSAND FIVE HUNDRED THIRTY FOUR PESOS AND EIGHTY-THREE CENTAVOS (P23,534.83) which represents her 13th month pay for 1986, unpaid vacation/sick leave benefits and retirement benefits, by depositing the same with this Office within fifteen (15) days from receipt hereof. Failure to comply within the period herein prescribed, a writ of execution shall automatically issue to satisfy this Decision. SO ORDERED. (pp. 43-44, Rollo) In so ruling, said respondent Labor Arbiter relied on Sections 13 and 14 of Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, which provide: Section 13. Retirement. –– In the absence of any collective agreement or other applicable agreement concerning terms and conditions of employment which provides for retirement at an older age, an employee may be retired upon reaching the age of sixty (60) years. Section 14. Retirement benefits. –– (a) An employee who is retired pursuant to a bonafide retirement plan or in accordance with the applicable individual or collective

agreement or established employer policy shall be entitled to all the retirement benefits provided therein or to termination pay equivalent to at least one month salary, or to one-half month salary for every year of service, whichever is higher, a fraction of at least (6) months being considered as one whole year. (emphasis supplied) Said decision was affirmed by the respondent Commission on appeal. In this petition, the petitioner contends that there is no basis for twice granting retirement benefits to the private respondent, who is admittedly a retired employee and a pensioner of the SSS. Considering that it is admitted by both parties that the petitioner has no collective bargaining agreement nor bona-fide retirement plan, the aforementioned provisions of the Implementing Rules are inapplicable to the instant case. Said provisions merely recognize and qualify the retirement benefits a retiring employee is entitled to receive, in case there is a separate retirement or private benefit plan. In fact, Article 287, the law being implemented by the aforesaid sections states: Art. 287. Retirement. –– any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining or other agreement. (Section 287, Labor Code, as amended) However, since private respondent had worked with the petitioner for such a long time, We deem it just and equitable to grant her separation pay as she is retiring from the service of the petitioner ten (10) years beyond the statutory age of sixty 60). We uphold the findings of the Labor Arbiter as affirmed by the respondent Commission with regard to the grant of separation pay, to wit: Anent the issue of 13th month pay, respondents, either in their position paper or in the affidavit of respondent Cobb, have been mum, an indication that complainant was not paid. As to the claim for vacation and sick leave benefits, since there is an admission by the respondents that complainant is entitled to the amount of P1,008.00 for the years 1985 and 1986 and are ready and willing to pay any time, the same need not have to be passed upon. In computing the separation or retirement benefits of complainants, we have to consider the period when the country was at war with Japan and also the occupation years which started in December, 1941 up to 1945. The separation benefits, therefore, have to be based on forty-five (45) years instead of forty-nine years as claimed and computed on the basis of the minimum wage rate in 1986 at P37.00 a day when complainant was separated from work. And being a daily paid employee, the computation has to be computed at 13 days per year of service, as follows: P37.00 x 13/days = P481.00/mo. P481.00 x 45 years = P21,645.00 or a total of Twenty One Thousand Six Hundred Forty-Five Pesos (P21,645.00). In fine, the total benefits to be received by complainant is P23,534.83 representing her 13

month pay for 1986, the unpaid vacation/sick leave benefits and retirement pay (p. 72, Rollo) PREMISES CONSIDERED, the petition is hereby DISMISSED. SO ORDERED.

G.R. No. 70615 October 28, 1986 VIRGILIO CALLANTA vs. CARNATION PHILIPPINES, INC. The issue raised in this petition for certiorari is whether or not an action for illegal dismissal prescribes in three [3] years pursuant to Articles 291 and 292 of the Labor Code which provide: Art. 291. Offenses.— Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three [3] years. xxx xxx xxx Art. 292. Money Claims. — All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three [3] years from the time the cause of action accrued; otherwise, they shall be forever barred. xxx xxx xxx Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc. [Carnation, for brevity] in January 1974 as a salesman in the Agusan del Sur area. Five [51 years later or on June 1, 1979, respondent Carnation filed with the Regional Office No. X of the Ministry of Labor and Employment [MOLE], an application for clearance to terminate the employment of Virgilio Callanta on the alleged grounds of serious misconduct and misappropriation of company funds amounting to P12,000.00, more or less. Upon approval on June 26, 1979 by MOLE Regional Director Felizardo G. Baterbonia, of said clearance application, petitioner Virgilio Callanta's employment with Carnation was terminated effective June 1, 1979. On July 5, 1982, Virgilio Callanta filed with the MOLE, Regional Office No. X, a complaint for illegal dismissal with claims for reinstatement, backwages, and damages against respondent Carnation. In its position paper dated October 5, 1982, respondent Carnation put in issue the timeliness of petitioner's complaint alleging that the same is barred by prescription for having been filed more than three [3] years after the date of Callanta's dismissal. On March 24, 1983, Labor Arbiter Pedro C. Ramos rendered a decision finding the termination of Callanta's employment to be without valid cause. Respondent Carnation was therefore ordered to reinstate Virgilio Callanta to his former position with backwages of one [1] year without qualification including all fringe benefits provided for by law and company policy, within ten [10] days from receipt of the decision. It was likewise provided that failure on the part of respondent to comply with the decision shall entitle complainant to full backwages and all fringe benefits without loss of seniority rights. On April 18, 1983, respondent Carnation appealed to respondent National Labor Relations Commission [NLRC] which in a decision dated February 25, 1985, 1 set aside the decision of the Labor Arbiter. It declared the complaint for illegal dismissal filed by Virgilio Callanta to have already prescribed. Thus: Records show that Virgilio Callanta was dismissed from his employment with respondent company effective June 1, 1979; and that on 5 July 1982, he filed the instant complaint against respondent for: Unlawful Dismissal with Backwages, etc. The provisions of the Labor Code applicable are:

Art. 291. Offenses. — Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall prescribe in three [3] years. Art. 292. Money claims. — All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three [3] years from the time the cause of action accrued; otherwise, they shall be forever barred. Obviously, therefore, the causes of action, i.e., "Unlawful Dismissal" and "Backwages, etc." have already prescribed, the complaint therefore having been filed beyond the three-year period from accrual date. With this finding, there is no need to discuss the other issues raised in the appeal. WHEREFORE, in view of the foregoing, the Decision appealed from is hereby SET ASIDE and another one entered, dismissing the complaint. SO ORDERED. Hence, this petition, which We gave due course in the resolution dated September 18, 1985. 2 Petitioner contends that since the Labor Code is silent as to the prescriptive period of an action for illegal dismissal with claims for reinstatement, backwages and damages, the applicable law, by way of supplement, is Article 1146 of the New Civil Code which provides a four [4]-year prescriptive period for an action predicated upon "an injury to the rights of the plaintiff" considering that an action for illegal dismissal is neither a "penal offense" nor a mere "money claim," as contemplated under Articles 291 and 292, respectively, of the Labor Code. Petitioner further claims that an action for illegal dismissal is a more serious violation of the rights of an employee as it deprives him of his means of livelihood; thus, it should correspondingly have a prescriptive period longer than the three 13] years provided for in "money claims." Public respondent, on the other hand, counters with the arguments that a case for illegal dismissal falls under the general category of "offenses penalized under this Code and the rules and regulations pursuant thereto" provided under Article 291 or a money claim under Article 292, so that petitioner's complaint for illegal dismissal filed on July 5, 1982, or three [3] years, one [1] month and five [5] days after his alleged dismissal on June 1, 1979, was filed beyond the three-year prescriptive period as provided under Articles 291 and 292 of the Labor Code, hence, barred by prescription; that while it is admittedly a more serious offense as it involves an employee's means of livelihood, there is no logic in assuming that it has a longer prescriptive period, as naturally, one who is truly aggrieved would immediately seek the redress of his grievance; that assuming arguendo that the law does not provide for a prescriptive period for the enforcement of petitioner's right, it is nevertheless beyond dispute that the said right has already lapsed into a stale demand; and that considering the seriousness of the act committed by petitioner, private respondent was justified in terminating the employment. We find for petitioner. Verily, the dismissal without just cause of an employee from his employment constitutes a violation of the Labor Code and its implementing rules and regulations. Such violation, however, does not amount to an "offense" as understood under Article 291 of the Labor Code. In its broad sense, an offense is an illegal act which does not amount to a crime as defined in the penal law, but which by statute carries with it a penalty similar to those imposed by law for the punishment of a crime. 3 It is in this sense that a general penalty clause is provided under Article 289 of the Labor Code which provides that "... any violation of the provisions of this code declared to be unlawful or penal in nature shall be punished with a fine of not less than One Thousand Pesos [P1,000.00] nor more than Ten Thousand Pesos [10,000.00], or imprisonment of not less than three [3] months nor more than three [3] years, or both such fine and imprisonment at the discretion of the court." [Emphasis supplied.]

The confusion arises over the use of the term "illegal dismissal" which creates the impression that termination of an employment without just cause constitutes an offense. It must be noted, however that unlike in cases of commission of any of the probihited activities during strikes or lockouts under Article 265, unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities under Article 38, among others, which the Code itself declares to be unlawful, termination of an employment without just or valid cause is not categorized as an unlawful practice. Besides, the reliefs principally sought by an employee who was illegally dismissed from his employment are reinstatement to his former position without loss of seniority rights and privileges, if any, backwages and damages, in case there is bad faith in his dismissal. As an affirmative relief, reinstatement may be ordered, with or without backwages. While ordinarily, reinstatement is a concomitant of backwages, the two are not necessarily complements, nor is the award of one a condition precedent to an award of the other. 4 And, in proper cases, backwages may be awarded without ordering reinstatement . In either case, no penalty of fine nor improsonment is imposed on the employer upon a finding of illegality in the dismissal. By the very nature of the reliefs sought, therefore, an action for illegal dismissal cannot be generally categorized as an "offense" as used under Article 291 of the Labor Code, which according to public respondent, must be brought within the period of three[3] years from the time the cause of action accrued, otherwise, the same is forever barred. It is true that the "backwwages" sought by an illegally dismissed employee may be considered, by reason of its practical effect, as a "money claim." However, it is not the principal cause of action in an illegal dismissal case but the unlawful deprivation of the one's employment committed by the employer in violation of the right of an employee. Backwages is merely one of the reliefs which an illegally dismissed employee prays the labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act committed by the employer. The award thereof is not private compensation or damages 5 but is in furtherance and effectuation of the public objectives of the Labor Code. 6 even though the practical effect is the enrichment of the individual, the award of backwages is not inredness of a private right, but, rather, is in the nature of a command upon the employer to make public reparation for his violation of the Labor Code. 7 The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this Court had occasion to hold that an action for damages involving a plaintiff seperated from his employment for alleged unjustifiable causes is one for " injury to the rights of the plaintiff, and must be brought within four [4] years. 8 In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court, thru then Chief Justice Enrique M. Fernando, sustained the sand of the Solicitor General that the period of prescription mentioned under Article 281, now Article 292, of the Labor Code, refers to and "is limited to money claims, an other cases of injury to rights of a workingman being governed by the Civil Code." Accordingly, this Court ruled that petitioner Marciana Santos, who sought reinstatement, had four [4] years within which to file her complaint for the injury to her rights as provided under Article 1146 of the Civil Code. Indeed there is, merit in the contention of petitioner that the four [4]-year prescriptive period under Article 1146 of the New Civil Code, applies by way of supplement, in the instant case, to wit: Art. 1146. The following actions must be instituted within four years. [1] Upon an injury to the lights of the plaintiff. xxx xxx xxx [Emphasis supplied]

As this Court stated in Bondoc us. People's Bank and Trust Co., 9 when a person has no property, his job may possibly be his only possession or means of livelihood, hence, he should be protected against any arbitrary and unjust deprivation of his job. Unemployment, said the Court in Almira vs. B.F. Goodrich Philippines, 10 brings "untold hardships and sorrows on those dependent on the wage earners. The misery and pain attendant on the loss of jobs thus could be avoided if there be acceptance of the view that under all the circumstances of this case, petitioners should not be deprived of their means of livelihood." It is a principle in American jurisprudence which, undoubtedly, is well-recognized in this jurisdiction that one's employment, profession, trade or calling is a "property right," and the wrongful interference therewith is an actionable wrong. 11 The right is considered to be property within the protection of a constitutional guaranty of due process of law. 12 Clearly then, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one's dismissal from employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years. In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3] years, one [1] month and five [5] days after the alleged effectivity date of his dismissal on June 1, 1979 which is well within the four [4]-year prescriptive period under Article 1146 of the New Civil Code. Even on the assumption that an action for illegal dismissal falls under the category of "offenses" or "money claims" under Articles 291 and 292, Labor Code, which provide for a three-year prescriptive period, still, a strict application of said provisions will not destroy the enforcement of fundamental rights of the employees. As a statutory provision on limitations of actions, Articles 291 and 292 go to matters of remedy and not to the destruction of fundamental rights. 13 As a general rule, a statute of limitation extinguishes the remedy only. Although the remedy to enforce a right may be barred, that right may be enforced by some other available remedy which is not barred. 14 More so, in the instant case, where the delay in filing the case was with justifiable cause. The threat to petitioner that he would be charged with estafa if he filed a complaint for illegal dismissal, which private respondent did after all on June 22, 1981, justifies, the delayed filing of the action for illegal dismissal with the Regional Office No. X, MOLE on July 5, 1982. Laches will not in that sense strengthen the cause of public respondent. Besides, it is deemed waived as it was never alleged before the Labor Arbiter nor the NLRC. Public respondent dismissed the action for illegal dismissal on the sole issue of prescription of actions. It did not resolve the case of illegal dismissal on the merits. Nonetheless, to resolve once and for all the issue of the legality of the dismissal, We find that petitioner, who has continuously served respondent Carnation for five [5] years was, under the attendant circumstances, arbitrarily dismissed from his employment. The alleged shortage in his accountabilities should have been impartially investigated with all due regard for due process in view of the admitted enmity between petitioner and E.L. Corsino, respondent's auditor. 15 Absent such an impartial investigation, the alleged shortage should not have been attended with such a drastic consequence as termination of the employment relationship. Outright dismissal was too severe a penalty for a first offense, considering that the alleged shortage was explained to respondent's Auditor, E.L. Corsino, in accordance with respondent's accounting and auditing policies. The indecent haste of his dismissal from employment was, in fact, aggravated by the filing of the estafa charge against petitioner with the City Fiscal of Butuan City on June 22, 1981, or two [2] years after his questioned dismissal. After the case had remained pending for five [5] years, the Regional Trial Court of Agusan del Norte and Butuan City, Branch V finally dismissed the same provisionally in an order dated February 21, 1986 for failure of the prosecution's principal witness to appear in court. Admittedly, loss of trust and confidence arising from the same alleged misconduct is sufficient ground

for dismissing an employee from his employment despite the dismissal of the criminal case. 16 However, it must not be indiscriminately used as a shield to dismiss an employee arbitrarily. 17 For, who can stop the employer from filing all the charges in the books for the simple exercise of it, and then hide behind the pretext of loss of confidence which can be proved by mere preponderance of evidence. We grant the petition and the decision of the NLRC is hereby reversed and set aside. Although We are strongly inclined to affirm that part of the decision of the Labor Arbiter ordering the reinstatement of petitioner to his former position without loss of seniority rights and privileges, a supervening event, which petitioner mentioned in his motion for early decision dated January 6, 1986 18 that is, FILIPRO, Inc.'s taking over the business of Carnation, has legally rendered the order of reinstatement difficult to enforce, unless there is an express agreement on assumption of liabilities 19 by the purchasing corporation, FILIPRO, Inc. Besides, there is no law requiring that the purchasing corporation should absorb the employees of the selling corporation. 20 In any case, the very concept of social justice dictates that petitioner shall be entitled to backwages of three [3] years. 21 WHEREFORE, respondent Carnation Philippines, Inc. is hereby ordered to pay petitioner Virgilio Callanta backwages for three [3] years without qualification and deduction. This decision is immediately executory. No costs. SO ORDERED. Virgilio Callanta vs. Carnation Philippines Inc.GR No. 70615, Oct. 28, 1986Facts: 1. Petitioner Virgillio Callanta was employed by Carnation Philippines, Inc. as a salesman in the Agusan del Sur Area. Five years later or June 1, 1979, respondent Carnation filed with the Ministry of Labor and Employment (MOLE), Regional Office X, an application for clearance to terminate the employment of Virgillio Callanta on the alleged grounds of serious misconduct and misappropriation of company funds amounting to P12,000.00 more or less. 2. On June 26, 1979 MOLE approved the said clearance and Virgillio Callanta was terminated effective June 1, 1979. 3. On July 5, 1982, Callanta filed with MOLE Regional Office X, a complaint for illegal dismissal withclaims for reinstatement, back wages and damages against respondent Carnation. 4. On October 5, 1982-Carnation put in issue the timeliness of Callanta’s complaint, alleging that the same is barred by prescription for having been filed more than three years after Callanta’s dismissal. 5. On March 24, 1983 - Labor Arbiter Pedro C. Ramos ruled in favor of Callanta and ordered reinstatement. 6. On April 18, 1983, respondent Carnation appealed to respondent National Labor Relations Commission [NLRC].7. NLRC set aside the decision of the Labor Arbiter and it declared that the complaint for illegal dismissal filed by Virgilio Callanta to have already prescribed. Labor Code provides that: Art. 291. Offenses.— Offenses penalized under this Code and the rules and regulations issuedpursuant thereto shall prescribe in three [3] years. Art. 292. Money claims. — All money claims arising from employer- employee relationsaccruing during the effectivity of this Code shall be filed within three [3] years from the time the cause of action accrued; otherwise, they shall be forever barred. Callanta filed a petition in the Supreme Court. Issue: Whether or not Callanta’s case of illegal dismissal prescribes in 3 years, pursuant to Art. 291 andArt. 292 of the Labor Code. Callanta’s Contention: Callanta contends that since the Labor Code is silent as to the prescriptive period of an action for illegaldismissal with claims for reinstatement, backwages and damages, the applicable law, by way of supplement, is Article 1146 of the New Civil Code which provides a four [4]-year prescriptive

period for an action predicated upon "an injury to the rights of the plaintiff". He added that, an action for illegal dismissal is neither a "penal offense" nor a mere "money claim," as contemplated under Articles 291 and 292, respectively, of the Labor Code. Petitioner further claims that an action for illegal dismissal is a more serious violation of the rights of an employee as it deprives him of his means of livelihood; thus, it should correspondingly have a prescriptive period longer than the three [ 3] years provided for in "money claims." Carnation Phil.’s Contention Carnation, counters that a case for illegal dismissal falls under the general category of "offenses penalized under this Code and the rules and regulations pursuant thereto" provided under Article291 or a money claim under Article 292, so that petitioner's complaint for illegal dismissal filed on July5, 1982, or three [3] years, one [1] month and five [5] days after his alleged dismissal on June 1,1979, was filed beyond the three-year prescriptive period as provided under Labor Code, hence, barred by prescription; SC’s Decision: The Supreme Court Find for Callanta. It reasoned that, the dismissal without just cause of an employee from his employment constitutes a violation of the Labor Code and its implementing rules and regulations. Such violation, however, does not amount to an "offense" as understood under Article 291 of the LaborCode. The confusion arises over the use of the term "illegal dismissal" which creates the impression that termination of an employment without just cause constitutes an offense. It must be noted, however that unlike in cases of commission of any of the prohibited activities during strikes or lockouts under Article 265, unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities under Article 38, among others, which the Code itself declares to be unlawful, termination of an employment without just or valid cause is not categorized as an unlawful practice. In the case, of illegal dismissal, no penalty of fine nor imprisonment is imposed on the employer upon a finding of illegality in the dismissal. By the very nature of the reliefs sought, therefore, an action for illegal dismissal cannot be generally categorized as an "offense" as used under Article 291 of the Labor Code, which must be brought within the period of three[3] years from the time the cause of action accrued, otherwise, the same is forever barred. The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this Court had occasion to hold that an action for damages involving a plaintiff separated from his employment for alleged unjustifiable causes is one for " injury to the rights of the plaintiff, and must be brought within four [4] years. Art. 1146. The following actions must be instituted within four years.[1] Upon an injury to the rights of the plaintiff. SC grant the petition and the decision of the NLRC was reversed and set aside.

Capitol Medical Center vs NLRC
This is a petition for review of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 57500 and its Resolution denying the motion for reconsideration thereof. The Antecedents[2] Whether the respondent Capitol Medical Center Employees Association-Alliance of Filipino Workers (the Union, for brevity) was the exclusive bargaining agent of the rank-and-file employees of the petitioner Capitol Medical Center, Inc. had been the bone of contention between the Union and the petitioner. The petitioner’s refusal to negotiate for a collective bargaining agreement (CBA) resulted in a union-led strike on April 15, 1993. The Union had to contend with another union – the Capitol Medical Center Alliance of Concerned Employees (CMC-ACE) – which demanded for a certification election among the rank-and-file employees of the petitioner. Med-Arbiter Brigida Fadrigon granted the petition, and the matter was appealed to the Secretary of Labor and Employment (SOLE). Undersecretary Bienvenido E. Laguesma rendered a Resolution on November 18, 1994 granting the appeal. He, likewise, denied the motion filed by the petitioner and the CMC-ACE. The latter thereafter brought the matter to the Court which rendered judgment on February 4, 1997 affirming the resolution of Undersecretary Laguesma, thus: 1. Dismissing the petition for certification election filed by the Capitol Medical Center Alliance of Concerned Employees-United Filipino Services Workers for lack of merit; and 2. Directing the management of the Capitol Medical Center to negotiate a CBA with the Capitol Medical Center Employees Association-Alliance of Filipino Workers, the certified bargaining agent of the rank-and-file employees.[3] The decision of the Court became final and executory. Thereafter, in a Letter dated October 3, 1997 addressed to Dr. Thelma N. Clemente, the President and Director of the petitioner, the Union requested for a meeting to discuss matters pertaining to a negotiation for a CBA, conformably with the decision of the Court.[4] However, in a Letter to the Union dated October 10, 1997, Dr. Clemente rejected the proposed meeting, on her claim that it was a violation of Republic Act No. 6713 and that the Union was not a legitimate one. On October 15, 1997, the petitioner filed a Petition for the Cancellation of the Union’s Certificate of Registration with the Department of Labor and Employment (DOLE) on the following grounds: 3) Respondent has failed for several years to submit annually its annual financial statements and other documents as required by law. For this reason, respondent has long lost its legal personality as a union. 4) Respondent also engaged in a strike which has been declared illegal by the National Labor Relations Commission.[5] Apparently unaware of the petition, the Union reiterated its proposal for CBA negotiations in a Letter dated October 16, 1997 and suggested the date, time and place of the initial meeting. The Union further reiterated its plea in another Letter[6] dated October 28, 1997, to no avail. Instead of filing a motion with the SOLE for the enforcement of the resolutions of Undersecretary Laguesma as affirmed by this Court, the Union filed a Notice of Strike on October 29, 1997 with the National Conciliation and Mediation Board (NCMB), serving a copy thereof to the petitioner. The Union alleged as grounds for the projected strike the following acts of the petitioner: (a) refusal to bargain; (b) coercion on employees; and (c) interference/ restraint to self-organization.[7] A series of conferences was conducted before the NCMB (National Capital Region), but no agreement was reached. On November 6, 1997, the petitioner even filed a Letter with the Board

requesting that the notice of strike be dismissed;[8] the Union had apparently failed to furnish the Regional Branch of the NCMB with a copy of a notice of the meeting where the strike vote was conducted. On November 20, 1997, the Union submitted to the NCMB the minutes [9] of the alleged strike vote purportedly held on November 10, 1997 at the parking lot in front of the petitioner’s premises, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. It appears that 178 out of the 300 union members participated therein, and the results were as follows: 156 members voted to strike; 14 members cast negative votes; and eight votes were spoiled.[10] On November 28, 1997, the officers and members of the Union staged a strike. Subsequently, on December 1, 1997, the Union filed an ex parte motion with the DOLE, praying for its assumption of jurisdiction over the dispute. The Union likewise prayed for the imposition of appropriate legal sanctions, not limited to contempt and other penalties, against the hospital director/president and other responsible corporate officers for their continuous refusal, in bad faith, to bargain collectively with the Union, to adjudge the same hospital director/president and other corporate officers guilty of unfair labor practices, and for other just, equitable and expeditious reliefs in the premises. [11] On December 4, 1997, the SOLE issued an Order, assuming jurisdiction over the ongoing labor dispute. The decretal portion of the order reads: WHEREFORE, this Office now assumes jurisdiction over the labor disputes at Capitol Medical Center pursuant to Article 263(g) of the Labor Code, as amended. Consequently, all striking workers are directed to return to work within twenty-four (24) hours from the receipt of this Order and the management to resume normal operations and accept back all striking workers under the same terms and conditions prevailing before the strike. Further, parties are directed to cease and desist from committing any act that may exacerbate the situation. Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and counter-proposals leading to the conclusion of the collective bargaining agreements in compliance with aforementioned Resolution of the Office as affirmed by the Supreme Court. SO ORDERED.[12] In obedience to the order of the SOLE, the officers and members of the Union stopped their strike and returned to work. For its part, the petitioner filed a petition[13] to declare the strike illegal with the National Labor Relations Commission (NLRC), docketed as NLRC NCR Case No. 00-12-08644-97. In its position paper, the petitioner appended the affidavit of Erwin Barbacena, the overseer of the property across the hospital which was being used as a parking lot, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. Also included were the affidavits of Simon J. Tingzon and Reggie B. Barawid, the petitioner’s security guards assigned in front of the hospital premises. They attested to the fact that no secret balloting took place at the said parking lot from 6:00 a.m. to 7:00 p.m. of November 10, 1997.[14] The petitioner also appended the affidavit of Henry V. Vera Cruz, who alleged that he was a member of the Union and had discovered that signatures on the Statements of Cash Receipt Over Disbursement submitted by the Union to the DOLE purporting to be his were not his genuine signatures;[15] the affidavits of 17 of its employees, who declared that no formal voting was held by the members of the Union on the said date, were also submitted. The latter employees also declared that they were not members of any union, and yet were asked to sign documents purporting to be a strike vote attendance and unnumbered strike vote ballots on different dates from November 8 to 11, 1997. In their position paper, the respondents appended the joint affidavit of the Union president and those members who alleged that they had cast their votes during the strike vote held on November 10, 1997.[16]

In the meantime, on September 30, 1998, the Regional Director of the DOLE rendered a Decision denying the petition for the cancellation of the respondent Union’s certificate of registratio n. The decision was affirmed by the Director of the Bureau of Labor Relations on December 29, 1998. In a parallel development, Labor Arbiter Facundo L. Leda rendered a Decision on December 23, 1998 in NLRC NCR Case No. 00-12-08644-97 in favor of the petitioner, and declared the strike staged by the respondents illegal. The fallo of the decision reads: 1. Declaring as illegal the strike staged by the respondents from November 28, 1997 to December 5, 1997; 2. Declaring respondent Jaime Ibabao, in his capacity as union president, the other union officers, and respondents Ronald Q. Centeno, Michael Eustaquio and Henry Vera Cruz to have lost their employment status with petitioner; and 3. Ordering the above respondents to pay, jointly and severally, petitioner the amount of Two Hundred Thousand Pesos (P200,000.00) by way of damages.[17] The Labor Arbiter ruled that no voting had taken place on November 10, 1997; moreover, no notice of such voting was furnished to the NCMB at least twenty-four (24) hours prior to the intended holding of the strike vote. According to the Labor Arbiter, the affidavits of the petitioner’s 17 employees who alleged that no strike vote was taken, and supported by the affidavit of the overseer of the parking lot and the security guards, must prevail as against the minutes of the strike vote presented by the respondents. The Labor Arbiter also held that in light of Article 263(9) of the Labor Code, the respondent Union should have filed a motion for a writ of execution of the resolution of Undersecretary Laguesma which was affirmed by this Court instead of staging a strike. The respondents appealed the decision to the NLRC which rendered a Decision[18] on June 14, 1999, granting their appeal and reversing the decision of the Labor Arbiter. The NLRC also denied the petitioner’s petition to declare the strike illegal. In resolving the issue of whether the union members held a strike vote on November 10, 1997, the NLRC ruled as follows: We find untenable the Labor Arbiter’s finding that no actual strike voting took place on November 10, 1997, claiming that this is supported by the affidavit of Erwin Barbacena, the overseer of the parking lot across the hospital, and the sworn statements of nineteen (19) (sic) union members. While it is true that no strike voting took place in the parking lot which he is overseeing, it does not mean that no strike voting ever took place at all because the same was conducted in the parking lot immediately/directly fronting, not across, the hospital building (Annexes “1 -J,” “1-K” to “1-K-6”). Further, it is apparent that the nineteen (19) (sic) hospital employees, who recanted their participation in the strike voting, did so involuntarily for fear of loss of employment, considering that their Affidavits are uniform and pro forma (Annexes “H-2” to “H-19”).[19] The NLRC ruled that under Section 7, Rule XXII of DOLE Order No. 9, Series of 1997, absent a showing that the NCMB decided to supervise the conduct of a secret balloting and informed the union of the said decision, or that any such request was made by any of the parties who would be affected by the secret balloting and to which the NCMB agreed, the respondents were not mandated to furnish the NCMB with such notice before the strike vote was conducted.[20] The petitioner filed a motion for the reconsideration of the decision, but the NLRC denied the said motion on September 30, 1999.[21] The petitioner filed a petition for certiorari with the CA assailing the decision and resolution of the NLRC on the following allegation: PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC) COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, ACTED CAPRICIOUSLY, AND CONTRAVENED THE LAW AND ESTABLISHED JURISPRUDENCE IN REVERSING THE LABOR ARBITER’S

DECISION DATED DECEMBER 23, 1998 (ANNEX “E”) AND IN UPHOLDING THE LEGALITY OF THE STRIKE STAGED BY PRIVATE RESPONDENTS FROM NOVEMBER 28, 1997 TO DECEMBER 5, 1997. [22] On September 29, 2000, the CA rendered judgment dismissing the petition and affirming the assailed decision and resolution of the NLRC. The petitioner filed the instant petition for review on certiorari under Rule 45 of the Rules of Court on the following ground: THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE NLRC’S FINDING THAT RESPONDENTS COMPLIED WITH THE LEGAL REQUIREMENTS FOR STAGING THE SUBJECT STRIKE. [23] The petitioner asserts that the NLRC and the CA erred in holding that the submission of a notice of a strike vote to the Regional Branch of the NCMB as required by Section 7, Rule XXII of the Omnibus Rules Implementing the Labor Code, is merely directory and not mandatory. The use of the word “shall” in the rules, the petitioner avers, indubitably indicates the mandatory nature of the respondent Union’s duty to submit the said notice of strike vote. The petitioner contends that the CA erred in affirming the decision of the NLRC which declared that the respondents complied with all the requirements for a lawful strike. The petitioner insists that, as gleaned from the affidavits of the 17 union members and that of the overseer, and contrary to the joint affidavit of the officers and some union members, no meeting was held and no secret balloting was conducted on November 10, 1997. The petitioner faults the CA and the NLRC for holding that a meeting for a strike vote was held on the said date by the respondents, despite the fact that the NLRC did not conduct an ocular inspection of the area where the respondent’s members allegedly held the voting. The petitioner also points out that it adduced documentary evidence in the form of affidavits executed by 17 members of the respondent union which remained unrebutted. The petitioner also posits that the CA and the NLRC erred in reversing the finding of the Labor Arbiter; furthermore, there was no need for the respondent union to stage a strike on November 28, 1997 because it had filed an urgent motion with the DOLE for the enforcement and execution of the decision of this Court in G.R. No. 118915. The petition is meritorious. We agree with the petitioner that the respondent Union failed to comply with the second paragraph of Section 10, Rule XXII of the Omnibus Rules of the NLRC which reads: Section 10. Strike or lockout vote. – A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda called for the purpose. A decision to declare a lockout must be approved by a majority of the Board of Directors of the employer, corporation or association or the partners obtained by a secret ballot in a meeting called for the purpose. The regional branch of the Board may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the regional branch of the Board and notice of meetings referred to in the preceding paragraph at least twenty-four (24) hours before such meetings as well as the results of the voting at least seven (7) days before the intended strike or lockout, subject to the cooling-off period provided in this Rule. Although the second paragraph of Section 10 of the said Rule is not provided in the Labor Code of the Philippines, nevertheless, the same was incorporated in the Omnibus Rules Implementing the Labor Code and has the force and effect of law.[24] Aside from the mandatory notices embedded in Article 263, paragraphs (c) and (f) of the Labor Code, a union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least twenty-four (24) hours prior to such meeting. Unless the NCMB is notified of the date, place and time of the meeting of the union members for the conduct of a strike

vote, the NCMB would be unable to supervise the holding of the same, if and when it decides to exercise its power of supervision. In National Federation of Labor v. NLRC,[25] the Court enumerated the notices required by Article 263 of the Labor Code and the Implementing Rules, which include the 24-hour prior notice to the NCMB: 1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the Regional Branch of the NCMB, copy furnished the employer of the union; 2) A cooling-off period must be observed between the filing of notice and the actual execution of the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair labor practice. However, in the case of union busting where the union’s existence is threatened, the cooling-off period need not be observed. … 4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike requires the secret-ballot approval of majority of the total union membership in the bargaining unit concerned. 5) The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended strike or lockout, subject to the cooling-off period. A union is mandated to notify the NCMB of an impending dispute in a particular bargaining unit via a notice of strike. Thereafter, the NCMB, through its conciliator-mediators, shall call the parties to a conference at the soonest possible time in order to actively assist them in exploring all possibilities for amicable settlement. In the event of the failure in the conciliation/mediation proceedings, the parties shall be encouraged to submit their dispute for voluntary arbitration. However, if the parties refuse, the union may hold a strike vote, and if the requisite number of votes is obtained, a strike may ensue. The purpose of the strike vote is to ensure that the decision to strike broadly rests with the majority of the union members in general and not with a mere minority, and at the same time, discourage wildcat strikes, union bossism and even corruption.[26] A strike vote report submitted to the NCMB at least seven days prior to the intended date of strike ensures that a strike vote was, indeed, taken. In the event that the report is false, the seven-day period affords the members an opportunity to take the appropriate remedy before it is too late. [27]The 15 to 30 day cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the NCMB conciliator/mediator,[28] while the seven-day strike ban is intended to give the DOLE an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.[29] The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the meeting for the said purpose is designed to (a) inform the NCMB of the intent of the union to conduct a strike vote; (b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c) should the NCMB decide on its own initiative or upon the request of an interested party including the employer, to supervise the strike vote, to give it ample time to prepare for the deployment of the requisite personnel, including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the union’s decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal. In this case, the respondent Union failed to comply with the 24-hour prior notice requirement to the NCMB before it conducted the alleged strike vote meeting on November 10, 1997. As a result, the petitioner complained that no strike vote meeting ever took place and averred that the strike staged by the respondent union was illegal.

Conformably to Article 264 of the Labor Code of the Philippines [30] and Section 7, Rule XXII of the Omnibus Rules Implementing the Labor Code,[31] no labor organization shall declare a strike unless supported by a majority vote of the members of the union obtained by secret ballot in a meeting called for that purpose. The requirement is mandatory and the failure of a union to comply therewith renders the strike illegal.[32] The union is thus mandated to allege and prove compliance with the requirements of the law. In the present case, there is a divergence between the factual findings of the Labor Arbiter, on the one hand, and the NLRC and the CA, on the other, in that the Labor Arbiter found and declared in his decision that no secret voting ever took place in the parking lot fronting the hospital on November 10, 1997 by and among the 300 members of the respondent Union. Erwin Barbacena, the overseer of the only parking lot fronting the hospital, and security guards Simon Tingzon and Reggie Barawid, declared in their respective affidavits that no secret voting ever took place on November 10, 1997; 17 employees of the petitioner also denied in their respective statements that they were not members of the respondent Union, and were asked to merely sign attendance papers and unnumbered votes. The NLRC and the CA declared in their respective decisions that the affidavits of the petitioner’s 17 employees had no probative weight because the said employees merely executed their affidavits out of fear of losing their jobs. The NLRC and the CA anchored their conclusion on their finding that the affidavits of the employees were uniform and pro forma. We agree with the finding of the Labor Arbiter that no secret balloting to strike was conducted by the respondent Union on November 10, 1997 at the parking lot in front of the hospital, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. This can be gleaned from the affidavit of Barbacena and the joint affidavit of Tingzon and Barawid, respectively: 1. That I am working as an overseer of a parking lot owned by Mrs. Madelaine Dionisio and located right in front of the Capitol Medical Center, specifically at the corner of Scout Magbanua Street and Panay Avenue, Quezon City; 2. That on November 10, 1997, during my entire tour of duty from 6:00 a.m. to 6:00 p.m., no voting or election was conducted in the aforementioned parking space for employees of the Capitol Medical Center and/or their guests, or by any other group for that matter.[33] … 1. That I, Simon J. Tingzon, am a security officer of Veterans Philippine Scout Security Agency (hereinafter referred to as VPSSA), assigned, since July 1997 up to the present, as Security Detachment Commander at Capitol Medical Center (hereinafter referred to as CMC) located at Scout Magbanua corner Panay Avenue, Quezon City; 2. That my (Tingzon) functions as such include over-all in charge of security of all buildings and properties of CMC, and roving in the entire premises including the parking lots of all the buildings of CMC; 3. That I, Reggie B. Barawid, am a security guard of VPSSA, assigned, since June 1997 up to the present, as security guard at CMC; 4. That my (Barawid) functions as such include access control of all persons coming in and out of CMC’s buildings and properties. I also sometimes guard the parking areas of CMC; 5. That on November 10, 1997, both of us were on duty at CMC from 7:00 a.m. to 7:00 p.m., with me (Barawid) assigned at the main door of the CMC’s Main Building along Scout Magbanua St.; 6. That on said date, during our entire tour of duty, there was no voting or election conducted in any of the four parking spaces for CMC personnel and guests.[34]

The allegations in the foregoing affidavits belie the claim of the respondents and the finding of the NLRC that a secret balloting took place on November 10, 1997 in front of the hospital at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. The respondents failed to prove the existence of a parking lot in front of the hospital other than the parking lot across from it. Indeed, 17 of those who purportedly voted in a secret voting executed their separate affidavits that no secret balloting took place on November 10, 1997, and that even if they were not members of the respondent Union, were asked to vote and to sign attendance papers. The respondents failed to adduce substantial evidence that the said affiants were coerced into executing the said affidavits. The bare fact that some portions of the said affidavits are similarly worded does not constitute substantial evidence that the petitioner forced, intimidated or coerced the affiants to execute the same. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of the Court of Appeals and NLRC are SET ASIDE AND REVERSED. The Decision of the Labor Arbiter is REINSTATED. No costs. SO ORDERED.

Elvira Abasolo vs NLRC Before us is a petition for certiorari seeking to annul two Resolutions of the National Labor Relations Commission (NLRC), Third Division, dated July 6, 1994[1] and September 23, 1994[2], in its affirmance of the Decision[3] of Labor Arbiter Ricardo N. Olairez dated December 29, 1993 dismissing petitioners’ consolidated complaint for separation pay for lack of merit. The facts are as follows: Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private respondent See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco leaves and its by-products. Tobacco season starts sometime in October of every year when tobacco farmers germinate their seeds in plots until they are ready for replanting in November. The harvest season starts in mid-February. Then, the farmers sell the harvested tobacco leaves to redrying plants or do the redrying themselves. The redrying plant of LUTORCO receives tobacco for redrying at the end of February and starts redrying in March until August or September. Petitioners have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted sometime in March 1993 when Compania General de Tabaccos de Filipinas (also known as TABACALERA) took over LUTORCO’s tobacco operations. New signboards were posted indicating a change of ownership and petitioners were then asked by LUTORCO to file their respective applications for employment with TABACALERA. Petitioners were caught unaware of the sudden change of ownership and its effect on the status of their employment, though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners. On March 17, 1993, the disgruntled employees instituted before the NLRC Regional Arbitration Branch No. 1, San Fernando, La Union a complaint[4] for separation pay against private respondent LUTORCO on the ground that there was a termination of their employment due to the closure of LUTORCO as a result of the sale and turnover to TABACALERA. Other equally affected employees filed two additional complaints[5], also for separation pay, which were consolidated with the first complaint. Private respondent corporation raised as its defense that it is exempt from paying separation pay and denied that it terminated the services of the petitioners; and that it stopped its operations due to the absence of capital and operating funds caused by losses incurred from 1990 to 1992 and absence of operating funds for 1993, coupled with adverse financial conditions and downfall of prices. [6] It alleged further that LUTORCO entered into an agreement with TABACALERA to take over LUTORCO’s tobacco operations for the year 1993 in the hope of recovering from its serious business losses in the succeeding tobacco seasons and to create a continuing source of income for the petitioners. [7] Lastly, it manifested that LUTORCO, in good faith and with sincerity, is willing to grant reasonable and adjusted amounts to the petitioners, as financial assistance, if and when LUTORCO could recover from its financial crisis.[8] On December 29, 1993, Labor Arbiter Ricardo N. Olairez rendered his decision dismissing the complaint for lack of merit. In upholding private respondent LUTORCO’s position, the Labor Arbiter declared that the petitioners are not entitled to the benefits under Article 283 [9] of the Labor Code since LUTORCO ceased to operate due to serious business losses and, furthermore, TABACALERA, the new employer of the petitioner has assumed the seniority rights of the petitioners and other employment liabilities of the LUTORCO.[10] Petitioners appealed[11] then the decision of the Labor Arbiter to the public respondent NLRC where it was assigned to the Third Division. In its Opposition to Appeal[12] dated February 5, 1994 private respondent LUTORCO presented new allegations and a different stand for denying separation pay. It alleged that LUTORCO never ceased to operate but continues to operate even after TABACALERA took over the operations of its redrying plaint in Aringay, La Union. Petitioners were not terminated from employment but petitioners instead refused to work with TABACALERA, despite the notice to petitioners to return to

work in view of LUTORCO’s need for workers at its Agoo plant which had approximately 300,000 kilos of Virginia tobacco for processing and redrying. Furthermore, petitioners are not entitled to separation pay because petitioners are seasonal workers. Adopting these arguments of private respondent, the NLRC, in a Resolution [13] dated July 6, 1994, affirmed the dismissal of the consolidated complaints for separation pay. Public respondent held that petitioners are not entitled to the protection of Article 283 of the Labor Code providing for separation pay since there was no closure of establishment or termination of services to speak of. It declared that there was no dismissal but a “non-hiring due mainly to *petitioners+ own volition.”[14] Moreover, the benefits of Article 283 of the Labor Code apply only to regular employees, not seasonal workers like petitioners.[15] Inasmuch as public respondent in its Resolution[16] dated September 23, 1994 denied petitioners’ motion for reconsideration, petitioners now assail the correctness of the NLRC’s resolution via the instant petition. Petitioners anchor their petition on the following grounds, to wit: I. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT THERE WAS NO DISMISSAL OR TERMINATION OF SERVICES. II. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT PETITIONERS WERE NOT REGULAR EMPLOYEES. III. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN NOT AWARDING SEPARATION PAY TO THE PETITIONERS. Petitioners vigorously maintain that they are regular workers of respondent LUTORCO since they worked continuously for many years with LUTORCO, some of them even for over 20 years, and that they performed functions necessary and desirable in the usual business of LUTORCO. [17] According to them, the fact that some of them work only during the tobacco season does not affect their status as regular workers since they have been repeatedly called back to work for every season, year after year.[18] Thus, petitioners take exception to the factual findings and conclusions of the NLRC, stressing that the conclusions of the NLRC were based solely on the new theory advanced by private respondent LUTORCO only on appeal, that is, that it was only LUTO RCO’s tobacco re-drying operation that was sold, and hence, diametrically opposed to its theory before the Labor Arbiter, i.e., that it is the entire company (LUTORCO) itself that was sold. Private respondent LUTORCO, on the other hand, insists that petiti oners’ employment was not terminated; that it never ceased to operate, and that it was petitioners themselves who severed their employer-employee relationship when they chose employment with TABACALERA because petitioners found more stability working with TABACALERA than with LUTORCO.[19] It likewise insists that petitioners are seasonal workers since almost all of petitioners never continuously worked in LUTORCO for any given year[20] and they were required to reapply every year to determine who among them shall be given work for the season. To support its argument that petitioners are seasonal workers, private respondent LUTORCO cites the case of Mercado, Sr. v. NLRC[21]wherein this Court held that “the employment of *seasonal workers+ legally ends upon the completion of the xxx season.” Clearly, the crux of the dispute boils down to two issues, namely, (a) whether petitioners’ employment with LUTORCO was terminated, and (b) whether petitioners are regular or seasonal workers, as defined by law. Both issues are clearly factual in nature as they involved appreciation of evidence presented before the NLRC whose finding of facts and conclusions thereon are entitled to respect and finality in the absence of proof that they were arrived at arbitrarily or capriciously.[22] In the instant case, however, cogent reasons exist to apply the exception, to wit: First, upon a thorough review, the records speak of a sale to TABACALERA in 1993 under conditions evidently so concealed that petitioners were not formally notified of the impending sale of

LUTORCO’s tobacco re-drying operations to TABACALERA and its attendant consequences with respect to their continued employment status under TABACALERA. They came to know of the fact of that sale only when TABACALERA took over the said tobacco re-drying operations. Thus, under those circumstances, the employment of petitioners with respondent LUTORCO was technically terminated when TABACALERA took over LUTORCO’s tobacco re-drying operations in 1993.[23] Moreover, private respondent LUTORCO’s allegation that TABACALERA assured the seniority rights of petitioners deserves scant consideration inasmuch as the same is not supported by documentary evidence nor was it confirmed by TABACALERA. Besides, there is no law requiring that the purchaser of an entire company should absorb the employees of the selling company. The most that the purchasing company can do, for reasons of public policy and social justice, is to give preference to the qualified separated employees of the selling company, who in its judgment are necessary in the continued operation of the business establishment. In the instant case, the petitioner employees were clearly required to file new applications for employment. In reality then, they were hired as new employees of TABACALERA. Second, private respondent LUTORCO’s contention that petitioners themselves severed the employer-employee relationship by choosing to work with TABACALERA is bereft of merit considering that its offer to return to work was made more as an afterthought when private respondent LUTORCO later realized it still had tobacco leaves for processing and redrying. The fact that petitioners ultimately chose to work with TABACALERA is not adverse to petitioners’ cause. To equate the more stable work with TABACALERA and the temporary work with LUTORCO is illogical. Petitioners’ untimely separation in LUTORCO was not of their own making and therefore, not construable as resignation therefrom inasmuch as resignation must be voluntary and made with the intention of relinquishing the office, accompanied with an act of relinquishment.[24] Third, the test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC,[25] in which this Court held: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists. Thus, the nature of one’s employment does not depend solely on the will or word of the employer. Nor on the procedure for hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employer’s nature of business and the duration and scope of work to be done.[26] In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some for over 20 years, performing services necessary and indispensable to LUTORCO’s business, serve as badges of regular employment.[27] Moreover, the fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases[28] this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until re-employed. Private respondent’s reliance on the case of Mercardo v. NLRC is misplaced considering that since in said case of Mercado, although the respondent company therein consistently availed of the services of the petitioners therein from year to year, it was clear that petitioners therein were not in

respondent company’s regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free to contract their services to work for other farm owners, as in fact they did. Thus, the Court ruled in that case that their employment would naturally end upon the completion of each project or phase of farm work for which they have been contracted. All the foregoing considered, the public respondent NLRC in the case at bar erred in its total affirmance of the dismissal of the consolidated complaint, for separation pay, against private respondents LUTORCO and See Lin Chan considering that petitioners are regular seasonal employees entitled to the benefits of Article 283 of the Labor Code which applies to closures or cessation of an establishment or undertaking, whether it be a complete or partial cessation or closure of business operation.[29] In the case of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC[30] this Court, when faced with the question of whether the separation pay of a seasonal worker, who works for only a fraction of a year, should be equated with the separation pay of a regular worker, resolved that question in this wise: 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[31] 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 case at bar, we hold that the amount of separation pay which respondent members xxx should receive is onehalf (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. Thus, in the said case, the employees were awarded separation pay equivalent to one (1) month, or to one-half (1/2) month pay for every year they rendered service, whichever is higher, provided they rendered service for at least six (6) months in a given year. As explained in the text of the decision in the said case, “month pay” shall be understood as “average monthly pay during the last season they worked.”[32] An award of ten percent (10%) of the total amount due petitioners as attorney’s fees is legally and morally justifiable under Art. 111 of the Labor Code, [33] Sec. 8, Rule VIII, Book III of its Implementing Rules,[34] and par. 7, Art. 2208[35] of the Civil Code.[36] WHEREFORE, the petition is hereby GRANTED, and the assailed Resolutions dated July 6, 1994 and September 23, 1994 of public respondent NLRC are REVERSED and SET ASIDE. Private respondent La Union Tobacco Redrying Corporation is ORDERED: (a) to pay petitioners separation pay equivalent to one (1) month, or one-half (1/2) month pay for each year that they rendered service, whichever is higher, provided that they rendered service for at least six (6) months in a given year, and; (b) to pay ten percent (10%) of the total amount due to petitioners, as and for attorney’s fees. Consequently, public respondent NLRC is ORDERED to COMPUTE the total amount of separation pay which each petitioner who has rendered service to private respondent LUTORCO for at least six (6) months in a given year is entitled to receive in accordance with this decision, and to submit its compliance thereon within forty-five (45) days from notice of this decision. SO ORDERED.

Abasolo vs NLRC
Facts: Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private respondent See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco leaves and its byproducts. Petitioners have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted sometime in March 1993 when Compania General de Tabaccos de Filipinas (also known as TABACALERA) took over LUTORCO’s tobacco operations. Petitioners were caught unaware of the

sudden change of ownership and its effect on the status of their employment, though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners. On March 17, 1993, the disgruntled employees instituted before the NLRC Regional Arbitration Branch No. 1, San Fernando, La Union a complaint for separation pay against private respondent LUTORCO on the ground that there was a termination of their employment due to the closure of LUTORCO as a result of the sale and turnover to TABACALERA. Private respondent corporation raised as its defense that it is exempt from paying separation pay and denied that it terminated the services of the petitioners; and that it stopped its operations due to the absence of capital and operating funds caused by losses incurred from 1990 to 1992and absence of operating funds for 1993, coupled with adverse financial conditions and downfall of prices. Respondent corporation also contends that the employees are seasonal worker, thus not entitled for separation pay. Labor Arbiter Ricardo N. Olairez rendered his decision dismissing the complaint for lack of merit. The NLRC affirmed the decision of the Labor Arbiter. Issue: Whether or not petitioners are regular employees entitled to separation pay. Ruling: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists. In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some for over 20 years, performing services necessary and indispensable to LUTORCO’s business, serve as badges of regular employment. Moreover, the fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until re-employed.

MSF Tire and Rubber Inc. vs CA
Petitioner seeks a review of the decision[1] of the Court of Appeals, dated March 20, 1997, which set aside the order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No. 95-770, granting petitioner’s application for a writ of preliminary injunction. The facts are as follows: A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private respondent, Philtread Tire Workers’ Union (Union), as a result of which th e Union filed on May 27, 1994 a notice of strike in the National Conciliation and Mediation Board-National Capital Region charging Philtread with unfair labor practices for allegedly engaging in union-busting for violation of the provisions of the collective bargaining agreement. This was followed by picketing and the holding of assemblies by the Union outside the gate of Philtread’s plant at Km. 21, East Service Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15, 1994. In an order, dated September 4, 1994,[2] then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and certified it for compulsory arbitration. She enjoined the Union from striking and Philtread from locking out members of the Union. On December 9, 1994, during the pendency of the labor dispute, Philtread entered into a Memorandum of Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under the Memorandum of Agreement, Philtread’s plant and equipment would be sold to a new company (petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which the plant was located would be sold to another company (Sucat Land Corporation), 60% of which would be owned by Philtread and 40% by Siam Tyre. This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then asked the Union to desist from picketing outside its plant and to remove the banners, streamers, and tent which it had placed outside the plant’s fence. As the Union refused petitioner’s request, petitioner filed on May 25, 1995 a complaint for injunction with damages against the Union and the latter’s officers and directors before the Regional Trial Court of Makati, Branch 59 where the case was docketed as Civil Case No. 95-770. On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court. It insisted that the parties were involved in a labor dispute and that petitioner, being a mere “alter ego” of Philtread, was not an “innocent bystander.” After petitioner made its offer of evidence as well as the submission of the parties’ respective memoranda, the trial court, in an order, dated March 25, 1996, denied petitioner’s application for injunction and dismissed the complaint. However, on petitioner’s motion, the trial court, on July 2, 1996, reconsidered its order, and granted an injunction. Its order read:[3] Considering all that has been stated, the motion for reconsideration is granted. The Order dated March 25, 1996 is reconsidered and set aside. Plaintiff’s complaint is reinstated and defendant’s motion to dismiss isDENIED. As regards plaintiff’s application for the issuance of a writ of preliminary injunction, the Court finds that the plaintiff has established a clear and subsisting right to the injunctive relief, hence, the same is GRANTED. Upon posting by the plaintiff and approval by the Court of a bond in the amount of One Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may suffer by reason of the injunction in the event that the Court may finally adjudge that the plaintiff is not entitled thereto, let a writ of preliminary injunction issue ordering the defendants and any other persons acting with them and/or on their behalf to desist immediately from conducting their assembly in the area immediately outside the plaintiff’s plant at Km. 21 East Service Road, South Superhighway, Muntinlupa, Metro Manila, and from placing and/or constructing banners, streamers,

posters and placards, and/or tents/shanties or any other structure, on the fence of, and/or along the sidewalk outside, the said plant premises until further orders from this Court. SO ORDERED.[4] Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and prohibition before the Court of Appeals. On March 20, 1997, the appellate court rendered a decision granting the Union’s petition and ordering the trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for review. Petitioner makes the following arguments in support of its petition: a. The Court of Appeals erred in not summarily dismissing the Union’s petition for its false certification of non-forum shopping and the Union’s failure to file a motion for reconsideration before going up to the Court of Appeals on a petition for certiorari. b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit on the alleged ground that MSF did not have a clear and unmistakable right to entitle it to a writ of preliminary injunction. c. The Court of Appeals’ pronouncement that it has not touched upon the issue of whether or not private respondent is a mere innocent bystander to the labor dispute between Philtread and the Union or upon the issue of whether or not private respondent is a mere dummy or continuity of Philtread is contrary to its own conclusions in the body of the decision, which conclusions are erroneous. d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on Philtread’s remaining operations in the country and allowed the Union to exercise its right to communicate the facts of its labor dispute within MSF’s premises, given the percentage of interest Philtread has in both MSF and the corporation which owns the land bearing said plant. The issues are (1) whether the Union’s failure to disclose the pendency of NCMB -NCR-NS-05-16796 in its certification of non-forum shopping and its failure to file a motion for reconsideration of the order, dated July 2, 1996, of the trial court were fatal to its petition for review before the Court of Appeals; and (2) whether petitioner has shown a clear legal right to the issuance of a writ of injunction under the “innocent bystander” rule. First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.[5] It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes.[6] As held in Executive Secretary v. Gordon:[7] Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has been held that there is forum-shopping (1) whenever as a result of an adverse decision in one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another, or (2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of Appeals since in such case he deliberately splits appeals “in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or (3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the same from the original court.

In determining whether or not there is forum-shopping, what is important is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues.[8] Petitioner asserts that the Court of Appeals should have dismissed the Union’s petition for review on the ground that the certification of non-forum shopping was false and perjurious as a result of the Union’s failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving the same parties and pending before the National Conciliation and Mediation Board. The argument is without merit. Petitioner was a party to the proceedings before the National Conciliation and Mediation Board in which an order, dated September 8, 1994, was issued by then Secretary of Labor Nieves Confesor, enjoining any strike or lock-out by the parties.[9] It was petitioner which initiated the action for injunction before the trial court. Aggrieved by the injunctive order issued by the lower court, the Union was forced to file a petition for review before the Court of Appeals. We cannot understand why petitioner should complain that no mention of the pendency of the arbitration case before the labor department was made in the certificate of non-forum shopping attached to the Union’s petition in the Court of Appeals. The petition of the Union in the Court of Appeals was provoked by petitioner’s action in seeking injunction from the trial court when it could have obtained the same relief from the Secretary of Labor. Indeed, by focusing on the Union’s certification before the appellate court, petitioner failed to notice that its own certification before the lower court suffered from the same omission for which it faults the Union. Although the body of petitioner’s complaint mentions NCMB-NCR-NS-05-167-96, its own certification is silent concerning this matter.[10] It is not in keeping with the requirements of fairness for petitioner to demand strict application of the prohibition against forum-shopping, when it, too, is guilty of the same omission. Second. Petitioner asserts that its status as an “innocent bystander” with respect to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the appellate court erred in not upholding its corporate personality as independent of Philtread’s. In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel ,[11] this Court, through Justice J.B.L. Reyes, stated the “innocent bystander” rule as follows: The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or “innocent bystanders” if it appears that the inevitable result of its exercise is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. In one case decided by this Court, we upheld a trial court’s injunction prohibiting the union from blocking the entrance to a feed mill located within the compound of a flour mill with which the union had a dispute. Although sustained on a different ground, no connection was found between the two mills owned by two different corporations other than their being situated in the same premises. It is to be noted that in the instances cited, peaceful picketing has not been totally banned but merely regulated. And in one American case, a picket by a labor union in front of a motion picture theater with which the union had a labor dispute was enjoined by the court from being extended in front of

the main entrance of the building housing the theater wherein other stores operated by third persons were located.[12] (Emphasis added) Thus, an “innocent bystander,” who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. For instance, in PAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate entities, different from, and without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike was directed, other than the incidental fact that they are the bank’s landlord and co -lessee housed in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent Concrete Workers Union,[13] this Court ruled that Liwayway was an “innocent bystander” and thus entitled to enjoin the union’s strike because Liwayway’s only connection with the employer company was the fact that both were situated in the same premises. In the case at bar, petitioner cannot be said not to have such connection to the dispute. As correctly observed by the appellate court: Coming now to the case before us, we find that the “negotiation, contract of sale, and the post transaction” between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation between them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights over its sold assets. On the contrary, Philtread remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation which was likewise incorporated in accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns the land were subject plant is located. This, together with the fact that private respondent uses the same plant or factory; similar or substantially the same working conditions; same machinery, tools, and equipment; and manufacture the same products as Philtread, lead us to safely conclude that private respo ndent’s personality is so closely linked to Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread, we find no clear and unmistakable right on the part of private respondent to entitle it to the writ of preliminary injunction it prayed for below. …. We stress that that in so ruling, we have not touched on the issue of . . . whether or not private respondent is a mere dummy or continuation of Philtread. . . .[14] Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat public convenience, justify wrong, protect fraud, defend crime, or where the corporation is used as a mere alter-ego or business conduit,[15] it is not these standards but those of the “innocent bystander” rule which govern whether or not petitioner is entitled to an injunctive writ. Since petitioner is not an “innocent bystander”, the trial court’s order, dated July 2, 1996, is a patent nullity, the trial court having no jurisdiction to issue the writ of injunction. No motion for reconsideration need be filed where the order is null and void.[16] WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED. SO ORDERED.

MSF Tire and Rubber vs CA Facts: Respondent Union filed a notice of strike in the NCMB charging (Phildtread) with unfair labor practice. Thereafter, they picketed and assembled outside the gate of Philtread’s plant. Philtread,

on the other hand, filed a notice of lockout. Subsequently, the Secretary of Labor assumed jurisdiction over the labor dispute and certified it for compulsory arbitration. During the pendency of the labor dispute, Philtread entered into a Memorandum of Agreement with Siam Tyre whereby its plant and equipment would be sold to a new company, herein petitioner, 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which the plant was located would be sold to another company, 60% of which would be owned by Philtread and 40% by Siam Tyre. Petitioner then asked respondent Union to desist from picketing outside its plant. As the respondent Union refused petitioner’s request, petitioner filed a complaint for injunction with damages before the RTC. Respondent Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court. Petitioner asserts that its status as an “innocent bystander” with respect to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts. Issue: WON petitioner has shown a clear legal right to the issuance of a writ of injunction under the “innocent bystander” rule. Held: In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel, this Court, through Justice J.B.L. Reyes, stated the “innocent bystander” rule as follows: The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it cannot be curtailed even in the absence of employer-employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or “innocent bystanders” if it appears that the inevitable result of its exercise is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. Thus, an “innocent bystander,” who seeks to enjoin a labor strike, must satisfy the court it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. In the case at bar, petitioner cannot be said not to have such connection to the dispute. We find that the “negotiation, contract of sale, and the post transaction” between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation between them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights over its sold assets. On the contrary, Philtread remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation which was likewise incorporated in accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns the land were subject plant is located. This, together with the fact that private respondent uses the same plant or factory; similar or substantially the same working conditions; same machinery, tools, and equipment; and

manufacture the same products as Philtread, lead us to safely conclude that private respondent’s personality is so closely linked to Philtread as to bar its entitlement to an injunctive writ. Petition denied.

EFREN P. PAGUIO vs. NATIONAL LABOR RELATIONS COMMISSION On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.1 Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of general circulation, published by respondent company. Petitioner, for his efforts, was to receive compensation consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on agency advertisements based on gross revenues less agency commission and the corresponding withholding tax. The commissions, released every fifteen days of each month, were to be given to petitioner only after the clients would have paid for the advertisements. Apart from commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious points raised by the parties had something to do with the following stipulations of the agreement; viz: "12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties. "13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) days prior to effectivity of termination."2 On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from respondent firm "Dear Mr. Paguio, "Please be advised of our decision to terminate your services as Account Executive of Manila Times effective September 30, 1992. "This is in accordance with our contract signed last July 1, 1992."3 Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for petitioner's termination was given. Aggrieved, petitioner filed a case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages. In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines.4Asserting their right to terminate the contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end the contract provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice to the other. The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to pay him his commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable to petitioner for moral damages in the amount of P20,000.00.

On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared the contractual relationship between the parties as being for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful as long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the worker and absent any other circumstances vitiating his consent."5 The finding of the NLRC was primarily hinged on the assumption that petitioner, on account of his educated stature, having indeed personally prepared his pleadings without the aid of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC held: "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which (would) necessarily come, although it (might) not be known when."6 Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of the commission. In his petition for review on certiorari, petitioner raised the following issues for resolution: "WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'S COMPANY IS FOR A FIXED PERIOD. "WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL. "WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES." 7 The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and respondent company - was it or was it not one of regular employment? A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the nonconcurrence, of the following factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative employee or the power to control the employee with respect to the means or methods by which his work is to be accomplished.8 The "control test" assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is performed or services are rendered under the control and supervision of the party contracting for the service, not only as to the result of the work but also as to the manner and details of the performance desired.9 An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent Metromedia Times Corporation not only of the right to control the results to be achieved but likewise the manner and the means used in reaching that end. 10 Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to submit a daily sales activity report and also a monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed and monitored the sales activities of petitioner. The Labor Code, in Article 280 thereof, provides: "ART. 280. Regular and Casual Employment. – The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. Even in these latter cases, where such person has rendered at least one year of service, regardless of the nature of the activity performed or of whether it is continuous or intermittent, the employment is considered regular as long as the activity exists, it not being indispensable that he be first issued a regular appointment or be formally declared as such before acquiring a regular status.11 That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went on for more than a year, could hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei, its President, herself admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent corporation recognized petitioner's invaluable contribution to the business when it renewed, not just once but five times, its contract with petitioner. Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been called upon to perform.12 The law affords protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to deprive the employee of his security of tenure.13 The sheer inequality that characterizes employer-employee relations, where the scales generally tip against the employee, often scarcely provides him real and better options. The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or authorized cause and must comply with the rudimentary due process of notice and hearing. It is not shown that respondent company has fully bothered itself with either of these requirements in terminating the services of petitioner. The notice of termination recites no valid or just cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense. The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of respondents, particularly by respondent Liberato I. Gomez, and the award of moral damages must thus be deleted. WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which award is deleted. SO ORDERED.