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Republic of the Philippines


Sogod, Southern Leyte


A Final Paper presented to
The Faculty of the Graduate Studies
Southern Leyte State University
In partial fulfilment of the course
MM 505 : Management and the Law
Summer 2015


Master in Management Student

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Cover Page


Table of Content



A. Objectives
B. Company Profile, Mission & Vision




Antecedent facts of the case



Resolutions, Findings and Decision of the Labor Management Problem



Recommendation and Observation





Whole Case citation


Nature of the Company




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Corporation is defined as the most common business organization which is formed by

a group of people. It has rights and liabilities separate from those of the individuals involved.
It may be a non-profit organization engaged in activities for the public good; a municipal
corporation, such as a city or town; or a private corporation, which is organized to make a
In the eyes of the law, a corporation has many of the same rights and responsibilities
as a person. It may buy, sell, and own property; enter into leases and contracts; and bring
lawsuits. It pays taxes. It can be prosecuted and punished (often with fines) if it violates the
law. The chief advantages are that it can exist indefinitely, beyond the lifetime of any one
member or founder, and that it offers its owners the protection of limited personal liability

A. Objectives
San Miguel Corporation is one of the Philippines most diversified conglomerates,
generating about 6.5% of the countrys gross domestic product. It operates in the manufacture
and sales through its highly integrated operations in beverages, food, packaging, fuel and oil,
power, mining and infrastructure and telecommunications.
San Miguel Corporations' fundamental and historical philosophy is "Profit with
Honor" and has the following objectives:
(a) To be constantly aware of the aspirations of the people and of the nation, and to
ensure that San Miguel continues to make a major contribution towards the
achievement of these aspirations.
(b) To manufacture, distribute and sell throughout the Philippines food products,
beverages, packaging products and animal feeds, being ready at all times to add,
modify or discontinue products in accordance with changes in the market.
(c) To diversify into fields which will ensure optimum utilization of management
resources and a substantial contribution to corporate profits?
(d) To seek and develop export markets for new products as well as for those already
being produced by the Corporation.
(e) To generate a return on funds employed sufficient to ensure an adequate rate of
growth for the Corporation, and to provide satisfactory returns to stockholders.
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(f) To provide an environment which is conducive to the development of the individual

and which encourages employees to realize their full capabilities.
(g) To adopt a flexible and objective attitude towards change and to pursue an active
policy of innovation.

B. Name of the corporation, Its Vision and Mission and its current profile
Named as Southeast Asias oldest and largest brewer, San Miguel Corporation is
registered under Securities and Exchange Commission (SEC) No. PW00000277 and under
BIR Tax Identification No. 000-060-741-000 with its corporate head office is at San Miguel
Avenue, Mandaluyong City, Philippines
San Miguel Corporation (San Miguel) is the Philippines largest beverage, food and
packaging company and it is one of the most profitable companies. It started in 1890 when
Don Enrique Ma Barretto de Ycaza establishes a brewery in Manila called La Fabrica de
Cerveza de San Miguel. Within the span of a generation, San Miguel Beer would become an
icon among beer drinkers.
By the year 1913, the brewery is incorporated and by 1914, San Miguel Beer was
being exported from its headquarters in Manila to Shanghai, Hong Kong and Guam. A
pioneer in Asia, San Miguel established a brewery in Hong Kong in 1948, the first local
brewer in the crown colony. But it was only in 1963 that the Company shortens its name to
San Miguel Corporation.
San Miguel Beerthe Companys flagship productis one of the largest selling beers
and among the top 10 beer brands in the world. While brewing beer is the companys
heritage, San Miguel subsequently branched out into the food and packaging businesses.
From the original cerveza that first rolled off the bottling line, San Miguel
Corporation has since diversified to produce a wide range of popular beverage, food and
packaging products which havefor over a centurycatered to generations of consumers ever
changing tastes.
Today, the company has over 100 facilities in the Philippines, Southeast Asia, and
China. One of the countrys premier business conglomerates, San Miguels extensive product
portfolio includes over 400 products ranging from beer, hard liquor, juices, basic and
processed meats, poultry, dairy products, condiments, coffee, flour, animal feeds and various
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packaging products. For generations, the Company has generated strong consumer loyalty
through brands that are among the most formidable in the Philippine food and beverage
industry San Miguel Pale Pilsen, Ginebra, Monterey, Magnolia, and Purefoods. Flagship
product, San Miguel Beer, holds an over 95% share of the Philippine beer market.
In addition to its leadership in the Philippine food and beverage industry, San Miguel
has established a significant presence overseas. The Companys operations extend beyond its
home base of the Philippines to China (including Hong Kong), Vietnam, Indonesia, Malaysia,
Thailand and Australia. Through strategic partnerships it has forged with major international
companies, San Miguel has gained access to managerial expertise, international practices and
advanced technology, thereby enhancing its performance and establishing itself as a worldclass company. San Miguels partners are world leaders in their respective businesses. Kirin
Brewery Co., Ltd. is a major shareholder of San Miguel Brewery. The Company also has
successful joint venture relationships with US-based Hormel Foods Corporation, Nihon
Yamamura Glass and QTel, a telecommunications company in Qatar.
In the Philippines, San Miguels corporate strategy is at aimed capitalizing on new
growth markets through acquisitions and further enhancing its competitive position by
improving synergies across existing operational lines. The company has significantly
expanded its participation in both its core businesses of food, beverage and packaging, as
well as heavy industries including power and other utilities, mining, energy, tollways and
San Miguel Corporation's vision is that SMC will be among the largest food, beverage
and packaging companies in the Asia-Pacific. With their mission, SMC is committed to bring
quality products and "Making everyday life a celebration." It targets to carry into new
markets its over-century-old tradition of quality and integrity. It target that customer will take
pleasure in reaching for their products and services because they are the best value for money.
SMC will be in every household and every retail outlet. "We will meet our consumers
everyday needs, delighting their every taste. Through SMC's products and services, every
occasion to drink and eat will bring enjoyment a celebration".
San Miguels goal is to help people enjoy and make progress in their lives through the
many products and services that the company offers. "We want to give every customer and
consumer we touch access to the best we can offerwhether in terms of quality, or
affordability or choice".
San Miguel Corporation's strategy for achieving these goals has five major elements
which are common to both our traditional and new businesses: (1) enhance value of their
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established businesses, (2) continue to diversify into industries that underpin the development
and growth of the Philippine economy, (3) identify and pursue synergies across businesses
through vertical integration, platform matching and channel management, Invest in and
develop businesses with market leading positions and (4) Adopt world-leading practices and
joint development of businesses.
All throughout, SMC is a values-oriented company. From its humble beginning until
now, values such as (1) passion for success, (2) respect for our people, (3)teamwork, (4)
customer focus, (4) innovativeness, (5) social responsibility, (6) integrity and (7) social
responsibility are still being maintain and being practice in the entire company.
SMC is subdivided into four important committees namely: Executive Committee
chaired by Eduaardo M. Conjuangco, Jr., Audit Committee chaired by Margarito B. Teves,
Executive Compensation Committee chaired by Menardo R. Jimenez and Nomination &
Hearing Committee chaired by Estelito P. Mendoza.
As of the first quarter of 2015, SMC's has consolidated net income of PHP 6 billion,

slightly better than year-ago level, despite the inventory losses of PHP 3 billion incurred by
its Petron Corporation following a significant decline in global oil prices. The company
managed to deliver a 6% growth in operating income to PHP 16.6 billion. Consolidated
EBITDA rose 4% to PHP 22.4 billion. Income from operations was PHP 16.6 billion against
PHP 15.6 billion a year ago. Net sales were PHP 159.2 billion against PHP 194.9 billion a
year ago.


Mr. Bonifacio Asurfin, the petitioner of the case formerly worked in San Miguel
Corporation refferred as respondents as utility/miscellaneous worker in February 1972. On
November 1, 1973, he became a regular employee paid on daily basis as a Forklift Operator.
On November 16, 1981, he became a monthly paid employee promoted as Stock Clerk.
Because the company undergone reorganization, his position was abolished and he
was later on assigned as warehouse checker at the Sum-ag Sales office, Su-ag, Bacolod 1984.
On April 1, 1996, respondent SMC implemented a new marketing system known as
the "pre-selling scheme" at the Sum-ag Beer Sales Office. As a consequence, all positions of
route sales and warehouse personnel were declared redundant.
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The petitioner filed a complaint for illegal dismissal against the respondent after it
fails to include him among the employees who signify their willingness to be absorbed by the
company after its announcement for retrenchment of their workers on ground of redundancy.
Apparently, respondent gave their employees the choice to opt to avail of the early retirement
package they offer or for re-deployment to its other sales offices. The petitioner chose to be
absorbed but was included in the list among those who want to avail of the retirement
package. Despite his manifestation of his willingness to be demoted to any position as long as
the company retain him for employment he was still dismissed from work. The labor arbiter
dismissed his complaint due to lack of merit and on appeal the decision was set aside by the
NLRC which ordered respondent to reinstate petitioner with payment of backwages. The
respondent appealed to the CA which reversed the decision of the NLRC and reinstated the
judgment of the labor arbiter. Thus, this petition before the SC.


The petitioner won on his case. It was proven that there was is an illegal dismissal of
the petitioner from employment. The court held that based from Dole Philippines, Inc. v.
NLRC, citing the leading case of Wiltshire File Co., Inc. v. NLRC, the nature of redundancy
is an authorized cause for dismissal wherein there is duplication of work of employees. It is
upon the judgment of the employer to determine whether an employees services are
sustainable and properly terminable. However, the employer should declare redundancy with
a just cause and in good faith. The court noted that the respondent was adamant from the
request of the petitioner to be retained despite his willingness to be demoted in position while
the same request of other employees was granted. The warehouse which respondent claims to
close remains to be in operation. The respondent also did not establish criteria in dismissing
the petitioner and the court gave weight to the petitioners predicament that his dismissal may
be related to his expose on some irregularities of transaction involving their manager. The
court upholds the right of every worker for security of tenure thus due to failure of the
respondent to give justifiable cause for dismissing petitioner, the decision of the Court of
Appeals was set aside and reinstated the decision of the NLRC, ordering reinstatement of the
petitioner with full backwages and respondent is likewise ordered to pay petitioner the sum
equivalent to ten percent (10%) of his total monetary award as attorneys fees

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Management has a wide latitude to conduct its own affairs in accordance with the necessities

of its business. This so-called management prerogative, however, should be exercised in accordance
with justice and fair play.
In case of illegal practice of such, complains should be filed in the right office. In this
decided case, I do believed that justice was rightly served. As what our Labor Law have, an
illegally dismissed employee can claim for reinstatement, full backwages, damages, other
benefits which rightfully belongs to him and attorneys fee and these claims should be stated
in a complaint filed with the concerned tribunal.
As in the part of SMC, they should have listened and put into considerations of what
petitioner had said. In the first place, we can conclude that SMC is bias on the matter of
termination of its employee. There should be a legal basis for the termination of such
employment and the same must be done in a lawful manner. There should be valid criteria in
terminating employees which not limited to less preferred status, efficiency; and seniority.
SMC or any other company should be fair to every employee. Company should make it
clearly to the employees the true nature of their termination explaining to them the grounds
for termination.
Best practices for termination procedures should be set with certain factors in mind,
such as selecting a day for terminations ensuring no discrimination laws or labor contracts are
Legal considerations are not the only elements involved in employee termination.
Common HR termination etiquette includes terminating an employee both verbally and in
writing, giving the employee a chance to appeal the termination or accept a severance
package. Additional considerations include what effects (if any) termination will have on
remaining employees, such as their morale and productivity. HR must also determine if the
position will be eliminated or refilled and whether the termination places a burden on
remaining employees and their workload.


A. The Whole Case Citation

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Republic of the Philippines

G.R. No. 156658 March 10, 2004
Coca Cola Plant, then a department of respondent San Miguel Beer Corporation (SMC), hired
petitioner as a utility/miscellaneous worker in February 1972. On November 1, 1973, he
became a regular employee paid on daily basis as a Forklift Operator. On November 16,
1981, he became a monthly paid employee promoted as Stock Clerk.
Sometime in 1984, the sales office and operations at the Sum-ag, Bacolod City Sales Office
were reorganized. Several positions were abolished including petitioners position as Stock
Clerk. After reviewing petitioners qualifications, he was designated warehouse checker at the
Sum-ag Sales Office.
On April 1, 1996, respondent SMC implemented a new marketing system known as the "preselling scheme" at the Sum-ag Beer Sales Office. As a consequence, all positions of route
sales and warehouse personnel were declared redundant. Respondent notified the DOLE
Director of Region VI that 22 personnel of the Sales Department of the Negros Operations
Center1 would be retired effective March 31, 1995.
Respondent SMC thereafter wrote a letter2 to petitioner informing him that, owing to the
implementation of the "pre-selling operations" scheme, all positions of route and warehouse
personnel will be declared redundant and the Sum-ag Sales Office will be closed effective
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April 30, 1996. Thus, from April 1, 1996 to May 15, 1996, petitioner reported to respondents
Personnel Department at the Sta. Fe Brewery, pursuant to a previous directive.
Thereafter, the employees of Sum-ag sales force were informed that they can avail of
respondents early retirement package pursuant to the retrenchment program, while those who
will not avail of early retirement would be redeployed or absorbed at the Brewery or other
sales offices. Petitioner opted to remain and manifested to Acting Personnel Manager
Salvador Abadesco his willingness to be assigned to any job, considering that he had three
children in college.3
Petitioner was surprised when he was informed by the Acting Personnel Manager that his
name was included in the list of employees who availed of the early retirement package.
Petitioners request that he be given an assignment in the company was ignored by the Acting
Personnel Manager.
Petitioner thus filed a complaint for illegal dismissal with the NLRC, docketed as RAB Case
No. 06-06-10233-96. On December 27, 1996, the Labor Arbiter dismissed the complaint for
lack of merit. Petitioner appealed to the National Labor Relations Commission (NLRC)
which set aside the Labor Arbiters decision and ordered respondent SMC to reinstate
petitioner to his former or equivalent position with full backwages.4
Respondent filed a petition with the Court of Appeals which reversed the decision of the
NLRC and reinstated the judgment of the Labor Arbiter dismissing the complaint for illegal
dismissal. Petitioners motion for reconsideration5 was denied in a Resolution dated
December 11, 2002.6
Hence, this petition for review assigning the following errors:
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The primordial issue to be resolved is whether or not the dismissal of petitioner is based on a
just and authorized cause.
Factual findings of administrative bodies, being considered experts in their fields, are binding
on this Court. However, this is a general rule which holds true only when established
exceptions do not obtain. One of these exceptive circumstances is when the findings of the
Labor Arbiter and the NLRC are conflicting. Considering that the ruling of the Labor Arbiter
was reversed by the NLRC whose judgment was in turn overturned by the appellate court, it
behooves us in the exercise of our equity jurisdiction to determine which findings are more
conformable to the evidentiary facts.7
In the case at bar, petitioner was dismissed on the ground of redundancy, one of the
authorized causes for dismissal.8 In Dole Philippines, Inc. v. NLRC,9 citing the leading case
of Wiltshire File Co., Inc. v. NLRC,10 we explained the nature of redundancy as an
authorized cause for dismissal thus:
. . . redundancy in an employers personnel force necessarily or even ordinarily refers to
duplication of work. That no other person was holding the same position that private
respondent held prior to the termination of his services, does not show that his position had
not become redundant. Indeed, in any well-organized business enterprise, it would be
surprising to find duplication of work and two (2) or more people doing the work of one
person. We believe that redundancy, for purposes of the Labor Code, exists where the
services of an employee are in excess of what is reasonably demanded by the actual
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requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous,

and superfluity of a position or positions may be the outcome of a number of factors, such as
overhiring of workers, decreased volume of business, or dropping of a particular product line
or service activity previously manufactured or undertaken by the enterprise.
The determination that employees services are no longer necessary or sustainable and,
therefore, properly terminable is an exercise of business judgment of the employer. The
wisdom or soundness of this judgment is not subject to discretionary review of the Labor
Arbiter and the NLRC, provided there is no violation of law and no showing that it was
prompted by an arbitrary or malicious act.11 In other words, it is not enough for a company
to merely declare that it has become overmanned. It must produce adequate proof that such is
the actual situation to justify the dismissal of the affected employees for redundancy.12
Persuasive as the explanation proffered by respondent may be to justify the dismissal of
petitioner, a number of disturbing circumstances, however, leave us unconvinced.
First, of the 23 SMC employees assigned at the Sum-ag Sales Office/Warehouse, 9 accepted
the offer of SMC to avail of the early retirement whose separation benefits was computed at
250% of their regular pay. The rest, including petitioner, did not accept the offer. Out of the
remaining fourteen 14, only petitioner clearly manifested, through several letters, 13 his desire
to be redeployed to the Sta. Fe Brewery or any sales office and for any position not
necessarily limited to that of a warehouse checker. In short, he was even willing to accept a
demotion just to continue his employment. Meanwhile, other employees who did not even
write a letter to SMC were redeployed to the Sta. Fe Brewery or absorbed by other
offices/outlets outside Bacolod City.14
Second, petitioner was in the payroll of the Sta. Fe Brewery and assigned to the Materials
Section, Logistics Department, although he was actually posted at the Sum-ag Warehouse. 15
Thus, even assuming that his position in the Sum-ag Warehouse became redundant, he should
have been returned to the Sta. Fe Brewery where he was actually assigned and where there
were vacant positions to accommodate him.
Third, it appears that despite respondents allegation that it ceased and closed down its
warehousing operations at the Sum-ag Sales Office, actually it is still used for warehousing
activities and as a transit point where buyers and dealers get their stocks. 16 Indeed, the Sum12 | P a g e

ag Office is strategically situated on the southern part of Bacolod City making it convenient
for dealers from the southern towns of Negros Occidental to get their stocks and deposit their
empty bottles in the said warehouse, thereby decongesting the business activities at the Sta.
Fe Brewery.
Fourth, in selecting employees to be dismissed, a fair and reasonable criteria must be used,
such as but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency;
and (c) seniority.17 In the case at bar, no criterion whatsoever was adopted by respondent in
dismissing petitioner. Furthermore, as correctly observed by the NLRC, respondent "has not
shown how the cessation of operations of the Sum-ag Sales Office contributed to the ways
and means of improving effectiveness of the organization with the end in view of efficiency
and cutting distribution overhead and other related costs. Respondent, thus, clearly resorted to
sweeping generalization[s] in dismissing complainant." 18 Indeed, petitioners predicament
may have something to do with an incident where he incurred the ire of an immediate
superior in the Sales Logistics Unit for exposing certain irregularities committed by the
In the earlier case of San Miguel Corporation v. NLRC, 20 respondents reasons for
terminating the services of its employees in the very same Sum-ag Sales Office was rejected,
to wit:
Even if private respondents were given the option to retire, be retrenched or dismissed, they
were made to understand that they had no choice but to leave the company. More bluntly
stated, they were forced to swallow the bitter pill of dismissal but afforded a chance to
sweeten their separation from employment. They either had to voluntarily retire, be
retrenched with benefits or be dismissed without receiving any benefit at all.
What was the true nature of petitioners offer to private respondents? It was in reality a
Hobsons choice.21 All that the private respondents were offered was a choice on the means or
method of terminating their services but never as to the status of their employment. In short,
they were never asked if they wanted to work for petitioner.
In the case at bar, petitioner is similarly situated. It bears stressing that whether it be by

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redundancy or retrenchment or any of the other authorized causes, no employee may be

dismissed without observance of the fundamentals of good faith.
It is not difficult for employers to abolish positions in the guise of a cost-cutting measure and
we should not be easily swayed by such schemes which all too often reduce to near nothing
what is left of the rubble of rights of our exploited workers.22 Given the nature of petitioners
job as a Warehouse Checker, it is inconceivable that respondent could not accommodate his
services considering that the warehousing operations at Sum-ag Sales Office has not shut
All told, to sustain the position taken by the appellate court would be to dilute the
workingmans most important right: his constitutional right to security of tenure. While
respondent may have offered a generous compensation package to those whose services were
terminated upon the implementation of the "pre-selling scheme," we find such an offer, in the
face of the prevailing facts, anathema to the underlying principles which give life to our labor
statutes because it would be tantamount to likening an employer-employee relationship to a
salesman and a purchaser of a commodity. It is an archaic abomination. To quote what has
been aptly stated by former Governor General Leonard Wood in his inaugural message before
the 6th Philippine Legislature on October 27, 1922 "labor is neither a chattel nor a
commodity, but human and must be dealt with from the standpoint of human interest."23
As has been said: "We do not treat our workers as merchandise and their right to security of
tenure cannot be valued in precise peso-and-centavo terms. It is a right which cannot be
allowed to be devalued by the purchasing power of employers who are only too willing to
bankroll the separation pay of their illegally dismissed employees to get rid of them." 24 This
right will never be respected by the employer if we merely honor it with a price tag. The
policy of "dismiss now and pay later" favors moneyed employers and is a mockery of the
right of employees to social justice.25
WHEREFORE, in view of all the foregoing, the petition is GRANTED. The Decision of the
Court of Appeals in CA-G.R. SP No. 53521 dated April 10, 2002, and the Resolution dated
December 11, 2002 denying petitioners Motion for Reconsideration, are SET ASIDE. The
decision of the National Labor Relations Division dated February 20, 1998 is REINSTATED.
Accordingly, petitioners dismissal is declared illegal, and respondent is ordered to reinstate
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him to his former or equivalent position, with full backwages computed from April 1, 1996
up to his actual reinstatement. Respondent is likewise ordered to pay petitioner the sum
equivalent to ten percent (10%) of his total monetary award as attorneys fees.
Davide, Jr., C.J., (Chairman), Carpio, and Azcuna, JJ., concur.
Panganiban, J., on official leave.

1 Record., p. 98.
2 Id., p. 104.
3 Rollo, p. 41.
4 Id., pp. 35-44.
5 Id., p. 31.
6 Id., p. 44.
7 Progressive Development Corporation v. NLRC, 344 SCRA 512 [2000]; PAL v. NLRC, 328
SCRA 273 [2000]; Aklan Electric Cooperative, Inc. v. NLRC, 323 SCRA 258 [2000];
Samson v. NLRC, 330 SCRA 460 [2000].
8 Article 283, Labor Code.
9 417 Phil. 428 [2001].
10 G.R. No. 82249, 7 February 1991, 193 SCRA 665.
11 Wiltshire File Co., Inc. v. NLRCA, supra.
12 Golden Thread Knitting Industries, Inc. v. NLRC, 364 Phil. 216 [1999], citing Salonga v.
NLRC, G.R. No. 118120, 23 February 1996, 254 SCRA 111; Guerrero v. NLRC, G.R. No.
119842, 30 August 1996, 261 SCRA 301; San Miguel Jeepney Service v. NLRC, G.R. No.
92772, 28 November 1996, 265 SCRA 35.
13 Record, pp. 324, 326, 501-502.
14 Id., p. 496.
15 Id., p. 130.
16 Id., p. 129.

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17 Capital Wireless, Inc. v. Confesor, 332 Phil. 78 [1996], citing Asiaworld Publishing
House, Inc. v. Ople, G.R. No. 56398, 23 July 1987, 152 SCRA 219.
18 NLRC Decision, p. 7; Records, p. 41.
19 Rollo, pp. 39-41.
20 G.R. No. 107693, 23 July 1998, 293 SCRA 13 [1998].
21 Hobsons choice means no choice at all; a choice between accepting what is offered or
having nothing at all. It refers to the practice of Tobias Hobson, an English stable-owner in
the 17th century, of offering only the horse nearest the stable door.
22 Palmeria v. NLRC, G.R. Nos. 113290-91, 3 August 1995, 247 SCRA 57.
23 Cited in Dissenting opinion, Puno J., Serrano v. NLRC, 323 SCRA 445, 519 [2000].
24 Palmeria v. NLRC, supra.
25 See note 23, p. 523

B. Nature of the Company

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C. References

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