Imasen Philippine Manufacturing Corporation (IPMC) v.

Ramonchito T. Alcon & Joann S. Papa

GR No. 194884, 22 October 2014

(Sexual intercourse inside company premises during working

hours constitute serious misconduct punishable by dismissal)

-in this case, no harm in the business but still considered immoral.
(??)

FACTS:

Ramonchito and Joann were hired as manual welders in 2001 by

IPMC, a company engaged in the manufacture of auto-seat
recliners.

Around 12:40 A.M. of October 5, 2002, when Ramonchito and

Joann were on second-shift duty. Cyrus, a security guard on duty,
patrolled and inspected the company premises. When he reached
the Tools and Die Section, he heard the sound of an industrial fan
running; intending to turn the fan off, he followed the sound and
there Cyrus discovered Ramonchito and Joann having sexual
intercourse using a piece of cartoon as mattress. Cyrus went back
to the guard house and requested his buddy Danilo, to conduct a
follow-up inspection. When he went to the Tool and Die Section,
Danilo saw several employees leaving the area, including
Ramonchito and Joann, where he noticed Ramonchito picked up
the cartoon they used and put it back in its proper place. Curys
then submitted a handwritten report to the companys Finance
and Administration Manager.

The company then issued separate interoffice memorandum to

Ramonchito and Joann directing them to submit their memoranda,
which the two did, claiming it was impossible for them to have
sexual intercourse as there were other employees in the area;
they were merely sleeping. An administrative investigation
ensued where Cyrus and Danilo reiterated the contents of their
report.
Thereafter, the company thru another memorandum terminated
Ramonchito and Joanns services, finding them guilty as charged
and characterizing their act as gross misconduct contrary to
existing company policies, rules and regulations.

Ramonchito and Joann thus filed a complaint for illegal

dismissal before the NLRC, reiterating their assertions at the
hearing.
The Labor Arbiter ruled their dismissal as valid, which the NLRC
affirmed.

However, the Court of Appeals, upon petition for certiorari by

Ramonchito and Joann, reversed and set aside the NLRC decision
holding that sexual misconduct inside company premises not
enough to warrant dismissal, but imposed on them the penalty of
three months suspension. Thus, the company elevated its case to
the Supreme Court.

ISSUE:
Whether or not sexual intercourse inside company premises
during working hours constitute serious misconduct and which
punishable by dismissal.

HELD:

Yes, sexual intercourse inside company premises during working

hours constitute serious misconduct which is punishable by
dismissal.

Sexual acts and intimacies between two consenting adults

belong, as a principled ideal, to the realm of purely private
relations. Whether aroused by lust or inflamed by sincere
affection, sexual acts should be carried out at such place, time
and circumstance that, by the generally accepted norms of
conduct, will not offend public decency nor disturb the generally
held or accepted social morals. Under these parameters, sexual
acts between two consenting adults do not have a place in
the work environment.
Indisputably, the respondents engaged in sexual intercourse
inside company premises and during work hours. These
circumstances, by themselves, are already punishable
misconduct. Added to these considerations, however, is the
implication that the respondents did not only disregard company
rules but flaunted their disregard in a manner that could reflect
adversely on the status of ethics and morality in the company.

Additionally, the respondents engaged in sexual intercourse in an

area where co-employees or other company personnel have ready
and available access. The respondents likewise committed their
act at a time when the employees were expected to be and had,
in fact, been at their respective posts, and when they themselves
were supposed to be, as all other employees had in fact been,
working.
Under these factual premises and in the context of legal
parameters we discussed, we cannot help but consider the
respondents misconduct to be of grave and aggravated
character so that the company was justified in imposing
the highest penalty available dismissal. Their infraction
transgressed the bounds of socially and morally accepted human
public behavior, and at the same time showed brazen disregard
for the respect that their employer expected of them as
employees. By their misconduct, the respondents, in effect,
issued an open invitation for others to commit the same
infraction, with like disregard for their employers rules, for the
respect owed to their employer, and for their co-employees
sensitivities. Taken together, these considerations reveal a
depraved disposition that the Court cannot but consider as a valid
cause for dismissal.

In ruling as we do now, we considered the balancing between the

respondents tenurial rights and the petitioners interests the
need to defend their management prerogative and to maintain as
well a high standard of ethics and morality in the workplace.
Unfortunately for the respondents, in this balancing under
the circumstances of the case, we have to rule against
their tenurial rights in favor of the employers
management rights.

(Engaging in illicit sexual relations prohibited under a

personnel policy is a ground for termination even if does not
connect to the performance of his duties.)

Co-employee complains that married employee having

relationship with co-employee's sister. It was based on "ethical
grounds" i.e. disgrace to the community.

G.R. No. 173489 : February 25, 2013

ALILEM CREDIT COOPERATIVE, INC., now known as ALILEM

MULTIPURPOSE COOPERATIVE, INC., Petitioner, v
.SALVADOR M. BANDIOLA, JR., Respondent.

PERALTA, J.:

FACTS:
Respondent was employed by petitioner as bookkeeper.
Petitioner's Board of Directors (the Board) received a letter from a
certain Napoleon Gao-ay (Napoleon) reporting the alleged
immoral conduct and unbecoming behavior of respondent by
having an illicit relationship with Napoleon sister, Thelma G.
Palma (Thelma). This prompted the Board to conduct a
preliminary investigation. During the preliminary investigation,
the Board received evidence of respondent alleged extramarital
affair.

Respondent, on the other hand, denied the accusation against

him. He, instead, claimed that the accusation was a result of the
insecurity felt by some members of the cooperative and of the
Board because of his growing popularity owing to his exemplary
record as an employee. Thelma executed an affidavit likewise
denying the allegations of extra-marital affair.

Meanwhile, on June 7, 1997, the Board received a petition from

about fifty members of the cooperative asking the relief of
respondent due to his illicit affair with Thelma.

In its Summary Investigation Report, the Ad Hoc Committee of

petitioner concluded that respondent was involved in an extra-
marital affair with Thelma. On July 10, 1997, the Chairman of the
Board sent a letter to respondent informing him of the existence
of a prima facie case against him for "illicit marital affair, an act
that brings discredit to the cooperative organization and a
cause for termination per AMPC (Alilem Multi-Purpose
Cooperative) Personnel Policy. Respondent was directed to
appear and be present at the AMPC office for a hearing. He was
likewise advised of his right to be assisted by counsel.

On the day of the hearing, respondent requested for

postponement on the ground that his lawyer was not available.
The request was, however, denied and the hearing proceeded as
scheduled.

In a Memorandum dated July 16, 1997, respondent was informed

of Board Resolution No. 05, series of 1997 embodying the Board
decision to terminate his services as bookkeeper of petitioner,
effective July 31, 1997, without any compensation or benefit
except the unpaid balance of his regular salary for services
actually rendered.

Aggrieved, respondent filed a Complaint for Illegal Dismissal

against petitioner before the Regional Arbitration Branch of the
NLRC.

On April 30, 1998, the Labor Arbiter (LA) dismissed respondent

complaint for lack of merit. The LA concluded that respondent had
been or might still be carrying on an affair with a married woman.
The LA found it unforgiving in the case of a married employee
who sleeps with or has illicit relations with another married person
for in such case, the employee sullies not only the reputation of
his spouse and his family but the reputation as well of the spouse
of his paramour and the latter family. As opposed to respondent
claim that the accusation is a mere fabrication of some of the
directors or cooperative members who were allegedly envious of
his growing popularity, the LA gave more credence to the
testimonies of petitioner witnesses who were relatives of Thelma
and who had no motive to falsely testify because their family
reputation was likewise at a risk of being tarnished. The LA, thus,
found respondent to have been validly dismissed from
employment for violation of the cooperative Personnel Policy. The
LA also found no violation of respondent right to due process as
he was given ample opportunity to defend himself from the
accusation against him.

On appeal, the NLRC set aside the LA decision. The NLRC found
petitioner Personnel Policy to be of questionable existence and
validity because it was unnumbered. It held that even assuming
that respondent had an extra-marital affair with a married
woman, the latter is not his fellow worker in petitioner business
establishment. It, thus, concluded that respondent dismissal was
not founded on any of the just causes for termination of
employment under Article 282 of the Labor Code, as amended.
Petitioner elevated the matter to the CA, but it failed to obtain a
favorable decision. Petitioner now comes before the Court in this
petition for review on certiorari insisting on the validity of
respondent dismissal from employment.

ISSUE: Whether or not petitioner illegally dismissed respondent.

HELD:

No, Bandiola was not illegally dismissed.

The Court of Appeals decision is reversed and set aside.

It is undisputed that respondent was dismissed from employment

for engaging in extramarital affairs, a ground for termination of
employment stated in petitioner Personnel Policy. This basis of
termination was made known to respondent as early as the
first communication made by petitioner. In its June 20, 1997
letter, petitioner directed respondent to explain in writing or
personal confrontation why he should not be terminated for
violation of Section 4.1.4 of the Personnel Policy. Respondent
merely denied the accusation against him and did not question
the basis of such termination. When the LA was called upon to
decide the illegal dismissal case, it ruled in favor of petitioner and
upheld the basis of such dismissal which is the cited Personnel
Policy. The NLRC, however, refused to recognize the existence and
validity of petitioner Personnel Policy on which the ground for
termination was embodied.

The existence of the Personnel Policy containing

provisions on the grounds for termination of employees
was not questioned by respondent. In his position paper,
respondent only assailed the effectivity of the policy, as for him as
it was amended on the same date as the letter-complaints against
him. In other words, he claimed that the policy was amended
in order to include therein the ground for his termination
to make sure that he is removed from his position.
Contrary to respondent claim, with the amendment of the
Personnel Policy, petitioner did not create a new ground for
the termination of employment to make sure that respondent
is removed from his position. The ground under the old policy is
similar to that provided for in the new policy. The enumeration
containing the specific act of "illicit marital affairs" is not an
additional ground, but an example of an act that brings
discredit to the cooperative. It is merely an interpretation of
what petitioner considers as such. It is, thus, clear from the
foregoing that engaging in extra-marital affairs is a
ground for termination of employment not only under the
new but even under the old Personnel Policy of petitioner.
The effectivity of the policy as to respondent cannot, therefore, be
questioned.

To be sure, an employer is free to regulate all aspects of

employment. It may make reasonable rules and regulations for
the government of its employees which become part of the
contract of employment provided they are made known to
the employee. In the event of a violation, an employee may be
validly terminated from employment on the ground that an
employer cannot rationally be expected to retain the employment
of a person whose lack of morals, respect and loyalty to his
employer, regard for his employer rules and application of the
dignity and responsibility, has so plainly and completely been
bared.

Applying now the above-discussed ground for termination, we

now determine whether respondent was properly dismissed from
employment. In other words, did petitioner adequately prove that
respondent indeed engaged in extra-marital affairs, an act which
petitioner considers as would bring discredit to the cooperative?

We answer in the affirmative.

The employer evidence consists of sworn statements of

either relatives or friends of Thelma and respondent. They
either had direct personal knowledge of the illicit relationship or
revealed circumstances indicating the existence of such
relationship.

There is also no reason to doubt the statement of Melanie Gao-ay,

the wife of Napoleon, who witnessed the embarrassing
"encounter", to borrow the term she used, between [respondent]
and Thelma in her own boarding house.

While respondent act of engaging in extra--marital affairs

may be considered personal to him and does not directly
affect the performance of his assigned task as
bookkeeper, aside from the fact that the act was
specifically provided for by petitioner Personnel Policy as
one of the grounds for termination of employment, said
act raised concerns to petitioner as the Board received
numerous complaints and petitions from the cooperative
members themselves asking for the removal of
respondent because of his immoral conduct.

The next question is whether procedural due process was

observed in the termination of respondent services. "Before the
services of an employee can be validly terminated, the employer
must furnish him two written notices: (a) a written notice served
on the employee specifying the ground or grounds for
termination, and giving the employee reasonable opportunity to
explain his side; and (b) 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. "The employer must inform the employee of the
charges against him and to hear his defenses. A full adversarial
proceeding is not necessary as the parties may be heard through
pleadings, written explanations, position papers, memorandum or
oral argument.

In this case, respondent was adequately afforded the

opportunity to defend himself and explain the accusation
against him. Upon receipt of the complaint, petitioner conducted
a preliminary investigation and even created an Ad Hoc
Committee to investigate the matter. Respondent was directed to
explain either in writing or by a personal confrontation with the
Board why he should not be terminated for engaging in illicit
affair. Not only did petitioner give him the opportunity but
respondent in fact informed petitioner that he opted to present
his side orally and did so as promised when he specifically denied
such allegations. Moreover, respondent was also allowed to
peruse the investigation report prepared by the Ad Hoc
Committee and was advised that he was entitled to assistance of
counsel. Afterwhich, hearing was conducted. It was only after
thorough investigation and proper notice and hearing to
respondent that petitioner decided whether to dismiss the former
or not. The decision to terminate respondent from employment
was embodied in Board Resolution No. 05, series of 1997 a copy
of which was furnished respondent. With this resolution,
respondent was adequately notified of petitioner decision to
remove him from his position. Respondent cannot now claim that
his right to due process was infringed upon.

GRANTED
Lovers' fight outside workplace - serious misconduct? NO.

Michael J. Lagrosas v. Bristol-Myers Squibb (Phil)

September 12, 2008

FACTS:

Petitioner and Ma. Dulcena Lim were lovers and also both
employee Bristol-Myers Squibb.

Sometime, after a meeting, Lagrosas saw Lim rode with another

guy Menquito. Due to jealousy, petitioner approached them and
hit Menquito with a metal steering wheel lock. When Lim tried to
intervene, Lagrosas accidentally hit her head.

In violation of the Code of Discipline for Territory Managers,

Bristol-Myers dismissed Lagrosas. Lagrosas then filed a
complaint illegal dismissal, non-payment of vacation and sick
leave benefits, 13th month pay, attorneys fees, damages and fair
market value of his Team Share Stock Option Grant.

Labor Arbiter declared the dismissal illegal.

National Labor Relations Commission (NLRC) set aside the

Decision of Labor Arbiter. It held that Lagrosas was validly
dismissed for serious misconduct in hitting his co-employee and
another person with a metal steering wheel lock.

NLRC issued a Resolution reversing its earlier ruling. It

ratiocinated that the incident was not work-related since it
occurred only after the district meeting of territory managers.

The appellate court considered the misconduct as having been

committed in connection with Lagrosas duty as Territory Manager
since it occurred immediately after the district meeting of territory
managers. It also held that the gravity and seriousness of the
misconduct cannot be denied.

ISSUE: WON Lagrosas was illegally dismissed.

HELD:

YES, Lagrosas was illegally dismissed.

For misconduct or improper behavior to be a just cause for

dismissal, it (a) must be serious; (b) must relate to the
performance of the employees duties; and (c) must show that the
employee has become unfit to continue working for the employer.

Tested against the foregoing standards, it is clear that Lagrosas

was not guilty of serious misconduct. It may be that the injury
sustained by Lim was serious since it rendered her unconscious
and caused her to suffer cerebral contusion that necessitated
hospitalization for several days. But we fail to see how such
misconduct could be characterized as work-related and reflective
of Lagrosas unfitness to continue working for Bristol-Myers.

Although we have recognized that fighting within company

premises may constitute serious misconduct, we have also held
that not every fight within company premises in which an
employee is involved would automatically warrant dismissal from
service. More so, in this case where the incident occurred outside
of company premises and office hours and not intentionally
directed against a co-employee, as hereafter explained.

First, the incident occurred outside of company premises and

after office hours since the district meeting of territory managers
which Lim attended at McDonalds had long been finished.
McDonalds may be considered an extension of Bristol-Myers office
and any business conducted therein as within office hours, but the
moment the district meeting was concluded, that ceased too.
When Lim dined with her friends, it was no longer part of the
district meeting and considered official time. Thus, when Lagrosas
assaulted Lim and Menquito upon their return, it was no longer
within company premises and during office hours. Second, Bristol-
Myers itself admitted that Lagrosas intended to hit Menquito only.
In the Memorandum dated March 23, 2000, it was stated that You
got out from your car holding an umbrella steering wheel lock and
proceeded to hit Mr. Menquito. Dulce tried to intervene, but you
accidentally hit her on the head, knocking her unconscious.
Indeed, the misconduct was not directed against a co-employee
who unfortunately got hit in the process. Third, Lagrosas was not
performing official work at the time of the incident. He was not
even a participant in the district meeting. Hence, we fail to see
how his action could have reflected his unfitness to continue
working for Bristol-Myers.

In light of Bristol-Myers failure to adduce substantial evidence to

prove that Lagrosas was guilty of serious misconduct, it cannot
use this ground to justify his dismissal. Thus, the dismissal of
Lagrosas employment was without factual and legal basis.
Chua-Qua vs. Hon. Jacobo C. Clave, et al.,
G .R . N o . L-49549, August 30, 1990

Facts:

Evelyn had been employed in an educational institution in

Bacolod City as a teacher since 1963 and, in 1976 when this
dispute arose, was the class adviser in the sixth grade where one
Bobby was enrolled. The teacher and the student (about half the
teacher's age) fell in love and eventually got married in
accordance with the rites of their religion.

On February 4, 1976, private respondent (school) filed with the

sub-regional office of the Department of Labor at Bacolod City an
application for clearance to terminate the employment of
petitioner on the ground that her "abusive and unethical conduct
(is) unbecoming of a dignified school teacher and that her
continued employment is inimical to the best interest, and would
downgrade the high moral values, of the school.

ISSUES:
1. WON teacher falling in love with students are immoral.
2. WON Reinstatement is possible.

HELD:

1.
Teacher falling in love with student, not immoral.

Even the labor arbiter conceded that there was no direct evidence
to show that immoral acts were committed. Nonetheless,
indulging in a patently unfair conjecture, he concluded that "it is
however enough for a sane and credible mind to imagine and
conclude what transpired during those times." In reversing his
decision, the National Labor Relations Commission observed that
the assertions of immoral acts or conducts are gratuitous and that
there is no direct evidence to support such claim.
With the finding that there is no substantial evidence of the
imputed immoral acts, it follows that the alleged violation of
the Code of Ethics governing school teachers would have
no basis. Private respondent (school) utterly failed to show that
petitioner took advantage of her position to court her student. If
the two eventually fell in love, despite the disparity of their ages
and academic levels, this only lends substance to the truism that
the heart has reasons of its own which reason does not know. But,
definitely, yielding to this gentle and universal emotion is not to
be so casually equated with immorality. The deviation of the
circumstances of their marriage from the usual societal pattern
cannot be considered as a defiance of contemporary social mores.
It would seem quite obvious that the avowed policy of the school
in rearing and educating children is being unnecessarily bannered
to justify the dismissal of petitioner. This policy, however, is not at
odds with and should not be capitalized on to defeat the security
of tenure granted by the Constitution to labor. In termination
cases, the burden of proving just and valid cause for
dismissing an employee rests on the employer and his
failure to do so would result in a finding that the dismissal is
unjustified.

2.
Reinstatement, not possible.

The charge against petitioner not having been substantiated, we

declare her dismissal as unwarranted and illegal. It being
apparent, however, that the relationship between petitioner and
private respondent has been inevitably and severely strained,
we believe that it would neither be to the interest of the parties
nor would any prudent purpose be served by ordering her
reinstatement.
Cheryll S. Leus v. St. Scholasticas College Westgrove
Jan 28, 2015

Dismissing an Employee on the Ground of Pregnancy Out

of Wedlock Valid or Not?

(Pregnant teacher in catholic school - not immoral or

disgraceful conduct; both free and consenting adults from
purely public and secular view of morality).
a.) totality of circumstances surrounding the conduct; and
b.) Assessment of the circumstances with the prevailing
norms of conduct i.e. what society considers moral and
respectable.

(different doctrine from Imasen case)

FACTS:

Cheryll was hired by St. Scholasticas College Westgrove (SSCW)

as an Assistant to SSCWs Director of the Lay Apostolate and
Community Outreach Directorate on May 2001. Sometime in
2003, the petitioner and her boyfriend conceived a child out of
wedlock. When SSCW learned of the petitioners pregnancy, Sr.
Edna Quiambao (Sr. Quiambao), SSCWs Directress, advised her to
file a resignation letter effective June 1, 2003. In response, the
petitioner informed Sr. Quiambao that she would not resign from
her employment just because she got pregnant without the
benefit of marriage.

On May 28, 2003, Sr. Quiambao formally directed the petitioner to

explain in writing why she should not be dismissed for engaging
in pre-marital sexual relations and getting pregnant as a result
thereof, which amounts to serious misconduct and conduct
unbecoming of an employee of a Catholic school.

Cheryll replied stating that her pregnancy outside of wedlock

does not amount to serious misconduct. She thereafter
requested a copy of SSCWs policy so that she can better respond
to the charge against her. SSCW did not a have these guidelines
as the guidelines handbook was currently pending of its
promulgation. It instead stated that they follow the 1992 Manual
of Regulations for Private School (1992 MRPS), specifically,
Sec.94, which cites disgraceful or immoral conduct" as a
ground for dismissal, in addition to the just causes for
termination of employment under Art.282, Labor Code.

The Labor Arbiter in Quezon City decided in favor of SSCW,

stating that Cheryll being pregnant out of wedlock is considered
disgraceful and immoral conduct taking into account that she
was employed in a Catholic institution which expect its employees
to live up to the Catholic values it teaches to the students. The
NLRC affirmed the decision of the Labor Arbiter.
ISSUE: WON Cherylls pregnancy out of wedlock constitutes a
valid ground to terminate her employment.

RULING:

The Supreme Court held that Cheryll was illegally dismissed

by her employer. Her pregnancy out of wedlock does not
constitute a valid ground to terminate her employment.

Disgraceful conduct is viewed in two ways, the public and

secular view and religious view. Our laws concern the first
view. Disgraceful conduct per se will not amount to violation of
the law the conduct must affect or poses a danger to the
conditions of society, for example, the sanctity of marriage, right
to privacy and the like.

The Court cited Estrada vs. Escritur in the said case, stating the
following relevant explanation;

(1) if the father of the child is himself unmarried, the woman is

not ordinarily administratively liable for disgraceful and immoral
conduct. It may be a not-so-ideal situation and may cause
complications for both mother and child but it does not give
cause for administrative sanction. There is no law which penalizes
an unmarried mother under those circumstances by reason of her
sexual conduct or proscribes the consensual sexual activity
between two unmarried persons. Neither does the situation
contravene any fundamental state policy as expressed in the
Constitution, a document that accommodates various belief
systems irrespective of dogmatic origins.

(2) if the father of the child born out of wedlock is himself

married to a woman other than the mother, then there is a cause
for administrative sanction against either the father or the
mother. In such a case, the disgraceful and immoral conduct
consists of having extramarital relations with a married person.
The sanctity of marriage is constitutionally recognized and
likewise affirmed by our statutes as a special contract of
permanent union. Accordingly, judicial employees have been
sanctioned for their dalliances with married persons or for their
own betrayals of the marital vow of fidelity. In this case, it was not
disputed that, like respondent, the father of her child was
unmarried. Therefore, respondent cannot be held liable for
disgraceful and immoral conduct simply because she gave birth
to the child Christian Jeon out of wedlock.

Furthermore, there was no substantial evidence to prove

that Cherylls pregnancy out of wedlock caused grave
scandal to SSCW and its students. Mere allegation of such will
not render a judgment in favor of the one making the allegation. It
is the burden of the employer to prove by substantial evidence
that the termination of the employment of the employee was
made and failure to discharge that duty would mean that the
dismissal is not justified and therefore illegal.

The Court ordered SSCW to reinstate Cheryll. But because

this is not possible anymore due to constrained relations with
SSCW, the Court ordered the employer to pay Cheryll separation
pay, full backwages and attorneys fees.

Christine Joy Cadiz v. Brent Hospital ( G.R. 187417, Feb.

24, 2016)

(Immorality of HR pregnant out of wedlock and deemed

terminated until she marries her boyfriend.)

SC: not immoral but reduced backwages.

(immorality is case to case basis)

FACTS:

Petitioner was the human resource officer of respondent Brent

Hospital and Colleges Inc. (Brent). She became pregnant out of
wedlock. Consequently, Brent placed her under an indefinite
suspension from employment. Brent imposed on her the
condition that she subsequently contract marriage with her
then boyfriend for her to be reinstated.

According to Brent, this is in consonance with the policy

against encouraging illicit or common-law relations that
would subvert the sacrament of marriage.

ISSUE: Is the condition validly imposed?

RULING:
No. Statutory law is replete with legislation protecting labor and
promoting equal opportunity in employment. No less than the
1987 Constitution mandates that 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.

The Labor Code of the Philippines, meanwhile, provides: Art. 136.

Stipulation against marriage. It shall be unlawful for an employer
to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.

With particular regard to women, Republic Act No. 9710 or the

Magna Carta of Women protects women against discrimination in
all matters relating to marriage and family relations, including the
right to choose freely a spouse and to enter into marriage only
with their free and full consent. Weighed against these
safeguards, it becomes apparent that Brents condition is
coercive, oppressive and discriminatory. There is no rhyme
or reason for it. It forces Cadiz to marry for economic
reasons and deprives her of the freedom to choose her
status, which is a privilege that inheres in her as an
intangible and inalienable right. While a marriage or no-
marriage qualification may be justified as a bona fide
occupational qualification, Brent must prove two factors
necessitating its imposition, viz:

(1) that the employment qualification is reasonably related to the

essential operation of the job involved; and
(2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.

Brent has not shown the presence of neither of these

factors. Perforce, the Court cannot uphold the validity of
said condition.

Duncan Assoc. of Detailman-PTGWO vs. Glaxo Wellcome

Phils., Inc.
September 17, 2008

(marrying employee of competitor against company rules)

FACTS:

Tecson was hired by Glaxo as a medical representative on Oct. 24,

1995. Contract of employment signed by Tecson stipulates,
among others, that he agrees to study and abide by the existing
company rules; to disclose to management any existing future
relationship by consanguinity or affinity with co-employees or
employees with competing drug companies and should
management find that such relationship poses a possible conflict
of interest, to resign from the company. Company's Code of
Employee Conduct provides the same with stipulation that
management may transfer the employee to another department
in a non-counterchecking position or preparation for employment
outside of the company after 6 months.

Tecson was initially assigned to market Glaxo's products in the

Camarines Sur-Camarines Norte area and entered into a
romantic relationship with Betsy, an employee of Astra,
Glaxo's competition. Before getting married, Tecson's District
Manager reminded him several times of the conflict of interest but
marriage took place in Sept. 1998.

In Jan. 1999, Tecson's superiors informed him of conflict of intrest.

Tecson asked for time to comply with the condition (that either he
or Betsy resign from their respective positions). Unable to comply
with condition, Glaxo transferred Tecson to the Butuan-Surigao
City-Agusan del Sur sales area. After his request against transfer
was denied, Tecson brought the matter to Glaxo's Grievance
Committee and while pending, he continued to act as medical
representative in the Camarines Sur-Camarines Norte sales area.
On Nov. 15, 2000, the National Conciliation and Mediation
Board ruled that Glaxo's policy was valid.

ISSUE: Whether or not the policy of a pharmaceutical company

prohibiting its employees from marrying employees of any
competitor company is valid

RULING:
On Equal Protection

Glaxo has a right to guard its trade secrets, manufacturing

formulas, marketing strategies, and other confidential programs
and information from competitors. The prohibition against pesonal
or marital relationships with employees of competitor companies
upon Glaxo's employees is reasonable under the circumstances
because relationships of that nature might compromise the
interests of the company. That Glaxo possesses the right to
protect its economic interest cannot be denied.

It is the settled principle that the commands of the equal

protection clause are addressed only to the state or those acting
under color of its authority. Corollarily, it has been held in a long
array of US Supreme Court decisions that the equal protection
clause erects to shield against merely privately conduct, however,
discriminatory or wrongful.

The company actually enforced the policy after repeated requests

to the employee to comply with the policy. Indeed the application
of the policy was made in an impartial and even-handed manner,
with due regard for the lot of the employee.

On Constructive Dismissal

Constructive dismissal is defined as a quitting, an involuntary

resignation resorted to when continued employment becomes
impossible, unreasonable or unlikely; when there is demotion in
rank, or diminution in pay; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to
the employee. None of these conditions are present in the
instant case.

HELD:

The challenged policy has been implemented by Glaxo impartially

and disinterestedly for a long period of time. In the case at bar,
the record shows that Glaxo gave Tecson several chances to
eliminate the conflict of interest brought about by his relationship
with Betsy, but he never availed of any of them.

DISPOSITIVE:

"WHEREFORE, the petition is DENIED for lack of merit."

Philippine Telegraph & Telephone Corp. vs. NLRC

FACTS:

PT&T (Philippine Telegraph & Telephone Company) initially hired

Grace de Guzman specifically as Supernumerary Project Worker,
for a fixed period from November 21, 1990 until April 20, 1991 as
reliever for C.F. Tenorio who went on maternity leave. She was
again invited for employment as replacement of Erlina F. Dizon
who went on leave on 2 periods, from June 10, 1991 to July 1,
1991 and July 19, 1991 to August 8, 1991.

On September 2, 1991, de Guzman was again asked to join PT&T

as a probationary employee where probationary period will cover
150 days. She indicated in the portion of the job
application form under civil status that she was single
although she had contracted marriage a few months
earlier. When petitioner learned later about the marriage, its
branch supervisor, Delia M. Oficial, sent de Guzman a
memorandum requiring her to explain the discrepancy. Included
in the memorandum, was a reminder about the companys
policy of not accepting married women for employment.
She was dismissed from the company effective January 29,
1992. Labor Arbiter handed down decision on November 23,
1993 declaring that petitioner illegally dismissed De Guzman, who
had already gained the status of a regular employee.
Furthermore, it was apparent that she had been discriminated on
account of her having contracted marriage in violation of
company policies.

ISSUE: Whether the alleged concealment of civil status can be

grounds to terminate the services of an employee.

HELD:

Article 136 of the Labor Code, one of the protective laws for
women, explicitly prohibits discrimination merely by reason of
marriage of a female employee. It is recognized that company is
free to regulate manpower and employment from hiring to firing,
according to their discretion and best business judgment, except
in those cases of unlawful discrimination or those provided by law.

PT&Ts policy of not accepting or disqualifying from work any

woman worker who contracts marriage is afoul of the right
against discrimination provided to all women workers by our labor
laws and by our Constitution. The record discloses clearly that de
Guzmans ties with PT&T were dissolved principally because of
the companys policy that married women are not qualified for
employment in the company, and not merely because of her
supposed acts of dishonesty.

The government abhors any stipulation or policy in the nature

adopted by PT&T. As stated in the labor code:

ART. 136. Stipulation against marriage. It shall be unlawful

for an employer to require as a condition of employment or
continuation of employment that a woman shall not get married,
or to stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of marriage.

The policy of PT&T is in derogation of the provisions stated in

Art.136 of the Labor Code on the right of a woman to be free from
any kind of stipulation against marriage in connection with her
employment and it likewise is contrary to good morals and public
policy, depriving a woman of her freedom to choose her status, a
privilege that is inherent in an individual as an intangible and
inalienable right. The kind of policy followed by PT&T
strikes at the very essence, ideals and purpose of
marriage as an inviolable social institution and ultimately,
family as the foundation of the nation. Such policy must be
prohibited in all its indirect, disguised or dissembled
forms as discriminatory conduct derogatory of the laws of
the land not only for order but also imperatively required.
Star Paper Corp. v. Simbol
April 12, 2006

(rule vs marriage with a co-employee?)

(no reasonable necessity)
refer to Duncan case

FACTS:

Respondents (complainant employees) were hired after they were

found fit for the job, but were asked to resign when they each
married co-employees. They resisted and assailed the alleged
company policy.

The employer contends that its policy will apply only when one
employee marries a co-employee, but employees remain free to
marry persons other than co-employees.

ISSUE: May an employee be dismissed for being married to a co-

employee?

HELD: NO.

The questioned policy may not facially violate Article 136 of the
Labor Code, but it creates a disproportionate effect and under the
disparate impact theory, the only way it could pass judicial
scrutiny is a showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect. The failure of
[the employer] to prove a legitimate business concern in imposing
the questioned policy cannot prejudice the employee's right to be
free from arbitrary discrimination based upon stereotypes of
married persons working together in one company.

Lastly, the absence of a statute expressly prohibiting marital

discrimination in our jurisdiction cannot benefit the petitioners.
The protection given to labor in our jurisdiction is vast and
extensive that we cannot prudently draw inferences from the
legislature's silence that married persons are not protected under
our Constitution and declare valid a policy based on a prejudice or
stereotype. Thus, for failure of [the employer] to present
undisputed proof of a reasonable business necessity, we
rule that the questioned policy is an invalid exercise of
Management prerogative.

ARMANDO G. YRASUEGUIvs.PHILIPPINE AIRLINES, INC.,

G.R. No. 168081, October 17, 2008

FACTS:

An international flight steward who was dismissed because of his

failure to adhere to the weight standards of the airline company.

The proper weight for a man of his height and body structure is
from 147 to 166 pounds, the ideal weight being 166 pounds, as
mandated by the Cabin and Crew Administration Manual of PAL.

In 1984, the weight problem started, which prompted PAL to send

him to an extended vacation until November 1985. He was
allowed to return to work once he lost all the excess weight. But
the problem recurred. He again went on leave without pay from
October 17, 1988 to February 1989.

Despite the lapse of a ninety-day period given him to reach his

ideal weight, petitioner remained overweight. On January 3, 1990,
he was informed of the PAL decision for him to remain grounded
until such time that he satisfactorily complies with the weight
standards. Again, he was directed to report every two weeks for
weight checks, which he failed to comply with.

On April 17, 1990, petitioner was formally warned that a repeated

refusal to report for weight check would be dealt with accordingly.
He was given another set of weight check dates, which he did not
report to.

On November 13, 1992, PAL finally served petitioner a Notice of

Administrative Charge for violation of company standards on
weight requirements. Petitioner insists that he is being
discriminated as those similarly situated were not treated the
same.

On June 15, 1993, petitioner was formally informed by PAL that

due to his inability to attain his ideal weight, and considering the
utmost leniency extended to him which spanned a period
covering a total of almost five (5) years, his services were
considered terminated effective immediately.

LABOR ARBITER: held that the weight standards of PAL are

reasonable in view of the nature of the job of petitioner.
However, the weight standards need not be complied with
under pain of dismissal since his weight did not hamper the
performance of his duties.

NLRC affirmed.

CA: the weight standards of PAL are reasonable. Thus,

petitioner was legally dismissed because he repeatedly failed to
meet the prescribed weight standards. It is obvious that the issue
of discrimination was only invoked by petitioner for purposes of
escaping the result of his dismissal for being overweight.

ISSUE: WON he was validly dismissed.

HELD: YES

A reading of the weight standards of PAL would lead to no other

conclusion than that they constitute a continuing qualification of
an employee in order to keep the job. The dismissal of the
employee would thus fall under Article 282(e) of the Labor Code.

In the case at bar, the evidence on record militates against

petitioners claims that obesity is a disease. That he was able to
reduce his weight from 1984 to 1992 clearly shows that it is
possible for him to lose weight given the proper attitude,
determination, and self-discipline. Indeed, during the clarificatory
hearing on December 8, 1992, petitioner himself claimed that
[t]he issue is could I bring my weight down to ideal weight which
is 172, then the answer is yes. I can do it now.
Petitioner has only himself to blame. He could have easily availed
the assistance of the company physician, per the advice of PAL.

In fine, We hold that the obesity of petitioner, when placed in the

context of his work as flight attendant, becomes an analogous
cause under Article 282(e) of the Labor Code that justifies his
dismissal from the service. His obesity may not be
unintended, but is nonetheless voluntary. As the CA
correctly puts it, [v]oluntariness basically means that the just
cause is solely attributable to the employee without any external
force influencing or controlling his actions. This element runs
through all just causes under Article 282, whether they be in the
nature of a wrongful action or omission. Gross and habitual
neglect, a recognized just cause, is considered voluntary although
it lacks the element of intent found in Article 282(a), (c), and (d).

NOTES:
The dismissal of petitioner can be predicated on the bona fide
occupational qualification defense. Employment in particular jobs
may not be limited to persons of a particular sex, religion, or
national origin unless the employer can show that sex, religion, or
national origin is an actual qualification for performing the job.
The qualification is called a bona fide occupational qualification
(BFOQ). In short, the test of reasonableness of the company
policy is used because it is parallel to BFOQ. BFOQ is valid
provided it reflects an inherent quality reasonably necessary for
satisfactory job performance.
The business of PAL is air transportation. As such, it has
committed itself to safely transport its passengers. In order to
achieve this, it must necessarily rely on its employees, most
particularly the cabin flight deck crew who are on board the
aircraft. The weight standards of PAL should be viewed as
imposing strict norms of discipline upon its employees.
The primary objective of PAL in the imposition of the weight
standards for cabin crew is flight safety.
Separation pay, however, should be awarded in favor of the
employee as an act of social justice or based on equity. This is so
because his dismissal is not for serious misconduct. Neither is it
reflective of his moral character.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 174184 January 28, 2015
G.J.T. REBUILDERS MACHINE SHOP, GODO FREDO
TRILLANA, and JULIANA TRILLANA, Petitioners,
vs.
RICARDO AMBOS, BENJAMIN PUTIAN, and RUSSELL AMBOS,
Respondents.
DECISION
LEONEN, J.:
To prove serious business losses, employers must present in
evidence financial statements showing the net losses suffered by
the business within a sufficient period of time. Generally, it cannot
be based on a single financial statement showing losses. Absent
this proof, employers closing their businesses must pay the
dismissed employees separation pay equivalent to one-month pay
or to at least one-half-month pay for every year of service,
whichever is higher.
This is a Petition for Review on Certiorari 1 of the Court of Appeals'
Decision,2 granting Ricardo Ambos, Russell Ambos, 3 and Benjamin
Putian's Petition for Certiorari. The Court of Appeals found that
G.J.T. Rebuilders Machine Shop (G.J.T. Rebuilders) failed to prove
its alleged serious business losses. Thus, when it closed its
establishment on December 15, 1997, G.J.T. Rebuilders should
have paid the affected employees separation pay. 4

G.J.T. Rebuilders is a single proprietorship owned by the Spouses

Godofredo and Juliana Trillana (Trillana spouses). It was engaged
in steel works and metal fabrication, employing Ricardo Ambos
(Ricardo), Russell Ambos (Russell), and Benjamin Putian
(Benjamin) as machinists.5

G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building
in Shaw Boulevard, Mandaluyong City, which served as the site of
its machine shop.
On September 8, 1996, a fire partially destroyed the FEA
Building.6

Due to the damage sustained by the building, its owner notified

its tenants to vacate their rented units by the end of September
1996 "to avoid any unforeseen accidents which may arise due to
the damage."7

Despite the building owners notice to vacate, G.J.T. Rebuilders

continued its business in the condemned building. When the
building owner finally refused to accommodate it, G.J.T. Rebuilders
left its rented space and closed the machine shop on December
15, 1997.8 It then filed an Affidavit of Closure before the
Department of Labor and Employment on February 16, 1998 and
a sworn application to retire its business operations before the
Mandaluyong City Treasurers Office on February 25, 1998. 9

Having lost their employment without receiving separation pay,

Ricardo, Russell, and Benjamin filed a Complaint for illegal
dismissal before the Labor Arbiter. They prayed for payment of
allowance, separation pay, and attorneys fees. 10
In their defense, G.J.T. Rebuilders and the Trillana spouses argued
that G.J.T. Rebuilders suffered serious business losses and
financial reverses, forcing it to close its machine shop. Therefore,
Ricardo, Russell, and Benjamin were not entitled to separation
pay.11

Labor Arbiter Facundo L. Leda (Labor Arbiter Leda) decided the

Complaint, finding no convincing proof of G.J.T. Rebuilders alleged
serious business losses. Labor Arbiter Leda, in the Decision12
dated December 28, 1999, found that Ricardo, Russell, and
Benjamin were entitled to separation pay under Article 283 of
the Labor Code.13 In addition, they were awarded attorneys fees,
having been constrained to litigate their claims. 14

Even assuming that G.J.T. Rebuilders closure was due to serious

business losses, Labor Arbiter Leda held that the employees
affected were still entitled to separation pay "based on social
justice and equity."15

G.J.T. Rebuilders and the Trillana spouses appealed Labor Arbiter

Ledas Decision before the National Labor Relations Commission. 16

In contrast with the Labor Arbiters finding, the National Labor

Relations Commission found G.J.T. Rebuilders to have suffered
serious business losses. Because of the fire that destroyed the
building where G.J.T. Rebuilders was renting space, the demand
for its services allegedly declined as "no same customer would
dare to entrust machine works to be done for them in a machine
shop lying in a ruined and condemned building." 17 The National
Labor Relations Commission then concluded that the fire
"proximately caused"18 G.J.T. Rebuilders serious business losses,
with its financial statement for the fiscal year 1997 showing a net
loss of 316,210.00.19

In the Decision20 dated January 25, 2001, the National Labor

Relations Commission vacated and set aside Labor Arbiter
Ledas Decision and dismissed the Complaint for lack of
merit. Since the Commission found that G.J.T. Rebuilders ceased
operations due to serious business losses, it held that G.J.T.
Rebuilders and the Trillana spouses need not pay Ricardo, Russell,
and Benjamin separation pay.

Ricardo, Russell, and Benjamin filed a Motion for Reconsideration,

which the National Labor Relations Commission denied in the
Resolution21 dated March 5, 2001.

Because of the alleged grave abuse of discretion of the National

Labor Relations Commission, a Petition for Certiorari was filed
before the Court of Appeals.22

The Court of Appeals reversed the National Labor Relations

Commissions Decision, agreeing with Labor Arbiter Leda that
G.J.T. Rebuilders failed to prove its alleged serious business
losses. The Court of Appeals conceded that G.J.T. Rebuilders had
to close the machine shop for reasons connected with the fire that
partially destroyed the building where it was renting space.
Nevertheless, G.J.T. Rebuilders continued its business for more
than one year after the fire. Thus, according to the Court of
Appeals, G.J.T. Rebuilders did not suffer from serious business
losses but closed the machine shop to prevent losses.23

With respect to G.J.T. Rebuilders financial statement showing an

alleged net loss in 1997, the Court of Appeals refused to admit it
in evidence since it was not subscribed under oath by the
Certified Public Accountant who prepared it. According to
the Court of Appeals, the financial statement was subscribed
under oath only after G.J.T. Rebuilders had submitted it to Labor
Arbiter Leda as an annex to its Motion to re-open proceedings and
to submit additional evidence. Thus, the Court of Appeals gave
G.J.T. Rebuilders financial statement "scant consideration." 24

In the Decision25 dated January 17, 2006, the Court of Appeals

granted the Petition for Certiorari, vacating and setting aside the
National Labor Relations Commissions Decision. It reinstated
Labor Arbiter Ledas Decision dated December 28, 1999.

G.J.T. Rebuilders and the Trillana spouses filed a Motion for

Reconsideration, which the Court of Appeals denied in the
Resolution26 dated August 11, 2006.

Petitioners G.J.T. Rebuilders and the Trillana spouses filed before

this court a Petition for Review on Certiorari. 27 Respondents
Ricardo, Russell, and Benjamin commented 28 on the Petition, after
which petitioners filed a Reply.29
In their Petition for Review on Certiorari, petitioners maintain that
G.J.T. Rebuilders suffered serious business losses as evidenced by
its financial statement covering the years 1996 and 1997.
Petitioners admit that the financial statement was belatedly
subscribed under oath.30 Nevertheless, "the credibility or veracity
of the entries"31 in the financial statement was not affected since
the Bureau of Internal Revenue received the same unsubscribed
financial statement when G.J.T. Rebuilders allegedly filed its
income tax return on April 15, 1998.32

Considering that petitioners sufficiently proved G.J.T. Rebuilders

serious business losses, petitioners argue that respondents are
not entitled to separation pay.

As for respondents, they contend that G.J.T. Rebuilders failed to

prove its alleged serious business losses. They argue that the
financial statement showing a net loss for the year 1997 was not
credible, having been belatedly subscribed under oath by the
Certified Public Accountant who prepared it.33
With no credible proof of G.J.T. Rebuilders supposed serious
business losses, respondents argue that petitioners must pay
them separation pay under Article 283 of the Labor Code. 34

The issue for our resolution is whether petitioners sufficiently

proved that G.J.T. Rebuilders suffered from serious business
losses.

This petition should be denied.

I
G.J.T. Rebuilders must pay respondents their separation pay for
failure to prove its alleged serious business losses
Article 283 of the Labor Code allows an employer to dismiss an
employee due to the cessation of operation or closure of its
establishment or undertaking, thus:

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
Department of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to
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 to at least one-
half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
The decision to close ones business is a management prerogative
that courts cannot interfere with. 35 Employers can "lawfully close
shop at anytime,"36 even for reasons of their own. "Just as no law
forces anyone to go into business, no law can compel anybody to
continue in it."37 In Mac Adams Metal Engineering Workers Union-
Independent v. Mac Adams Metal Engineering, 38 this court said:
It would indeed be stretching the intent and spirit of the law if
[courts] were to unjustly interfere with the managements
prerogative to close or cease its business operations just because
[the] business operation or undertaking is not suffering from any
loss or simply to provide the workers continued employment. 39

However, despite this management prerogative, employers

closing their businesses must pay the affected workers separation
pay equivalent to one-month pay or to at least one-half-month
pay for every year of service, whichever is higher. 40 The reason is
that an employee dismissed, even for an authorized cause, loses
his or her means of livelihood.41
The only time employers are not compelled to pay separation pay
is when they closed their establishments or undertaking due to
serious business losses or financial reverses. 42
Serious business losses are substantial losses, not de minimis. 43
"Losses" means that the business must have operated at a loss
for a period of time for the employer "to [have] perceived
objectively and in good faith"44 that the business financial
standing is unlikely to improve in the future.
The burden of proving serious business losses is with the
employer.45 The employer must show losses on the basis of
financial statements covering a sufficient period of time. The
period covered must be sufficient for the National Labor Relations
Commission and this court to appreciate the nature and vagaries
of the business.
In North Davao Mining Corporation v. NLRC, 46 North Davao Mining
Corporation presented in evidence financial statements showing a
continuing pattern of loss from 1988 until its closure in 1992. The
company suffered net losses averaging 3 billion a year, with an
aggregate loss of 20 billion by the time of its closure. 47 This court
found that North Davao suffered serious business losses. 48
In Manatad v. Philippine Telegraph and Telephone Corporation, 49
the Philippine Telegraph and Telephone Corporation presented in
evidence financial statements showing a continuing pattern of
loss from 1995 to 1999. 50 By 2000, the corporation suffered an
aggregate loss of 2.169 billion, constraining it to retrench some of
its employees. This court held that the Philippine Telegraph and
Telephone Corporation was "fully justified in implementing a
retrenchment program since it was undergoing business reverses,
not only for a single fiscal year, but for several years prior to and
even after the program."51
In LVN Pictures Employees and Workers Association (NLU) v. LVN
Pictures, Inc.,52 a case G.J.T. Rebuilders cited, LVN Pictures, Inc.
presented in evidence financial statements showing a continuing
pattern of loss from 1957 to 1961. By the time the corporation
closed its business, it had suffered an aggregate loss of
1,560,985.14.53 This court found that LVN Pictures, Inc. suffered
serious business losses.54
Aside from the obligation to pay separation pay, employers must
comply with the notice requirement under Article 283 of the Labor
Code. Employers must serve a written notice on the affected
employees and on the Department of Labor and Employment at
least one month before the intended date of closure. Failure to
comply with this requirement renders the employer liable for
nominal damages.55
We uphold G.J.T. Rebuilders decision to close its establishment as
a valid exercise of its management prerogative. G.J.T. Rebuilders
closed its machine shop, believing that its "former customers . . .
seriously doubted [its] capacity . . . to perform the same quality
[of service]"56 after the fire had partially damaged the building
where it was renting space.
Nevertheless, we find that G.J.T. Rebuilders failed to sufficiently
prove its alleged serious business losses.
The financial statement G.J.T. Rebuilders submitted in evidence
covers the fiscal years 1996 and 1997. Based on the financial
statement, G.J.T. Rebuilders earned a net income of 61,157.00 in
1996 and incurred a net loss of 316,210.00 in 1997.57
We find the two-year period covered by the financial statement
insufficient for G.J.T. Rebuilders to have objectively perceived that
the business would not recover from the loss. Unlike in North
Davao Mining Corporation, Manatad, and LVN Pictures Employees
and Workers Association (NLU), no continuing pattern of loss
within a sufficient period of time is present in this case. In fact, in
one of the two fiscal years covered by the financial statement
presented in evidence, G.J.T. Rebuilders earned a net income. We,
therefore, agree with the Labor Arbiter and the Court of Appeals
that G.J.T. Rebuilders closed its machine shop to prevent losses,
not because of serious business losses. 58
Considering that G.J.T. Rebuilders failed to prove its alleged
serious business losses, it must pay respondents their separation
pay equivalent to one-month pay or at least one-half-month pay
for every year of service, whichever is higher. In computing the
period of service, a fraction of at least six months is considered a
year.59
Ricardo began working as a machinist on February 9, 1978. 60
Since he last worked for G.J.T. Rebuilders on December 15, 1997,
he worked a total of 19 years, 10 months, and six days. This
period is rounded off to 20 years, with the last 10 months and six
days being considered a year.61
Ricardo had a daily salary of 230.00 and worked 13 days a
month.62 His one-month pay, therefore, is equal to 2,990.00. On
the other hand, his one-half-month pay for every year of service is
equal to 29,250.00. The latter amount being higher, Ricardo must
receive 29,250.00 as separation pay.
With respect to Russell, he began his employment on September
1, 1992.63 Since he last worked for G.J.T. Rebuilders on December
15, 1997, he worked a total of five years, three months, and 14
days. This period is rounded off to five years, not six years, since
the last three months and 14 days are less than the six months
required to be considered a year.64
Russell had a daily salary of 225.00 and worked 13 days a
month.65 His one-month pay, therefore, is equal to 2,925.00. On
the other hand, his one-half-month pay for every year of service is
equal to 7,312.50. The latter amount being higher, Russell must
receive 7,312.50 as separation pay.
As for Benjamin, he began working as a machinist on February 1,
1994.66 Since he last worked for G.J.T. Rebuilders on December 15,
1997, he worked a total of three years, 10 months, and 14 days.
This period is rounded off to four years, with the last 10 months
and 14 days being considered a year.67
Benjamin had a daily salary of 225.00 and worked 13 days a
month.68 His one-month pay, therefore, is equal to 2,925.00. On
the other hand, his one-half-month pay for every year of service is
equal to 5,850.00. The latter amount being higher, Benjamin must
receive 5,850.00 as separation pay.
II
G.J.T. Rebuilders must pay respondents
nominal damages for failure to comply
with the procedural requirements for
closing its business
In addition to separation pay, G.J.T. Rebuilders must pay each of
the respondents nominal damages for failure to comply with the
notice requirement under Article 283 of the Labor Code.
Notice of the eventual closure of establishment is a "personal
right of the employee to be personally informed of his [or her]
proposed dismissal as well as the reasons therefor." 69 The reason
for this requirement is to "give the employee some time to
prepare for the eventual loss of his [or her] job." 70
The requirement "is not a mere technicality or formality which the
employer may dispense with."71 Should employers fail to properly
notify their employees, they shall be liable for nominal damages
even if they validly closed their businesses. 72
Generally, employers that validly closed their businesses but
failed to comply with the notice requirement are liable in the
amount of 50,000.00.73 This amount of nominal damages,
however, may be reduced depending on "the sound discretion of
the court."74 In Sangwoo Philippines, Inc. v. Sangwoo Philippines,
Inc. Employees Union-OLALIA,75 we said that:
[i]n the determination of the amount of nominal damages which is
addressed to the sound discretion of the court, several factors are
taken into account: (1) the authorized cause invoked . . .; (2) the
number of employees to be awarded; (3) the capacity of the
employers to satisfy the awards, taking into account their
prevailing financial status as borne by the records; (4) the
employers grant of other termination benefits in favor of the
employees; and (5) whether there was bona fide attempt to
comply with the notice requirements as opposed to giving no
notice at all.76
G.J.T. Rebuilders allegedly "conferred with all [of its employees] of
[its] intention to cease business operations" 77 one month before
closing its business. It allegedly submitted an Affidavit of Closure
to the Department of Labor and Employment on February 16,
1998.78
"Conferring with employees" is not the notice required under
Article 283 of the Labor Code.1wphi1 The law requires a written
notice of closure served on the affected employees. As to when
the written notice should be served on the Department of Labor
and Employment, the law requires that it be served at least one
month before the intended date of closure. G.J.T. Rebuilders
served the written notice on the Department of Labor and
Employment on February 16, 1998, two months after it had closed
its business on December 15, 1997.
With G.J.T. Rebuilders failing to comply with the notice
requirement under Article 283 of the Labor Code, we find that it
deprived respondents of due process. However, considering that
G.J.T. Rebuilders attempted to comply with the notice
requirement, we find the nominal damages of 10,000.00 for each
of the respondents sufficient.79
III
Respondents are not entitled to attorneys fees
Attorneys fees "represent the reasonable compensation [a client
pays his or her lawyer] [for legal service rendered]." 80 The award
of attorneys fees is the exception rather than the rule. 81
Specifically in labor cases, attorneys fees are awarded only when
there is unlawful withholding of wages82 or when the attorneys
fees arise from collective bargaining negotiations that may be
charged against union funds in an amount to be agreed upon by
the parties.83 For courts and tribunals to properly award attorneys
fees, they must make "an express finding of fact and [citation] of
applicable law"84 in their decisions.
In the present case, there is no unlawful withholding of wages or
an award of attorneys fees arising from collective bargaining
negotiations. Neither did the Labor Arbiter nor the Court of
Appeals make findings of fact or cite the applicable law in
awarding attorneys fees. That respondents were "constrained to
engage the services of counsel to prosecute their claims" 85 is not
enough justification since "no premium should be placed on the
right to litigate."86
For these reasons, we delete the award of attorneys fees.
All told, G.J.T. Rebuilders failed to prove that it closed its machine
shop due to serious business losses. Moreover, it failed to comply
with Article 283 of the Labor Code on the notice requirement.
Therefore, petitioners must pay respondents Ricardo Ambos,
Russell Ambos, and Benjamin Putian separation pay and nominal
damages.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The
Court of Appeals Decision dated January 17, 2006 is AFFIRMED
with MODIFICATION.
Petitioners are ordered to PAY respondents their separation pay
with 6% legal interest87 from the finality of this Decision until full
payment:
Ricardo Ambos P29,250.00
 Russell Ambos P7,312.50
Benjamin Putian P5,850.00.
Furthermore, petitioners shall PAY each of the respondents
P10,000.00 as nominal damages with 6% legal interest88 from
the finality of this Decision until full payment.
The award of attorney's fees is DELETED.
SO ORDERED.
MARVIC M.V.F. LEONEN
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
PRESBITERO J. VELASCO JR.* MARIANO C. DEL CASTILLO
Associate Justice Associate Justice
JOSE CATRAL MENDOZA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer
of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the
Division Chairperson's Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court's
Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
*
Designated acting member per S. 0. No. 1910 dated January 12,
2015.
1
Rollo, pp. 315.
2
Id. at 1824. The Decision dated January 17, 2006 was penned
by Associate Justice Roberto A. Barrios and concurred in by
Associate Justices Mario L. Guaria and Santiago Javier Ranada of
the Fifth Division.
3
Russell Ambos was also referred to as "Ruzell Ambos." See rollo,
pp. 18, 36, and 44.
4
Rollo, pp. 2122.
5
Id. at 19.
6
Id. at 29.
7
Id.
8
Id. at 8 and 19.
9
Id. at 56 and 20.
10
Id. at 19.
11
Id. at 1920.
12
Id. at 3643.
13
Id. at 3940. This Article was renumbered to Article 297 by Rep.
Act No. 10151, otherwise known as An Act Allowing the
Employment of Night Workers, Thereby Repealing Articles 130
and 131 of Presidential Decree Number Four Hundred Forty-Two,
as amended, Otherwise Known as the Labor Code of the
Philippines; Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc.
Employees Union Olalia, G.R. No. 173154, December 9, 2013, 711
SCRA 618, 624 [Per J. Perlas-Bernabe, Second Division].
14
Id. at 4142.
15
Id. at 40, citing Banco Filipino Savings and Mortgage Bank v.
National Labor Relations Commission, 266 Phil. 770, 780 (1990)
[Per J. Medialdea, First Division] and International Hardware, Inc. v.
National Labor Relations Commission (Third Division), 257 Phil.
261 (1989) [Per J. Gancayco, First Division].
16
Id. at 44.
17
Id. at 50.
18
Id.
19
Id. at 72.
20
Id. at 4153.
21
Id. at 5455.
22
Id. at 18 and 21.
23
Id. at 2122.
24
Id. at 22.
25
Id. at 1824.
26
Id. at 2628.
27
Id. at 316.
28
Id. at 6066.
29
Id. at 7076.
30
Id. at 9.
31
Id.
32
Id. at 910.
33
Id. at 6364.
34
Id. at 63.
35
Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc., Labor
Union-Super, et al., 585 Phil. 88, 101 (2008) [Per J. Austria-
Martinez, Third Division].
36
Mac Adams Metal Engineering Workers Union-Independent v.
Mac Adams Metal Engineering, 460 Phil. 583, 590 (2003) [Per J.
Corona, Third Division].
37
Id.
38
460 Phil. 583 (2003) [Per J. Corona, Third Division].
39
Id. at 590.
40
LABOR CODE, art. 283, now renumbered to art. 297 by Rep. Act
No. 10151.
41
Indino v. NLRC (Second Division), 258 Phil. 792, 800 (1989) [Per
J. Sarmiento, Second Division].
42
Lopez Sugar Corporation v. Federation of Free Workers, G.R.
Nos. 7570001, August 30, 1990, 189 SCRA 179, 186 [Per J.
Feliciano, Third Division].
43
Philippine Tobacco Flue-Curing & Redrying Corp. v. NLRC, 360
Phil. 218, 236 (1998) [Per J. Panganiban, First Division], citing
Somerville Stainless Steel Corporation v. NLRC, 350 Phil. 859, 869
(1998) [Per J. Panganiban, First Division].
44
Id. at 236237, citing Somerville Stainless Steel Corporation v.
NLRC, 350 Phil. 859, 870 (1998) [Per J. Panganiban, First Division].
45
Reahs Corporation v. NLRC, 337 Phil. 698, 705 (1997) [Per J.
Padilla, First Division].
46
325 Phil. 202 (1996) [Per J. Panganiban, En Banc].
47
Id. at 205.
48
Id. at 212.
49
571 Phil. 494 (2008) [Per J. Chico-Nazario, Third Division].
50
Id. at 501.
51
Id. at 509.
52
146 Phil. 153 (1970) [Per J. Ruiz Castro, En Banc].
53
Id. at 157.
54
Id. at 157 and 166.
55
Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc.
Employees Union-Olalia, G.R. No. 173154, December 9, 2013, 711
SCRA 618, 627629 [Per J. Perlas-Bernabe, Second Division].
56
Rollo, p. 13.
57
Id. at 35.
58
Id. at 2122 and 40.
59
LABOR CODE, art. 283, now renumbered to art. 297 by Rep. Act
No. 10151.
60
Rollo, p. 42.
61
Id.
62
Id.
63
Id.
64
Id.
65
Id.
66
Id.
67
Id.
68
Id.
69
Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc.
Employees Union-Olalia, G.R. No. 173154, December 9, 2013, 711
SCRA 618, 627 [Per J. Perlas-Bernabe, Second Division].
70
Id.
71
Id.
72
Id. at 628.
73
Id. at 629, citing Abbott Laboratories, Philippines v. Alcaraz, G.R.
No. 192571, July 23, 2013, 701 SCRA 682, 715 [Per J. Perlas-
Bernabe, En Banc].
74
Id.
75
G.R. No. 173154, December 9, 2013, 711 SCRA 618 [Per J.
Perlas-Bernabe, Second Division].
76
Id. at 629, citing Industrial Timber Corporation v. Ababon, 520
Phil. 522, 527528 [Per J. Ynares-Santiago, First Division].
77
Rollo, p. 5.
78
Id. at 5 and 30.
79
Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc.
Employees Union-Olalia, G.R. No. 173154, December 9, 2013, 711
SCRA 618, 630 [Per J. Perlas-Bernabe, Second Division].
80
Lui Enterprises, Inc. v. Zuellig Pharma Corporation, G.R. No.
193494, March 12, 2014,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/march2014/193494.pdf> 26 [Per J.
Leonen, Third Division].
81
Id.
82
LABOR CODE, art. 111(1) provides: Art. 111. Attorneys fees.
(1) In cases of unlawful withholding of wages, the culpable party
may be assessed attorneys fees equivalent to ten percent (10%)
of the amount of wages recovered; Reahs Corporation v. NLRC,
337 Phil. 698, 709 (1997) [Per J. Padilla, First Division].
83
LABOR CODE, art. 222(2) provides: Art. 222. Appearances and
Fees. - . . . . (2) No attorneys fees, negotiation fees or similar
charges of any kind arising from any collective bargaining
agreement shall be imposed on any individual member of the
contracting union: Provided, however, That attorneys fees may
be charged against union funds in an amount to be agreed upon
by the parties. Any contract, agreement or arrangement of any
sort to the contrary shall be null and void; Reahs Corporation v.
NLRC, 337 Phil. 698, 709 (1997) [Per J. Padilla, First Division].
84
Reahs Corporation v. NLRC, 337 Phil. 698, 709 (1997) [Per J.
Padilla, First Division].
85
Rollo, p. 42.
86
Lui Enterprises, Inc. v. Zuellig Pharma Corporation, G.R. No.
193494, March 12, 2014,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/march2014/193494.pdf> 27 [Per J.
Leonen, Third Division].
87
Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703
SCRA 439, 458 [Per J. Peralta, En Banc].
88
Id.
Agabon vs. NLRC / Riviera Home - GR No. 158693 Case
Digest

FACTS:

Petitioners were employed by Riviera Home as gypsum board and

cornice installers from January 1992 to February 23, 1999 when
they were dismissed for abandonment of work. Petitioners
filed a complaint for illegal dismissal and was decided in their
favor by the Labor Arbiter. Riviera appealed to the NLRC
contending just cause for the dismissal because of petitioners
abandonment of work. NLRC ruled there was just cause and
petitioners were not entitled to backwages and separation pay.
The CA in turn ruled that the dismissal was not illegal because
they have abandoned their work but ordered the payment of
money claims.

ISSUE:

Whether or not petitioners were illegally dismissed.

RULING:

To dismiss an employee, the law required not only the existence

of a just and valid cause but also enjoins the employer to give the
employee the right to be heard and to defend himself.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. For a valid finding or
abandonment, two factors are considered: failure to report for
work without a valid reason; and, 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.

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 Doctrine of the Belated Due process Rule.

Art. 279 means that the termination is illegal if it is not for any of
the justifiable or authorized by law. Where the dismissal is for a
just cause, the lack of statutory due process should not nullify the
dismissal but the employer should indemnify the employee for the
violation of his statutory rights. The indemnity should be stiffer to
discourage the abhorrent practice of dismiss now, pay later
which we sought to deter in Serrano ruling. The violation of
employees rights warrants the payment of nominal damages.