138. Sebuguero vs.

National Labor Relations Commission

G.R. No. 115394, September 27, 1995
DAVIDE, JR., J.:

Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent
GTI Sportswear Corporation (hereinafter GTI ), a corporation engaged in the manufacture and export
of ready-to-wear garments, who were given “temporary lay-off” notices by the latter on 22 January
1991 due to alleged lack of work and heavy losses caused by the cancellation of orders from
abroad and by the garments embargo of 1990. Believing that their “temporary lay-off” was a ploy to
dismiss them, resorted to because of their union activities, and was in violation of their right to security of
tenure since there was no valid ground therefore, the 38 laid-off employees filed with the Labor
Arbiter’s office in the National Capital Region complaints for illegal dismissal, unfair labor practice,
underpayment of wages under Wage Orders Nos. 01 and 02, and non- payment of overtime pay and 13th
month pay.

Private respondent GTI denied the claim of illegal dismissal and asserted that it was its
prerogative to lay-off its employees temporarily for a period not exceeding six months to prevent
losses due to lack of work or job orders from abroad, and that the lay-off affected both union and
non-union members. It justified its failure to recall the 38 laid-off employees after the lapse of six
months because of the subsequent cancellations of job orders made by its foreign principals, a
fact which was communicated to the petitioners and the other complainants who were all offered
severance pay. Twenty-two (22) of the 38 complainants accepted the separation pay. The petitioners
herein did not.

Issue: Whether or not there was compliance with the law regarding a valid retrenchment at anytime
within the six month-period that they were temporarily laid-off.

Ruling: No. Retrenchment is used interchangeably with the term “lay-off.” It is the termination of
employment initiated by the employer through no fault of the employee’s and without prejudice to the
latter, resorted to by management during periods of business recession, industrial depression, or
seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of
the plant for a new production program or the introduction of new methods or more efficient machinery, or
of automation. Simply put, it is an act of the employer of dismissing employees because of losses in the
operation of a business, lack of work, and considerable reduction on the volume of his business, a right
consistently recognized and affirmed by this Court.

Under Article 283 of the Labor Code, there are three basic requisites for a valid retrenchment: (1) the
retrenchment is necessary to prevent losses and such losses are proven; (2) written notice to the
employees and to the Department of Labor and Employment at least one month prior to the
intended date of retrenchment; and (3) payment of separation pay equivalent to one month pay or at
least 1/2 month pay for every year of service, whichever is higher. The requirement of notice to both
the employees concerned and the Department of Labor and Employment (DOLE) is mandatory
and must be written and given at least one month before the intended date of retrenchment. In this
case, it is undisputed that the petitioners were given notice of the temporary lay-off. There is, however, no
evidence that any written notice to permanently retrench them was given at least one month prior to the
date of the intended retrenchment. The law requires two notices—one to the employee/ s concerned and
another to the DOLE— not just one. The notice to the DOLE is essential because the right to retrench is
not an absolute prerogative of an employer but is subject to the requirement of law that retrenchment be
done to prevent losses. The DOLE is the agency that will determine whether the planned retrenchment is
justified and adequately supported by facts.

139. Asiaworld Publishing House, Inc. vs. Ople and CONCEPCION M. JOAQUIN
G.R. No. L-56398. July 23, 1987

J. Gutierrez, Jr.

DOCTRINE:

There must be fair and reasonable criteria to be used in selecting employees to be dismissed, such as:
(a) less preferred status (e.g. temporary employee); (b) efficiency rating, and (c) seniority.

FACTS:

Private respondent was hired by Asiaworld Publishing House, Inc., as its advertising sales director. To
enable the private respondent to entertain advertisers in the course of her duties, she was allowed to
establish a credit line with Shiruko Restaurant with the petitioner agreeing to pay whatever amount was
incurred by her for representation purposes. Sometimes, the private respondent had to entertain clients
elsewhere, spending her own money and petitioner would later reimburse her for such expenses.

Due to the respondent's able management and hard work, Asiaworld's income from sales advertising
increased tremendously. Sometime in 1976, Vicente Pesayco, Jr., the corporation's president and private
respondent's immediate superior, requested Ms. Joaquin not to go on vacation leave because she was
needed to help direct the advertising sales campaign of Asia Forum, a magazine the petitioner had newly
acquired. Respondent Joaquin acceded to such request. She did not avail of her vacation leave benefits
for three times at the request of Pesayco.

In 1977, the private respondent was appointed VicePresident for marketing in a concurrent capacity and
her monthly compensation was increased to P2,300.00.

On May 3, 1978, the petitioner advised the private respondent in writing that her services would be
terminated effective May 16, 1978 because of continued losses and offered to pay her one (1) month's
salary for her more than three (3) years of service.

The private respondent filed a complaint with the Regional Director for illegal dismissal and for recovery
of unpaid earned and unused vacation leave credits and reimbursement of representation expenses
which she advanced for the petitioner.

After several resetting of the case, the parties agreed to submit their position papers and the Hearing
Officer Demetrio Marero rendered his decision to reinstate Joaquin and to pay the cash equivalent of her
vacation leave totalling forty-five days and reimburse her representation expenses amounting to
P1,517.00.

Petitioner filed an MR which was treated as an appeal and was denied for lack of merit. Hence the
petition.

ISSUE:

Whether the Minister of Labor erred in affirming the order of the regional director reinstating the
respondent. NO, Minister of Labor did not commit a mistake.

HELD:

Petitioner maintains that the respondent Minister should not have affirmed the findings of facts of the
Regional Director because the same are erroneous and not supported by evidence.

The only justification presented by the petitioner for dismissing the private respondent was its financial
statement showing a loss of P196,087.83 for the year 1977. Asiaworld failed to show that fair and
reasonable standards were used in ascertaining who would be dismissed and who would be retained
among its employees.

As the Solicitor General correctly stated, there must be fair and reasonable criteria to be used in selecting
employees to be dismissed, such as: (a) less preferred status (e.g. temporary employee); (b) efficiency
rating, and (c) seniority.

In the case at bar, the petitioner never denied the fact that the private respondent was performing her job
satisfactorily so much so that its income from sales advertising increased.

Secondly, both the Regional Director and the respondent Minister found that after the private
respondent's termination, the petitioner hired a new employee to take the former's position. Although the
petitioner belies the fact that the person who assumed the private respondent's job was a new employee,
it did not present any employment contract or other proof to support its allegation.

Thirdly, the petitioner never controverted the private respondent's allegation that in all instances when she
did not go on vacation leave it was upon the request of the president of Asiaworld. Clearly, she was
prevented from taking the vacation leaves to which she was entitled.

To argue now that the private respondent should have secured the authority of her superior and the
approval of management to liquidate and convert into cash her unused vacation leaves for 1975, 1976,
and 1977, would be grossly unfair. The respondent Minister correctly affirmed the decision of the
Regional Director in awarding the respondent the cash equivalent of her unused vacation leaves.

As regards the order of reinstatement, we have to take into account that antagonism between the
petitioner and the private respondent has been brought about by the filing of this case plus the fact that a
new employee had been hired to take over the place of the respondent. There is no showing that an
equivalent position is available to Ms. Joaquin. All of these militate against the propriety of reinstating the
respondent.

If the respondent had been a laborer, clerk, or other rank and file employee, there would be no problem in
ordering her reinstatement with facility. But she was Vice President for Marketing of Asiaworld. An officer
in such a key position can work effectively only if she enjoys the full trust and confidence of top
management.

140. NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST, Petitioners, v.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ANTONIO M. VILLANUEVA and
WILFREDO GUILLEMA, Respondents.

G.R. No. 112546. March 13, 1996 PANGANIBAN, J.

Doctrine:

TERMINATION OF EMPLOYMENT; CAUSED BY CLOSURE DUE TO LOSSES; EMPLOYER, NOT

OBLIGATED TO PAY SEPARATION BENEFITS. — Where the closure was due to business losses the
Labor Code does not impose any obligation upon the employer to pay separation benefits, for obvious
reasons. Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the
closure is due to losses.

Facts:
North Davao Mining Corporation was incorporated in 1974 as a 100% privately-owned company. As of
December 31, 1990 the national government held 81.8% of the common stock and 100% of the preferred
stock of said company.

In May 1992, North Davao completely ceased operations due to serious business reverses. When it
ceased operations, its remaining employees were separated and given the equivalent of 12.5 days’ pay
for every year of service, computed on their basic monthly pay.

However, it appears that, during the life of the petitioner corporation, from the beginning of its operations
in 1981 until its closure in 1992, it had been giving separation pay equivalent to 30 days’ pay for every
year of service.

Subsequently, a complaint was filed with respondent LA by respondent Guillema and 271 other seperated
employees for additional separation pay of 17.5 days for every year of service, among others.

ISSUE:
WON a company which is forced by huge business losses to close its business, legally required to pay
separation benefits to its employees at the time of its closure in an amount equivalent to the separation
pay paid to those who were separated when the company was still a going concern.

HELD:

NO.

“Art. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or under-taking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least 1 month before the intended date thereof. In
case of termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his 1 month pay or to at least 1 month
pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking not due to serious business losses
or financial reverses, the separation pay shall be equivalent to 1 month pay or at least ½ month pay for
every year of service, whichever is higher. A fraction of at least 6 months shall be considered whole
year.”

The underscored portion of Art. 283 governs the grant of separation benefits “in case of closures or
cessation of operation” of business establishments “NOT due to serious business losses or financial
reverses x x x”. Where, however, the closure was due to business losses – as in the instant case, in
which the aggregate losses amounted to over P20 billion – the Labor Code does not impose any
obligation upon the employer to pay separation benefits, for obvious reasons.

In the instant case, the company’s practice of giving one month’s pay for every year of service could no
longer be continued precisely because the company could not afford it anymore. It was forced to close
down on account of accumulated losses of over P20 billion. North Davao gave 30-days’ separation pay
to its employees when it was still a going concern even if it was already losing heavily. As a going
concern, its cash flow could still have sustained the payment of such separation benefits. But when a
business enterprise completely ceases operations, i.e., upon its death as a going business concern, its
vital lifeblood -its cashflow – literally dries up. Therefore, the fact that less separation benefits were
granted when the company finally met its business death cannot be characterized as discrimination.
Such action was dictated not by a discriminatory management option but by its complete inability to
continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry
stone. Nor water out of parched land.
141. ASIAN ALCOHOL CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION
(G.R. No. 131108)

Doctrine:
For the implementation of a redundancy program to be valid, the employer must comply with the
following requisites: (1) written notice served on both the employees and the Department of Labor and
Employment at least one month prior to the intended date of retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one month pay for every year of service, whichever is
higher; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly abolished.

Facts: The Parsons family, who originally owned the controlling stocks in Asian Alcohol Corporation
(AAC), was driven by mounting business losses to sell their majority rights to Prior Holdings which took
over its management and operation the following month. Prior Holding implemented organizational plan
and other cost-saving measures. 117 employees out of a total workforce of 360 were separated. 72 of
them occupied redundant positions that were abolished. Of these positions, 21 held by union members
and 51 by non-union members.

Private respondents are among those union members whose positions were abolished due to
redundancy. They received individual notices of termination; were paid the equivalent of one month salary
for every year of service as separation pay, the money value of their unused sick, vacation, emergency
and seniority leave credits, 13th month pay, medicine allowance, tax refunds, and goodwill cash bonuses
for those with at least 10 years of service. All of them executed sworn releases, waivers and quitclaims.
Except for Verayo and Tormo, they all signed sworn statements of conformity to the company
retrenchment program. And except for Martinez, they all tendered letters of resignation.

Private respondents filed with the NLRC complaints for illegal dismissal with a prayer for reinstatement
with backwages, moral damages and attorney's fees. They alleged that Asian Alcohol used the
retrenchment program as a subterfuge for union busting. They claimed that they were singled out for
separation by reason of their active participation in the union. They also asseverated that AAC was not
bankrupt as it has engaged in an aggressive scheme of contractual hiring.

LA dismissed the complainants and held that the fact that respondent AAC incurred losses in its business
operations was not seriously challenged by the complainants. Private respondents appealed to the NLRC
which ruled that the positions of private respondents were not redundant for the simple reason that they
were replaced by casuals. The company at the time of retrenchment was not then in the state of business
reverses. The financial status shown in records submitted was before Prior Holdings took over the
operation and management of the corporation. This is no proof that when the termination of
complainant[s] took effect the company was experiencing losses or at least imminent losses. Possible
future losses do not authorize retrenchment. Retrenchment and/or redundancy not having been proved,
complainants, therefore, were illegally dismissed. NLRC denied the motion.

Issues: W/N there was a valid redundancy program thus making the dismissal of private respondents
legal. YEAH!!! YEAH!!!

Ruling: We find that the reorganizational plan and comprehensive cost-saving program to turn the
business around were not designed to bust the union of the private respondents. Retrenched were 117
employees. 72 of them including private respondents were separated because their positions had
become redundant. In this context, what may technically be considered as redundancy may verily be
considered as retrenchment measure. Their positions had to be declared redundant to cut losses.

Redundancy exists when the service capability of the work force is in excess of what is reasonably
needed to meet the demands on the enterprise. A redundant position is one rendered superfluous by any
number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular
product line previously manufactured by the company or phasing out of a service activity priorly
undertaken by the business. Under these conditions, the employer has no legal obligation to keep in its
payroll more employees than are necessary for the operation of its business.

For the implementation of a redundancy program to be valid, the employer must comply with the
following requisites: (1) written notice served on both the employees and the Department of Labor and
Employment at least one month prior to the intended date of retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one month pay for every year of service, whichever is
higher; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly abolished.

142. Balasbas vs NLRC

Doctrine:

Termination of Employment; Retrenchment; Employer must sufficiently prove business reverses to prove
valid termination of employment based on retrenchment.—Under Article 283 of the Labor Code, the
closure of a business establishment or reduction of personnel is a ground for the termination of the
services of any employee unless the closing or retrenching is for the purpose of circumventing the
provision of the law. But while business reverses can be a just cause for terminating employees, these
must be sufficiently proved by the employer.

Notice of Termination; Waiver; Immediate filing of complaint for illegal dismissal negates waiver of right to
30-day notice of termination.—The alleged waiver by the petitioner of the 30-day notice of termination
deserves scant consideration. Being an ordinary rank and file employee, the petitioner may not be
expected to completely comprehend or realize the consequences of his act. This is more than adequately
shown by the fact that he immediately filed a complaint for illegal dismissal on April 12, 1985, the same
day he was served the notice of termination of employment.

Illegal Dismissal; Reinstatement; Backwages; Employee entitled to reinstatement with full backwages in
the absence of just cause for dismissal.—There being no proof of serious business losses or financial
reverses that would justify the petitioner’s dismissal and there being a failure on the part of the employer
to prove that the dismissal is for a just cause, the employee is entitled to reinstatement with full
backwages.

Facts: On August 31, 1984, A security agency named Veterans Philippine Scout Security Agency hired
Balasbas as operations supervisor and assigned him in the security division. Eight months after his
employment, the company handed him a termination notice advising him of his severance from the
service effective immediately pursuant to a retrenchment program that was being implemented. The same
day, he filed a case for illegal dismissal, non-payment of the 13th month pay and underpayment of basic
salary.

Finding that the petitioner's dismissal was indeed unlawful, having been effected without proper notice as
required by law, Labor Arbiter ordered the petitioner's reinstatement with full backwages and other
benefits from the date of his dismissal until actually reinstated. Additionally, he ordered the payment of
petitioner's 13th month pay for 1985 (partial) as admitted by respondent company. The respondent
company appealed to the NLRC. The NLRC reversed and set aside the Labor Arbiter's ruling, citing in
particular the petitioner's waiver of the mandatory 30-day notice required by law to justify the reversal.

Petitioner Balasbas seeks the reversal of the NLRC Decision, for having been rendered with grave abuse
of discretion. He specifically invokes Article 277, paragraph b of the Labor Code which guarantees the
constitutional right of workers to security of tenure and their right to be protected against dismissal except
for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of the
same Code. He argues that his acceptance of the separation pay and other benefits should not be
construed as a waiver of the 30-day notice of termination.

The defense of the respondent company is that retrenchment, being a managerial prerogative resorted to
by any employer when confronted by economic losses, respondent was within its rights in separating the
petitioner. It is their position that the 30-day advance notice is deemed to have been waived when the
petitioner voluntarily accepted the termination benefits.

Issue: Whether the NLRC gravely abused its discretion in ordering only the payment of the petitioner’s
13th month pay instead of reinstating him to his previous position with full backwages.

Ruling: Yes. Under Article 283 of the Labor Code, the closure of a business establishment or reduction of
personnel is a ground for the termination of the services of any employee unless the closing or
retrenching is for the purpose of circumventing the provision of the law. But while business reverses can
be a just cause for terminating employees, these must be sufficiently proved by the employer.

The case of Sugar Lopez Corporation v. Federation of Free Workers, lays down the general standards
under which an employer may retrench or reduce the number of his employees. Firstly, the losses
expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be
forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the
bonafide nature of the retrenchment would appear to be seriously in question. Secondly, the substantial
loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in
good faith by the employer. There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the
employees retired or otherwise laid-off. Because of the far-reaching nature of the retrenchment, it must,
thirdly, be reasonably necessary and likely to effectively prevent the expected losses. Lastly, but certainly
not the least important, the alleged losses if already incurred, and the expected imminent losses sought to
be forestalled, must be proved by sufficient and convincing evidence.

In the case at bar, there is a dearth of sufficient and convincing documentary evidence to bolster the
claim of the respondent company that it is indeed suffering from business losses of such magnitude as to
impel the retrenchment of petitioner Balasbas. The records are bereft of evidence on any application for a
reduction of employees or written notice to the Department of Labor. If indeed there were, it would have
been logical for the respondent company to have attached copies of the same.

The records show that immediately after the petitioner's termination from work, the respondent company
advertised and hired another employee for the position of inspector or investigator, indubitable proof that
the alleged retrenchment was merely a cover-up to ease out herein petitioner Balasbas. This unlawful
and unjust act of the respondent company was compounded when it dismissed the petitioner without
complying with the 30-day advance notice of termination containing a statement of the cause for his
termination, thus affording him ample opportunity to be heard. There being no proof of serious business
losses or financial reverses that would justify the petitioner's dismissal and there being a failure on the
part of the employer to prove that the dismissal is for a just cause, the employee is entitled to
reinstatement with full backwages.

143. Revidad vs. National Labor Relations Commission

G.R. No. 111105. June 27, 1995
REGALADO, J.
DOCTRINE
Retrenchment; Adverse business conditions justify the exercise of management prerogative to retrench in
order to avoid the not so remote possibility of the closure of the entire business.—First, it has been
sufficiently and convincingly established by AG & P before the voluntary arbitrator that it was suffering
financial reverses. Even the rank and file union at AG & P did not contest the fact that management had
been undergoing financial difficulties for the past several years. Hence, the voluntary arbitrator
considered this as an admission that indeed AG & P was actually experiencing adverse business
conditions which would justify the exercise of its management prerogative to retrench in order to avoid the
not so remote possibility of the closure of the entire business which, in the opinion of the voluntary
arbitrator, would in the last analysis be adverse to both the management and the union.
Financial statements audited by independent external auditors constitute the normal and reliable method
of proof of the profit and loss performance of a company.—Second, the voluntary arbitrator’s conclusions
were premised upon and substantiated by the audited financial statements and the auditor’s reports of
AG & P for the years 1987 to 1991. These financial statements audited by independent external auditors
constitute the normal and reliable method of proof of the profit and loss performance of a company.
Retrenchment is one of the economic grounds to dismiss employees, which is resorted to by an employer
to avoid or minimize business losses.—Third, contrary to petitioners’ asseverations, proof of actual
financial losses incurred by the company is not a condition sine qua non for retrenchment. Retrenchment
is one of the economic grounds to dismiss employees, which is resorted to by an employer primarily to
avoid or minimize business losses. The law recognizes this under Article 283 of the Labor Code.
“To prevent losses” means that retrenchment or termination of the services of some employees is
authorized to be undertaken by the employer sometime before the anticipated losses are actually
sustained or realized.—In its ordinary connotation, the phrase “to prevent losses” means that
retrenchment or termination of the services of some employees is authorized to be undertaken by the
employer sometime before the anticipated losses are actually sustained or realized. It is not, in other
words, the intention of the lawmaker to compel the employer to stay his hand and keep all his employees
until after losses shall have in fact materialized. If such an intent were expressly written into the law, that
law may well be vulnerable to constitutional attack as unduly taking property from one man to be given to
another.
Employer bears the burden to prove his allegation of economic or business reverses with clear and
satisfactory evidence, it being in the nature of affirmative defense. —On the bases of these
considerations, it follows that the employer bears the burden to prove his allegation of economic or
business reverses with clear and satisfactory evidence, it being in the nature of an affirmative defense. As
earlier discussed, we are fully persuaded that the private respondent has been and is besieged by a
continuing downtrend in both its business operations and financial resources, thus amply justifying its
resort to drastic cuts in personnel and costs.
Notice to Department of Labor and Employment; Requirement of notice to the labor department one
month before retrenchment is to enable the proper authorities to ascertain whether the closure of the
business is being done in good faith and not just a pretext for evading compliance with just obligations of
employers to employees.—Anent the mandatory written notice to be filed with the labor department one
month before the date of retrenchment, we are of the considered opinion that the proceedings had before
the voluntary arbitrator, where both parties were given the opportunity to be heard and present evidence
in their favor, constitute substantial compliance with the requirement of the law. The purpose of this notice
requirement is to enable the proper authorities to ascertain whether the closure of the business is being
done in good faith and is not just a pretext for evading compliance with the just obligations of the
employer to the affected employees. In fact, the voluntary arbitration proceedings more than satisfied the
intendment of the law considering that the parties were accorded the benefit of a hearing, in addition to
the right to present their respective position papers and documentary evidence.

FACTS
Private respondent Atlantic, Gulf and Pacific Company of Manila, Inc. (hereafter, AG & P) terminated the
services of 178 employees, including herein petitioners, under a redundancy program. As a
consequence, a complaint for illegal dismissal was filed by herein petitioners with public respondent
NLRC.
The case was subsequently decided in favor of petitioners, as a result of which they were reinstated and
assigned to the Batangas plant of private respondent.
However, pursuant to a presidential directive issued by the company's president and containing
management's decision to lay off 40% of the employees due to financial losses incurred, AG & P
implemented and effected the temporary lay-off of some 705 employees. By reason thereof, the AG & P
United Rank and File Association (URFA, for facility), which was the employees' union, staged a strike.
This issue was eventually resolved by the voluntary arbitrator in a decision where it was held that AG & P
had the right to exercise its management prerogative to temporarily lay off its employees owing to the
unfavorable business climate being experienced by the company consequent to the financial reverses it
suffered.
In the meantime, as found by public respondent in its decision, the three labor unions then existing at AG
& P met and arrived at the agreement that the Company agreed to extend financial assistance to all
temporarily laid off or to be laid off employees the equivalent of two (2) months’ pay.
Subsequently, herein petitioners were served a notice of temporary lay-off.
Thereafter, petitioners received their respective financial assistance and they signed a pro
forma authorization in favor of AG & P to deduct from the separation pay due them the amount of
financial assistance received.
Considering that petitioners were not being recalled by the AG & P management, they filed a complaint
for illegal dismissal and unfair labor practice against AG & P before respondent commission where the
labor arbiter rendered judgment ordering the reinstatement of petitioners on the ground that AG & P failed
to substantiate the alleged losses it incurred which resulted in the retrenchment of its operations. On
appeal, public respondent NLRC reversed and set aside the decision of the labor arbiter, and dismissed
the complaint for illegal dismissal for lack of merit. Hence, this petition which prays for the affirmance in
toto of the labor arbiter's decision.
Petitioners contend that their lay-off cannot be justified by the losses suffered by AG & P from 1989 to
1990 since it had not been shown that such losses continued up to 1991.
ISSUE: WON the retrenchment program of private respondent and the dismissal of petitioners were valid
and legal.

HELD
YES. The retrenchment program of private respondent and the dismissal of petitioners were valid and
legal.
First, it has been sufficiently and convincingly established by AG & P before the voluntary arbitrator that it
was suffering financial reverses. Even the rank and file union at AG & P did not contest the fact that
management had been undergoing financial difficulties for the past several years. Hence, the voluntary
arbitrator considered this as an admission that indeed AG & P was actually experiencing adverse
business conditions which would justify the exercise of its management prerogative to retrench in
order to avoid the not so remote possibility of the closure of the entire business which, in the
opinion of the voluntary arbitrator, would in the last analysis be adverse to both the management and
the union.
Second, the voluntary arbitrator's conclusions were premised upon and substantiated by the audited
financial statements and the auditor's reports of AG & P for the years 1987 to 1991. These, financial
statements audited by independent external auditors constitute the normal and reliable method of
proof of the profit and loss performance of a company.
Third, contrary to petitioners' asseverations, proof of actual financial losses incurred by the
company is not a condition sine qua non, for retrenchment. Retrenchment is one of the economic
grounds to dismiss employees, which is resorted to by an employer primarily to avoid or minimize
business losses. The law recognizes this under Article 283 of the Labor Code.
In its ordinary connotation, the phrase "to prevent losses" means that retrenchment or
termination of the services of some employees is authorized to be undertaken by the employer
sometime before the anticipated losses are actually sustained or realized. It is not, in other words,
the intention of the lawmaker to compel the employer to stay his hand and keep all his employees
until after losses shall have in fact materialized. If such an intent were expressly written into the
law, that law may well be vulnerable to constitutional attack as unduly taking property from one
man to be given to another.
At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss
is sufficient legal warrant for the reduction of personnel. In the nature of things, the possibility of
incurring losses is constantly present, in greater or lesser degree, in the carrying on of business
operations, since some, indeed many, of the factors which impact upon the profitability or viability
of such operations may be substantially outside the control of the employer.
On the bases of these considerations, it follows that the employer bears the burden to prove his allegation
of economic or business reverses with clear and satisfactory evidence, it being in the nature of an
affirmative defense. As earlier discussed, we are fully persuaded that the private respondent has been
and is besieged by a continuing downtrend in both its business operations and financial resources, thus
amply justifying its resort to drastic cuts in personnel and costs.
As a final word, let it be reiterated herein what we have heretofore said, that the law in protecting the
rights of the laborer authorizes neither oppression nor self-destruction of the employer. While the
Constitution is committed to the policy of social justice and the protection of the working class, it should
not be supposed that every labor dispute will be automatically decided in favor of labor. Management also
has its own rights, which as such are entitled to respect and enforcement in the interest of simple fair
play. Out of its concern for those with less privileges in life, the Supreme Court has inclined more often
than not toward the worker and upheld his cause with his conflicts with the employer. Such favoritism,
however, has not blinded the Court to rule that justice is in every case for the deserving, to be dispensed
in the light of the established facts and applicable law and doctrine.

144. FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES (FASAP) v.

PHILIPPINE AIRLINES, INC., PATRIA CHIONG and COURT OF APPEALS
October 2, 2009/ G.R. No. 178083

Doctrine:
There was no reason to drastically implement a permanent retrenchment scheme in response to a
temporary strike, which could have ended at any time, or remedied promptly, if management acted with
alacrity. Juxtaposed with its failure to implement the required cost-cutting measures, the retrenchment
scheme was a knee-jerk solution to a temporary problem that beset PAL at the time.

PAL must still prove that it implemented cost-cutting measures to obviate retrenchment, which under the
law should be the last resort. By PAL’s own admission, however, the cabin personnel retrenchment
scheme was one of the first remedies it resorted to, even before it could complete the proposed
downsizing of its aircraft fleet.

Facts:
Cabin crew personnel were covered by the retrenchment and demotion scheme of PAL due to financial
distress which is evidenced by proof of its claimed losses in a petition for suspension of payments, as well
as the Order of the Securities and Exchange Commission (SEC) approving the said petition for
suspension of payments, together with proof of summary of its debts and other liabilities.

Exercising its management prerogative and sound business judgment, it decided to cut its fleet of aircraft
in order to minimize its operating losses and rescue itself from “total downfall;” which meant that a
corresponding company-wide reduction in manpower necessarily had to be made. As a result, 5,000 PAL
employees (including the herein 1,400 cabin attendants) were retrenched.
PAL, however, gave a whole different reason for retrenchment when the pilots went on strike.
Accordingly, what really brought about “the really perilous situation of closure was that on June 5, 1998,
the pilots went on strike, ninety (90%) per cent of the pilots went on strike, approximately six hundred
(600).” These pilots’ strike was so devastating x x x. Without any pilots no plane can fly, your Honor, that
is the stark reality of the situation, and without airplanes flying, there would be no place for employment of
cabin attendants.

Issue:
Whether the strike, which PAL used as basis to undertake the massive retrenchment under scrutiny, is an
authorized cause.

Held:
The strike was a temporary occurrence that did not necessitate the immediate and sweeping
retrenchment of 1,400 cabin or flight attendants.

There was no reason to drastically implement a permanent retrenchment scheme in response to a

temporary strike, which could have ended at any time, or remedied promptly, if management acted with
alacrity. Juxtaposed with its failure to implement the required cost-cutting measures, the retrenchment
scheme was a knee-jerk solution to a temporary problem that beset PAL at the time.
PAL must still prove that it implemented cost-cutting measures to obviate retrenchment, which under the
law should be the last resort. By PAL’s own admission, however, the cabin personnel retrenchment
scheme was one of the first remedies it resorted to, even before it could complete the proposed
downsizing of its aircraft fleet. The following elements under Article 283 of the Labor Code must concur or
be present, to wit:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or
at least one-half (1⁄2) month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement
of its interest and not to defeat or circumvent the employees’ right to security of tenure; and,
(5) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.
In the absence of one element, the retrenchment scheme becomes an irregular exercise of management
prerogative.

The retrenchment scheme under scrutiny was not triggered directly by any financial difficulty PAL was
experiencing at the time, nor borne of an actual implementation of its proposed downsizing of aircraft.

145. BUSINESSDAY v. NLRC, G.R. NO. 103575, April 5, 1993

GRINO-AQUINO, J.:

DOCTRINES:

Employer may not pay separation benefits unequally to its lawfully retrenched employees.
Grant of bonus is an exclusive prerogative of management. Employees cannot complain they were not
given bonus while others were given bonus.

FACTS:

BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its
creditors, the Development Bank of the Philippines (DBP) and the Asset Privatization Trust (APT), took
possession of its assets, including a manufacturing plant in Marilao, Bulacan.

As a retrenchment measure, some plant employees, including the private respondents, were laid off on
May 16, 1988, after prior notice, and were paid separation pay equivalent to one-half (1/2) month pay for
every year of service. Upon receipt of their separation pay, the private respondents signed individual
releases and quitclaims in favor of BSSI.

BSSI retained some employees in an attempt to rehabilitate its business as a trading company.

However, barely two and a half months later, these remaining employees were likewise discharged
because the company decided to cease business operations altogether. Unlike the private respondents,
that batch of employees received separation pay equivalent to a full month’s salary for every year of
service plus mid-year bonus.

Protesting against the discrimination in the payment of their separation benefits, the twenty-seven (27)
private respondents filed three (3) separate complaints against the BSSI and Raul Locsin. These cases
were later consolidated.

At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion, petitioners denied that there
was unlawful discrimination in the payment of separation benefits to the employees. They argued that the
first batch of employees was paid “retrenchment” benefits mandated by law, while the remaining
employees were granted higher “separation” benefits because their termination was on account of the
closure of the business.

LA: Rendered a decision in favor of respondents and ordered the payment of their separation pay
differentials and mid-year bonus for the year 1988.

NLRC: Affirmed the decision

ISSUE: Whether there was unlawful discrimination in the payment of separation benefits to the
employees

RULING:

Undoubtedly, petitioners’ right to terminate employees on account of retrenchment to prevent losses or

closure of business operations, is recognized by law, but it may not pay separation benefits unequally for
such discrimination breeds resentment and ill-will among those who have been treated less generously
than others.

Clearly, there was impermissible discrimination against the private respondents in the payment of their
separation benefits. The law requires an employer to extend equal treatment to its employees. It may not,
in the guise of exercising management prerogatives, grant greater benefits to some and less to others.
Management prerogatives are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758).
Article 283 of the Labor Code, as amended, protects workers whose employment is terminated because
of closure of the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA 141, 145).
With regard to the private respondents’ claim for the mid-year bonus, it is settled doctrine that the grant of
a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC,189 SCRA
274). The matter of giving a bonus over and above the worker’s lawful salaries and allowances is entirely
dependent on the financial capability of the employer to give it. The fact that the company’s business was
no longer profitable (it was in fact moribund) plus the fact that the private respondents did not work up to
the middle of the year (they were discharged in May 1988) were valid reasons for not granting them a
mid-year bonus. Requiring the company to pay a mid-year bonus to them also would in effect penalize
the company for its generosity to those workers who remained with the company “till the end” of its days.
(Traders Royal Bank vs. NLRG, supra.) The award must therefore be deleted.

146. CHENIVER DECO PRINT TECHNICS CORP v. NLRC, G.R. NO. 122876
Quisumbing, J.

DOCTRINE:
Although there is no complete dissolution of petitioner’s undertaking, but a mere relocation; the phrase,
“closure or cessation of operation of an establishment not due to serious business losses or reverses,”
under Article 283 of the Labor Code includes the cessation of only part of a company’s business.
Company had a legitimate reason to relocate its plant due to the expiration of the lease contract in
Makati; however, it is still required to pay its workers separation pay. Cessation of operation not due to
serious business losses is an authorized cause for termination; and the Labor Code provides that such
terminated employees are entitled to separation pay of 1 month pay or at least ½ month for every year of
service, whichever is higher

FACTS:
Cheniver Deco Print Technic Corp is a duly organized corporation operating its printing business in
VisitaSt., Barangay Sta. Cruz, Makati. Private respondent CFW-Magkakaisang Lakas ng mga
Manggagawa sa Cheniver Deco Print Technic Corporation is a registered labor union affiliated with the
Confederation of Free Workers (CFW). Private respondent Edgardo Viguesilla and twenty-two (22) others
are members of aforesaid union and former employees of petitioner and on June 5, 1992, petitioner
informed its workers about the transfer of the company from its site in Makati to Sto. Tomas, Batangas.
The company decided to relocate its business in view of the expiration of the lease contract on the
premises it occupied in Makati and the refusal of the lessor to renew the same.- The company gave its
employees up to the end of June 1992 to inform management of their willingness to go with petitioner,
otherwise, it would hire replacements- On August 4, 1992, the company wrote its employees to report to
the new location within seven days, otherwise, they would be considered to have lost interest in their work
and would be replaced. Five days later , the union advised petitioner that its members are not willing to go
along with the transfer to the new site. Nonetheless, petitioner gave its workers additional time within
which to report to the new work place. private respondents herein) filed a complaint against petitioner for
unfair labor practice, illegal dismissal, underpayment of wages, non-payment of legal holiday pay, 13th
month pay, incentive leave pay and separation pay. On October 27, 1994, the labor arbiter rendered a
decision declaring the transfer of petitioner's operation valid and absolving petitioner of the charges of
unfair labor practice and illegal dismissal. However, the labor arbiter directed petitioner to pay private
respondents their separation pay and other money claims as well as attorney's fees

ISSUE:
Whether or not private respondents are entitled to separation pay

HELD:
Yes.
There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of
the lease contract on the premises it occupied. That is its prerogative. But even though the transfer
was due to a reason beyond its control, petitioner has to accord its employees some relief in the
form of severance pay. Thus, in E. Razon, Inc. v. Secretary of Labor and Employment,6 petitioner
therein provides arrastre services in all piers in South Harbor, Manila, under a management contract with
the Philippine Ports Authority. Before the expiration of the term of the contract, the PPA cancelled the
said contract resulting in the termination of employment of workers engaged by petitioner. Obviously, the
cancellation was not sought, much less desired by petitioner. Nevertheless, this Court required
petitioner therein to pay its workers separation pay in view of the cessation of its arrastre
operations.
Now, let it be noted that the termination of employment by reason of closure or cessation of business is
authorized under Article 283 of the Labor Code.

147. NATIONAL FEDERATIONS OF LABOR v. NLRC, G.R. NO. 127718

DOCTRINE: An employer is not liable to pay separation pay where the cessation of its operation is
caused by the compulsory acquisition by the government of its land for purposes of agrarian
reform. It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and
reduction of personnel. The peculiar circumstances in the case at bar, however, involves neither the
closure of an establishment nor a reduction of personnel as contemplated under the aforesaid article.

The closure of establishments contemplated under Article 283 of the Labor Code is a unilateral and
voluntary act on the part of the employer to close the business establishment as may be gleaned from the
use of the word “may”—it does not contemplate a situation where the closure of the business
establishment is forced upon the employer and ultimately for the benefit of the employees.

Where the closure of the establishment was due to the act of the government of acquiring the land to
benefit the employees by making them agrarian lot beneficiaries, they are not entitled to separation pay.

FACTS:

Petitioners are bona fide members of the National Federation of Labor (NFL), a legitimate labor
organization duly registered with the Department of Labor and Employment. They were employed by
private respondents Charlie Reith and Susie Galle Reith, general manager and owner, respectively, of the
354-hectare Patalon Coconut Estate located at Patalon, Zamboanga City.

In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), which mandated the compulsory acquisition of all covered
agricultural lands for distribution to qualified farmer beneficiaries under the so-called Comprehensive
Agrarian Reform Programme (CARP).

Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the Patalon Estate Agrarian
Reform Association (PEARA), a cooperative accredited by the Department of Agrarian Reform (DAR), of
which petitioners are members and co-owners.

As a result of this acquisition, private respondents shut down the operation of the Patalon Coconut Estate
and the employment of the petitioners was severed on July 31, 1994. Petitioners did not receive any
separation pay.

Subsequently, the cooperative took over the estate. Being beneficiaries of the Patalon Coconut Estate
pursuant to the CARP, the petitioners became part-owners of the land.
Petitioners, thereafter, filed individual complaints before the Regional Arbitration Branch (RAB) of the
National Labor Relations Commission (NLRC) in Zamboanga City, praying for their reinstatement with full
backwages on the ground that they were illegally dismissed.

RAB dismissed the complaints for lack of merit. However, ordered respondents thru its owner-manager or
its duly authorized representative to pay complainants’ separation pay in view of the latter’s cessation of
operations or forced sale, and for 13th month differential pay.

NLRC on appeal, set aside the decision of RAB ordering respondents to pay separation pay and 13th
month differentials stating that, the severance of employer-employee relationship between the parties
came about INVOLUNTARILY, as a result of an act of the State. MR Denied. Hence, this petition.

ISSUE: Whether or not an employer that was compelled to cease its operation because of the
compulsory acquisition by the government of its land for purposes of agrarian reform, is liable to pay
separation pay to its affected employees?

RULING: NO

Petitioners contend that they are entitled to separation pay citing Article 283 of the Labor Code.

It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of
personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an
establishment nor a reduction of personnel as contemplated under the aforesaid article. When the
Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant
to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and
ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of
the Labor Code is not applicable to the case at bench.

In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of the
business establishment is forced upon the employer and ultimately for the benefit of the employees.

Capital and management sectors must also be protected under a regime of justice and the rule of law.

148. Cebu Royal Plant vs Deputy of Minister of Labor

L-58639; August 12, 1987
Cruz, J.

Doctrine:

Absence of a medical certificate from a competent public health authority, indicates that the employee's
disease is not of such a nature that it will not be cured within a period of 6 months even with proper
medical treatment, and thus his dismissal was a severe and unlawful sanction.—The record does not
contain the certification required by the above rule. The medical certificate offered by the petitioner came
from its own physician, who was not a "competent public health authority," and merely stated the
employee's disease, without more. We may surmise that if the required certification was not presented, it
was because the disease was not of such a nature or seriousness that it could not be cured within a
period of six months even with proper medical treatment. If so, dismissal was unquestionably a severe
and unlawful sanction.
Prior clearance rule in force at the time requires that it must be obtained prior to the operative act of
termination of an employee.—It is also worth noting that the petitioner's application for clearance to
terminate the employment of the private respondent was filed with the Ministry of Labor only on August
28, 1978, or seven days after his dismissal. As the NLRC has repeatedly and correctly said, the prior
clearance rule (which was in force at that time) was not a "trivial technicality." It required "not just the
mere filing of a petition or the mere attempt to procure a clearance" but that "the said clearance be
obtained prior to the operative act of termination."

Facts:
Private respondent was terminated by the Petitioner thus, he filed a complaint to the Ministry of Labor. His
complaint was dismissed by the regional director but it was reversed by the respondent Deputy Minister
of Labor.

Petitioner claims that respondent was still a probationary at the time of dismissal and that his dismissal
was for the protection of public health since his work involved handling ingredient in the processing of
softdrinks. The alleged ground for dismissal was respondent’s ailment of “pulmonary tuberculosis
minimal” which was not certified as incurable within 6 mos as to justify the termination.

On the other hand, it was the contention of the Deputy Minister that at the time private respondent was
terminated, he was already a permanent employee, hence, entitled to security of tenure.

Issue:
(1) Whether or not he is a regular employee
(2) Whether or not respondent was validly terminated

Ruling:
(1) Respondent is a regular employee. His probationary period started on February 16, 1978, thus,
he obtained his regular employment status on August 17, 1978 which was four days after he ceased to be
a probationer.

The contention of the petitioner that they could not immediately terminate respondent on the last day of
his probation because they waited for the results of his x-ray examination in untenable. The petitioner had
all of 6 mos during which to conduct such examination but it waited until the exact last day of the
probationary period.

(2) Having attained the status of a regular employee, respondent was illegally terminated by the
petitioner. Should he be legally terminated due to his disease, Section 8, Rule I, Book VI of the Rules and
Regulations Implementing the Labor Code, specifically provides that a certification by a competent public
authority that the disease is of such nature or at such stage that it cannot be cured within a period of 6
mos even with proper medical treatment must be made.

In this case, the required certification was not presented, it was because disease was not of such nature
or seriousness that it could not be cured within a period of 6 mos. It was also worth noting that the
petitioner’s application for clearance to terminate the employment of the private respondent was filed with
the Ministry of Labor only on August 28, 1978 or 7 days after his dismissal. As the NLRC has repeatedly
and correctly said, the prior clearance rule (which was in force at that time) was not a "trivial technicality."
It required "not just the mere filing of a petition or the mere attempt to procure a clearance" but that "the
said clearance be obtained prior to the operative act of termination. "7

149. SICANGCO V. NLRC

FACTS: Sicangco was appointed Senior Attorney in the Metro Drug Corporation (MDC). He was
promoted to the position of Assistant Vice-President for Legal Affairs. MDC was then acquired by another
company and subsequently renamed Metro Drug Inc (MDI). Sicancgo retained his position in MDI. As
Assistant Vice-President for Legal Affairs, he was in charge of labor relations, personnel administration
and all other corporate concerns of MDI.
 Sicangco was assigned to the legal staff of the mother company, First Pacific. The company
thereafter informed him that his position would be declared redundant. He was assured of benefits due
him under the law.

Sicangco did not protest and instead successfully negotiated for higher separation benefits. In
accordance with his agreement with the company and before the declared redundancy of his position
took effect, Sicangco tendered his resignation. Sicangco signed a document entitled, “Release, Waiver
and Quitclaim.” This document was prepared by him and the other lawyers of the company.

Sicancgo then filed an action against the company for unfair labor practice and illegal dismissal.

LA declared Sicangco’s dismissal as illegal and ordered his reinstatement with backwages. The
NLRC ruled that Sicangco’s termination from employment was due to his voluntary resignation and not
because of redundancy.

NLRC held that Sicangco’s termination employment was due to his voluntary resignation and not
because of redundancy. It did not give credence to Sicangco’s claim of dire necessity as the reason that
compelled him to execute the quitclaim.

ISSUE: Is redundancy the true cause of the severance from employment of the petitioner from
the respondent company. (Is petitioner illegally dismissed?)

RULING: The petitioner was not illegally dismissed. It would appear that when he was informed
that his position had become redundant, he decided to resign and was allowed to do so before his
redundancy took effect. We have said that there is nothing illegal with the practice of allowing an
employee to resign instead of being separated for just cause, so as not to smear his employment record.

Contrary to Sicangco's allegations, there is no indication in the record that he was coerced into
resigning from the company. It should be noted that the petitioner is a lawyer and specializes in labor
relations at that. There is every reason to suppose that he knows his basic rights as an employee and, no
less importantly, knows how to protect these rights as a lawyer. In fact, he used this knowledge to his
advantage when he negotiated successfully for higher separation benefits.

Moreover, the petitioner cannot renege on the release, waiver and quitclaim he executed. His
contention that it was coerced, considered especially in the light of the fact that he is a lawyer, must be
rejected. Lawyers are not easily coerced into signing legal documents.
Quitclaims executed by employees are commonly frowned upon as contrary to public policy and
ineffective to bar claims for the full measure of the worker's legal rights. Neither does acceptance of
benefits estop the employee from prosecuting his employer for unfair labor practice acts. The reason is
plain. Employer and employee obviously do not stand on the same footing.
Nevertheless, the above rule is not without exception, as this Court held in Periquet v. NLRC: 7

Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the
parties and may not later be disowned simply because of a change of mind. It is only
where there is clear proof that the waiver was wangled from an unsuspecting or gullible
person, or the terms of settlement are unconscionable on its face, that the law will step in
to annul the questionable transaction. But where it is shown that the person making the
waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.

As for his excuse of "dire necessity," Veloso v. DOLE, 8 commented on precisely this ground thus:
 "Dire necessity" is not an acceptable ground for annulling the releases, especially since it
has not been shown that the employees had been forced to execute them. It has not
even been proven that the considerations for the quitclaims were unconscionably low and
that the petitioners had been tricked into accepting them. . . .

It is inconceivable that as an experienced lawyer, the petitioner would allow himself to be inveigled or
coerced into signing away his rights. He obviously has forgotten the lesson in the old but still valid case
of Vales v. Villa that —

. . . Courts cannot constitute themselves guardians of persons who are not legally
incompetent. Courts operate not because one person has been defeated or overcome by
another, but because he has been defeated or overcome illegally. Men may do foolish
things, make ridiculous contracts, use miserable judgment and lose money by them —
indeed, all they have in the world; but not for that alone can the law intervene and
restore. There must be, in addition, a violation of law, the commission of what the law
knows as an actionable wrong, before the courts are authorized to lay hold of the
situation and remedy it.

We find that the respondent Commission committed no grave abuse of discretion in finding that
the petitioner resigned voluntarily and that he knowingly waived all rights of action against the respondent
company in exchange for the separation benefits he received from it.

150. INTERTROD MARITIME, INC. and TROODOS SHIPPING CO., petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and ERNESTO DE LA CRUZ, respondents.

DOCTRINE :

Article 21(c) of the Labor Code requires that the Philippine Overseas Employment Administration
(formerly NSB) should approve and verify a contract for overseas Employment. A contract, which is
approved by the National Seamen Board, such as the one in this case, is the law between the contracting
parties; and where there is nothing in it which is contrary to law, morals, good customs, public policy or
public order, the validity of said contract must be sustained.

Resignation is the voluntary act of an employee who "finds himself in a situation where he believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, then he has no other choice
but to disassociate himself from his employment."16 The employer has no control over resignations and
so, the notification requirement was devised in order to ensure that no disruption of work would be
involved by reason of the resignation. This practice has been recognized because "every business
enterprise endeavors to increase its profits by adopting a device or means designed towards that goal."
Resignations, once accepted and being the sole act of the employee, may not be withdrawn without the
consent of the employer.

FACTS :

Ernesto de la Cruz signed a shipboard employment contract with petitioner Troodos Shipping Company
as principal and petitioner Intertrod Maritime, Inc., as agent to serve as Third Engineer on board the M/T
"BREEDEN" for a period of (12) months but he eventually boarded a sister vessel, M/T "AFAMIS" and
proceeded to work as the vessel's Third Engineer under the same terms and conditions of his
employment contract previously referred to. While the ship (M/T "Afamis") was at Port Pylos, Greece,
private respondent requested for relief, due to "personal reason." The Master of the ship approved his
request but informed private respondent that repatriation expenses were for his account and that he had
to give (30) days notice in view of the Clause 5 of the employment contract so that a replacement for him
(private respondent) could be arranged. While the vessel was at Port Said in Egypt and despite the fact
that it was only four (4) days after private respondent's request for relief, the Master "signed him off" and
paid him in cash all amounts due him less the amount of US$780.00 for his repatriation expenses.

Private respondent filed a complaint with the National Seamen Board (NSB)(now POEA) charging
petitioners for breach of employment contract and violation of NSB rules and regulations. Private
respondent alleged that his request for relief was made in order to take care of a Filipino member of the
crew of M/T "AFAMIS" who was hospitalized on 25 August 1982 in Athens, Greece. However, the Master
of the ship refused to let him immediately disembark in Greece so that the reason for his request for relief
ceased to exist. Hence, when the Master of the ship forced him to step out in Egypt despite his
protestations to the contrary, there being no more reason to request for relief, an illegal dismissal
occurred and he had no other recourse but to return to the Philippines at his own expense.

POEA rendered a decision dismissing the complaint for lack of merit.

On appeal to the NLRC, the decision was reversed.

ISSUE/S :
Whether or not the employee was validly dismissed?

RULING :

YES. Paragraph 5 of the Employment Contract between petitioners and private respondent Ernesto de la
Cruz provides as follows:

That, if the seaman decide to terminate his contract prior to the expiration of the service period as stated
and defined in paragraph 4 of this Employment Contract, without due cause, he will give the Master thirty
(30) days notice and agree to allow his repatriation expenses to be deducted from wages due him.

Clearly, therefore, private respondent Ernesto de la Cruz was required by the employment contract not
only to pay his own repatriation expenses but also to give thirty (30) days notice should he decide to
terminate his employment prior to the expiration of the period provided in the contract. When the Master
approved his request for relief, the Master emphasized that private respondent. was required to give thirty
(30) days notice and to shoulder his own repatriation expenses. Approval of his request for relief,
therefore, did not constitute a waiver by petitioners of the provisions of the contract, as private respondent
would have us believe, for it was made clear to him that the provisions of the contract, insofar as the thirty
(30) days notice and repatriation expenses were concerned, were to be enforced.

Once an employee resigns and his resignation is accepted, he no longer has any right to the job. If the
employee later changes his mind, he must ask for approval of the withdrawal of his resignation from his
employer, as if he were re-applying for the job. It will then be up to the employer to determine whether or
not his service would be continued. If the employer accepts said withdrawal, the employee retains his job.
If the employer does not, as in this case, the employee cannot claim illegal dismissal for the employer has
the right to determine who his employees will be. To say that an To say that an employee who has
resigned is illegally dismissed, is to encroach upon the right of employers to hire persons who will be of
service to them.

151. SANTOS v. NLRC, 287 SCRA 117

Labor Law; Dismissals; Two requisites in order to constitute a valid dismissal.—We have consistently held
that in order to constitute a valid dismissal, two requisites must concur: (a) the dismissal must be for any
of the causes expressed in Art. 282 of the Labor Code, and (b) the employee must be accorded due
process, basic of which are the opportunity to be heard and defend himself.
 Same; Same; To constitute immorality, the circumstances of each particular case must be
holistically considered and evaluated in light of the prevailing norms of conduct and

applicable laws.—On the outset, it must be stressed that to constitute immorality, the

circumstances of each particular case must be holistically considered and evaluated in light

of the prevailing norms of conduct and applicable laws. American jurisprudence has defined

immorality as a course of conduct which offends the morals of the community and is a bad

example to the youth whose ideals a teacher is supposed to foster and to elevate, the same

including sexual misconduct. Thus, in petitioner’s case, the gravity and seriousness of the

charges against him stem from his being a married man and at the same time a teacher.

Same; Same; The personal behavior of teachers, in and outside the classroom, must be beyond
reproach.— Consequently, it is but stating the obvious to assert that teachers must

adhere to the exacting standards of morality and decency. There is no dichotomy of morality.

A teacher, both in his official and personal conduct, must display exemplary behavior. He

must freely and willingly accept restrictions on his conduct that might be viewed irksome by

ordinary citizens. In other words, the personal behavior of teachers, in and outside the

classroom, must be beyond reproach.

Same; Same; They must observe a high standard of integrity and honesty.—Accordingly,
teachers must abide by a standard of personal conduct which not only proscribes the commission of
immoral acts, but also prohibits behavior creating a suspicion of immorality

because of the harmful impression it might have on the students. Likewise, they must observe

a high standard of integrity and honesty.

Same; Same; When a teacher engages in extra-marital relationship, especially when the

parties are both married, such behavior amounts to immorality, justifying his termination from
employment.—From the foregoing, it seems obvious that when a teacher engages in extramarital
relationship, especially when the parties are both married, such behavior amounts to immorality, justifying
his termination from employment.

Same; Same; Since the burden of proof rests upon the employer to show that the dismissal was
for a just and valid cause, the same must be supported by substantial evidence.—Having concluded that
immorality is a just cause for dismissing petitioner, it is imperative that the private respondent prove the
same. Since the burden of proof rests upon the employer to show that the dismissal was for a just and
valid cause, the same must be supported by substantial evidence.

FACTS: Petitioner is a married man employed as a teacher by respondent Hagonoy Institute Inc.
Petitioner and Mrs. Arlene Martin, also a teacher fell in love and had an affair. Respondent, upon hearing
of circulating rumors among faculty and school officials, of the illicit relationship of petitioner and Mrs.
Martin advised the latter to take a leave of absence, Mrs. Martin ignored such notice and was prevented
from entering the campus of respondent, effectively dismissing her from work. Respondent set up a
committee to investigate the veracity of the rumors, after two weeks of investigation, the illicit relationship
of petitioner and Mrs. Martin was confirmed.

Petitioner was charged administratively for immorality and asked to present his side, petitioner
was dismissed. Petitioner then filed a complaint for illegal dismissal.

ISSUE: Can the illicit relationship between the petitioner and Mrs. Martin be considered immoral
as to constitute a cause for termination

RULING: Court reiterates that to constitute a valid dismissal, two requisites must concur: (a) it must
be for any offense expressed in Art. 282 of the Labor Code, (b) employee must be accorded due process,
that is, the opportunity to be heard and to defend oneself. Art. 282 of the Labor Code lists the following
just causes to terminate an employee: (1) serious misconduct or wilful disobedience by employee of
lawful orders of the employer or his representative in connection with his work, (2) gross and habitual
neglect by employee of his duties; (3) fraud or willful breach, (4) commission of crime or offense of the
person of his employer or his family or his authorized representative, (5) other courses analogous to the
foregoing.

In addition, Section 94, Manual of Regulations for Private Schools, paragraph E, lists “disgraceful
or immoral conduct” as ground for termination. Furthermore, the Court ruled that Art. 68 of the Family
Code enjoins the husband and wife to live together, observe mutual love, respect and fidelity, and render
mutual help and support.” As a teacher, one stands in loco parentis to his students and must therefore act
with a high standard of integrity and honesty. It is settled therefore that a teacher who engages in extra
marital affairs, when both are married, amounts to gross immorality justifying termination from
employment. Petition is dismissed, NLRC decision is affirmed with modification, deleting financial
assistance.

152. CHUA-QUA VS.CLAVE

G.R. No. 49549. August 30, 1990
REGALADO, J.

DOCTRINES: 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.

FACTS: In 1976, Petitioner was the Grade 6 class adviser in Tay Tung High School, Inc. in Bacolod City
where one Bobby Qua, a 16 years old pupil was enrolled. Petitioner was giving remedial lessons to
Bobby Qua as per school policy when she and Bobby became very close. On December 24, 1975, they
were married in a civil ceremony in Iloilo City when Petitioner was then 30 years old, and Bobby was only
16 years old. Bobby received the consent and advice of her mother, Mrs. Concepcion Ong. They were
then married in a church wedding on January 10, 1976.

On February 4, 1976, Respondent filed with the sub-regional office of the Department of Labor in Bacolod
City an application for clearance to terminate Petitioner’s employment on the ground of “abusive and
unethical conduct unbecoming of a dignified school teacher….” Petitioner was suspended without pay on
March 12, 1976. Labor Arbiter Jose Aguirre, without conducting any formal hearing, awarded in favor of
Respondent. Petitioner appealed to the NLRC claiming denial of due process for not receiving copies of
affidavits relied by the labor arbiter. On December 27, 1976, NLRC reversed the labor arbiter’s decision,
but was in turn reversed by the Minister of Labor awarding 6-months salary to Petitioner as financial
assistance. Petitioner appealed to the Office of the President of the Philippines, and through Executive
Assistant Jacobo C. Clave, reversed the decision of the Minister of Labor and ordered Petitioner to be
reinstated. However, Public Respondent reversed his earlier decision however and supported Petitioner’s
dismissal from work.

ISSUE/S: Did Petitioner’s marriage with her student constitute immorality and/or grave misconduct as to
warrant her dismissal by herein Private Respondent?

RULING: NO. Respondent failed to discharge the burden of proof to prove the legality of Petitioner’s
immoral or grave misconduct. To constitute immorality, the circumstances of each particular case must be
holistically considered and evaluated in the light of prevailing norms of conduct and the applicable law.
Contrary to what Petitioner had insisted on from the very start, what is before us is a factual question, the
resolution of which is better left to the trier of facts. Considering that there was no formal hearing
conducted, we are constrained to review the factual conclusions arrived at by Public Respondent, and to
nullify his decision through the extraordinary writ of certiorari if the same is tainted by absence or excess
of jurisdiction or grave abuse of discretion. The findings of fact must be supported by substantial
evidence; otherwise, this Court is not bound thereby.

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 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 in 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. 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.

The Supreme Court ordered Private Respondent to pay Petitioner her back wages equivalent to three
years without deduction and separation pay of one month for every year of service.

Wherefore, petition granted.

153. JRS Business v NLRC

DOCTRINE:

The employer may place the worker concerned under preventive suspension if his continued employment
poses a serious and imminent threat to the life or property of the employer or of his co-workers.

No preventive suspension shall last longer than 30 days. The employer shall thereafter reinstate the
worker in his former or in a substantially equivalent position of the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and other benefits due to the
worker.

FACTS:

Petitioner employed private respondent on April 7, 1980. Subsequently, private respondent was promoted
as Station Manager of petitioner's Davao branch office.
In September 1988, petitioner's Internal Auditor, conducted an audit of its Davao office. The audit
revealed a shortage totalling P145,564.33 arising from undeposited cash sales and unexplained cash
shortages from charge sales.
On September 27, 1988, private respondent was informed by Ernesto A. Gonzales, petitioner's Personnel
Manager, of the appointment of Fernando T. dela Cerna as officer-in-charge of the Davao office. He was
further instructed to report to dela Cerna for his new duties pending petitioner's final decision regarding
the result of the audit report.

On October 2, 1988, the employees of petitioner: namely, Elizabeth Paulino, the office cashier, her
husband, Jaime, and Darwin Solis, signed statements which detailed the irregularities committed by
private respondent and his wife.

On October 12, 1988, private respondent was directed by Ernesto A. Gonzales to go on leave without pay
effective October 15, 1988 until further notice, in view of the on-going investigation.

On October 13, 1988, private respondent wrote petitioner a letter rebutting the allegations contained in
the affidavits submitted against him. He alleged that he merely requested his wife to assist him in the
preparation of reports as she was a former employee of petitioner. Furthermore, he denied any
participation in the cash shortage.

On November 17, 1988, private respondent and his wife received separate demand letters for the
immediate restitution of the amount of P145,564.33.

On February 6, 1988, considering his indefinite forced leave without pay as a constructive dismissal,
private respondent filed a complaint against petitioner with the Regional Arbitration Branch of Davao City
for illegal dismissal, reinstatement with back wages, vacation and sick leave pay, moral and exemplary
damages and attorney's fees.

ISSUE:
Whether private respondent was constructively or illegally dismissed

RULING:
Yes. The NLRC also found the other charges levelled against private respondent to be without basis and
accepted his explanation thereof as satisfactory. It took note of the long and dedicated service of private
respondent to the company. It belittled the charges that private respondent allowed his wife to go to the
branch office to help him prepare his reports and that he brought to the office his own air-conditioning unit
saying that it is common practice for housewives to have "their presence felt" in the offices of their
husbands and executives to bring their own appliances to their office.

Sections 3 and 4, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code, Termination of
Employment, provide:

Sec. 3. Preventive suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or
property of the employer or of his co-workers.

Sec. 4 Period of suspension. No preventive suspension shall last longer than 30 days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent
position of the employer may extend the period of suspension provided that during the period of
extension, he pays the wages and other benefits due to the worker. In such case, the worker shall
not be bound to reimburse the amount paid to him during the extension if the employer decides,
after completion of the hearing, to dismiss the worker.

Petitioner having violated the maximum 30-day preventive suspension under Section 4, Rule XIV, Book of
the Omnibus Rules Implementing the Labor Code, a sanction is imposed on him in consonance with our
ruling in Great Pacific Life Assurance Corporation v. National Labor Relations Commission, 187 SCRA
694 (1990). Petitioner must indemnify private respondent in the amount of One Thousand Pesos
(P1,000.00).
154. GACO v. NLRC, GR. NO. 104690
Doctrine:

Unjustified demotion, in effect, constitutes constructive dismissal, which is illegal, and which would entitle
complainant to reinstatement and payment of backwages.

Facts:

Petitioner was hired by private respondent on April 17, 1974 for the position of Picker. In 1975, after a
year of service, she was promoted to the position of Production Recorder. She held this position for a
period of fourteen (14) years until the end of private respondent's working season in 1989. In April, 1990,
when petitioner reported for work at the start of the working season for that year, she found out that her
position was already occupied by another employee and that she was being demoted to the position of
Picker. Petitioner believed that, having been with private respondent for fifteen (15) years without any
derogatory record, her demotion was not justified. Considering it as constructive dismissal, petitioner thus
refused to report for work and filed a complaint before the Labor Arbiter for payment of separation pay.

Issue:

Whether or not the demotion can be considered as a constructive dismissal?

Ruling:

Constructive dismissal as a quitting because continued employment is rendered impossible,

unreasonable or unlikely; as, an offer involving a demotion in rank and a diminution in pay. As we have
stated previously, both the Labor Arbiter and respondent NLRC arrived at a factual finding that petitioner
was demoted to her former position without any justifiable cause. However, they differed in the
conclusions they derived therefrom: the Labor Arbiter considered petitioner's demotion as constructive
dismissal whereas respondent NLRC held that constructive dismissal could not deduced from the
circumstances. On the basis of the foregoing jurisprudence defining the term constructive dismissal, we
sustain the ruling of the Labor Arbiter and his rationalization thereon. Consequently, petitioner is entitled
to her full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed
from the time her compensation was withheld from her up to the time of her actual reinstatement.
Unjustified demotion, in effect, constitutes constructive dismissal, which is illegal, and which would entitle
complainant to reinstatement and payment of backwages.

NO #155

156. The PHILAM Life and General Insurance Co., v. Gramaje

G.R. No. 156963, November 11, 2004
Chico-Nazario, J.:

DOCTRINE: Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by
an employer has become so unbearable to the employee leaving him with no option but to forego with his
continued employment. The circumstances which prevailed in the working environment of the respondent
clearly demonstrate this.

FACTS: Atty. Angelita Gramaje was employed by Philam Life as Assistant Vice President and Head of
the Pensions Department. The management staff of said department were transferred to another division,
leaving Atty. Gramaje to run the Pensions Department single-handedly with only one assistant to help
her. Sometime in November 1998, she was offered P250,000 as severance fee asking her to leave her
position. Gramaje declined the offer since there was no valid reason for her to leave. The officers of
Philam Life admonished her that her filing of suit would prompt the President of Philam Life to blacklist
her in companies where he holds directorships and advised her that Philam Life is big and can stand the
long ordeal of justice system, whereas she may not withstand the phase of the trial.

The President of Philam Life issued a memorandum instructing Gramaje to transfer to the legal
department. Gramaje protested the sudden unexplained transfer and stressed that she was hired
because of her marketing, finance and fund management skills, not her legal skills. She also said that her
department was performing well, surpassing its 15M target hitting almost 20M. While Gramaje was on
sick leave, she found out that the resident had appointed someone else as head of the Pensions
Department, and that her department was physically transferred to another building. Hence, she filed a
case for constructive dismissal.

ISSUE: Was respondent constructively dismissed?

RULING: YES. Constructive dismissal exists when an act of clear discrimination, insensibility or disdain
by an employer has become so unbearable to the employee leaving him with no option but to forego with
his continued employment. The circumstances which prevailed in the working environment of the
respondent clearly demonstrate this. The transfer of respondent from the Pensions Department to the
Legal Department was not a legitimate exercise of management prerogative on the part of petitioner.
Before the order to transfer was made, discrimination, bad faith, and disdain towards respondent were
already displayed by petitioner. It may be true that in the transfer of Gramaje from the Pensions
Department to the Legal Department, there was no demotion in rank nor diminution of the salaries,
benefits and privileges, however, this is not the only standard that must be satisfied in order to
substantiate the transfer.

Management has the prerogative to transfer or assign employees, provided that there is no
demotion ins rank or diminution of salary, benefits and other privileges, and the action is not motivated by
discrimination made in bad faith, or effected as a form of punishment or demotion without sufficient
cause. Discrimination is the failure to treat all persons equally when no reasonable distinction can be
found between those favored and those not favored. It is proscribed as an unfair labor practice.

In the case at bar, there was bad faith and discrimination on the part of Philam Life when a
memorandum was issued announcing the appointment of Gramaje’s replacement when she was still on
official sick leave; when Gramaje was unreasonably and inconveniently transferred to the Legal
Department, knowing that she had no adequate exposure in the field of litigation. All the actions of Philam
Life lead to the conclusion that Gramaje was constructively dismissed.

157. JOEL MENDOZA, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, SAN MIGUEL
CORPORATION, MAGNOLIA DIVISION and CONRAD YUMAN III, Respondents.

DOCTRINE:

Due process contemplates freedom from arbitrariness. What it requires is fairness or justice; the
substance rather than the form being paramount. When a party has been given the opportunity to be
heard, then he was afforded due process.
FACTS:

Petitioner was a regular employee (salesman) of private respondent San Miguel Corporation (SMC),
Magnolia Division, assigned to its Baguio Sales Office.

On June 2, 1988, petitioner submitted to private respondent Conrad B. Yumang III, then Regional Sales
Supervisor, an accident report that reads as follows: "This is to inform you about the accident that
happened last May 31, 1988 at around nine thirty to ten thirty in the evening along Holy Ghost in Imelda
Village, Baguio City. I left the sales office at about 7:05 in the evening after submitting my remittances on
the said date, I was constrained to return to Lina’s Mini-Mart along Marcos Highway to collect my
uncollected cash sales for the purpose that no short remittance will be reflected on my report due to
month ending. Mr. Nick Villabona came along with me.

While waiting for the owner of the said outlet, Mr. Nick Villabona recalled that there is a missing freezer,
who at that time is conducting a physical freezer inventory. I suggested that we have to look for it. We
were informed that Mr. Roberto Tan of Bollian’s brought the freezer at the vicinity of Imelda Village. And
then, while we were maneuvering a right turn curve, suddenly two men crossed the road coming from the
left side. To avoid hitting them, I slowed down and moved the truck a little to the left. Not knowing that the
road was softened by the constant heavy downpour of rain. All of a sudden, the left shoulder gave way
and the truck with Plate No. SMC 408 slowly slipped down and turned-turtle in its left side. Hitting first the
separate kitchen located infront of the house which was badly damaged and then landed at the left
portion of the house. Because of the incident, we were too confused and shocked that we proceeded first
to the house of Mr. Nick Villabona to inform his wife. Not knowing what to do, while Nick Villabona was
experiencing pain due to the incident, we decided to go to SLM Hospital for medical check-up and
treatment. From there I called-up the police station to report the accident that happened.

An investigation followed which submitted Mendoza in a series of questioning.

Despite his plea for help with SMC, petitioner was relieved by private respondent SMC of the duties and
responsibilities as tetra salesman of the Baguio Sales Office and eventually terminated.

Consequently, petitioner filed a complaint for illegal dismissal with the labor arbiter.

LA: There was illegal dismissal.

NLRC: Petition has no merit, ruled in favor of SMC.

ISSUE:

Whether or not there was due process to consequently conclude that the dismissal was valid.

RULE:

YES there was due process.

There can be no dispute about the requirement that before any regular employee or laborer may be
dismissed from service by the employer, he must be given due notice and an opportunity to be heard.

Petitioner contends that the investigation conducted by private respondent Yumang was only to
determine the truth about the reported accident and not to determine his responsibility arising therefrom
and to impose disciplinary action.

The Court is not impressed. During the investigation it appears that he knew all the time that the
investigation involves his administrative responsibility to his superior, as he made this statement:
"A Sir tulungan mo naman ako for the lost time, please. I am appealing for the offense committed which is
in your behalf causes you a big problem. I am really very sorry sir for what has been done. I realized the
gravity of my offense and I know that a heavy penalty would be imposed upon me. And for this, I am
begging for your consideration and hoping that you will extend a helping hand not just for the but also for
my family.

In no uncertain terms he admitted the gravity of his offense and asked that a heavy penalty should be
imposed on him.

At such investigation private respondent SMC found that petitioner violated the company’s policy on
employees conduct on three counts, namely (1) driving under the influence of liquor; (2) unauthorized use
of company vehicle; and (3) damage to company vehicle which was a total wreck.

The rules laid down by the company for the investigation of an employee before his termination need not
be observed to the letter. It is enough that there was due notice and a hearing before a judgment or
resolution thereof is made.

Due process contemplates freedom from arbitrariness. What it requires is fairness or justice; the
substance rather than the form being paramount. When a party has been given the opportunity to be
heard, then he was afforded due process.

158. MERALCO, petitioner Vs. NLRC, Cortez

HERMOSISIMA, JR., J:

Doctrine/s: It is the totality not the compartmentalization of company infraction that private respondent
had consistently committed which justified his penalty of dismissal.

Article 283 of the Labor Code enumerates the just causes for termination. Among such cause are the
following:
“a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work.

b) Gross and habitual neglect by the employee of his duties.

x x x x x x x x x.”

This cause includes gross inefficiency, negligence and carelessness. Such just causes is derived from
the right of the employer to select and engage his employees. For indeed, regulation of manpower by the
company clearly falls within the ambit of management prerogative.

Notice and hearing in termination cases does not connote full adversarial proceedings as elucidated in
numerous cases decided by this court. The essence of due process is simply an opportunity to be heard,
or as applied to administrative proceedings, an opportunity to explain one’s side.

FACTS:
Private respondent Jeremias C. Cortez, Jr. was employed on probationary status by petitioner Meralco as
lineman driver. Six months later, he was regularized as a 3rd class lineman-driver assigned at petitioner's
North Distribution Division. In1977, and until the time of his dismissal, he worked as 1st class lineman-
driver whose duties and responsibilities among others, includes the maintenance of Meralco's distribution
facilities (electric lines) by responding to customer's complaints of power failure, interruptions, line
trippings and other line troubles.
Characteristic, however, of private respondent's service with petitioner is his perennial suspensions from
work.

Due to his numerous infractions, private respondent was administratively investigated for violation of
Meralco's Code on Employee Discipline, particularly his repeated and unabated absence from work
without prior notice from his superiors specifically from August 2 to September 19, 1989.
After such administrative investigation was conducted by petitioner, it concluded that private respondent
was found to have grossly neglected his duties by not attending to his work as lineman from Aug. 2, 1989
to September 19, 1989 without notice to his superiors.

In a letter, private respondent was notified of the investigation result and consequent termination of his
services effective January 19, 1990
Respondent filed a complaint for illegal dismissal against petitioner.

LA: The petition was dismissed for lack of merit.

NLRC: Dismissal was illegal.

ISSUE: Whether there was illegal dismissal?

RULE: NO.

Article 283 of the Labor Code enumerates the just causes for termination. Among such causes are
the following:

a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work.

b) Gross and habitual neglect by the employee of his duties.

This cause includes gross inefficiency, negligence and carelessness. Such just causes is derived
from the right of the employer to select and engage his employees. For indeed, regulation of manpower
by the company clearly falls within the ambit of management prerogative. This court had defined a valid
exercise of management prerogative as one which covers: hiring, work assignment, working methods,
time, place and manner of work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of workers, and the discipline,
dismissal and recall of workers. Except as provided for, or limited by, special laws, an employer is free to
regulate,
according to his own discretion and judgment, all aspects of employment.

Moreover, this Court has upheld a company's management prerogatives so long as they are exercised in
good faith for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements.

In the case at bar, the service record of private respondent with petitioner is perpetually characterized by
unexplained absences and unauthorized sick leave extensions. The nature of his job as a lineman-driver
requires his physical presence to minister to incessant complaints often faulted with electricity.

The penchant of private respondent to continually incur unauthorized absences and/or a violation of
petitioner's sick leave policy finally rendered his dismissal as imminently proper.

Habitual absenteeism should not and cannot be tolerated by petitioner herein which is a public utility
company engaged in the business of distributing and selling electric energy within its franchise areas and
that the maintenance of Meralco's distribution facilities (electric lines) by responding to customer's
complaints of power failure, interruptions, line trippings and other line troubles is of paramount importance
to the consuming public.
Hence, an employee's habitual absenteeism without leave, which violated company rules and regulations
is sufficient cause to justify termination from service.

Notice and hearing in termination cases does not connote full adversarial proceedings as elucidated in
numerous cases decided by this court. The essence of due process is simply an opportunity to be heard,
or as applied to administrative proceedings, an opportunity to explain one's side.

In this case, private respondent was given the opportunity of a hearing as he was able to present his
defense to the charge against him. Unfortunately, petitioner found such defense inexcusable. In other
words, the fact that private respondent was given the chance to air his side of the story already suffices.

159. G.R. No. 146621 July 30, 2004 RENE P. VALIAO, petitioner, vs. HON. COURT OF APPEALS,
NATIONAL LABOR RELATIONS COMMISSION-FOURTH DIVISION (Cebu City), WEST NEGROS
COLLEGE, respondents.
DOCTRINE: The totality of infractions or the number of violations committed during the period of
employment shall be considered in determining the penalty to be imposed upon an erring employee. The
offenses committed by him should not be taken singly and separately but in their totality.
FACTS: Petitioner Rene Valiao was appointed by private respondent West Negros College (WNC) as
Student Affairs Office (SAO) Director. He was assigned as Acting Director, Alumni Affairs Office.
Petitioner was transferred to a staff position and designated as Records Chief at the Registrar’s Office but
was again re-assigned as a typist. The latest re-assignment was due to his tardiness and absences, as
reflected in the summary of tardiness and absences report, which showed him to have been absent or
late for work from a minimum of seven (7) to a maximum of seventy-five (75) minutes for the, and to have
reported late almost every day for the period November to December 1991. Copies of his
tardiness/absences reports were furnished petitioner, along with memoranda requiring him to explain but
his explanations were either unacceptable or unsatisfactory. Subsequent reports also showed that he did
not change his habits resulting in tardiness and absences. He was even caught one time manipulating the
bundy clock, thus necessitating another memorandum to him asking him to explain his dishonest
actuations in accomplishing the daily attendance logbook and in using the bundy clock. Petitioner was
suspended due to dishonesty and after serving the suspension, the petitioner reported back to office.
Petitioner was reshuffled in various postitions but his absences and tardiness persists. He was relieved
from his post and transferred to the College of Liberal Arts as Records Evaluator. Not for long, the Dean
of the Liberal Arts sent a letter to the Human Resources Manager complaining about the petitioner’s poor
performance and habitual absenteeism, as shown in the daily absence reports. He was again absent from
work without permission or notice to his immediate superior. It turned out that he went to Bacolod City,
the petitioner was one of those arrested during a raid in the house of one "Toto Ruiz," a suspected drug
pusher and was brought to the Bacolod Police Station along with four (4) other suspects. Upon further
search and investigation by the Narcotics Control Division, the petitioner was found possessing two (2)
suspected marijuana roaches (butts) which were placed inside his left shoe. (LOL noob!) Petitioner was
asked to explain within 24 hours why he should not be terminated as a result of the raid and the charges
against him for violation of Rep. Act No. 6425 as amended. Petitioner allegedly was not able to answer
immediately since he was in jail and received said memorandum only on January 30, 1993, although his
wife had earlier received the memorandum. On January 29, 1993, the petitioner was dismissed for failure
to answer said memorandum. Petitioner requested for due process and was granted. After the
investigation attended by the petitioner and his counsel, with proceedings duly recorded, the investigation
committee recommended the dismissal of petitioner. A notice of termination was then sent to petitioner
informing him of his termination from the service for serious misconduct and gross and habitual neglect of
duty. The petitioner received the notice on March 25, 1993, but did not file a grievance concerning the
notice of termination. A petition for illegal dismissal was filed.
LA ruled the dismissal was valid due to absenteeism and tardiness.
NLRC: Affirmed.
CA: Affirmed NLRC
ISSUE: WoN the dismissal was valid.
RULING: YES Considering the submissions of the parties as well as the records before us, we find the
petition without merit. Petitioner’s dismissal from employment is valid and justified. For an employee’s
dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded
due process.7 Serious misconduct and habitual neglect of duties are among the just causes for
terminating an employee under the Labor Code of the Philippines. Gross negligence connotes want of
care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties
for a period of time, depending upon the circumstances.8The Labor Arbiter’s findings that petitioner’s
habitual absenteeism and tardiness constitute gross and habitual neglect of duties that justified his
termination of employment are sufficiently supported by evidence on record. This Court has held that
habitual absenteeism without leave constitute gross negligence and is sufficient to justify termination of
an employee.9 However, petitioner claims that he was dismissed not for his tardiness or absences but for
his arrest as a suspected drug user. His claim, however, is merely speculative. Contrary to petitioner’s
assertion, the NLRC did not base its conclusions on the fact of the arrest of petitioner for violation of Rep.
Act No. 6425 but on the totality of the number of infractions incurred by the petitioner during the period of
his employment in different positions he occupied at WNC. Indeed, even without the arrest incident, WNC
had more than enough basis for terminating petitioner from employment. It bears stressing that
petitioner’s absences and tardiness were not isolated incidents but manifested a pattern of habituality. In
one case, we held that where the records clearly show that the employee has not only been charged with
the offense of highgrading but also has been warned 21 times for absences without official leave, these
repeated acts of misconduct and willful breach of trust by an employee justify his dismissal and forfeiture
of his right to security of tenure.11 The totality of infractions or the number of violations committed during
the period of employment shall be considered in determining the penalty to be imposed upon an erring
employee. The offenses committed by him should not be taken singly and separately but in their totality.
Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of
character, conduct, and ability separate and independent of each other.12 Needless to say, so
irresponsible an employee like petitioner does not deserve a place in the workplace, and it is within the
management’s prerogative of WNC to terminate his employment.

160. ROSARIO A. GATUS, petitioner, vs. QUALITY HOUSE, INC. and CHRISTOPHER CHUA,
respondents. (G.R. No. 156766. April 16, 2009 * BRION, J.:)

Right to Due Process; The law itself only requires “ample opportunity to be heard”; The essence of this
requirement as an element of due process in administrative proceedings is the chance to explain oneÊs
side; Jurisprudence has amply clarified that administrative due process cannot be fully equated with due
process in the strict judicial sense.

Facts: The respondent company Quality House, Inc., placed the petitioner Rosario A. Gatus, along with
other employees, under preventive suspension on July 1, 1997 through a notice, because of a physical
altercation incident involving her husband her supervisor Leonilo Echavez. Gatus, on her letter of
explanation to the respondent company stated that, she refused to join PAFLU because she is actively
participating in the formation of the Quality House, Inc. Workers Union, thus she was discriminated at
work that led to the confrontation/encounter between her husband and Echavez. On July 9, 1997 Quality
House Inc., terminated Gatus service.
Labor arbiter Canizares dismissed the case illegal dismissal and unfair labor practice of petitioner
for lack of merit. On appeal to the NLRC, the case was reconsidered and referred to labor arbiter Florez,
who recommended her reinstatement with full back wages, which was upheld by the NLRC. On appeal to
the CA held on Sept. 25, 2002, that NLRC committed grave abuse of discretion when it awarded
reinstatement and monetary award of the petitioner Gatus.

Issue: Whether Gatus was accorded due process and was legally dismissed?

Ruling:
Yes, because Gatus was given an ample opportunity to be heard, thus due process was
observed on consideration of her termination of employment.
In the Labor Code on the matter of hearings., ART. 277. Miscellaneous provisions.·x x x (b)
Subject to the constitutional right of workers to security of tenure and their right to be protected against
dismissal except for a just and authorized cause and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his representative if he so
desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to
the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor
may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie
finding by the appropriate official of the Department of Labor and Employment before whom such dispute
is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-
off.
The Supreme Court note and stress once more for everyones guidance that the law itself only
requires ample opportunity to be heard. The essence of this requirement as an element of due process
in administrative proceedings is the chance to explain one’s side. Jurisprudence has amply clarified
that administrative due process cannot be fully equated with due process in the strict judicial sense, and
that there is no violation of due process even if no formal or actual hearing was conducted, provided a
party is given a chance to explain his side. What is frowned upon is the denial of the opportunity to be
heard. A hearing means that a party should be given a chance to adduce his evidence to support his side
of the case and that the evidence should be taken into account in the adjudication of the controversy. “To
be heard” does not mean verbal argumentation inasmuch as one may be heard just as effectively through
written explanations, submissions or pleadings. Therefore, while the phrase “ample opportunity to be
heard” may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the
existence of an actual, formal “trial type” hearing, although preferred is not absolutely necessary to satisfy
the employeeÊs right to be heard.
In the present case, Supreme Court significantly note that petitioner, after filing her explanation in
response to the employer’s July 1, 1997 memo, never asked for any clarificatory hearing during the plant-
level proceedings. She also had ample opportunity to explain her side vis-à-vis the principal charge
against her· her involvement in the incident of June 30, 1997. It is a matter of record that the petitioner
lost no time in submitting the required explanation, as she submitted it on the very same day that the
memo was served on her. The explanation, in Filipino, narrated among others the indifferent and
discriminatory treatment she had been receiving from the group of Nilo Echavez, which she also told her
husband who got mad. Taken together with the testimonies of other witnesses who gave their statements
on how the petitioner encouraged her husband to attack Echavez (all of which were duly and seasonably
disclosed), the petitioner cannot claim that the respondent company did not give her ample opportunity to
be heard. The respondent company acted based on a valid cause for dismissal and observed the
required procedures in so acting.

CONCURRING and DISSENTING OPINION VELASCO, JR., J.:

Dissent revolves around main issue: Was Gatus, before her dismissal, entitled to a formal hearing or
conference as mandated by the Implementing Rules and Regulations (IRR) of Book V of the Labor Code?
Justice Velasco Jr, is in the negative. - - - That all reasonable doubts in the interpretation of labor laws
should be resolved in favor of labor, the words “ample opportunity” should be given a liberal construction
as would advance the rights of workers. A mere first notice is not adequate enough for employees to
collate and sift evidence for their defense. Most often, the first notice merely serves as or is limited to a
general notice which cites the company rules breached, without detailing the facts and circumstances
relevant to the charges and without appending the pieces of supporting evidence. Lastly, the holding of
an actual hearing will obviate the obnoxious practice of railroaded dismissals, as the employers would be
compelled present convincing evidence to support the charges. In all, the advantages far outweigh the
disadvantages in holding an actual hearing.

161. ABIERA VS NLRC

TERMINATION OF EMPLOYMENT; LOSS OF TRUST AND CONFIDENCE AS A GROUND;
ESTABLISHED IN CASE AT BAR. — Regarding the ground for his dismissal, we find that the NLRC
correctly sustained the Investigating Committee in concluding that the petitioner, as branch manager,
violated RPB’s Code of Discipline through the numerous transactions he entered into or approved that
caused detriment to the bank and its clients. The charges were either expressly admitted by him or
established by preponderant evidence. His conduct caused the private respondent to lose confidence in
his judgment and even his integrity and provided the just cause for his dismissal as branch manager.
Article 282(c) of the Labor Code plainly states: Art. 282. Termination by employer. — An employer may
terminate an employment for any of the following causes: . . . (c) Fraud or willful breach by the employee
of the trust reposed in him by his employer or duly authorized representative.

DUE PROCESS; REQUIREMENT OF NOTICE; AMPLE OPPORTUNITY TO BE HEARD NOT DENIED

IN CASE AT BAR. — The twin requirements of notice and hearing constitute the essential elements of
due process. The first element was not violated because the petitioner was duly notified of the
Specification of Charges and invited to appear at the hearing scheduled for their investigation. The
requirement for hearing was also observed. The petitioner cannot say he was deprived of this right
because the record shows he was duly afforded ample opportunity to defend himself and introduce
evidence on his behalf. "Ample opportunity" connotes every kind of assistance that management
must accord the employee to enable him to prepare adequately for his defense, including legal
representation.

DOES NOT ALWAYS AND IN ALL SITUATION REQUIRE TRIAL-TYPE PROCEEDINGS. — A formal
trial-type hearing is not at all times and in all instances essential to due process. It is enough that the
parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and
to present supporting evidence on which a fair decision can be based. This type of hearing is not even
mandatory in cases of complaints lodged before the Labor Arbiter (Llora Motors Inc. v. Drilon)

Facts:
Petitioner Ramon Abiera was the Manager of the Roxas City branch of respondent Republic Planters
Bank (RPB). Said branch had earlier been the subject of an audit by the internal auditors of RPB’s head
office. Sometime thereafter, in August 1986, Abiera applied for vacation leave for about two weeks. Upon
his return, he received a memorandum from respondent bank requiring his response to the internal audit
report which suggested his possible participation in the violations therein. After submitting his response,
he received a Memorandum containing several charges against him which included “Over-financing in the
amount of P2,573,000.00”; Approval of loan advances in violation of RPB’s policy prohibiting the grant of
new loans to clients with past due accounts, among others. His activities were in violation of the
respondent bank’s Code of Discipline. As a result of loss of trust and confidence, he was later on
dismissed from service. Hence, a case for illegal dismissal.

Issue:
1. W/N petitioner was legally terminated on the ground of loss of trust and confidence
2. W/N there was compliance with the notice and hearing requirement of due process

Held:
1. YES. NLRC correctly concluded that petitioner, as branch manager, violated RPB’s Code of
Discipline through the numerous transactions he entered into or approved that caused detriment to
the bank and its clients. The charges were either expressly admitted by him or established by
preponderant evidence. His conduct caused the private respondent to lose confidence in his
judgment and even his integrity and provided the just cause for his dismissal as branch manager.
There was justified loss of confidence in him by the respondent bank. In view of the nature of its
business, the bank had every reason to demand that the conduct of the petitioner, who was holding a
sensitive and responsible position, be entirely above- board and fully deserving of its trust. Fraud or
willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative is one of the enumeration in Art. 282 which authorizes the employer to terminate an
employee from service.

1. YES. The twin requirements of notice and hearing constitute the essential elements of due
process. The first element was not violated because the petitioner was duly notified of the Specification of
Charges and invited to appear at the hearing scheduled for their investigation. The requirement for
hearing was also observed. The petitioner cannot say he was deprived of this right because the record
shows he was duly afforded ample opportunity to defend himself and introduce evidence on his behalf.
"Ample opportunity" connotes every kind of assistance that management must accord the
employee to enable him to prepare adequately for his defense, including legal representation. A
formal trial-type hearing is not at all times and in all instances essential to due process. It is enough that
the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy
and to present supporting evidence on which a fair decision can be based. This type of hearing is not
even mandatory in cases of complaints lodged before the Labor Arbiter