under no compulsion to accept any such pleading and that the supplemental
rejoinder’s admission rests on the labor arbiter’s discretion.
006 Am-Phil. v. Padilla (OLAZO edited by LEONG)
1 October 2014 | Leonen, J. | Labor Arbiter
PETITIONER: Am-Phil Food Concepts, Inc.
RESPONDENTS: Paolo Jesus T. Padilla
SUMMARY: Padilla was a Marketing Associate under Am-Phil. He was
later on informed by Am-Phil’s officers that Padilla was included in a
retrenchment program of the company due to serious and adverse business
conditions. Padilla pointed out that there were 6 contractual employees, that
Am-Phil was actually still hiring, and that the company’s sales were not any
lower than the previous year. Padilla was given 2 choices, be retrenched
with separation pay, or be demoted to a waiter. Padilla was then sent a
memorandum informing him of his retrenchment. He was then paid his
separation pay, to which he executed a quitclaim/waiver in favor of the
company. Padilla then filed a case before the LA, which ruled in his favor
and found that he was illegaly dismissed. Am-Phil appealed to NLRC
pointing out that LA was wrong to decide the case, as there was a
pending motion for leave to file supplemental rejoinder, wherein Am-
Phil was supposed to annex their audited financial statements to prove
business losses. Am-Phil claimed that its right to due process was
violated by LA’s refusal to consider its 2001 to 2004 audited financial
statements. NLRC affirmed LA. CA then affirmed NLRC.
[MAIN] Issue 1: WoN the LA is duty-bound to accept the supplemental
rejoinder of Am-Phil which violated their due process? NO. Am-Phil’s
motion for leave to file supplemental rejoinder, dated May 20, 2005 was
filed on May 31, 2005 well after the LA promulgated his May 9, 2005
decision. Common sense dictates that as the motion for leave to file
supplemental rejoinder was filed after the rendition of the decision, the
decision could not have possibly taken into consideration the motion.
Giving consideration to a motion filed after the promulgation of the decision
is not only unreasonable, it is impossible. It follows that it is completely
absurd to fault Labor Arbiter Chuanico for not considering a May 31 motion
in his May 9 decision.
LA was under no obligation to consider the motion for leave of Am-Phil
because such motion was filed after the decision was rendered. Am-Phil
had to file a motion seeking permission to file its supplemental rejoinder
(i.e., motion for leave to file) is proof of its own recognition that the LA is
Also, a supplemental rejoinder is NOT a pleading which the LA was duty
bound to accept. From the provisions of the 2002 Rules, it is clear that a
supplemental rejoinder, as correctly ruled by the NLRC, is not a pleading
which a LA is duty-bound to accept. Even following changes to the NLRC
Rules of Procedure in 2005 and 2011, a rejoinder has not been recognized
as a pleading that LAs must necessarily admit. The 2005 and 2011
National Labor Relations Commission Rules of Procedure only go so far as
to recognize that a reply “may” be filed by the parties.
Am-Phil’s due process was not vioalated because it was given opportunity
to be heard when 3 (1-position paper; 2-reply; 3-rejoinder) of its pleadings
were considered by the LA before rendering a decision.
Issue 2: WoN Padilla was illegaly dismissed. – YES. Retrenchment is an
authorized cause under article 283 of the labor code. It entails an exercise
of management prerogative. It has been decribed as a measure of last resort
when other less drastic means have been tried and found to be inadequate.
Am-Phil’s audited financial statements were not considered as they were
merely annexes of the supplemental rejoinder which the LA validly
disregarded. Thus, there is no clear and convincing evidence to sustain the
substantive ground for the supposed valid retrenchment of Padilla. Am-Phil
also did not serve a written notice to the DOLE 1 month before the intended
date of Padilla’s retrenchment which was required by article 283.
Compliance with only 1 of the requirements, i.e. the giving of separation
pay, does not absolve Am-Phil of liability. Also, the fact that Padilla
executed a quitclaim has no effect. As a rule, deeds of release or quitclaim
cannot bar employees from demanding benefits to which they are legally
entitled or from contesting the legality of their dismissal.
DOCTRINE: LA was under no obligation to consider the motion for leave
of Am-Phil because such motion was filed after the decision was rendered.
Also, a supplemental rejoinder is NOT a pleading which the LA was duty
bound to accept. Am-Phil’s due process was not vioalated because it was
given opportunity to be heard when 3 (1-position paper; 2-reply; 3-
rejoinder) of its pleadings were considered by the LA before rendering a
decision.
FACTS:
1. Padilla was hired as a Marketing Associate by Am-Phil, a corporation
 engaged in the restaurant business. Later on, Padilla became a regular
employee.
2. Sometime in March 2004, Am-Phil’s officers informed Padilla that
they would be implementing a retrenchment program which would
affect 3 employees, including Padilla. This was allegedly due to
serious and adverse business conditions, such as lack of demand in
market, stiffer competition, devaluation of the Phil. peso, and
escalating operation costs.
3. Padilla answered by pointing out that Am-Phil had 6 contractual
employees and he was a regular employee with good evaluation
record. He also pointed out Am-Phil was actually still hiring new
employees and that Am-Phil’s sales have not been lower compared to
the prior year.
4. Am-Phil gave Padilla 2 choices, either: (1) be retrenched with
severance pay; or (2) be transferred as a waiter, which is considered a
demotion.
5. Am-Phil then sent Padilla a memorandum notifying him of his
retrenchment. He was given his separation pay, and Padilla executed
a quitclaim and release in favor of Am-Phil.
6. Padilla then filed a case for illegal dismissal with the NLRC against
Am-Phil. The Labor Arbiter ruled in favor of Padilla finding that there
was illegal dismissal.
7. Am-Phil appealed to the NLRC. Specifically, it pointed out that the
LA was wrong in deciding the case becase there was a pending motion
of Am-Phil for leave to file supplemental rejoinder, wherein they were
supposed to annex their audited financial statements to prove that they
suffered business loses. The NLRC affirmed the LA, and
subsequently, the CA affirmed the NLRC.
ISSUE/s:
1. [MAIN] WoN Am-Phil’s right to due process was violated because of
the act of LA deciding the case despite their pending motion for leave
to file supplemental rejoinder. – NO. The motion was filed after the
rendition of the decision; thus, LA was correct in not considering the
motion.
2. WoN Padilla was illegally dismissed. – YES. Am-Phil failed to
comply with the requirements for a valid retrenchment.
RULING: WHEREFORE, the petition for review on certiorari is DENIED.
The February 25, 2009 decision and the July 3, 2009 resolution of the Court of
Appeals are AFFIRMED.
RATIO:
Right to Due Process Not Violated
1. Am-Phil’s motion for leave was filed after rendition of the decision.
Thus, it was not unreasonable that LA did not consider their motion.
2. Even if the fact that it was filed late was ignored, LA was under no
obligation to admit the supplemental rejoinder. A supplemental
rejoinder is not a pleading which the LA is duty-bound to accept.
3. From the provisions of the 2002 Rules, it is clear that a supplemental
rejoinder, as correctly ruled by the National Labor Relations
Commission, is not a pleading which a labor arbiter is duty-bound to
accept. Even following changes to the National Labor Relations
Commission Rules of Procedure in 2005 and 2011, a rejoinder has not
been recognized as a pleading that labor arbiters must necessarily
admit. The 2005 and 2011 National Labor Relations Commission
Rules of Procedure only go so far as to recognize that a reply “may”
be filed by the parties.
4. Thus, Labor Arbiter Chuanico was under no obligation to grant Am-
Phil’s motion for leave to admit supplemental rejoinder and, thereby,
consider the supplemental rejoinder’s averments and annexes. That
Am-Phil had to file a motion seeking permission to file its
supplemental rejoinder (i.e., motion for leave to file) is proof of its
own recognition that the labor arbiter is under no compulsion to accept
any such pleading and that the supplemental rejoinder’s admission
rests on the labor arbiter’s discretion.
5. In labor cases, due process only requires opportunity to be heard. Am-
Phil was given this considering they filed 3 pleadings which were
allowed. Thus, their right to due process was not violated.
Padilla was illegally dismissed.
6. Retrenchment is an authorized cause under article 283 of the labor
code. It entails an exercise of management prerogative. It has been
decribed as a measure of last resort when other less drastic means have
been tried and found to be inadequate.
7. The requirements for a valid retrenchment are:
a. that the 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;
b. 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;
c. that the employer pays the retrenched employees separation
pay equivalent to one month pay or at least 1/2 month pay for
every year of service, whichever is higher;
d. 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
e. that the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status (i.e., whether
they are temporary, casual, regular or managerial employees),
efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.
8. As pointed out earlier, Am-Phil’s audited financial statements were
not considered as they were merely annexes of the supplemental
rejoinder which the LA validly disregarded. Thus, there is no clear and
convincing evidence to sustain the substantive ground for the
supposed valid retrenchment of Padilla.
9. Am-Phil also did not serve a written notice to the DOLE 1 month
before the intended date of Padilla’s retrenchment which was required
by article 283.
10. Compliance with only 1 of the requirements, i.e. the giving of
separation pay, does not absolve Am-Phil of liability. Also, the fact
that Padilla executed a quitclaim has no effect. As a rule, deeds of
release or quitclaim cannot bar employees from demanding benefits to
which they are legally entitled or from contesting the legality of their
dismissal.
Note: LA ruled that reinstatement no longer viable since position was
abolished and separation pay was already received.