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ONG, respondents. Angara, Abello, Concepcion, Regala & Cruz for petitioner. Jose R. Millares & Associates for private respondent.
FELICIANO, J.:p Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he received a monthly salary of P14,375.00 excluding commissions from sales which averaged P5,000.00 a month. He also enjoyed vacation leave with pay equivalent to P7,187,50 per year, as well as hospitalization privileges to the extent of P10,000.00 per year. On 13 June 1985, upon private respondent's return from a business and pleasure trip abroad, he was informed by the President of petitioner Wiltshire that his services were being terminated. Private respondent maintains that he tried to get an explanation from management of his dismissal but to no avail. On 18 June 1985, when private respondent again tried to speak with the President of Wiltshire, the company's security guard handed him a letter which formally informed him that his services were being terminated upon the ground of redundancy. Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal alleging that his position could not possibly be redundant because nobody (save himself) in the company was then performing the same duties. Private respondent further contended that retrenching him could not prevent further losses because it was in fact through his remarkable performance as Sales Manager that the Company had an unprecedented increase in domestic market share the preceding year. For that accomplishment, he continued, he was promoted to Marketing Manager and was authorized by the President to hire four (4) Sales Executives five (5) months prior to his termination. In its answer, petitioner company alleged that the termination of respondent's services was a cost-cutting measure: that in December 1984, the company had experienced an unusually low volume of orders: and that it was in fact forced to rotate its employees in order to save the company. Despite the rotation of employees, petitioner alleged; it continued to experience financial losses and private respondent's position, Sales Manager of the company, became redundant. On 2 December 1986, during the proceedings before the Labor Arbiter, petitioner, in a letter 1 addressed to the Regional Director of the then Ministry of Labor and Employment, notified that official that effective 2 January 1987, petitioner would close its doors permanently due to substantial business losses. In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's services illegal and ordered petitioner to pay private respondent backwages in the amount of P299,000.00, unpaid salaries in the amount of P22,352.11, accumulated sick and vacation leaves in the amount of P12,543.91, hospitalization benefit package in the amount of P10,000.00, unpaid commission
in the amount of P57,500,00, moral damages in the amount of P100,000.00 and attorney's fees in the amount of P51,639.60. On appeal by petitioner Wiltshire, the National Labor Relations Commission ("NLRC") affirmed in toto on 9 February 1988 the decision of the Labor Arbiter. The NLRC held that: The termination letter clearly spelled out that the main reason in terminating the services of complainant is REDUNDANT and not retrenchment. The supposed duplication of work of herein complainant and Mr. Deliva, the VicePresident is absent that would justify redundancy. . . . On the claim for moral damages, the NLRC pointed out that the effective date of private respondent's termination was 18 July 1985, although it was only 18 June 1985 that he received the letter of termination, and concluded that he was not given any opportunity to explain his position on the matter. The NLRC held that the termination was attended by malice and bad faith on the part of petitioner, considering the manner of private respondent was ordered by the President to pack up and remove his personal belongings from the office. Private respondent was said to have been embarrassed before his immediate family and other acquaintance due to his inability to explain the reasons behind the termination of his services. In this Petition for Certiorari, it is submitted that private respondent's dismissal was justified and not illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was compelled to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause for termination does not necessarily mean duplication of work but a "situation where the services of an employee are in excess of what is demanded by the needs of an undertaking . . ." Having reviewed the record of this case, the Court has satisfied itself that indeed petitioner had serious financial difficulties before, during and after the termination of the services of private respondent. For one thing, the audited financial statements of the petitioner for its fiscal year ending on 31 July 1985 prepared by a firm of independent auditors, showed a net loss in the amount of P4,431,321.00 and a total deficit or capital impairment at the end of year of P6,776,493.00. 2 In the preceding fiscal year (1983-1984), while the company showed a net after tax income of P843,506.00, it actually suffered a deficit or capital impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors and terminated all operations in the Philippines on January 1987, barely two (2) years after the termination of private respondent's employment. We consider that finally shutting down business operations constitutes strong confirmatory evidence of petitioner's previous financial distress. The Court finds it very difficult to suppose that petitioner Wiltshire would take the final and irrevocable step of closing down its operations in the Philippines simply for the sole purpose of easing out a particular officer or employee, such as the private respondent. Turning to the legality of the termination of private respondent's employment, we find merit in petitioner's basic argument. We are unable to sustain public respondent NLRC's holding that private respondent's dismissal was not justified by redundancy and hence illegal. In the first place, we note that while the letter informing private respondent of the termination of his services used the word "redundant", that letter also referred to the company having "incur[red] financial losses which [in] fact has compelled [it] to resort to retrenchment to prevent further losses". 3 Thus, what the letter was in effect saying was that because of financial losses, retrenchment was necessary, which retrenchment in turn resulted in the redundancy of private respondent's position. In the second place, we do not believe that redundancy in an employer's personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that
private respondent held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. 4 The employer has no legal obligation to keep in its payroll more employees than are necessarily for the operation of its business. In the third place, in the case at bar, petitioner Wiltshire, in view of the contraction of its volume of sales and in order to cut down its operating expenses, effected some changes in its organization by abolishing some positions and thereby effecting a reduction of its personnel. Thus, the position of Sales Manager was abolished and the duties previously discharged by the Sales Manager simply added to the duties of the General Manager, to whom the Sales Manager used to report. It is of no legal moment that the financial troubles of the company were not of private respondent's making. Private respondent cannot insist on the retention of his position upon the ground that he had not contributed to the financial problems of Wiltshire. The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. It should also be noted that the position held by private respondent, Sales Manager, was clearly managerial in character. In D.M. Consunji, Inc. v. National Labor Relations Commission, 5 the Court held: An employer has a much wider discretion in terminating the employment relationship of managerial personnel as compared to rank and file employees. However, such prerogative of management to dismiss or lay off an employee must be made without abuse of discretion, for what is at stake is not only the private respondent's position but also his means of livelihood . . . . 6 The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. 7 On the issue of moral damages, petitioner assails the finding of the NLRC that the dismissal was done in bad faith. Petitioner argues that it had complied with the one-month notice required by law; that there was no need for private respondent to be heard in his own defense considering that the termination of his services was for a statutory or authorized cause; and that whatever humiliation might have been suffered by private respondent arose from a lawful cause and hence could not be the basis of an award of moral damages. Termination of an employee's services because of retrenchment to prevent further losses or redundancy, is governed by Article 283 of the Labor Code which provides as follows: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of
In case of termination due to the installation of labor saving devices or redundancy. Termination of services for any of the above described causes should be distinguished from termination of employment by reason of some blameworthy act or omission on the part of the employee. by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. (emphasis supplied) We note that Section 2 of Rule XIV quoted above requires the notice to specify "the particular acts or omissions constituting the ground for his dismissal". and (e) Other causes analogous to the foregoing. any of the following causes: An employer may terminate an employment for (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. 2. In cases of abandonment of work.circumventing the provisions of this Title. (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative. (b) Gross and habitual neglect by the employee of his duties. The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. xxx xxx xxx Sec. the notice shall be served at the worker's last known address. 282. whichever is higher. the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every of service. in which case the applicable provision is Article 282 of the Labor Code which provides as follows: Art. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. Answer and hearing. 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. Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the "Rules to Implement the Labor Code" read as follows: Sec. the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service. whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. 5. a requirement which is obviously . Notice of dismissal. Termination by employer. (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires.
however. Embarrassment. with evident personal ill-will. It is precisely for this reason that an employer seeking to terminate services of an employee or employees because of "closure of establishment and reduction of personnel". Again. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. the termination of private respondent's services was not a wrongful act.applicable where the ground for dismissal is the commission of some act or omission falling within Article 282 of the Labor Code.. entitled to separation pay and other benefits under Act 283 of the Labor Code and petitioner's letter dated 17 June 1985. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. SO ORDERED. While private respondent may well have suffered personal embarrassment by reason of termination of his services.J. on the business and financial circumstances compelling retrenchment and resulting in redundancy. ACCORDINGLY. It is such allegations by the employer and any counter-allegations that the employee may wish to make that need to be heard before dismissal is effected. the Court Resolved to GRANT due course to the Petition for Certiorari. The award of moral damages that rests on such ground must accordingly fall. In the instant case. C. had been carried out in an arbitrary. private respondent did controvert before the appropriate labor authorities the grounds for termination of services set out in petitioner's letter to him dated 17 June 1985. 8 As discussed above. to begin with. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. as in the instant case. This is not to say that the employee may not contest the reality or good faith character of the retrenchment or redundancy asserted as grounds for termination of services. Section 5 may be seen to envisage charges against an employee constituting one or more of the just causes for dismissal listed in Article 282 of the Labor Code. Fernan. The appropriate forum for such controversion would. No pronouncement as to costs. The Resolutions of the National Labor Relations Commission dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and NULLIFIED. at which private respondent would have had the right to be present. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. even humiliation. such fact alone cannot justify the award of moral damages. JJ. while due to an authorized or statutory cause. The Temporary Restraining Order issued by this Court on 21 March 1988 is hereby made PERMANENT. concur . of course. Thus. Where. capricious and malicious manner. Moral damages are simply a species of damages awarded to compensate one for injuries brought about by a wrongful act. Bidin and Davide. allege any malfeasance or non-feasance on the part of the employee. Jr. Thus. there are no allegations which the employee should refute and defend himself from. that is not proximately caused by a wrongful act does not constitute a basis for an award of moral damages.. In such case. therefore. There is in this case no clear and convincing evidence of record showing that the termination of private respondent's services. Private respondent is. Jr. to require petitioner Wiltshire to hold a hearing... Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". is legally required to give a written notice not only to the employee but also to the Department of Labor and Employment at least one month before effectivity date of the termination. Gutierrez. We hold. is bereft of factual and legal bases. that the NLRC's finding that private respondent had not been accorded due process.
announced to the members of the cabin crew a change in the departure time from 3:00 to 5:30 p. Rubirosa Versoza and Dave Francisco M. at around 3:45 p.m. Petitioners were among those assigned to serve as cabin crew members of Flight PR501 for to Singapore. 'respondents') are former PAL employees. share the following findings of facts. Ms. JORGE MA.. and to return to at 8:00 a. During a pre-flight briefing conducted on the afternoon of departure. They are part of PAL's crew of International Cabin Attendants and as such receive a monthly salary of Nineteen Thousand Pesos (P19.: The present Petition for Review assails a Court of Appeals Decision  declaring that where both contending parties. PATRIA T. Cui. as well as the union to which all petitioners belong. On the other hand.m. Inc. 2005 AMELITA M..m.R. JR. 'petitioners') are regular employees of private respondent Philippine Airlines. scheduled to depart from on 03 April 1997 at 3:00 p.. while private respondents Patria T.m. VELASCO. Petitioners. constitutes res judicata on the other petition. CHIONG. It appears that petitioners received per diem without incident.000. Petitioners decided to inform PAL's Line Administrator. No. Without giving the cabin crew members a chance to voice out their sentiments or objections. PAL Flight Purser. CUI. Ricardo L. Chiong and Jorge Ma.00). the first decision by the appellate court in one petition once it assumes finality. in the presence of senior PAL officials. J. separately elevate said judgment by their respective petitions for certiorari. Flight Purser Gayoso announced that those taking the flight and its return leg would receive a per diem of Thirty-three US Dollars (US$33. Escareal. Jr. April 7. When they arrived at the NAIA at 4:00 p. ESCAREAL. Montecillo. PHILIPPINE AIRLINES. dissatisfied as they were with the judgment of the National Labor Relations Commission (NLRC). the next day. operating as a common carrier transporting passengers and cargo through aircraft. INC. PAL is a domestic corporation organized and existing under the laws of the Republic of the Philippines. NATIONAL LABOR RELATIONS COMMISSION (3rdDivision). a situation which would result in further delay. Velasco (collectively. RUBIROSA VERSOZA and DAVE FRANCISCO M. which infringed on the minimum rest period granted to them under the 1995 PAL-FASAP Collective Bargaining Agreement (CBA). their intention to back out from servicing Flight PR 501. vs. the crew found out that the aircraft to be used for Flight PR501 was not yet available. Jesulita de Leon.00) due to the resultant reduction in the cabin crew's rest period. Respondents. the pertinent provision of which states: . Petitioners cited as basis for such intention the consequent decrease in their rest period. because the aircraft intended for PR501 would arrive late. through a Mr.m. DECISION TINGA. The quasi-judicial arbiters and the Court of Appeals. Jaime Gayoso. (PAL). (collectively. the Flight Attendants and Stewards Association of the Philippines (FASAP). viz: Petitioners Amelita M. Upon the conclusion of the pre-flight briefing. the cabin crew members were transported via shuttle to the Ninoy Aquino International Airport (NAIA). 151922.. in the two petitions before two of its Divisions.G.
Loitering or Abandonment of Post. After the tour of duty. However. they had heard the end of the matter.m.000. The minimum rest period after a tour-of-duty will be twelve (12) hours. which was docketed as NLRC-NCR Case No. Petitioner Velasco submitted his reply on even date while Petitioners Escareal and Versoza submitted their joint reply on 11 April 1997. Petitioners thought that in having caused no interruption in the flight scheduling. After the parties submitted their respective Position Papers. . vacation and sick leaves (sic) pay and 13th month pay corresponding to the period of their suspension plus 10% of the total award as reasonable attorney's fees. a cabin attendant shall be allowed a rest period of at least twice the number of flight duty hours in his tour-of-duty before he is assigned to another tour-of-duty.) and arrived in Singapore at 9:30 p. Jesus Estenor. PAL found probable cause to administratively charge the petitioners. in the same manner that herein petitioners were required to file their written answers and counter-affidavits under oath. petitioners filed a Complaint for Unfair Labor Practices before the NLRC. Labor Arbiter Caday found no truth to the allegation that petitioners announced their intention to decline servicing Flight PR501 only immediately before take-off.m. Flight PR501 left with a complete set of replacement cabin attendants at 6:00 p. Refusal to Take Assignment. petitioners were instructed to return their Thirty-three US Dollar (US $33.00 each and payment of their unenjoyed holiday pay. (half an hour later than the adjusted departure time of 5:30 p. Mr. petitioners submitted a Manifestation with Omnibus Motion to Dismiss and/or for a Bill of Particulars  praying. that respondents' witnesses be required to submit their respective statements under oath. through a 'Letter of Inquiry dated 04 April 1997. leaving PAL short of time to arrange for relievers. and to arrange their next flight duty. petitioners were required by PAL to comment on their failure to take Flight PR501. It was agreed between them that it would be in the interest of PAL should petitioners assert their rest period while still in rather than in Singapore. It held: WHEREFORE. The Labor Arbiter also belied the allegation that none of petitioners returned to the PAL Scheduling Office to notify personnel about the changes in cabin crew complement. On 20 August 1997. inter alia.00) per diem. Montecillo contacted the PAL Scheduling Office and informed the Duty Manager. These instructions were complied with. 00-03-02977-98 and raffled to the sala of Labor Arbiter Manuel Caday. FASAP's Mr. proceed by shuttle to the PAL Scheduling Office to make known the resultant changes in the cabin crew complement. to ascertain who among them were resorting to falsehood. about petitioners' intention to back out of the flight and assert their rest period under the CBA. Despite the explanation that they were asserting a right provided them under the CBA. PAL rendered a decision finding petitioners guilty as charged and imposing upon them a penalty of a one-year suspension without pay. premises considered. Before being relieved from their scheduled flight duty by Flight Purser Gayoso and Line Administrator de Leon.m. judgment is rendered declaring the one (1) year suspension without pay of the complainants illegal and ordering the respondents to reinstate the complainants to their former positions with backwages amounting to P228. Petitioners each received a Notice of Administrative Charge dated 22 April 1997 for Conspiracy or Concerted Action. Without acting on the Manifestation with Omnibus Motion. and Withholding Cooperation. Upon petitioners' request. On 31 March 1998. Without further incident.Section 38.
and (3) that PAL wanted to keep the facts muddled by failing to require its witnesses to submit their statements under oath. petitioners filed on 10 September 1999 their own Petition for Certiorari with the Court of Appeals. and they have a right to recover the salaries and benefits corresponding thereto. At this point. That is. It was docketed as CA-G. Thus.. (2) that PAL was not faultless and that no harm or delay was caused by petitioners' acts. A suspension of one month would have been sufficient. On appeal. Despite their earlier submission of the Consolidated Comment/Opposition in CA-G.00 x 11) plus the complainants' unenjoyed benefits like holiday pay. . the judgment award is hereby REDUCED to P209. the penalty of one year suspension meted on them was too harsh. . Both parties were dissatisfied with the Decision. SP No. were denied by the NLRC in a minute Resolution dated 30 June 1999.. . However. SO ORDERED.00 (P19. SP No. they should not have taken the law into their own hands. PAL first filed its original action for certiorari with the Court of Appeals.R. There are specific legal procedures designed to provide relief for the violation of rights under a CBA. It modified the Labor Arbiter's Decision accordingly. They should have availed of such remedies. 54099 and assigned to the Thirteenth Division of the Appellate Court. controverting PAL's assertions and buttressing their prayer for the reinstatement of the Decision of the Labor Arbiter. holding thus: .R. vacation and sick leave pay and 13th month pay for eleven (11) months. the eleven-month period of their suspension was unwarranted. the decision is hereby MODIFIED to the extent that only eleven of the twelve-month suspension is hereby declared illegal.. indeed. It was docketed as CA-G. it would not completely justify the complainants' refusal to fulfill their duty of rendering service on board flight PR 501. the NLRC rendered a Decision  reiterating the factual findings of the Labor Arbiter. On 26 July 1999.000. Both.R. Petitioners filed a Consolidated Comment/Opposition  on 31 August 1999. petitioners sought the annulment and setting aside of the NLRC's Decision and the reinstatement of the Decision of the Labor Arbiter. 54850 and assigned to its Special Eleventh Division.000. a violation of the CBA on the part of the respondent. 54099. the twist which served as the root of the crucial issue before the Court took shape. Consequently. The Petition for Certiorari  ascribed to the NLRC grave abuse of discretion in holding: (1) that herein petitioners did not wait until the last minute to inform PAL of their decision not to take Flight PR501. it found that the manner by which petitioners asserted their right to a full twelve (12) hours of rest merited the imposition of a one(1)-month suspension. Considering that the respondent was not faultless and that no harm or delay was caused by the complainants' refusal to take flight PR 501. In their petition.Complainants claim for damages are hereby dismissed for lack of evidence to support them. WHEREFORE. however. SO ORDERED. even if there were. The award of attorney's fees equivalent to ten percent (10%) of the total monetary award is hereby AFFIRMED. . which is the precursor to the instant case. Petitioners submitted a Motion for Partial Reconsideration and respondents filed a Motion for Reconsideration. Nevertheless. SP No.
to wit: In the case at bench. SP No. holding that there was no justifiable reason to disturb the factual findings of the Labor Arbiter and the NLRC. Rule 39 of the Rules of Court establishes the distinctive principles governing res judicata. and the petitioners to submit a reply thereto. 54099 which declared illegal eleven of the twelve. Moreover. This Decision became final and executory on 08 March 2000.R. 54099 which is the petition with the lower case number. .. the latter having been rendered on a different issue. PAL filed a Comment praying for the dismissal of the Petition on the ground of res judicata. Thus.R. Effect of judgments or final orders. 54099. 47. 47. . SP No.R. causing them to file the instant Petition for Review. to which petitioners replied in opposition. having jurisdiction to pronounce the judgment or final order. SP No. SP No. SP No.. SP No. 54850. On 12 November 1999. 54099 which already became final and executory. 54850 a Manifestation And Motion Cum Notification Of Pending Action requesting the consolidation of the petition with CA-G. . SP No. The conclusion is based on their allegation that the one-month suspension is the issue. Such finality is conclusive between petitioners and respondent PAL 'with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto. with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto.R. on the ground of res judicata. SP No.R. but is inapplicable to the declaration by the NLRC that the remaining one-month suspension is valid. litigating for the same thing and under the same title and in the same capacity. .R. the Special Eleventh Division issued a Decision  dismissing CA-G. since the issues therein were already conclusively determined in CA-G. 54850. it is undeniable that this Court had jurisdiction to render a final judgment or order in CA G. Paragraph (b). Both parties simultaneously filed their Memoranda on 02 April 2001. The 'matter directly adjudged is legality of the eleven (11) months suspension. . the Thirteenth Division of the Court of Appeals dismissed PAL's petition in CAG.R. 54850 but which was not determined in CA-G. On 29 June 2001. SP No. subject matter.R. Sec. the resolution of the issue pertaining to the remaining one (1) month suspension is 'actually and necessarily included in the resolution of the issue pertaining to the eleven (11) months suspension. PAL submitted to the Special Eleventh Division in CA-G. On 15 September 2000. (b) In other cases. petitioners did not file their own or separate motion for the consolidation of the two petitions before either Division of the Court of Appeals. It also held that at most PAL had raised an error in judgment. 54099.R. conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding. (emphasis in the original) Petitioners filed a Motion for Reconsideration.R. SP No. Apparently.R.The effect of a judgment or a final order rendered by a court of the Philippines. 54099 had already been decided by the Thirteenth Division. subject matter and cause of action. which was denied.In October of 1999. and cause of action in CA-G.to wit: Sec. which is not correctible through the original civil action of certiorari. SP No. the Court of Appeals affirmed in toto the ruling of the NLRC.. The 'other matter that could have been raised in relation thereto is the remaining one (1) month suspension.months suspension meted on them. The same Resolution ordered respondents to comment on the Petition docketed as CA-G. 54099. the judgment or final order is. PAL's motion for consolidation was denied for having 'untenable since CAG. may be as follows: . Petitioners now insist that the principle of res judicata is applicable only to the portion of CA-G.
Res judicata applies when there exists in two cases identity of parties, subject matter, and cause of action. Thus, the judgment in the first case is final as to the claim or demand in controversy, between the parties and those privy with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose and of all matters that could have been adjudged in that case. For the preclusive effect of res judicata to be enforced, the following requisites must obtain: (1) The former judgment or order must be final; (2) It must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case; (3) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) There must be, between the first and second actions, identity of parties, of subject matter and of cause of action. This requisite is satisfied if the two actions are substantially between the same parties. On core examination, the first three elements of res judicata are present. The Decision of the Court of Appeals in CA-G.R. SP No. 54099 is final and executory. It was rendered on the merits and the Court of Appeals had jurisdiction over the case, as even plaintiffs sought the same by filing their own Petition for Certiorari with said Court. Now, is the fourth requisite presentthat of uniformity of parties, subject matter and cause of action? We hold in the affirmative. Obviously the parties involved are the same; the subject matter and cause of action in CA-G.R. SP No. 54099 and CA-G.R. SP No. 54850 are the same despite an expected difference in the manner by which the opposing parties presented their grounds for certiorari. A subject matter is the item with respect to which the controversy has arisen, or concerning which the wrong has been done, and it is ordinarily the right, the thing, or the contract under dispute. On the other hand, a cause of action is an act or omission of one party in violation of the legal right of the other. The sole and common objective of petitioners and respondents in filing their respective original actions for certiorari and in impleading therein the NLRC as public respondent was to secure the reversal of the NLRC's Decision. By definition, therefore, the subject matter and the cause of action of the two original actions is the assailed Decision promulgated by the NLRC. Moreover, we have held in Stilanopolus v. City of Legaspi  that causes of action are identical when there is an identity in the facts essential to the maintenance of the two actions, or where the same evidence will sustain both actions. The Court of Appeals aptly observed that the reliefs sought in petitioners' Consolidated Comment/ Oppositionin CA-G.R. SP No. 54099 are similar to those prayed for in their Petition docketed as CA-G.R. SP No. 54850. Thus, the singularity of the relief sought by herein petitioners and the identity of factual origins of the two cases ascertain the identity of the causes of action in the two cases. In fact, res judicata has been applied to cases far more diverse than the hair-splitting distinctions raised by petitioners concerning the instant case. For instance, a case for rendering an accounting of funds was held to preclude a subsequent case for the partition of the same funds and their fruits; a judgment in an action for recovery of damages for property lost was an effective bar to any other action between the same parties for the recovery of the same property or its value. All the more should res judicata be applied herein, where both cases emanated from, and contest the judiciousness of, a single decision a quo.
We note that the Petition, in its prayer, entreats this Court to first set aside the Decision of the Special Eleventh Division and, thereafter, affirm the Decision of the Labor Arbiter, which held them free of any liability from their actions. However, implicit in petitioners' prayer is a request for this Court to annul or set aside the final and executoryDecision of the Court of Appeals in CA-G.R. SP No. 54099, since they seek a modification of the NLRC Decision which that court affirmed. The 1997 Rules of Civil Procedure provides only two remedies for aggrieved parties to annul a final and executory judgment. The first is by filing a verified petition for relief from judgment under Rule 38 on the ground of fraud, accident, mistake, or excusable negligence within sixty days after the petitioner learns of the judgment to be set aside, and not more than six months after such judgment was entered. The other remedy is for a party to file a verified petition for annulment of judgment under Rule 47, on the ground of extrinsic fraud and lack of jurisdiction, within four years from its discovery. However, in addition to these, jurisprudence has likewise recognized an additional relief through a direct action, as certiorari, or by a collateral attack against a judgment that is void on its face. Petitioners have not alleged that the judgment in CA-G.R. SP No. 54099 was entered against them through fraud, accident, mistake, or excusable negligence; not to mention that the prescriptive period for filing a petition for relief had lapsed. Petitioners do not allege any extrinsic or collateral fraud taken against them in the rendition of the decision; nor do they claim the lack of jurisdiction of the NLRC to make its Decision, or the lack of jurisdiction of the Court of Appeals to affirm the same. Moreover, the Decision in CA-G.R. SP No. 54099 is not patently void. In fact, petitioners have recognized the final and executory nature thereof and even admitted a partial res judicata effectof said judgment. Consequently, there is neither statutory nor jurisprudential basis for this Court to annul theDecision of the Court of Appeals in CA-G.R. SP No. 54099. As a last-ditch effort, petitioners ask this Court to disregard the rigid application of res judicata to avoid the 'sacrifice of justice to technicality. In addressing this supplication, this Court must ask itself, were petitioners denied a fair hearing so as to merit an exception to the finality of judgments? A review of the proceedings a quo shows that petitioners had been given their day in court. Petitioners filed a complaint against respondents. They also elevated the adverse decision of the NLRC in their own Petition for Certiorari and filed a lengthy Consolidated Comment/Opposition to PAL's Petition forCertiorari, buttressed with factual and legal arguments not only to defeat PAL's allegations but also to substantiate their own bid to obtain the reinstatement of the Decision of the Labor Arbiter. The Special Eleventh Division of the Court of Appeals rendered its decision only after a review of the submissions of petitioners. Had there been a due process violation, it may have been possible for this Court to set aside even a final and executory judgment. However, we do not see any overriding reason not to abide by the wellentrenched doctrine ofres judicata. Indeed it has been well said that this maxim is more than a mere rule of law, more even than an important principle of public policy, and that it is a fundamental concept in the organization of every jural society,for not only does it ward off endless litigation, it ensures the stability of judgment, and guards against inconsistent decisions on the same set of facts. It also takes into consideration the ideal that a party should not be vexed twice regarding the same cause. When an issue of fact or law is actually litigated and determined by a valid judgment, that determination is conclusive in a subsequent action to the parties thereto. What petitioners should have done was to appeal the adverse decision in CA-G.R. SP No. 54099, failing which, petitioners must contend and content themselves with the finality of judicial pronouncements.
WHEREFORE, premises considered, the assailed judgment and resolution of the Court of Appeals dismissing the petition are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED. Puno, (Chairman), Austria-Martinez, and Callejo, Sr., JJ., concur.
the head of the Cane Marketing Section. He emphasized that the management shall have the final say on who would be covered. J. the Department of Labor and Employment (DOLE) in Iloilo City. The union was made to understand that the management s counter-proposals would be presented during their conference on August 30. By 1994. ROGELIO R. 1995. Jr. PERRIN and EDUARDO T. LEONITO G. Rogelio R.R. He also ensured the adequate supply of oil products. 2005] LOPEZ SUGAR CORPORATION. Perrin and Candelario were employed in 1975 and 1976. The latter informed . respondents. Romeo T. by 1994. in turn. which affirmed the decision of the National Labor Relations Commission (NLRC) in NLRC Case No. SP No.[G. reversed the decision of the Labor Arbiter in RAB Case Nos. Pabalan. decided to form a labor union called Lopez Sugar Corporation Supervisor s Association. DECISION CALLEJO. which led to the submission of the union s proposals for a CBA on July 24. 49964. Regional Office No. who rose from the ranks and. and attend to their various needs. on the other hand.. On December 29. Out of the 108 members. His co-employee. 06-01-1004796. provide technical assistance to planters. Perrin and Candelario. Pabalan. In January 1995. Pabalan. issued a Certificate of Registration to the union. was about 28 years old when he was hired by the Corporation as Shift Supervisor in the Sugar Storage Department in 1975. respectively. were among its active members. which. the Corporation s president issued a Memorandum to the vicepresident and department heads for the adoption of a special retirement program for supervisory and middle level managers. Franco was barely 20 years old when he was employed in 1974 as Fuel-in-Charge. During its organizational meeting. as Planter Service Representatives (PSRs). 148195.. on the other hand. Perrin and Candelario were on leave when they were invited by Juan Masa. CANDELARIO. and that the program would be irrevocable once approved. Pabalan supervised the delivery of sugar and molasses to and from the storage during his shift. the officers of the union and the management held a meeting. spearheaded by Franco. Meantime. the Corporation requested for more time to study the union s proposals for a CBA. 1995. 06-64-10164-96 and 06-07-10292-96. to the Northeast Beach Resort in Escalante. Candelario were supervisory employees of the Lopez Sugar Corporation (the Corporation. Franco. The Antecedents Private respondents Leonito G. No. Perrin and Candelario. 1995. 105 had agreed to authorize the check-off of union dues against their salaries even before any Collective Bargaining Agreement (CBA) had been executed by the union and management. contractual and casual employees who were engaged in handling sugar. V-0138-97. SR. for brevity). VI. 1995. Franco supervised the fuel tenders. he likewise supervised the regular. as well as those of the planters who ordered their requirements from the central.R. the supervisory employees of the Corporation. Perrin and Eduardo T. occupied supervisory positions in the Corporation s Cane Marketing Section. PABALAN. were tasked to convince planters to mill their canes using the services of the Corporation. For his part. Franco was elected president and Pabalan as treasurer. 1994. May 16.: This is a petition for review on certiorari of the Decision of the Court of Appeals (CA) in CA-G. on August 8. FRANCO. Negros Occidental. ROMEO T. In a Letter dated August 14. monitored fuel and lubricant requirements of the central. Perrin and Candelario. On the other hand. petitioner. vs.
As stated in the memorandum. they were not informed of the criteria. Masa. Your inclusion in the Program is primarily due to the fact that our study of our current organizational set-up reveals that the organization is presently over-staff[ed]. thus: In line with the memorandum of the President dated August 8. thus. the collective bargaining process [was] over. In their position paper.  They further averred that the connection between the untimely demise of the negotiations and the dismissal of 32 employees. and even after the termination of Perrin and Candelario s employment. we wish to formalize our advice that you are one of the employees who will be covered by the Program. Franco. were included in the special program. Thereafter. 1995 from the Corporation s Vice-President for Administration and Finance. They pointed out that Perrin and Candelario. Franco. which is twice what the law provides. True enough. who were officers and members of the union. There are actually duplication of functions and responsibilities. Pabalan. They were thus led to conclude that their dismissal was capricious. thus increasing their number. the private respondents filed separate complaints against the corporation with the NLRC for illegal dismissal. guidelines or standard in the implementation of the special retirement program. 1995. however. Candelario was then rehired on a contractual basis only until January 1996 when the complaint was filed against the Corporation. one year before the program was implemented. Management therefore had no choice but to reduce the present number of employees and you were selected as among those who will be separated from the service. is being offered in consideration of your acceptance of your separation. 1995. had rejected a similar offer to work on a contractual basis. the Corporation hired two more PSRs. the management wrote the union that its proposals for a CBA had been referred to its counsel. in addition to the conversion of your unused/earned sick leave and vacation leave credits and pro-rated 13th month pay. Perrin and Candelario received copies of the Memorandum dated August 25. On August 31. was too obvious to be ignored . The private respondents also alleged that their inclusion in the said program was resorted to in order to intimidate the union and its members from pursuing their objective of institutionalizing a collective bargaining mechanism for supervisory employees in the company. their employment with the Corporation was to be terminated effective September 29. and our earlier discussion with you. reinstatement and damages. a pathetic end for an enterprise that started with such great enthusiasm from 105 of the 108 supervisors. This generous non-precedent setting separation package. Moreover. the Corporation hired two more on a contractual basis. and some duties could actually be performed by just one person. The private respondents received their respective separation pays and executed their respective Release Waiver and Quitclaim after receiving their clearances from the Corporation. unfair labor practice. and they would be paid their salaries until September 27. 1995. informing them that they were included in the special retirement program for supervisors and middle level managers. who had been with the corporation for already 20 years. the private respondents claimed that they were made to understand that their employment was terminated on the ground of redundancy. The complainants averred that for all intents and purposes. announcing the adoption of a special retirement program for the supervisors and the middle level managers. aborting the birth of a labor organization capable of bargaining with the management on the terms and conditions of employment. 1995. you will be entitled to a separation package equivalent to two months pay for every year of service. having failed to progress beyond the proposal stage.them that they were all included in the special retirement program and would receive their respective notices of dismissal shortly. while others who had been employed with the corporation for only one to six years had been retained. on the other hand. thereby relieving the company from the trouble of any court litigation. hence.
which greatly affected the local sugar industry. the AFTA and other international trade agreements.0 The inclusion of the complainants in the special retirement or right sizing program has nothing to do with their exercise of their right to self-organization. in fact. 14. although still in their productive years. 1997. the recommendation to save cost was not implemented.considering further that the claim of redundancy was untenable. In the case of the Sugar and Molasses Storage Department (SMSD). In its position paper. According to the Labor Arbiter. thus: 12. Gorres. hence. In the case of complainant Pabalan. The Corporation also averred that in July 1995. 13. The complainants also averred that they were all in their late 40s. As to the Cane Marketing Department where Perrin and Candelario were assigned as PSRs. nor did they waive any of their rights. it commissioned Sycip. whose position was Shift-in-Charge/Supervisor. 15. They insisted that it was a case of adherence. On February 26. and replacements were hired on December 1. They further emphasized that nowhere in the SGV study was it recommended that they be dismissed from employment. thus: Based on this study. With respect to complainants Perrin and Candelario. and found themselves in no position to resist. The private respondents pointed out that this was an evidence of the Corporation s intention to contract out the work of the PSRs. there was a real and factual basis to declare redundancy. their prospects for other employment were very slim. legal and justified. who were Planters Service Representatives. are basically the same as that of Fuel Tenders and therefore his activities could well be done by existing Fuel Tenders who would be directly under the General Warehouse Supervisor. the position and functions of fuel-in-charge. hence. were dismissed. considering further that those who had been employed for only one to six years were retained. there is no unfair labor practice being committed by the Company. instead Pabalan and another shift supervisor who was also a union officer (Bitera). wherein they are tasked to maintain good and harmonious . They averred that they did not relent on their claim.0 Complainants separation from service was done in good faith and in complete compliance with procedural and substantive legal requirements. Velayo and Company (SGV) to conduct a study of the Corporation and its operations to identify changes that could be implemented to achieve cost effectiveness and global competitiveness. the Labor Arbiter rendered judgment in favor of the Corporation and ordered the dismissal of the complainants. the Corporation maintained that the termination of the employment of the complainants was in response to the challenges brought about by the General Agreement on Tariff and Trade (GATT). and had served the petitioner for about 20 years. The respondent summarized its position. In their Reply-Affidavit. it was observed that the job was more complementary to the marketing aspect. held by complainant Franco. the complainants averred that they signed their respective Release Waiver and Quitclaim because their employer had driven them to the wall.0 Complainants are barred by the release waiver and quitclaim that they have executed in favor of the Company from further contesting the validity of their separation from service. or that their positions be abolished. 1996. for instance.0 Complainants separation from employment was made pursuant to a legitimate exercise by the Company of its prerogatives to adopt measures to cut cost and to maintain its profitability and competitiveness. recommended the strengthening of the said unit. not of choice. the respondent dismissed such employees who had been employed from 13 to 25 years. the study. it was observed that his tasks could be merged in the functions of the Property Warehouse Supervisor. as they were no longer employed.
on the ground that the NLRC did not commit grave abuse of discretion in rendering judgment against the Corporation. The Labor Arbiter noted that the complainants received their separation pay and other monetary benefits from the Corporation. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN DISREGARDING BASIC PRINCIPLES OF LAW AND JURISPRUDENCE LAID DOWN BY THE SUPREME COURT TO THE EFFECT THAT: i. It was found that these PSR functions could well be handled by agents or consultants. The determination that a position is redundant and therefore legally terminable. 2000. denied by the CA. iv. which by law and jurisprudence are not vested with managerial functions. now the petitioner.relations with the company s sugar planters. The complainants appealed to the NLRC which rendered judgment on December 9. The matter of evaluating the merits of the issues presented in a labor case is primarily addressed to the sound discretion of the Labor Arbiter. and for as long as it is done in good faith. The NLRC ruled that there was no factual and legal basis for the termination of the employment of the private respondents based on retrenchment or redundancy. when voluntarily and intelligently executed. The Corporation s motion for reconsideration thereof was. Iii Termination on ground of redundancy is anchored on the superfluity of a position and not on the fact that actual loss is incurred by a company. and thereafter. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN OVERRIDING THE LEGITIMATE EXERCISE BY THE PETITIONER OF ITS MANAGEMENT PREROGATIVE OF REDUCING ITS WORK FORCE TO ADDRESS CURRENT BUSINESS AND ECONOMIC REALITIES. and that the Deeds of Release Waiver and Quitclaim executed by the complainants were ineffective. ii. The Corporation filed a motion for reconsideration of the decision. Unsatisfied. The Corporation. insisting that: PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT SET ASIDE AND OVERRULED THE DECISION OF THE LABOR ARBITER ON THE BASIS OF COINCIDENCES AND BASELESS ACCUSATION OF BAD FAITH. is basically an exercise of management prerogative. more so if he is not just an ordinary employee. A waiver and quitclaim. his findings and conclusions should not be disturbed but must be accorded with respect by the NLRC and even by the Supreme Court. as it is supported by substantial evidence and the law. maintains that the Labor Arbiter correctly ruled that . the Corporation filed a petition for certiorari with the CA. is binding upon the employee. 1997 granting their appeal and reversing the decision of the Labor Arbiter. the CA rendered judgment dismissing the petition. contending that the decision of the Labor Arbiter should prevail. the wisdom or soundness thereof is beyond the review power of the Labor Arbiter nor of the NLRC. voluntarily executed their respective Deeds of Release Waiver and Quitclaim in its favor. to ensure continued patronage of the mill s services. On April 28. when the decision of the Labor Arbiter is amply supported by substantial evidence. likewise. The petitioner. thus. assails the ruling of the CA. Thus. COMPLETELY MISAPPRECIATING THE SUBSTANTIAL EVIDENCE WHICH SUPPORTED THE LABOR ARBITER S DECISION. who would be paid on commission basis. which was denied by the NLRC.
(1) (2) (3)
the separation of the Respondents from employment was for a valid and authorized cause; the positions of the Respondents were redundant; there was a real and factual basis to declare redundancy;
(4) there is no evidence to show that the right sizing program was deliberately intended to stifle union activities; (5) (6) the confluence of events was just a coincidence; there is no evidence of deviousness in the right sizing program;
(7) the Respondents received their individual separation benefits, and there is no evidence that either moral or physical compulsion or both made them accept the benefits offered; and (8) Petitioner Company has complied with the legal requisites of terminating the employment of the Respondents. The petitioner further argues that the decision of the NLRC is essentially flawed because the private respondents were terminated on the ground of redundancy, and not retrenchment which is an entirely different concept. There is absolutely no evidence on record, save the bare allegations of the private respondents that they were singled out as victims of retrenchment. The other redundant positions were, likewise, eliminated. It insists that unlike retrenchment, redundancy does not require business losses to be an authorized cause for dismissal. Moreover, the law does not give any criteria, guidelines or standard for the selection of employees who are to be dismissed on the ground of redundancy. It insists that Article 283 of the Labor Code merely requires that in case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to, at least, one (1) month pay for every year of service, whichever is higher. The petitioner further posits that the law does not require a corporation to adopt radical cost-cutting measures prior to a termination on the ground of redundancy. It avers that the mere fact that the termination took place at a time when the private respondents had just organized the union does not automatically render their termination invalid. It theorizes that the union could have been organized as leverage to the implementation of the redundancy program which the supervisory employees knew was forthcoming. It further claims that it is clearly not within the discretion of the NLRC to say that the termination was prematurely resorted to, as such determination was clearly within the business discretion of the petitioner corporation. It adds that, as evidenced by the generous separation packages given to the private respondents, their welfare was amply considered by it. Thus, the petitioner concludes, there was patent partiality and bias on the part of the NLRC when it sweepingly declared that the dismissal of the private respondents was illegal and without valid and authorized cause. 
The Ruling of the Court The petition is denied for lack of merit. In the main, the issues in this case are factual. Under Rule 45 of the Rules of Court, only questions of law may be raised in this Court; such factual issues may be considered and resolved only when the
findings of facts and the conclusions of the Labor Arbiter are inconsistent with those of the NLRC and the CA. Nevertheless, we have meticulously reviewed the records in this case and find that the NLRC did not commit any grave abuse of its discretion amounting to lack or excess of jurisdiction in rendering its decision in favor of the private respondents. The CA acted in accord with the evidence on record and case law when it dismissed the petitioner s petition for certiorari and affirmed the assailed decision and resolution of the NLRC. We reiterate that it is the burden of the petitioner, as employer, to prove the factual and legal basis for the dismissal of its employees on the ground of redundancy. In Asian Alcohol Corporation v. National Labor Relations Commission, the Court ruled that 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. The Court proceeded to expound, as follows: A redundant position is one rendered superfluous by any number of factors, such as over-hiring 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. Contrary to the petitioner s claim, the employer must comply with the following requisites to ensure the validity of the implementation of a redundancy program: (1) a 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. The Court emphasized in the earlier case of Panlilio v. National Labor Relations Commission that it is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program, such as but not limited to (a) preferred status; (b) efficiency; and (c) seniority. The general rule is that the characterization by an employer of an employee s services as no longer necessary or sustainable is an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterization or decision is not, as a general rule, subject to discretionary review on the part of the Labor Arbiter, the NLRC and the CA. Such characterization may, however, be rejected if the same is found to be in violation of the law or is arbitrary or malicious. In Dangan v. National Labor Relations Commission, the Court ruled that the hiring, firing or demotion of employees is a management prerogative, but is subject to limitations stated in the collective bargaining agreement, if any, or general principles of fair play and justice. Indeed, the Court will not hesitate to strike down a redundancy program structured by a corporation to downsize its personnel, solely for the purpose of weakening the union leadership, thereby preventing it from securing reasonable terms and conditions of employment in their CBA with the employer. In this case, we agree with the ruling of the CA that the petitioner illegally dismissed the private respondents from their employment by including them in its special retirement program, thus, debilitating the union, rendering it pliant by decapacitating its leadership. As such, the so-called downsizing of the Cane Marketing Department and SMSD based on the SGV Study Report was a farce capricious and arbitrary. The Court agrees with the private respondents averments in their position paper, as follows:
Complainants are not in a position to anticipate how respondent will present its case for redundancy particular[ly] because no standard, criteria or guidelines for the selection of dismissed employees was made known to them, and all that they were told was that you were selected as among those who will be separated from the service; nonetheless, this early, it is possible to point out certain facts which throw light on the plausibility or want of it, of the ground relied upon. 1. No contingency has occurred, of the kind mentioned by the Supreme Court in the Wiltshire case, (over-hiring of workers, decreased volume of business or dropping of a particular service line) which would explain the dismissal on the ground of redundancy; over-hiring of workers cannot conceivably occur in the level of the supervisors; on the other hand, it would have required an event of cataclysmic proportion to justify the dismissal for redundancy of a full one-third of the supervisors in an establishment, and if such an event were to occur it would have resulted in tremendous losses which is not true here because the dismissal is not on account of or to prevent losses; 2. In no other category of employees did positions suddenly become redundant except among the supervisors who have just organized themselves into a labor union and were working for their first-ever CBA in the establishment; 3. The dismissal came at the precise time when the Lopez Sugar Central Supervisors Association (LSCA) had presented its CBA proposals and was expecting the company s reply as mandated by law; in fact, the reply was overdue, being required to be submitted by management within ten (10) days from receipt of the union proposal; there is no better proof that the dismissals have served their hidden purpose than that the CBA negotiation has ended to all intents and purpose, before management could even present its counterproposal. Certainly, it would be farfetched to say that the remaining union officers and members have abandoned its objective of having a CBA for reasons other than the fear of suffering the fate of those who had been dismissed. The absence of criteria, guidelines, or standard for selection of dismissed employees renders the dismissals whimsical, capricious and vindictive; in the case of the complainants Franco and Pabalan, who are the Union President and Treasurer, respectively, the reason for their inclusion is obvious. Additionally, it must be mentioned that in the case of Pabalan, there were three shift supervisors, one for each 8-hour shift before the program was implemented, namely, Pabalan, Bitera and Lopez; Pabalan and Bitera (a union director) were terminated, leaving Lopez alone, who worked on 12-hour shift duty with Henry Villa, department head who was forced to perform the work of shift supervisor; Pabalan was offered to be rehired as an employee of BUGLAS, a labor-only contractor but he refused; an employee, Eugenio Bolanos was assigned from another department to do the work of shift supervisor and three of them (Lopez, Villa and Bolanos) now divide shift duties among themselves. There is no explanation why among the shift supervisors it was Pabalan and Bitera who were included in the program. In the case of complainants [P]errin and Candelario, both Planter Service Representatives, the manipulation is even more apparent; one year before the program was instituted, two new PSRs were hired (Labrador and Cambate) bringing to six the total number of PSRs; after the termination of [P]errin and Candelario, who have served for nearly 20 years, two new PSRs were hired (Oropel and Jeres) on contractual basis and whose compensation is based on pakiao; additionally, Candelario was hired after his dismissal under the same arrangement as Oropel and Jeres, which lasted only up to January 1996 when management learned of the filing of the first of these cases; [P]errin, on his part, was offered the same arrangement but he refused. 4. The rehiring of dismissed employees through a labor-only contractor exposes the program as a circumvention of the law. This is true in the case of the following supervisors who were terminated with complainant but were subsequently employed to do exactly the same work, but as employees of BUGLAS, a labor-only contractor which supplies laborers to respondent LSC:
Raymundo Llenos. Supervisor.4 Sugar and Molasses Storage 2. such as preferred status. Supervisor. . the observation of the Supreme Court in the Wiltshire case to the effect that in a well-organized establishment. respectively. failed to formulate fair and reasonable parameters to determine who among the supervisors and middle-level managers should be retired for redundancy. As to duplication of functions. None of the work has been phased out or rendered obsolete by any event that took place. as well as the criteria for the selection of the supervisors to be retired. Community Development Officer. Electrical Department. Moreover. Foremost. Joseph Nicolas. It.4. the petitioner came out with a special retirement program for its 108 supervisors and middle-level managers. It is too much of a coincidence that the two private respondents were active members of the union. Refrigeration and Air Conditioning.4.4 Install a marking mechanism that would indicate production date on bagged refined sugar 2.5 Conduct weekly checks and adjustment on the bag sewing and conveyor equipment  The downsizing of personnel was not among the foregoing recommendations. B. The following recommendations relating to the Sugar and Molasses Storage Department were made: RECOMMENDATIONS ================= 2. the petitioner failed to formulate fair and reasonable criteria in ascertaining what positions were declared redundant and accordingly obsolete. lighting and raw sugar handling 2. without due regard to the SGV report.4. the petitioner downsized the Cane Marketing Department by eliminating private respondents Perrin and Candelario.4. efficiency or seniority. Contrary to its submissions. C. likewise. and Franco and Candelario from the Sugar and Molasses Storage Department.A. and those to be retained or transferred or demoted.3 Renovate bagging room of refined sugar to enforce strict hygiene/sanitation 2. all indicate that there was no redundancy. making it clear that its decision to eliminate them was final and irrevocable.4. Using the SGV report as anchor. and yet this was what the petitioner did. thereby terminating their employment. duplication of functions is hardly to be expected is pertinent. by including private respondents Franco and Pabalan.1 Renovate old bulk warehouse to improve ventilation. the private respondents were not properly apprised of the existence of the special retirement program. through its special retirement program. the short-lived rehiring of the former and the offer to hire the latter which he refused. such as the hiring of 2 men PSRs after Candelario and [P]errin were terminated. The above re-hiring in addition to other circumstances earlier mentioned.2 Install a conveyor/scale before bag sewing of refined sugar to check weight conformity 2. it must be mentioned that the positions of complainants have existed for a long time judging from their years of service with respondent. Juanito Lanos.
during the organizational meeting. 1995. namely.1. the President and Treasurer. Iloilo City on December 29. the petitioner eliminated private respondents Perrin and Candelario and retained three PSRs. Treasurer. the supervisory employees of LSC organized a labor union called Lopez Sugar Corporation Supervisor s Associations which was issued a certificate of registration by the DOLE Regional Office No. respectively. We agree with the findings of the CA that the private respondents were unilaterally included in the said program for the following reasons: As evidenced by various documents attached to the affidavit of Leonito Franco and Rogelio Pabalan. On July 24. Neither is there any substantial evidence on record that the private respondents performance had been deteriorating. who had been working there for only six years. they received instead on August 26.3 Beef up SC s cane marketing efforts by hiring more effective PSRs to replace ineffective PSRs 1. There is no showing in the record that respondents Perrin and Candelario were eliminated solely because they were inefficient. who were employed with the petitioner from one to three years and transferred Raymundo de la Rosa. it is too much of a coincidence that Franco and Pabalan. The letter also stated that according to a study conducted by .292 hectares) 1. the report recommended the beefing up of the petitioner s planter service representative force. To the surprise of the complainants.1. they had been so far so efficient that they had been given promotions from time to time during their employment.1. As can be gleaned from the above. in accordance with the special retirement program of respondent. their services will be terminated effective September 27. Roberto Combate and Danilo Labrador. on the contrary.1. Complainants [P]errin and Candelario are active union members. The management in a letter expressed willingness to meet the union panel on August 30. 1994. Again. Complainant Franco was elected President and complainant. Pabalan. which the latter understood to mean that the management would present its counter-proposal during the said conference. 1995. VI.1 Expand SC s farm leasing operations (by 6.5 Apply marketing techniques used by other companies/industries. of the union. 1995. Yet. as well as supporting affidavits of complainants. the union formally submitted its CBA proposal to respondent with request for a reply in ten (10) days pursuant to the Labor Code.0 Cane Marketing 1.On the other hand. Danilo Villanueva.2 Establish cane supply planning system 1. The management was also informed subsequently that 105 out of 108 supervisory employees have joined the union and authorized check-off of the union dues starting March 1995.1. the following recommendations were made relating to the Cane Marketing Department: CANE MARKETING AND TRANSPORT 1. Management was duly informed about this fact and in January 1995 a conference was conducted between the union and management where the status of the union was clarified and some problems in the workplace were discussed.4 Acquire 6 motorcycles instead of second-hand jeeps 1. 1995 a letter of termination stating that. were included in the special retirement program. The check-off was effected. while eliminating those who were ineffective.
1995 that it had the final say on who would be included in its special retirement program. An indication of this sad state of affairs into which the union has fallen is that nothing came out of its CBA proposal. the private respondents were left to fend for themselves. 1995) Private respondents Franco and Pabalan protested the termination of their employment. but no counter-proposal has been submitted and no single conference has been held since then. they were invited to the Northeast Beach Resort by Juan Masa. The private respondents had no other recourse but to execute the said Release Waiver and Quitclaim because the petitioner made it clear in its Memorandum dated August 8. Because out of job. we find and so hold that the NLRC did not err in nullifying the decision of the Labor Arbiter. IN LIGHT OF ALL THE FOREGOING. the dismissals generated a general perception that management was sending a strong message that all employees hold their position at its pleasure. thus: The Release Waiver and Quitclaim were not verified by the complainants. While it may be true that the private respondents signed separate Deeds of Release Waiver and Quitclaim and received separation pay. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. 1996. and that it was within its power to dismiss anyone anytime. It has been a year and three months as of this writing since the respondent informed the union that its proposal had been referred to the company s external counsel. they were suddenly out of jobs. criteria or standard was shown to lend coherence to the program. solely because they organized a union that would bargain for reasonable terms and conditions of employment sought to be included in a CBA. 1995 that the matter was referred to its external counsel for appropriate disposition in the light of the recent development in this company. We have herefore (sic) explained that the reason why quitclaims are commonly frowned upon as contrary to public policy and why they are held to be ineffective to bar claims for the full measures of the workers legal rights is the fact the employer and the employee obviously do not stand on the same footing. with no source of income from then on. No clarification was made as to how the terminated employees were chosen.the respondent of its organizational set-up. no one would even assume the position of union President. Jr. Out of fear. prospects for new jobs were dim. Private respondents Candelario and Perrin were shocked when. although they were on leave. on August 25. the union virtually collapsed as an organization. they had to face the harsh necessities of life. With the dismissal of the union officers and with the membership now effectively threatened. 111744. They included the union President and Treasurer and majority of the Board of Directors and active union members. after spending a considerable number of years under the petitioner s employ. G. the petition is DENIED for lack of merit. and no guidelines. No. As to the CBA counter-proposal. the head of the Cane Marketing Department. September 8. The law does not consider as valid any agreement whereby a worker agrees to receive less compensation than what he is entitled to recover. it is over-staffed and there are duplications of functions which left it no choice but to reduce personnel. In fine. only to be told that. The latter must have to get hold of the money. Their dismissal from the petitioner corporation was a fait accompli. . As may be expected. the management wrote the union on August 31. The special retirement program affected 32 employees or roughly one-third of the supervisory personnel. x x x (Marcos vs. the fact that an employee has signed a satisfaction receipt of his claims does not necessarily result in the waiver thereof. Under prevailing jurisprudence.R. The employer drove the employees to the wall.. the private respondents were forced to sign the said documents and receive their separation pay. NLRC. Their backs against the wall. nonetheless.
petitioner. (Chairman). No. and Chico-Nazario. JJ. Austria-Martinez.R. 131108.. Puno. vs. . FOURTH DIVISION. [G. ROBERTO C.SO ORDERED. CARIAS. Tinga. NATIONAL LABOR RELATIONS COMMISSION. concur. CEBU CITY and ERNESTO A. March 25. 1999] ASIAN ALCOHOL CORPORATION.
Private respondents appealed to the NLRC. They also alleged that petitioner was not bankrupt as it has engaged in an aggressive scheme of contractual hiring. REQUISITES FOR VALIDITY THEREOF. moral damages and attorney s fees. Thus. Corollarily. Moreover. TERMINATION OF EMPLOYMENT. Private respondents failed to proffer any proof that the management acted in malicious or arbitrary manner in engaging the services of an independent contractor.MARTINEZ. TORMO. Thus. The Labor Arbiter found petitioner s claim that it incurred substantial losses in its business operations prior to the implementation of its retrenchment program as supported by documents such as audited Balance Sheet and Statement of Income and Deficit as well as Income Tax Return indicating an accumulated deficit. The reduction of the number of workers in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. The Labor Arbiter dismissed the complaints ruling that the dismissal of private respondents on ground of redundancy/retrenchment was valid. the Court had no basis to interfere with the bonafide decision of management to effect more and efficient methods of production. The NLRC. VERAYO and ERENEO S. But while tilting the scales of justice in favor of workers. Petitioner s motion for reconsideration was denied. as amended. the Supreme Court dismissed the complaints for illegal dismissal filed by private respondents. RAFAEL H. The Supreme Court also found that petitioner s reorganizational plan and comprehensive cost saving program to turn the business around were not designed to bust the union. SENDON. the NLRC declared that private respondents were illegally dismissed and directed their reinstatement with full backwages. the fundamental law also guarantees the right of the employer to reasonable returns from his investments. SYNOPSIS Private respondents filed complaints for illegal dismissal with prayer for reinstatement with backwages. AMACIO. this Court has inclined towards the worker and upheld his cause in his conflicts with the employer. In the instant case. rejected the evidence offered by petitioner to prove its business reversals. RETRENCHMENT. Neither did they object to their admissibility. SYLLABUS 1. in its decision. This favored treatment is directed by the social justice policy of the Constitution. Absent any such proof. and attorney s fees. It faulted petitioner for retrenching private respondents on the ground of mere possible future losses. Union and non-union members were treated alike. The condition of business losses is normally shown by audited financial documents. CARLOS A. this Court has upheld reductions in the work force to forestall business losses or stop the . Thus. governs the right of management to dismiss workers during the period of business recession and to install labor saving devices to prevent losses. the NLRC ruled that the positions of private respondents were not redundant for the simple reason that they were casuals. LABOR RELATIONS. They alleged that petitioner used the retrenchment program as a subterfuge for union busting. -Out of its concern for those with less privilege in life. They show that petitioner had accumulated losses and showing no sign of abating in the near future. LEANDRO O. this petition. LABOR AND SOCIAL LEGISLATION. the law allows an employer to downsize his business to meet clear and continuing economic threats. respondents. Hence. private respondents never contested the veracity of the audited financial documents offered by petitioner. ENUMERATED. An employer s good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees. Article 283 of the Labor Code.
efficiency. There were no signs that these losses would abate.. regular or managerial employees). serious. Neither did they object their admissibility. interpreted the law to mean that the employer need not keep all his employees until after his losses shall have materialized..hemorrhaging of capital. and financial hardship for certain workers. In the case at bar. They show that petitioner has accumulated losses amounting to P306. (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.00 and showing nary a sign of abating in the near future. casual. its losses may be on a downward trend. the failure of the employer to show its income or loss for the immediately preceding year or to prove that it expected no abatement of such losses in the coming years. including those incurred under the former owners of the company. or if only expected.764.. Irrefutable was the fact that losses have bled Asian Alcohol incessantly over a span of several years. being a drastic move. In exercising its right. actual and real. . it is Prior Holding that will absorb all the losses. We have.. In the instant case. ID. PHRASE RETRENCHMENT TO PREVENT LOSSES. 2. may bespeak the weakness of its cause.. are reasonably imminent as perceived objectively and in good faith by the employer. (3) 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. CONSTRUED. however. age. indicating that business is picking up and retrenchment. The right of management to dismiss workers during periods of business recession and to install labor saving devices to prevent losses is governed by Art. The law gives the new management every right to undertake measures to save the company from bankruptcy. whichever is higher. Under this provisions. 3. seniority. Ultimately. physical fitness.349. Prior Holdings took over the operations of Asian Alcohol in October 1991. Thus. such as status (i. ID. They were incurred under the management of the Parsons family and continued to be suffered under the new management of Prior Holdings.It should be observed that Article 283 of the Labor Code uses the phrase retrenchment to prevent losses. whether they are temporary. Plain to see. It is necessary that the employer also show that its losses increased through a period of time and that the condition of the company is not likely to improve in the near future. EMPLOYER MUST SHOW THAT BUSINESS LOSSES CANNOT BE ABATED IN THE NEAR FUTURE. if already incurred. this phrase means that retrenchment must be undertaken by the employer before losses are actually sustained. management must faithfully comply with the substantive and procedural requirements laid down by law and jurisprudence. ID. For it may happen that while the company has indeed been losing. the last quarter losses in 1991 were already incurred under the new management.e. they can be assailed as self-serving documents.. Otherwise. ID. In its ordinary connotation. but substantial. NEW MANAGEMENT GIVEN THE RIGHT TO UNDERTAKE MEASURES TO SAVE THE COMPANY FROM BANKRUPTCY. are presented in evidence. But it is not enough that only the financial statements for the year during which retrenchment was undertaken. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. ID. . are not merely de minimis. 283 of the Labor Code. ID. ID. .. It is our ruling that financial statements must be prepared and signed by independent auditors. ID.. however. private respondents never contested the veracity of the audited financial documents proffered by Asian Alcohol before the Executive Labor Arbiter. Unless duly audited. retrenchment and redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the business. as amended. The requirements for valid retrenchment which must be proved by clear and convincing evidence are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which..The condition of business losses is normally shown by audited financial documents like yearly balance sheets and profit and loss statements as well as annual income tax returns. should no longer be resorted to. (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. the law could be vulnerable to attack as undue taking of property for the benefit of another.
ENUMERATED. ID. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. the Court has no basis to intefere with the bona fide decision of management to effect more economic and efficient methods of production. WHEN IT EXISTS.. ID.. CIVIL LAW. ID. last out in choosing which positions to declare as redundant or whom to retrench to prevent further business losses. And the reason is simple enough. ID.. REQUISITES FOR VALIDITY THEREOF. voluntary agreements that represents a reasonable settlement are binding on the parties and should not later be disowned.. No law mandates such a policy. In determining these issues. ID.. or the terms of settlement are . ID.4. CHARACTERIZATION OF POSITIONS AS REDUNDANT CONSIDERED AS EMPLOYER'S EXERCISE OF BUSINESS JUDGMENT.. private respondent failed to proffer any proof that the management acted in a malicious or arbitrary manner in engaging the services of an independent contractor to operate the Laura wells. ID. (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.. It will be upheld as long as it passes the test of arbitrariness.. Nonetheless. REORGANIZATIONAL PLAN AND COMPREHENSIVE COST-SAVING PROGRAM CONSIDERED AS RETRENCHMENT MEASURES TO CUT LOSSES IN CASE AT BAR. 8. Under these conditions. 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.. . ID. ID. dropping of a particular line previously manufactured by the company or phasing out of a service activity priorly undertaken by the business. ID. The characterization of positions as redundant is an exercise of business judgment on the part of the employer. GENERALLY CONSIDERED VOID. We have previously ruled that the reduction of the number of workers in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. . ID.For the implementation of a redundancy program to be valid. In this context. (3) good faith in abolishing the redundant positions..Redundancy exist when the service capability of the work is in excess of what is reasonably needed to meet the demands on the enterprise. They only contend that the new management should have followed the policy of first in. decreased volume of business. ID.We have held that an employer's good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees. ID. It is true that this Court has generally held that quitclaims and releases are contrary to public policy and therefore. 6. the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business. In the case at bar. REDUNDANCY.. ... A redundant position is one rendered superfluous by any number of factors. management has to enjoy a pre-eminent role. Their positions had to be declared redundant to cut losses. void. Retrenched were one hundred seventeen (117) employees. . A host of relevant factors come into play in determining cost efficient measures and in choosing the employees who will be retained or separated to save the company from closing shop. ID. and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. ID. 5.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.. ID.. QUITCLAIMS AND RELEASES. . 9. ID.. GOOD FAITH IN IMPLEMENTING A REDUNDANCY PROGRAM NOT DESTROYED BY EMPLOYERS AVAILMENT OF THE SERVICES OF INDEPENDENT CONTRACTOR. such as overhiring of workers. what may technically be considered as redundancy may verily be considered as retrenchment measures.Not one of the private respondents refuted the foregoing facts. ID. 7.. ID.. Absent such proof.. EXCEPTION. Seventy two (72) of them including private respondents were separated because their positions had become redundant.
We first unfurl the facts. were driven by mounting business losses to sell their majority rights to prior Holdings. 10. petitioner Asian Alcohol Corporation (hereinafter referred to as Asian Alcohol) filed this petition for certiorari. Carias. moral damages and attorney s fees. vacation. They alleged that Asian Alcohol used the retrenchment program as a subterfuge for the union busting. Verayo and Ereneo S. Some one hundred seventeen (117) employees out of a total workforce of three hundred sixty (360) were separated. on May 30. Private respondents Carias. DECISION PUNO. ABSENCE OF FORCE OR DURESS IN THE EXECUTION THEREOF IN CASE AT BAR. Amacio. 1992. The six (6) private respondents are among those union members whose positions were abolished due to redundancy. waivers and voluntary resignation letters were executed by the private respondents under force or duress. All of them executed sworn releases.There is no showing that the quitclaims. who originally owned the controlling stocks in Asian Alcohol. thirteenth (13th) month pay for the year 1992. Seventy two (72) of them occupied redundant positions that were abolished.: Contending that the dismissal of private respondents Ernesto A. Roberto C.. emergency and seniority leave credits. and Sendon were water pump tenders. was valid on the twin grounds of redundancy and retrenchment to prevent business losses. . the money value of their unused sick. and goodwill cash bonuses for those with at least ten (10) years of service. (hereinafter referred to as Prior Holdings). In truth. they all signed sworn statements of conformity to the company retrenchment program. On December 18. Verayo was a briquetting plant operator while Tormo was a plant helper under him. ID. Martinez. that the law will step in to bail out the employees. Inc. The next month. Prior Holdings implemented a reorganizational plan and other cost-saving measures. complaints for illegal dismissal with a prayer for reinstatement with backwages. Their late complaints have no basis and deserve our scant consideration. Martinez. the six (6) private respondents files with the NLRC Regional Arbitration Branch VI. only these six (6) private respondents were not impressed by the generosity of their employer. waivers and quitclaims. Leandro O. In October. medicine allowance. Carlos A. 1992. Sendon. While it is our duty to prevent the exploitation of employees. twenty one (21) were held by union members and fifty one (51) by nonunion members. They claimed that they were singled out for separation by reason for . Prior Holdings took over its management and operation. 1997. Tormo. 1991.unconscionable. Bacolod City. Except for Verayo and Tormo. they all tendered letters of resignation. it is also behooves us to protect the sanctity of contracts that do not contravene our laws. the Parsons family. Of these positions. tax refunds. Amacio was a machine shop mechanic. Rafael H. They were all assigned at the Repair and Maintenance Section of the Pulupandan plant.. To thwart further losses. J. they received individual notices of termination effective November 30. They were paid the equivalent of one month salary for every year of service as separation pay. And except for Martinez. Asian Alcohol ascribes grave abuse of discretion to public respondents National Labor Relations Commission(hereinafter referred to as NLRC) when. In September. 1992. We note that out of more than one hundred workers that were retrenched by Asian Alcohol. it set aside the decision of the Executive Labor Arbiter dismissing the illegal termination complaints filed by private respondents. the documents embodied separation benefits that were well beyond what the company was legally required to give private respondents. ID.
In the case of respondent AAC. Roberto Martinez and Rafael Sendon had become unnecessary. For this reason. The Executive Labor Arbiter dismissed the complaints. it implemented its retrenchment program not only to prevent losses but to prevent further losses as it was then incurring huge losses in its operations. Hence the abolition of the position of Ereneo Tormo. the other two. x x x With respect to Carlos Amacio. its boiler before was 100% coal fired. Pulupandan. Ereneo Tormo. 21 of which were occupied by union members. 72 positions were abolished due to redundancy.00. (2) Statement of Income and Deficit for the year ended December 31. As regards complainants Leandro Verayo and Ereneo Tormo. They also asseverated that Asian Alcohol was not bankrupt as it has engaged in an aggressive scheme of contractual hiring. We have to stress that Eriberto Songaling. Roberto Martinez and Rafael Sendon who were all Water Pump Tenders assigned to AAC s water wells in Ubay. being only 28 and 35 respectively. thus: The fact that respondents AAC incurred losses in its business operations was not seriously challenged by the complainants. the theory of complainants that they were terminated from work on ground of their union membership is far from the truth. Jr. Considering the manual nature of the work of coal briquetting. It has to be emphasized that the law allows an employer to retrench some of its employees to prevent losses. Complainants would want us to believe that their positions were abolished because they are union members. the grounds cited by respondent AAC in support of its decision to retrench them are too convincing to be ignored. it needs only nine mechanics. Ereneo Tormo was the oldest. On the contrary.889. were retrenched as an offshoot to the termination of the lease agreement as the water thereunder had become salty due to extensive prawn farming nearby. As a consequence. . (3) Income Tax Return for Fiscal Year ending September 30. For one thing. Javier and Songaling. 1991 x x x. The fact that it incurred substantial losses in its business operations prior to the implementation of its retrenchment program is amply supported by the documents on records.their active participation in the union. there was no more need for the position of briquetting plant operator and the services for only two briquetting helpers were determined to be adequate for the job of briquetting coal. so that AAC could no longer use the water for its purpose. and Rudy Javier. As earlier said. the retrenchment program of AAC affected not only union members but also the non-union members. 1989 x x x. being already 41 years old. Eriberto Songaling. Jr. there were 117 employees of AAC who were affected by the reorganization. The boiler was manned by a briquetting plant operator in the person of Leandro Verayo and three (3) briquetting helpers. Of the 117 positions. Accordingly to respondent AAC. and that they were replaced by casual employees. Jr. 1990 x x x. (5) Income Tax Return for Fiscal Year ending December 31. Records show that Carlos Amacio was among the ten machine shop mechanics employed by respondent AAC. Of the three (3) briquetting helpers. Thus. and (6) Income Tax Return for the Fiscal Year ending December 31. 1991 x x x.117. younger workers are always preferred for reasons of efficiency [sic]. (4) Income Tax Return for the Fiscal Year ending December 31. thereby saving on fuel cost. he was retrenched not because of his being a union member but because of his poor health condition which greatly affect[ed] his work efficiency. are also union members. Negros Occidental which were drilled and operated before under the old management by virtue of right-of-way with the landowner. (sic) namely: (1) Balance Sheet of AAC as of December 31. the services of Ernesto Carias. indicating an accumulated deficit of P26. while 51 were held by non-union members. Complainants pretense is rather untenable. Jr. He explained. 1989 x x x. we find that complainants Ernesto Carias. redundant and superfluous. and Rudy Javier. Since AAC had shifted to the use of bunker fuel by about 70% to fire its boiler. namely. 1991 x x x. its usage of coal had been drastically reduced to only 30% of its total fuel usage in its production plant. Under AAC s reorganization plan.
submitted by respondent was before the respondent.  Private respondents appealed to the NLRC. The evidence. retrenchment and/or redundancy not having been proved. Otherwise stated. Asian Alcohol moved for reconsideration of the foregoing decision. the wells of the respondent were operated by contractors. Inc. In summation. There is therefore no reason to retrench. x x x The alleged deficits of the corporations did not prove anything for the respondent.  The dispositive portion of the decision of the NLRC provides as follows: WHEREFORE. This is no proof that on November 30.xxx On the whole. the NLRC rendered the challenged decision. 199. . Secondly in the case of REDUNDANCY. the Decision appealed from is hereby ordered SET ASIDE and VACATED and in lieu thereof. were eased out in the guise of retrenchment or redundancy [so that] their jobs [will] be performed by workers belonging to a contractor. xxx Admittedly. [that] the respondent terminated complainants to protect the company from future losses. the dismissal of complainants on ground of redundancy/retrenchment was perfectly valid or legal. The NLRC essayed this explanation: In this case. 1992 and up to actual reinstatement. It rejected the evidence proffered by Asian Alcohol to prove its business reversals. from the testimonies of Engr. the positions of the complainants were not redundant for the simple reason that they were replaced by casuals. 1997. Possible future losses do not authorize retrenchment. The financial status as shown in the Statement of Income and Deficits and Income Tax Returns from 1989 to 1991. took over the operation and management of the corporation in October. does not create an impression of imminent loss. On September 25. 1997. The company at the time of retrenchment was not then in the state of business reverses. 1992 when the termination of complainant[s] took effect the company was experiencing losses or at least imminent losses. however. therefore. premises considered. Plus 10% attorney s fees. in truth and in fact. On May 30. SO ORDERED. performing jobs necessary and desirable to the business of the company. the respondent Asian Alcohol Corporation is hereby ordered to reinstate complainants with full backwages from the time they were dismissed on November 30. It ruled that the positions of private respondents were not redundant for the simple reason that they were replaced by casuals. 1997.  On July 2. Palmares. Redundancy exist where the service[s] of x x x employee[s] are in excess of what is reasonably demanded by the actual requirements of the enterprise.. therefore. the NLRC denied the motion. complainant[s] who are regular workers of the respondent. new management of Prior Holdings. complainants. proved that. were illegally dismissed.
this Court has inclined towards the worker and upheld his cause in his conflicts with the employer. retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title. Corollarily. The right of management to dismiss workers during periods of business recession and to install labor saving devices to prevent losses is governed by Art. It invoked the following grounds: 6.  On March 25. surmises and conjectures. 1998. 1997 and September 25. GROUNDS FOR THE PETITION 6. as hereinafter shown.--The employer may also terminate the employment of any employee due to the installation of labor saving devices. We find the petition meritorious. respectively. as amended. viz.1 Public respondent has committed. redundant and superfluous. thereby justifying the termination of their employment. as hereinafter shown.On January 12. this Court has upheld reductions in the work force to forestall business losses or stop the hemorrhaging of capital. the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every . 283. the law allows an employer to downsize his business to meet clear and continuing economic threats. a manifest grave abuse of discretion amounting to lack or excess of jurisdiction in declaring in its assailed Decision x x x and Resolution x x x that the termination of the employment of private respondents by the petitioner herein is illegal and ordering their reinstatement with full backwages from the time they were dismissed on November 30. 283 of the Labor Code. a manifest grave abuse of discretion amounting to lack or excess of jurisdiction by totally disregarding and refusing to consider the factual findings of the Executive Labor Arbiter with respect to the circumstances which rendered the positions of the private respondents unnecessary. 1998. Out of its concern for those with less privilege in life. plus 10% attorney s fees.3 Public respondents has furthermore committed. Asian Alcohol filed in this Court a petition for certiorari assailing both the decision of the NLRC and the resolution denying its reconsideration. as hereinafter shown. 6. by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service.: Art. redundancy. Closure of establishment and reduction of personnel.2 Public respondent has likewise committed. 1997. 6. Thus. said Decision and Resolution of the public respondents being contrary to the established facts of the case. a manifest grave abuse of discretion amounting to lack or excess of jurisdiction in giving full credit to the oral testimonies quoted in its assailed Decision x x x and taking them as conclusive proof of the alleged replacement of the private respondents with casual workers despite the fact that said quoted testimonies clearly amount to nothing but speculations. In case of retrenchment to prevent losses and in case of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses. In case of termination due to the installation of labor saving devices or redundancy. But while tilting the scales of justice in favor of workers. 1992 up to their actual reinstatement. It provides. whichever is higher. we issued a Temporary Restraining Order enjoining the NLRC from enforcing its Decision and Resolution dated May 30. This favored treatment is directed by the social justice policy of the Constitution. the fundamental law also guarantees the right of the employer to reasonable returns from his investments. well-settled jurisprudence and the law on the matter.
In rejecting petitioner s claim of business losses. its losses may be on a downward trend. however. or if only expected. may bespeak the weakness of its cause. It is necessary that the employer also show that its losses increased through a period of time and that the condition of the company is not likely to improve in the near future. Otherwise. We do not agree. efficiency.. if already incurred. But it is not enough that only the financial statements for the year during which retrenchment was undertaken. . Theorizing that proof of losses before the take over is no proof of losses after the take over. Neither did they object their admissibility. The records show that the positions of fifty one (51) other non-union members were abolished due to business losses. seniority. In exercising its right. this phrase means that retrenchment must be undertaken by the employer before losses are actually sustained. and financial hardship for certain workers. however. interpreted the law to mean that the employer need not keep all his employees until after his losses shall have materialized. are presented in evidence. For it may happen that while the company has indeed been losing. In its ordinary connotation. They show that petitioner has accumulated losses amounting to P306. but substantial. (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.e. the law could be vulnerable to attack as undue taking of property for the benefit of another.00 and showing nary sign of abating in the near future. Unless duly audited. The allegation of union busting is bereft of proof. A fraction of at least six (6) months shall be considered one (1) whole year. retrenchment and redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the business. serious. it faulted Asian Alcohol for retrenching private respondent on the ground of mere possible future losses . The condition of business losses is normally shown by audited financial documents like yearly balance sheets and profit and loss statements as well as annual income tax returns. are reasonably imminent as perceived objectively and in good faith by the employer. The requirements for valid retrenchment which must be proved by clear and convincing evidence are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. should no longer be resorted to. management must faithfully comply with the substantive and procedural requirements laid down by law and jurisprudence. they can be assailed as self-serving documents. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees.349.year of service. [emphasis ours] Under the foregoing provisions. It should be observed that Article 283 of the Labor Code uses the phrase retrenchment to prevent losses . In the instant case. whether they are temporary. being a drastic move. regular or managerial employees). the failure of the employer to show its income or loss for the immediately preceding year or to prove that it expected no abatement of such losses in the coming years. are not merely de minimis. whichever is higher. whichever is higher.764. We have. age. physical fitness. actual and real. the NLRC stated that the alleged deficits of the corporation did not prove anything for the [petitioners]  since they were incurred before the take over of Prior Holdings. (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. Thus. indicating that business is picking up and retrenchment. casual. such as status (i. (3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service. Union and non-union members were treated alike. private respondents never contested the veracity of the audited financial documents proffered by Asian Alcohol before the Executive Labor Arbiter. It is our ruling that financial statements must be prepared and signed by independent auditors.
Age. Negros Occidental. Tormo. In the process. being already 41 years old. was terminated. 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 moth prior to the intended date of retrenchment. Martinez and Sendon were water pump tenders. with the physical strength that comes with it. Seventy two (72) of them including private respondent were separated because their positions had become redundant. A redundant position is one rendered superfluous by any number of factors. Plain to see. In 1992.In the case at bar. Asian Alcohol did not own the land where the wells stood. Private respondent Tormo was one of the three briquetting helpers. Ultimately. Prior Holdings took over the operations of Asian Alcohol in October 1991. being only 28 and 35. dropping of a particular product line previously manufactured by the company or phasing out of a service activity priorly undertaken by the business. the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business. was the oldest. Retrenched were one hundred seventeen (117) employees. They were incurred under the management of the Parsons family and continued to be suffered under the new management of Prior Holdings. was particularly taken into consideration by the management team in deciding whom to separate. However. what may technically be considered as redundancy may verily be considered as retrenchment measures. At their current production level. decreased volume of business. the positions of private respondent Verayo had to be abolished. In this context. were younger. The wells had to be closed and needless to say. To enhance production efficiency. the management examined employment records and reports to determine the least efficient . Irrefutable was the fact that losses have bled Asian Alcohol incessantly over a span of several years. Private respondent Verayo was the briquetting plant operator in charge of the coal-fired boiler. We find that the reorganizational plan and comprehensive cost-saving program to turn the business around were nor designed to bust the union of the private respondent. the services of Carias. Thus. Hence. In choosing whom to separate among the ten (10) mechanics. Private respondent Amacio was among the ten (10) mechanics who manned the machine shop at the plant site. The other two. Redundancy exist when the service capability of the work is in excess of what is reasonably needed to meet the demands on the enterprise. (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. the lease contract which also provided for a right of way leading to the site of the wells. the new management found that it was more cost efficient to maintain only nine (9) mechanics. Pulupandan. The shift meant substantial fuel cost savings. Also. It only leased them. There were no signs that these losses would abate. and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. including those incurred under the former owners of the company.. however the need for a briquetting plant operator ceased as the services of only two (2) helpers were all that was necessary to attend to the much lesser amount of coal required to run the boiler. the new management team shifted to the use of bunker fuel by about seventy percent (70%) to fire its boiler. The management choice rested on a rational basis. respectively. Martinez and Sendon had to be terminated on the twin grounds of redundancy and retrenchment. the water from the wells had become salty due to extensive prawn farming nearby and could no longer be used by Asian Alcohol for its purpose. it was private respondent Tormo who was separated from service. Of the three (3) briquetting helpers. In the case at bar. For the implementation of a redundancy program to be valid. Jr. private respondent Carias. Their positions had to be declared redundant to cut losses. it is Prior Holding that will absorb all the losses. the last quarter losses in 1991 were already incurred under the new management. such as overhiring of workers. Rudy Javier Jr. They tended the water wells of Asian Alcohol located in Ubay. (3) good faith in abolishing the redundant positions. Under these conditions. and Eriberto Songaling. The law gives the new management every right to undertake measures to save the company from bankruptcy.
that the law will step in to bail out the employees. They maintain that in principle. the persons mentioned are all workers of independent contractors? WITNESS: A I am not sure. ATTY. waivers and voluntary resignation letters only to get their separation package. Not one of the private respondents refuted the foregoing facts. In determining these issues. No law mandates such a policy. Finally. It is true that this court has generally held that quitclaims and releases are contrary to public policy and therefore. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. but to the Laura wells. YMBALLA: Q In other words. Jr. voluntary agreements that represents a reasonable settlement are binding on the parties and should not later be disowned. we have held that an employer s good faith in implementing a redundancy program is not necessarily destroyed by availment of the services of an independent contractor to replace the services of the terminated employees. Federico Palmares) Q But in the Laura well? WITNESS: A Mansteel was hired as contractor. They only contend that the new management should have followed the policy of first in. While it is our duty to prevent the exploitation of employees. . Private respondents call our attention to their allegation that casuals were hired to replace Carias. It was private respondent Amacio who appeared the least efficient because of his poor health conditions. void. In the case at bar. Martinez and Sendon. they did not believe that their dismissal was valid. or the terms of settlement are unconscionable. They rely on the testimony of Engr. A reading of the testimony of Engr. he declared in cross examinations: ATTY. Nonetheless. It will be upheld as long as it passes the test of arbitrariness.among them. Palmares. Thus. maybe. We have previously ruled that the reduction of the number of workers in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. YMBALLA: (cross-examination of respondent witness. The characterization of positions as redundant is an exercise of business judgment on the part of the employer. Absent such proof. management has to enjoy a pre-eminent role. it is also behooves us to protect the sanctity of contracts that do not contravene our laws. will reveal that he referred not to the Ubay wells which were tended by private respondents Carias. Federico Palmares.. And the reason is simple enough. the head of the Mechanical Engineering Department who admitted the engagement of independent contractors to operate the wells. private respondent failed to proffer any proof that the management acted in a malicious or arbitrary manner in engaging the services of an independent contractor to operate the Laura wells. Martinez and Sendon as water pump tenders at the Ubay wells. A host of relevant factors come into play in determining cost efficient measures and in choosing the employees who will be retained or separated to save the company from closing shop. last out in choosing which positions to declare as redundant or whom to retrench to prevent further business losses. the Court has no basis to interfere with the bona fide decision of management to effect more economic and efficient methods of production. however.  In any event. private respondents now claim that they signed the quitclaims.
06-1210893-92 is ORDERED REINSTATED. 1997 and its Resolution dated September 25. We note that out of more than one hundred workers that were retrenched by Asian Alcohol. only these six (6) private respondents were not impressed by the generosity of their employer.. concur. 1997 are ANNULED AND SET ASIDE. The Decision of the Executive Labor Arbiter dated January 10. 1996 in RAB Case No. IN VIEW WHEREOF. waivers and voluntary resignation letters were executed by the private respondents under force or duress. (Chairman). JJ. and Buena . The complaints for illegal dismissal filed by private respondents against Asian Alcohol Corporation are hereby ORDERED DISMISSED FOR LACK OF MERIT. The Decision of the National Labor Relations Commission dated May 30. Quisumbing. the documents embodied separation benefits that were well beyond what the company was legally required to give private respondents. No cost. In truth. the petition is GRANTED.In the case at bar. Their late complaints have no basis and deserve our scant consideration. Bellosillo. Mendoza. SO ORDERED. there is no showing that the quitclaims. .
SEVERO C. ERLINA B. AN EXERCISE OF MANAGEMENT PREROGATIVE.The Labor Code recognizes retrenchment as one of the authorized causes for terminating the employer-employee relationship and the decision to retrench or not to retrench is a management prerogative. JESUS M. JESUS E. CONRADO D. BONIFACIO A. CORDERO. NAPICOL. ANNIE J. TORIBIO B. In the case at bar.It is now settled that the NLRC has the power to admit on appeal additional evidence to show lawful cause for dismissal.. AUGUSTO A. QUINTO. evidence of losses for the years 1987 up to 1990 was belatedly introduced in the NLRC. AMARANTE. PROVIDED THAT THE DELAY IN THE SUBMISSION THEREOF IS EXPLAINED AND THE SAME CLEARLY PROVES THE EMPLOYER'S ALLEGATION OF VALID CAUSE FOR DISMISSING HIS EMPLOYEES.. "Redundancy" exists when the services of an employee are in excess of what is required by an enterprise. 4." while denominated as such. DE LEON. . null and void. FELIMON R. ID. ANDAN. The additional evidence presented confirmed private respondent's allegation that the losses expected by the company were substantial and reasonably imminent justify the layoff of the individual petitioners. 3. 2. Private respondent's "redundancy program. RICARDO M. ROLAND C. CONSTANCIO R. CANONIGO. GOMEZ. PERMICILLO. SATURNINO C.respondents. OSCAR B. REDUNDANCY DISTINGUISHED FROM RETRENCHMENT. SANCHEZ. VALIENTE. TUPALAR. November 29. . ANANIAS S. it is necessary to distinguish "redundancy" from "retrenchment. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel. NOT ALL QUITCLAIMS AND RELEASES ARE CONTRARY TO PUBLIC POLICY. JULIO F. LANDAYAN. .[G. CECILIA D. "Retrenchment. ROLANDO L. TERMINATION OF EMPLOYMENT. TEOFILO C. PELIAS. PALATTAO. ANITA A. JAIME B. MA. SARAH S. But the delay was satisfactorily explained by respondent company. No. PIMENTEL. the company losses were duly established by the financial statements presented by both parties. SANDOVAL. FRANCISCO M. MARIA G. as the audit conducted on its financial report by Sycip Gorres Velayo and Co.petitioners. REYES. . CAHILIG. AUTHORIZED CAUSES. provided that the delay in the submission of said evidence is explained and the same clearly proves the employer's allegation of a valid cause for dismissing his employees. QUINTIN ONG III. OSCAR O. CASE AT BAR." Both are mentioned in Art. SENORIN. Not . 1996] AG&P UNITED RANK AND FILE ASSOCIATION (AG&P URFA) REYNALDO V." on the other hand. THE NLRC HAS THE POWER TO ADMIT ON APPEAL ADDITIONAL EVIDENCE TO SHOW LAWFUL CAUSE FOR DISMISSAL. IRENEO T. DEOGENES F. CASE AT BAR. HOLGADO. In the case at bar. ID. FAUSTINO C. INC. DELA PENA. ASUNCION L. CIVIL LAW.. MAGDALENA MAGALONG. MARCELINO ADLIT. MONTANO. ESPIRITU. 108259. ID.Petitioners insist that the documents of waiver are without any effect because quitclaims and releases are contrary to public policy and therefore. EFFECT AND APPLICATION OF LAWS. DOCUMENTS OF WAIVER VOLUNTARILY EXECUTED ARE VALID AND BINDING.. GUEVARRA. RIUS. RAMON M. FORNALIZA. AS AN AUTHORIZED CAUSE FOR TERMINATING ONE'S EMPLOYMENT. SAN ESTEBAN. BALBASTRO.. JUANITO A. RETRENCHMENT. SYLLABUS 1. NLRC (First Division) and ATLANTIC GULF and PACIFIC COMPANY OF MANILA. LABOR AND SOCIAL LEGISLATION. MANALO. RAMOS. was completed only in 1991.At this point. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. MANGARAN. vs.R. CAINTIC.
whichever is higher. 1988. Among these was a socalled redundancy program. made not only in pursuance of the company s policy of giving preference to its dismissed workers. the employees waived their claims because of awareness of the precarious financial condition of the company as shown by a steady decline in its income. it is binding on the parties and may not later be disowned simply because of a change of mind. dated May 29. Labor Arbiter Mendoza found the complaint to be without merit and accordingly dismissed it. DECISION MENDOZA. After trial. 1988 from which both parties appealed. But where it is shown that the person making the waiver did so voluntarily. which was more than what they were entitled to receive under the law which provides for separation pay equivalent to one month pay or one-half (1/2) month pay for every year of service. but actually beneficial to the workers as well.: This is a special civil action for certiorari to set aside the resolution. with full understanding of what he was doing. contrary to public policy. The individual complainants are officers and members of petitioner. the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. In the case at bar. petitioners filed a complaint for unfair labor practice and illegal dismissal. The affected employees were given separation pay equivalent to one month pay for every year of service. prior to the rendition of the decision of the Secretary of Labor and Employment. As we have stated: Not all waivers and quitclaims are invalid as against public policy. he held that petitioners .all quitclaims and releases are. 1987. As matter of fact. 1992. If the agreement was voluntarily entered into and represents a reasonable settlement. 1988. He found the redundancy program necessary for the company s existence and considered private respondent s practice of rehiring of reemploying dismissed employees under the said program as managerial prerogative. Less than a month later. As a result of a deadlock in the negotiations for a collective bargaining agreement. some of whom were officers and members of the petitioner union. reconsidering the decision of the Third Division of the same body and reinstating that of Labor Arbiter Quintin Mendoza who dismissed petitioners complaint for illegal dismissal and unfair labor practice. Moreover. or the terms of settlement are unconscionable on its face. On January 11. however. On March 14. the employees received separation pay equivalent to one month pay for every year of service. and the consideration for the quitclaim is credible and reasonable. for which they signed documents of waiver. of the First Division of the NLRC and its resolution promulgated on October 29. however. the documents of waiver were executed by the affected employees without any force or duress used against them by private respondent or its representatives. The documents embodied reasonable settlements of the parties' claim. the union declared a strike on September 22. as implemented onMarch 1. the Department of Labor and Employment assumed jurisdiction over the dispute. 1992. the transaction must be recognized as a valid and binding undertaking. resulted in the layoff of around 177 employees. which. 1988. The facts are as follows: Petitioner union is the duly certified bargaining agent of the rank and file employees of the respondent corporation. Then Secretary Franklin Drilon rendered a decision onFebruary 10. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. that the law will step in to annul the questionable transaction. To the contrary. J.
Hence. On May 29. it is necessary to distinguish redundancy from retrenchment. as the audit conducted on its financial report by Sycip Gorres Velayo and Co. evidence of losses for the years 1987 up to 1990 was belatedly introduced in the NLRC. It found that the company did not incur losses but instead made substantial profits from 1983 to 1986. to wit: (1) (2) (3) The losses expected should be substantial and not merely de minimis in extent. 1992. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel. not declaring as null and void the quitclaims and releases issued by petitioners. But the delay was satisfactorily explained by respondent company. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. Retrenchment on the other hand. The petition has no merit. In the case at bar.acceptance of termination pay and other benefits constituted a waiver of their right to question their dismissal. Consequently it held private respondents guilty of unfair labor practice and illegal dismissal of petitioners and ordered it to reinstate the individual petitioner to their former positions without loss of seniority rights and to pay them full back wages. At this point. 6715. plus ten percent (10%) of the total award as attorney s fees. The company moved for a consideration.A. Private respondent s . the First Division. Redundancy exists when the services of an employee are in excess of what is required by an enterprise. It admitted on appeal evidence of losses sustained by the company from 1987 up to 1990. Petitioner contend that the NLRC gravely abused its discretion by: (1) admitting evidence of losses. Petitioners filed a motion for reconsideration but their motion was denied in a resolution promulgated on October 29. 1992. to which the case was reassigned after the reorganization of the NLRC under R. No. (2) declaring the legality of the redundancy program implemented by private respondent on March 31. 1988. as such imminence can be perceived objectively and in good faith by the employer. provided that the delay in the submission of said evidence is explained and the same clearly proves the employer s allegation of a valid cause for dismissing his employees. the Third Division of the National Labor Relations Commission reversed the labor arbiter s ruling. It is now settled that the NLRC has the power to admit on appeal additional evidence to show lawful cause for dismissal. was completed only in 1991. The substantial loss apprehended must be reasonably imminent. The admission of the evidence strengthened private respondent s claim that the petitioners had not been illegally dismissed but had been separated from employment as a result of the redundancy program implemented in accordance with the conditions for retrenching. Both are mentioned in Art. reconsidered the decision of the Third Division and reinstated the decision of the labor arbiter. this petition. which was not introduced in the proceedings before the labor arbiter. (3) (4) not declaring the private respondent guilty of illegal dismissal and unfair labor practice. On appeal. The additional evidence presented confirmed private respondent s allegation that the losses expected by the company were substantial and reasonably imminent to justify the layoff of the individual petitioners. The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses.
True enough. while it is true that the company rehired or reemployed some of the dismissed workers. or the terms of settlement are unconscionable on its face. Moreover. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. This contention cannot stand in the face of evidence of substantial losses suffered by the company. the records show that aside from its redundancy program. the employees waived their claims because of awareness of the precarious financial condition of the company as shown by a steady decline in its income.181. Indeed. it declared a loss of P34 million. with full understanding of what he was doing. the transaction must be recognized as a valid and binding undertaking. Inc. But where it is shown that the person making the waiver did so voluntarily. and that this separation from the service has no relations whatsoever with my union affiliations or activities. As the NLRC (First Division) noted: In the case at bar. the Labor Code recognizes retrenchment as one of the authorized causes for terminating the employer-employee relationship and the decision to retrench or not to retrench is a management prerogative. respondent company had to resort to other cost-cutting measures inorder to stave off impending losses. which prompted private respondent to retrench. it is binding on the parties and may not later be disowned simply because of a change of mind. In 1987. and the consideration for the quitclaim is credible and reasonable. In the case at bar. while denominated as such. The documents embodied reasonable settlement of the parties claims. that I admit the regularity of my separation and that I signed these presents after having fully understood its contents.00. is more precisely termed retrenchment because it is primarily intended to prevent serious business losses. however. in part.505. In the case at bar. the documents of waiver were executed by the affected employees without any force or duress used against them by private respondent or its representatives. In other words. Not all quitclaims and releases are however. that the law will step in to annul the questionable transaction. all amounts due me by way of compensation arising out and in the course of my employment. As a matter of fact. the company losses were duly established by the financial statements presented by both parties. The declining trend in respondent income and losses in 1987. null and void. To the contrary. P175 million in 1985 and P101 million in 1986. it has been shown that such action was made only as company projects became available and that this was done in pursuance of the company s policy of giving preference to its former workers in the hiring of project employees. The rehiring or reemployment does not negate the imminence of losses. confirms its allegation that respondent is predicting a bleak future considering the slump not only in foreign contracts but with respect to domestic contracts as well. there is no question that respondent s income had been continously decreasing P205 million in 1984. If the agreement was voluntarily entered into and represents a reasonable settlement. As already stated. aimed at removing union officers who had declared a strike. Petitioners contend that the redundancy program was actually a union-busting scheme of management. Lastly. read: I do hereby further acknowledge and declare that I have been paid by the Atlantic Gulf & Pacific Company of Manila. Petitioners insist that the documents are without any effect because quitclaims and releases are contrary to public policy and therefore.redundancy program. the losses or abrupt down fall in income which respondent wanted to abate by resorting to the reduction in the number of employees was imminent and real. As we have stated: Not all waivers and quitclaims are invalid as against public policy. it is not disputed that petitioners signed documents of waiver which. the employees received separation pay equivalent to one month pay for every year of service. which was more than what they were entitled to receive under the law which . respondent incurred further tremendous losses in 1990 in the amount of P176. contrary to public policy.
concur. Romero. SO ORDERED. its policy of preferring former workers in the recruitment of project employees and the documents of waiver voluntarily executed. the petition is DISMISSED. (Chairman). . whichever is higher. which negates petitioners charge of grave abuse of discretion. In sum. JJ.provides for separation pay equivalent to one month pay or one half (1/2) month pay for every year of service.. WHEREFORE. consisting of the company s audited financial reports. Regalado. Puno. and Torres. Jr. there is substantial evidence supporting the decision of both the labor arbiter and the NLRC..
871. On December 14. GENERAL SERVICES and JESUSA ADLAWAN TOROBU. MASCARINAS. In his Complaint. DECISION QUISUMBING. 00-03-02279-98. respondents. SO ORDERED. The decretal portion of the decision reads as follows: WHEREFORE. Initially. No. petitioners. January 26. Sometime in April 1997. 2004] J. including private respondent. and its Resolution dated May 28. private respondent alleged that he started as helper mechanic of JAT on January 6. NATIONAL LABOR RELATIONS COMMISSION and JOSE F. the Labor Arbiter rendered a decision on March 25. judgment is hereby rendered ordering the respondents [herein petitioners] to pay complainant the aggregate sum of P85. He related that he was one of those retrenched from employment by JAT and was allegedly required to sign a piece of paper which he refused. co-petitioner Jesusa Adlawan Torobu. J. which affirmed the Decision of Labor Arbiter Jose G. In October 1997.00 per day after six (6) months in employment. legal holiday pay.R. the sales of heavy equipment declined because of the Asian currency crisis. which was increased to P180.00 per day. JAT hired private respondent Jose F. notifying the latter of its decision to close its business operations due to business losses and financial reverses.00. causing his termination from employment. .: For review are the Decision dated February 27. private respondent filed a case for illegal dismissal and underpayment of wages against petitioners before the NLRC. 1997 with an initial salary rate ofP165. 60337. SP No. among others. not to report for work starting on the first week of March 1998. 148340.A.00. Consequently. backwages. service incentive leave pay and 13th month pay in the aggregate sum ofP85. vs. 2001 of the Court of Appeals in CA-G. 1999.871. finding the dismissal of herein private respondent unjustified and ordering JAT to pay private respondent separation pay and backwages. denying the motion for reconsideration. Third Division. After due proceedings. 2001.[G. all the foregoing premises being considered. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers. which found petitioners liable for illegal dismissal and ordered petitioners to pay private respondent Jose Mascarinas separation pay.R. JAT indefinitely closed shop effective May 1998. private respondent was hired as a probationary employee and was paid P165 per day that was increased to P180 in July 1997 and P185 in January 1998. A few days after. JAT filed an Establishment Termination Report with the Department of Labor and Employment (DOLE). It advised its employees. 1998. De Vera in NLRC-NCR Case No. as culled from the records. The facts.T. JAT is owned by its namesake. are as follows: Petitioner Jesusa Adlawan Trading & General Services (JAT) is a single proprietorship engaged in the business of selling second-hand heavy equipment. The Court of Appeals dismissed the petition for certiorari filed by petitioners and affirmed the Resolution of the National Labor Relations Commission (NLRC). JAT temporarily suspended its operations.
hence. The NLRC found that the financial statements submitted on appeal were questionable.The Labor Arbiter ruled that (1) private respondent Jose F. C. is hereby DENIED DUE COURSE. and the assailed decision of the National Labor Relations Commission AFFIRMED.00. SO ORDERED. Dissatisfied.00 and separation pay. The NLRC also affirmed the monetary awards because petitioners failed to prove the payment of benefits claimed by private respondent. or P10. Mascarinas dismissal was unjustified because of petitioners failure to serve upon the private respondent and the DOLE the required written notice of termination at least one month prior to the effectivity thereof and to submit proof showing that petitioners suffered a business slowdown in operations and sales effective January 1998.066. THE LOWER COURT (sic) ERRED IN AWARDING BACKWAGES AND/OR SEPARATION PAY TO PRIVATE RESPONDENT EVEN FOR PERIOD AFTER PETITIONERS FILED A NOTICE OF ACTUAL CLOSURE OF THE COMPANY BEFORE THE LABOR DEPARTMENT.810. The appellate court held that the petitioners failed to prove by clear and convincing evidence their compliance with the requirements for valid retrenchment. with costs to petitioners. in the amount of P1. The decretal portion of the decision reads as follows: WHEREFORE. in lieu of reinstatement. service incentive leave pay in the amount of P925. at the rate of one (1) month pay for every year of service.00 and 13th month pay for 1997 in the amount of P4. THE LOWER COURT (sic) ERRED IN RULING THAT A NOTICE TO THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) IS NECESSARY IN CASE OF TEMPORARY SUSPENSION OF BUSINESS. 1997. which was denied by the Court of Appeals. particularly as to the date of the alleged closure of operation.296. B.00. (2) private respondent may recover backwages from March 1. Petitioners filed a Motion of Reconsideration. 1998. (3) the payrolls submitted by JAT showed that effective May 1. (4) that private respondent be awarded legal holiday pay in the amount of P1. 1998 up to March 1. they cannot be used to support private respondent s dismissal. the NLRC affirmed the decision of the labor arbiter. D. The Court of Appeals affirmed the findings of the NLRC.924. which the latter dismissed. ASSUMING ARGUENDO THAT THE NOTICE TO THE LABOR DEPARTMENT FAILED TO COMPLY WITH THE ONE-MONTH PERIOD. . 1997 to January 6. Hence. and ordered DISMISSED.00. 1999 or P66. unreliable and inconsistent with petitioners allegations in the pleadings. having no merit in fact and in law. On appeal. the present petition alleging that the: A. and that the petitioners late submission of notice of closure is indicative of their bad faith. private respondent is entitled to salary differentials from May 1.850. hence. THE LOWER COURT (sic) ERRED IN RULING THAT PRIVATE RESPONDENT IS ENTITLED TO BACKWAGES DESPITE THE FACT THAT PRIVATE RESPONDENT WAS NOT DISMISSED FROM SERVICE AT THE TIME THE COMPLAINT WAS FILED. foregoing premises considered. petitioners filed a Petition for Certiorari under Rule 65 before the Court of Appeals. particularly on the illegal dismissal of the private respondent. It cited the findings of the NLRC on the belated submission of the financial statements during appeal that could not be given sufficient weight. private respondent s wages did not conform to the prevailing minimum wage. the instant petition.00. THE LOWER COURT (sic) ERRED IN RULING THAT THE EMPLOYER HAS THE BURDEN OF PROVING THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES.
the petitioners claim that the Court of Appeals erroneously concluded that they are liable for illegal dismissal because of non-compliance of the procedural and substantive requirements of terminating employment due to retrenchment and cessation of business. backwages and other monetary awards. A brief discussion on the difference between retrenchment and closure of business as grounds for terminating an employee is necessary. On the other hand. In the present case. thus the procedural requirement for terminating an employee does not come into play yet. On the first issue. we find the issues and contentions more centered on closure of business operation rather than retrenchment. Rather. The employer may also terminate the employment of any employee due to the installation of labor-saving devices. the separation . Suffice it to state that there is no termination of employment during the period of suspension. Thus. to wit: ART. While the two are often used interchangeably and are interrelated. it cited jurisprudence relating toretrenchment to support its resolution and conclusion. unlike in the case of permanent closure of business operation. Termination of an employment may be predicated on one without need of resorting to the other. due to the decline in sales and heavy losses incurred in its business arising from the 1997 Asian financial crisis. retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title. Closure of business. Closure or cessation of operation of the establishment is an authorized cause for terminating an employee under Article 283 of the Labor Code. petitioners relate that JAT was compelled to permanently close its operation eight (8) months later or on November 1998. the issue demanding a sharpened focus here concerns the validity of dismissal resulting from the closure of JAT. by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. petitioners argue that it cannot be held liable for illegal dismissal in March 1998 since there was no termination of employment during suspension of operations and a notice to employee is not required. While the Court of Appeals defined the issue to be the validity of dismissal due to alleged closure of business. redundancy. is the reversal of fortune of the employer whereby there is a complete cessation of business operations and/or an actual locking-up of the doors of establishment. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. and (b) whether or not private respondent is entitled to separation pay. This matter is not pertinent to. the disposition of this case. retrenchment is reduction of personnel usually due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. 283. 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. much less determinative of. They argued that there was no closure but only suspension of operation in good faith in March 1998. they are actually two separate and independent authorized causes for termination of employment.The relevant issues for our resolution are: (a) whether or not private respondent was illegally dismissed from employment due to closure of petitioners business. Petitioners assert that under Article 286 of the Labor Code. a bona fide suspension of the operation of a business for a period not exceeding six (6) months shall not terminate employment and no notice to an employee is required. Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. Closure of business as an authorized cause for termination of employment aims to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. It is sometimes also referred to as down-sizing. However. on one hand. when the hope of recovery became nil but only after sending notices to all its workers and DOLE. Closure of establishment and reduction of personnel. usually due to financial losses. We need not belabor the issue of notice requirement for a suspension of operation of business under Article 286 of the Labor Code. when private respondent claimed to have been illegally dismissed.
Hence. Having concluded that private respondent was not validly dismissed resulting from closure of business operations due to substantial losses. in one case. we emphasized that: Art. Even the public respondents. we held more emphatically that: . Said provision in fact provides for the payment of separation pay to employees terminated because of closure of business not due to losses. the closure was due to business losses as in the instant case. A careful examination of Article 283 of the Labor Code shows that closure or cessation of business operation as a valid and authorized ground of terminating employment is not limited to those resulting from business losses or reverses. their 1998 financial statement (Annex E ) indicates operations up to and ending December 31. who might be merely feigning business losses or reverses in their business ventures in order to ease out employees. for obvious reasons. However. In the present case. Both statements need interpretation as to their impact on the company s termination of certain personnel as well as business closure. 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. the burden of proving that such closure is bona fide falls upon the employer. we now proceed to determine whether or not private respondent was validly dismissed on the ground of closure or cessation of operations for reasons other than substantial business losses. The income statements only indicated a decline in sales in 1998 as compared to 1997. if any. as noted earlier. the above-mentioned financial statements do not justify the complainant s dismissal. the financial statements were not only belatedly submitted but were also bereft of necessary details on the extent of the alleged losses incurred. these were not given much evidentiary weight by the NLRC as well as the Court of Appeals.091 in 1998. Yet. impliedly concede this point. the income statement of 1997 still shows JAT posting a net income of P19. whichever is higher. in their Comment filed by the Solicitor General. it is an essential requirement that alleged losses in business operations must be proven convincingly. however. thus implying that termination of employees other than closure of business due to losses may be valid. A fraction of at least six (6) months shall be considered one (1) whole year. While business reverses or losses are recognized by law as an authorized cause for terminating employment. These fell short of the stringent requirement of the law that the employer prove sufficiently and convincingly its allegation of substantial losses. While the comparative income statement shows a net loss ofP207. JAT justifies its closure of business due to heavy losses caused by declining sales. 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. 1998. (2) they (the respondents) allegedly closed on March 1. There is no need to belabor this point.pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service. We see no cogent reason to set it aside. to wit: The financial statements submitted by the respondents on appeal are questionable for the following reasons: (1) the figures in Annexes D-2 and E of the appeal memorandum (which both refer to 1997) do not tally.361. 1998. It belatedly submitted its 1997 Income Statement and Comparative Statement of Income and Capital for 1997 and 1998 to the NLRC to prove that JAT suffered losses starting 1997. In view of the foregoing. said ground for termination would be susceptible to abuse by scheming employers.  The foregoing findings of the Court of Appeals is conclusive on us. Where. In another case. Otherwise. In this case. However.
 The closure of business operation by petitioners. and (c) payment to the employees of termination pay amounting to at least one-half (1/2) month pay for every year of service. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. while petitioners did not sufficiently establish substantial losses to justify closure of the business. be stretching the intent and spirit of the law if we were to unjustly interfere in management s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss. The decision to permanently close business operations was arrived at after a suspension of operation for several months precipitated by a slowdown in sales without any prospects of improving. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to illegal dismissal. or one (1) month pay. The amount of separation pay must be computed from the time private respondent commenced employment with petitioners until the time the latter ceased operations. the petitioners saw the declining sales figures and the unsustainable business environment with no hope of recovery during the period of suspension as indicative of bleak business prospects. petitioners had notified private respondent and all other workers through written letters dated November 25. . namely: (a) service of a written notice to the employees and to the DOLE at least one (1) month before the intended date thereof. eventually leading to its permanent closure in December 1998. Further. provided separation pay be paid to the terminated employee. But in certain cases. or not supported by evidence on record or the judgment is based on a misapprehension of facts. In this case. we agree that undue interference with an employer s judgment in the conduct of his business is uncalled for. however. (b) the cessation of business must be bona fide in character. its income statement shows declining sales in 1998. As long as the company s exercise of the same is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement such exercise will be upheld. as long as he pays his employees their termination pay in the amount corresponding to their length of service. Generally. contrary to the findings of the Labor Arbiter. Further we hold that private respondent was validly terminated.In any case. It would. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business. prompting the petitioners to suspend its business operations sometime in March 1998. we are persuaded that the closure of JAT s business is not unjustified. we are constrained to analyze or weigh the evidence again if the findings of fact of the labor tribunals and the appellate court are in conflict. Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses. in our view. Nevertheless in this case. because the closure of business operations is justified. whichever is higher. indeed. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE. Even as the law is solicitous of the welfare of employees. it must also protect the right of an employer to exercise what is clearly a management prerogatives. It is settled that in case of closure or cessation of operation of a business establishment not due to serious business losses or financial reverses. the employees are always given separation benefits. justifying a permanent closure of operation to save its business from further collapse. Apparently. Considering that private respondent was not illegally dismissed. It is well settled that backwages may be granted only when there is a finding of illegal dismissal. no backwages need to be awarded. under Article 283 of the Labor Code. review of labor cases elevated to this Court on a petition for review on certiorari is confined merely to questions of law. we must stress that the closure of business operation is allowed under the Labor Code. In the event. three requirements are necessary for a valid cessation of business operations. On this score. In the present case.
00 and 13th month pay in the amount of P4. namely legal holiday pay.047. Puno. Callejo. and Tinga. concur.00 are maintained.R. legal holiday pay in the amount of P1.00 as backwages is deleted.00.850.. The assailed Resolutions of the Court of Appeals in CA-G. No pronouncement as to costs. WHEREFORE. JJ. Sr. . These awards.The other monetary awards to private respondent are undisputed by petitioners and unrefuted by any contrary evidence.00 and the other monetary awards. (Chairman). namely salary differentials in the amount of P1. SP No. SO ORDERED.296. The award of separation pay amounting to P10. service incentive leave pay and 13th month pay. or a total of P29.910.924. should be maintained.066.. 60337 are AFFIRMED with the MODIFICATION that the award of P66.00. service incentive leave pay in the amount of P925. the petition is given due course. Austria-Martinez.
Espiritu. as well as by the pleadings of the parties. G. and non-payment of overtime pay and 13th month pay. 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. unfair labor practice. Labor Arbiter Pablo C.R. WILMA BALDERA. JR. petitioners.I. SATURNINO GURAL. a corporation engaged in the manufacture and export of ready-to-wear garments. JUANITO CUSTODIO. are not complicated. and that the lay-off affected both union and non-union members.G. . The antecedent facts as disclosed by the decisions of the Labor Arbiter and the NLRC. and ALEX MASAYA. while the latter denied the motion to reconsider the former. In his decision of 26 February 1993 with respect to the claims of the petitioners. respondents. above premises considered. vs. The petitioners herein did not. CARLOS ONG. NENE MANAOG. resorted to because of their union activities and was in violation of their right to security of tenure since there was no valid ground therefor. Sportswear Corporation. 115394 September 27. J. Believing that their "temporary lay-off" was a ploy to dismiss them. found for them and disposed as follows: WHEREFORE. EVANGELINE AGNADO. NATIONAL LABOR RELATIONS COMMISSION. G. The cases then involving those who accepted the separation pay were pro tanto dismissed with prejudice. CRISANTA LACSAM. 4 Private respondent GTI denied the claim of illegal dismissal and asserted that it was its prerogative to layoff its employees temporarily for a period not exceeding six months to prevent losses due to lack of work or job orders from abroad. DAISY PASCUA. RESTITUTO GLORIOSO. proportionate 13th month pay for 1991 and attorney's fees. 01 and 02.T. No. 1995 FE S.I. FATIMA POTESTAD. The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). SPORTSWEAR CORPORATION and/or BENEDICTO YUJUICO. WILMA ORBELLO. the 38 laid-off employees filed with the Labor Arbiter's office in the National Capital Region complaints for illegal dismissal. Twenty-two (22) of the 38 complainants accepted the separation pay. Jr. DAVIDE. a fact which was communicated to the petitioners and the other complainants who were all offered severance pay. judgment is hereby rendered finding Respondent. JANESE DE LOS REYES. underpayment of wages under Wage Orders Nos. liable for constructive dismissal.T. LEONILA VALDEZ.: This is a special civil action for certiorari under Rule 65 of the Rules of Court to set aside for having been rendered with grave abuse of discretion the decision of 29 November 1993 1 and resolution of 9 February 1994 2of public respondent National Labor Relations Commission (NLRC) in NLRC NCR CA Case No.. 004673-93. SEBUGUERO. The former modified the decision of 26 February 1993 of the Labor Arbiter 3 by setting aside the award of back wages. RODOLFO SANCHEZ. 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.
such right is likewise limited to a period of six (6) months applying Art. Although. and 13th-month pay differentials and concomitantly. as in this case.63.underpayment of wages under NCR 01 and 02. "15". In this case. "15-A". The claims for unfair labor practice. SO ORDERED. c. However. To pay complainants 13th-month pay differentials arising out of underpayment of wages and proportionate 13th-month pay for 1991 in the following amounts: . e.618. and exemplary damages are hereby denied for lack of merit. "17" and Annexes "5". "13". and May of 1991 respondent company received several messages/correspondence from its foreign principals informing them (Respondent) that they are canceling/transferring some of their quotas/orders to other countries. The evidence presented by Respondent company proves this fact (Exhibits "12". . "7". . To pay complainants the amount of P120. . . in the months of March. Respondent company has the prerogative and right to resort to temporary lay-off. "14". . d. this Arbitration Branch finds that there was ample justification on the part of Respondent company to lay-off temporarily some of its employees to prevent losses as a result of the reduction of the garment quota allocated to Respondent company due to the garment embargo of 1990. moral damages.87 representing 10% attorney's fees based on the total judgment award of P1. To pay the following complainants backwages from the time of their constructive dismissal (July 22. 1991) till promulgation considering that reinstatement is no longer decreed: . . . the Labor Arbiter made the following ratiocinations: On the validity of the temporary lay-off. where the Respondent found it unnecessary to continue employing some of its workers because of business recession. respondent company was justified in the temporary lay-off of some of its employees. 286 of the Labor Code on suspension of employer-employee relationship not exceeding six (6) months. To pay complainants underpayment of wages under NCR Wage 01 and NCR Wage 02 in the following amounts: . showing the different documentary evidence on cancellation of orders and forced leave schedules of workers due to lack of work). April. b. Respondent corporation is hereby ordered: a. 5 In support of the disposition. .326. as a general rule.807. In fact. nonpayment of overtime pay. lack of materials to work on due to government controls (garments embargo) and due to the lack of the demand for export quota from its principal foreign buyers. "6". This is sustainable. "16". Respondent company should have recalled them after the end of the six month period or at the least reasonably informed them (complainants) that the Respondent company is still not in a position to recall them due to the continuous drop of . To pay complainants separation pay of 1/2 month for every year of service in lieu of reinstatement in the following amounts: .
that the lack of work and selection of personnel continued to persist . . Respondent failed to show proof by means of payrolls to disprove the claim of the complainants. 1991 in view of constructive dismissal. . Complainants are also entitled to their proportionate 13th-month pay differentials as a result of the underpayment of wages under NCR-01 and 02 and likewise to their proportionate 13th-month pay for 1991 for the month of January 1991. in view of constructive dismissal. as testified by the Vice-President for marketing and personnel manager. As result thereof. 6 The Labor Arbiter found no sufficient evidence to prove the petitioners' charges of unfair labor practice. 15 Sept. during the trial of this case and in view of the strained relations between the parties. thereafter complainants are already entitled to backwages. NLRC. 67880. 1986. G. 1991 (date of lay-off) to July 22. . Complainants cannot be placed on temporary lay-off forever. respondent company chose not to recall nor send notice to the complainants after the lapse of the six (6) month period. the respondents conveyed to the complainants the . 1989). the same is also limited to a duration of six months.R. as testified by the VicePresident for marketing and personnel manager. However. 10 Aug. and for moral and exemplary damages. Hence. complainants are entitled to reasonable attorney's fees considering they were forced to engage the services of counsel in order to fully ventilate their rights and grievances in accordance with the Labor Code as amended. (Divine Word High School vs. there is in this complaint a clear case of constructive dismissal. that the lack of work and selection of personnel continued to persist and considering the antagonism and hostility displayed by both litigants." Besides. reinstatement of the complainants would not be prudent. it was not denied by the complainants that during the proceeding of the case. . due to the fact that they were no longer recalled back to work. Failing in this regard. . 004673-93. are entitled under the law (Art. 72207.R. as observed by this Arbiter. . G. NLRC. during the trial it was proven. While there is a valid reason for the temporary layoff. . but disagreed with the latter's ruling granting back wages after 22 July 1991. The NLRC justified its postulation as follows: However. 34302. . The limited period of six (6) months is based provisionally too prevent circumvention on the right to security of tenure and to prevent grave abuse of discretion on the part of the employer. thereby extending the temporary lay-off with a definite period of recall and if the same cannot be met. . . the temporary lay-off of the complainants from January 22. the NLRC concurred with the findings of the Labor Arbiter that there was a valid lay-off of the petitioners due to lack of work. 1989. then the company should implement retrenchment and pay its employees separation pay. G. complainants herein. 6 Aug. Hernandez vs. it being acknowledged by him that ". However. Private respondent GTI seasonably appealed the aforesaid decision to the NLRC. 286) to be recalled back to work. we cannot sustain the findings of the Labor Arbiter in awarding the complainants backwages after July 22. however. Hence. overtime pay. Thereafter the employees. In its challenged decision. On the issue of monetary claims this Arbitration Branch finds that Respondent is liable for underpayment of wages under NCR Wage Order 01 and 02 considering that respondent failed to rebut the claims of the complainants.demand in the export market (locally or internationally). NLRC. 1991 is valid.R. separation pay of 1/2 month for every year of service in lieu of reinstatement is in order. which docketed the appeal as NLRC NCR CA Case No. Esmalin vs. since during the trial it was proven.
Dismissal by its term. 7 It thus set aside the awards for back wages. such as overhiring of workers. What the NLRC sustained and affirmed is not redundancy. The same cannot be said of the case at bar. proportionate 13th month pay for 1991. A position is redundant where it is superfluous. and superfluity of a position or positions may be the outcome of a number of factors. 10 . They contend that the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion when it: (a) ruled that there was a valid and legal reduction of business and in sustaining the theory of redundancy in justifying the dismissal of the petitioners. as amended. the proportionate 13th month pay for 1991 and attorney's fees for lack of legal basis and direct. and (c) deleted the award of attorney's fees. The complainants did not question the evidence of lack of work on account of reduction of government quota or cancellation of orders. presuppose that there was still work available and that the employer terminated the services of the employee therefrom. the petitioners filed this special civil action for certiorari. and disposed as follows: WHEREFORE. 1991. but retrenchment as a ground for termination of employment. 286. decreased volume of business.impossibility of having them recalled in view of the continued unavailability of work as the economic recession of the respondent's principal market persisted. It is only after the six months period that an employee can be presumed to have been terminated. The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months. In fact. The petitioners' first contention is based on a wrong premise or on a miscomprehension of the statement of the NLRC. and for attorney's fees which it found to be without basis. it necessarily follow[s] that retrenchment did take place and not constructive dismissal. Art. . . 9 Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. 1993 is hereby modified by deleting the award of backwages. They are not synonymous but distinct and separate grounds under Article 283 of the Labor Code. . premises considered the decision of the Labor Arbiter dated February 26. the respondent company offered to complainants payment of their separation pay which offer [w]as accepted by 22 out of 38 complainants. or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. . Having established lack of work. 286 of the Labor Code is precised [sic] in this regards when it provided that: Art. (b) failed to apply in full the provisions of law and of jurisprudence as to the full payment of back wages in cases of illegal dismissal. 8 Unable to accept the NLRC judgment. When employment not deemed terminated. . We gave due course to this petition after the filing of the separate comments to the petition by the public and private respondents and the petitioners' reply to the public respondent's comment. . shall not terminate employment . the payment of separation pay equal to one-half month salary for every year of service as of July 22.
or seasonal fluctuations. the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service. retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title. industrial depression. shortage of materials.12 Article 283 of the Labor code which covers retrenchment. A fraction of at least six (6) months shall be considered one (1) whole year. lack of work. whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses. To remedy this situation or fill the hiatus. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. and . 283. 13 Six months is the period set by law that the operation of a business or undertaking may be suspended thereby suspending the employment of the employees concerned. and considerable reduction on the volume of his business. This provision. therefore. resorted to by management during periods of business recession.Retrenchment. speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. After six months. on the other hand. In case of termination due to the installation of labor saving devices or redundancy. The employer may also terminate the employment of any employee due to the installation of labor saving devices. redundancy. Closure of establishment and reduction of personnel." It is the termination of employment initiated by the employer through no fault of the employee's and without prejudice to the latter. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. however. 11 Simply put. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. by servicing a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. or during lulls occasioned by lack of orders. a right consistently recognized and affirmed by this Court. 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. it is an act of the employer of dismissing employees because of losses in the operation of a business. Under the aforequoted Article 283 of the Labor Code. the employees should either be recalled to work or permanently retrenched following the requirements of the law. To determine. Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. These employees cannot forever be temporarily laid-off. is used interchangeably with the term "lay-off. whether the petitioners were validly retrenched or were illegally dismissed. or of automation. we must determine whether there was compliance with the law regarding a valid retrenchment at anytime within the six month-period that they were temporarily laid-off. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service. whichever is higher. reads as follows: Art.
18 The notice must also be given at least one month in advance of the intended date of retrenchment to enable the employees to look for other means of employment and therefore to ease the impact of the loss of their jobs and the corresponding income. All that the parties. for not having been effected with the required notices. The DOLE is the agency that will determine whether the planned retrenchment is justified and adequately supported by facts. The NLRC found that GTI conveyed to the petitioners the impossibility of recalling them due to the continued unavailability of work. 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. our conclusion would remain the same: that the retrenchment of the petitioners is defective in the face of our finding that the required notices to both the petitioners and the DOLE were not given. both the Labor Arbiter and the NLRC found that the private respondent was suffering and would continue to suffer serious losses. There is. it is undisputed that the petitioners were given notice of the temporary lay-off. 21 Comment to the Petition. make the petitioners' retrenchment illegal such that they are entitled to the payment of back wages and separation pay in lieu of reinstatement as they contend. 14 Here. They cannot now question this finding that there is a valid ground to lay-off or retrench them. 20 offer of exhibits. however. 25 As to when this offer was made was not. no evidence that any written notice to permanently retrench them was given at least one month prior to the date of the intended retrenchment. 17 But what the law requires is a written notice to the employees concerned and that requirement is mandatory. There is also nothing in the records to prove that a written notice was ever given to the DOLE as required by law.(3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year of service. It is settled that findings of quasi-judicial agencies which have acquired expertise in the matters entrusted to their jurisdiction are accorded by this Court not only with respect but with finality if they are supported by substantial evidence. the Labor Arbiter and the NLRC stated in their respective pleadings and decisions was that the offer and payment were made during the pendency of the illegal dismissal case with the Labor Arbiter. thereby justifying the retrenchment of some of its employees. Their retrenchment. In this case. however. 19 That they were already on temporary lay-off at the time notice should have been given to them is not an excuse to forego the one-month written notice because by this time. Furthermore. 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. 16 In the instant case. GTI's position paper. whichever is higher. no claim was made by any of the parties that such a finding was not supported by substantial evidence. The lack of written notice to the petitioners and to the DOLE does not. . In those cases where we found the retrenchment to be illegal and ordered the employees' reinstatement and the payment of back wages. As for the first requisite. proven. 24 With respect to the payment of separation pay. the NLRC found that GTI offered to give the petitioners their separation pay but that the latter rejected such offer which was accepted only by 22 out of the 38 original complainants in this case. the petitioners did not appeal the finding of the Labor Arbiter that their temporary lay-off to prevent losses was amply justified. The law requires two notices one to the employee/s concerned and another to the DOLE not just one. is merely defective. including the petitioners. 15 The latter means that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. however. their lay-off is to become permanent and they were definitely losing their employment. whether or not an employer would imminently suffer serious or substantial losses for economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to determine. 22 and Memorandum 23 in this case do not mention of any such written notice. But with or without this offer of separation pay. the validity of the cause for retrenchment. We are not prepared to disregard this finding of fact.
SO ORDERED. be reasonable. National Labor Relations Commission. The sanction. vs. 35 the sum of P5. 31 and Aurelio vs. National Labor Relations Commission 33 and Alhambra Industries. vs. an amount we find to be reasonable.e. which is equivalent to ten percent (10%) of the amounts recovered.that is the existence of imminent or actual serious or substantial losses. 004673-93 is modified by reversing and setting aside its deletion of the awards in the Labor Arbiter's decision of proportionate 13th month pay for 1991 and attorney's fees. There is only a violation by GTI of the procedure prescribed in Article 283 of the Labor Code in effecting the retrenchment of the petitioners. Inc. 116805. however. It is now settled that where the dismissal of an employee is in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process.000.000.00 was awarded to the employee as indemnification for the employer's failure to comply with the requirements of procedural due process. as attorney's fees should be reduced to P25. Rule VIII. Thus.00 as indemnification for its failure to observe due process in effecting the retrenchment. Inc. vs.000. the instant petition is partially GRANTED and the challenged decision of public respondent National Labor Relations Commission in NLRC NCR CA Case No. in the nature of indemnification or penalty. hence. the dismissal shall be upheld but the employer must be sanctioned for non-compliance with the requirements of or for failure to observe due process.87. 30 Pacific Mills.).00 which we find to be just and reasonable under the circumstances of this case. private respondent G. Inc. Separation pay equivalent to one-half (1/2) month pay for every year of service shall be computed from the dates of the commencement of the petitioners' respective employment until the end of their six-month temporary lay-off which is 22 July 1991. 27 Seahorse Maritime Corp. National Labor Relations Commission. National Labor Relations Commission.000. Book III of the Implementing Rules is the maximum. 26 But here. National Labor Relations Commission. was not proven. Accordingly. 34 More recently. furnishing any explanation for this finding. GTI must be sanctioned for such failure and thereby required to indemnify each of the petitioners the sum of P2. National Labor Relations Commission.I. any amount less than that may be awarded as the circumstances of the case may warrant. National Labor Relations Commission 32 to P10.R. The ten percent (10%) attorney's fees provided for in Article 111 of the Labor Code and Section 11. vs.000. he was not furnished the twin requirements of notice and the opportunity to be heard. 28 Shoemart.000. 29 Rubberworld (Phils. the petitioners are entitled to an award for attorney's fees pursuant to paragraph 7.618. however. WHEREFORE. depends on the facts of each case and the gravity of the omission committed by the employer and has ranged from P1. in Worldwide Papermills. In addition. The award of P120. such a cause is present as found by both the Labor Arbiter and the NLRC. vs.Alonzo. [G.000. Inc. the award of the 13th-month pay made and sufficiently justified by the Labor Arbiter must be reinstated as prayed for by the petitioners. National Labor Relations Commission. June 22. Also. i.T.00 in Reta vs. vs. we affirm the deletion by the NLRC of the award of back wages. Inc. No. 2000] . Article 2208 of the Civil Code which must. As for the award of the 13th-month pay made by the Labor Arbiter and deleted by the NLRC.00 as in the cases of Wenphil vs. Costs against the private respondent.00. But because the required notices of the petitioners' retrenchment were not served upon the petitioners and the DOLE.. Sportswear Corporation is ordered to pay each of the petitioners the sum of P2. the latter being reduced to P25. without.00. we do not find anything in the decision of the NLRC to support the deletion of this award other than its opinion that there is lack of legal basis to support such an award.
59-61.Check No... Diaz.... 301249 ......... Espina. J.... Antipolo.000........ 301247 . 1992 ...........000.00 ........ The facts. 1992 haideem "5.... Rollo)....... ordering respondent Rene G.. respondents......February 1. 301246 ..... the private respondent as seller..... ESPINA...February 22.....April 25...00 to be paid upon the execution of the contract and the balance to be paid through PCI Bank postdated checks as follows: "1.....000... Antipolo.. are as follows: "Mario S......P400....... and Rene G... Rizal. N-10 (p. 301245 ............ Valley Golf Subdivision. whereby the former sold to the latter the aforesaid condominium unit for the amount of P100...April 4.. Such ownership is evidenced by Condominium Certificate of Title No... 1992 "3... Rollo). 1992 "6... 1991..00 .. Rizal... petitioner.... Antipolo...... attorney's fees and costs.MARIO S.... ...Check No... "On November 29.....P200.000........ Rizal....Check No... vs... 1992 "4.... Victoria Valley Condominium......P200.........00 ....Check No.000.....March 14.. 301250 .P200.January 15..000... Espina is the registered owner of a Condominium Unit No.......affirming in all respects the decision of the Municipal Trial Court..00 ..00 ....... 301248 ...00 ..... THE COURT OF APPEALS and RENE G..... Diaz to vacate the condominium unit owned by petitioner and to pay back current rentals.Check No.... 31. the petitioner as buyer..... executed a Provisional Deed of Sale..P200... 1992 "2.. 403.....P200.......(pp.....Check No.. DIAZ... Mario S..... batas DECISION PARDO......: The case before the Court is an appeal from a decision of the Court of Appeals reversing that of the Regional Trial Court..000........ as found by the Court of Appeals.
000. private respondent sent petitioner a "Notice of Cancellation" of the Provisional Deed of Sale (p. Rollo). "However. 1992. 48. petitioner informed private respondent that his checking account with PCI Bank has been closed and a new checking account with the same drawee bank is opened for practical purposes. 1992. Annex "B". Rollo) "From the said decision. and to pay P7. On August 8. acknowledged by him as partial payment for the condominium unit subject of this controversy (p. paid private respondent Mario Espina P200. Rollo).000. "On January 25. 64. the amount of P300. Valley Golf Subdivision. p.000.000. Socorro Diaz. SO ORDERED. On July 20. private respondent filed a complaint docketed as Civil Case No. petitioner through Ms."Subsequently. Rollo).00 (p. the Court of Appeals denied the motion. 27. Rizal. Rollo). "On November 12. to pay the amount of P5. petitioner filed a motion for reconsideration of the decision of the Court of Appeals. The letter further stated that the postdated checks issued will be replaced with new ones in the same drawee bank (p. covering the period July 1991 up to the filing (sic) complaint.00. "On February 24. and costs of suit.00 after deducting all the total obligations of the defendant as specified in the decision from receipt of said decision. 1994. On April 29. the latter accepted payment from petitioner per Metrobank Check No. 1994. 1992. wife of petitioner. judgment is hereby rendered ordering the defendant and all persons claiming rights under him to vacate unit 403 of the Victoria Golf Valley Condominium. On August 19. 1993. Chiefx However. 395694 dated and encashed on October 28. . the Court of Appeals promulgated its decision reversing the appealed decision and dismissing the complaint for unlawful detainer with costs against petitioner Espina.000. despite the Notice of Cancellation from private respondent. 2104 for Unlawful Detainer against petitioner before the Municipal Trial Court of Antipolo.00 per appearance. "On July 26. 1994." On June 14. 1992 in the amount of P 100. 1994. petitioner appealed to the Regional Trial Court Branch 71. 1993. the trial court rendered its decision. Rizal. to pay the total arrears of P126. 63.000. petitioner filed with the Court of Appeals a petition for review. in a letter dated January 22. in view of the foregoing consideration. Branch 1. Antipolo. Antipolo.' (Decision. 1994.00.00 every month thereafter as rentals unit (sic) he vacates the premises.64. said appellate court affirmed in all respects the decision of the trial court.00 as and attorney's fees. the plaintiff may refund to the defendant the balance from (sic) P400. the dispositive portion of which reads: WHEREFORE.
unless the terms of the new contract are fully incompatible with the former agreement on every point. Antipolo. the Court GRANTS the petition for review on certiorari. the original contract remains in force. Esmsc The question is. Consequently. Rizal. respondent's checks in payment of six installments all bounced and were dishonored upon presentment for the reason that the bank account was closed. petitioner gave respondent a notice to vacate the premises and to pay his back rentals. Branch 01 an action for unlawful detainer against respondent Diaz. the provisional deed of sale that was subsequently executed by the parties novated the original existing contract of lease. On October 28. We do not agree. Failing to do so. The novation must be clearly proved since its existence is not presumed. 1992.00 that may be applied either to the back rentals or for the purchase of the condominium unit. While he occupied the premises as lessee. Antipolo. petitioner agreed to sell the condominium unit to respondent by installments. In this case. on February 24." Novation takes place only if the parties expressly so provide. In other words. the parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. Branch 71. respondent's possession became unlawful and his eviction was proper. WHEREFORE. 1992. and REVERSES the decision of the Court of Appeals. Unless the application of payment is expressly indicated. We resolve the issue in favor of petitioner. the payment shall be applied to the obligation most onerous to the debtor. The agreement to sell was provisional as the consideration was payable in installments. Consequently.Hence. The basic issue raised is whether the Court of Appeals erred in ruling that the provisional deed of sale novated the existing contract of lease and that petitioner had no cause of action for ejectment against respondent Diaz. a deed of cession of the right to repurchase a piece of land does not supersede a contract of lease over the same property. Thus. respondent Diaz continued to occupy the premises. the Court of Appeals erred in ruling that the payment was "additional payment" for the purchase of the property. Respondent originally occupied the condominium unit in question in 1987 as a lessee. affirming in toto the decision of the Municipal Trial Court. did the provisional deed of sale novate the existing lease contract? The answer is no. Rizal. . the unpaid rentals constituted the more onerous obligation of the respondent to petitioner. on July 26. petitioner's cause of action for ejectment survives. Now respondent contends that the petitioner's subsequent acceptance of such payment effectively withdrew the cancellation of the provisional sale. In the provisional deed of sale in this case. 1993. On February 13.000. this appeal via petition for review on certiorari. 1993. petitioner terminated the provisional deed of sale by a notarial notice of cancellation. the Court REVIVES the decision of the Regional Trial Court. as lessee. Rizal. Branch 01. As the payment did not fully settle the unpaid rentals. The contention cannot be sustained. but failed to pay the rentals due. it must be proven as a fact either by express stipulation of the parties or by implication derived from an irreconcilable incompatibility between old and new obligations or contracts. No costs. petitioner filed with the Municipal Trial Court. Antipolo. otherwise. "In this light. Thus. Hence. Nonetheless. SO ORDERED. respondent made a payment of P100. novation cannot be presumed to take place. According to respondent Diaz. Where there is no clear agreement to create a new contract in place of the existing one. after the initial down payment. novation is never presumed.
R. Five days later. Tomas. EDGARDO VIGUESILLA. petitioner gave its workers additional time within which to report to the new work place. in NLRC NCR CA 007946-94. Batangas. Marylin Macaraig. otherwise. DECISION QUISUMBING. Dexter Mitschek. On June 27. the union advised petitioner that its members are not willing to go along with the transfer to the new site. Eduardo Jolbitado. The records disclose that on June 5. not one reported for work at petitioner s new site.. 122876. 1995. Diomedis Poblio. However. CFW-MAGKAKAISANG LAKAS NG MGA MANGGAGAWA SA CHENIVER DECO PRINT TECHNIC CORPORATION. the remaining workers (private respondents herein) filed a complaint against petitioner for unfair labor practice. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. it would hire replacements. Albert Pimentel. Earlier. Tomas. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION). On August 4. petitioner gave its employees up to the end of June 1992 to inform management of their willingness to go with petitioner. Maria Cecilia Perez and Wilfredo Flores. which denied petitioner s motion for reconsideration. non-payment of legal . otherwise. petitioner wrote its employees to report to the new location within seven days. Cruz. 1992. Marlon Tafalla. the local authorities also took action to force out petitioner from Makati because of the alleged hazards petitioner s plant posed to the residents nearby. 1992 last day of operation in Makati temporary shutdown to give way to transfer of operation start of operation at new site in Sto. Nonetheless. 1992. In view of the impending transfer. Edgar Paquit. Rodel Gomez. vs. Batangas. petitioner informed its workers about the transfer of the company from its site in Makati to Sto. 1992 August 1. Barangay Sta. Marieta Ramos. Maricris Polvorosa. Gilbert Saquibal. J. 2000] CHENIVER DECO PRINT TECHNICS CORPORATION. they would be considered to have lost interest in their work and would be replaced. underpayment of wages. 1992. It appears that several employees namely. Petitioner 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. illegal dismissal.: This special civil action for certiorari seeks to annul the resolution of public respondent promulgated on May 31. 1995. Makati. and its resolution dated August 14. Private respondent Edgardo Viguesilla and twenty-two (22) others are members of aforesaid union and former employees of petitioner. the labor federation informed petitioner that the employees decided to continue working for petitioner.[G. On the other hand. Solitario Andres. petitioner reminded its workers of the following schedule to be followed: June 29. Nicanor Quebec. Petitioner is a duly organized corporation operating its printing business in Visita St. Vicente Solis. No. Later on. Eugene De la Cruz. petitioner. 1992 July 1-31. 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). February 17. respondents.
Silveria c) Arizala.00 15. Liza ----------------------------------------P 20.00 18. (ULP). Nelita n) Largadas. to wit: a) Adeser. Bonifacio j) Famillaran.204. Roel r) Pedrigosa.272. Mario o) Mitschek.00 12.00 15. Imelda d) Canares. Lourdes g) Dizon.272. incentive leave pay and separation pay.408.00 ------------------------------------- 12. the labor arbiter directed petitioner to pay private respondents their separation pay and other money claims as well as attorney s fees.408. Danilo e) Carin.00 18.00 18.00 9. 1994. 2. However.00 36.00 9. Tarcisio b) Albino.holiday pay.476.544.408. Salome i) Esguerra.272. On October 27.00 36.00 33.00 21.816. Lerma s) Pedrigosa. judgment is hereby rendered: 1. Edgar q) Panotes.340.340. Juanito h) Domingo.00 .00 27. Hadjie m) Jores. Amelia l) Ibardolaza. 13th month pay.408.748.476. Declaring respondent company not guilty of unfair labor practice. 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.00 18.00 ------------------------------------------------------------------------------------------------------------------------------- 21.280. Declaring respondent company not guilty of illegal dismissal and illegal lay-off but directing it to pay the individual complaints their separation pay.816. premises considered. Dexter p) Paquit.00 12. decreeing as follows: "WHEREFORE.00 24. Elena f) Cabanatan. Benjamin k) Gabucan.204.612.
t) Ulzoron.00 13.330.010.00 13.00 13.00 13. Hadjie m) Jores.00 ---------------------------------------13.00 13.204. Edgar q) Panotes.00 13.188.00 13. Silveria c) Arizala.080.00 ------------ ---------------.080. distributed as follows: a) Adeser. Bonifacio j) Famillaran.00 3.00 13.080.00 as to their other money claims aforestated.080. Roel r) Pedrigosa.080.00 13.080.00 ------------------------------------------------------------------------------------------------------------------------------- 13.00 13.080. Lerma ---------------.080.476.080.P 5. Benjamin k) Gabucan. Ruel ------------- 9.00 _____________ P 422. Dexter p) Paquit.080. Edgardo v) Viray.00 13.9.080.00 .00 21. Elena f) Cabanatan. Nelita n) Largadas. Juanito h) Domingo.00 ---------------------------------------------------- 13. Imelda d) Canares. Mario o) Mitschek. Danilo e) Carin. Amelia l) Ibardolaza.00 13. Lourdes g) Dizon.080.080. Salome i) Esguerra.080.080.00 13. Tarcisio b) Albino.080.080. Yolanda u) Viguesilla.00 13. Directing respondent company to pay complainants the sum of P280.204.
s) Pedrigosa." Petitioner contends that the transfer of its business is neither a closure nor retrenchment.080. Edgardo v) Viray. Liza t) Ulzoron.080.080." Its motion for reconsideration having been denied. Directing respondent company to pay complainants attorney s fees of ten (10%) percent based on the totality of the monetary award. . hence. Yolanda u) Viguesilla.010. II AFFIRMING THE AWARD OF OTHER MONEY CLAIMS TO PRIVATE RESPONDENTS WITHOUT BASIS IN FACT AND [IN] LAW AS SHOWN BY LACK OF COMPUTATION OF THE SAME. Other claims are hereby dismissed for lack of factual and legal basis. SO ORDERED. bereft of merit.00 13. SO ORDERED. separation pay should not be awarded to the private respondents. hence. The foregoing contention lacks factual and legal basis.00 ______________ P 280." On appeal.00 13. Ruel --------------------------- 13. It also avers that private respondents were not terminated from the service but they resigned from their job because they find the new work site too far from their residences.080. respondent NLRC affirmed with modification the decision of the labor arbiter by deleting the award of attorney s fees.00 4.00 ------------------------- 13. thus: "For all of the foregoing the decision appealed from is hereby AFFIRMED with modification that the award of attorney s fees be deleted for lack of legal and factual basis. petitioner filed the instant petition alleging that public respondent committed grave abuse of discretion in: "I AFFIRMING THE LABOR ARBITER S AWARD OF SEPARATION PAY TO PRIVATE RESPONDENTS.
In case of termination due to the installation of labor saving devices or redundancy. petitioner shall give private respondents separation pay equivalent to at least one (1) month or one-half (1/2) month pay for every year of service. the PPA cancelled the said contract resulting in the termination of employment of workers engaged by petitioner. under a management contract with the Philippine Ports Authority. Inc. petitioner herein must pay his employees their termination pay in the amount corresponding to their length of service. Before the expiration of the term of the contract. not construable as resignation. does not appear convincing. accompanied with an act of relinquishment. Petitioner s contention that private respondents resigned from their jobs. Nevertheless. Thus. -. much less desired by petitioner. Razon. Quezon City to Candon. Ilocos Sur. Closure of establishment and reduction of personnel.Broadly speaking. Obviously. 283. But even though the transfer was due to a reason beyond its control. the cancellation was not sought. It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a company s business. petitioner has to accord its employees some relief in the form of severance pay.The employer may terminate the employment of any employee due to the installation of labor saving devices. whichever is higher. in our view. 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. Yet. NLRC." Consequently. The company therein did not actually close its entire business but merely relocated its tobacco processing and redrying operations to another place. in E. 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 which provides: "ART. Manila. hence. the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service. Now. petitioner therein provides arrastre services in all piers in South Harbor. a company transferred its tobacco processing plant in Balintawak. this Court considered the transfer as closure not due to serious business losses for which the workers are entitled to separation pay. As public respondent observed. . it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. Indeed. That is its prerogative. whichever is higher. retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title. 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. redundancy. by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. A fraction of at least six (6) months shall be considered one (1) whole year. Resignation must be voluntary and made with the intention of relinquishing the office. this Court required petitioner therein to pay its workers separation pay in view of the cessation of its arrastre operations. whichever is higher. the subsequent transfer of petitioner to another place hardly accessible to its workers resulted in the latter s untimely separation from the service not to their own liking. vs. In Philippine Tobacco Flue-Curing & Redrying Corp. there appears no complete dissolution of petitioner s business undertaking but the relocation of petitioner s plant to Batangas. amounts to cessation of petitioner s business operations in Makati. vs. Resignation is inconsistent with the filing of the said complaint. Since the closure of petitioner s business is not on account of serious business losses. Secretary of Labor and Employment. the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or at least one (1) month pay for every year of service.
00 wage increase. The case pursued by Canares is for diminution of salary on account of his demotion which was decided in his favor with finality by this Court. Lastly. Dexter Mitschek and Ruel Viray involved different issues which are distinct and have no bearing on the case at bar. legal holiday pay. the wage differential received by private respondents by virtue of the mandated wage increase is different from the monetary benefits herein being claimed by private respondents. As noted by the Solicitor General. This is not correct.As to petitioner s assertion that private respondents resorted to forum shopping. Certainly. Mitschek s case pertains to diminution of his salary. NCR-02 mandating P2. the same deserves scant consideration. As correctly pointed out by the Solicitor General. petitioner alleges that claims of other private respondents have already been paid upon the enforcement of the order dated February 26. 1992 in case number NRC-00-9112-CI-001. private respondents claims in this case are based on underpayment of wages. the other cases separately filed in different fora by Danilo Canares. and Viray s complaint was dismissed without prejudice for failure to prosecute. Thus. WHEREFORE. On the other hand. and the assailed RESOLUTIONS of public respondent are AFFIRMED. service incentive leave pay and 13thmonth pay. the aforesaid order refers to the enforcement of Wage Order No. Hence. there is no basis for petitioner s forum shopping charge as the instant case and the others do not raise identical causes of action. . Gabucan s case involves reinstatement to her job. Costs against petitioner. Aurelia Gabucan. the instant petition is DENIED. subject matter and issues. public respondent cannot be faulted for grave abuse of discretion on this score. SO ORDERED.
The same principle applies in temporary suspension of operations.Temporary suspension of operations is recognized as a valid exercise of management prerogative provided it is not carried out in order to circumvent the provisions of the Labor Code or to defeat the rights of the employees under the Code. Neither is it acceptable for petitioner to allege that the latest financial statements (for the year 1991) were still being prepared by its accountants and not yet ready for submission. REASON.. since the financial statements for the prior years 1989 and 1990 would have sufficed. In this instance. The precarious financial condition must be established by evidence. SECRETARY OF LABOR. what is more important. 1996] SAN PEDRO HOSPITAL OF DIGOS. the State is bound to intervene.R. Thus. vs. No. balance sheets and income statements. Petitioner was recklessly pushing its luck when it believed that the Secretary could be convicted without first obtaining and examining petitioner's financial statements and the notes thereto. that its cessation of operations was really necessitated by its financial condition. But where it is shown that the closure is motivated not by a desire to prevent further losses. having wretchedly failed to justify by even the most rudimentary proof its temporary suspension of . ID. as such was petitioner's duty. by undertaking such suspension of operation. considering that it involves laying off employees for a period of six months. THE SAN PEDRO HOSPITAL EMPLOYEES UNION NATIONAL FEDERATION OF LABOR. ID. October 11. e. WHEN VALID AS A MANAGEMENT PREROGATIVE. 3. Such an act would be tantamount to a taking of property without due process of law. 104624. petitioner had to establish the fact of its precarious financial health. SYLLABUS 1.. INC. The fact that the conciliator never asked for them is no sufficient excuse for not presenting the same.g. LABOR RELATIONS. TEMPORARY SUSPENSION OF OPERATIONS. considering that the dismissal of an employee from work involves not only the loss of his position but.It is a hornbook rule that employers who contemplate terminating the services of their workers must base their decisions on more than just flimsy excuses. 2. petitioner.The burden of proving that such a temporary suspension is bona fide falls upon the employer. but to discourage the workers from organizing themselves into a union for more effective negotiations with management.. as no business can be required to continue operating at a loss simply to maintain the workers in employment . which the employer has a right to resist.[G. as in this case. respondents. since the purported financial hemorrhage would definitely have been reflected therein. and the figures therein must be interpreted and discussed at length. and that said condition would probably be alleviated or improved. petitioner's unexplained and continued failure to submit its financial statements could not but raise grave doubts as to the truth of the claimed financial crisis and the real purpose of the suspension of operations. THE BURDEN OF PROVING THAT THE SUSPENSION IS BONA FIDE FALLS UPON THE EMPLOYER. Petitioner... THE SECRETARY OF LABOR AND EMPLOYMENT DID NOT ACT WITH GRAVE ABUSE OF DISCRETION IN FINDING THE TEMPORARY SUSPENSION OF OPERATION ILLEGAL. It is not enough to merely raise this issue nor to discuss it only in passing. his means of livelihood. LABOR LAW.. or its losses abated. The determination to cease or suspend operations is a prerogative of management that the State usually does not interfere with. Petitioner could have at least partly met the foregoing requirements by submitting its financial statements or records as proof of its financial crisis.
. ID. the deadlock and the temporary suspension of operations. Rule 1. 193 SCRA 223. It is beyond the cavil then that petitioner sufferred serious and actual business reverses. 1991. as in this case. January 23. In the absence of any other information . Since there is basis for the permanent closure of the business. 5. the plain and natural presumption will be that petitioner would resume operations after six months. Thus. Secretary of Labor and Employment. ID. not affect the employment relationship. he ruled only on these matters. Thus. we . with more reason will an invalid and illegal suspension of operations.The losses registered in 1989. When Secretary Confessor assumed jurisdiction over the labor dispute. DID NOT ACT WITH GRAVE ABUSE OF DISCRETION IN ORDERING THE PARTIES TO ENTER INTO A NEW CBA WHILE PETITIONER WAS UNDER TEMPORARY SUSPENSION OF OPERATION. it is undisputed that petitioner never questioned the legality of the strike. it follows that a new CBA will be needed to govern the employment relations of the parties. His concern was the labor dispute. the employer-employee relationship is revived and restored. the grant of backwages was due to the illegality of the temporary suspension. on the legality or illegality of the strike. when he assumed the office.As pointed out by the Solicitor General.." Section 12. THE SECRETARY OF LABOR. Respondent union struck before the Secretary of Labor assumed jurisdiction over the dispute. We thus hold that the Secretary of Labor and Employment did not act with grave abuse of discretion in finding the temporary suspension unjustified and illegal. THE SECRETARY OF LABOR'S ORDER OR PETITIONER TO PAY BACKWAGES IS NOT ADJUDICATION ON THE LEGALITY OF THE STRIKE OF RESPONDENT UNION. the grant of backwages was not only dependent on the legality of the temporary suspension of operations by petitioner but also on the legality of the strike of respondent union. she ordered the immediate return to work of the striking employees in order to restore the conditions of employment prior to the strike. the respondent Secretary cannot be faulted nor considered to have gravely abused his discretion for ordering the parties to enter into a new CBA. 6. and was not within the ambit of the jurisdiction conferred upon him by law. In such a case. valid and legal suspension of operations does not terminate but merely suspends the employee-employer relationship. it being implicitly assumed that once operations are resumed. and therefore. 1990 and 1991 cannot be deemed "paltry. In this instance. On the other hand. This is properly its prerogative.Art. However.. the respondent Secretary of Labor did not act with grave abuse of discretion in ordering petitioner to pay backwages because it is not an adjudication on the legality of the strike. at first glance. If a legitimate. 228-230. DESPITE THE ABSENCE OF GRAVE ABUSE OF DISCRETION ON THE PART OF THE RESPONDENT SECRETARY. the old one having already expired. This is within his jurisdiction and is warranted by his finding as to the invalidity of the temporary suspension. 286 of the Labor Code provides: "The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months x x x shall not terminate employment.e. Book VI of the Omnibus Rules Implementing the Labor Code provides that the employer-employee relationship shall be deemed suspended in case of the suspension of operation referred to above. THIS COURT CANNOT COMPEL THE PETITIONER TO ENTER INTO A NEW CBA WITH THE UNION. under the circumstances. is not in point because in this case the Secretary did not rule on the legality of the strike. Under Article 263 (g) of the Labor Code.. petitioner expressly represented that the suspension was to be for six months only. The legality of the strike was not in question as far as Secretary Torres was concerned. as claimed by petitioner.operations. must bear the consequences thereof. In fine. ID.. and not. 4. LIKEWISE. REASON.. the Secretary is authorized to penalize an erring employer who refuses to accept returning employees by ordering such employer to pay backwages. it is clear that there is no basis for petitioner to claim that a new CBA should not be entered into or that collective bargaining should not be conducted during the effectivity of a temporary suspension of operations. Management has the final say as to whether it will continue to risk its capital in its business or not.. not the illegality of the strike. REASON. Clearly then." Consider also the loss of doctors and patients prior to the temporary suspension. i. The foregoing premises considered. the case of Philippine Airlines vs.
On February 12. as the parties remained adamant in their positions. 1991. Thus. and presented their respective proposals. Said orders directed herein petitioner hospital to pay backwages for the period from June 21. However. The Facts Petitioner San Pedro Hospital of Digos. DECISION PANGANIBAN. and (c) ten pesos per day for the third year. it was only onMarch 4. Petitioner had a three-year collective bargaining agreement (CBA) covering the period December 15. After the parties failed to reach agreement on the issues. and 18. with a wage reopening clause. 1991 and January 31. counter-offered an increase of two pesos per day for each of the three years of the new CBA. 1991 that respondent union filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB). Petitioner also adamantly opposed the proposal for a union security clause. J. 1991. 1991 declared a deadlock. 1991 to returning workers who are members of San Pedro Hospital Employees Union and to enter into a new collective bargaining agreement with the union. to December 15. non-profit medical and educational training corporation. the hospital management considered the union actions as tantamount to a strike. non-stock. (b) twenty pesos per day for the second year. On February 20. the union during the meeting of February 19.: When is temporary suspension of business considered not done in good faith? Can the Secretary of Labor compel management to enter into a new collective bargaining agreement with the union while the business enterprise is undergoing a temporary suspension of operations? Can the Secretary grant backwages without deciding the legality of a strike? These questions are addressed by the Court in resolving this Petition for Certiorari. Petitioner. this Court cannot impose upon petitioner the directive to enter into a new CBA with the union for the very simple reason that to do so would be to compel petitioner to contnue its business when it had already decided to close shop. the parties formally commenced negotiations for the renewal of their CBA. 1990. The union's demands included wage increases and inclusion in the CBA of a provision for union shop. . NCMB-RBXI-NS-03-017-91 entitled "In Re: Labor Dispute at San Pedro Hospital of Digos". and that would be judicial tyranny on our part. The operations of the hospital having come to a grinding halt. despite the absence of grave abuse of discretion on the part of the respondent Secretary. broken down as follows: (a) thirty pesos per day for the first year.National Federation of Labor (NAMASAP-NFL). which seeks nullification of the Orders dated October 16. Respondent union proposed a cumulative salary increase of sixty pesos per day for three years. is a charitable.cannot read into it any attempt to defeat the rights of its employees under the law. On April 10. Nagkahiusang Mamumuo sa San Pedro Hospital of Digos . the exclusive bargaining agent of the hospital's rank-and-file workers. claiming it was incurring losses on account of a serious financial crisis. respondent union saturated petitioner's premises with streamers and picketed the hospital. 1991. the NCMB held conciliation conferences but failed to settle the deadlock. 1991. Inc. 1987 until December 15. with herein private respondent. nor any oppressive and high-handed motives. 1992 of the Secretary of Labor and Employment rendered in DOLE Case No. 11.
1991. Despite the NCMB's call for a conciliation conference. that the union shop provision was necessitated precisely because of management's actuations. 1991. 1991. Several conferences were held by the NCMB Conciliator where petitioner stated it would submit the necessary documents showing its serious financial condition "should the need be in earnest". 1991. it had already notified the DOLE via its letter datedJune 13. such decision being purely a management prerogative. June 13. Similar notices were individually delivered to union members. Accordingly." However. all striking workers are hereby directed to return to work within twenty-four (24) hours from receipt of a copy of this Order and for the Hospital to accept all returning workers under the same terms and conditions of employment existing prior to the work stoppage. In the meantime. The parties are likewise directed to cease and desist from committing any act that may aggravate the prevailing precarious situation. On June 27. the partes are directed to submit their respective position papers and evidence within ten (10) days from receipt of this Order. this Office hereby assumes jurisdiction over the entire labor dispute at the San Pedro Hospital of Digos. The last patient was discharged on June 10. which was received by the DOLE on June 14. Petitioner also alleged that on June 13. 1991 order of the Labor Secretary. 1991. nurses and nurse aides who were members of the union abandoned their respective departments and joined the picket line a week later. Respondent union filed its own position paper on July 13. 1991. 1991. then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and issued an orderproviding that: "WHEREFORE. 1991. On the same day. the resident/consultant physicians abandoned the hospital because there were no more patients. 1991. 1991. a "Notice of Temporary Suspension of Operations" was issued by petitioner hospital and submitted to the local office of the NCMB on June 14. . 1991. or up to December 15. Petitioner thus refused the return of its striking workers on account of such suspension of operations. and that petitioner acted in bad faith and circumvented the return-towork order when it suspended operations. respondent union struck. 1991. that petitioner was not in serious financial condition. petitioner filed its position paper in which it maintained that the aforementioned order to accept all returning workers had become moot and academic in view of the suspension of its operations. Doctors began leaving the hospital and the number of patients dwindled.On May 28. this order was received by petitioner only on June 20. respondent union through its legal counsel wrote the Executive conciliator/Mediator of the NCMB in Davao City informing the latter that the union members were willing to return to their former work assignments at the hospital in compliance with the June 13. that it would temporarily suspend operations for six (6) months effective June 15. Moreover. said order could not substitute for (and override) the decision of the petitioner hospital's Board of Trustees to suspend operations for six months. To expedite the resolution of this dispute. On June 24. 1991 alleging that its very existence was threatened because management was convincing new employees not to join respondent union. ABOVE PREMISES CONSIDERED. 1991. but only fourteen out of the seventy-four rank-and-file employees/union members acknowledged receipt thereof. On June 12.
petitioner formally ceased operations. and. he in effect ruled on the legality of the strike. 2. Ordering the hospital to pay the wages of the returning workers who are members of the Union covering the period 21 June 1991 to 15 December 1991. which he was not authorized to do. Sec. jurisdiction therefor pertaining only to labor arbiters]. the date they were refused admittance by petitioner. petitioner was not represented in that meeting. Secretary Torres resolved the labor dispute and issued the questioned Order. by way of penalty. and therefore. 1991. petitioner filed a Motion for Reconsideration of the abovequoted Order alleging that: (1) the Office of the Secretary of Labor had no jurisdiction to resolve the issue of the legality or illegality of the union's strike [since. The dispositive portion of Secretary Torres' Order reads: "WHEREFORE. This last directive was prompted by the finding that petitioner's Financial Statements for the years 1989 and 1990 (copies of which. 1991.On October 11. Shortly thereafter.00 as of year-end 1990. 1991.791.000 in 1990. 1992. on October 16. On January 31. Torres went to Digos. Ordering the parties to enter and formalize a new collective bargaining agreement (CBA) embodying therein the dispositions hereinabove set forth as well as the provisions of the old CBA not otherwise touched upon by this Order. (2) the union members were not entitled to backwages because the temporary cessation of petitioner's operation suspended the employer-employee relationship between the union members and petitioner. this petition filed under Rule 65 of the Revised Rules of Court. as it would infringe on petitioner's inherent right to manage and conduct its own business affairs. 1991. 1991. 1991 did not rule on the legality of the strike. backwages for the workers from June 21. the Secretary denied the Motion for Reconsideration. judgment is hereby rendered: 1. the expiration of the temporary suspension of the hospital's operation. incidentally. Hence.00 each for the first three years of the new CBA. Petitioner was also directed to grant a wage increase of P3. 1991. He thus decided to grant. On December 15. in ordering the payment of backwages. DOLE Secretary Ruben D. until December 15. wherein he ruled that the suspension of operations was not for a valid or justifiable cause but was actually for the purpose of defeating the worker's right to self-organization. holding among other things that his Order of October 16. he held that it would be unjust and a sheer abuse of discretion to compel the hospital to continue operations and accept the returning workers.159. Notices of its permanent closure were sent to NCMB and individual rank-and-file employees. were submitted not by petitioner but by respondent union) showed that although petitioner incurred a loss of some P200. The Secretary also visited the hospital without notice to petitioner. and (3) petitioner could not be obligated to enter into a new CBA because said employeremployee relationship no longer existed. But because the hospital had actually ceased operations. its Balance Sheet revealed that it had a Fund Balance (Retained Earnings) of P3. The Issues Petitioner alleges that the Secretary of Labor gravely abused his discretion thus: ." On November 4. it was financially capable of granting an increase in its employees' wages. Davao del Sur and met respondent union's officers and members in a restaurant. Torres also enjoined petitioner to enter into a new CBA with respondent union and to adopt and incorporate therein a union shop provision because it was proven that petitioner had intervened in the workers' right to join or not to join a labor organization of their own choosing.
 Two. Respondent union further alleged that petitioner could have afforded the wage increases since it had previously proposed an increase of P2. 1992. The Court's Ruling First issue: Petitioner Was Afforded Opportunity to Present Evidence Petitioner alleges that it was never given an opportunity to present its evidence. and that the Order of October 16. petitioner submitted its position paper where it questioned the authenticity of the said order claiming that it (petitioner) received only an uncertified photocopy. the Hospital failed to meet the conditional requirements that would justify the temporary cessation of its operations. 2.00 for three years. and Evangeline Montues. pharmacist. Davao del Sur on October 11. it was afforded opportunity to present its evidence. xxx when he issued the two orders. on the other hand. said public respondent to all intents and purposes ruled that the strike staged by the union was legal.00 every year for each year of the new CBA which it later reduced to just P2."1. as he himself conceded. xxx in ordering the hospital to execute a new collective bargaining agreement with the union knowing fully well. Secretary Torres did visit petitioner's premises without notice to see for himself the actual situation therein obtaining. 3. it complied fully with the law on strikes because a skeletal force was left to man the hospital and the gate was left open and not barricaded. and that it was petitioner that refused to admit patients and hired replacements for the strikers. Also attached were the affidavits of Armand Anthony Gallardo. based on these pleadings and supporting papers. 1991 and January 31. the assumption order of Secretary Confessor inter alia directed the parties to submit their respective position papers and evidence to enable the Secretary to resolve the dispute. the evidence on record clearly shows that. (In its Supplemental Position Paper. 1991. to show that petitioner had been persuading the new regular workers not to join respondent union. nor did they affect said Order. the Secretary noted that petitioner hospital did not discuss and support its claim of serious financial crisis on account of losses incurred. To be sure. Respondent union. It also alleged that the doctors did not withdraw from the hospital because it happened to be the best equipped in the locality. without affording the hospital the opportunity to present evidence on its behalf. xxx in ordering the hospital to pay backwages to the members of the union. staff nurse. that the hospital had actually ceased operations. His October 16." The main question is whether the Secretary of Labor and Employment acted correctly in issuing the Orders of October 16. contrary to petitioner's allegation. However. He thus found that the temporary suspension was to avoid compliance with the return-to-work order. Admittedly. One. attached a copy of petitioner's financial statements to its position paper to show that petitioner was not in dire financial straits as it had a significant fund balance in 1990. the facts and circumstances attendant to . and not due to the supposed financial hemorrhage. It did not bother to prove its serious financial condition and thereby justify its suspension of operations and its refusal to accede to the demanded wage increases. respondent union also alleged that when it struck.) Three. necessitating temporary suspension of operations. subject of this case. and that the Secretary's visit and meeting were not the reasons for the ruling in favor of respondent union. for in doing so. 1991 was influenced by the Secretary of Labor's meeting with the officers and members of respondent union when the former went to Digos. 1991 Order stated as follows: "In the case under consideration. and informed the Secretary of its suspension of operations.
by undertaking such suspension of operation. directing it to accept all returning workers under the same terms and conditions of employment existing prior to the work stoppage. While the Hospital may have incurred losses of P200. Such an act would be tantamount to a taking of property without due process of law. For indeed. petitioner had to establish the fact of its precarious financial health. This conclusion finds support from the following undisputed facts: First. Thus. Thirdly. This being the case. however. and not for the purpose of defeating the rights of the workers to selforganization. Worse still. not because it is in financial crisis. said Order is clearly based on substantial evidence on record. the Hospital had shown scant regard to the constitutional right of the members of the Union to self-organization and to negotiate for better terms and conditions of employment. Temporary suspension of operations is reorganized as a valid exercise of management prerogative provided it is not carried out in order to circumvent provisions of the Labor Code or to defeat the rights of the employees under the Code. But where it is shown that the closure is motivated not by a desire to prevent further losses. that its cessation of operations was really necessitated by its financial condition. the Hospital has not submitted these documents thereby creating serious doubts on the validity of the suspension of its operations. Petitioner also attacks Secretary Torres' conclusion that its temporary cessation of operations was not legitimate but for the purpose of circumventing the return-to-work order previously issued. and. On the contrary. the notice of temporary suspension dated 13 June 1991 filed by the Hospital made mention of its intention to submit the necessary documents of its alleged financial losses (Annex "A". reveals that it (hospital) was not actually losing in its operations. The burden of proving that such a temporary suspension is bona fide falls upon the employer. a copy of the Financial Statements of the Hospital for the years 1989 and 1990. Petitioner could have at least partly met the foregoing requirements by submitting its financial statements or records as proof of its financial crisis.942. leaving the Union without sufficient time to adjust to the sudden and unexpected cessation of the hospital's operations. since the purported financial hemorrhage would definitely have been reflected therein. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. its Balance Sheet reveals a Fund Balance (Retained Earnings) of P3. the Union was not furnished a copy of the notice of temporary suspension. In the light of the undisputed facts narrated above. The determination to cease or suspend operations is a prerogative of management that the State usually does not interfere with. the notice was filed on 14 June 1991 and was made effective the following day or on 15 June 1991. Hospital's position paper). and that said condition would probably be alleviated or improved. much less the opportunity to controvert the same. we are more inclined to sustain the view that the temporary suspension of the hospital's operations (was done) by the hospital. but merely for the purpose of avoiding compliance with our Order dated 13 June 1991. the Hospital never brought the issue of its alleged financial losses necessitating the temporary suspension of its operations.00 for the year 1990 (Annex "G-2" Union's Position Paper dated 4 July 1991). Be that as it may. petitioner's unexplained and continued failure to submit its financial statements could not but raise grave doubts as to the truth of the claimed financial crisis and the real . which the employer has a right to resist." The foregoing excerpt clearly shows that Secretary Torres' visit was not the turning point insofar as his Order was concerned. 159.this case do not warrant a finding that the temporary suspension of the hospital's operations was for a valid or justifiable cause. we cannot give imprimatur to the actuation exhibited herein by the Hospital. In this instance. 791. Until the present. during the CBA negotiation and immediately prior to the closure. Secondly. or its losses abated. the State is bound to intervene.00 in 1990. We are not persuaded. as no business can be required to continue operating at a loss simply to maintain the workers in employment. submitted by the Union.
it being implicitly assumed that once operations are resumed.month suspension of operations on December 16. what is more important.purpose of the suspension of operations. Neither is it acceptable for petitioner to allege that the latest financial statements (for the year 1991) were still being prepared by its accountants and not yet ready for submission. Petitioner was recklessly pushing its luck when it believed that the Secretary could be convinced without first obtaining and examining petitioner's financial statements and the notes thereto. and the figures therein must be interpreted and discussed at length. It is a hornbook rule that employers who contemplate terminating the services of their workers must base their decisions on more than just flimsy excuses. must bear the consequences thereof. We thus hold that the Secretary of Labor and Employment did not act with grave abuse of discretion in finding the temporary suspension unjustified and illegal. Clearly. the respondent Secretary was of the impression that petitioner would operate again after the lapse of the six. The same principle applies in temporary suspension of operations. And as above adverted to. the employer-employee relationship is revived and restored. Petitioner. It would thus be sheer abuse of discretion on our part to compel the hospital to continue its operations and admit the returning workers. that the hospital had actually ceased operations. having wretchedly failed to justify by even the most rudimentary proof its temporary suspension of operations. his means of livelihood. he also ordered the parties to execute a new CBA to govern their relations upon the expiry of the period of suspension and the resumption of normal operations. e. Art. The fact that the conciliator never asked for them is no sufficient excuse for not presenting the same. On the other hand. Rule 1. 286 of the Labor code provides: "The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months x x x shal not terminate employment. It is not enough to merely raise this issue nor to discuss it only in passing. since the financial statements for the prior years 1989 and 1990 would have sufficed. petitioner cites the portion of the assailed Order which reads that: "It must be noted. 1991. as in this case. 1991. As proof thereof. considering that the dismissal of an employee from work involves not only the loss of his position but." We disagree. and so ordered the parties to enter into and formalize a new CBA to govern their relations upon resumption of operations. however. . considering that it involves laying off employees for a period of six months.g. xxx. Book VI of the Omnibus Rules Implementing the Labor Code provides thatthe employer-employee relationship shall be deemed suspended in case of the suspension of operation referred to above." Section 12.. the aforequoted portion of the Order must be understood in the context of the Secretary's finding that the temporary suspension was only for circumventing the return-to-work order. as such was petitioner's duty. Second Issue: New CBA Despite Temporary Suspension? Petitioner alleges that respondent Secretary acted in grave abuse of discretion when he ordered petitioner to enter into a new CBA despite his knowledge that it had actually ceased operations. he thus ordered instead the payment of backwages to the returning workers who were refused admittance by petitioner on June 21. The precarious financial condition must be established by evidence. balance sheets and income statements. but in spite of which he held that he could not order petitioner to continue operations as "this would infringe on its inherent right to manage and conduct its own business affairs".
properly granted the wage increase and imposed the union shop provision. For. it would border on the ridiculous to still try to enforce the October 16. Clearly then. petitioner expressly represented that the suspension was to be for six months only. Considering that after the lapse of the six-month period on December 16. where this Court ruled that: "Under Art. the old one having already expired. with more reason will an invalid and illegal suspension of operations. under the circumstances. Inc. not the legality or illegality of any strike that may have been resorted to in the meantime (Binamira vs. without valid and sufficient cause. OganOccena. While petitioner cannot be forced to abandon its suspension of operations even if said suspension be declared unjustified. the Labor Secretary's authority to resolve a labor dispute within 30 days from the date of assumption of jurisdiction. as already indicated above. xxx xxx xxx In ruling on the legality of the PALEA strike. . We shall delve more into the complete cessation of business when discussing the fourth issue below. Did the Secretary act in excess of jurisdiction in imposing the wage increases and union shop provision on the petitioner? We hold that he did not. In the absence of any other information. 685 ). the Secretary of Labor acted without or in excess of his jurisdiction. 1991 Order and require the parties to negotiate the terms and conditions of employment.jurisdiction over which question pertains to the labor arbiter. Secretary of Labor and Employment. 148 SCRA 677. Using the suspension as an excuse to evade the duty to bargain is further proof of its illegality. Third Issue: Grant of Backwages Is Not An Adjudication on the Legality of the Strike Petitioner charges the respondent Secretary with having gravely abused his discretion in ordering it to pay backwages to the union members because it is tantamount to ruling that the union's strike was legal -. neither can petitioner evade its obligation to bargain with the union. The foregoing premises considered.If a legitimate. the Secretary in the exercise of his powers under Article 263(i) of the Labor Code to decide and resolve labor disputes. petitioner did not resume operations. illegal and invalid. encompasses only the issues in the dispute. and therefore. the employer-employee relationship was merely suspended (and not terminated) for the duration of the temporary suspension. as in this case. petitioner cites Philippine Airlines. In this instance. 263 of the Labor Code. valid and legal suspension of operations does not terminate but merely suspends the employee-employer relationship. the plain and natural presumption will be that petitioner would resume operations after six months. It shows abuse of this option and bad faith on the part of petitioner. it follows that a new CBA will be needed to govern the employment relations of the parties. not affect the employment relationship. And since it refused to bargain. It goes without saying that the said Order directing the parties to enter into a new CBA is already moot and academic. the respondent Secretary cannot be faulted nor considered to have gravely abused his discretion for ordering the parties to enter into a new CBA. 1991. vs. As support. using the cessation of its business as reason therefor. it is clear that there is no basis for petitioner to claim that a new CBA should not be entered into or that collective bargaining should not be conducted during the effectivity of a temporary suspension of operations.
Under Article 263 (g) of the Labor Code. he ruled only on these matters. vs. under Art. the Secretary is authorized to penalize an erring employer who refuses to accept returning employees by ordering such employer to pay backwages. she ordered the immediate return to work of the striking employees in order to restore the conditions of employment prior to the strike..There is merit in PAL's contention that the Labor Secretary erred in declaring the strike valid and in prohibiting PAL from taking retaliatory or disciplinary action against the strikers for the damages suffered by the Airline as a result of the illegal work stoppage. not the illegality of the strike. the law recognizes the same as a just cause for terminating an employment [Art. this Court has 'affirmed the right of an employer to lay off or dismiss employees because of losses in the operation of its business.e. 263 of the Labor Code. when he assumed the office.e. Fourth Issue: Supervening Event Notwithstanding that respondent Secretary did not act with grave abuse of discretion in issuing the challenged Orders." We disagree. Respondent union struck before the Secretary of Labor assumed jurisdiction over the dispute. the grant of backwages was due to the illegality of the temporary suspension. we cannot ignore the supervening event which occurred after December 15. Inc. 283(a) of the Labor Code] and in many instances. When Secretary Confessor assumed jurisdiction over the labor dispute. as claimed by petitioner. but not the company's right to take action against union officers who participated in the illegal strike and committed illegal acts. the respondent Secretary of Labor did not act with grave abuse of discretion in ordering petitioner to pay backwages because it is not an adjudication on the legality of the strike. In fine. lack of work and considerable reduction in the volume of his business. Thus. and was not within the ambit of the jurisdiction conferred upon by him by law." . This Court held in Columbia Development Corporation vs. On the other hand. 35 SCRA 147 and the cases cited therein]. The legality of the strike was not in question as far as Secretary Torres was concerned. The prohibition which the Seretary issued to PAL constitutes an unlawful deprivation of property and denial of due process for it prevents PAL from seeking redress for the huge property losses that it suffered as a result of the union's illegal mass action. xxx xxx xxx The Labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary action against its guilty employees. However. i. for. As pointed out by the Solicitor General. i. 1991. Minister of Labor and Employment that: "Precisely because reverses in a business venture are expected. Business reverses or losses are recognized by law as a just cause for terminating employment. Thus. LVN Pictures. the subsequent permanent cessation of operation of petitioner on account of losses. it is undisputed that petitioner never questioned the legality of the strike.. This is within his jurisdiction and is warranted by his finding as to the invalidity of the temporary suspension. on the legality or illegality of the strike.' [LVN Pictures and Workers Asso. all that the Secretary may enjoin is the holding of the strike. at first glance. the grant of backwages was not only dependent on the legality of the temporary suspension of operations by petitioner but also on the legality of the strike of respondent union. and not. the deadlock and the temporary suspension of operations. His concern was the the labor dispute.. the said case is not in point because in this case the Secretary did not rule on the legality of the strike.
net loss mounted to P3.5 million from the previous year's P7.791.00. 1990 and 1991 cannot be deemed paltry.942. the high risks of continuing operations were enough to make petitioner bail out.180.00 from the previous year. petitioner's external auditors reported that the 1991 financial statements have not yet made any provisions for petitioner's liability resulting from this and other labor disputes. In 1990. The burden of establishing the truth as to these losses or reverses falls upon the employer. it had exhausted its Fund Balance completely. . We should mention that his case is different from Union of Filipino Workers vs. it is necessary that business reverses or losses be serious. signaling serious financial trouble. In such a case. this Court cannot impose upon petitioner the directive to enter into a new CBA with the union for the very simple reason that to do so would be to compel petitioner to continue its business when it had already decided to close shop. Eventually. by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof.00. a staggering decline. When petitioner suspended operations in the second half of 1991." Further. It is beyond cavil then that petitioner suffered serious and actual business reverses. Furthermore.  Consider also the loss of doctors and patients prior to the temporary suspension. And attached to its Reply to Comment were its financial statements for 1991. petitioner had a net profit of P106. management has the final say as to whether it will continue to risk its capital in its business or not. Thus.268. x x x. This means that nothing was left of the entire capital of petitioner. which is why petitioner contends that it is not in any position to resume operations. The Statements of Revenues and Expenses revealed that in 1989. its gross revenues covered only 56% of operating expenses. 670.00.00. its financial troubles resulted in the demise of petitioner as a going concern.8 million. despite the absence of grave abuse of discretion on the part of the respondent Secretary.00. Considering that it had been operating mainly on the revenues it generated.102. financial trouble is reflected in petitioner's financial statements since 1989 and the cessation of operations was total. substantive and procedural requirements are imposed before it can be resorted to.477. the hospital's costs and operating expenses exceeded gross revenues.00. completely wiping out its entire Fund Balance (retained earnings) of P3. It seems that the temporary suspension turned out to have been more costly rather than beneficial. 283.00 despite other income of P203. In both 1989 and 1990.Since this ground can be abused by scheming employers feigning business losses to ease out employees. This is properly its prerogative.159. Petitioner's total assets in 1991 registered a drop of about P2. The decrease in expenses to about half the prior years' was still too small to offset the revenues fore-gone. petitioner sustained a net loss of P200. we cannot read into it any attempt to defeat the rights of its employees under the law. National Labor Relations Commission because in the case at bar. operating losses could not be offset by other income. nor any oppressive and high-handed motives. actual and real.092. -. In 1991. Since there is basis for the permanent closure of the business.The employer may also terminate the employment of any employee due to the x x x cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this title. The losses registered in 1989. In the following years.772. The Labor Code provides that: "Art. and leaving a negative figure of P20. but this was due to other income of P202. Petitioner finally submitted its financial statements for 1990 as an annex to its petition. Closure of establishment and reduction of personnel. and that would be judicial tyranny on our part. which offset losses from operations of P96.
petitioner was able to prove conclusively a supervening event. . that its financial health had deteriorated to such an extent as to justify the complete cessation of its operations. by presenting its later financial statements. in view of the crucial public service they rendered. The assailed Orders. insofar as they grant backwages from June 21. However.e. it nonetheless sustained its permanent closure thereafter. which directives are hereby SET ASIDE for being moot and academic. It is even more sad that.. We would have wanted to see the parties amicably settle their differences and patch things up. On the other hand. it was petitioner s temporary suspension of operations that made inevitable and irreversible (as well as legally tenable) its subsequent permanent closure. the hospital was the best equipped in the locality . and its permanent closure. The Court is grieved by the closure of the petitioner hospital. up to the time of its suspension of operation. To resolve this seeming contradiction. However. petitioner s employees and staff. all that is water under the bridge now. not only to petitioner. i. we repeat: we found no arbitrariness in the ruling of the then Secretary of Labor finding the suspension of operations as unwarranted because petitioner failed to adduce evidence before the conciliator to show that the hospital s financial condition at that time justified such suspension. are AFFIRMED. by reason of such closure. the petition is partially GRANTED. nurses and other hospital workers. 1991. they are MODIFIED insofar as they directed the parties to enter into a new collective bargaining agreement. and there is really not much that this Court can do in the premises and at this time except to decide the instant case on the basis of the legal issues raised. have had to be laid off. including doctors. before us. particularly since. but to the public and especially patients and those in need of medical attention. 1991 until December 15. WHEREFORE. Ironically. SO ORDERED.Epilogue It will be noted that while the Court ruled as improper the temporary suspension of petitioner s operation. and what such closure meant.
Manila. President of Hotel Mabuhay. 2 On same date Syjuco formally turned over the possession of the leased premises to petitioner who actually took possession and occupied the same on May 1. INC. 1987 with the Regional Trial Court of Manila docketed as Civil Case No. RESTAURANT AND ALLIED INDUSTRIES. Private respondent Hotel Mabuhay. A complaint for damages with preliminary injunction and/or temporary restraining order was filed by petitioner on May 7. 1 Mabuhay offered to sell its assets and personal properties in the premises to petitioner to which petitioner agreed. Syjuco offered the said premises for lease to petitioner. Restaurant and Allied Services (NUWHRAIN for short) picketed the leased premises. MARIANO PENANO. an order was issued by public respondent Secretary of Labor assuming jurisdiction over the labor dispute pursuant to Article 263(g) of the Labor Code as amended and in the interim. 82341 December 6. 1987. Nevertheless. due to nonpayment of rentals. Bautista-Lozada for petitioner. HON. employees and guests free access to and egress from said premises. (NUWHRAIN). No. Inc. respondents. DRILON. in his capacity as Secretary of the Department of Labor and Employment. NATIONAL UNION OF WORKERS IN HOTEL. NUWHRAIN maintained their strike on the subject premises but filed an answer to the complaint. 1987 to commence on May 1. A deed of assignment of said assets and personal properties was executed by Mabuhay on April 29.. Carmelita S. Ermita. Inc. 1989 SUNDOWNER DEVELOPMENT CORPORATION. 1987. HOTEL MABUHAY. (Syjuco for short) located at 1430 A. Paterno D.. vs. requiring all striking employees to return to work and for respondent Mabuhay to accept all returning employees pending final determination of the issue of the absorption of the former employees of Mabuhay. (Mabuhay for short. respondent National Union of Workers in Hotel. On the same day. THE CHAPTER OFFICERS AND MEMBERS. the Executive Judge of said court issued a restraining order against respondent NUWHRAIN and its officers and members as prayed for in the petition. HOTEL MABUHAY CHAPTER. Mabuhay offered to amicably settle the case by surrendering the premises to Syjuco and to sell its assets and personal property to any interested party. On May 14.: The principal issue in this case is whether or not the purchaser of the assets of an employer corporation can be considered a successor employer of the latter's employees. The negotiation culminated with the execution of the lease agreement on April 16. Mabini St.) leased the premises belonging to Santiago Syjuco. Inc. Thus. GANCAYCO.G.1992.1987 in favor of petitioner. The . 1987. Menzon Law Office for private respondent NUWHRAIN. However. barricaded the entrance to the leased premises and denied petitioner's officers. 1987 and to expire on April 30. petitioner. On May 4. and MR. FRANKLIN M.R. J. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. petitioner wrote a letter-complaint to Syjuco. 87-40436.
that the order for absorption of the employees of Mabuhay as well as the payment of their backwages is contrary to law. Respondent NUWHRAIN also filed a motion for clarification of the aforesaid order. that the prevailing doctrine that there is no law requiring bona fide purchasers of the assets of an on-going concern to absorb in its employ the employees of the latter should be applied in this case. petitioner in order to commence its operation. without giving due course to the petition." alleging that it was denied due process. that there were serious errors in the findings of fact which would cause grave and irreparable damage to its interest.1988 a motion for reconsideration of the aforesaid order alleging that the theory of implied acceptance and assumption of statutory wrong does not apply in the instant case. respondents NUWHRAIN and Mabuhay whereby the latter paid to respondent NUWHRAIN the sum of P 638.1987 and surrendered the premises to petitioner so that there exists a legal and physical impossibility on its part to comply with the return to work order specifically on absorption. the public respondent issued an order requiring petitioner to absorb the members of the union and to pay backwages from the time it started operations up to the date of the order. 1988.1987. 4 Petitioner filed on January 27. 1987. 1988 and March 8. labor contracts being in personam. On January 20. On June 26. 1987 filed its position paper alleging connivance between Mabuhay and petitioner in selling the assets and closing the hotel to escape its obligations to the employees of Mabuhay and so it prays that petitioner accept the workforce of Mabuhay and pay backwages from April 15. thus binding only between the parties . Hence. this Court. petitioner filed a "Partial Motion for Reconsideration and Position Paper.11. On May 25. On March 23.447. 3 Respondent NUWHRAIN on July 13. 1988.000. signed a tri-partite agreement so the workers may lift their strike. On the other hand. the public respondent denied said motion for reconsideration and motion for clarification for lack of merit. The rule is that unless expressly assumed.parties were also directed to submit their respective position papers within ten (10) days from receipt of the order. the day Mabuhay stopped operation. as well as on questions of law.00 in addition to the first payment in the sum of P 386. On March 8. required respondents to comment thereon within ten (10) days from notice and issued a temporary restraining order enjoining public respondent or his duly authorized representatives from executing and implementing the orders dated January 20. by and among petitioner. This conclusion draws its force from the right of an employer to select his employees and to decide when to engage them . The petition is impressed with merit. Mabuhay submitted its position paper alleging among others that it had sold all its assets and personal properties to petitioner and that there was no sale or transfer of its shares whatsoever and that Mabuhay completely ceased operation effective April 28. 1988.5 A labor contract merely creates an action in personally and does not create any real right which should be respected by third parties. this petition for review by certiorari with prayer for preliminary injunction and/or temporary restraining order filed by petitioner in this Court. 1988. Petitioner presents seven issues for resolution which all revolve about the singular issue of whether or not under the circumstances of this case the petitioner may be compelled to absorb the employees of respondent Mabuhay. for which reason respondent NUWHRAIN agreed to lift the picket .1986 to April 28. 1987. labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise.
Moreover. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between petitioner and Syjuco. with no commitment whatsoever on the part of the THIRD PARTY to hire them in the business that it will operate in the premises formerly occupied by the Hotel Mabuhay. Indeed. . Moreover.500.000. contrary to the claim of the public respondent that the transaction between petitioner and Mabuhay was attended with bad faith. is only to consider them for re-employment in the operation of the business in the same premises. in the deed of assignment that was executed by Mabuhay in favor of petitioner on April 14. 1 987 for and in consideration of P2. It was only when Mabuhay offered to sell its assets and personal properties in the premises to petitioner that they came to deal with each other. It appears that petitioner agreed to purchase said assets of respondent Mabuhay to enable Mabuhay to pay its obligations to its striking employees and to Syjuco. listed . 10 From the foregoing. although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employers of the seller of such assets or enterprise. 6 As a general rule. . " and "in no way involves any assumption or undertaking on the part of Second Party (petitioner) of any debts or liabilities whatsoever of Hotel Mabuhay. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. That. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees it was Syjuco who found petitioner and persuaded petitioner to lease said premises. it is clearly stipulated as follows: 8. and the same can only be restricted by law through the exercise of the police power. The court finds no such duty on the part of petitioner and its failure to notify said employees cannot be an indicium of bad faith. Inc. it is clear that petitioner has no liability whatsoever to the employees of Mabuhay And its responsibility if at all. . the FIRST PARTY shall give a list of its members to the THIRD PARTY that it desires to recommend for employment so that the latter can consider them for employment. in the tripartite agreement that was entered into by petitioner with respondents NUWHRAIN and Mabuhay. the court finds no cogent basis for such contention. immediately after the execution of this Agreement.00. the absorption of the employees of Mabuhay may not be imposed on petitioner. Thus.as protected under our Constitution. Inc. 7 However. it is specifically provided therein that the same is "purely for and in consideration of the sale/transfer and assignment of the personal properties and assets of Hotel Mabuhay. 8 In the case at bar. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. the court does not subscribe to the theory of public respondent that petitioner should have informed NUWHRAIN of its lease of the premises and its purchase of the assets and personal properties of Mabuhay therein so that said employees could have taken steps to protect their interest." 9 The liabilities alluded to in this agreement should be interpreted to mean not only any monetary liability of Mabuhay but any other liability or obligation arising from the operation of its business including its liability to its employees.
enabled Mabuhay to pay its obligations to its employees. 1988 and March 8. Griño-Aquino and Medialdea. . WHEREFORE. It has no controlling interest whatever in respondent Mabuhay. Narvasa. There being no employer-employee relationship between the petitioner and the Mabuhay employees. the petition must fail. Petitioner can not be compelled to absorb the employees of Mabuhay and to pay them backwages. Petitioner and Mabuhay have no privity and are strangers to each other. Petitioner is a corporation entirely different from Mabuhay. The restraining order that this Court issued on March 20. SO ORDERED. by purchasing the assets of respondent Mabuhay in the hotel premises. concur. there can be no continuity of the business operations of the predecessor employer by the successor employer as respondent Mabuhay had not retained control of the business.1988 is hereby made permanent. the petition is GRANTED and the questioned orders of public respondent Secretary of Labor and Employment dated January 20.. What is obvious is that the petitioner. No pronouncement as to costs.Much less is there any evidence that petitioner and respondent Mabuhay are joint tortfeasors as found by public respondent. Cruz. JJ. 1988 are reversed and set aside. While it is true that petitioner is using the leased property for the same type of business as that of respondent Mabuhay.
petitioner. GANCAYCO.G. the court issued a restraining order as prayed for in the petition enjoining the enforcement of the decision dated October 16. who immediately asked private respondent to see her. stepped on his foot and picked up the ice scooper and brandished it against the latter. Later that day the Operations . At about 2:30 P. 1987 setting aside the appealed decision and ordering the reinstatement of private respondent to his former position without loss of seniority and other related benefits and one (1) year backwages without qualification and deduction. Private respondent appealed to the National Labor Relations Commission (NLRC) wherein in due course a decision was rendered on October 16.M. May 20. Thus private respondent filed a complaint against petitioner for unfair labor practice.000. No. Private respondent refused to see Hermosura and it took the security guard to bring him to her. 1984 as a crew member at its Cubao Branch. Delilah C. private respondent slapped Barrameda's cap. 1989 WENPHIL CORPORATION. 1987. Thereafter a decision was rendered by the Labor Arbiter on December 3. 1985. Hence the herein petition for certiorari with preliminary injunction and/or restraining order wherein petitioner alleges that the public respondent NLRC committed a grave abuse of discretion in rendering its decision contrary to the evidence on record. The theory of the petitioner is that on the aforesaid date. on May 20. It was the store manager who issued a report meting out the penalty of suspension on the two until further notice in the following morning. J. respondents. 80587 February 8. NATIONAL LABOR RELATIONS COMMISSION AND ROBERTO MALLARE. 1985. Job Barrameda. illegal suspension and illegal dismissal. Kolimlim who was a management trainee tried to pacify private respondent but he defied her so Kolimlim reported the incident to the assistant manager. the case was submitted for resolution. He thereafter became the assistant head of the Backroom department of the same branch. Private respondent then shouted and uttered profane words instead of making an explanation before her. 1985 private respondent had an altercation with a co-employee.: Once again the dismissal of an employee without affording him due process is brought to the attention of this Court by this petition. 1986 dismissing the complaint for lack of merit. He stated the matter should be settled only by him and Barrameda. Private respondent was hired by petitioner on January 18. On December 2. The following day Kolimlim and Hermosura submitted a report on the incident and recommended the imposition of the appropriate penalties on both. After submitting their respective position papers to the Labor Arbiter and as the hearing could not be conducted due to repeated absence of counsel for respondent. Hermosura.00. vs. as a result of which he and Barrameda were suspended on the following morning and in the afternoon of the same day a memorandum was issued by the Operations Manager advising private respondent of his dismissal from the service in accordance with their Personnel Manual. Marijo B. 1987 of public respondent NLRC upon petitioner posting a bond of P20.R. when private respondent and Barrameda had a misunderstanding about tending the Salad Bar. The notice of dismissal was served on private respondent on May 25.
The contention of petitioner is untenable. The main thrust of the petition is that under the Personnel Manual of petitioner which had been read and understood by private respondent.Manager issued a memorandum advising Barrameda of one (1) week suspension and the dismissal of private respondent from the service. upon the request of the erring employee. The investigation board shall discuss the merits of the case and shall issue a ruling. there shall be convened an investigation board composed of the following 1. 2. He received an official notice of his termination four (4) days later. if he so desires. Indeed said provision of the Personnel Manual of petitioner which may effectively deprive its employees of the right to due process is clearly against the law and hence null and void. that the employer shall afford him ample opportunity to be heard and to defend himself with the assistance of his representative. Petitioner alleges that private respondent not having asked for an investigation he is thus deemed to have waived his right to the same. and 7 of the same rules require that before an employer may dismiss an employee the latter must be given a written notice stating the particular act or omission constituting the grounds thereof. (p. the Labor Code and other related laws. Nevertheless his refusal to explain his side under the circumstances cannot be considered as a waiver of his right to an investigation. he was defiant and showed that he was not interested to avail of an investigation. which shall be final and conclusive. The defiant attitude of private respondent immediately after the incident amounted to insubordination. Petitioner avers that immediately after the incident when private respondent was asked to see Hermosura. 3. private respondent waived his right to the investigation. 5. The incident happened on May 20. The security of tenure of a laborer or employee is enshrined in the Constitution. and that it is only then that the employer may dismiss the employee by . it is provided that "No worker shall be dismissed except for just or authorized cause provided by law and after due process. 1985 and right then and there as afore repeated on the following day private respondent was suspended in the morning and was dismissed from the service in the afternoon. The Parlor Manager or Supervisor on duty when the incident occurred. 6. From the foregoing it appears that an investigation shall only be conducted if the offense committed by the employee is punishable with the penalty higher than suspension of fifteen (15) days and the erring employee requests for an investigation of the incident. Personnel Manual: Emphasis supplied). it states that an erring employee must request for an investigation it does not thereby mean that petitioner is thereby relieved of the duty to conduct an investigation before dismissing private respondent. It is provided therein that INVESTIGATION If the offense is punishable with a penalty higher than suspension for fifteen (15) days. Rule XIV of the Implementing Regulations of the Labor Code. that the employee may answer the allegations within a reasonable period. Although in the Personnel Manual of the petitioner. The General Manager or the Assistant Manager. 1 Under Section 1." Sections 2.
when it appears he was not afforded due process. should not be rewarded with re-employment and back wages. it will demoralize the rank and file if the undeserving. Indeed. it can not justify a ruling that private respondent should be reinstated with back wages as the public respondent NLRC so decreed. which proceeds upon inquiry and renders judgment only after trial. The basic requirement of due process is that which hears before it condemns. 2 The standards of due process in judicial as well as administrative proceedings have long been established. where the private respondent. By the same token. The labor arbiter concluded that the dismissal of private respondent was for just cause. The Court is bound by this finding of the labor arbiter. In its bare minimum due process of law simply means giving notice and opportunity to be heard before judgment is rendered. He has no right to return to his former employer. who appears to be of violent temper. It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. Under the circumstances the dismissal of the private respondent for just cause should be maintained. if not undesirable. private respondent was afforded due process before the labor arbiter wherein the just cause of his dismissal bad been established. remains in the service. If no hearing was had. However. it was the fault of private respondent as his counsel failed to appear at the scheduled hearings. Such dismissal is without prejudice to the right of the employee to contest its validity in the Regional Branch of the NLRC. Indeed. . This is borne by the sworn statements of witnesses. The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment of his wages during the period of his separation until his actual reinstatement but not exceeding three (3) years without qualification or deduction. it is well taken and supported by the records.notifying him of the decision in writing stating clearly the reasons therefor. 4 However. caused trouble during office hours and even defied his superiors as they tried to pacify him. Although belatedly. that when the matter was brought to the labor arbiter he was able to submit his position papers although the hearing cannot proceed due to the non-appearance of his counsel. Petitioner insists that private respondent was afforded due process but he refused to avail of his right to the same. the conclusion of the public respondent NLRC on appeal that private respondent was not afforded due process before he was dismissed is binding on this Court. With such finding. and that the private respondent is guilty of serious misconduct in threatening or coercing a co-employee which is a ground for dismissal under Article 283 of the Labor Code. He was found guilty of grave misconduct and insubordination.employees and supervisors is without merit. 3 The claim of petitioner that a formal investigation was not necessary because the incident which gave rise to the termination of private respondent was witnessed by his co. The failure of petitioner to give private respondent the benefit of a hearing before he was dismissed constitutes an infringement of his constitutional right to due process of law and equal protection of the laws. He presented his position paper as did the petitioner. it would be arbitrary and unfair to order his reinstatement with back wages. although his dismissal was found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe. should be re-examined. it is a matter of fact that when the private respondent filed a complaint against petitioner he was afforded the right to an investigation by the labor arbiter. Thus in the present case.
000. WHEREFORE. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1. This decision is immediately executory. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.However. 1986 dismissing the complaint is revived and affirmed. SO ORDERED. the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. Thus. The dismissal of an employee must be for just or authorized cause and after due process. 5 Petitioner committed an infraction of the second requirement. .00. the petition is GRANTED. The rule is explicit as above discussed. 1987 for the reinstatement with back wages of private respondent is REVERSED AND SET ASIDE.00.000. it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. but with the modification that petitioner is ordered to indemnify private respondent in the amount of P1. and the decision of the labor arbiter dated December 3. The restraining order issued by this Court on December 2. 1987 is hereby made permanent and the bond posted by petitioner is cancelled. The questioned decision of the public respondent NLRC dated October 16.
 Sometime in 1991.] TERESITA A. . J. vs. 1991 for illegal dismissal... Initially hired on October 4.. 1984 on contractual basis. petitioner eventually became a regular employee on April 4. The parties were required to submit their position papers. private respondent decided to phase out its entire security section and engage the services of an independent security agency. January 27. For this reason.In view of the retrenchment program of the company. as a cost-cutting measure.Please secure your clearance from this office. petitioner. underpayment of wages. on the basis of which the Labor Arbiter defined the issues as follows: Whether or not there is a valid ground for the dismissal of the complainant. we hereby reiterate our verbal notice to you of your termination as Security Section Head effective October 11.respondents. [Sgd. 1985. RUBEN SERRANO PRESENT Dear Mr. unfair labor practice.. VILLANUEVA Human Resources Division Manager The loss of his employment prompted petitioner to file a complaint on December 3.[G.. Very truly yours. 1994 and August 26. The facts are as follows: Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend shoplifters and prevent pilferage of merchandise.: This is a petition seeking review of the resolutions.. DECISION MENDOZA.. illegal layoff. 2000] RUBEN SERRANO. No. NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE. it wrote petitioner the following memorandum: October 11. In 1988. he became head of the Security Checkers Section of private respondent. dated March 30... 1991 MR. Serrano. of the National Labor Relations Commission (NLRC) which reversed the decision of the Labor Arbiter and dismissed petitioner Ruben Serrano s complaint for illegal dismissal and denied his motion for reconsideration. . 117040. . 1994.. 1991.R. and nonpayment of salary and overtime pay.
Ordering the Respondent to pay complainant the amount of P7. Petitioner filed a motion for reconsideration. that private respondent failed to accord due process to petitioner. All other claims of the complainant whether monetary or otherwise is hereby dismissed for lack of merit.00/month at the time of his termination but limited to (3) three years... the Labor Arbiter ordered: WHEREFORE. instead.Whether or not complainant is entitled to his monetary claims for underpayment of wages. 1993. On April 30..995.91...020... nonpayment of salaries. He ruled that private respondent failed to establish that it had retrenched its security section to prevent or minimize losses to its business. and proportionate 13th month pay. .. above premises considered. SO ORDERED. (d)..040. This order is immediately executory even pending appeal. the day after petitioner s dismissal.73 and proportionate 13th month pay in the amount of P3. reversed the decision of the Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month pay for every year of service.Ordering the Respondent to immediately reinstate the complainant to his former position as security section head or to a reasonably equivalent supervisorial position in charges of security without loss of seniority rights.Finding the dismissal of the complainant to be illegal and concomitantly. Thereafter. representing 10% attorney s fees based on the total judgment award of P79.Ordering the Respondent to pay complainant unpaid wages in the amount of P2. judgment is hereby decreed: (a).198.00 from the time of his dismissal until reinstatement (computed till promulgation only) based on his monthly salary of P4. (b)... that private respondent had not shown that petitioner and other employees in the security section were so inefficient so as to justify their replacement by a security agency. that private respondent failed to use reasonable standards in selecting employees whose employment would be terminated. the case was heard..30... Accordingly. 13th month pay for 1991 and overtime pay. (c). Private respondent appealed to the NLRC which. or that "cost-saving devices [such as] secret video cameras (to monitor and prevent shoplifting) and secret code tags on the merchandise" could not have been employed. unpaid salary.. private respondent employed a safety and security supervisor with duties and functions similar to those of petitioner. 1994.12.. in its resolution of March 30.959. Respondent is ordered to pay complainant full backwages without qualification or deduction in the amount of P74. Whether or not Respondent is guilty of unfair labor practice... the Labor Arbiter rendered a decision finding petitioner to have been illegally dismissed. privileges and benefits.740... but his motion was denied.
National Labor Relations Commission. It held: In contracting the services of Gemac Machineries. that the rule of "reasonable criteria" in the selection of the employees to be retrenched did not apply because all positions in the security section had been abolished. . And in the absence of any proof that the management abused its discretion or acted in a malicious or arbitrary manner. In case of termination due to the installation of labor-saving devices or redundancy. retrenchment to prevent losses or the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title. the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service. regardless of the reason therefor". the services rendered by the mechanics became redundant and superfluous. whichever is higher. and that the appointment of a safety and security supervisor referred to by petitioner to prove bad faith on private respondent s part was of no moment because the position had long been in existence and was separate from petitioner s position as head of the Security Checkers Section.The employer may also terminate the employment of any employee due to the installation of labor-saving devices. The company merely exercised its business judgment or management prerogative. and therefore properly terminable. . Hence this petition. the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service. 283 provides: Closure of establishment and reduction of personnel. A fraction of at least six (6) months shall be considered as one (1) whole year.The NLRC held that the phase-out of private respondent s security section and the hiring of an independent security agency constituted an exercise by private respondent of "[a] legitimate business decision whose wisdom we do not intend to inquire into and for which we cannot substitute our judgment". that the distinction made by the Labor Arbiter between "retrenchment" and the employment of "cost-saving devices" under Art. the court will not interfere with the exercise of such prerogative. Art. by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. 283 of the Labor Code was insignificant because the company official who wrote the dismissal letter apparently used the term "retrenchment" in its "plain and ordinary sense: to layoff or remove from one s job. Petitioner raises the following issue: IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO REPLACE ITS CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE EMPLOYEES CLASSED UNDER THE LATTER? Petitioner contends that abolition of private respondent s Security Checkers Section and the employment of an independent security agency do not fall under any of the authorized causes for dismissal under Art. whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses. In De Ocampo v. Petitioner Laid Off for Cause Petitioner s contention has no merit. as part of the company s cost-saving program. 283 of the Labor Code. redundancy. this Court upheld the termination of employment of three mechanics in a transportation company and their replacement by a company rendering maintenance and repair services.
 In the case at bar. To be sure. redundancy. Indeed. [While there] should be mutual consultation. Sanctions for Violations of the Notice Requirement Art. The NLRC.00 each as indemnity. his services were terminated. and the question is the appropriate sanction for the violation of petitioner s right. workers in a garment factory were temporarily laid off due to the cancellation of orders and a garment embargo. in abolishing the security section. the Court likewise upheld the termination of employment of water pump tenders and their replacement by independent contractors.e. absent proof that management acted in a malicious or arbitrary manner. Hence.In Asian Alcohol Corporation v. He was thus denied his right to be given written notice before the termination of his employment. the Court will not interfere with the exercise of judgment by an employer. 283 of the Labor Code. petitioner should be given separation pay at the rate of one month pay for every year of service. the . On the same day. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies . 283 also provides that to terminate the employment of an employee for any of the authorized causes the employer must serve "a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. the Court ordered the employer to pay the workers P2. Indeed. as we pointed out in another case. the "[management of a company] cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. 282. National Labor Relations Commission. which is a right guaranteed to employers under the Constitution. The Labor Arbiter found that the workers had been illegally dismissed and ordered the company to pay separation pay and backwages. NLRC." In the case at bar. However. we hold that the termination of petitioner s services was for an authorized cause. Such an assertion is not a sufficient basis for concluding that the termination of petitioner s employment was not a bona fide decision of management to obtain reasonable return from its investment. Accordingly. eventually deference is to be paid to what management decides. we have only the bare assertion of petitioner that. 1991. It ruled that an employer s good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of an independent contractor to replace the services of the terminated employees to promote economy and efficiency." Consequently. . i. found that this was a case of retrenchment due to business losses and ordered the payment of separation pay without backwages.e. on the other hand. . i. as the company did not comply with the 30-day written notice in Art. 283 of the Labor Code. that the phase-out of the security section constituted a "legitimate business decision" is a factual finding of an administrative agency which must be accorded respect and even finality by this Court since nothing can be found in the record which fairly detracts from such finding. although based on any of the just causes under Art. pursuant to Art..000. petitioner was given a notice of termination on October 11. The decision followed the ruling in several cases involving dismissals which. This Court sustained the NLRC s finding. As this Court said: "It is now settled that where the dismissal of one employee is in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process. In Sebuguero v. this is not the first time this question has arisen.. were effected without notice and hearing to the employee as required by the implementing rules. he was not furnished the twin requirements of notice and opportunity to be heard. private respondent s real purpose was to avoid payment to the security checkers of the wage increases provided in the collective bargaining agreement approved in 1990.
It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. The fines imposed for violations of the notice requirement have varied from P1. we once again consider the question of appropriate sanctions for violations of the notice requirement in light of our experience during the last decade or so with the Wenphil doctrine. The shift in doctrine took place in 1989 in Wenphil Corp." The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just cause or the termination of employment is for an authorized cause." On the other hand. Justice Panganiban finds the monetary sanctions "too insignificant. should be re-examined. However. The number of cases involving dismissals without the requisite notice to the employee. when it appears he was not afforded due process. it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Validity of Petitioner s Layoff Not Affected by Lack of Notice . too niggardly. NLRC..dismissal shall be upheld but the employer must be sanctioned for non-compliance with the requirements of. 282). the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. it will demoralize the rank and file if the undeserving.000. Thus. in their view. 283-284) or to give notice and hearing (in the case of dismissals for just causes under Art.000.000.00. . Need for Reexamining the Wenphil Doctrine Today. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.00. the employee concerned should be reinstated and paid backwages. the dismissal or termination is illegal if effected without notice to the employee.. For this reason. pay later" which moneyed employers find more convenient to comply with than the requirement to serve a 30-day written notice (in the case of termination of employment for an authorized cause under Arts.000.00 to P10. Consequently. The dismissal of an employee must be for just or authorized cause and after due process. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1. if not undesirable. this Court said: The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment of his wages during the period of his separation until his actual reinstatement but not exceeding three (3) years without qualification or deduction. although effected for just or authorized causes. although his dismissal was found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment. they regard any dismissal or layoff without the requisite notice to be null and void even though there are just or authorized causes for such dismissal or layoff. due process. Indeed. suggests that the imposition of fine for violation of the notice requirement has not been effective in deterring violations of the notice requirement. The rule is explicit as above discussed. Petitioner committed an infraction of the second requirement.00 to P5. and sometimes even too late.. v.000. Justice Puno says there has in effect been fostered a policy of "dismiss now. remains in the service. or for failure to observe.00 to P2. In announcing the change.
e. he quotes the statement of Chief Justice Concepcion in Vda. however. i." Justice Puno concludes that the dismissal of an employee without notice and hearing. the employee should be reinstated with full back pay. Vda. and judicial proceedings suffering from the same flaw are subject to the same sanction. any statutory provision to the contrary notwithstanding. the termination of his employment should not be considered void but he should simply be paid separation pay as provided in Art. Bocar that "[w]here the denial of the fundamental right of due process is apparent. III. §1 of the Constitution. even if for a just cause. of an attempt on the life of the employer or the latter s family. the remedy is to order the payment to the employee of full backwages from the time of his dismissal until the court finds that the dismissal was for a just cause. Prescinding from this premise. de Cuaycong v. however. On the other hand. This is because his dismissal is ineffectual. can deny due process only under the pain of nullity. violation by the employer of the notice requirement cannot be considered a denial of due process resulting in the nullity of the employee s dismissal or layoff. as provided in Arts. This is plain from the text of Art. a decision rendered in disregard of that right is void for lack of jurisdiction. . We do not agree. 283-284. de Sengbengco that "acts of Congress. 283-284. is a nullity. if an employee is laid off for any of the causes in Arts.We agree with our esteemed colleagues. But. 283 in addition to backwages. Justices Puno and Panganiban. while recognizing the employee s right to notice before he is dismissed or laid off. Such rule was abandoned in Wenphil because it is really unjust to require an employer to keep in his service one who is guilty. on the other hand. for example. 283-284. or for an authorized cause. to the denial of due process by the State. If the Wenphilrule imposing a fine on an employer who is found to have dismissed an employee for cause without prior notice is deemed ineffective in deterring employer violations of the notice requirement.. then the termination of his employment should be considered ineffectual and he should be paid backwages. 282. the remedy is not to declare the dismissal void if there are just or valid grounds for such dismissal or if the termination is for an authorized cause. but the employer did not give him and the DOLE a 30-day written notice of termination in advance. installation of a labor-saving device. or when the employer is precisely retrenching in order to prevent losses. That would be to uphold the right of the employee but deny the right of the employer to dismiss for cause." Violation of Notice Requirement Not a Denial of Due Process The cases cited by both Justices Puno and Panganiban refer. which is not the case here. Justice Puno argues that an employer s failure to comply with the notice requirement constitutes a denial of the employee s right to due process. ." The reason is simple: Only the State has . as well as of the Executive. at the same time acknowledges the right of the employer to dismiss for any of the just causes enumerated in Art. otherwise. even if just or authorized causes exist. liberty. Justice Panganiban quotes from the statement in People v. that we should rethink the sanction of fine for an employer s disregard of the notice requirement. The need is for a rule which. that disregard of this requirement by an employer renders the dismissal or termination of employment null and void. For the same reason. Rather. Hence. his dismissal must be upheld and he should not be reinstated. 282 or to terminate employment for any of the authorized causes mentioned in Arts. as provided in Art. such as the termination of employment under the Labor Code. Such a stance is actually a reversion to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid backwages when it is shown that he has not been given notice and hearing although his dismissal or layoff is later found to be for a just or authorized cause.: "No person shall be deprived of life. There are three reasons why. However. . viz. It does not apply to the exercise of private power. The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. or property without due process of law.
serious misconduct or willful disobedience by the employee of the lawful orders of the employer. the law was amended by R." The . "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. 283 can not be considered a requirement of the Due Process Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. the purpose of which was to give the employer the opportunity to find a replacement or substitute. to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the fact that Art. no notice was required to be given to the employee..A. 6715 on March 2. No. R. But on June 12. 1052. commission of crime against the employer or the latter s immediate family or duly authorized representatives.P. 130 which amended the Labor Code. As Art. liberty. This provision was repealed by Art. was enacted reviving the mesada. 283 had its origin in Art. his act should be void instead of simply making him liable for damages. This was made in the rules issued by the then Minister of Labor and Employment to implement B. The purpose of the Due Process Clause is to ensure that the exercise of this power is consistent with what are considered civilized methods. He says that "statistics in the DOLE will prove that many cases have been won by employees before the grievance committees manned by impartial judges of the company. an employee could be laid off by paying him a mesada equivalent to his salary for one month. 1954. Blg. Otherwise. It cannot be that the former regime denied due process to the employee. Then that is the time we speak of notice and hearing as the essence of procedural due process. 283. 1950. the purpose for the requirement of notice and hearing is not to comply with Due Process Clause of the Constitution. The third reason why the notice requirement under Art. which took effect on August 30. and the employee the equal opportunity to look for another job or source of employment. compliance by the employer with the notice requirement before he dismisses an employee does not foreclose the right of the latter to question the legality of his dismissal. 1957. for there is none. In lieu of notice. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to determine whether economic causes do exist justifying the termination of his employment. This is obviously not the case of termination of employment under Art. This is also the case in termination of employment for a just cause under Art." Indeed.authority to take the life. The time for notice and hearing is at the trial stage.A. or other analogous cases).A. 1787 providing for the giving of advance notice or the payment of compensation at the rate of one-half month for every year of service. The second reason is that notice and hearing are required under the Due Process Clause before the power of organized society are brought to bear upon the individual. And it was still much later when the notice requirement was embodied in the law with the amendment of Art. in case an employee leaves his job without cause and without prior notice to his employer. It was only on September 4. fraud or willful breach of trust of the employer. 1989. 2270 of the Civil Code. there should now likewise be a rule that. No. 302 of the Spanish Code of Commerce of 1882 which gave either party to the employer-employee relationship the right to terminate their relationship by giving notice to the other one month in advance. Even in cases of dismissal under Art.e. Justice Puno disputes this. 282. The purpose for requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against him. No. gross and habitual neglect of duties. The Termination Pay Law was held not to be a substantive law but a regulatory measure. 1981 that notice was required to be given even where the dismissal or termination of an employee was for cause. 277(b) provides. 282 (i. On June 21. Here the employee is not faced with an aspect of the adversary system. or property of the individual. 277(b) by R. Where the termination of employment was for a just cause. otherwise known as the Termination Pay Law. Thus.
however. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. What is more. at . it would ignore the fact that under Art. if it is the employee who fails to give a written notice to the employer that he is leaving the service of the latter. in cases involving the sale of immovable property. 283 of the Labor Code. Indeed. the employee was fully heard in his defense.In cases of regular employment. Others are simply an application of the Justinian precept. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. not to render his act (dismissal or resignation. Under these provisions. Consequently. it appearing that in the NLRC. with respect to Art. Lack of Notice Only Makes Termination Ineffectual Not all notice requirements are requirements of due process. therefore. nominal and moral damages may also be awarded. in Batangas Laguna Tayabas Bus Co. We hold. This is clear from Art. the employee should be reinstated and paid backwages. his summary and arbitrary dismissal amounted to deprivation of his property without due process of law. Court of Appeals. Such is the notice requirement in Arts. the vendor cannot exercise this power even though the vendee defaults in the payment of the price. of the Civil Code in rescinding a contract for the sale of immovable property. only the absence of a just cause for the termination of employment can make the dismissal of an employee illegal. If warranted. that. 285. as Justices Puno and Panganiban do. and observe honesty and good faith toward one s fellowmen. give everyone his due. different because it is established by agreement of the employer and the employees and composed of representatives from both sides. 282-283.grievance machinery is. Thus." But here we are dealing with dismissals and layoffs by employers alone. although a professor was dismissed without a hearing by his university. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. The measure of damages is the amount of wages the employee should have received were it not for the termination of his employment without prior notice. . Some are simply part of a procedure to be followed before a right granted to a party can be exercised. it was held that "Since the right of [an employee] to his labor is in itself a property and that the labor agreement between him and [his employer] is the law between the parties. except by bringing an action in court or giving notice of rescission by means of a notarial demand. therefore. his dismissal for having made homosexual advances on a student was sustained. Araneta University Foundation. embodied in the Civil Code. while the power of a party to rescind a contract is implied in reciprocal obligations. which Justice Puno cites. under the Labor Code. that even if the termination is for a just or authorized cause the employee concerned should be reinstated and paid backwages would be to amend Art. to act with justice. and the vendee can make payment even after the due date since no valid notice of rescission has been given. It is similar to the failure to observe the provisions of Art. v. Accordingly in Montemayor v. 279 which provides: Security of Tenure. as the case may be) void. without the intervention of any grievance machinery. The consequence of the failure either of the employer or the employee to live up to this precept is to make him liable in damages. 1191. the employer s failure to comply with the notice requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination of employment which makes the termination of employment merely ineffectual. inclusive of allowances. 1592. That is why. a notice of rescission given in the letter of an attorney has no legal effect. To contend. nonetheless. 279 by adding another ground for considering a dismissal illegal. in relation to Art. only if the termination of employment is not for any of the causes provided by law is it illegal and.
he must be granted separation pay in accordance with Art. who is otherwise guilty of. not because there was a denial of due process. A fraction of at least six months shall be considered one (1) whole year." The Constitution bids the State to "afford full protection to labor. For not giving notice and hearing before dismissing an employee. and provides incentives to needed investment." And it is oppression to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not economically in his interest to do so. Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal The refusal to look beyond the validity of the initial action taken by the employer to terminate employment either for an authorized or just cause can result in an injustice to the employer. theft. the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service. but because the dismissal was without cause. The sanction is not the payment alone of nominal damages as Justice Vitug contends. then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. v. NLRC." That would be a misapplication of this noble phrase originally from Professor Thomas Reed Powell of the Harvard Law School. to wit: In case of termination due to the installation of labor-saving devices or redundancy. an employer will be forced to keep in his employ such guilty employee." But so does it declare that it "recognizes the indispensable role of the private sector. say. his failure to comply with the legal requirement does not result in making his resignation void but only in making him liable for damages. In sum." But it is equally true that "the law. or even of an attempt against the life of the employer. . the appropriate sanction for the failure to give notice is the payment of backwages for the period when the employee is considered not to have been effectively dismissed or his employment terminated. 283. Instead. whichever is higher.least one month in advance. therefore. in protecting the rights of the laborer. 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. as found by the Court. therefore. in support of his view that an illegal dismissal results not only from want of legal cause but also from the failure to observe "due process. authorizes neither oppression nor self-destruction of the employer. The dismissal was. was not proven. 283. the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one month for every year of service. encourages private enterprise. Justice Panganiban cites Pepsi-Cola Bottling Co. it is shown that the termination of employment was due to an authorized cause. which would result from the adoption of the theory of the minority cannot simply be explained by invoking President Ramon Magsaysay s motto that "he who has less in life should have more in law. whichever is higher." The PepsiCola case actually involved a dismissal for an alleged loss of trust and confidence which. we hold that if in proceedings for reinstatement under Art. illegal. This is unjust. The statement that the failure of management to comply with the notice requirement "taints the dismissal with illegality" was merely a dictum thrown in as additional grounds for holding the dismissal to be illegal. Given the nature of the violation. It is true the Constitution regards labor as "a primary social economic force. This disparity in legal treatment.
282. 282. backwages. On the other hand. he must be paid backwages from the time his employment was terminated until it is determined that the termination of employment is for a just cause because the failure to hear him before he is dismissed renders the termination of his employment without legal effect. Inc. his unpaid salary. SO ORDERED. and his proportionate 13th month pay and. whether he is reinstated or only granted separation pay. the petition is GRANTED and the resolution of the National Labor Relations Commission is MODIFIED by ordering private respondent Isetann Department Store. if it is shown that the employee was dismissed for any of the just causes mentioned in said Art. 1991 up to the time the decision herein becomes final. WHEREFORE. .If the employee s separation is without cause. in accordance with that article. and other monetary awards to petitioner. instead of being given separation pay. In either case. he should not be reinstated. For this purpose. then. full backwages from the time his employment was terminated on October 11. he should be paid full backwages if he has been laid off without written notice at least 30 days in advance. this case is REMANDED to the Labor Arbiter for computation of the separation pay. with respect to dismissals for cause under Art. to pay petitioner separation pay equivalent to one (1) month pay for every year of service. he should be reinstated. in addition. However.
1999 when they were dismissed for abandonment of work.EN BANC JENNY M. JJ. Tinga. SP No. Jr. Carpio. modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. AGABON and VIRGILIO C. Chico-Nazario. C. Quisumbing. Accordingly. Inc. G.. INC. and Garcia. premises considered. RIVIERA HOME IMPROVEMENTS.: This petition for review seeks to reverse the decision of the Court of Appeals dated January 23.J. Promulgated: November 17.R. in CA-G. Sandoval-Gutierrez. 2003. Austria-Martinez. No. AGABON. respondent is hereby ordered to pay them their backwages up to November 29. 023442-00. We find the termination of the complainants illegal. J.. Respondents. the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims.. and VICENTE ANGELES. Callejo. The dispositive portion of the decision states: WHEREFORE. Private respondent Riviera Home Improvements. . 63017.R. Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28. 1999 in the sum of: . Corona.versus - NATIONAL LABOR RELATIONS COMMISSION (NLRC). 1999. Puno. Panganiban. 2004 x ---------------------------------------------------------------------------------------. Sr. Carpio-Morales. Ynares-Santiago. 1992 until February 23. Azcuna.x DECISION YNARES-SANTIAGO. is engaged in the business of selling and installing ornamental and construction materials. 158693 Present: Davide. Petitioners. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2.
2. 1999. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence. and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123. Nicolas. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996. The dispositive portion of the decision reads: WHEREFORE. and 1998. Jenny M. NCR. Hence. Upon denial of their motion for reconsideration. On appeal. as well as their service incentive leave pay for said years.1.150. Agabon Virgilio C. 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabon s 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2.93) Pesos for Jenny Agabon. in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29. Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a pakyaw basis when they reported for duty on February . Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996.93 56. the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work.00) Pesos. SO ORDERED. 231. and to pay the balance of petitioner Virgilio Agabon s 13th month pay for 1998 in the amount of P2. 231.00. as per attached computation of Julieta C.150.828. 1997.93) Pesos for Virgilio Agabon. OIC. this petition for review on the sole issue of whether petitioners were illegally dismissed. the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioner s money claims. and were not entitled to backwages and separation pay. Agabon - P56. or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121.678.93 and. Research and Computation Unit. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. petitioners filed a petition for certiorari with the Court of Appeals. SO ORDERED.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.000 square meters of cornice installation work. if the factual findings of the NLRC and the Labor Arbiter are conflicting. Accordingly. 1999. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing. and (e) other causes analogous to the foregoing. petitioners stopped reporting for work and filed the illegal dismissal case. Petitioners also demanded for an increase in their wage to P280. When this was not granted. It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. (b) gross and habitual neglect by the employee of his duties. the Court of Appeals. To dismiss an employee. maintained that petitioners were not dismissed but had abandoned their work. For a valid finding of abandonment. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. However. ruled that petitioners dismissal was for a just cause. petitioners did not report for work because they had subcontracted to perform installation work for another company. the reviewing court may delve into the records and examine for itself the questioned findings. (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative. It is a form of neglect of duty. the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter s representative in connection with the employee s work. private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. after a careful review of the facts. hence.00 per day. as in this case. However. on the other hand. Private respondent s manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40. these two factors should be present: (1) the failure to . In fact. They had abandoned their employment and were already working for another employer. (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative. Private respondent.23. a just cause for termination of employment by the employer. This is especially so when such findings were affirmed by the Court of Appeals.
for the purpose of looking for a job elsewhere. This was not the first time they did this. we now determine if the procedures for dismissal were observed. is considered to have abandoned his job. we held that an employee who deliberately absented from work without leave or permission from his employer. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. The procedure for terminating an employee is found in Book VI. Clave.report for work or absence without valid or justifiable reason. Private respondent at that time warned petitioners that they would be dismissed if this happened again. In February 1999. We should apply that rule with more reason here where petitioners were absent because they were already working in another company. In January 1996. observance of the procedural requirements of notice and hearing in the termination of employment. with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. In Sandoval Shipyard v. petitioners were frequently absent having subcontracted for an installation work for another company. On the other hand. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him. the law also recognizes the right of the employer to expect from its workers not only good performance. Rule I. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. Section 2(d) of the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of notice. they did not report for work because they were working for another company. In all cases of termination of employment. The law imposes many obligations on the employer such as providing just compensation to workers. After establishing that the terminations were for a just and valid cause. For termination of employment based on just causes as defined in Article 282 of the Code: . but also good conduct and loyalty. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. and (2) a clear intention to sever employeremployee relationship. the following standards of due process shall be substantially observed: I. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. adequate work and diligence.
In the first situation. is given opportunity to respond to the charge. and (2) if the dismissal is based on authorized causes under Articles 283 and 284. When the termination of employment is declared illegal. If reinstatement is no longer possible where the dismissal was unjust.(a) A written notice served on the employee specifying the ground or grounds for termination. and (c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances. the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. (3) the dismissal is without just or authorized cause and there was no due process. (1) if the dismissal is based on a just cause under Article 282. (2) the dismissal is without just or authorized cause but due process was observed. for an authorized cause under Article 283. present his evidence or rebut the evidence presented against him. the dismissal is undoubtedly valid and the employer will not suffer any liability. with the assistance of counsel if the employee so desires. the foregoing notices shall be served on the employee s last known address. the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. . grounds have been established to justify his termination. or for health reasons under Article 284. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code. Procedurally. and giving to said employee reasonable opportunity within which to explain his side. In case of termination. a notice of the decision to dismiss. and (4) the dismissal is for just or authorized cause but due process was not observed. separation pay may be granted. A termination for an authorized cause requires payment of separation pay. reinstatement and full backwages are mandated under Article 279. (b) A hearing or conference during which the employee concerned. and due process was observed.
The employee had a violent temper and caused trouble during office hours. v. Prior to 1989. Thus. He has no right to return to his former employment. Unfortunately for the private respondent. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. however. Petitioner committed an infraction of the second requirement. this is not a valid excuse because the law mandates the twin notice requirements to the employee s last known address. Private respondent.In the second and third situations where the dismissals are illegal. the employer should be held liable for noncompliance with the procedural requirements of due process. a just ground for termination under Article 282. although not given any notice and hearing. However. A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National Labor Relations Commission. We concluded that reinstating the employee and awarding backwages may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe.  We further held that: Under the circumstances. the rule was that a dismissal or termination is illegal if the employee was not given any notice. the dismissal of the private respondent for just cause should be maintained. National Labor Relations Commission. inclusive of allowances. The rule is explicit as above discussed. defying superiors who tried to pacify him. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. The dismissal of an employee must be for just or authorized cause and after due process. Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. In the fourth situation. the dismissal should be upheld. was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination. Thus. However. did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. While the procedural infirmity cannot be cured. it should not invalidate the dismissal. it should be held liable for noncompliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. In the 1989 case ofWenphil Corp. the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. we reversed this long-standing rule and held that the dismissed employee. it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from .
On January 27. Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. the rule on the extent of the sanction was changed.employment. that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states: ART.00. This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. inclusive of allowances. To be sure. Due process is that . the Due Process Clause in Article III. This became known as the Wenphil or Belated Due Process Rule. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine. We held that the violation by the employer of the notice requirement in termination for just or authorized causes was not a denial of due process that will nullify the termination. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. In cases of regular employment. Payment of backwages and other benefits. the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1. Hence. We believe. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. However. Security of Tenure. however. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.000. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. in Serrano. Serrano was confronting the practice of employers to dismiss now and pay later by imposing full backwages. including reinstatement. is justified only if the employee was unjustly dismissed. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. 2000. the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. 279. The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement.
Rule I. as amended by Department Order Nos. the employer must be deemed to have opted or. Procedural due process requirements for dismissal are found in the Implementing Rules of P. like Constitutional due process. in his separate opinion in MGG Marine Services. the dismissal was for a just and valid cause but the employee was not accorded due process. it would not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. 9 and 10. Due process under the Labor Code. i. In Sebuguero v.which comports with the deepest notions of what is fair and right and just. Constitutional due process protects the individual from the government and assures him of his rights in criminal. while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. however. accordingly. did not entitle the employee to reinstatement. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to be accorded to the employee by the employer. National Labor Relations Commission. nominal damages to the employee. It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights.. 442. albeit without due process.e. Mr. Where there is just cause for dismissal but due process has not been properly observed by an employer. Vitug. 2. damages and attorney s fees.e. i.. In Nath v. The sanction should be in the nature of indemnification or penalty. peculiar circumstances might obtain in certain situations where to undertake the above steps would be no more than a useless formality and where. should be made liable. Sec. in any case. v. the valid and authorized causes of employment termination under the Labor Code. In failing. it was ruled that even if the employee was not given due process. we believe that in cases involving dismissals for cause but without observance of the twin . in lieu of separation pay. for the payment of separation pay. The dismissal being for just cause. stated: C. the failure did not operate to eradicate the just causes for dismissal. it would not be imprudent to apply the res ipsa loquiturrule and award. After carefully analyzing the consequences of the divergent doctrines in the law on employment termination. Therefore statutory due process should be differentiated from failure to comply withconstitutional due process. to comply with the procedure prescribed by law in terminating the services of the employee. National Labor Relations Commission. and procedural. backwages. civil or administrative proceedings. Justice Jose C.which opinion he reiterated in Serrano. the manner of dismissal. otherwise known as the Labor Code of the Philippines in Book VI.D. The dismissal was upheld by the Court but the employer was sanctioned. National Labor Relations Commission. x x x. Nevertheless. Breaches of these due processrequirements violate the Labor Code. as amended. has two aspects: substantive. and depends on the facts of each case and the gravity of the omission committed by the employer. Inc.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. It has to allow for changing times and circumstances. who has fled and cannot be found. The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences. should be used only to correct an injustice. must be stiffer than that imposed in Wenphil. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. abandonment. Laurel observed. this Court would be able to achieve a fair result by dispensing justice not just to employees. an employer should not be compelled to pay employees for work not actually performed and in fact abandoned. or where serious business losses demand that operations be ceased in less than a month. and of bringing about the greatest good to the greatest number. and quiet of all persons. Social justice is not based on rigid formulas set in stone. i. As the eminent Justice Jose P. This would encourage frivolous suits.e. social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life. . Serrano and related cases. as in this case.requirements of notice and hearing.  This is not to say that the Court was wrong when it ruled the way it did in Wenphil. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right. consistent with the fundamental and paramount objective of the state of promoting the health.. but to employers as well. Social justice. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. would undoubtedly result in a valid dismissal. Certainly. however. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. By doing so. the petitioners committed a grave offense. if the requirements of due process were complied with. the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. It could also discourage investments that can generate employment in the local economy. Let us take for example a case where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal. Such sanctions. comfort. which. where even the most notorious violators of company policy are rewarded by invoking due process. Invalidating the dismissal would not serve public interest. It must be stressed that in the present case. as the term suggests.
hence. But never is it justified to give preference to the poor simply because they are poor. The Court. nominal damages is adjudicated in order that a right of the plaintiff. we deem it proper to fix it at P30. which we sought to deter in the Serrano ruling. or render it illegal.50. which has been violated or invaded by the defendant.000. We believe this form of damages would serve to deter employers from future violations of the statutory due .Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labormanagement relations and dispense justice with an even hand in every case: We have repeatedly stressed that social justice or any justice for that matter is for the deserving. As interdependent and indispensable partners in nation-building. As enunciated by this Court in Viernes v. National Labor Relations Commission. whether he be a millionaire in his mansion or a pauper in his hovel. in effecting such dismissal. Justice in every case should only be for the deserving party. the need to weigh and balance the rights and welfare of both the employee and employer. after considering the circumstances therein. or reject the rich simply because they are rich. an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if. taking into special consideration the gravity of the due process violation of the employer. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now. labor and management need each other to foster productivity and economic growth.00. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. as in the instant case. the employer should indemnify the employee for the violation of his statutory rights. as management has rights that should be fully respected and enforced by this Court. However. Considering the prevailing circumstances in the case at bar. This indemnity is intended not to penalize the employer but to vindicate or recognize the employee s right to statutory due process which was violated by the employer. which was equivalent to the employee s one month salary. in case of reasonable doubt.590. Under the Civil Code. fixed the indemnity at P2. may be vindicated or recognized. for justice must always be served for the poor and the rich alike. pay later. the employer fails to comply with the requirements of due process. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor. The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. National Labor Relations Commissions. The amount of such damages is addressed to the sound discretion of the court. the lack of statutory due process should not nullify the dismissal. taking into account the relevant circumstances. It is true that. we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case. Where the dismissal is for a just cause. according to the mandate of the law. or ineffectual. as ruled in Reta v.
We are not persuaded. In the case at bar.process rights of employees. The lack of authority to deduct is further bolstered by the . task. as determined by the Secretary of Labor. of board. The reason for the rule is that the pertinent personnel files. to wit: th (f) Wage paid to any employee shall mean the remuneration or earnings. the general rule is that the burden rests on the employer to prove payment. lodging. capable of being expressed in terms of money whether fixed or ascertained on a time. The evident intention of Presidential Decree No. however designated. remittances and other similar documents which will show that overtime. it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. or commission basis. rather than on the employee to prove non-payment. or for services rendered or to be rendered and includes the fair and reasonable value. piece . payrolls. Even where the employee must allege non-payment. it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. we find the same to be unauthorized. the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code. one who pleads payment has the burden of proving it. At the very least. or other facilities customarily furnished by the employer to the employee from which an employer is prohibited under Article 113 of the same Code from making any deductions without the employee s knowledge and consent. service incentive leave and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer. Private respondent is liable for petitioners holiday pay. private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon s 13th month pay was authorized by the latter. other than being self-serving. Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon s 13 month pay. But it did not. service incentive leave pay and 13th month pay. do not constitute proof of payment. Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay. As a general rule. Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday pay. 851 is to grant an additional income in the form of the 13thmonth pay to employees not already receiving the same so as to further protect the level of real wages from the ravages of world-wide inflation. if private respondent indeed paid petitioners holiday pay and service incentive leave pay. Consequently. as additional income. In the instant case. it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed. We affirm the ruling of the appellate court on petitioners money claims. service incentive leave pay and 13th month pay without deductions. or other method of calculating the same. records. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. differentials.  Clearly.
R. in view of the foregoing.00 and the balance of Virgilio Agabon s thirteenth month pay for 1998 in the amount of P2. is further ORDERED to pay each of the petitioners the amount of P30.150. The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998.00 as nominal damages for non-compliance with statutory due process. the petition is DENIED.150. The decision of the Court of Appeals dated January 23.00. SO ORDERED.000. . Inc.00 is AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements.255. No costs. in CA-G. SP No. 63017.520.255.520.00 and the balance of Virgilio Agabon s thirteenth month pay for 1998 in the amount of P2. in the amount of P6. service incentive leave pay for the same period in the amount of P3. WHEREFORE. finding that petitioners Jenny and Virgilio Agabon abandoned their work. 2003.fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998.00. service incentive leave pay for the same period in the amount of P3.00. in the amount of P6.
-x DECISION QUISUMBING... 2002... 1992.. 2006 x .. G...000 from another seaman.. as well as the Resolution dated March 11...R. seaman Marcial Tanoy returned to the country bringing with him US$1.F.... Tanoy gave the ..... J.. On May 27.F.. and VELASCO.. it hired respondent Renato Zialcita as a clerk in its Crewing Department.. On May 15.. Sharp & Co. 1993. SHARP & CO. 1989.. Petitioner C.. Petitioner. SP No.. dismissing its petition for certiorari against the National Labor Relations Commission. RENATO ZIALCITA.. JJ..versus CARPIO MORALES.. JR. Chairperson.. Promulgated: July 17... Inc....R... TINGA. of the Court of Appeals in CA-G......: The petitioner seeks the reversal of the Decision dated December 12. No..* . INC.C... The petitioner alleged that on May 18. denying its motion for reconsideration. 2003. Fernando Guerrero.... deploys Filipino seamen to foreign ship owners. 62578.. On February 17. CARPIO.. it promoted him as Assistant Crewing Manager and was tasked to handle the Texaco Marine Account and process shipping papers of the petitioner s seamen... 1993. 157619 Present: QUISUMBING.** Respondent. J..
to reinstate the complainant to his former position or equivalent position of equal rank with full backwages including benefits and other privileges from his dismissal up to the time this decision is rendered which.money to respondent Zialcita. already amounts to P217[. Tanoy returned and begged him to accept the money since he was leaving for the Visayas and Guerrero s wife would pick it up the following day. and on June 23.00. claims and damages before the Arbitration Branch of the National Labor Relations Commission (NLRC). 1993. Respondent was served with a notice giving him seventy-two hours to respond to the Guerreros complaint. a statement/complaint against him. However. much less acceptable. 1993. He gave them the US$800 and promised to return the US$200 on July 2. The respondent also issued a promissory note on the US$200 balance due on July 2. This time. He added that on June 25. Paquito Apolonio. the respondent acknowledged he had the money but could not give it to them then. The respondent then brought back the money to his office and placed it inside his drawer. he informed them that he did not have the money. the Guerreros went to his office but he advised them to come back since the money was in his house. but he refused to accept the money due to the petitioner s policy against unauthorized handling of remittances from its seamen. 1993..F. 1993. judgment is hereby rendered ordering respondent C. 1993. . 1996. Complainant is directed to report to this Arbitration Branch for the implementation of the reinstatement aspect by the Sheriff.*** who immediately paid the deficiency. 1993. the respondent denied he had it. According to respondent. Guerrero s wife did not come so he brought the money home. SO ORDERED. Shar[p] and Co. the NLRC through Labor Arbiter Sampang held: WHEREFORE. Inc. and placed on preventive suspension immediately. When the day came. 1993. he reimbursed the petitioner the balance of US$200. the petitioner  Thus. 1993. the petitioner s Senior Crewing Manager. Respondent averred that Tanoy had approached him on May 28. Under the date July 2. On July 2. respondent filed a complaint for illegal dismissal with money dismissed Zialcita on July 6. 1993. he discovered that US$200 was missing. the Guerreros came back together with Tanoy. On June 29. 1993. 1993. as of 21 February 1996.. When the Guerreros returned on June 29. On June 25. 1993. when Guerrero s father and sister came to the petitioner s office to get the money. On February 22. the respondent submitted his reply. On June 14. he returned US$800 to Guerrero s father who issued a receipt. the Guerreros reported the matter to the Senior Crewing Manager. The respondent later learned that the Guerreros submitted to Paquito Apolonio. when the Guerreros went to the petitioner s office. Not finding the explanation credible.]350.
1996. since the petitioner failed to show what sanction is imposed in accordance with its policies for the cited violation. the charge of gross misconduct against him would fail. . It will be noted that Tanoy and his wife failed to testify regarding their allegations. On appeal. Yet. all the foregoing premises being considered. the NLRC reversed the Arbiter s decision: WHEREFORE. the NLRC vacated the decision on the ground that the case was decided prematurely without affording the petitioner the opportunity to present rebuttal evidence. 1998 is hereby SET ASIDE. 1996 is reinstated with modification in that a penalty of one (1) month suspension is imposed upon complainant. and the petition DISMISSED. The appellate court noted that the only evidence on record that the respondent received the money on May 27. the Court of Appeals affirmed the NLRC: IN VIEW OF THE FOREGOING. the appellate court affirmed that the respondent indeed received the money. SO ORDERED. 1993. 1993. SO ORDERED. 1993 was Tanoy s affidavit and his wife s letter datedJune 18. the Decision dated September 14.On October 30. 1993. to wit: WHEREFORE. he would be guilty of gross misconduct for giving the Guerreros a run-around on June 14. the assailed decision of the NLRC is AFFIRMED. the Labor Arbiter rendered a Decision on September 14. The decision of Labor Arbiter Sampang dated February 22. Upon remand. 2000. Nevertheless. SO ORDERED. But if he received it only on June 23. 1996 is AFFIRMED. The appellate court sustained the NLRC finding that the date when the respondent received the money from Tanoy was pivotal. judgment is hereby rendered dismissing the complaint for lack of merit. these are insufficient to overcome the respondent s testimony that he received the money only on June 23. The rest of the Decision dated February 22. the appellate court upheld the NLRC ruling that the respondent should be reinstated and punished only with one (1) month suspension. 1998. 1993 informing the Guerreros that the money was with the respondent already. On September 29. 1993. premises considered. If he received it on May 27. However.
Hence.F. sinabi niya sa akin na hindi sila tumatanggap ng padalang pera dahil marami na ang nawawala. . Sharp at sinabi ko [kay] Rene Zialcita tungkol sa padala ni Mr. If he received it on May 27. We have examined the affidavit carefully and found that Tanoy failed to allege the specific date when he gave the money to the respondent. this petition where the petitioner alleges that the appellate court erred: I [IN GIVING] CREDENCE ON THE FINDINGS OF THE NLRC THAT THE AFFIDAVIT EXECUTED BY MARCIAL TANOY CANNOT BE GIVEN WEIGHT ON THE GROUND THAT HE WAS NOT SUBJECTED TO CROSS-EXAMINATION AND THAT THE SAME IS SELFSERVING. If he received it only on June 23. Be that as it may. the petitioner contends that Tanoy s affidavit should be given probative value although he was not presented as witness and cross-examined. We agree. the charge of gross misconduct against him would fail. pumunta ako sa opisina ng C. he would be guilty of gross misconduct for giving the Guerreros a run-around on June 14. Tanoy s affidavit is still insufficient to establish that the respondent was guilty of gross misconduct. Nang lumapit naman ako sa babaeng tinuro ni Zialcita. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. NOTWITHSTANDING THAT THE PRESENT [PROCEEDING] IS A LABOR CASE. In labor cases the rules of evidence prevailing in courts of law or equity are not always controlling. Sinabihan ako ni Zialcita na dalhin ang pera sa mga babae sa likod ng desk niya dahil sila ang tumatanggap ng mga perang padala ng mga seamen. Trial-type hearings are not required in labor cases and these may be decided on verified position papers. Both the NLRC and the appellate court opined that the date when the respondent received the money from Tanoy was pivotal. Nang dumating ako sa Maynila. to wit: xxxx 5. with supporting documents and their affidavits. 6. the issues are: (1) Should Tanoy s affidavit be given credence although he was not cross-examined? and (2) Is there just cause to dismiss respondent? On the first issue. II IN AFFIRMING THE RULING OF THE NLRC WHEN THE EVIDENCE ON RECORD SHOWS THAT THERE IS JUST CAUSE FOR THE DISMISSAL OF RESPONDENT. In essence. It is sufficient that the documents submitted by the parties have a bearing on the issue at hand and support the positions taken by them. Guerrero.
Hindi ko na siya pinapirma ng resibo dahil baka mainsulto siya. bilangin mo muna sa harapan ko .) Thus. Further. sinara ko uli ang sobre. O sige. or out of proportion. heedlessly or inadvertently. 8. There is no definite showing of what delicate matters . A breach is willful if it is done intentionally. After considering the records. Ginawa ko naman ito. Other than processing the shipping papers of the petitioner s seamen. 1993. the petitioner argues that the respondent s violation of its company policy warranted his dismissal from the service under Article 282(c) of the Labor Code which governs termination of employment by reason of loss of confidence. Pagkatapos sinabi niya. we found insufficient reason to dismiss the respondent. The petitioner merely alleged that the respondent occupied a sensitive position and dealt with both the principal and the seamen. It is incommensurate. respondent was remiss in his duties when he received the money. 1993. imbued with trust and confidence. Nag-isip muna siya. Bumalik ako kay Zialcita at sinabi ko na ang pera ay naka. It must be premised on the fact that the employee concerned is invested with delicate matters. the act complained of must be workrelated and shows that the employee concerned is unfit to continue working for the employer. whims. at binigay ko ito sa kanya. To be sure. if any. For there is no indubitable proof that as of June 14. to the offense committed. dito na muna sa akin iyan. and failed to produce the entire amount when it was finally claimed. the NLRC and the appellate court properly ruled that the respondent was not guilty of gross misconduct. at ako ay tagadala lamang nito. especially in the absence of any malicious intent or fraud on the respondent s part. As Assistant Crewing Manager. x x x x (Emphasis supplied. caprices or suspicion. however. siya na ang bahalang magpadala ng telegrama sa kanyang kapatid o magulang. it was not shown that he handled company property and assets. have been entrusted to him by petitioner. as distinguished from an act done carelessly. It must rest on substantial grounds and not on the employer s arbitrariness. However. such as the handling or care and protection of the property and assets of the employer. Also. knowingly and purposely. loss of trust and confidence must be based on a willful breach of trust and founded on clearly established facts. On the second issue. To be a valid ground for dismissal. the respondent occupied a position of responsibility. thoughtlessly. he already had the money.7. there has been no allegation of any . Pagkatapos kong bilangin. without justifiable excuse. failed to turn it over to the proper custodians per petitioner s Memorandum dated February 24. we disagree that dismissal is the proper sanction.care of sa kanya. Ilan ba iyan. Sinabi ko rin sa kanya na ayon kay Guerrero.
is the proper sanction against respondent under the circumstances of this case. as in this case. of the Court of Appeals in CA-G. when the breach of trust or loss of confidence alleged is not borne by clearly established facts. 2002. Costs against petitioner. such dismissal on the cited grounds cannot be allowed. are AFFIRMED. the petition is DENIED. SP No. We agree with the NLRC and the CA that one month suspension. . and the Resolution dated March 11. Because of its subjective nature. It bears stressing that in termination cases. and not dismissal.R. 2003. this Court has been strictly scrutinizing the allegations and the evidence in cases of dismissal based on loss of trust and confidence because they can easily be concocted by an abusive employer. The assailed Decision dated December 12. For instance. The fact that respondent is a managerial employee does not by itself exclude him from the protection of the constitutional guarantee of security of tenure. Thus. a condemnation of dishonesty and disloyalty cannot arise from suspicions spawned by speculative inferences. there is no showing that he had been previously found guilty of accepting remittances and misappropriating them. the employer bears the onus of proving that the dismissal was for just cause.aggravating circumstance. 62578. WHEREFORE. Indeed. SO ORDERED.
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