Vous êtes sur la page 1sur 153

EN BANC

[G.R. No. 112546. March 13, 1996]

NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ANTONIO M. VILLANUEVA and WILFREDO GUILLEMA, respondents. DECISION
PANGANIBAN, J.:

Is a company which is forced by huge business losses to close its business, legally required to pay separation benefits to its employees at the time of its closure in an amount equivalent to the separation pay paid to those who were separated when the company was still a going concern? This is the main question brought before this Court in this petition for certiorari under Rule 65 of the Revised Rules of Court, which seeks to reverse and set aside the Resolutions dated July 29, 1993 [1] and September 27, 1993[2] of the National Labor Relations Commision[3] (NLRC) in NLRC-CA No. M-00139593. The Resolution dated July 29, 1993 affirmed in tow the decision of the Labor Arbiter in RAB-1 1-08-00672-92 and RAB- 11-08-00713-92 ordering petitioners to pay the complainants therein certain monetary claims. The Resolution dated September 27, 1993 denied the motion for reconsideration of the said July 29, 1993 Resolution.

The Facts Petitioner North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset Privatization Trust (APT). As of December 31, 1990 the national government held 81.8% of the common stock and 100% of the preferred stock of said company. [4]

Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the companys closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos (P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31, 1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos, as shown by its financial statements audited by the Commission on Audit. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 hours travel time by public transportation; this arrangement lasted from 1981 up to 1990. Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271 other seperated employees for: (1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as computed by private respondent. [5] On May 6, 1993, respondent Labor Arbiter rendered a decision ordering petitioner North Davao to pay the complainants the following:

(a) Additional separation pay of 17.5 days for every year of service; (b) Backwages equivalent to two (2) days a month times the number of years of service but not to exceed three (3) years; (c) Transportation allowance at P80 a month times the number of years of service but not to exceed three (3) years.
The benefits awarded by respondent Labor Arbiter amounted to P10,240,517.75. Attorneys fees equivalent to ten percent (10%) thereof were also granted.[6] On appeal, respondent NLRC affirmed the decision in toto. Petitioner North Davaos motion for reconsideration was likewise denied. Hence, this petition. The Parties Submissions and the Issues

In affirming the Labor Arbiters decision, respondent NLRC ruled that since (North Davao) has been paying its employees separation pay equivalent to thirty (30) days pay for every year of service, knowing fully well that the law provides for a lesser sep aration pay, then such company policy has ripened into an obligation, and therefore, depriving now the herein private respondent and others similarly situated of the same benefits would be discriminatory.[7] Quoting from Businessday Information Systems and Services. Inc. (BISSI) vs. NLRC.[8] it said that petitioners may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously than others. It also cited Abella vs. NLRC,[9] as authority for saying that Art. 283 of the Labor Code protects workers in case of the closure of the establishment. To justify the award of two days a month in backwages and P80 per month of transportation allowance, respondent Commission ruled:

As to the appellants claim that complainants-appeallees time spent in collecting their wages at Tagum, Davao is not compensable allegedly because it was on official time can not be given credence. No iota of evidence has been presented to back up said contention. The same is true with appellants assertion that the claim for transportation expenses is without basis since they were incurred by the complainants. Appellants should have submitted the payrolls to prove that complainants-appellees were not the ones who personally collected their wages and/or the bus/jeep trip tickets or vouchers to show that the complainants-appellees were provided with free transportation as claimed.
Petitioner, through the Government Corporate Counsel, raised the following grounds for the allowance of the petition:

1. The NLRC acted with grave abuse of discretion in affirming without legal basis the award of additional separation pay to private respondents who were separated due to serious business losses on the part of petitioner. 2. The NLRC acted with grave abuse of discretion in affirming without sufficient factual basis the award of backwages and transportation expenses to private respondents. 3. There is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of the law.
and the following issues:

1. Whether or not an employer whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its employees separated by reason of such closure.

2. Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. 3. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that these expenses were incurred.
The First Issue: Separation Pay To resolve this issue, it is necessary to revisit the provision of law adverted to by the parties in their submissions, namely Art. 283 of the Labor Code, which reads 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 under-taking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half () 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. (italics supplied)
The underscored portion of Art. 283 governs the grant of seperation benefits in case of closures or cessation of operation of business establishments NOT due to serious business losses or financial reverses x x x. Where, however, the closure was due to business losses - as in the instant case, in which the aggregate losses amounted to over P20 billion - the Labor Code does notimpose any obligation upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. Even the public respondents, in their Comment[10] filed by the Solicitor General, impliedly concede this point. However, respondents tenaciously insist on the award of separation pay, anchoring their claim solely on petitioner North Davaos long-standing policy of giving separation pay benefits equivalent to 30- days pay, which policy had been in force in the years prior to its closure. Respondents contend that, by denying the same separation benefits to private respondent and the others similarly situated, petitioners discriminated against them. They rely on this Courts ruling in Businessday Information Systems and

Services, Inc. (BISSI) vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial reverses, decided as a retrenchment measure to lay -off some employees on May 16, 1988 and gave them separation pay equivalent to one-half () month pay for every year of service. BISSI retained some employees in an attempt to rehabilitate its business as a trading company. However, barely two and a half months later, these remaining employees were likewise discharged because the company decided to cease business operations altogether. Unlike the earlier terminated employees, the second batch received separation pay equivalent to a full months salary for every year of service, plus a mid-year bonus. This Court ruled that there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others. x x x In resolving the present case, it bears keeping in mind at the outset that the factual circumstances of BISSI are quite different from the current case. The Court noted that BISSI continued to suffer losses even after the retrenchment of the first batch of employees; clearly, business did not improve despite such drastic measure. That notwithstanding, when BISSI finally shut down, it could well afford to (and actually did) pay off its remaining employees with MORE separation benefits as compared with those earlier laid off; obviously, then, there was no reason for BISSI to skimp on separation pay for the first batch of discharged employees. That it was able to pay one-month separation benefit for employees at the time of closure of its business meant that it must have been also in a position to pay the same amount to those who were separated prior to closure. That it did not do so was a wrongful exercise of management prerogatives. That is why the Court correctly faulted it with impermissible discrimination. Clearly, it exercised its management prerogatives contrary to general principles of fair play and justice. In the instant case however, the companys practice of giving one months pay for every year of service could no longer be continued precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over P20 billion. This could not be said of BISSI. In the case of North Davao, it gave 30-days separation pay to its employees when it was still a going co ncern even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment of such separation benefits. But when a business enterprise completely ceases operations, i.e., upon its death as a going business concern, its vital lifeblood -its cashflow - literally dries up. Therefore, the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land. As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by

Art. 248 (e) of said Code. Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy - a fact that is not controlled by management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all - although not required by law - and 12.5-days worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. As this Court held in Manila Trading & Supply Co. vs. Zulueta,[11] and reiterated in San Miguel Corporation vs. NLRC[12] and later, in Allied Banking Corporation vs. Castro,[13] (t)he law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. At this juncture, we note that the Solicitor General in his Comment challenges the petitioners assertion that North Davao, having closed down, no longer has the means to pay for the benefits. The Solicitor General stresses that North Davao was among the assets transferred by PNB to the national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this government asset. He then concludes that (i)t would, therefore, be incongruous to declare that the National Government, which should always be presumed to be solvent, could not pay now private respondents money claims. Such argumentation is completely misplaced. Even if the national government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence, a stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced.[14] From another angle, the national government is not the employer of private respondent and his co-complainants, so there is no reason to expect any kind of bailout by the national government under existing law and jurisprudence.

The Second and Third Issues: Back Wages and Transportation Allowance Anent the award of back wages and transportation allowance, the issues raised in connection therewith are factual, the determination of which is best left to the respondent NLRC. It is well settled that this Court is bound by the findings of fact of the NLRC, so long as said findings are supported by substantial evidence.[15] As the Solicitor General pointed out in his comment:

It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages (p.109, Vol. 1, Record).
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:

Section 4. Place of payment. - (a) As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. (b) xxx xxx xxx.

(Italics supplied)
Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1, Record), the Regional Director, Regional Office No. XI, Department of Labor and Employment, Davao City, ordered petitioner NDMC, among others, as follows:

WHEREFORE, x x x. Respondent is further ordered to pay its workers salaries at the plantsite at Amacan, New Leyte, Maco, Davao del Norte or whenever not possible, through the bank in Tagum, Davao del Norte as already been practiced subject, however to the provisions of Section 4 of Rule VIII, Book III of the rules implementing the Labor Code as amended.

Thus, public respondent Labor Arbiter Antonio M. Villanueva correctly held that:

From the evidence on record, we find that the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and the risks in commuting all the time in collecting complainants salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for. Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days. (p. 10, Decision; p. 207, Vol. 1, Record)
On the contrary, it will be petitioners burden or duty to present evidence of compliance of the law on labor standards, rather than for private respondents to prove that they were not paid/provided by petitioners of their backwages and transportation expenses. Other than the bare denials of petitioners, the above findings stands uncontradicted. Indeed we are not at liberty to set aside findings of facts of the NLRC, absent any capriciousness, arbitrariness, or abuse or complete lack of basis. In Maya Farms Employees Organizations vs. NLRC,[16] we held:

This Court has consistently ruled that findings of fact of administrative agencies and quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon this Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record.
WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution by SETTING ASIDE and deleting the award for additional separation pay of 17.5 days for every year of service, and AFFIRMING it in all other aspects. No costs. SO ORDERED. Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, and Hermosisima, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 141615 October 24, 2003

MAC ADAMS METAL ENGINEERING WORKERS UNIONINDEPENDENT and MARIO GARCIA, RUPERTO JUADIONG JR., MARCELINO JIMENEZ, MANUEL PRANADA, HARRY SARINGAN, NECER BAYLON, HERMINIGILDO MALONG, RUBEN SARINGAN, ARSENIO ORTIZ, FELIXBERTO MIRANA, FERNANDO ESPALDON, ROLANDO CORTES, RAMON SERASPI, HERMINIGILDO JUSTO, GUILLERMO MACARAEG, SALVADOR CATER, JAMES RAFON, ROMEO AGUADO, JUN PEDRACIO, DANILO ORTIZ, MENARDO RECALDE, ARNEL DE LADIA, LARRY ESPALDON, EDUARDO CASTRO, RUFO DE LA CRUZ, BONARDO RAGA, NICOLAS JIMENEZ, CARLITO PARAY, ROLANDO DE VERA, GARY GATCHO, HALIM ROLDAN, RICKY LAMAYO, RODRIGO PASTRADO, ARNOLD PAJARES, BERNARDO LIBICO, ANACLETO PAJARES, CORSINO PAJARES and REYNALDO RAMIREZ, petitioners, vs. MAC ADAMS METAL ENGINEERING and/or LYDIA SISON; GBS ENGINEERING SERVICES and/or GERONIMO SISON; and MVS HEAVY EQUIPMENT RENTALS and BUILDERS and/or DOMINIC SISON, and the COURT OF APPEALS, respondents. DECISION CORONA, J.: Assailed in this petition for review on certiorari filed by Mac Adams Metal Engineering Workers Union-Independent (MAMEWU) and 38 employees of private respondents Mac Adams Metal and Engineering (MAME) and GBS Engineering Services (GBS), is the decision1 dated July 9, 1999 of the Court of Appeals affirming the decision2 of the National Labor Relations Commission (NLRC) which, in turn, upheld the findings of the labor arbiter.3 The present controversy stemmed from two separate complaints: the first complaint, filed on November 9, 1993 by petitioner MAMEWU and its

president, petitioner Mario A. Garcia, for and in behalf of 29 other petitioners, charged private respondents MAME and GBS with unfair labor practices (ULP) committed through union busting and illegal closure, and illegal dismissal. The second complaint, filed on November 9, 1993 by the last eight petitioners led by Halim Roldan, alleged that aside from ULP and illegal dismissal, private respondents were likewise liable for non-payment of premium pay for holidays and rest days, night differential pay and 13th month pay. Insisting that the closure of MAME and GBS was illegal as it was calculated to bust their union, petitioners claimed that MAME and GBS continued doing business under new business names, i.e., MBS Machine and Industrial Supply (MBS) and MVS Heavy Equipment Rental and Builders (MVS). Thus, MBS and MVS were impleaded as respondents in the complaint for allegedly being run-away shops of MAME and GBS. In both complaints, petitioners prayed for alternative reliefs for reinstatement with backwages and/or separation pay. In their answer, private respondent spouses Geronimo and Lydia V. Sison, proprietors of GBS and MAME respectively, denied petitioners allegations. Explaining the closure of MAME and GBS, private respondents narrated that respondent Lydia V. Sison decided to retire from business when she became sickly in 1988. Her health did not improve despite proper medical attention. In the general meeting of the workers held sometime in July 1992, she announced her plan to close shop effective early 1993. The announcement in advance was intended to give the workers ample time to look for alternative employment. Accordingly, she declined to accept new projects and proceeded with the winding up of her business. After the July 1992 workers general meeting, some employees formed a union ostensibly for the purpose of making representations with the management to reconsider its decision to cease business operations or, at least, see to it that all benefits due the affected employees would be paid. In the course of negotiations with the management, the union leadership demanded separation pay computed at 45 days for every year of service, a proposal private respondents rejected. As it turned out, even before respondent Lydia V. Sison could formally notify the employees and the concerned government agencies of the intended closure and cessation of her business, MAMEWU and its members started resorting to concerted

activities such as work slowdown, picketing, refusal to report for work and ultimately, strikes. Meanwhile, the workers of GBS joined in the concerted activities in sympathy with the striking employees of MAME. As a consequence, GBS was also forced to close and cease its business operations. For their part, MBS and MVS denied being run-away shops of MAME and GBS. Private respondent Geronimo B. Sison admitted being a part-owner of MBS which, he maintained, was an entirely separate and distinct business enterprise from MAME and GBS. MBS was engaged in manufacturing carton boxes and other allied products. On the other hand, MAME and GBS were both engaged in the businesses of machine shop operations, fabrication and construction. Private respondent Dominic Sison, son of private respondent spouses Geronimo and Lydia V. Sison, claimed that he was the sole proprietor of MVS. He denied that MVS was a run-away shop of his parents. On the contrary, MVS was a legitimate business outfit engaged in leasing out heavy equipment. With an initial capital of P 1M, MVS used to rent from respondent MAME some of its heavy equipment which MVS, in turn, offered for lease to others. Sometime in May 1994, respondent Dominic Sison obtained an P 8M loan from the PNB and, with the fresh capital, he branched out into the construction business. Hence, MVS was an entirely separate and distinct business entity with a capital of its own, completely different personnel complement, equipment, machineries and implements, and whose clients were different from those of MAME and GBS. On June 20, 1997, the labor arbiter rendered a decision declaring that the closure of business of MAME and GBS was legitimate, having been done in good faith and in accordance with law. Hence, no unfair labor practice or illegal dismissal was committed: xxx All told, finding the charge of unfair labor practice to be bereft of any factual basis, but on the contrary, the evidence amply shows that the closure of respondent MAME and GBS was legitimately and validly carried out in compliance with the legal mandates and in good faith, it necessarily follows that the charge of illegal dismissal may not be upheld.

The labor arbiter further ruled that only 16 out the 38 petitioners were regular employees. The rest were hired on a contractual basis and therefore not entitled to separation pay. On appeal to the NLRC, the assailed decision of the labor arbiter was affirmed. Aggrieved, petitioners filed a petition for review before the Court of Appeals questioning the decision of the NLRC. On July 9, 1999, the Court of Appeals rendered a decision affirming the findings of both the labor arbiter and the NLRC that there was a legitimate and bona fide closure and cessation of business by MAME and GBS. The appellate court, however, modified the assailed decision and declared the second group of petitioners, led by Halim Roldan, as regular employees also entitled to separation pay. Petitioners are now before us imputing the following errors to the Court of Appeals: I THE PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR OF LAW IN NOT AWARDING BACKWAGES TO PETITIONERS DESPITE THE FACT THAT THEIR DISMISSAL FROM WORK WAS TAINTED WITH VIOLATION OF THEIR RIGHT TO DUE PROCESS. II THE PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR OF LAW IN NOT HOLDING THAT RESPONDENTS MAME AND GBS WERE GUILTY OF UNION BUSTING IN CLOSING THEIR OPERATIONS IN BAD FAITH. III PUBLIC RESPONDENT COMMITTED A SERIOUS LEGAL ERROR IN NOT HOLDING THAT RESPONDENTS WERE GUILTY OF ENGAGING IN A RUN-AWAY SHOP. IV

PUBLIC RESPONDENT LEGALLY ERRED IN NOT HOLDING THAT PRIVATE RESPONDENTS GERONIMO AND LYDIA SISONS ACTS OF INTERROGATING EMPLOYEES WHO HAD JOINED THE UNION CONSTITUTED UNFAIR LABOR PRACTICE.4 The foregoing assignments of error boil down to the lone issue of whether the closure of private respondents business was done in good faith and for legitimate business reasons. The applicable law is Article 283 of the Labor Code which provides: ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. - The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least onehalf (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. Explicit from the above provision is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. The owner, for any bona fide reason, can lawfully close shop at anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the managements prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss5 or simply to provide the workers continued employment.

The employer need only comply with the following requirements for a valid cessation of business operations. (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof; (b) the cessation of or withdrawal from business operations must be bona fide in character and (c) payment of termination pay equivalent to at least one-half month pay for each year of service, or one month pay, whichever is higher.6 The records reveal that private respondents complied with the aforecited requirements. MAMEs employees were adequately informed of the intended business closure and a written notice to the Regional Director of the Department of Labor and Employment (DOLE) was filed by private respondents, informing the DOLE that except for winding-up operations, MAME will be closed effective March 8, 1993. Similar notices were served by Lydia V. Sison to the Social Security System (SSS), Bureau of Internal Revenue (BIR), Department of Trade and Industry (DTI) and the Municipal Licensing Division of Antipolo, Rizal. Thus, the licenses and registration of respondent MAME with the SSS, the Municipality of Antipolo, Rizal and the DTI were subsequently canceled and/or withdrawn. In the case of respondent GBS, the employees were likewise sufficiently informed and formal notices were served on the appropriate government offices, namely, DOLE, DTI, BIR, SSS, and the Municipality of Antipolo Rizal at least one month prior to March 8, 1993. The labor arbiter, the NLRC and the Court of Appeals were unanimous in their findings that private respondents closure of business was bona fide and that private respondents did not engage in the operation of runaway shops. We have always held that we are bound, in principle, by the factual findings of administrative officials, if supported by substantial evidence. Their factual findings are entitled not only to great weight and respect but even finality, unless petitioners are able to show that the labor arbiter and the NLRC arbitrarily disregarded the evidence before them or misapprehended evidence of such nature as to compel a contrary conclusion if properly appreciated. We find no cogent reason to depart from the rule. Finally, since private respondents cessation and closure of business was lawful, there was no illegal dismissal to speak of. This fact negated the obligation to pay backwages. Instead private respondents were required to

give separation pay, which they already did, to all their regular employees except petitioners Rolando Cortes, Herminigildo Justo, Guillermo Macaraeg, Felixberto Mirana, Arsenio Ortiz, Manuel Pranada, Ruben Saringan and Ramon Seraspi who refused to accept their separation pay. We conclude that petitioners have failed to show any reversible error on the part of the Court of Appeals in rendering the assailed decision. WHEREFORE, the petition is hereby DENIED. SO ORDERED. Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.

Footnotes
1

Penned by Associate Justice Romeo A. Brawner and concurred in by Associate Justices Candido V. Rivera and Martin S. Villarama of the Special Eighth Division.
2

Penned by Presiding Commissioner Raul T. Aquino and concurred in by Commissioner Victoriano R. Calalay.
3

Pedro C. Ramos. Rollo, p. 19. Catatista vs. NLRC, 247 SCRA 46 [1995].

Mobil Employees Association [MEA] and Inter-Island Labor Organization [ILO] vs. NLRC, et al., 183 SCRA 737 [1990].
The Lawphil Project - Arellano Law Foundation

SECOND DIVISION

[G.R. No. 119842. August 30, 1996]

VENANCIO GUERRERO, NORBERTO H. ESCULLAR, JOAQUIN C. SAMSON, EMERITO C. DORADO, IRENEO CONSIGNADO, RUPERTO REFRACCIO, ANTONIO FIESTA, JOSE M. CAGUICLA, AMADO SALONGA, CONSTANCIO AMBRAD, ROLANDO N. ABENIO, ROGELIO E. ABENIO, ROMELITO M. ARIZOBAL, TEODORO M. CAAMOAN, JR., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, R.O.H. AUTO PRODUCTS PHILS., INC. and GOEFF KEMP, respondents. DECISION
PUNO, J.:

This is an original action for certiorari under Rule 65 of the Revised Rules of Court to annul the Decision of respondent National Labor Relations Commission (NLRC) dismissing petitioners' complaints for illegal dismissal against R.O.H. Auto Products Phils., Inc. and its president, Goeff Kemp.
[1]

The petitioners are former employees of respondent R.O.H. Auto Products Phils., Inc., a corporation engaged in the manufacture of automotive steel wheels. On March 24, 1992, members of the union in respondent company went on strike. The petitioners, however, did not participate in the strike. Respondent company allegedly sustained huge losses as the strike virtually paralyzed its operations. To prevent further losses, respondent proposed on April 22, 1992 to the non-striking employees a "financial assistance" in exchange for their resignation. Respondent company, nevertheless, assured them priority in hiring when positions of equal stature and compensation become available. On April 24, 1992, the petitioners availed of respondent company's offer. They signed individual Quit Claim and Release deeds upon receipt of their separation pay. On May 3, 1992, the strike ended. The operations in respondent company resumed and all the striking employees returned to their posts. The petitioners offered to re-assume their former positions but respondent company refused to admit them. They filed separate complaints for illegal dismissal.

In a consolidated Decision dated June 29, 1993, Labor Arbiter Geobel A. Bartolabac dismissed the complaints for lack of merit, viz: WHEREFORE, premises considered, the above-entitled cases are now hereby dismissed for lack of merit. Respondents (sic) R.O.H. Auto Products Phils. Inc. is, however, ordered to pay each complainant an additional financial assistance equivalent to their one month salary. This was affirmed by the NLRC in its Decision dated March 10, 1995. Hence, this petition. The issue is whether petitioners were illegally dismissed. We rule in the affirmative. The law gives an employer the right to terminate the services of its employees to obviate or to minimize business losses. This right, however, may not be exercised arbitrarily or whimsically. Article 283 of the Labor Code lays down the conditions for the exercise of such rights, thus: Art. 283. Closure of establishment and reduction or personnel. -- The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (emphasis supplied) The requisites for valid retrenchment under the foregoing provision are:
(1) necessity of the retrenchment to prevent losses and proof of such losses; (2) written notice to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; and
[3]

[2]

(3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year or service, whichever is higher.[4]

Considering the circumstances in the case at bar, we find that respondent company did not satisfy the legal requirements for valid retrenchment. First, respondent company did not present sufficient evidence to prove the extent of its losses. To justify the employees' termination of service, the losses must be serious, actual and real, and they must be supported by sufficient and convincing evidence. The burden of proof rests on the employer. Respondent company alleged that the strike paralyzed its operations and resulted in the withdrawal of its clients' orders. Respondent company, however, failed to prove its claim with competent evidence which would show that it was indeed suffering from business losses so serious as would necessitate retrenchment or reduction of personnel. As we held in Lopez Sugar Corporation vs. Federation of Free Workers:
[5] [6] [7] [8]

Lastly but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. In Garcia v. National Labor Relations Commission, the Court said: xxx But it is essentially required that the alleged losses in business operations must be prove[n]. Otherwise, said ground for termination would be susceptible to abuse by scheming employers who might be merely feigning business losses or reverses in their business ventures in order to ease out employees. We reject respondent company's contention that it was not necessary to present proof of severity of the losses it sustained since petitioners were aware of the strike and its adverse effects on the company's operations. The rule is that not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses.
[9]

Second, respondent company failed to prove that retrenchment was necessary to prevent further losses. There is no showing in this case that respondent company has taken other measures to abate the losses it sustained because of the strike. Retrenchment must be exercised only as a last resort, considering that it will lead to the loss of the employees' livelihood. Retrenchment is justified only when all other less drastic means have been tried and found insufficient.
[10]

Respondent company did not also follow the proper procedure for retrenchment under Article 283. It did not give written notices to both the petitioners and the Department of Labor and Employment at least one (1) month prior to the retrenchment. Its purpose is to enable the proper authorities to ascertain whether retrenchment is being done in good faith and is not just a pretext for evading compliance with the just obligations of the employer to the affected employees. This requirement is mandatory as it is intended to protect the workers' right to security of tenure. The payment of "one (1) month salary in lieu of the notice" which was included in petitioners' separation pay cannot be considered as sufficient compliance with the requirement of the law.
[11] [12] [13]

Finally, petitioners' availment of the "financial assistance" given by respondent company did not estop them from questioning the legality of their separation from the company. When respondent company made the offer, petitioners were made to believe that the company would cease to operate for an indefinite period of time. Hence, petitioners were constrained to accept whatever relief the respondent company offered at that time. In De Leon vs. NLRC, we held that "employees who receive their separation pay are not barred from contesting the legality of their dismissal. The acceptance of those benefits (will) not amount to estoppel."
[14]

IN VIEW WHEREOF, the assailed Decision is REVERSED and SET ASIDE. Respondents R.O.H. Auto Products Phils., Inc. and Goeff Kemp are hereby ordered to REINSTATE the petitioners without loss of seniority rights and with full backwages minus the amount received by them as "financial assistance" upon their separation. No costs.
[15]

SO ORDERED.

SECOND DIVISION

[G.R. No. 144899. February 5, 2004]

ELIZABETH C. BASCON and NOEMI V. COLE, petitioners, vs. HONORABLE COURT OF APPEALS, METRO CEBU COMMUNITY HOSPITAL, INC., and GREGORIO IYOY, respondents. DECISION
QUISUMBING, J.:

This petition for review on certiorari assails the Court of Appeals Decision[1] in CAG.R. SP No. 51690, dated March 13, 2000, which set aside the decision of the National Labor Relations Commission (NLRC), 4th Division, dated November 25, 1998, in NLRC Case No. V-00234-97. The NLRC had reversed the judgment of the Labor Arbiter, dated April 24, 1997, in NLRC-RAB-VII Case No. 07-0828-96, which held valid herein petitioners dismissal from employment. Petitioners also challenge the appellate courts Resolution,[2] dated August 9, 2000, which denied their motion for reconsideration. The petitioners in the instant case were employees of private respondent Metro Cebu Community Hospital, Inc. (MCCH) and members of the Nagkahiusang Mamumuo sa Metro Cebu Community Hospital (NAMA-MCCH), a labor union of MCCH employees. Petitioner Elizabeth C. Bascon had been employed as a nurse by respondent MCCH since May 1984. At the time of her termination from employment in April 1996, she already held the position of Head Nurse. The other petitioner, Noemi V. Cole, had been working as a nursing aide with MCCH since August 1974. Both petitioners were dismissed by the respondent hospital for allegedly participating in an illegal strike. The instant controversy arose from an intra-union conflict between the NAMAMCCH and the National Labor Federation (NFL), the mother federation of NAMAMCCH. In November 1995, NAMA-MCCH asked MCCH to renew their Collective Bargaining Agreement (CBA), which was set to expire on December 31, 1995. NFL, however, opposed this move by its local affiliate. Mindful of the apparent intra-union dispute, MCCH decided to defer the CBA negotiations until there was a determination as to which of said unions had the right to negotiate a new CBA. Believing that their union was the certified collective bargaining agent, the members and officers of NAMA-MCCH staged a series of mass actions inside MCCHs premises starting February 27, 1996. They marched around the hospital putting up streamers, placards and posters. On March 13 and 19, 1996, the Department of Labor and Employment (DOLE) office in Region 7 issued two (2) certifications stating that NAMA-MCCH was not a registered labor organization. This finding, however, did not deter NAMA-MCCH from filing a notice of strike with the Region 7 Office of the National Conciliation and Mediation Board (NCMB). Said notice was, however, disregarded by the NCMB for want of legal personality of the union. Meanwhile, the MCCH management received reports that petitioners participated in NAMA-MCCHs mass actions. Consequently, notices were served on all union members, petitioners included, asking them to explain in writing why they were wearing red and black ribbons and roaming around the hospital with placards. In their collective response dated March 18, 1996, the union members, including petitioners, explained that wearing armbands and putting up placards was their answer to MCCHs illegal refusal to negotiate with NAMA-MCCH. Subsequently, on March 28, 1996, MCCH notified the petitioners that they were to be investigated for their activities in the mass actions, with the hearings being scheduled on March 28, 1996 and April 1, 1996. Petitioners, however, denied receiving

said notices. In a notice dated April 8, 1996, MCCH ordered petitioners to desist from participating in the mass actions conducted in the hospital premises with a warning that non-compliance therewith would result in the imposition of disciplinary measures. Petitioners again claimed they did not receive said order. Petitioners Bascon and Cole were then served notices terminating their employment effective April 12, 1996 and April 19, 1996, respectively. The dismissal of petitioners did not deter NAMA-MCCH from staging more mass actions. The means of ingress to and egress from the hospital were blocked. Employees and patients, including emergency cases, were harassed, according to MCCH management, which also complained that mass actions held inside the hospital had created an atmosphere of animosity and violence, aggravating the condition of ailing patients. Furthermore, the hospital also suffered heavy losses brought about by a notable decline in the patient admission rates and the refusal of suppliers to extend credit. To address its labor problems, MCCH sought an injunction from the NLRC on July 9, 1996 in Injunction Case No. V-0006-96. Meanwhile, on July 1, 1996, Bascon and Cole filed a complaint for illegal dismissal, docketed as NLRC-RAB-VII Case No. 07-0828-96. They denied having participated in said mass actions or having received the notices (1) enjoining them from wearing armbands and putting up placards, with warning that disciplinary measure would be imposed, and (2) informing them of the schedule of hearing. They admit, however, to wearing armbands for union identity while nursing patients as per instruction of their union leaders. On July 16, 1996, a Temporary Restraining Order (TRO) was duly issued in Injunction Case No. V-0006-96. On August 27, 1996, the local government of Cebu City ordered the demolition of the picket staged by the members of NAMA-MCCH for being both a public nuisance and a nuisance per se. On September 18, 1996, the injunction was made permanent by an NLRC Resolution in Injunction Case No. V-0006-96, the fallo of which reads:

WHEREFORE, premises considered, the petition for injunction is hereby GRANTED enjoining respondents in the course of their strike/picket from committing the illegal acts mentioned in Article 264 (e) of the Labor Code more particularly the blocking of the free ingress to and egress from petitioner hospital and from committing threats, coercion and intimidation of the non-striking/picketing employees/workers reporting for work, vehicles/patients desiring to enter for the purpose of seeking admission/confinement in petitioner hospital and for such other lawful purpose. SO ORDERED.
[3]

In a Decision[4] dated April 24, 1997, the Labor Arbiter found the termination complained of in NLRC-RAB-VII Case No. 07-0828-96 to be valid and legal, and dismissed the complaint. The Labor Arbiter held that petitioners were justly dismissed

because they actually participated in the illegal mass action. It also concluded that petitioners received the notices of hearing, but deliberately refused to attend the scheduled investigation. Petitioners then appealed the Labor Arbiters ruling to the NLRC, 4 th Division, which docketed the appeal as NLRC Case No. V-00234-97. In its Decision[5] dated November 25, 1998, the NLRC, 4th Division reversed the ruling of the Labor Arbiter and ordered the reinstatement of petitioners with full backwages. First, it found that petitioners merely wore armbands for union identity, per instruction of their union officials. Said wearing of armbands while nursing patients, is a constitutional right, which cannot be curtailed if peacefully carried out. Second, it ruled that the placards complained of by MCCH did not contain scurrilous, indecent or libelous remarks. Finally, it concluded that, in a belated but crude attempt to camouflage the illegal dismissal of petitioners, MCCH merely fabricated the notices allegedly sent to petitioners. Anent the charge of gross insubordination, the NLRC ruled that petitioners were not guilty thereof, because the elements thereof had not been sufficiently proven, to wit: (1) reasonableness and lawfulness of the order or directive, (2) sufficiency of knowledge on the part of the employee of such order, and (3) the connection of the order with the duties which the employee had been engaged to discharge. Unconvinced of the correctness of the NLRC decision, MCCH filed a motion for reconsideration presenting the following documentary evidence:

1) Affidavits of Paz Velasco, Luciano Quitoy, Joseph Dagatan, and Gina Jumao-as to show that petitioners were duly served the notices in question; 2) Letter reply of NAMA-MCCH dated March 18, 1996 wherein petitioners, together with the rest of the union members, collectively acknowledged receipt of the March 15, 1996 directive; 3) Position Paper of terminated co-employees where the receipt of the subject notices were admitted as well as the commission of the aforementioned protest mass actions; and 4) Appeal of private respondents, who did not join the protest mass action, to the Board of Trustees of MCCH to show that reinstatement is no longer feasible in view of strained relationship.
On February 4, 1999, the NLRC denied the plea for reconsideration of MCCH. Undeterred, MCCH filed a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure before the Court of Appeals, docketed as CA-G.R. SP No. 51690.

In its Decision[6] dated March 13, 2000, the Court of Appeals decided CA-G.R. SP No. 51690 as follows:

WHEREFORE, the petition is granted. The Decision of public respondent NLRC 4th Division dated November 25, 1998 in NLRC Case No. V-00234-97 is hereby REVERSED and the complaint of private respondents is dismissed for lack of merit. Petitioner Metro Cebu Community Hospital (MCCH) is however ordered to pay the private respondents separation pay equivalent to one-half month for every year of service in the interest of equity. No costs. SO ORDERED.
[7]

The appellate court held that Bascon and Cole were validly terminated for their gross insubordination or willful disobedience as:
1) The order for petitioners to refrain from wearing armbands and putting up placards was legal, fair and reasonable. 2) The order was connected with the duties, which the petitioners had been engaged to discharge. 3) Said order was sufficiently made known to petitioners as receipt of the same by the latter was convincingly substantiated by hard evidence.

The appellate court stressed that petitioners gross insubordination constituted unlawful acts undertaken in conjunction with an illegal mass concerted action akin to an illegal strike. Finally, the Court of Appeals ruled that petit ioners union activities violated the rights of patients and third parties such that they were outside the ambit of legality and beyond the mantle of protection of the freedom of speech. Hence, the instant case, with the petitioners submitting for resolution the following issues:
I

CAN THE HONORABLE COURT OF APPEALS SUPPLANT ITS FINDINGS OF FACTS WITH THAT OF THE COMMISSION?
II

CAN THE HONORABLE COURT OF APPEALS REVERSE THE DECISION OF THE COMMISSION ALTHOUGH THERE IS NO FINDING OF GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION?
III

CAN AN EMPLOYEE BE TERMINATED FOR INSUBORDINATION FOR IPSO FACTO NOT SHOWING UP FOR THE INVESTIGATION?

[8]

Anent the first and second issues, as a general rule, the findings of facts of the NLRC are deemed binding and conclusive upon the Court. We have repeatedly said that the Court is not a trier of facts. Thus, resort to judicial review of the decisions of the NLRC in a special civil action for certiorari under Rule 65 of the Rules of Court is generally limited to the question of grave abuse of discretion amounting to lack or excess of jurisdiction.[9] However, where, as in the instant case, the findings of facts of the NLRC contradict those of the Labor Arbiter, a departure from the general rule is warranted. Thus, the Court may look into the records of the case and reexamine the questioned findings.[10] Where the NLRC and the Labor Arbiter disagree on their finding of facts, the Court can review the records to determine which findings should be preferred as more conformable to the evidentiary facts.[11] In St. Martin Funeral Home v. NLRC,[12] we held that the special civil action of certiorari is the mode of judicial review of the decisions of the NLRC either by this Court or the Court of Appeals, but the latter court is the more appropriate forum in strict observance of the doctrine on the hierarchy of courts and that, in the exercise of this power, the Court of Appeals can review the factual findings or the legal conclusions of the NLRC.[13] With regard to the third issue, note that petitioners were terminated for allegedly participating in an illegal strike and gross insubordination to the order prohibiting them from wearing armbands and putting up placards, not for ipso facto failing to show up in the scheduled investigation. Thus, the real issue is whether or not petitioners were validly terminated for (1) allegedly participating in an illegal strike and/or (2) gross insubordination to the order to stop wearing armbands and putting up placards. As to the first ground, Article 264 (a) of the Labor Code provides in part that:

Any union officer who knowingly participates in illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status (Emphasis ours)
Thus, while a union officer can be terminated for mere participation in an illegal strike, an ordinary striking employee, like petitioners herein, must have participated in the commission of illegal acts during the strike (underscoring supplied). There must be proof that they committed illegal acts during the strike. [14] But proof beyond reasonable doubt is not required. Substantial evidence, which may justify the imposition of the penalty of dismissal, may suffice. In this case, the Court of Appeals found that petitioners actual participation in the illegal strike was limited to wearing armbands and putting up placards. There was no finding that the armbands or the placards contained offensive words or symbols. Thus, neither such wearing of armbands nor said putting up of placards can be construed as an illegal act. In fact, per se, they are within the mantle of constitutional protection under freedom of speech.

Evidence on record shows that various illegal acts were committed by unidentified union members in the course of the protracted mass action. And we commiserate with MCCH, patients, and third parties for the damage they suffered. But we cannot hold petitioners responsible for acts they did not commit. The law, obviously solicitous of the welfare of the common worker, requires, before termination may be considered, that an ordinary union member must have knowingly participated in the commission of illegal acts during a strike. As regards the appellate courts finding that petitioners were justly terminated for gross insubordination or willful disobedience, Article 282 of the Labor Code provides in part:

An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work.
However, willful disobedience of the employers lawful orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two requisites: (1) the employee's assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.[15] In this case, we find lacking the element of willfulness characterized by a perverse mental attitude on the part of petitioners in disobeying their employers order as to warrant the ultimate penalty of dismissal. Wearing armbands and putting up placards to express ones views without violating the rights of third parties, are legal per se and even constitutionally protected. Thus, MCCH could have done well to respect petitioners right to freedom of speech instead of threatening them with disciplinary action and eventually terminating them. Neither are we convinced that petitioners exercise of the right to freedom of sp eech should be taken in conjunction with the illegal acts committed by other union members in the course of the series of mass actions. It bears stressing that said illegal acts were committed by other union members after petitioners were already terminated, not during the time that the latter wore armbands and put up placards. Finally, even if willful disobedience may be properly appreciated, still, the penalty of dismissal is too harsh. Not every case of willful disobedience by an employee of a lawful work-connected order of the employer may be penalized with dismissal. There must be reasonable proportionality between, on the one hand, the willful disobedience by the employee and, on the other hand, the penalty imposed therefor.[16] In this case, evidence is wanting on the depravity of conduct and willfulness of the disobedience on the part of petitioners, as contemplated by law. Wearing armbands to signify union membership and putting up placards to express their views cannot be of such great dimension as to warrant the extreme penalty of dismissal, especially considering the long years of

service rendered by petitioners and the fact that they have not heretofore been subject of any disciplinary action in the course of their employment with MCCH. The termination of petitioners employment not being for any of the just or authorized causes, it constitutes illegal dismissal. Article 279 of the Labor Code, as amended, provides that:

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, inclusive of allowances, 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.
Hence, illegally dismissed employees are entitled to both reinstatement and full backwages as a matter of course. MCCH alleges that due to strained relations, reinstatement is no longer possible. We disagree. In Quijano v. Mercury Drug Corporation,[17] we stated that the doctrine of strained relations is inapplicable to a situation where the employee has no say in the operation of the employers business. Petitioners herein are nurse and nursing aide, respectively in MCCH and thus, have no prerogative in the operation of the business. As also held in the Mercury Drugcase:

To protect labors security of tenure, we emphasize that the doctrine of strained relations should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every labor dispute almost always results in strained relations, and the phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.
[18]

We cannot in our conscience allow MCCH to unjustly deny petitioners their lawful occupation, especially at this late point in their lives when it would be a near impossibility for them to find another employment. The employers power to dismiss must be tempered with the employees right to security of tenure. Time and again we have said that the preservation of the lifeblood of the toiling laborer comes before concern for business profits. Employers must be reminded to exercise the power to dismiss with great caution, for the State will not hesitate to come to the succor of workers wrongly dismissed by capricious employers. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 51690 dated March 13, 2000 is REVERSED. Private respondent Metro Cebu Community Hospital is hereby ordered to reinstate petitioners Noemi V. Cole and Elizabeth C. Bascon without loss of seniority rights and other privileges and to pay them full backwages, inclusive of allowances, and other benefits computed from the time they were dismissed up to the time of their actual reinstatement. No pronouncement as to costs. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 89920 October 18, 1990 UNIVERSITY OF STO. TOMAS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, UST FACULTY UNION, respondents. Abad, Leao & Associates for petitioner. Eduardo J. Mario, Jr. for private respondent.

GUTIERREZ, JR., J.: May a university, pending resolution by the National Labor Relations Commission (NLRC) of its labor dispute with its union, comply with a readmission order by granting substantially equivalent academic assignments, in lieu of actual reinstatement, to dismissed faculty members? On June 19, 1989, the University of Sto. Tomas (UST), through its Board of Trustees, terminated the employment of all sixteen union officers and directors of respondent UST Faculty Union on the ground that "in publishing or causing to be published in Strike Bulletin No. 5 dated August 4, 1987, the libelous and defamatory attacks against the Father Rector, (each of them) has committed the offenses of grave misconduct, serious disrespect to a superior and conduct unbecoming a faculty member." (Rollo p. 41) As a result of the dismissal of said employees, some faculty members staged mass leaves of absence on June 28, 1989 and several days thereafter, disrupting classes in all levels at the University. (Rollo, pp. 53, 92)

On July 5, 1989, the faculty union filed a complaint for illegal dismissal and unfair labor practice with the Department of Labor and Employment. (Rollo, p. 42) On July 7, 1989, the labor arbiter, on a prima facie showing that the termination was causing a serious labor dispute, certified the matter to the Secretary of Labor and Employment for a possible suspension of the effects of termination. (Rollo, p. 51) Secretary Franklin Drilon subsequently issued an order dated July 11, 1989, the decretal portion of which reads as follows: WHEREFORE, ABOVE PREMISES CONSIDERED, and in the interest of industrial peace and pursuant to Section 33 (b) of RA 6715, the effects of the termination of Ma. Melvyn Alamis, Eduardo Marino, Jr., Urbano Agalabia, Anthony Cura, Norma Collantes, Fulvio Guerrero, Corinta Barranco, Porfirio Jose Guico, Lily Matias, Rene Sison, Henedino Brondial, Myrna Hilario, Ronaldo Asuncion, Nilda Redoblado, Zenaida Burgos, and Milagros Nino are hereby suspended and management is likewise ordered to accept them back to work under the same terms and conditions prevailing prior to their dismissal. In furtherance of this Order, all faculty members are directed to immediately report back for work and for management to accept them back under the same terms and conditions prevailing prior to the strike. Labor Arbiter Nieves de Castro is hereby directed to proceed with the case pending before her and to expedite the resolution of the same. Pending resolution, the parties are directed to cease and desist, from committing any and all acts that might exacerbate the situation. (Rollo, p. 54) Petitioner UST filed a motion for reconsideration on July 12, 1989 asking the Secretary of Labor and Employment to either assume jurisdiction over the present case or certify it to the National Labor Relations Commission (NLRC) for compulsory arbitration without suspending the effects of the termination of the 16 dismissed faculty members. (Rollo, pp. 55-64)

On July 18, 1989, Secretary Drilon, acting on said motion for reconsideration, issued another order modifying his previous order. The dispositive portion of the new order is quoted below: WHEREFORE, ABOVE PREMISES CONSIDERED, the Order dated 11 July 1989 is hereby modified. Accordingly, this Office hereby certifies the labor dispute to the National Labor Relations Commission for compulsory arbitration pursuant to Article 263(g) of the Labor Code, as amended by Section 27 of RA 6715. In accordance with the above, the University of Santo Tomas is hereby ordered to readmit all its faculty members, including the sixteen (16) union officials, under the same terms and conditions prevailing prior to the present dispute. The NLRC is hereby instructed to immediately call the parties and expedite the resolution of the dispute. The directive to the parties to cease and desist from committing any act that will aggravate the situation is hereby reiterated. (Rollo, p. 81) The petitioner filed a motion for clarification dated July 20, 1989 which was subsequently withdrawn. (Rollo, p. 94) On July 27, 1989, Secretary Drilon issued another order that contained the following dispositive portion: WHEREFORE, ABOVE PREMISES CONSIDERED, the Order dated 18 July 1989 directing the readmission of all faculty members, including the 16 union officials, under the same terms and conditions prevailing prior to the instant dispute is hereby affirmed. The NLRC is hereby ordered to immediately call the parties and ensure the implementation of this Order. No further motion of this and any nature shall be entertained. (Rollo, p. 103)

The NLRC subsequently caned the parties to a conference on August 11, 1989 before its Labor Arbiter Romeo Go. (Rollo, p. 9) On August 14, 1989, the respondent union filed before the NLRC a motion to implement the orders of the Honorable Secretary of Labor and Employment dated July 11, 18 and 27, 1989 and to cite Atty. Joselito Guianan Chan (the petitioner's in-house counsel) for contempt. (Rollo, p. 104) The petitioner, on August 25, 1989, filed its opposition to the private respondent's motion. (Rollo, p. 112) On September 6, 1989, the NLRC issued a resolution, which is the subject of this petition for certiorari, set forth below: Certified Case No. 0531 IN RE: LABOR DISPUTE at the University of Santo Tomas. Acting on the Motion to Implement the Orders of the Honorable Secretary of Labor and Employment dated July 11, 18, and 27, 1989 and to cite Joselito Guianan Chan for Contempt dated August 14, 1989 and the Urgent Ex-parte Motion to Implement Certification Orders of the Honorable Secretary of Labor and Employment dated July 18 and 17, (Sic) 1989 and the subsequent Manifestation dated September 4, 1989, all filed by the UST Faculty Union; and considering the Opposition to Union's Motion to Cite Atty. Joselito Guianan Chan for Contempt and Comments on its Motion to Implement the Orders of the Honorable Secretary of Labor and Employment dated July 11, 18 and 27, 1989 filed on August 25, 1989 by UST through its counsel, the Commission, after deliberation, resolved, to wit: a) The University is hereby directed to comply and faithfully abide with the July 11, 18 and 27, 1989 Orders of the Secretary of Labor and Employment by immediately reinstating or readmitting the following faculty members under the same terms and conditions prevailing prior to the present dispute or merely reinstate them in the payroll: a) Ronaldo Asuncion b) Lily Matias c) Nilda Redoblado

d) Zenaida Burgos e) Eduardo Marino, Jr. f) Milagros Nino g) Porfirio Guico b) To fully reinstate, by giving him additional units or through payroll reinstatement, Prof. Urbano Agalabia who was assigned only six (6) units; c) To fully reinstate or reinstate through payroll, Prof. Fulvio Guerrero, who was assigned only three (3) units; d) The University is directed to pay the above-mentioned faculty members full backwages starting from July 13, 1989, the date the faculty members presented themselves for reinstatement up to the date of actual reinstatement or payroll reinstatement. e) The payroll reinstatement of the above-named faculty members is hereby allowed only up to the end of the First semester 1989; Next semester, the University is directed to actually reinstate the faculty members by giving them their normal teaching loads; f) The University is directed to cease and desist from offering the aforementioned faculty members substantially equivalent academic assignments as this is not compliance in good faith with the Orders of the Secretary of Labor and Employment. (Rollo, pp. 30-31) Acting on an urgent motion for the issuance of a writ of preliminary injunction and/or restraining order, the Court resolved to issue a temporary restraining order dated October 25, 1989 enjoining respondents from enforcing or executing the assailed NLRC resolution. (Rollo, p. 160) The petitioner assigns the following errors: I

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (NLRC) GRAVELY ABUSED ITS DISCRETION IN A MANNER AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED THE ASSAILED RESOLUTION WHICH ORDERS THE ALTERNATIVE REMEDIES OF ACTUAL REINSTATEMENT OR PAYROLL REINSTATEMENT OF THE DISMISSED FACULTY MEMBERS. II THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DIRECTED THE UNIVERSITY TO PAY SOME OF THE DISMISSED FACULTY MEMBERS ASSIGNED TO HANDLE SUBSTANTIALLY EQUIVALENT ACADEMIC ASSIGNMENTS, 'FULL BACKWAGES STARTING FROM JULY 13, 1989, THE DATE THE FACULTY MEMBERS PRESENTED THEMSELVES FOR REINSTATEMENT UP TO THE DATE OF ACTUAL REINSTATEMENT OR PAYROLL REINSTATEMENT. III THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION AMOUNT ING TO LACK OR EXCESS OF JURISDICTION WHEN IT CONSIDERED AS 'NOT COMPLIANCE IN GOOD FAITH WITH THE ORDERS OF THE SECRETARY OF LABOR AND EMPLOYMENT' THE UNIVERSITY'S ACT OF GRANTING TO SOME OF THE DISMISSED FACULTY MEMBERS, SUBSTANTIALLY EQUIVALENT ACADEMIC ASSIGNMENTS. IV THE HONORABLE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT ARROGATED UPON ITSELF THE EXERCISE OF THE RIGHT AND PREROGATIVES REPOSED BY LAW TO THE PETITIONER UNIVERSITY IN THE LATTER'S CAPACITY AS EMPLOYER. (Rollo, pp. 9-10) We shall deal with the first and third assignment of errors jointly because they are interrelated.

The petitioner states in its petition that: a) It has already actually reinstated six of the dismissed faculty members, namely: Professors Alamis, Collantes, Hilario, Barranco, Brondial and Cura; b) As to Professors Agalabia and Guerrero, whose teaching assignments were partially taken over by new faculty members, they were given back their remaining teaching loads (not taken by new faculty members) but were likewise given substantially equivalent academic assignments corresponding to their teachings loads already taken over by new faculty members; c) The remaining seven faculty members, to wit: Professors Asuncion, Marino Jr., Matias, Redoblado, Burgos, Nino and Guico, were given substantially equivalent academic assignments in lieu of actual teaching loads because all of their teaching loads originally assigned to them at the start of the first semester of school year 1989-1990 were already taken over by new faculty members; d) One dismissed faculty member Rene Sison, had been "absent without official leave" or AWOL as early as the start of the first semester. (Rollo, pp. 11-12). The petitioner advances the argument that its grant of substantially equivalent academic assignments to some of the dismissed faculty members, instead of actual reinstatement, is well-supported by just and valid reasons. It alleges that actual reinstatement of the dismissed faculty members whose teaching assignments were previously taken over by new faculty members is not feasible nor practicable since this would compel the petitioner university to violate and terminate its contracts with the faculty members who were assigned to and had actually taken over the courses. The petitioner submits that it was never the intention of the Secretary of Labor to force it to break employment contracts considering that those ordered temporarily reinstated could very well be accommodated with substantially equivalent academic assignments without loss in rank, pay or privilege. Likewise, it claims that to change the faculty member when the semester is about to end would seriously impair and prejudice the welfare and interest of the students because dislocation, confusion and loss in momentum, if not demoralization, will surely ensue once the change in faculty is effected. (Rollo, pp. 13-14) The petitioner also avers that the faculty members who were given substantially equivalent academic assignments were told by their respective deans to report to the Office of Academic Affairs and Research for their academic assignments but the said faculty members failed to comply with these instructions. (Rollo, p. 118) Thus, the petitioner

postulates, mere payroll reinstatement which would give rise to the obligation of the University to pay these faculty members, even if the latter are not working, would squarely run counter to the principle of "No Work, No Pay". (Rollo, p. 15) The respondent UST Faculty Union, on the other hand, decries that the petitioner is using the supposed substantially equivalent academic assignments as a vehicle to embarrass and degrade the union leaders and that the refusal of the petitioner to comply with the return-to-work order is calculated to deter, impede and discourage the union leaders from pursuing their union activities. (Rollo, pp. 246, 254) It also claims that the dismissed faculty members were hired to perform teaching functions and, indeed, they have rendered dedicated teaching service to the University students for periods ranging from 12 to 39 years. Hence, they maintain, their qualifications are fitted for classroom activities and the assignment to them of non-teaching duties, such as (a) book analysis; (b) syllabi-making or revising; (c) test questions construction; (d) writing of monographs and modules for students' use in learning "hard to understand" topics on the lectures; (e) designing modules, transparencies, charts, diagrams for students' use as learning aids; and (f) other related assignments, is oppressive. (Rollo, pp. 243-244) In resolving the contentions of both parties, this Court refers to Article 263 (g), first paragraph, of the Labor Code, as amended by Section 27 of Republic Act No. 6715, which provides: (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor

and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. (Emphasis supplied.) It was in compliance with the above provision that Secretary Drilon issued his July 18, 1989 order to "readmit all its faculty members, including the sixteen (16) union officials, under the same terms and conditions prevailing prior to the present dispute." (Rollo, p. 81) And rightly so, since the labor controversy which brought about a temporary stoppage of classes in a university populated by approximately 40,000 students affected national interest. After the petitioner filed a motion for clarification which, however, was subsequently withdrawn, Secretary Drilon issued another order dated July 27, 1989 affirming his July 18 order and directing the NLRC to immediately call the parties and "ensure the implementation of this order" (Rollo, p. 103) The NLRC was thereby charged with the task of implementing a valid return-to-work order of the Secretary of Labor. As the implementing body, its authority did not include the power to amend the Secretary's order. Since the Secretary's July 18 order specifically provided that the dismissed faculty members shall be readmitted under the same terms and conditions prevailing prior to the present dispute, the NLRC should have directed the actual reinstatement of the concerned faculty members. It therefore erred in granting the alternative remedy of payroll reinstatement which, as it turned, only resulted in confusion. The remedy of payroll reinstatement is nowhere to be found in the orders of the Secretary of Labor and hence it should not have been imposed by the public respondent NLRC. There is no showing that the facts called for this type of alternative remedy. For the same reason, we rule that the grant of substantially equivalent academic assignments can not be sustained. Clearly, the giving of substantially equivalent academic assignments, without actual teaching loads, cannot be considered a reinstatement under the same terms and conditions prevailing before the strike. Within the context of Article 263(g), the phrase "under the same terms and conditions" contemplates actual reinstatement or the return of actual teaching loads to the dismissed faculty members. There are academic assignments such as the research and writing of treatises for publication or full-time laboratory work leading to

exciting discoveries which professors yearn for as badges of honor and achievement. The assignments given to the reinstated faculty members do not fall under such desirable categories. Article 263(g) was devised to maintain the status quo between the workers and management in a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, pending adjudication of the controversy. This is precisely why the Secretary of Labor, in his July 11, 1989 order, stated that "Pending resolution, the parties are directed to cease and desist from committing any and all acts that might exacerbate the situation." (Rollo, p. 54) And in his order of July 18, he decreed that "The directive to the parties to cease and desist from committing any act that will aggravate the situation is hereby reiterated." (Rollo, p. 81) The grant of substantially equivalent academic assignments of the nature assigned by the petitioner would evidently alter the existing status quo since the temporarily reinstated teachers will not be given their usual teaching loads. In fact, the grant thereof aggravated the present dispute since the teachers who were assigned substantially equivalent academic assignments refused to accept and handle what they felt were degrading or unbecoming assignments, in turn prompting the petitioner University to withhold their salaries. (Rollo, p. 109) We therefore hold that the public respondent NLRC did not commit grave abuse of discretion when it ruled that the petitioner should "cease and desist from offering the aforementioned faculty members substantially equivalent academic assignments as this is not compliance in good faith with the order of the Secretary of Labor and Employment." It was error for the NLRC to order the alternative remedies of payroll reinstatement or actual reinstatement. However, the order did not amount to grave abuse of discretion. Such error is merely an error of judgment which is not correctible by a special civil action for certiorari. The NLRC was only trying its best to work out a satisfactory ad hoc solution to a festering and serious problem. In the light of our rulings on the impropriety of the substantially equivalent academic assignments and the need to defer the changes of teachers until the end of the first semester, the payroll reinstatement will actually minimize the petitioners problems in the payment of full backwages.

As to the second assignment of error, the petitioner contends that the NLRC committed grave abuse of discretion in awarding backwages from July 13, 1989, the date the faculty members presented themselves for work, up to the date of actual reinstatement, arguing that the motion for reconsideration seasonably filed by the petitioner had effectively stayed the Secretary's order dated July 11, 1989. The petitioner's stand is unmeritorious. A return-to-work order is immediately effective and executory despite the filing of a motion for reconsideration by the petitioner. As pointed out by the Court in Philippine Air Lines Employees Association (PALEA) v. Philippine Air Lines, Inc. (38 SCRA 372 [1971]): The very nature of a return-to-work order issued in a certified case lends itself to no other construction. The certification attests to the urgency of the matter affecting as it does an industry indispensable to the national interest. The order is issued in the exercise of the court's compulsory power of arbitration, and therefore must be obeyed until set aside. To say that its effectivity must wait affirmance in a motion for reconsideration is not only to emasculate it but indeed to defeat its import, for by then the deadline fixed for the return-to-work would, in the ordinary course, have already passed and hence can no longer be affirmed insofar as the time element is concerned. Additionally, although the Secretary's order of July 11 was modified by the July 18 order, the return-to-work portion of the earlier order which states that "the faculty members should be admitted under the same terms and conditions prevailing prior to the dispute" was affirmed. We likewise affirm the NLRC's finding that the dismissed teachers presented themselves for reinstatement on July 13, 1989 since the factual findings of quasi-judicial agencies like the NLRC are generally accorded not only respect but even finality if such findings are supported by substantial evidence. (Mamerto v. Inciong, 118 SCRA 265 [1982]; Baby Bus, Inc. v. Minister of Labor, 158 SCRA 221 [1988]; Packaging Products Corporation v. National Labor Relations Commission, 152 SCRA 210 [1987]; Talisay Employees' and Laborers Association (TELA) v. Court of

Industrial Relations, 143 SCRA 213 [1986]). There is no showing that such substantial evidence is not present. The petitioner, however, stresses that since the faculty members who were given substantially equivalent academic assignments did not perform their assigned tasks, then they are not entitled to backwages. (Rollo, p. 19) The petitioner is wrong. The reinstated faculty members' refusal to assume their substantially equivalent academic assignments does not contravene the Secretary's return-to-work order. They were merely insisting on being given actual teaching loads, on the return-to-work order being followed. We find their persistence justified as they are rightfully and legally entitled to actual reinstatement. Since the petitioner University failed to comply with the Secretary's order of actual reinstatement, we adjudge that the NLRC's award of backwages until actual reinstatement is correct. With respect to the fourth assignment of error, the petitioner expostulates that as employer, it has the sole and exclusive right and prerogative to determine the nature and kind of work of its employees and to control and manage its own operations. Thus, it objects to the NLRC's act of substituting its judgment for that of the petitioner in the conduct of its affairs and operations. (Rollo, pp. 23-24) Again, we cannot sustain the petitioner's contention. The hiring, firing, transfer, demotion and promotion of employees are traditionally Identified as management prerogatives. However, these are not absolute prerogatives. They are subject to limitations found in law, a collective bargaining agreement, or general principles of fair play and justice. (Abbott Laboratories [Phil.] Inc. v. NLRC, 154 SCRA 713 [1987]) Article 263(g) is one such limitation provided by law. To the extent that Art. 263(g) calls for the admission of all workers under the same terms and conditions prevailing before the strike, the petitioner University is restricted from exercising its generally unbounded right to transfer or reassign its employees. The public respondent NLRC is not substituting its own judgment for that of the petitioner in the conduct of its own affairs and operations; it is merely complying with the mandate of the law. The petitioner manifests the fear that if the temporarily reinstated faculty members will be allowed to handle actual teaching assignments in the classroom, the latter would take advantage of the situation by making the

classroom the forum not for the purpose of imparting knowledge to the students but for the purpose of assailing and lambasting the administration. (Rollo, p. 330) There may be a basis for such a fear. We can even state that such concern is not entirely unfounded nor farfetched. However, such a fear is speculative and does not warrant a deviation from the principle that the dismissed faculty members must be actually reinstated pending resolution of the labor dispute. Unpleasant situations are sometimes aftermaths of bitter labor disputes. It is the function of Government to fairly apply the law and thereby minimize the dispute's harmful effects. It is in this light that the return to work order should be viewed and obeyed. One thing has not escaped this Court's attention. Professors Alamis, Cura, Collantes, Barranco, Brondial and Hilario were already reinstated by the petitioner in compliance with the Secretary's return-to-work order. Knowing this to be a fact, the NLRC, in its assailed resolution, dealt only with the fate of the remaining faculty members who were given substantially equivalent academic assignments. The names of the aforementioned faculty members appear nowhere in the disputed NLRC order. Inasmuch as these faculty members actually reinstated were not covered by the NLRC resolution, then it follows that they were likewise not covered by the Court's temporary restraining order enjoining respondents from enforcing or executing the NLRC resolution. The effects of the temporary restraining order did not extend to them. Yet, after the Court issued the temporary restraining order, the petitioner lost no time in recalling their actual teaching assignments and giving them, together with the rest of the dismissed faculty members, substantially equivalent academic assignments. The petitioner's dogmatic insistence in issuing substantially equivalent academic assignments stems from the fact that the teaching loads of the dismissed professors have already been assigned to other faculty members. It wants us to accept this remedy as one resorted to in good faith. And yet, the petitioner's employment of the temporary restraining order as a pretext to enable it to substitute substantially equivalent academic assignments even for those who were earlier already reinstated to their actual teaching loads runs counter to the dictates of fair play. With respect to the private respondent's allegation of union busting by the petitioner, we do not at this time pass upon this issue. Its determination falls within the competence of the NLRC, as compulsory arbitrator, before whom the labor dispute is under consideration. We are merely called upon

to decide the propriety of the petitioner University's grant of substantially equivalent academic assignments pending resolution of the complaint for unfair labor pratice and illegal dismissal filed by the private respondent. Although we pronounce that the dismissed faculty members must be actually reinstated while the labor dispute is being resolved, we have to take into account the fact that at this time, the first semester for schoolyear 1990-1991 is about to end. To change the faculty members around the time of final examinations would adversely affect and prejudice the students whose welfare and interest we consider to be of primordial importance and for whom both the University and the faculty union must subordinate their claims and desires. This Court therefore resolves that the actual reinstatement of the non-reinstated faculty members, pending resolution of the labor controversy before the NLRC, may take effect at the start of the second semester of the schoolyear 1990-1991 but not later. With this arrangement, the petitioner's reasoning that it will be violating contracts with the faculty members who took over the dismissed professors' teaching loads becomes moot considering that, as it alleges in its petition, it operates on a semestral basis. Under the principle that no appointments can be made to fill items which are not yet lawfully vacant, the contracts of new professors cannot prevail over the right to reinstatement of the dismissed personnel. However, we apply equitable principles for the sake of the students and order actual reinstatement at the start of the second semester. WHEREFORE, the petition is hereby DISMISSED. However, the NLRC resolution dated September 6, 1989 is MODIFIED and the petitioner University of Sto. Tomas is directed to temporarily reinstate, pending and without prejudice to the outcome of the labor dispute before the National Labor Relations Commission, the sixteen (16) dismissed faculty members to their actual teaching assignments, at the start of the second semester of the schoolyear 1990-1991. Prior to their temporary reinstatement to their actual teaching loads, the said faculty members shall be entitled to fall wages, backwages, and other benefits. The Temporary Restraining Order dated October 25, 1989 is hereby LIFTED. SO ORDERED. Fernan, C.J., (Chairman), Bidin and Cortes, JJ., concur.

Feliciano, J., is on leave. The Lawphil Project - Arellano Law Foundation THIRD DIVISION

[G.R. No. 149440. January 28, 2003]

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents. DECISION
PANGANIBAN, J.:

Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers have served them for several years already. Hence, they are regular -- not seasonal -- employees.

The Case Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001 Decision of the Court of Appeals [1] (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads:

WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED.
[2]

On the other hand, the National Labor Relations Decision,[3] upheld by the CA, disposed in this wise:

Commission

(NLRC)

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally dismissed. Respondents are herebyORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva

to their previous position and to pay full backwages from September 1991 until reinstated. Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages.
[4]

The Facts The facts are summarized in the NLRC Decision as follows:

Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants persistence and dogged determination in going back to work. Indeed, it would appear that respondents did not look with favor workers having organized themselves into a union. Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement which stipulated among others that: a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days. b) The management will give priority to the women workers who are members of the union in case work relative x x x or amount[ing] to gahit and [dipol] arises. c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week. d) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority. However, in case the said workforce would not be enough, the management can hire additional workers to supplement them. e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and f) The union will immediately lift the picket upon signing of this agreement.

However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises. Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides: Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union officials and members; Whereas parties to the present dispute agree to settle the case amicably once and for all; Now therefore, in the interest of both labor and management, parties herein agree as follows: 1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers; 2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a Memorandum of Agreement entered into by and between the parties last January 4, 1990; 3. That herein parties can use other employment references in support of their respective claims whether or not any or all of the listed 36 union members are employees or hacienda workers or not as the case may be; 4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration; 5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.) Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows:

The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received their 13th month pay. The following are deemed not considered employees: 1. 2. 3. 4. Luisa Rombo Ramona Rombo Bobong Abrega Boboy Silva

The name Orencio Rombo shall be verified in the 1990 payroll. The following employees shall be reinstated immediately upon availability of work: 1. 2. 3. 4. 5. 6. Jose Dagle Rico Dagle Ricardo Dagle Jesus Silva Fernando Silva Ernesto Tejares 7. 8. 9. 10. 11. 12. Alejandro Tejares Gaudioso Rombo Martin Alas-as Jr. Cresensio Abrega Ariston Eruela Sr. Ariston Eruela Jr.

When respondents again reneged on its commitment, complainants filed the present complaint. But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of refusing to work and being choosy in the kind of work they have to perform. (Citations omitted)
[5]

Ruling of the Court of Appeals The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any

infringement upon this right was deemed by the CA to be tantamount to illegal dismissal. The appellate court found neither rhyme nor reason in petitioners argument that it was the workers themselves who refused to or were choosy in their work. As found by the NLRC, the record of this case is replete with complainants persistence and dogged determination in going back to work.[6] The CA likewise concurred with the NLRCs finding that petitioners were guilty of unfair labor practice. Hence this Petition.[7]

Issues Petitioners raise the following issues for the Courts consideration:
A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year. B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, xxx, and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco,Bacolod-Murcia, and Gaco, xxx. C. Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRCs conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages.[8]

Consistent with the discussion in petitioners Memorandum, we shall take up Items A and B as the first issue and Item C as the second. The Courts Ruling The Petition has no merit.

First Issue: Regular Employment At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions.[9] Questions of fact are not entertained.[10] The Court is not a trier of facts and, in labor cases, this doctrine applies

with greater force.[11] Factual questions are for labor tribunals to resolve. [12] In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court. Contrary to petitioners contention, the CA did not err when it held that respondents were regular employees. Article 280 of the Labor Code, as amended, states:

Art. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist. (Italics supplied)
For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents -- with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva -repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable. In Abasolo v. National Labor Relations Commission,[13] the Court issued this clarification:

[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the

employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.
xxx x xx xxx

x x x [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the x x x season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed.
[14]

The CA did not err when it ruled that Mercado v. NLRC[15] was not applicable to the case at bar. In the earlier case, the workers were required to perform phases of agricultural work for a definite period of time, after which their services would be available to any other farm owner. They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every season for several years, are considered the latters regular employees for their respective tasks. Petitioners eventual refusal to use their services -- even if they were ready, able and willing to perform their usual duties whenever these were available -and hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter. The Court finds no reason to disturb the CAs dismissal of what petitioner s claim was their valid exercise of a management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented immediately after respondents had organized themselves into a union and started demanding collective bargaining. Those who were union members were effectively deprived of their jobs. Petitioners move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code. Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause. [16] In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees.

Second Issue: Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:

Indeed, from respondents refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their haciendaa clear interference in the right of the workers to self-organization.
[17]

We uphold the CAs affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme Court.[18] Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence.[19] Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis.[20] The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages.[21] WHEREFORE, the Petition is hereby DENIED and Decision AFFIRMED. Costs against petitioners. SO ORDERED. Puno, J., (Chairman), Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur. the assailed

[G.R. No. 118475. November 29, 2000]

ELVIRA ABASOLO, ANTONIO ABAY, PURIFICACION ABAY, CATALINA ABELLERA, DANIEL ABELLERA, ELSIE ABELLERA, LOURDES ADUSE, PACITA ALAMAN, REYNALDO ALBAY, ROGELIO ALBAY, EMERITA ALCOY, ERLINDA ALEGRE, CORAZON ALOOT, IMELDA ALOOT, ROWENA ALOOT, SHIRLEY JULIANA ALOOT, ADORACION ANTALAN, ESTRELLA ANTOLIN, EPIFANIA ANTONIO, CARMELITA AQUINO, CECENIA ASPIRAS, EMILIANA ASPIRAS, ANA BELEN ASPREC, MELENCIO ASPURIA, ILUMINADA ASTRO, CARMELITA ASUNCION, FLORENTINA AVENA, EMILIA BACQUIL, GLORIA BAGALAN,

BENJAMIN BALANAG, CLARITA BALANAG, CONSUELO BALANAG, DOLORES BALANAG, CANDIDA BALANGA, CLARITA BALANGA, FRANCISCA BALANGA, CORAZON BALANGUE, MILDRED BALANGUE, ERLINDA BALDERAS, MANUEL BALLESIL, ERLINDA BAMBAO, ROSEMARIE BASIO, AMALIA BATARIO, CONCHITA BATARIO, CORAZON BATARIO, ERLINDA BATARIO, GLORIA BATARIO, PEDRO BATARIO, JR., REBECCA BATARIO, PERLA BAUTISTA, SHIRLEY BAUTISTA, ANGELISA BAYANI, MORGAN BEGALAN, FRANCISCA BERBON, BERNARD VISITACION, EVELYN BIASON, VERONICA BLANDO, UFENIA BLANZA, AMBROSIA BOADO, CARLOS BOADO, LOLITA BORJE, MARILOU BUNGAY, RODRIGO BURGOS, AMELITA CABALBAG, ERNESTO CABALBAG, ELVIRA CABUGON, JOSEFINA CACANINDIN, CORAZON CACAYARA, JAIME CACHERO, JULIET CALLANO, ANDRES CALUZA, TERESITA CALUZA, ISABEL COMADRO, EDITA CARBONEL, LOLITA CARILLA, BIENVENIDA CARINO, DELIA CARINO, LOLITA CARINO, AMARIO CARREON, ARMELINDA CARREON, ERLINDA CARREON, FECIDAD CARREON, JOSE CARREON, MA. VICTORIA CARREON, BENJAMIN CASALLO, DEMETRIA CASEM, ALBERTO CASIM, GLORIA CASIM, FLORIDA CATUNGAL, ESTER CAVINTA, REMEDIOS CAVINTA, ROSALINDA CAVINTA, JULITA CAYABYAB, IRENE CELESTE CARMELITA CHAN, ESMENIA CORDERO, LYDIA CORPUZ, JOVA CORTEZ, NORA CORTEZ, MAGDALENA CUDAL, GENOVA DACANAY, SABINA BACLAN, CORAZON DANAO, ELISA DASALLA, AGNES BIBIANA DE CASTRO, ANITA DE CASTRO, EDITHA DE CASTRO, NIDA DE CASTRO, CORAZON DE JESUS, JOSE DE JESUS, MERLA DE JESUS, MILAGROS DE VERA, APOLINARIO DOLATRE, CAMILO DOLOR, JR., LOLITA DOLOR, WILMA DOMINGO, OLYMPIA DOMONOON, BASILIO DULATRE, BASILIO DULATRE, IMELDA DULATRE, LETICIA DULATRE, MARTINA DULATRE, RODRIGO DULATRE, JR., ROGELIO DULATRE, TRIFONA DULATRE, CONSOLACION DULAY, CRESILDA DULAY, DANILO DULAY, EDITHA DULAY, ELENA G. DULAY, ERLINDA DULAY, ESTRELLA DULAY, ESTELITA DULAY, ESTRELITA P. DULAY, EVANGELINE DULAY, FELICIDAD DULAY, FELISA DULAY, GINA DULAY, GINA DULAY, GLORIA DULAY, GUILLERMO DULAY, JAIME DULAY, LETICIA DULAY, LOLITA DULAY, LUIS DULAY, MARIA G. DULAY,

MILAGROS DULAY, REMEDIOS DULAY, ROBERTO DULAY, SOTERO DULAY, TERESITA DULAY, TERESITA G. DULAY, TERESITA M. DULAY, THERESITA DULAY, VALENTIN DULAY, EDITHA DUMO, REMEDIOS DY, RIA MAPILI, VICTORIO MAPILI, ROBERTO MARAMBA, SUSANA MARAMBA, ANDRES MARCOS, LANIA MARCOS, AURORA MARGASA, ARSENIA MARIGZA, LOLITA MARQUEZ, ANA MARIA MARZAN, ANGELITA MEDINA, ADELINA MEDRIANO, ELIZABETH MEDRIANO, HERMINIA M. MEDRIANO, ROSALINDA MEDRIANO, CLEOFE MELANA, LOLITA MELENDEZ, LOURDES MIGUEL, EMILIA G. MILANES, JOSE MILANES, LILIA MILO, LILIAN MILO, FELICIDA MORION, EVELYN MOSTER, ADORACION MUNAR, ELEONORA MUNAR, IMELDRA NAVARRO, TERESITA NAVERIDA, ANITA NINOBLA, AURELIA NINOBLA, CARMELITA NINOBLA, MARCELA NINOBLA, MYRNA NISPERO, JOSEFINA NUTO, LANY OBSRA, ELENA OCAMPO, SYLVIA OLINARES, ROSITA OPENIANO, TRINIDAD ORDUNA, ROSALINDA ORDONEZ, JESSIE ORIBELLO, REMEDIOS ORIBELLO, TERESITA ORIBELLO, HILARIO ORACION, AVELINA ORTILLA, MAGDALENA ORTILLA, MARIETTA ORTILLA, LEONORA PADER, AMALIA PADILLA, ARCELITA PADILLA, EVELYN PADILLA, FELICIDA ORTILLA, JOSELYN PADILLA, JOSEPHINE PADILLA, VIRGINIA PADILLA, CLARITA PAIS, EDUARDO PANIS, JESUS PANIS, JOSE PANIS, TEOFILA PANIS, VIOLETA PARADO, ROSITA PAROCHA, CARMELITA PASCUA, LUCIA PAYUMO, MARIA PICAR, REYNALDA PILARCA, LUZVIMINDA QUERO, ALEJANDRA QUEZADA, TEODORO QUEZADA, ARLENE QUIBAN, AIDA QUINDARA, JUANITA QUINONES, GLORIA RABOT, EFREN RACELIS, ERLINDA RACELIS, IMELDA RACELIS, REMEDIOS RACELIS, SUSANA RACELIS, TERESITA RACELIS, FLORITA RAQUEL, ALMA RAMIREZ, CARMEN RAMIREZ, ROSEMARIE RAMIREZ, GEMMA RAMOS, JUANITA RAMOS, IMELITA REYES, VICTORIA A. RIVERA, VIRGINIA RIVERA, LYDIA ROBLES, EMILIA RONQUILLO, ROSALLA ROSETE, FORTUNATO RUIZ, GLORIA RUIZ, RICARDO RUIZ, ROSALINDA RUIZ, ROLIE RUIZ, DANILO RULLA, EDITHA RULLA, MARITES RULLA, ANTONIO RULLAMOS, BERNADETEE RULLAMAS, JULITA R. RULLAMAS, SOLEDAD RULLAMAS, CELILIA RULLAN, NAPOLEON RULLAN, NORA RULLAN, WARLITO RULLAN, AURORA RULLODA, GLORIA RULLODA, REMEDIOS RULLODA, LETICIA RUMATAY,

FELY RUNAS, RIZALITO RUNAS, DOMINGA SABADO, JOSE SACDAL, CLARITA SALAZAR, GLORIA SALTING, PURITA SAMSON, ESTRELLITA SERRANO, GEMMA SIABABA, SUSANA SIABANA, PERLITA SOBREMONTE, CARMEN SOBREVILLA, RUBIE SOLOMON, MONICA SORIANO, ERLINDA SUGUITAN, JULITA SUCNET, FEDEL TACIO, LETICIA TAGARA, JOSEFINA TALENG, MARILY TAMONDON, NIEVEZ TAMONDON, GLORI TANGALIN, LEONARDO TANGALIN, MYRNA TANGALIN, NOEMA TANGALIN, NORMA TANGALIN, CRISTETA TEANAN, RUFINA TRANCIA, ALMA TRINIDAD, GLORIA TUGADE, TERESITA TUMBAGA, ALICIA UBONGEN, ZENAIDA UCOL, ADELA UGAY, AMAILIA UGAY, ESTELLA UGAY, HONORATO UGAY, JULIETA UGAY, LOURDES UGAY, PURIFICACION UGAY, ROSEMARIE UGAY, RUFINA UGAY, ANGELITO UMEL, JOSEFINA VALDEZ, ALFREDO VERCELES, JOSIE VERCELES, HELEN VILLANUEVA, SALVACION VILLAROSA, DOMINGO YARANON, FELIMON YARANON, FELIX YARANON, MONICA YARES, CONSOLACION YARIZ, DEMETRIA YARIZ, IMELDA YARIZ, MARGARITA ZARATE, ESMERALDA ABAD, LOURDES ABELLERA, MILAGROS ADUBE, JOSEPHINE ARIAS, ERLINDA ASPERIN, EMELDA ASUNCION, LILIA ASUNCION, VIOLETA ASUNCION, ROSA BALAGOT, ADORACION BALANAG, ALICA J. BALANAG, GLECERIA BALANGA, CORAZON BAMBICO, RICARDO BAIARIO, ADELA BAUTISTA, CORAZON BRAVO, DINAH BULATAO, MARILOU BUNGAY, LORETO BURGOS, EVELYN CABUNIAS, CARLITO CACAYURAN, ISABEL CAMACHO, LUCRECIA CARREON, ALFREDO CASEM, HERA CASEM, MELY CASEM, NATIVIDAD CASIPIT, MARILYN CASTILLO, NENITA CASTANEDA, CARMELITA CAVINTA, LEONIDA CAVINTA, LEONILA CAVINTA, MELANIE CHAVEZ, LORETO CORTEZ, HERMANA DACANAY, MARIETTA DACANAY, MARITES G. DACANAY, MARIO DALAZA, AIDA DANAO, EVA DANAO, MARGIE DE GUZMAN, NATIVIDAD DE CASTRO, NATIVIDAD DELA CRUZ, LORETA DIFUNTORUM, LOLITA DISTOR, ADELINA DOMONDON, HELEN DULATRE, IMELDA M. DULATRE, JOSE N. DULATRE, LYDIA A. DULATRE, MERLY DULATRE, CONCEPCION DULAY, DOMINGA DULAY, ELENA C. DULAY, ERLINDA DULAY, ORPILINA R. DULAY, PABLO A. DULAY, RENATO DULAY, NORMA EISMA, EDNA ESTOQUE, TEOFILO FAJARDO, ADELINA FONTANILLA, TERESITA FORONDA,

MARGARITA FREDELUCES, RUFINA GALESTE, MARISSA GALI, LUZVIMINDA GAMBOA, CLEOFE GARCIA, ERLINDA GAPASIN, JULITA GATCHALIAN, MARISSA GATCHALIAN, ALFONSO HALOG, TERESITA IBASAN, RICARDO JUGO, ELMA JULOYA, ELENITA LACUATA, EPIFANIA LACUATA, SEBASTIAN LACUATA, JOSEFINA LARON, PEDRO LEGASPI, DOLORES LUCENA, FLORDELIZA MABANTA, PERLITA MACAGBA, CESAR MAGLAYA, ERNA MAGNO, GLORIA MAGNO, BONA P. MAMARIL, CONCEPCION MAMARIL, MARCELINA MAMARIL, TERESITA MAMARIL, ESTINILIE MANGADANG, HERMOGENES MANGADANG, LETICIA MANGADANG, LYDIA MANGADANG, SHIRLEY MANGADANG, SONIA MANGADANG, TRINIDAD MANGADANG, VICTORIANO MANGADANG, CRESTITA D. MANZANO, ERLINDA MAPALO, FABIAN F. MAPANAO, LYDIA MAPILE, RUMO MASON, SUSANA MEDRIANO, DOLORES MILAN, ANTONIO G. MUNAR, MARINA NINIALBA, CORAZON B. NINOBLE, SUSAN ORIBELLO, JOVENCIO ORLINO, CHARITO ORPILLA, FERDINAND PADILLA, LETECIA PAGADUAN, BERLINA PALMONES, ARISTON PANIS, PATRICIO PANIS, PRIMO PANIS, REMEDIOS B. PANIS, EMELITO PERALTA, GLORIA RAMIREZ, DOMINGA RAMOS, GERTRUDES RAMOS, DOROTEO REFUERZO, JR., JUANITA REFUERZO, FLORENCIO REGACHO, MAGDALENA REBACHO, ADELINA REYES, DELIA REYES, EUFENIA RIVERA, LEONORA RIVERA, ROSEMARIE ROSIMO, VICTORIA RUALO, DANILO RULLAN, AURORA RULLODA, SERAFICA RULLODA, ZENAIDO P. RULLODA, IMELDA RUNAS, REMEDIOS SANTOS, DOMINADOR TABABA, ROSENDA TABAO, JOSEFINA TALENS, REVELINA TORCEDO, RUFINA TUMBANGA, JULITA F. UGAY, BRENDA VILLANUEVA, GLORIA VILORIA, FLORIDA YARIS, MARGARITA ZARATE, FERNANDO SACDAL, ANICETA MANONGDO and BEATRIZ UGAY, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER RICARDO N. OLAIREZ, LA UNION TOBACCO REDRYING CORPORATION and SEE LIN CHAN, respondents. DECISION
DE LEON, JR., J.:

Before us is a petition for certiorari seeking to annul two Resolutions of the National Labor Relations Commission (NLRC), Third Division, dated July 6, 1994[1] and September 23, 1994[2], in its affirmance of the Decision[3] of Labor Arbiter Ricardo N. Olairez dated December 29, 1993 dismissing petitioners consolidated complaint for separation pay for lack of merit. The facts are as follows: Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private respondent See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco leaves and its by-products. Tobacco season starts sometime in October of every year when tobacco farmers germinate their seeds in plots until they are ready for replanting in November. The harvest season starts in mid-February. Then, the farmers sell the harvested tobacco leaves to redrying plants or do the redrying themselves. The redrying plant of LUTORCO receives tobacco for redrying at the end of February and starts redrying in March until August or September. Petitioners have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted sometime in March 1993 when Compania General de Tabaccos de Filipinas (also known as TABACALERA) took over LUTORCOs tobacco operations. New signboards were posted indicating a change of ownership and petitioners were then asked by LUTORCO to file their respective applications for employment with TABACALERA. Petitioners were caught unaware of the sudden change of ownership and its effect on the status of their employment, though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners. On March 17, 1993, the disgruntled employees instituted before the NLRC Regional Arbitration Branch No. 1, San Fernando, La Union a complaint[4] for separation pay against private respondent LUTORCO on the ground that there was a termination of their employment due to the closure of LUTORCO as a result of the sale and turnover to TABACALERA. Other equally affected employees filed two additional complaints [5], also for separation pay, which were consolidated with the first complaint. Private respondent corporation raised as its defense that it is exempt from paying separation pay and denied that it terminated the services of the petitioners; and that it stopped its operations due to the absence of capital and operating funds caused by losses incurred from 1990 to 1992 and absence of operating funds for 1993, coupled with adverse financial conditions and downfall of prices. [6] It alleged further that LUTORCO entered into an agreement with TABACALERA to take over LUTORCOs tobacco operations for the year 1993 in the hope of recovering from its serious business losses in the succeeding tobacco seasons and to create a continuing source of income for the petitioners.[7] Lastly, it manifested that LUTORCO, in good faith and with sincerity, is willing to grant reasonable and adjusted amounts to the petitioners, as financial assistance, if and when LUTORCO could recover from its financial crisis. [8] On December 29, 1993, Labor Arbiter Ricardo N. Olairez rendered his decision dismissing the complaint for lack of merit. In upholding private respondent LUTORCOs position, the Labor Arbiter declared that the petitioners are not entitled to the benefits

under Article 283[9] of the Labor Code since LUTORCO ceased to operate due to serious business losses and, furthermore, TABACALERA, the new employer of the petitioner has assumed the seniority rights of the petitioners and other employment liabilities of the LUTORCO.[10] Petitioners appealed[11] then the decision of the Labor Arbiter to the public respondent NLRC where it was assigned to the Third Division. In its Opposition to Appeal[12] dated February 5, 1994 private respondent LUTORCO presented new allegations and a different stand for denying separation pay. It alleged that LUTORCO never ceased to operate but continues to operate even after TABACALERA took over the operations of its redrying plaint in Aringay, La Union. Petitioners were not terminated from employment but petitioners instead refused to work with TABACALERA, despite the notice to petitioners to return to work in view of LUTORCOs need for workers at its Agoo plant which had approximately 300,000 kilos of Virginia tobacco for processing and redrying. Furthermore, petitioners are not entitled to separation pay because petitioners are seasonal workers. Adopting these arguments of private respondent, the NLRC, in a Resolution[13] dated July 6, 1994, affirmed the dismissal of the consolidated complaints for separation pay. Public respondent held that petitioners are not entitled to the protection of Article 283 of the Labor Code providing for separation pay since there was no closure of establishment or termination of services to speak of. It declared that there was no dismissal but a non-hiring due mainly to [petitioners] own volition.[14] Moreover, the benefits of Article 283 of the Labor Code apply only to regular employees, not seasonal workers like petitioners.[15] Inasmuch as public respondent in its Resolution[16] dated September 23, 1994 denied petitioners motion for reconsideration, petitioners now assail the correctness of the NLRCs resolution via the instant petition. Petitioners anchor their petition on the following grounds, to wit:
I. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT THERE WAS NO DISMISSAL OR TERMINATION OF SERVICES. II. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING THAT PETITIONERS WERE NOT REGULAR EMPLOYEES. III. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN NOT AWARDING SEPARATION PAY TO THE PETITIONERS.

Petitioners vigorously maintain that they are regular workers of respondent LUTORCO since they worked continuously for many years with LUTORCO, some of them even for over 20 years, and that they performed functions necessary and desirable in the usual business of LUTORCO.[17] According to them, the fact that some of them work only during the tobacco season does not affect their status as regular workers since they have been repeatedly called back to work for every season, year after year.[18] Thus, petitioners take exception to the factual findings and conclusions of the NLRC, stressing that the conclusions of the NLRC were based solely on the new

theory advanced by private respondent LUTORCO only on appeal, that is, that it was only LUTORCOs tobacco re-drying operation that was sold, and hence, diametrically opposed to its theory before the Labor Arbiter, i.e., that it is the entire company (LUTORCO) itself that was sold. Private respondent LUTORCO, on the other hand, insists that petitioners employment was not terminated; that it never ceased to operate, and that it was petitioners themselves who severed their employer-employee relationship when they chose employment with TABACALERA because petitioners found more stability working with TABACALERA than with LUTORCO.[19] It likewise insists that petitioners are seasonal workers since almost all of petitioners never continuously worked in LUTORCO for any given year[20] and they were required to reapply every year to determine who among them shall be given work for the season. To support its argument that petitioners are seasonal workers, private respondent LUTORCO cites the case of Mercado, Sr. v. NLRC[21]wherein this Court held that the employment of [seasonal workers] legally ends upon the completion of the xxx season. Clearly, the crux of the dispute boils down to two issues, namely, (a) whether petitioners employment with LUTORCO was terminated, and (b) whether petitioners are regular or seasonal workers, as defined by law. Both issues are clearly factual in nature as they involved appreciation of evidence presented before the NLRC whose finding of facts and conclusions thereon are entitled to respect and finality in the absence of proof that they were arrived at arbitrarily or capriciously.[22] In the instant case, however, cogent reasons exist to apply the exception, to wit: First, upon a thorough review, the records speak of a sale to TABACALERA in 1993 under conditions evidently so concealed that petitioners were not formally notified of the impending sale of LUTORCOs tobacco re-drying operations to TABACALERA and its attendant consequences with respect to their continued employment status under TABACALERA. They came to know of the fact of that sale only when TABACALERA took over the said tobacco re-drying operations. Thus, under those circumstances, the employment of petitioners with respondent LUTORCO was technically terminated when TABACALERA took over LUTORCOs tobacco re-drying operations in 1993.[23] Moreover, private respondent LUTORCOs allegation that TABACALERA assured the seniority rights of petitioners deserves scant consideration inasmuch as the same is not supported by documentary evidence nor was it confirmed by TABACALERA. Besides, there is no law requiring that the purchaser of an entire company should absorb the employees of the selling company. The most that the purchasing company can do, for reasons of public policy and social justice, is to give preference to the qualified separated employees of the selling company, who in its judgment are necessary in the continued operation of the business establishment. In the instant case, the petitioner employees were clearly required to file new applications for employment. In reality then, they were hired as new employees of TABACALERA. Second, private respondent LUTORCOs contention that petitioners themselves severed the employer-employee relationship by choosing to work with TABACALERA is bereft of merit considering that its offer to return to work was made more as an afterthought when private respondent LUTORCO later realized it still had tobacco

leaves for processing and redrying. The fact that petitioners ultimately chose to work with TABACALERA is not adverse to petitioners cause. To equate the more stable work with TABACALERA and the temporary work with LUTORCO is illogical. Petitioners untimely separation in LUTORCO was not of their own making and therefore, not construable as resignation therefrom inasmuch as resignation must be voluntary and made with the intention of relinquishing the office, accompanied with an act of relinquishment.[24] Third, the test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC,[25] in which this Court held:

The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists.
Thus, the nature of ones employment does not depend solely on the will or word of the employer. Nor on the procedure for hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employers nature of business and the duration and scope of work to be done.[26] In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some for over 20 years, performing services necessary and indispensable to LUTORCOs business, serve as badges of regular employment.[27] Moreover, the fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases[28] this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until re-employed. Private respondents reliance on the case of Mercardo v. NLRC is misplaced considering that since in said case of Mercado, although the respondent company therein consistently availed of the services of the petitioners therein from year to year, it was clear that petitioners therein were not in respondent companys regular employ. Petitioners therein performed different phases of agricultural work in a given

year. However, during that period, they were free to contract their services to work for other farm owners, as in fact they did. Thus, the Court ruled in that case that their employment would naturally end upon the completion of each project or phase of farm work for which they have been contracted. All the foregoing considered, the public respondent NLRC in the case at bar erred in its total affirmance of the dismissal of the consolidated complaint, for separation pay, against private respondents LUTORCO and See Lin Chan considering that petitioners are regular seasonal employees entitled to the benefits of Article 283 of the Labor Code which applies to closures or cessation of an establishment or undertaking, whether it be a complete or partial cessation or closure of business operation.[29] In the case of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC[30] this Court, when faced with the question of whether the separation pay of a seasonal worker, who works for only a fraction of a year, should be equated with the separation pay of a regular worker, resolved that question in this wise:

The amount of separation pay is based on two factors: the amount of monthly salary and the number of years of service. Although the Labor Code provides different definitions as to what constitutes one year of service, Book Six does not specifically define one year of service for purposes of computing separation pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be considered one whole year. Applying this case at bar, we hold that the amount of separation pay which respondent members xxx should receive is one-half (1/2) their respective average monthly pay during the last season they worked multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year.
[31]

Thus, in the said case, the employees were awarded separation pay equivalent to one (1) month, or to one-half (1/2) month pay for every year they rendered service, whichever is higher, provided they rendered service for at least six (6) months in a given year. As explained in the text of the decision in the said case, month pay shall be understood as average monthly pay during the last season they worked. [32] An award of ten percent (10%) of the total amount due petitioners as attorneys fees is legally and morally justifiable under Art. 111 of the Labor Code,[33] Sec. 8, Rule VIII, Book III of its Implementing Rules,[34] and par. 7, Art. 2208[35] of the Civil Code.[36] WHEREFORE, the petition is hereby GRANTED, and the assailed Resolutions dated July 6, 1994 and September 23, 1994 of public respondent NLRC are REVERSED and SET ASIDE. Private respondent La Union Tobacco Redrying Corporation is ORDERED: (a) to pay petitioners separation pay equivalent to one (1) month, or one-half (1/2) month pay for each year that they rendered service, whichever is higher, provided that they rendered service for at least six (6) months in a given year, and; (b) to pay ten percent (10%) of the total amount due to petitioners, as and for attorneys fees. Consequently, public respondent NLRC is ORDERED to COMPUTE the

total amount of separation pay which each petitioner who has rendered service to private respondent LUTORCO for at least six (6) months in a given year is entitled to receive in accordance with this decision, and to submit its compliance thereon within forty-five (45) days from notice of this decision. SO ORDERED. Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 79869 September 5, 1991 FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO MERCADO and LEON SANTILLAN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA; and STO. NIO REALTY, INCORPORATED, respondents. Servillano S. Santillan for petitioners. Luis R. Mauricio for private respondents.

PADILLA, J.:p Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations Commission (NLRC) dated 8 August 1984 which affirmed the decision of respondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting the award of financial assistance to petitioners, and the resolution of the respondent NLRC dated 17 August 1987, denying petitioners' motion for reconsideration.

This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and 13th month pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. Nio Realty Incorporated, with Regional Arbitration Branch No. III, National Labor Relations Commission in San Fernando, Pampanga. 1 Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment; and that, during the period of their employment, petitioners received the following daily wages: From 1962-1963 P1.50 1963-1965 P2.00 1965-1967 P3.00 1967-1970 P4.00 1970-1973 P5.00 1973-1975 P5.00 1975-1978 P6.00 1978-1979 P7.00 Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her regular employees and instead averred that she engaged their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the number of workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production and/or sugar cane production, after which they would be free to render services to other farm owners who need their services. 2 The other private respondents denied having any relationship whatsoever with the petitioners and state that they were merely registered owners of the land in question included as corespondents in this case. 3

The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent farm workers and therefore entitled to the benefits which they pray for. And corollary to this, whether or not said petitioners were illegally dismissed by private respondents. Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners were not regular and permanent workers of the private respondents, for the nature of the terms and conditions of their hiring reveal that they were required to perform phases of agricultural work for a definite period of time after which their services would be available to any other farm owner. 4 Respondent Labor Arbiter deemed petitioners' contention of working twelve (12) hours a day the whole year round in the farm, an exaggeration, for the reason that the planting of lice and sugar cane does not entail a whole year as reported in the findings of the Chief of the NLRC Special Task Force. 5 Even the sworn statement of one of the petitioners, Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were hired only as casuals, on an "on and off" basis, thus, it was within the prerogative of private respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work had been completed by them. 6 Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the complaint by the petitioners who are related to one another, either by consanguinity or affinity, was the filing of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to private respondent, Aurora Cruz regarding said criminal case. 7 In his affidavit, Jesus David stated under oath that petitioners were never regularly employed by private respondent Aurora Cruz but were, on-and-off hired to work and render services when needed, thus adding further support to the conclusion that petitioners were not regular and permanent employees of private respondent Aurora Cruz. 8 Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and 1978-1979 may be properly considered since all the other money claims have prescribed for having accrued beyond the three (3) year period prescribed by law. 9 On grounds of equity, however, respondent Labor Arbiter awarded petitioners financial assistance by

private respondent Aurora Cruz, in the amount of Ten Thousand Pesos (P10,000.00) to be equitably divided among an the petitioners except petitioner Fortunato Mercado, Jr. who had manifested his disinterest in the further prosecution of his complaint against private respondent. 10 Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners questioned respondent Labor Arbiter's finding that they were not regular and permanent employees of private respondent Aurora Cruz while private respondents questioned the award of financial assistance granted by respondent Labor Arbiter. The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with the modification of the deletion of the award for financial assistance to petitioners. The dispositive portion of the decision of the NLRC reads: WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby modified in that the award of P10,000.00 financial assistance should be deleted. The said Decision is affirmed in all other aspects.
SO ORDERED.
11

Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8 August 1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987. 12 In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that petitioners are not regular and permanent employees of private respondents based on the terms and conditions of their hiring, for said findings are contrary to the provisions of Article 280 of the Labor Code. 13 They submit that petitioners' employment, even assuming said employment were seasonal, continued for so many years such that, by express provision of Article 280 of the Labor Code as amended, petitioners have become regular and permanent employees. 14 Moreover, they argue that Policy Instruction No. 12 15 of the Department of Labor and Employment clearly lends support to this contention, when it states:

PD 830 has defined the concept of regular and casual employment. What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. If not, then the employment is casual. Employment for a definite period which exceeds one (1) year shall be considered re for the duration of the definite period. This concept of re and casual employment is designed to put an end to casual employment in regular jobs which has been abused by many employers to prevent so-called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions.
This new concept should be strictly enforced to give meaning to the constitutional 16 guarantee of employment tenure.

Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider them as casual workers since they have been doing all phases of agricultural work for so many years, activities which are undeniably necessary, desirable and indispensable in the rice and sugar cane production business of the private respondents. 17 In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as aimed by respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence presented by the parties and also by the Chief of the Special Task Force of the NLRC Regional Office and, therefore, in accordance with the rule on findings of fact of administrative agencies, the decision should be given great weight. 18 Furthermore, they contend that the arguments used by petitioners in questioning the decision of the Labor Arbiter were based on matters which were not offered as evidence in the case heard before the regional office of the then Ministry of Labor but rather in the case before the Social Security Commission, also between the same parties. 19 Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it has long been settled that findings of fact of administrative agencies if supported by substantial evidence are entitled to great weight. 20 Moreover, it argues that petitioners cannot be deemed to

be permanent and regular employees since they fall under the exception stated in Article 280 of the Labor Code, which reads:
The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, exceptwhere the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration 21 of the season. (emphasis supplied)

The Court resolved to give due course to the petition and required the parties to submit their respective memoranda after which the case was deemed submitted for decision. The petition is not impressed with merit. The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the Government is that the findings of fact made therein are respected, so long as they are supported by substantial evidence, even if not overwhelming or preponderant; 22 that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of the evidence; 23 that the administrative decision in matters within the executive's jurisdiction can only be set aside upon proof of gross abuse of discretion, fraud, or error of law. 24 The questioned decision of the Labor Arbiter reads: Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of both parties, it is our welldiscerned opinion that the petitioners are not regular and permanent workers of the respondents. The very nature of the terms and conditions of their hiring reveal that the petitioners were required to perform p of cultural work for a definite period, after which their services are available to any farm owner. We cannot share the arguments of the petitioners that they worked continuously the whole year round for twelve hours a day. This, we feel, is an exaggeration which does not deserve any serious consideration inasmuch as the plan of rice and sugar cane does not entail a whole year operation, the area in question

being comparatively small. It is noteworthy that the findings of the Chief of the Special Task Force of the Regional Office are similar to this.
In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners were only hired as casuals, on-and-off basis. With this kind of relationship between the petitioners and the respondent Aurora Cruz, we feel that there is no basis in law upon which the claims of the petitioners should be sustained, more specially their complaint for illegal dismissal. It is within the prerogative of respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work has been completed by them. We are of the opinion that the real cause which triggered the filing of this complaint by the petitioners who are related to one another, either by consanguinity or affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz against Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979, according to Jesus David, Zone Chairman of the locality where the petitioners and respondent reside, petitioner Fortunato Mercado, Sr. asked for help regarding the case of his son, Reynaldo, to talk with respondent Aurora Cruz and the said Zone Chairman also stated under oath that the petitioners were never regularly employed by respondent Aurora Cruz but were on-and25 off hired to work to render services when needed.

A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case are ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed by the National Labor Relations Commission. The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been applied in their case presents an opportunity to clarify the afore-mentioned provision of law. Article 280 of the Labor Code reads in full: Article 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is

seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The first paragraph answers the question of who are employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season 26 as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit. The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause that it immediately follows. 27 Thus, it has been held that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to the statute itself or to other

sections thereof. 28 The only exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself as a whole. 29 Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers to prevent called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. 30 WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs. SO ORDERED. Melencio-Herrera (Chairperson), Paras and Regalado, JJ., concur. Sarmiento, J., on leave. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 147816

May 9, 2003

EFREN P. PAGUIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA IGLESIA,respondents. VITUG, J.: On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.1 Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of general circulation, published by respondent company. Petitioner, for his efforts, was to receive compensation consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on agency advertisements based on gross revenues less agency commission and the corresponding withholding tax. The commissions, released every fifteen days of each month, were to be given to petitioner only after the clients would have paid for the advertisements. Apart from commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious points raised by the parties had something to do with the following stipulations of the agreement; viz: "12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties. "13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) days prior to effectivity of termination."2

On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from respondent firm "Dear Mr. Paguio, "Please be advised of our decision to terminate your services as Account Executive of Manila Times effective September 30, 1992. "This is in accordance with our contract signed last July 1, 1992."3 Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for petitioner's termination was given. Aggrieved, petitioner filed a case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages. In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines.4Asserting their right to terminate the contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end the contract provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice to the other. The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to pay him his commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable to petitioner for moral damages in the amount of P20,000.00. On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared the contractual relationship between

the parties as being for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful as long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the worker and absent any other circumstances vitiating his consent."5 The finding of the NLRC was primarily hinged on the assumption that petitioner, on account of his educated stature, having indeed personally prepared his pleadings without the aid of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC held: "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which (would) necessarily come, although it (might) not be known when."6 Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of the commission. In his petition for review on certiorari, petitioner raised the following issues for resolution: "WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'S COMPANY IS FOR A FIXED PERIOD. "WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL. "WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES."7 The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and respondent company - was it or was it not one of regular employment? A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the following factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative employee or the power to control the employee with respect to the means or methods by which his work is to be accomplished.8 The "control test" assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is performed or services are rendered under the control and supervision of

the party contracting for the service, not only as to the result of the work but also as to the manner and details of the performance desired.9 An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent Metromedia Times Corporation not only of the right to control the results to be achieved but likewise the manner and the means used in reaching that end.10 Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to submit a daily sales activity report and also a monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed and monitored the sales activities of petitioner. The Labor Code, in Article 280 thereof, provides: "ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. Even in these latter cases, where such person has rendered at least one year of service, regardless of the nature of the

activity performed or of whether it is continuous or intermittent, the employment is considered regular as long as the activity exists, it not being indispensable that he be first issued a regular appointment or be formally declared as such before acquiring a regular status.11 That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went on for more than a year, could hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei, its President, herself admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent corporation recognized petitioner's invaluable contribution to the business when it renewed, not just once but five times, its contract with petitioner. Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been called upon to perform.12 The law affords protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to deprive the employee of his security of tenure.13 The sheer inequality that characterizes employer-employee relations, where the scales generally tip against the employee, often scarcely provides him real and better options. The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or authorized cause and must comply with the rudimentary due process of notice and hearing. It is not shown that respondent company has fully bothered itself with either of these requirements in terminating the services of petitioner. The notice of termination recites no valid or just cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense. The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of respondents, particularly by

respondent Liberato I. Gomez, and the award of moral damages must thus be deleted. WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which award is deleted. SO ORDERED. Davide, Jr., C.J., Ynares-Santiago, Carpio, and EN BANC FELIX B. PEREZ and AMANTE G. DORIA, Petitioners, G.R. No. 152048

Present: PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, CARPIO, AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, TINGA, CHICO-NAZARIO, VELASCO, JR., NACHURA, LEONARDO-DE CASTRO, BRION and PERALTA, JJ.

- versus -

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, Respondents.

Promulgated:

April 7, 2009 x--------------------------------------------------x DECISION CORONA, J.:

Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in PT&Ts Shipping Section, Materials Management Group.

Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping Section, respondents formed a special audit team to investigate the matter. It was discovered that the Shipping Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly showed traces of tampering, alteration and superimposition.

On September 3, 1993, petitioners were placed on preventive suspension for 30 days for their alleged involvement in the anomaly.[1] Their suspension was extended for 15 days twice: first on October 3, 1993[2] and second on October 18, 1993.[3]

On October 29, 1993, a memorandum with the following tenor was issued by respondents:
In line with the recommendation of the AVP-Audit as presented in his report of October 15, 1993 (copy attached) and the subsequent filing of criminal charges against the parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby dismissed from the service for having falsified company [4] documents. (emphasis supplied)

On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal dismissal.[5] They alleged that they were dismissed on November 8, 1993, the date they received the above-mentioned memorandum. The labor arbiter found that the 30-day extension of petitioners suspension and their subsequent dismissal were both illegal. He ordered respondents to pay petitioners their salaries during their 30-day illegal suspension, as well as to reinstate them with backwages and 13th month pay.

The National Labor Relations Commission (NLRC) reversed the decision of the labor arbiter. It ruled that petitioners were dismissed for just cause, that they were accorded due process and that they were illegally suspended for only 15 days (without stating the reason for the reduction of the period of petitioners illegal suspension).[6]

Petitioners appealed to the Court of Appeals (CA). In its January 29, 2002 decision,[7] the CA affirmed the NLRC decision insofar as petitioners illegal suspension for 15 days and dismissal for just cause were concerned. However, it found that petitioners were dismissed without due process.

Petitioners now seek a reversal of the CA decision. They contend that there was no just cause for their dismissal, that they were not accorded due process and that they were illegally suspended for 30 days. We rule in favor of petitioners.

RESPONDENTS FAILED TO PROVE JUST CAUSE AND TO OBSERVE DUE PROCESS

The CA, in upholding the NLRCs decision, reasoned that there was sufficient basis for respondents to lose their confidence in petitioners [8] for allegedly tampering with the shipping documents. Respondents emphasized the importance of a shipping order or request, as it was the basis of their liability to a cargo forwarder.[9]

We disagree.

Without undermining the importance of a shipping order or request, we find respondents evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted.[10] Other than their bare allegations and the fact that such documents came into petitioners hands at some point, respondents should have provided evidence of petitioners functions, the extent of their duties, the procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of shipping documents. The alterations on the shipping documents could not reasonably be attributed to petitioners because it was never proven that petitioners alone had control of or access to these documents. Unless duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer that it has lost confidence in its employee.[11]

Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination.[12] However, in General Bank and Trust Co. v. CA,[13] we said:
[L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.

The burden of proof rests on the employer to establish that the dismissal is for cause in view of the security of tenure that employees enjoy under the Constitution and the Labor Code. The employers evidence must clearly and convincingly show the facts on which the loss of confidence in the employee may be fairly made to rest.[14] It must be adequately proven by substantial evidence.[15] Respondents failed to discharge this burden. Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee. [16]

Petitioners were neither apprised of the charges against them nor given a chance to defend themselves. They were simply and arbitrarily separated from work and served notices of termination in total disregard of their rights to due process and security of tenure. The labor arbiter and the CA correctly found that

respondents failed to comply with the two-notice requirement for terminating employees.

Petitioners likewise contended that due process was not observed in the absence of a hearing in which they could have explained their side and refuted the evidence against them.

There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires:
ART. 277. Miscellaneous provisions. x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. (emphasis supplied)

The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him:[17]
Section 2. Security of Tenure. x x x (d) In all cases of termination of employment, the following standards of due process shall be substantially observed: For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. (iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (emphasis supplied)

Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of an employee? Can the apparent conflict between the law and its IRR be reconciled?

At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the administrative regulations implementing it.[18] The

authority to promulgate implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute.[19] As such, it cannot amend the law either by abridging or expanding its scope.[20]

Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given ample opportunity to be heard and to defend himself.Thus, the opportunity to be heard afforded by law to the employee is qualified by the word ample which ordinarily means considerably more than adequate or sufficient.[21]In this regard, the phrase ample opportunity to be heard can be reasonably interpreted as extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance with the due process requirement in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation between the employer and the employee. The ample opportunity to be heard standard is neither synonymous nor similar to a formal

hearing. To confine the employees right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.[22]

The standard for the hearing requirement, ample opportunity, is couched in general language revealing the legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit. Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards of due process outlined therein shall be observed substantially, not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. An employees right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy.[23] To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings.[24] Therefore, while the phrase ample opportunity to be heard may in fact in clude an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to satisfy the employees right to be heard.

This Court has consistently ruled that the due process requirement in cases of termination of employment does not require an actual or formal hearing. Thus, we categorically declared in Skippers United Pacific, Inc. v. Maguad:[25]
The Labor Code does not, of course, require a formal or trial type proceeding before an erring employee may be dismissed. (emphasis supplied)

In Autobus Workers Union v. NLRC,[26] we ruled:


The twin requirements of notice and hearing constitute the essential elements of due process. Due process of law simply means giving opportunity to be heard before judgment is rendered. In fact,there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard. xxx xxx xxx

A formal trial-type hearing is not even essential to due process. It is enough that the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present supporting evidence on which a fair decision can be based. This type of hearing is not even mandatory in cases of complaints lodged before the Labor Arbiter. (emphasis supplied)

In Solid

Development

Corporation

Workers

Association

v.

Solid

Development Corporation,[27] we had the occasion to state:


[W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. In separate infraction reports, petitioners were both apprised of the particular acts or omissions constituting the charges against them. They were also required to submit their written explanation within 12 hours from receipt of the reports. Yet, neither of them complied. Had they found the 12-hour period too short, they should have requested for an extension of time. Further, notices of termination were also sent to them informing them of the basis of their dismissal. In fine, petitioners were given due process before they were dismissed. Even if no hearing was conducted, the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. (emphasis supplied)

Our holding in National Semiconductor HK Distribution, Ltd. v. NLRC[28] is of similar import:


That the investigations conducted by petitioner may not be considered formal or recorded hearings or investigations is immaterial. A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the parties are

afforded fair and reasonable opportunity to explain their side of the controversy. It is deemed sufficient for the employer to follow the natural sequence of notice, hearing and judgment.

The above rulings are a clear recognition that the employer may provide an employee with ample opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written.

After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes[29] or where company rules or practice requires an actual hearing as part of

employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point of law.

This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably implements the ample opportunity to be heard standard under Article 277(b) of the Labor Code without unduly restricting the language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that [a]ll doubts in the implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations shall be resolved in favor of labor.

In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases: (a) ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.

(b)

a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it.

(c)

the ample opportunity to be heard standard in the Labor Code prevails over the hearing or conference requirement in the implementing rules and regulations.

PETITIONERS WERE ILLEGALLY SUSPENDED FOR 30 DAYS

An employee may be validly suspended by the employer for just cause provided by law. Such suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or paid his wages during the extended period.[30] In this case, petitioners contended that they were not paid during the two 15day extensions, or a total of 30 days, of their preventive suspension. Respondents failed to adduce evidence to the contrary. Thus, we uphold the ruling of the labor arbiter on this point. Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, as amended, mandates that the

employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement.[31] In this case, however, reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution.[32] Fourteen years have transpired from the time petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any prudent or practical purpose.[33]

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 29, 2002 in CA-G.R. SP No. 50536 finding that petitioners Felix B. Perez and Amante G. Doria were not illegally dismissed but were not accorded due process and were illegally suspended for 15 days, is SET ASIDE. The decision of the labor arbiter dated December 27, 1995 in NLRC NCR CN. 11-06930-93 is hereby AFFIRMED with the MODIFICATION that

petitioners should be paid their separation pay in lieu of reinstatement .

SO ORDERED.

RENATO C. CORONA Associate Justice

WE CONCUR:

REYNATO S. PUNO Chief Justice

LEONARDO A. QUISUMBING Associate Justice

CONSUELO YNARES-SANTIAGO Associate Justice

ANTONIO T. CARPIO Associate Justice

(On Official Leave) MA. ALICIA M. AUSTRIA-MARTINEZ Associate Justice

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 80609 August 23, 1988 PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents. Nicanor G. Nuevas for petitioner.

CRUZ, J.: The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who had been dismissed for cause as found by the public respondent. Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated from the service. 2 She went to the Ministry of Labor and Employment claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's decision declared: WHEREFORE, the instant complaint is dismissed for lack of merit.
Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outhide the premises of respondent company and that their act of giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must be given one month pay for 3 every year of service as financial assistance.

Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the above- quoted award as having been made with grave abuse of discretion. In its challenged resolution of September 22, 1987, the NLRC said:
... Anent the award of separation pay as financial assistance in complainant's favor, We find the same to be equitable, taking into consideration her long years of service to the company whereby she had undoubtedly contributed to the success of respondent. While we do not in any way approve of complainants (private respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion 5 that we resolve to uphold the award of financial assistance in her favor.

The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law. In the case of the private respondent, she has been awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead of deterring corruption. For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with the company for ten years. In support of this position, the Solicitor General cites the cases of Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for cause but were nevertheless allowed separation pay on grounds of social and compassionate justice. As the Court put it in the Firestone case: In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However, considering that Lariosa had worked with the company for eleven years with no known previous bad record, the ends of social and compassionate justice would be served if he is paid full separation pay but not reinstatement without backwages by the NLRC. In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay for his 11 years of service with the company. In Soco, the employee was also legally separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings but he was just the same granted one-half month separation pay for every year of his 18-year service.

Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for preferring certain dealers in violation of company policy but was allowed separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss of confidence because of her failure to account for certain funds but she was awarded separation pay equivalent to one-half month's salary for every year of her service of 15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he had instigated labor unrest among the workers and had serious differences with them, among other grounds, but he was still granted three months separation pay corresponding to his 3-year service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service was held validly terminated for lack of confidence and abandonment of work but he was nonetheless granted three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed three employees who had been dismissed after they were found guilty of misappropriating company funds. The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. 13 The cases above cited constitute the exception, based upon considerations of equity. Equity has been defined as justice outside law, 14 being ethical rather than jural and belonging to the sphere of morals than of law. 15 It is grounded on the precepts of conscience and not on any sanction of positive law. 16 Hence, it cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub- topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with

management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. The Court notes, however, that where the exception has been applied, the decisions have not been consistent as to the justification for the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded separation pay notnvithstanding that the first cause was certainly more serious than the second. No less curiously, the employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service, but in Filipro the award was two months separation pay for 2 years service. In Firestone, the emplovee was allowed full separation pay corresponding to his 11 years of service, but in Metro, the employee was granted only onehalf month separation pay for every year of her 15year service. It would seem then that length of service is not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal. The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should be re-examined. It is time we rationalized the exception, to make it fair to both labor and management, especially to labor. There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this

being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause. But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified. We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will

encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee. 17 WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is AFFIRMED in totoexcept for the grant of separation pay in the form of financial assistance, which is hereby DISALLOWED. The

temporary restraining order dated March 23, 1988, is LIFTED. It is so ordered. Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Medialdea, JJ., concur. EN BANC

[G.R. No. 151378. March 28, 2005]

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB, respondents. DECISION
GARCIA, J.:

Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. SP. No. 59847, to wit:
1. Decision dated 16 November 2001,[1] reversing and setting aside an earlier decision of the National Labor Relations Commission (NLRC); and 2. Resolution dated reconsideration. 8 January 2002,[2] denying petitioners motion for

The material facts may be briefly stated, as follows: Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the corporation was in dire financial straits. It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. In time, respondents separately filed with the regional Arbitration Branch of the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and nonpayment of service incentive leave and 13th month pay against JAKA and its HRD Manager, Rosana Castelo.

After due proceedings, the Labor Arbiter rendered a decision [3] declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. More specifically the decision dispositively reads:

WHEREFORE, judgment is hereby rendered declaring as illegal the termination of complainants and ordering respondents to reinstate them to their positions with full backwages which as of July 30, 1998 have already amounted to P339,768.00. Respondents are also ordered to pay complainants the amount of P2,775.00 representing the unpaid service incentive leave pay of Parohinog, Lescano and Cagabcab an the amount of P19,239.96 as payment for 1997 13th month pay as alluded in the above computation. If complainants could not be reinstated, respondents are ordered to pay them separation pay equivalent to one month salary for very (sic) year of service. SO ORDERED.
Therefrom, JAKA went on appeal to the NLRC, which, in a decision dated August 30, 1999,[4] affirmed in toto that of the Labor Arbiter. JAKA filed a motion for reconsideration. Acting thereon, the NLRC came out with another decision dated January 28, 2000,[5] this time modifying its earlier decision, thus:

WHEREFORE, premises considered, the instant motion for reconsideration is hereby GRANTED and the challenged decision of this Commission [dated] 30 August 1999 and the decision of the Labor Arbiter xxx are hereby modified by reversing an setting aside the awards of backwages, service incentive leave pay. Each of the complainants-appellees shall be entitled to a separation pay equivalent to one month. In addition, respondents-appellants is (sic) ordered to pay each of the complainantsappellees the sum of P2,000.00 as indemnification for its failure to observe due process in effecting the retrenchment. SO ORDERED.
Their motion for reconsideration having been denied by the NLRC in its resolution of April 28, 2000,[6] respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No. 59847. As stated at the outset hereof, the Court of Appeals, in a decision dated November 16, 2000, applying the doctrine laid down by this Court in Serrano vs. NLRC,[7] reversed and set aside the NLRCs decision of January 28, 2000, thus:

WHEREFORE, the decision dated January 28, 2000 of the National Labor Relations Commission is REVERSED and SET ASIDE and another one entered ordering

respondent JAKA Foods Processing Corporation to pay petitioners separation pay equivalent to one (1) month salary, the proportionate 13th month pay and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the time the Decision herein becomes final. SO ORDERED.
This time, JAKA moved for a reconsideration but its motion was denied by the appellate court in its resolution of January 8, 2002. Hence, JAKAs present recourse, submitting, for our consideration, the following issues:
I. II. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED FULL BACKWAGES TO RESPONDENTS. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED SEPARATION PAY TO RESPONDENTS.

As we see it, there is only one question that requires resolution, i.e. what are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employers compliance with the notice requirement under the Labor Code. This, certainly, is not a case of first impression. In the very recent case of Agabon vs. NLRC,[8] we had the opportunity to resolve a similar question. Therein, we found that the employees committed a grave offense, i.e., abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article 282 of the Labor Code. In said case, we upheld the validity of the dismissal despite noncompliance with the notice requirement of the Labor Code. However, we required the employer to pay the dismissed employees the amount of P30,000.00, representing nominal damages for non-compliance with statutory due process, thus:

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta vs. National Labor Relations Commission. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. xxx xxx xxx

The violation of petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of

such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules, (Emphasis supplied).
The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the same Code. At this point, we note that there are divergent implications of a dismissal for just cause under Article 282, on one hand, and a dismissal for authorized cause under Article 283, on the other. A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employers exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program. The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay.[9] For these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based on one of the authorized causes under Article 283. Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative.

The records before us reveal that, indeed, JAKA was suffering from serious business losses at the time it terminated respondents employment. As aptly found by the NLRC:

A careful study of the evidence presented by the respondent-appellant corporation shows that the audited Financial Statement of the corporation for the periods 1996, 1997 and 1998 were submitted by the respondent-appellant corporation, The Statement of Income and Deficit found in the Audited Financial Statement of the respondent-appellant corporation clearly shows the following in 1996, the deficit of the respondent-appellant corporation was P188,218,419.00 or 94.11% of the stockholders [sic] equity which amounts to P200,000,000.00. In 1997 when the retrenchment program of respondent-appellant corporation was undertaken, the deficit ballooned to P247,222,569.00 or 123.61% of the stockholders equity, thus a capital deficiency or impairment of equity ensued. In 1998, the deficit grew to P355,794,897.00 or 177% of the stockholders equity. From 1996 to 1997, the deficit grew by more that (sic) 31% while in 1998 the deficit grew by more than 47%. The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged losses was prepared by an independent auditor, SGV & Co. It convincingly showed that the respondent-appellant corporation was in dire financial straits, which the complainants-appellees failed to dispute. The losses incurred by the respondent-appellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were adequately shown with respondent-appellants audited financial statement. Having established the loss incurred by the respondent-appellant corporation, it necessarily necessarily (sic) follows that the ground in support of retrenchment existed at the time the complainants-appellees were terminated. We cannot therefore sustain the findings of the Labor Arbiter that the alleged losses of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is therefore logical for the corporation to implement a retrenchment program to prevent further losses.[10]
Noteworthy it is, moreover, to state that herein respondents did not assail the foregoing finding of the NLRC which, incidentally, was also affirmed by the Court of Appeals. It is, therefore, established that there was ground for respondents dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00. We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of

service. This is because in Reahs Corporation vs. NLRC,[11] we made the following declaration:

The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons. xxx. (Emphasis supplied)
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of the Court of Appeals respectively dated November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new one entered upholding the legality of the dismissal but ordering petitioner to pay each of the respondents the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process. SO ORDERED. Davide, Jr., C.J., Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Chico-Nazario, JJ., concur. Puno, J., reiterate dissent in Agaban & Serrano. Panganiban, J., reiterate dissent in Agaban v. NLRC, GR 158693, Nov. 17, 2004, and Serrano v. NLRC, 380 Phil. 416, Jan. 27, 2000. Tinga, J., only in the result. See separate opinion.

Agabon vs. NLRC Case Digest


Jenny Agabon & Virgilio Agabon vs. NLRC G.R. No.158693 November 17, 2004 Facts: Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims.

Issue: Whether or not respondents dismissal is illegal and if not, entitles them benefits. Ruling: The Court ruled that the dismissal is legal and entitles them of payment of benefits. 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. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full back wages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, 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, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. 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, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, 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. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process. The Court ruled that respondent is liable for petitioners holiday pay, service incentive leave pay and 13th month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month 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. Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code. An employer is prohibited under Article 113 of the same Code from making any deductions without the employees knowledge and consent.
Email This

G.R. No. 82511 March 3, 1992 GLOBE-MACKAY CABLE AND RADIO CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and IMELDA SALAZAR, respondents. Castillo, Laman, Tan & Pantaleon for petitioner. Gerardo S. Alansalon for private respondent.

ROMERO, J.:

For private respondent Imelda L. Salazar, it would seem that her close association with Delfin Saldivar would mean the loss of her job. In May 1982, private respondent was employed by Globe-Mackay Cable and Radio Corporation (GMCR) as general systems analyst. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. Sometime in 1984, petitioner GMCR, prompted by reports that company equipment and spare parts worth thousands of dollars under the custody of Saldivar were missing, caused the investigation of the latter's activities. The report dated September 25, 1984 prepared by the company's internal auditor, Mr. Agustin Maramara, indicated that Saldivar had entered into a partnership styled Concave Commercial and Industrial Company with Richard A. Yambao, owner and manager of Elecon Engineering Services (Elecon), a supplier of petitioner often recommended by Saldivar. The report also disclosed that Saldivar had taken petitioner's missing Fedders airconditioning unit for his own personal use without authorization and also connived with Yambao to defraud petitioner of its property. The airconditioner was recovered only after petitioner GMCR filed an action for replevin against Saldivar. 1 It likewise appeared in the course of Maramara's investigation that Imelda Salazar violated company reglations by involving herself in transactions conflicting with the company's interests. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed to inform her employer. Consequently, in a letter dated October 8, 1984, petitioner company placed private respondent Salazar under preventive suspension for one (1) month, effective October 9, 1984, thus giving her thirty (30) days within which to, explain her side. But instead of submitting an explanations three (3) days later or on October 12, 1984 private respondent filed a complaint against petitioner for illegal suspension, which she subsequently amended to include illegal dismissal, vacation and sick leave benefits, 13th month pay and damages, after petitioner notified her in writing that effective November 8, 1984, she was considered dismissed "in view of (her) inability to refute and disprove these findings. 2

After due hearing, the Labor Arbiter in a decision dated July 16, 1985, ordered petitioner company to reinstate private respondent to her former or equivalent position and to pay her full backwages and other benefits she would have received were it not for the illegal dismissal. Petitioner was also ordered to pay private respondent moral damages of P50,000.00. 3 On appeal, public respondent National Labor Relations, Commission in the questioned resolution dated December 29, 1987 affirmed the aforesaid decision with respect to the reinstatement of private respondent but limited the backwages to a period of two (2) years and deleted the award for moral damages. 4 Hence, this petition assailing the Labor Tribunal for having committed grave abuse of discretion in holding that the suspension and subsequent dismissal of private respondent were illegal and in ordering her reinstatement with two (2) years' backwages. On the matter of preventive suspension, we find for petitioner GMCR. The inestigative findings of Mr. Maramara, which pointed to Delfin Saldivar's acts in conflict with his position as technical operations manager, necessitated immediate and decisive action on any employee closely, associated with Saldivar. The suspension of Salazar was further impelled by th.e discovery of the missing Fedders airconditioning unit inside the apartment private respondent shared with Saldivar. Under such circumstances, preventive suspension was the proper remedial recourse available to the company pending Salazar's investigation. By itself, preventive suspension does, not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the company's property pending investigation any alleged malfeasance or misfeasance committed by the employee. 5 Thus, it is not correct to conclude that petitioner GMCR had violated Salazar's right to due process when she was promptly suspended. If at all, the fault, lay with private respondent when she ignored petitioner's memorandum of October 8, 1984 "giving her ample opportunity to present (her) side to the Management." Instead, she went directly to the Labor Department and filed her complaint for illegal suspension without giving her employer a chance to evaluate her side of the controversy.

But while we agree with the propriety of Salazar's preventive suspension, we hold that her eventual separation from employment was not for cause. What is the remedy in law to rectify an unlawful dismissal so as to "make whole" the victim who has not merely lost her job which, under settled Jurisprudence, is a property right of which a person is not to be deprived without due process, but also the compensation that should have accrued to her during the period when she was unemployed? Art. 279 of the Labor Code, as amended, provides:
Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. 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 , inclusive of allowances, 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 6 reinstatement. (Emphasis supplied)

Corollary thereto are the following provisions of the Implementing Rules and Regulations of the Labor Code: Sec. 2. Security of Tenure. In cases of regular employments, the employer shall not terminate the services of an employee except for a just cause as provided in the Labor Code or when authorized by existing laws.
Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall by 7 entitled to reinstatement without loss of seniority rights and to backwages ." (Emphasis supplied)

Before proceeding any furthers, it needs must be recalled that the present Constitution has gone further than the 1973 Charter in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Given the pro-poor orientation of several articulate Commissioners of the Constitutional Commission of 1986, it was not surprising that a whole new Article emerged on Social Justice and Human Rights designed, among other things, to "protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good."8 Proof of the priority accorded to labor is that it leads the other areas of concern in the Article on Social Justice,viz., Labor ranks ahead of such topics as Agrarian and Natural Resources Reform, Urban

Land Roform and Housing, Health, Women, Role and Rights of Poople's Organizations and Human Rights. 9 The opening paragraphs on Labor states The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled tosecurity of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting 10 their rights and benefits is may be provided by law. (Emphasis supplied)

Compare this with the sole.provision on Labor in the 1973 Constitution under the Article an Declaration of Principles and State Policies that provides:
Sec. 9. The state shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and employers. The State shall ensure the rights of workers to self-organization, collective baegaining, security of tenure, and just and 11 humane conditions of work. The State may provide for compulsory arbitration.

To be sure, both Charters recognize "security of tenure" as one of the rights of labor which the State is mandated to protect. But there is no gainsaying the fact that the intent of the framers of the present Constitution was to give primacy to the rights of labor and afford the sector "full protection," at least greater protection than heretofore accorded them, regardless of the geographical location of the workers and whether they are organized or not. It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who substantially contributed to the present formulation of the protection to labor provision and proposed that the same be incorporated in the Article on Social Justice and not just in the Article on Declaration of Principles and State Policies "in the light of the special importance that we are giving now to social justice and the necessity of emphasizing the scope and role of social justice in national development." 12 If we have taken pains to delve into the background of the labor provisions in our Constitution and the Labor Code, it is but to stress that the right of an

employee not to be dismissed from his job except for a just or authorized cause provided by law has assumed greater importance under the 1987 Constitution with the singular prominence labor enjoys under the article on Social Justice. And this transcendent policy has been translated into law in the Labor Code. Under its terms, where a case of unlawful or unauthorized dismissal has been proved by the aggrieved employee, or on the other hand, the employer whose duty it is to prove the lawfulness or justness of his act of dismissal has failed to do so, then the remedies provided in Article 279 should find, application. Consonant with this liberalized stance vis-a-vis labor, the legislature even went further by enacting Republic Act No. 6715 which took effect on March 2, 1989 that amended said Article to remove any possible ambiguity that jurisprudence may have generated which watered down the constitutional intent to grant to labor "full protection."13 To go back to the instant case, there being no evidence to show an authorized, much less a legal, cause for the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but ay well, to full backwages." 14 The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is, in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary meaning of the word "reinstate" is "to restore to a state, conditione positions etc. from which one had been removed" 15 and in the latter, to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her "whole." Sadly, the avowed intent of the law has at times been thwarted when reinstatement has not been forthcoming and the hapless dismissed employee finds himself on the outside looking in. Over time, the following reasons have been advanced by the Court for denying reinstatement under the facts of the case and the law applicable thereto; that reinstatement can no longer be effected in view of the long passage of time (22 years of litigation) or because of the realities of the situation; 16 or that it would be "inimical to the employer's interest; " 17 or that reinstatement may no longer be feasible; 18 or, that it will not serve the best interests of the parties involved; 19 or that the company would be prejudiced by the workers' continued employment; 20 or that it will not serve any

prudent purpose as when supervening facts have transpired which make execution on that score unjust or inequitable 21 or, to an increasing extent, due to the resultant atmosphere of "antipathy and antagonism" or "strained relations" or "irretrievable estrangement" between the employer and the employee. 22 In lieu of reinstatement, the Court has variously ordered the payment of backwages and separation pay 23 or solely separation pay. 24 In the case at bar, the law is on the side of private respondent. In the first place the wording of the Labor Code is clear and unambiguous: "An employee who is unjustly dismissed from work shall be entitled to reinstatement. . . . and to his full backwages. . . ." 25 Under the principlesof statutory construction, if a statute is clears plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plain-meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by, the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. 26 The legislature is presumed to know the meaning of the words, to:have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute. 27 Verba legis non est recedendum, or from the words of a statute there should be no departure. Neither does the provision admit of any qualification. If in the wisdom of the Court, there may be a ground or grounds for non-application of the abovecited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. A few examples, will suffice to illustrate the Court's application of the above principles: where the employee is a Vice-President for Marketing and as such, enjoys the full trust and confidence of top management; 28 or is the Officer-In-Charge of the extension office of the bank where he works; 29 or is an organizer of a union who was in a position to sabotage the union's

efforts to organize the workers in commercial and industrial establishments; 30 or is a warehouseman of a non-profit organization whose primary purpose is to facilitate and maximize voluntary gifts. by foreign individuals and organizations to the Philippines; 31 or is a manager of its Energy Equipment Sales. 32 Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwisey reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. 33 Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. 34 Here, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee. Hence, this does not constitute an exception to the general rule mandating reinstatement for an employee who has been unlawfully dismissed. On the other hand, has she betrayed any confidence reposed in her by engaging in transactions that may have created conflict of interest situations? Petitioner GMCR points out that as a matter of company policy, it prohibits its employees from involving themselves with any company that has business dealings with GMCR. Consequently, when private respondent Salazar signed as a witness to the partnership papers of Concave (a supplier of Ultra which in turn is also a supplier of GMCR), she was deemed to have placed. herself in an untenable position as far as petitioner was concerned. However, on close scrutiny, we agree with public respondent that such a circumstance did not create a conflict of interests situation. As a systems analyst, Salazar was very far removed from operations involving the procurement of supplies. Salazar's duties revolved around the development of systems and analysis of designs on a continuing basis. In other words,

Salazar did not occupy a position of trust relative to the approval and purchase of supplies and company assets. In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As we have held countless times, while loss of confidence or breach of trust is a valid ground for terminations it must rest an some basis which must be convincingly established. 35 An employee who not be dismissed on mere presumptions and suppositions. Petitioner's allegation that since Salazar and Saldivar lived together in the same apartment, it "presumed reasonably that complainant's sympathy would be with Saldivar" and its averment that Saldivar's investigation although unverified, was probably true, do not pass this Court's test. 36 While we should not condone the acts of disloyalty of an employee, neither should we dismiss him on the basis of suspicion derived from speculative inferences. To rely on the Maramara report as a basis for Salazar's dismissal would be most inequitous because the bulk of the findings centered principally oh her friend's alleged thievery and anomalous transactions as technical operations' support manager. Said report merely insinuated that in view of Salazar's special relationship with Saldivar, Salazar might have had direct knowledge of Saldivar's questionable activities. Direct evidence implicating private respondent is wanting from the records. It is also worth emphasizing that the Maramara report came out after Saldivar had already resigned from GMCR on May 31, 1984. Since Saldivar did not have the opportunity to refute management's findings, the report remained obviously one-sided. Since the main evidence obtained by petitioner dealt principally on the alleged culpability of Saldivar, without his having had a chance to voice his side in view of his prior resignation, stringent examination should have been carried out to ascertain whether or not there existed independent legal grounds to hold Salatar answerable as well and, thereby, justify her dismissal. Finding none, from the records, we find her to have been unlawfully dismissed. WHEREFORE, the assailed resolution of public respondent National Labor Relations Commission dated December 29, 1987 is hereby AFFIRMED. Petitioner GMCR is ordered to REINSTATE private respondent Imelda Salazar and to pay her backwages equivalent to her salary for a period of two (2) years only.

This decision is immediately executory. SO ORDERED. FIRST DIVISION

[G. R. No. 143215. July 11, 2002]

SOLIMAN SECURITY SERVICES, INC. and/or TERESITA L. SOLIMAN, petitioners, vs. THE COURT OF APPEALS and EDUARDO VALENZUELA,respondents. DECISION
VITUG, J.:

Respondent Eduardo Valenzuela, a security guard, was a regular employee of petitioner Soliman Security Services assigned at the BPI-Family Bank, Pasay City. On 09 March 1995, he received a memorandum from petitioners relieving him from his post at the bank, said to be upon the latters request, and requiring him to report to the security agency for reassignment. The following month, or on 07 April 1995, respondent filed a complaint for illegal dismissal on the ground that his services were terminated without a valid cause and that, during his tenure at the bank, he was not paid his overtime pay, 13th month pay, and premium pay for services rendered during holidays and rest days. He averred that, after receiving the memorandum of 09 March 1995, he kept on reporting to the office of petitioners for reassignment but, except for a brief stint in another post lasting for no more than a week, he was put on a floating status. Petitioners contended that the relief of respondent from his post, made upon request of the client, was merely temporary and that respondent had been offered a new post but the latter refused to accept it. Petitioners argued that respondents floating status for barely 29 days did not constitute constructive dismissal. On 31 July 1995, the Labor Arbiter, Ariel Cadiente Santos, arrived at a decision holding petitioners guilty of constructive dismissal and ordering the reinstatement of the complainant to his former position with full backwages from the date of his dismissal until his actual reinstatement; directing the Research and Information Unit to compute the various monetary benefits awarded to the complainant; and adjudging the payment, by way of attorneys fees, of ten percent (10%) of all sums owing to the complainant. On 16 October 1998, petitioners filed an appeal to the National Labor Relations Commission (NLRC). On 11 November 1998, the NLRC issued an order directing petitioners to submit an affidavit to the effect that their appeal bond was genuine and that it would be in force

and effect until the final disposition of the case. In his reply memorandum, dated 28 November 1998, respondent, asseverating that petitioners failed to deposit the required bond for the appeal, sought the appeal to be declared as not having been validly perfected. On 19 January 1999, petitioners submitted a manifestation and affidavit in compliance with the 11th November 1998 order of the NLRC.[1]Apparently satisfied, the NLRC, on 30 April 1999, gave due course to the appeal and rendered the presently assailed decision, reversing that of the Labor Arbiter, to wit:

WHEREFORE, the decision appealed from is hereby SET ASIDE. However, respondent [before the NLRC] is hereby ordered to pay complainant separation pay computed at one-half (1/2) month for every year of service, reckoned from date of employment on October 9, 1990 up to September 9, 1995, the date the complainant should have been redeployed.
[2]

A motion for reconsideration, filed by herein private respondent Valenzuela, was denied by the NLRC. Valenzuela forthwith brought the matter up to the Court of Appeals. On the thesis that the only issue interposed was whether or not the NLRC committed grave abuse of discretion when it took cognizance of the appeal and reversed the decision of the Labor Arbiter despite the failure of herein petitioners to validly post the appeal bond, the appellate court responded in the affirmative, set aside the assailed decision of the NLRC and reinstated that of the Labor Arbiter. A motion to reconsider the decision was denied. In the instant recourse before this Court, petitioners claim that the Court of Appeals (Eleventh Division) has committed grave abuse of discretion amounting to lack or excess of jurisdiction in declaring petitioners to have failed in perfecting their appeal with the NLRC. This Court finds merit in the petition. Private respondent would posit that the appeal of petitioners to the NLRC should be considered to have been made on 19 January 1999 (when petitioner submitted, pursuant to the NLRC order, a statement under oath to the effect that the surety bond it had posted was genuine and confirmed it to be in effect until the final termination of the case) which was beyond the ten-day period for perfecting an appeal. The records before the Court would show, however, that an appeal bond was posted with the NLRC at the same time that the appeal memorandum of petitioners was filed on 16 October 1998. A certified true copy of the appeal bond[3] would indicate that it was received by the Commission on 16 October 1998, the date reflected by the stamp-mark thereon. The surety bond issued by the Philippine Charter Insurance Corporation bore the date of 14 October 1998 or two days before the appeal memorandum was seasonably filed on 16 October 1998. The Order,[4] dated 11 November 1998, of the NLRC categorically stated that records [would] disclose that the instant appeal [was] accompanied by a surety bond, as the Decision sought to be appealed involved a monetary award. The NLRC, in fact, ordered petitioner to submit an affidavit to confirm that its appeal bond was genuine and would be in force and effect until the final disposition of the case. The

Commissions declaration that the appeal was accompanied by a surety bond indicated that there had been compliance with Article 223[5] of the Labor Code. An appeal to the NLRC is perfected once an appellant files the memorandum of appeal, pays the required appeal fee and, where an employer appeals and a monetary award is involved, the latter posts an appeal bond or submits a surety bond issued by a reputable bonding company.[6] In line with the desired objective of labor laws to have controversies promptly resolved on their merits, the requirements for perfecting appeals are given liberal interpretation and construction.[7] The only issue on the merits of the case is whether or not private respondent should be deemed constructively dismissed by petitioner for having been placed on floating status, i.e., with no reassignment, for a period of 29 days. The question posed is not new. In the case of Superstar Security Agency, Inc., vs. NLRC, [8] this Court, addressing a similar issue, has said:

x x x The charge of illegal dismissal was prematurely filed. The records show that a month after Hermosa was placed on a temporary off-detail, she readily filed a complaint against the petitioners on the presumption that her services were already terminated. Temporary off-detail is not equivalent to dismissal. In security parlance, it means waiting to be posted. It is a recognized fact that security guards employed in a security agency may be temporarily sidelined as their assignments primarily depend on the contracts entered into by the agency with third parties (Agro Commercial Security Agencies, Inc. vs. NLRC, et al., G.R. Nos. 82823-24, 31 July 1989). However, it must be emphasized that such temporary inactivity should continue only for six months. Otherwise, the security agency concerned could be liable for constructive dismissal.
[9]

Constructive dismissal exists when an act of clear discrimination, insensibility or disdain, on the part of an employer has become so unbearable as to leave an employee with no choice but to forego continued employment.[10] The temporary off-detail of respondent Valenzuela is not such a case. WHEREFORE, the instant petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE and the decision of the National Labor Relations Commission in NCR CN. 04-02620-95 is REINSTATED. No costs. SO ORDERED. Davide, Jr., C.J., (Chairman), Kapunan, Ynares-Santiago, and Austria-Martinez, JJ., concur.

ECOND DIVISION

[G.R. No. 147080. April 26, 2005]

CAPITOL MEDICAL CENTER, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, JAIME IBABAO, JOSE BALLESTEROS, RONALD CENTENO, NARCISO SARMIENTO, EDUARDO CANAVERAL, SHERLITO DELA CRUZ, SOFRONIO COMANDAO, MARIANO GALICIA, RAMON MOLOD, CARMENCITA SARMIENTO, HELEN MOLOD, ROSA COMANDAO, ANGELITO CUIZON, ALEX MARASIGAN, JESUS CEDRO, ENRICO ROQUE, JAY PERILLA, HELEN MENDOZA, MARY GLADYS GEMPEROSO, NINI BAUTISTA, ELENA MACARUBBO, MUSTIOLA SALVACION DAPITO, ALEXANDER MANABE, MICHAEL EUSTAQUIO, ROSE AZARES, FERNANDO MANZANO, HENRY VERA CRUZ, CHITO MENDOZA, FREDELITA TOMAYAO, ISABEL BRUCAL, MAHALKO LAYACAN, RAINIER MANACSA, KAREN VILLARENTE, FRANCES ACACIO, LAMBERTO CONTI, LORENA BEACH, JUDILAH RAVALO, DEBORAH NAVE, MARILEN CABALQUINTO, EMILIANA RIVERA, MA. ROSARIO URBANO, ROWENA ARILLA, CAPITOL MEDICAL CENTER EMPLOYEES ASSOCIATION-AFW, GREGORIO DEL PRADO, ARIEL ARAJA, and JESUS STA. BARBARA, JR., respondents. DECISION
CALLEJO, SR., J.:

This is a petition for review of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 57500 and its Resolution denying the motion for reconsideration thereof. The Antecedents[2] Whether the respondent Capitol Medical Center Employees AssociationAlliance of Filipino Workers (the Union, for brevity) was the exclusive bargaining agent of the rank-and-file employees of the petitioner Capitol Medical Center, Inc. had been the bone of contention between the Union and the petitioner. The petitioners refusal to negotiate for a collective bargaining agreement (CBA) resulted in a union-led strike on April 15, 1993. The Union had to contend with another union the Capitol Medical Center Alliance of Concerned Employees (CMC-ACE) which demanded for a certification election among the rank-and-file employees of the petitioner.

Med-Arbiter Brigida Fadrigon granted the petition, and the matter was appealed to the Secretary of Labor and Employment (SOLE). Undersecretary Bienvenido E. Laguesma rendered a Resolution on November 18, 1994 granting the appeal. He, likewise, denied the motion filed by the petitioner and the CMC-ACE. The latter thereafter brought the matter to the Court which rendered judgment on February 4, 1997 affirming the resolution of Undersecretary Laguesma, thus: 1. Dismissing the petition for certification election filed by the Capitol Medical Center Alliance of Concerned Employees-United Filipino Services Workers for lack of merit; and 2. Directing the management of the Capitol Medical Center to negotiate a CBA with the Capitol Medical Center Employees Association-Alliance of Filipino Workers, the certified bargaining agent of the rank-and-file employees.[3] The decision of the Court became final and executory. Thereafter, in a Letter dated October 3, 1997 addressed to Dr. Thelma N. Clemente, the President and Director of the petitioner, the Union requested for a meeting to discuss matters pertaining to a negotiation for a CBA, conformably with the decision of the Court.[4] However, in a Letter to the Union dated October 10, 1997, Dr. Clemente rejected the proposed meeting, on her claim that it was a violation of Republic Act No. 6713 and that the Union was not a legitimate one. On October 15, 1997, the petitioner filed a Petition for the Cancellation of the Unions Certificate of Registration with the Department of Labor and Employment (DOLE) on the following grounds: 3) Respondent has failed for several years to submit annually its annual financial statements and other documents as required by law. For this reason, respondent has long lost its legal personality as a union. 4) Respondent also engaged in a strike which has been declared illegal by the National Labor Relations Commission.[5] Apparently unaware of the petition, the Union reiterated its proposal for CBA negotiations in a Letter dated October 16, 1997 and suggested the date, time and place of the initial meeting. The Union further reiterated its plea in another Letter[6] dated October 28, 1997, to no avail. Instead of filing a motion with the SOLE for the enforcement of the resolutions of Undersecretary Laguesma as affirmed by this Court, the Union filed a Notice of Strike on October 29, 1997 with the National Conciliation and

Mediation Board (NCMB), serving a copy thereof to the petitioner. The Union alleged as grounds for the projected strike the following acts of the petitioner: (a) refusal to bargain; (b) coercion on employees; and (c) interference/ restraint to self-organization.[7] A series of conferences was conducted before the NCMB (National Capital Region), but no agreement was reached. On November 6, 1997, the petitioner even filed a Letter with the Board requesting that the notice of strike be dismissed;[8] the Union had apparently failed to furnish the Regional Branch of the NCMB with a copy of a notice of the meeting where the strike vote was conducted. On November 20, 1997, the Union submitted to the NCMB the minutes[9] of the alleged strike vote purportedly held on November 10, 1997 at the parking lot in front of the petitioners premises, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. It appears that 178 out of the 300 union members participated therein, and the results were as follows: 156 members voted to strike; 14 members cast negative votes; and eight votes were spoiled.[10] On November 28, 1997, the officers and members of the Union staged a strike. Subsequently, on December 1, 1997, the Union filed an ex parte motion with the DOLE, praying for its assumption of jurisdiction over the dispute. The Union likewise prayed for the imposition of appropriate legal sanctions, not limited to contempt and other penalties, against the hospital director/president and other responsible corporate officers for their continuous refusal, in bad faith, to bargain collectively with the Union, to adjudge the same hospital director/president and other corporate officers guilty of unfair labor practices, and for other just, equitable and expeditious reliefs in the premises.[11] On December 4, 1997, the SOLE issued an Order, assuming jurisdiction over the ongoing labor dispute. The decretal portion of the order reads: WHEREFORE, this Office now assumes jurisdiction over the labor disputes at Capitol Medical Center pursuant to Article 263(g) of the Labor Code, as amended. Consequently, all striking workers are directed to return to work within twenty-four (24) hours from the receipt of this Order and the management to resume normal operations and accept back all striking workers under the same terms and conditions prevailing before the strike. Further, parties are directed to cease and desist from committing any act that may exacerbate the situation. Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and counter-proposals leading to the conclusion of the collective

bargaining agreements in compliance with aforementioned Resolution of the Office as affirmed by the Supreme Court. SO ORDERED.[12] In obedience to the order of the SOLE, the officers and members of the Union stopped their strike and returned to work. For its part, the petitioner filed a petition[13] to declare the strike illegal with the National Labor Relations Commission (NLRC), docketed as NLRC NCR Case No. 00-12-08644-97. In its position paper, the petitioner appended the affidavit of Erwin Barbacena, the overseer of the property across the hospital which was being used as a parking lot, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. Also included were the affidavits of Simon J. Tingzon and Reggie B. Barawid, the petitioners security guards assigned in front of the hospital premises. They attested to the fact that no secret balloting took place at the said parking lot from 6:00 a.m. to 7:00 p.m. of November 10, 1997.[14] The petitioner also appended the affidavit of Henry V. Vera Cruz, who alleged that he was a member of the Union and had discovered that signatures on the Statements of Cash Receipt Over Disbursement submitted by the Union to the DOLE purporting to be his were not his genuine signatures;[15] the affidavits of 17 of its employees, who declared that no formal voting was held by the members of the Union on the said date, were also submitted. The latter employees also declared that they were not members of any union, and yet were asked to sign documents purporting to be a strike vote attendance and unnumbered strike vote ballots on different dates from November 8 to 11, 1997. In their position paper, the respondents appended the joint affidavit of the Union president and those members who alleged that they had cast their votes during the strike vote held on November 10, 1997.[16] In the meantime, on September 30, 1998, the Regional Director of the DOLE rendered a Decision denying the petition for the cancellation of the respondent Unions certificate of registration. The decision was affirmed by the Director of the Bureau of Labor Relations on December 29, 1998. In a parallel development, Labor Arbiter Facundo L. Leda rendered a Decision on December 23, 1998 in NLRC NCR Case No. 00-12-08644-97 in favor of the petitioner, and declared the strike staged by the respondents illegal. The fallo of the decision reads: 1. Declaring as illegal the strike staged by the respondents from November 28, 1997 to December 5, 1997;

2. Declaring respondent Jaime Ibabao, in his capacity as union president, the other union officers, and respondents Ronald Q. Centeno, Michael Eustaquio and Henry Vera Cruz to have lost their employment status with petitioner; and 3. Ordering the above respondents to pay, jointly and severally, petitioner the amount of Two Hundred Thousand Pesos (P200,000.00) by way of damages.[17] The Labor Arbiter ruled that no voting had taken place on November 10, 1997; moreover, no notice of such voting was furnished to the NCMB at least twenty-four (24) hours prior to the intended holding of the strike vote. According to the Labor Arbiter, the affidavits of the petitioners 17 employees who alleged that no strike vote was taken, and supported by the affidavit of the overseer of the parking lot and the security guards, must prevail as against the minutes of the strike vote presented by the respondents. The Labor Arbiter also held that in light of Article 263(9) of the Labor Code, the respondent Union should have filed a motion for a writ of execution of the resolution of Undersecretary Laguesma which was affirmed by this Court instead of staging a strike. The respondents appealed the decision to the NLRC which rendered a Decision[18] on June 14, 1999, granting their appeal and reversing the decision of the Labor Arbiter. The NLRC also denied the petitioners petition to declare the strike illegal. In resolving the issue of whether the union members held a strike vote on November 10, 1997, the NLRC ruled as follows: We find untenable the Labor Arbiters finding that no actual strike voting took place on November 10, 1997, claiming that this is supported by the affidavit of Erwin Barbacena, the overseer of the parking lot across the hospital, and the sworn statements of nineteen (19) (sic) union members. While it is true that no strike voting took place in the parking lot which he is overseeing, it does not mean that no strike voting ever took place at all because the same was conducted in the parking lot immediately/directly fronting, not across, the hospital building (Annexes 1-J, 1-K to 1-K-6). Further, it is apparent that the nineteen (19) (sic) hospital employees, who recanted their participation in the strike voting, did so involuntarily for fear of loss of employment, considering that their Affidavits are uniform and pro forma (Annexes H-2 to H-19).[19] The NLRC ruled that under Section 7, Rule XXII of DOLE Order No. 9, Series of 1997, absent a showing that the NCMB decided to supervise the conduct of a secret balloting and informed the union of the said decision, or that any such request was made by any of the parties who would be affected by the secret balloting and to which the NCMB agreed, the respondents were

not mandated to furnish the NCMB with such notice before the strike vote was conducted.[20] The petitioner filed a motion for the reconsideration of the decision, but the NLRC denied the said motion on September 30, 1999.[21] The petitioner filed a petition for certiorari with the CA assailing the decision and resolution of the NLRC on the following allegation: PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC) COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, ACTED CAPRICIOUSLY, AND CONTRAVENED THE LAW AND ESTABLISHED JURISPRUDENCE IN REVERSING THE LABOR ARBITERS DECISION DATED DECEMBER 23, 1998 (ANNEX E) AND IN UPHOLDING THE LEGALITY OF THE STRIKE STAGED BY PRIVATE RESPONDENTS FROM NOVEMBER 28, 1997 TO DECEMBER 5, 1997.[22] On September 29, 2000, the CA rendered judgment dismissing the petition and affir

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. Nos. 95494-97 September 7, 1995 LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, JOSE ERAD, FERNANDO HERNANDO, EDDIE ESTRELLA, CIRILO DAYAG, EDUARDO POQUITA, CARLITO PEPITO, RENE ARAO, JUANITO GAHUM, EMILIANO MAGNO, PERLITO LISONDRA, GREGORIO ALBARAN, ABRAHAM BAYLON, DIONESIO TRUCIO, TOMAS BASCO AND ROSARIO SINDAY, pertitioners, vs. NATIONAL LABOR RELATIONS COMMISSION & DEVELOPMENT CORPORATION, respondents. G.R. Nos. 95494-97 September 7, 1995

LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND CADECO ARGO DEVELOPMENT PHILS., INC.respondents. G.R. Nos. 95494-97 September 7, 1995 LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND LAPANDAY AGRICULTURAL & DEVELOPMENT CORPORATION, respondents. G.R. Nos. 95494-97 September 7, 1995 LAPANDAY WORKERS UNION, TOMAS N. BASCO, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND LAPANDAY AGRICULTURAL & DEVELOPMENT CORPORATION, respondents.

PUNO, J.: Petitioner Lapanday Agricultural Workers' Union (Union for brevity) and petitioners-workers of Lapanday Agricultural and Development Corporation and CADECO Agro Development Philippines, Inc., seek to reverse the consolidated Decision dated August 29, 1990, 1rendered by public respondent National Labor Relations Commision, declaring their strike illegal and ordering the dismissal of their leaders. The background of the case: Private respondents are sister companies engaged in the production of bananas. Their agricultural establishments are located in Davao City. On the other hand, petitioner Lapanday Workers' Union (Union) is the duly certified bargaining agent of the rank and file employees of private respondents. The Union is affiliated with the KMU-ANGLO. The other petitioners are all members of the Union.

The records show that petitioner Union has a collective bargaining agreement with private respondents, covering the period from December 5, 1985 to November 30, 1988. A few months before the expiration of their CBA, private respondents initiated certain management policies which disrupted the relationship of the parties. First, on August 1, 1988, private respondents contracted Philippine Eagle Protectors and Security Agency, Inc., to provide security services for their business premises located in Lapanday, Bandug, Callawa, Davao City, and Guising, Davao Del Sur. Their contract also called for the protection of the lives and limbs of private respondents' officers, employees and guests within company premises. The Union branded the security guards posted within the company premises as private respondents' "goons" and "special forces." It also accused the guards of intimidating and harassing their members. Second, private respondents conducted seminars on Human Development and Industrial Relations (HDIR) for their managerial and supervisory employees and, later, the rank-and-filers, to promote their social education and economic growth. Among the topics discussed in the seminar were the mission statement of the company, corporate values, and the Philippine political spectrum. The Union claimed that the module on the Philippine political spectrum lumped the ANGLO (Alliance of Nationalist and Genuine Labor Organization), with other outlawed labor organizations such as the National Democratic Front or other leftist groups. These issues were discussed during a labor-management meeting held on August 2, 1988. The labor group was represented by the Union, through its President, petitioner Arquilao Bacolod, and its legal counsel. After private respondents explained the issues, the Union agreed to allow its members to attend the HDIR seminar for the rank-and-filers. Nevertheless, on August 19 and 20, the Union directed its members not to attend the seminars scheduled on said dates. Earlier on, or on August 6, 1988, the Union, led by petitioners Arquilao Bacolod and Rene Arao, picketed the premises of the Philippine Eagle Protectors to show their displeasure on the hiring of the guards. Worse still, the Union filed on August 25, 1988, a Notice of Strike with the National Conciliation and Mediation Board (NCMB). It accused the company of unfair labor practices consisting of coercion of employees,

intimidation of union members and union-busting. 2 These were the same issues raised by the Union during the August 2, 1988 labor-management meeting. On August 29, 1988, the NCMB called a conciliation conference. The conference yielded the following agreement: (1) Union officers, including the officials of KMU-ANGLO, and the Executive Director of the NCMB would attend the HDIR seminar on September 5, 1988; and (2) A committee shall convene on September 10, 1989, to establish guidelines governing the guards. The Union officials did attend the September 5, 1988 seminar. While they no longer objected to the continuation of the seminar, they reiterated their demand for the deletion of the discussion pertaining to the KMU-ANGLO. With the apparent settlement of their differences, private respondents notified the NCMB that there were no more bases for the notice of strike. An unfortunate event brake the peace of the parties. On September 8, 1988, Danilo Martinez, a member of the Board of Directors of the Union, was gunned down in his house in the presence of his wife and children. The gunman was later identified as Eledio Samson, an alleged member of the new security forces of private respondents. On September 9, 1988, the day after the killing, most of the members of the Union refused to report for work. They returned to work the following day but they did not comply with the "quota system" adopted by the management to bolster production output. Allegedly, the Union instructed the workers to reduce their production to thirty per cent (30%). Private respondents charged the Union with economic sabotage through slowdown. On September 14, 1988, Private respondents filed separate charges against the Union and its members for illegal strike, unfair labor practice and damages, with prayer for injunction. These cases were docketed as Case Nos. RAB-11-09-00612-888 and RAB No. 11-09-00613-88 before Labor Arbiter Antonio Villanueva.

On September 17, 1988, petitioners skipped work to pay their last respect to the slain Danilo Martinez who was laid to rest. Again, on September 23, 1988, petitioners did not report for work. Instead, they proceeded to private respondents' office at Lanang, carrying placards and posters which called for the removal of the security guards, the ouster of certain management officials, and the approval of their mass leave application. Their mass action did not succeed. In a last ditch effort to settle the deteriorating dispute between the parties, City Mayor Rodrigo Duterte intervened. Dialogues were held on September 27 and 29, 1988 at the City Mayor's Office. Again, the dialogues proved fruitless as private respondents refused to withdraw the cases they earlier filed with public respondent. On October 3, 1988, a strike vote was canducted among the members of the Union and those in favor of the strike won overwhelming support from the workers. The result of the strike vote was then submitted to the NCMB on October 10, 1988. Two days later, or on Ootober 12, 1988, the Union struck. On the bases of the foregoing facts, Labor Arbiter Antonio Villanueva ruled that the Onion staged an illegal strike. The dispositlve portion of the Decision, dated December 12, 1988, states: COMFORMABLY WITH ALL THE FOREGOING, judgment is hereby rendered: a) Declaring the strike staged by respondents (petitioners) to be illegal; b) Declaring the employees listed as respondents in the complaint and those mentioned in page 21 to have lost their employment status with complainants Lapanday Agricultural and Development Corporation and Cadeco Agro Development Philippines, Inc.; and c) Ordering respondents (petitioners in this case) to desist from further committing an illegal strike. Petitioners appealed the Villanueva decision to public respondent NLRC.

It also appears that on December 6, 1988, or before the promulgation of the decision of Arbiter Villanueva, the Union, together with Tomas Basco and 25 other workers, filed a complaint for unfair labor practice and illegal suspension against LADECO. The case was docketed as Case No. RAB11-12-00780-88. On even date, another complaint for unfair labor practice and illegal dismissal was filed by the Union, together with Arquilao Bacolod and 58 other complainants. This was docketed as Case No. RAB-11-1200779-88. These two (2) cases were heard by Labor Arbiter Newton Sancho. Before the NLRC could resolve the appeal taken on the Villanueva decision in Case Nos. RAB-11-09-00612-88 and RAB-11-09-00613-88, Labor Arbiter Sancho rendered a decision in the two (2) cases filed by the Union against private respondents LADECO and CADECO (Case Nos. RAB-1112-00779-88 and RAB-11-12-00780-88). The Sancho decision, dated October 18, 1989, declared LADECO and CADECO guilty of unfair labor practices and illegal dismissal and ordered the reinstatement of the dismissed employees of private reapondents, with backwages and other benefits. Significantly, the Sancho decision considered the refusal of the workers to report for work on September 9, 1988, justified by the circumstance then prevailing, the killing of Danilo Martinez on September 8,1988. Private respondents appealed the Sancho decision, claiming, among others, that labor arbiter Sancho erred in passing upon the legality of the strike staged by petitioners since said issue had already been passed upon by the Regional Arbitration Branch and was still on appeal before the NLRC. Considering that the four (4) cases before it arose from the same set of facts and involved substantially the same issues, the NLRC rendered a consolidated decision, promulgated August 29, 1990, upholding the Villanueva decision in Case Nos. RAB-11-09-00612-88 and RAB-11-0900613-88. The dispositive portion of the assailed NLRC decision states: WHEREFORE, premises considered, a new judgment is entered in the four consolidated and above-captioned cases as follows:

1. The strike staged by the Lapanday Agricultural Workers Union is hereby declared to be (sic) illegal; 2. As a consequence thereof, the following employees-union officers are declared to have lost their employment status with Lapanday Agricultural Development Corporation and CADECO Agro Development Philippines, to wit: Arguilao Bacolod, Jose Erad, Fernando Hernando, Eldie Estrella, Cerelo Dayag, Lucino Magadan, Rene Arao, Eduardo Poquita, Juanito Gahum, Emilio Magno, Perlito Lisondra, Gregorio Albaron, Abraham Baylon, Dionosio Trocio, Tomas Basco and Rosario Sinday; 3. However, the individual respondents (union members), being merely rank-and-file employees and who merely joined the strike declared as illegal, are ordered reinstated but without backwages, the period they were out of work is deemed the penalty for the illegal strike they staged; 4. Ordering Lapanday Workers' Union, its leaders and members, to desist from further committing an illegal strike; and 5. Dismissing the complaint for unfair labor practice, illegal suspension and illegal dismissal filed by the Lapanday Workers Union (LWU)-ANGLO and its members, for lack of merit. SO ORDERED. Petitioners fileds motion for reconsideration. It did not prosper. Hence, the petition. Petitioners now claim that public respondent NLRC gravely abused its discretion in: a) declaring that their activities, from September 9, 1988 to October 12, 1988, were strike activities; and b) declaring that the strike staged on October 12, 1988 was illegal. The critical issue is the legality of the strike held on October 12, 1988. The applicable laws are Articles 263 and 264 of the Labor Code, as amended by E.O. No. 111, dated December 24, 1986. 3 Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111, provides:

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file anotice of strike or the employer may file, notice of lockout with the Ministry at least 30 days before the intended date thereof. In cases of unfair labor practice, the notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the 15daycooling-off period shall not apply and the union may take action immediately. xxx xxx xxx (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct of secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven (7) days before the intended strike or lockout subject to the cooling-off period herein provided. Article 264 of the same Code reads: Art. 264. Prohibited activities. (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry.

xxx xxx xxx . . . . Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided that mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. (emphasis ours). A strike is "any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute." 4 It is the most preeminent of the economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. Undeniably, strikes exert some disquieting effects not only on the relationship between labor and management but also on the general peace and progress of society. Our laws thus regulate their exercise within reasons by balancing the interests of labor and management together with the overarching public interest. Some of the limitations on the exercise of the right of strike are provided for in paragraphs (c) and (f) of Article 263 of the Labor Code, as amended, supra. They Provide for the procedural steps to be followed before staging a strike filing of notice of strike, taking of strike vote, and reporting of the strike vote result to the Department of Labor and Employment. In National Federation of Sugar Workers (NFSW) vs. Overseas, et al., 5 we ruled that these steps are mandatory in character, thus: If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not the waiting periods so specifically and emphatically prescribed by law, the purposes (hereafter discussed) far which the filing of the strike notice and strike-vote report is required cannot be achieved. . . . xxx xxx xxx So too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor General

. . . The submission of the report gives assurance that a strike vote has been taken and that, if the report concerning it is false, the majority of the members can take appropriate remedy before it is too late. The seven (7) day waiting period is intended to give the Department of Labor and Employment an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members. The need for assurance that majority of the union members support the strike cannot be gainsaid. Strike is usually the last weapon of labor to compel capital to concede to its bargaining demands or to defend itself against unfair labor practices of management. It is a weapon that can either breathe life to or destroy the union and its members in their struggle with management for a more equitable due of their labors. The decision to wield the weapon of strike must, therefore, rest on a rational basis, free from emotionalism, unswayed by the tempers and tantrums of a few hotheads, and firmly focused on the legitimate interest of the union which should not, however, be antithetical to the public welfare. Thus, our laws require the decision to strike to be the consensus of the majority for while the majority is not infallible, still, it is the best hedge against haste and error. In addition, a majority vote assures the union it will go to war against management with the strength derived from unity and hence, with better chance to succeed. InBatangas Laguna Tayabas Bus Company vs. NLRC, 6 we held: xxx xxx xxx The right to strike is one of the rights recognized and guaranteed by the Constitution as an instrument of labor for its protection against exploitation by management. By virtue of this right, the workers are able to press their demands for better terms of employment with more energy and persuasiveness, poising the threat to strike as their reaction to employer's intransigence. The strike is indeed a powerful weapon of the working class. But precisely because of this, it must be handled carefully, like a sensitive explosive, lest it blow up in the workers' own hands. Thus, it must be declared only after the most thoughtful consultation among them, conducted in the only way allowed, that is, peacefully, and in every case

conformably to reasonable regulation. Any violation of the legal requirements and strictures, . . . will render the strike illegal, to the detriment of the very workers it is supposed to protect. Every war must be lawfully waged. A labor dispute demands no less observance of the rules, for the benefit of all concerned. Applying the law to the case at bar, we rule that strike conducted by the union on October 12, 1988 is plainly illegal as it was held within th seven (7) day waiting period provided for by paragraph (f), Article 263 of the Labor Code, as amended. The haste in holding the strike prevented the Department of Labor and Employment from verifying whether it carried the approval of the majority of the union members. It set to naught an important policy consideration of our law on strike. Considering this finding, we need not exhaustively rule on the legality of the work stoppage conducted by the union and some of their members on September 9 and 23, 1988. Suffice to state, that the ruling of the public respondent on the matter is supported by substantial evidence. We affirm the decision of the public respondent limiting the penalty of dismissal only to the leaders of the illegal strike. especially the officers of the union who served as its major players. They cannot claim good faith to exculpate themselves. They admitted knowledge of the law on strike, including its procedure. They cannot violate the law which ironically was cast to promote their interest. We, likewise, agree with the public respondent that the union members who were merely instigated to participate in the illegal strike should be treated differently from their leaders. Part of our benign consideration for labor is the policy of reinstating rank-and-file workers who were merely misled in supporting illegal strikes. Nonetheless, these reinstated workers shall not be entitled to backwages as they should not be compensated for services skipped during the illegal strike. IN VIEW WHEREOF, the petition is dismissed for failure to show grave abuse of discretion on the part of the public respondent. Costs against the petitioners. SO ORDERED. Narvasa, C.J., Regalado, Mendoza and Francisco, JJ., concur.

Footnotes 1 In Case Nos. RAB-11-09-00612-88, RAB-11-09-00613-88, RAB-11-12-00779-88 and RAB-12-00780-88, affirming the decision of Labor Arbiter Antonio Villanueva, dated December 12, 1988. 2 Annex "C" of Petition, Rollo, p. 94. 3 The complaint was filed before the effectivity of RA 6715 on March 21, 1989. 4 Article 212 (1) of the Labor Code, as amended. 5 G.R. No. 59743, May 31, 1982, 114 SCRA 354, 365. 6 G.R. No.101858, August 21, 1992, 212 SCRA 792, 802.
The Lawphil Project - Arellano Law Foundation

SECOND DIVISION

[G.R. No. 128632. August 5, 1999]

MSF TIRE AND RUBBER, INC., petitioner, vs. COURT OF APPEALS and PHILTREAD TIRE WORKERS UNION, respondents. DECISION
MENDOZA, J.:

Petitioner seeks a review of the decision[1] of the Court of Appeals, dated March 20, 1997, which set aside the order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No. 95-770, granting petitioners application for a writ of preliminary injunction. The facts are as follows: A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private respondent, Philtread Tire Workers Union (Union), as a result of which the Union filed on May 27, 1994 a notice of strike in the National Conciliation and Mediation Board-National Capital Region charging Philtread with unfair labor practices for allegedly engaging in union-busting for

violation of the provisions of the collective bargaining agreement. This was followed by picketing and the holding of assemblies by the Union outside the gate of Philtreads plant at Km. 21, East Service Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15, 1994. In an order, dated September 4, 1994,[2] then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and certified it for compulsory arbitration. She enjoined the Union from striking and Philtread from locking out members of the Union. On December 9, 1994, during the pendency of the labor dispute, Philtread entered into a Memorandum of Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under the Memorandum of Agreement, Philtreads plant and equipment would be sold to a new company (petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which the plant was located would be sold to another company (Sucat Land Corporation), 60% of which would be owned by Philtread and 40% by Siam Tyre. This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then asked the Union to desist from picketing outside its plant and to remove the banners, streamers, and tent which it had placed outside the plants fence. As the Union refused petitioners request, petitioner filed on May 25, 1995 a complaint for injunction with damages against the Union and the latters officers and di rectors before the Regional Trial Court of Makati, Branch 59 where the case was docketed as Civil Case No. 95770. On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court. It insisted that the parties were involved in a labor dispute and that petitioner, being a mere alter ego of Philtread, was not an innocent bystander. After petitioner made its offer of evidence as well as the submission of the parties respective memoranda, the trial court, in an order, dated March 25, 1996, denied petitioners application for injunction and dismissed the complaint. However, on petitioners motion, the trial court, on July 2, 1996, reconsidered its order, and granted an injunction. Its order read:[3]

Considering all that has been stated, the motion for reconsideration is granted. The Order dated March 25, 1996 is reconsidered and set aside. Plaintiffs complaint is reinstated and defendants motion to dismiss isDENIED. As regards plaintiffs application for the issuance of a writ of preliminary injunction, the Court finds that the plaintiff has established a clear and subsisting right to the injunctive relief, hence, the same is GRANTED. Upon posting by the plaintiff and approval by the Court of a bond in the amount of One Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may suffer by reason of the injunction in the event that the Court may finally adjudge that the plaintiff is not entitled thereto, let a writ of preliminary injunction issue ordering the defendants and any other persons acting with them and/or on their behalf to desist immediately from conducting their assembly in the area immediately outside the plaintiffs plant at Km.

21 East Service Road, South Superhighway, Muntinlupa, Metro Manila, and from placing and/or constructing banners, streamers, posters and placards, and/or tents/shanties or any other structure, on the fence of, and/or along the sidewalk outside, the said plant premises until further orders from this Court. SO ORDERED.[4]
Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and prohibition before the Court of Appeals. On March 20, 1997, the appellate court rendered a decision granting the Unions petition and ordering the trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for review. Petitioner makes the following arguments in support of its petition:

a. The Court of Appeals erred in not summarily dismissing the Unions petition for its false certification of non-forum shopping and the Unions failure to file a motion for reconsideration before going up to the Court of Appeals on a petition for certiorari. b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit on the alleged ground that MSF did not have a clear and unmistakable right to entitle it to a writ of preliminary injunction. c. The Court of Appeals pronouncement that it has not touched upon the issue of whether or not private respondent is a mere innocent bystander to the labor dispute between Philtread and the Union or upon the issue of whether or not private respondent is a mere dummy or continuity of Philtread is contrary to its own conclusions in the body of the decision, which conclusions are erroneous. d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on Philtreads remaining operations in the country and allowed the Union to exercise its right to communicate the facts of its labor dispute within MSFs premises, given the percentage of interest Philtread has in both MSF and the corporation which owns the land bearing said plant.
The issues are (1) whether the Unions failure to disclose the pendency of NCMB-NCR-NS05-167-96 in its certification of non-forum shopping and its failure to file a motion for reconsideration of the order, dated July 2, 1996, of the trial court were fatal to its petition for review before the Court of Appeals; and (2) whether petitioner has shown a clear legal right to the issuance of a writ of injunction under the innocent bystander rule. First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.[5] It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes.[6] As held in Executive Secretary v. Gordon:[7]

Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has been held that there is forum-shopping (1) whenever as a result of an adverse decision in one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another, or (2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of Appeals since in such case he deliberately splits appeals in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or (3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the same from the original court.
In determining whether or not there is forum-shopping, what is important is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues.[8] Petitioner asserts that the Court of Appeals should have dismissed the Unions petition for review on the ground that the certification of non-forum shopping was false and perjurious as a result of the Unions failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving the same parties and pending before the National Conciliation and Mediation Board. The argument is without merit. Petitioner was a party to the proceedings before the National Conciliation and Mediation Board in which an order, dated September 8, 1994, was issued by then Secretary of Labor Nieves Confesor, enjoining any strike or lock-out by the parties.[9] It was petitioner which initiated the action for injunction before the trial court. Aggrieved by the injunctive order issued by the lower court, the Union was forced to file a petition for review before the Court of Appeals. We cannot understand why petitioner should complain that no mention of the pendency of the arbitration case before the labor department was made in the certificate of non-forum shopping attached to the Unions petition in the Court of Appeals. The petition of the Union in the Court of Appeals was provoked b y petitioners action in seeking injunction from the trial court when it could have obtained the same relief from the Secretary of Labor. Indeed, by focusing on the Unions certification before the appellate court, petitioner failed to notice that its own certification before the lower court suffered from the same omission for which it faults the Union. Although the body of petitioners complaint mentions NCMB-NCRNS-05-167-96, its own certification is silent concerning this matter.[10] It is not in keeping with the requirements of fairness for petitioner to demand strict application of the prohibition against forum-shopping, when it, too, is guilty of the same omission.

Second. Petitioner asserts that its status as an innocent bystander with respect to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the appellate court erred in not upholding its corporate personality as independent of Philtreads. In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel,[11] this Court, through Justice J.B.L. Reyes, stated the innocent bystander rule as follows:

The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or innocent bystanders if it appears that the inevitable result of its exercise is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. In one case decided by this Court, we upheld a trial courts injunction prohibiting the union from blocking the entrance to a feed mill located within the compound of a flour mill with which the union had a dispute. Although sustained on a different ground, no connection was found between the two mills owned by two different corporations other than their being situated in the same premises. It is to be noted that in the instances cited, peaceful picketing has not been totally banned but merely regulated. And in one American case, a picket by a labor union in front of a motion picture theater with which the union had a labor dispute was enjoined by the court from being extended in front of the main entrance of the building housing the theater wherein other stores operated by third persons were located.[12] (Emphasis added)
Thus, an innocent bystander, who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. For instance, in PAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate entities, different from, and without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike was directed, other than the incidental fact that they are the banks landlord and co-lessee housed in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent Concrete Workers Union,[13] this Court ruled that Liwayway was an innocent bystander and thus entitled to enjoin the unions strike because Liwayways only connection with the employer company was the fact that both were situated in the same premises.

In the case at bar, petitioner cannot be said not to have such connection to the dispute. As correctly observed by the appellate court:

Coming now to the case before us, we find that the negotiation, contract of sale, and the post transaction between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation between them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights over its sold assets. On the contrary, Philtread remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation which was likewise incorporated in accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns the land were subject plant is located. This, together with the fact that private respondent uses the same plant or factory; similar or substantially the same working conditions; same machinery, tools, and equipment; and manufacture the same products as Philtread, lead us to safely conclude that private respondents personality is so closely linked to Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread, we find no clear and unmistakable right on the part of private respondent to entitle it to the writ of preliminary injunction it prayed for below. . We stress that that in so ruling, we have not touched on the issue of . . . whether or not private respondent is a mere dummy or continuation of Philtread. . . .[14]
Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat public convenience, justify wrong, protect fraud, defend crime, or where the corporation is used as a mere alter-ego or business conduit,[15] it is not these standards but those of the innocent bystander rule which govern whether or not petitioner is entitled to an injunctive writ. Since petitioner is not an innocent bystander, the trial courts order, dated July 2, 1996, is a patent nullity, the trial court having no jurisdiction to issue the writ of injunction. No motion for reconsideration need be filed where the order is null and void.[16] WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED. SO ORDERED. Bellosillo, (Chairman), Quisumbing, and Buena, JJ., concur.

[1]

Penned by Associate Justice Fidel P. Purisima and concurred in by Associate Justice Angelina Sandoval Gutierrez and Associate Justice Conrado M. Vazquez, Jr.

[2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16]

Rollo, pp. 60-62. Per Judge Lucia Violago Isnani. Rollo, pp. 161-162. Solid Homes, Inc. v. Court of Appeals, 271 SCRA 157 (1997). Ibid. G.R. No. 134171, November 18, 1998. Golangco v. Court of Appeals, 283 SCRA 493 (1997). Rollo, pp. 60-62. Rollo, p. 58. 27 SCRA 465 (1969). Id., 472-473. 108 SCRA 161 (1981). Rollo, pp. 38-39. Indophil Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992). Vda. de Sayman v. Court of Appeals, 121 SCRA 650 (1983).

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 75271-73 June 27, 1988 CATALINO N. SARMIENTO and 71 other striking workers of ASIAN TRANSMISSION CORPORATION,petitioners, vs. THE HON. JUDGE ORLANDO R. TUICO of the Municipal Trial Court of Calamba, Laguna, ROBERTO PIMENTEL, NELSON C. TEJADA, and the COMMANDING OFFICER, 224th PC Company at Los Baos Laguna, respondents. No. L-77567 June 27, 1988 ASIAN TRANSMISSION, CORPORATION (ATC), petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), respondent.

Jose C. Espinas for petitioners in G.R. Nos. 75271-73. Augusto Gatmaytan for petitioner ATC. Emilio C. Capulong, Jr. for private respondents in G.R. Nos. 75271-73.

CRUZ, J.: Two basic questions are presented in these cases, to wit: 1. Whether or not a return-to-work order may be validly issued by the National Labor Relations Commission pending determination of the legality of the strike; and 2. Whether or not, pending such determination, the criminal prosecution of certain persons involved in the said strike may be validly restrained. The first issue was submitted to the Court in G.R. No. 77567, to which we gave due course on July 1, 1987. 1 The case arose when on May 7, 1986, petitioner Asian Transmission Corporation terminated the services of Catalino Sarmiento, vice-president of the Bisig ng Asian Transmission Labor Union (BATU), for allegedly carrying a deadly weapon in the company premises. 2 As a result, the BATU filed a notice of strike on May 26, 1986, claiming that the ATC had committed an unfair labor practice. 3 The conciliatory conference held on June 5, 1986, failed to settle the dispute. The ATC then filed a petition asking the Ministry of Labor and Employment to assume jurisdiction over the matter or certify the same to the NLRC for compulsory arbitration. 4 Noting that the impending strike would prejudice the national interest as well as the welfare of some 350 workers and their families, the MOLE issued an order on June 3, 1986, certifying the labor dispute to the NLRC. 5 At the same time, it enjoined the management from locking out its employees and the union from declaring a strike or similar concerted action. This order was reiterated on June 13, 1986, upon the representation of the ATC that some 40 workers had declared a strike and were picketing the company premises. 6 Proceedings could not continue in the NLRC, however, because of the acceptance by President Aquino of the resignations of eight of its members, leaving only the vice-chairman in office. 7 For this reason, the MOLE, on September 9, 1986, set aside the orders of June 9 and 13, 1986, and directly assumed

jurisdiction of the dispute, at the same time enjoining the company to accept all returning workers. 8 This order was itself set aside on November 24,1986, upon motion of both the BATU and the ATC in view of the appointment of new commissioners in the NLRC. The MOLE then returned the case to the respondent NLRC and directed it to expeditiously resolve all issues relating to the dispute, "adding that the union and the striking workers are ordered to return to work immediately." 9 Conformably, the NLRC issued on January 13, 1987 the following resolution, which it affirmed in its resolution of February 12, 1987, denying the motion for reconsideration: CERTIFIED CASE No. NCR-NS-5-214-86, entitled Asian Transmission Corporation, Petitioner versus Bisig ng Asian Transmission Labor Union (BATU), et al., Respondents.Considering that the petitioner, despite the order dated 24 November 1986 of the Acting Minister, "to accept all the returning workers" continues to defy the directive insofar as 44 of the workers are concerned, the Commission, sitting en banc, resolved to order the petitioner to accept the said workers, or, to reinstate them on payroll immediately upon receipt of the resolution. It is these orders of January 13 and February 12, 1987, that are challenged by the ATC in this petition for certiorari and are the subject of the temporary restraining order issued by this Court on March 23, 1987. 10 The second issue was raised in G.R. Nos. 75271-73, which we have consolidated with the first- mentioned petition because of the Identity of their factual antecedents. This issue was provoked by three criminal complaints filed against the petitioning workers in the municipal trial court of Calamba, Laguna, two by the personnel administrative officer of the ATC and the third by the Philippine Constabulary. The first two complaints, filed on July 11 and July 15, 1986, were for "Violation of Article 265, par. 1, in relation to Article 273 of the Labor Code of the Philippines."11 The third, filed on July 17, 1986, was for coercion. 12 In all three complaints, the defendants were charged with staging an illegal strike, barricading the gates of the ATC plant and preventing the workers through intimidation, harassment and force from reporting for work. Acting on Criminal Case No. 15984, Judge Orlando Tuico issued a warrant of arrest against the petitioners and committed 72 of them to jail although he later ordered the

release of 61 of them to the custody of the municipal mayor of Calamba, Laguna. 13 The petitioners had earlier moved for the lifting of the warrant of arrest and the referral of the coercion charge to the NLRC and, later, for the dismissal of Criminal Cases Nos. 15973 and 15981 on the ground that they came under the primary jurisdiction of the NLRC. 14 As the judge had not ruled on these motions, the petitioners came to this Court in this petition for certiorari and prohibition. On August 12, 1986, we issued a temporary restraining order to prevent Judge Tuico from enforcing the warrant of arrest and further proceeding with the case. 15 This order was reiterated on September 21, 1987, "to relieve tensions that might prevent an amicable settlement of the dispute between the parties in the compulsory arbitration proceedings now going on in the Department of Labor," and made to apply to Judge Paterno Lustre, who had succeeded Judge Tuico. 16 That is the background. Now to the merits. It is contended by the ATC that the NLRC had no jurisdiction in issuing the return-to-work order and that in any case the same should be annulled for being oppressive and violative of due process. The question of competence is easily resolved. The authority for the order is found in Article 264(g) of the Labor Code, as amended by B.P. Blg. 227, which provides as follows: When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely affecting the national interest, such as may occur in but not limited to public utilities, companies engaged in the generation or distribution of energy, banks, hospitals, and export- oriented industries, including those within export processing zones, the Minister of Labor and Employment shall assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The

Minister may seek the assistance of law-enforcement agencies to ensure compliance with this provision as well as such orders as he may issue to enforce the same. The justification of the MOLE for such order was embodied therein, thus: Asian Transmission Corporation is an export-oriented enterprise and its annual export amounts to 90% of its sales generating more than twelve (12) million dollars per year. The corporation employs three hundred fifty (350) workers with a total monthly take home pay or approximately P1,300,000.00 a month. Any disruption of company operations will cause the delay of shipments of export finished products which have been previously committed to customers abroad, thereby seriously hampering the economic recovery program which is being pursued by the government. It wig also affect gravely the livelihood of three hundred fifty (350) families who will be deprived of their incomes. This Office is therefore of the opinion that a strike or any disruption in the normal operation of the company will adversely affect the national interest. It is in the interest of both labor and management that the dispute be certified for compulsory arbitration to National Labor Relations Commission.
WHEREFORE, this Office hereby certifies the labor dispute to the National Labor Relations Commission in accordance with Article 264(g) of the Labor Code, as amended. In line with this Certification, the management is enjoined from locking out its employees and the union from declaring a strike, or any concerted action which will disrupt the 17 harmonious labor-management relations at the company.

There can be no question that the MOLE acted correctly in certifying the labor dispute to the NLRC, given the predictable prejudice the strike might cause not only to the parties but more especially to the national interest. Affirming this fact, we conclude that the return-to-work order was equally valid as a statutory part and parcel of the certification order issued by the MOLE on November 24, 1986. The law itself provides that "such assumption or certification shall have the effect of automatically enjoining the intended or impending strike. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall

immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout." The challenged order of the NLRC was actually only an implementation of the above provision of the Labor Code and a reiteration of the directive earlier issued by the MOLE in its own assumption order of September 9, 1986. It must be stressed that while one purpose of the return-to-work order is to protect the workers who might otherwise be locked out by the employer for threatening or waging the strike, the more important reason is to prevent impairment of the national interest in case the operations of the company are disrupted by a refusal of the strikers to return to work as directed. In the instant case, stoppage of work in the firm will be hurtful not only to both the employer and the employees. More particularly, it is the national economy that will suffer because of the resultant reduction in our export earnings and our dollar reserves, not to mention possible cancellation of the contracts of the company with foreign importers. It was particularly for the purpose of avoiding such a development that the labor dispute was certified to the NLRC, with the return-to-work order following as a matter of course under the law. It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to his job together with his co-workers so the operations of the company can be resumed and it can continue serving the public and promoting its interest. That is the real reason such return can be compelled. So imperative is the order in fact that it is not even considered violative of the right against involuntary servitude, as this Court held in Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills. 18 The worker can of course give up his work, thus severing his ties with the company, if he does not want to obey the order; but the order must be obeyed if he wants to retain his work even if his inclination is to strike. If the worker refuses to obey the return-to-work order, can it be said that he is just suspending the enjoyment of a right and he is entitled to assert it later as and when he sees fit? In the meantime is the management required to keep his position open, unable to employ replacement to

perform the work the reluctant striker is unwilling to resume because he is still manning the picket lines? While the ATC has manifested its willingness to accept most of the workers, and has in fact already done so, it has balked at the demand of the remaining workers to be also allowed to return to work. 19 Its reason is that these persons, instead of complying with the return-to-work order, as most of the workers have done, insisted on staging the restrained strike and defiantly picketed the company premises to prevent the resumption of operations. By so doing, the ATC submits, these strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly replaced. The Court agrees. The records show that the return-to-work order was first issued on June 3, 1986, and was reiterated on June 13, 1986. The strike was declared thereafter, if we go by the criminal complaints in G.R. Nos. 75271-73, where the alleged acts are claimed to have been done on June 9,1986, and July 15,1986. These dates are not denied. In fact, the petitioners argue in their pleadings that they were engaged only in peaceful picketing, 20 which would signify that they had not on those dates returned to work as required and had decided instead to ignore the said order. By their own acts, they are deemed to have abandoned their employment and cannot now demand the right to return thereto by virtue of the very order they have defied. One other point that must be underscored is that the return-to-work order is issued pending the determination of the legality or illegality of the strike. It is not correct to say that it may be enforced only if the strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to maintain the status quo while the determination is being made. Otherwise, the workers who contend that their strike is legal can refuse to return to their work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill. Worse, they win also claim payment for work not done, on the ground that they are still legally employed although actually engaged in activities inimical to their employer's interest.

This is like eating one's cake and having it too, and at the expense of the management. Such an unfair situation surely was not contemplated by our labor laws and cannot be justified under the social justice policy, which is a policy of fairness to both labor and management. Neither can this unseemly arrangement be sustained under the due process clause as the order, if thus interpreted, would be plainly oppressive and arbitrary. Accordingly, the Court holds that the return-to-work order should benefit only those workers who complied therewith and, regardless of the outcome of the compulsory arbitration proceedings, are entitled to be paid for work they have actually performed. Conversely, those workers who refused to obey the said order and instead waged the restrained strike are not entitled to be paid for work not done or to reinstatement to the positions they have abandoned by their refusal to return thereto as ordered. Turning now to the second issue, we hold that while as a general rule the prosecution of criminal offenses is not subject to injunction, the exception must apply in the case at bar. The suspension of proceedings in the criminal complaints filed before the municipal court of Calamba, Laguna, is justified on the ground of prematurity as there is no question that the acts complained of are connected with the compulsory arbitration proceedings still pending in the NLRC. The first two complaints, as expressly captioned, are for "violation of Art. 265, par. 2, in relation to Art. 273, of the Labor Code of the Philippines," and the third complaint relates to the alleged acts of coercion committed by the defendants in blocking access to the premises of the ATC. Two of the criminal complaints were filed by the personnel administrative officer of the ATC although he vigorously if not convincingly insists that he was acting in his personal capacity. In view of this, the three criminal cases should be suspended until the completion of the compulsory arbitration proceedings in the NLRC, conformably to the policy embodied in Circular No. 15, series of 1982, and Circular No. 9, series of 1986, issued by the Ministry of Justice in connection with the implementation of B.P. Blg. 227. 21 These circulars, briefly stated, require fiscals and other government prosecutors to first secure the clearance of the Ministry of Labor and/or the Office of the President "before taking cognizance of complaints for preliminary investigation and the filing in court of the corresponding informations of cases arising out of or related to a labor dispute," including "allegations of violence, coercion, physical injuries, assault upon a person in authority and

other similar acts of intimidation obstructing the free ingress to and egress from a factory or place of operation of the machines of such factory, or the employer's premises." It does not appear from the record that such clearance was obtained, conformably to the procedure laid down "to attain the industrial peace which is the primordial objectives of this law," before the three criminal cases were filed. The Court makes no findings on the merits of the labor dispute and the criminal cases against the workers as these are not in issue in the petitions before it. What it can only express at this point is the prayerful hope that these disagreements will be eventually resolved with justice to all parties and in that spirit of mutual accommodation that should always characterize the relations between the workers and their employer. Labor and management are indispensable partners in the common endeavor for individual dignity and national prosperity. There is no reason why they cannot pursue these goals with open hands rather than clenched fists, striving with rather than against each other, that they may together speed the dawning of a richer day for all in this amiable land of ours. WHEREFORE, judgment is hereby rendered as follows: 1. In G.R. No. 77567, the petition is DENIED and the challenged Orders of the NLRC dated January 13, 1986, and February 12, 1986, are AFFIRMED as above interpreted. The temporary restraining order dated March 23, 1987, is LIFTED. 2. In G.R. Nos. 75271-73, the temporary restraining order of August 12,1986, and September 21, 1986, are CONTINUED IN FORCE until completion of the compulsory arbitration proceedings in the NLRC. No costs. It is so ordered. Narvasa, Gancayco, Grio-Aquino and Medialdea, J
Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 100158 June 2, 1992

ST. SCHOLASTICA'S COLLEGE, petitioner, vs. HON. RUBEN TORRES, in his capacity as SECRETARY OF LABOR AND EMPLOYMENT, and SAMAHANG NG MANGGAGAWANG PANG-EDUKASYON SA STA. ESKOLASTIKA-NAFTEU, respondents.

BELLOSILLO, J.: The principal issue to be resolved in this recourse is whether striking union members terminated for abandonment of work after failing to comply with return-to-work orders of the Secretary of Labor and Employment (SECRETARY, for brevity) should by law be reinstated. On 20 July 1990, petitioner St. Scholastica's College (COLLEGE, for brevity) and private respondent Samahan ng Manggagawang Pang-Edukasyon sa Sta. EskolastikaNAFTEU (UNION, for brevity) initiated negotiations for a first-ever collective bargaining agreement. A deadlock in the negotiations prompted the UNION to file on 4 October 1990 a Notice of Strike with the Department of Labor and Employment (DEPARTMENT, for brevity), docketed as NCMB-NCR-NS-10-826. On 5 November 1990, the UNION declared a strike which paralyzed the operations of the COLLEGE. Affecting as it did the interest of the students, public respondent SECRETARY immediately assumed jurisdiction over the labor dispute and issued on the same day, 5 November 1990, a return-to-work order. The following day, 6 November 1990, instead of returning to work, the UNION filed a motion for reconsideration of the return-to-work order questioning inter alia the assumption of jurisdiction by the SECRETARY over the labor dispute. On 9 November 1990, the COLLEGE sent individual letters to the striking employees enjoining them to return to work not later than 8:00 o'clock A.M. of 12 November 1990 and, at the same time, giving notice to some twenty-three (23) workers that their return would be without prejudice to the filing of appropriate charges against them. In response, the UNION presented a list of (6) demands to the COLLEGE in a dialogue conducted on 11 November 1990. The most important of these demands was the unconditional acceptance back to work of the striking employees. But these were flatly rejected. Likewise, on 9 November 1990, respondent SECRETARY denied reconsideration of his return-to-work order and sternly warned the striking employees to comply with its terms. On 12 November 1990, the UNION received the Order.

Thereafter, particularly on 14 and 15 November 1990, the parties held conciliation meetings before the National Conciliation and Mediation Board where the UNION pruned down its demands to three (3), viz.: that striking employees be reinstated under the same terms and conditions before the strike; that no retaliatory or disciplinary action be taken against them; and, that CBA negotiations be continued. However, these efforts proved futile as the COLLEGE remained steadfast in its position that any return-to-work offer should be unconditional. On 16 November 1990, the COLLEGE manifested to respondent SECRETARY that the UNION continued to defy his return-to-work order of 5 November 1990 so that "appropriate steps under the said circumstances" may be undertaken by him. 1 On 23 November 1990, the COLLEGE mailed individual notices of termination to the striking employees, which were received on 26 November 1990, or later. The UNION officers and members then tried to return to work but were no longer accepted by the COLLEGE. On 5 December 1990, a Complaint for Illegal Strike was filed against the UNION, its officers and several of its members before the National Labor Relations Commission (NLRC), docketed as NLRC Case No. 00-12-06256-90. The UNION moved for the enforcement of the return-to-work order before respondent SECRETARY, citing "selective acceptance of returning strikers" by the COLLEGE. It also sought dismissal of the complaint. Since then, no further hearings were conducted. Respondent SECRETARY required the parties to submit their respective position papers. The COLLEGE prayed that respondent SECRETARY uphold the dismissal of the employees who defied his return-to-work order. On 12 April 1991, respondent SECRETARY issued the assailed Order which, inter alia, directed the reinstatement of striking UNION members, premised on his finding that no violent or otherwise illegal act accompanied the conduct of the strike and that a fledgling UNION like private respondent was "naturally expected to exhibit unbridled if inexperienced enthusiasm, in asserting its existence". 2 Nevertheless, the aforesaid Order held UNION officers responsible for the violation of the return-to-work orders of 5 and 9 November 1990 and, correspondingly, sustained their termination. Both parties moved for partial reconsideration of the Order, with petitioner COLLEGE questioning the wisdom of the reinstatement of striking UNION members, and private respondent UNION, the dismissal of its officers. On 31 May 1991, in a Resolution, respondent SECRETARY denied both motions. Hence, this Petition for Certiorari, with Prayer for the Issuance of a Temporary Restraining Order.

On 26 June 1991, We restrained the SECRETARY from enforcing his assailed Orders insofar as they directed the reinstatement of the striking workers previously terminated. Petitioner questions the assumption by respondent SECRETARY of jurisdiction to decide on termination disputes, maintaining that such jurisdiction is vested instead in the Labor Arbiter pursuant to Art. 217 of the Labor Code, thus Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, the following cases involving all workers, whether agricultural or non-agricultural: . . . 2. Termination disputes . . . 5. Cases arising from any violation of Article 264 of this Code, including questions on the legality of strikes and lock-outs . . . In support of its position, petitioner invokes Our ruling in PAL v. Secretary of Labor and Employment 3 where We held: The labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary measures against its guilty employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is the holding of the strike but not the company's right to take action against union officers who participated in the illegal strike and committed illegal acts. Petitioner further contends that following the doctrine laid down in Sarmiento v. Tuico 4 and Union of Filipro Employees v. Nestle Philippines, Inc., 5 workers who refuse to obey a return-to-work order are not entitled to be paid for work not done, or to reinstatement to the positions they have abandoned of their refusal to return thereto as ordered. Taking a contrary stand, private respondent UNION pleads for reinstatement of its dismissed officers considering that the act of the UNION in continuing with its picket was never characterized as a "brazen disregard of successive legal orders", which was readily apparent in Union Filipro Employees v. Nestle Philippines, Inc., supra, nor was it a willful refusal to return to work, which was the basis of the ruling in Sarmiento v. Tuico, supra. The failure of UNION officers and members to immediately comply with the return-to-work orders was not because they wanted to defy said orders; rather, they held the view that academic institutions were not industries indispensable to the national interest. When respondent SECRETARY denied their motion for reconsideration, however, the UNION intimated that efforts were immediately initiated to fashion out a reasonable return-to-work agreement with the COLLEGE, albeit, if failed. The issue on whether respondent SECRETARY has the power to assume jurisdiction over a labor dispute and its incidental controversies, causing or likely to cause a strike or lockout in an industry indispensable to the national interest, was already settled

in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment. 6 Therein, We ruled that: . . . [T]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction. And rightly so, for, as found in the aforesaid case, Article 217 of the Labor Code did contemplate of exceptions thereto where the SECRETARY is authorized to assume jurisdiction over a labor dispute otherwise belonging exclusively to the Labor Arbiter. This is readily evident from its opening proviso reading "(e)xcept as otherwise provided under this Code . . . Previously, We held that Article 263 (g) of the Labor Code was broad enough to give the Secretary of Labor and Employment the power to take jurisdiction over an issue involving unfair labor practice. 7 At first glance, the rulings above stated seem to run counter to that of PAL v. Secretary of Labor and Employment, supra, which was cited by petitioner. But the conflict is only apparent, not real. To recall, We ruled in the latter case that the jurisdiction of the Secretary of Labor and Employment in assumption and/or certification cases is limited to the issues that are involved in the disputes or to those that are submitted to him for resolution. The seeming difference is, however, reconcilable. Since the matter on the legality or illegality of the strike was never submitted to him for resolution, he was thus found to have exceeded his jurisdiction when he restrained the employer from taking disciplinary action against employees who staged an illegal strike. Before the Secretary of Labor and Employment may take cognizance of an issue which is merely incidental to the labor dispute, therefore, the same must be involved in the labor disputed itself, or otherwise submitted to him for resolution. If it was not, as was the case in PAL v. Secretary or Labor and Employment, supra, and he nevertheless acted on it, that assumption of jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the ruling in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment, supra, will apply. The submission of an incidental issue of a labor dispute, in assumption and/or certification cases, to the Secretary of Labor and Employment for his resolution is thus one of the instances referred to whereby the latter may exercise concurrent jurisdiction together with the Labor Arbiters.

In the instant petition, the COLLEGE in its Manifestation, dated 16 November 1990, asked the "Secretary of Labor to take the appropriate steps under the said circumstances." It likewise prayed in its position paper that respondent SECRETARY uphold its termination of the striking employees. Upon the other hand, the UNION questioned the termination of its officers and members before respondent SECRETARY by moving for the enforcement of the return-to-work orders. There is no dispute then that the issue on the legality of the termination of striking employees was properly submitted to respondent SECRETARY for resolution. Such an interpretation will be in consonance with the intention of our labor authorities to provide workers immediate access to their rights and benefits without being inconvenienced by the arbitration and litigation process that prove to be not only nervewracking, but financially burdensome in the long run. Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by long-winded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. For, labor laws are meant to promote, not defeat, social justice (Maternity Children's Hospital v. Hon. Secretary of Labor ). 8 After all, Art. 4 of the Labor Code does state that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. We now come to the more pivotal question of whether striking union members, terminated for abandonment of work after failing to comply strictly with a return-to-work order, should be reinstated. We quote hereunder the pertinent provisions of law which govern the effects of defying a return-to-work order: 1. Article 263 (g) of the Labor Code Art. 263. Strikes, picketing, and lockouts. . . . (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same . . . (as amended by Sec. 27, R.A. 6715; emphasis supplied).

2. Article 264, same Labor Code Art. 264. Prohibited activities. (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout . . . (emphasis supplied). Any worker whose employment has been terminated as consequence of an unlawful lockout shall be entitled to reinstatement with full back wages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike . . . (emphasis supplied). 3. Section 6, Rule IX, of the New Rules of Procedure of the NLRC (which took effect on 31 August 1990) Sec. 6. Effects of Defiance. Non-compliance with the certification order of the Secretary of Labor and Employment or a return to work order of the Commission shall be considered an illegal act committed in the course of the strike or lockout and shall authorize the Secretary of Labor and Employment or the Commission, as the case may be, to enforce the same under pain or loss of employment status or entitlement to full employment benefits from the locking-out employer or backwages, damages and/or other positive and/or affirmative reliefs, even to criminal prosecution against the liable parties . . . (emphasis supplied). Private respondent UNION maintains that the reason they failed to immediately comply with the return-to-work order of 5 November 1990 was because they questioned the assumption of jurisdiction of respondent SECRETARY. They were of the impression that being an academic institution, the school could not be considered an industry indispensable to national interest, and that pending resolution of the issue, they were under no obligation to immediately return to work. This position of the UNION is simply flawed. Article 263 (g) of the Labor Code provides that if a strike has already taken place at the time of assumption, "all striking . . .

employees shall immediately return to work." This means that by its very terms, a return-to-work order is immediately effective and executory notwithstanding the filing of a motion for reconsideration (University of Sto. Tomas v. NLRC). 9 It must be strictly complied with even during the pendency of any petition questioning its validity ( Union of Filipro Employees v. Nestle Philippines, Inc., supra). After all, the assumption and/or certification order is issued in the exercise of respondent SECRETARY's compulsive power of arbitration and, until set aside, must therefore be immediately complied with. The rationale for this rule is explained in University of Sto. Tomas v. NLRC, supra, citing Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 10 thus To say that its (return-to-work order) effectivity must wait affirmance in a motion for reconsideration is not only to emasculate it but indeed to defeat its import, for by then the deadline fixed for the return to work would, in the ordinary course, have already passed and hence can no longer be affirmed insofar as the time element is concerned. Moreover, the assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes involving academic institutions was already upheld in Philippine School of Business Administration v. Noriel 11 where We ruled thus: There is no doubt that the on-going labor dispute at the school adversely affects the national interest. The school is a duly registered educational institution of higher learning with more or less 9,000 students. The ongoing work stoppage at the school unduly prejudices the students and will entail great loss in terms of time, effort and money to all concerned. More important, it is not amiss to mention that the school is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth. Respondent UNION's failure to immediately comply with the return-to-work order of 5 November 1990, therefore, cannot be condoned. The respective liabilities of striking union officers and members who failed to immediately comply with the return-to-work order is outlined in Art. 264 of the Labor Code which provides that any declaration of a strike or lockout after the Secretary of Labor and Employment has assumed jurisdiction over the labor dispute is considered an illegal. act. Any worker or union officer who knowingly participates in a strike defying a return-to-work order may, consequently, "be declared to have lost his employment status." Section 6 Rule IX, of the New Rules of Procedure of the NLRC, which provides the penalties for defying a certification order of the Secretary of Labor or a return-to-work order of the Commission, also reiterates the same penalty. It specifically states that non-compliance with the aforesaid orders, which is considered an illegal act, "shall authorize the Secretary of Labor and Employment or the Commission . . . to enforce the

same under pain of loss of employment status." Under the Labor Code, assumption and/or certification orders are similarly treated. Thus, we held in Sarmiento v. Tuico, supra, that by insisting on staging the restrained strike and defiantly picketing the company premises to prevent the resumption of operations, the strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly replaced. We recently reiterated this stance in Federation of Free Workers v. Inciong, 12 wherein we cited Union of Filipro Employees v. Nestle Philippines, Inc., supra, thus A strike undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as amended . . . The union officers and members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal act. Despite knowledge of the ruling in Sarmiento v. Tuico, supra, records of the case reveal that private respondent UNION opted to defy not only the return-to-work order of 5 November 1990 but also that of 9 November 1990. While they claim that after receiving copy of the Order of 9 November 1990 initiatives were immediately undertaken to fashion out a return-to-work agreement with management, still, the unrebutted evidence remains that the striking union officers and members tried to return to work only eleven (11) days after the conciliation meetings ended in failure, or twenty (20) days after they received copy of the first return-to-work order on 5 November 1990. The sympathy of the Court which, as a rule, is on the side of the laboring classes (Reliance Surety & Insurance Co., Inc. v. NLRC), 13 cannot be extended to the striking union officers and members in the instant petition. There was willful disobedience not only to one but two return-to-work orders. Considering that the UNION consisted mainly of teachers, who are supposed to be well-lettered and well-informed, the Court cannot overlook the plain arrogance and pride displayed by the UNION in this labor dispute. Despite containing threats of disciplinary action against some union officers and members who actively participated in the strike, the letter dated 9 November 1990 sent by the COLLEGE enjoining the union officers and members to return to work on 12 November 1990 presented the workers an opportunity to return to work under the same terms and conditions or prior to the strike. Yet, the UNION decided to ignore the same. The COLLEGE, correspondingly, had every right to terminate the services of those who chose to disregard the return-to-work orders issued by respondent SECRETARY in order to protect the interests of its students who form part of the youth of the land. Lastly, the UNION officers and members also argue that the doctrine laid down in Sarmiento v. Tuico, supra, and Union of Filipro Employees v. Nestle, Philippines, Inc.,

supra, cannot be made applicable to them because in the latter two cases, workers defied the return-to-work orders for more than five (5) months. Their defiance of the return-to-work order, it is said, did not last more than a month. Again, this line of argument must be rejected. It is clear from the provisions above quoted that from the moment a worker defies a return-to-work order, he is deemed to have abandoned his job. It is already in itself knowingly participating in an illegal act. Otherwise, the worker will just simply refuse to return to his work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill (Sarmiento v. Tuico, supra).Suffice it to say, in Federation of Free Workers v. Inciong, supra, the workers were terminated from work after defying the return-to-work order for only nine (9) days. It is indeed inconceivable that an employee, despite a return-to-work order, will be allowed in the interim to stand akimbo and wait until five (5) orders shall have been issued for their return before they report back to work. This is absurd. In fine, respondent SECRETARY gravely abused his discretion when he ordered the reinstatement of striking union members who refused to report back to work after he issued two (2) return-to-work orders, which in itself is knowingly participating in an illegal act. The Order in question is, certainly, contrary to existing law and jurisprudence. WHEREFORE, the Petition for Certiorari is hereby GRANTED. The Order of 12 April 1991 and the Resolution 31 May 1991 both issued by respondent Secretary of Labor and Employment are SET ASIDE insofar as they order the reinstatement of striking union members terminated by petitioner, and the temporary restraining order We issued on June 26, 1991, is made permanent. No costs. SO ORDERED. Cruz, Grio-Aquino and Medialdea, JJ., concur.
SUPREME COURT