Assigned Cases in Labor Law II Finals

WMSU LLB 2A 2015
Labor Laws II
Atty. Rhett Julius J. PLagata
ASSIGNED CASES IN LABOR LAW II

(FINALS)
TABLE OF CONTENTS
Capitol Medical Center vs. NLRC ...................................................................................................................................3
Lapanday Workers Union vs NLRC ...............................................................................................................................14
San Miguel Corp vs NLRC .............................................................................................................................................23
Sarmiento vs Tuico ......................................................................................................................................................33
Stamford Marketing vs Julian ......................................................................................................................................41
St. Scholasticas College vs Torres ...............................................................................................................................55
MSF Tire and Rubber, Inc. vs CA ..................................................................................................................................64
Cebu Marine Beach Resort vs NLRC ............................................................................................................................70
Callanta vs Carnation Phil. ...........................................................................................................................................76
Guerrero vs NLRC.........................................................................................................................................................83
NFL vs NLRC .................................................................................................................................................................87
North Davao Mining vs NLRC .......................................................................................................................................93
Mac Adams Metal Engg Workers Union vs Mac Adams Metal Engg .......................................................................102
Agabon vs NLRC .........................................................................................................................................................107
Jaka Food Processing Corp. vs Pacot .........................................................................................................................147
Chiang kai Shek College vs CA ....................................................................................................................................152
Superstar Security Agency vs NLRC ...........................................................................................................................161
Perez vs PTNT ............................................................................................................................................................165
Globe Mackay Cable and Radio Corp. vs NLRC ..........................................................................................................189
Bustamante vs NLRC ..................................................................................................................................................199
Brent School Inc., vs Zamora .....................................................................................................................................205
Mercado Sr. vs NLRC ..................................................................................................................................................216
Hacienda Fatima vs National Federation of Sugarcane Workers ..............................................................................224
Abasolo vs NLRC ........................................................................................................................................................232
Rowell Industrial Corp. vs CA .....................................................................................................................................239
Viernes vs NLRC .........................................................................................................................................................249
Cartagenas vs Romago Electric Company ..................................................................................................................257
Maraguinot vs NLRC ..................................................................................................................................................263
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Philippine Village Hotel vs NLRC ................................................................................................................................278

Paguio vs NLRC ..........................................................................................................................................................283
UST vs NLRC ...............................................................................................................................................................289
KILUSAN vs Drilon ......................................................................................................................................................300
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CAPITOL MEDICAL CENTER VS. NLRC

SECOND 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 Association-Alliance 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 rank3
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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
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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
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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:
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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 affirming
the assailed decision and resolution of the NLRC.
The petitioner filed the instant petition for review on certiorari under Rule 45 of the Rules
of Court on the following ground:
THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE NLRCS FINDING THAT
RESPONDENTS COMPLIED WITH THE LEGAL REQUIREMENTS FOR STAGING THE SUBJECT
STRIKE.[23]
The petitioner asserts that the NLRC and the CA erred in holding that the submission of a
notice of a strike vote to the Regional Branch of the NCMB as required by Section 7, Rule XXII of
the Omnibus Rules Implementing the Labor Code, is merely directory and not mandatory. The
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use of the word shall in the rules, the petitioner avers, indubitably indicates the mandatory
nature of the respondent Unions duty to submit the said notice of strike vote.
The petitioner contends that the CA erred in affirming the decision of the NLRC which
declared that the respondents complied with all the requirements for a lawful strike. The
petitioner insists that, as gleaned from the affidavits of the 17 union members and that of the
overseer, and contrary to the joint affidavit of the officers and some union members, no
meeting was held and no secret balloting was conducted on November 10, 1997.
The petitioner faults the CA and the NLRC for holding that a meeting for a strike vote was
held on the said date by the respondents, despite the fact that the NLRC did not conduct an
ocular inspection of the area where the respondents members allegedly held the voting. The
petitioner also points out that it adduced documentary evidence in the form of affidavits
executed by 17 members of the respondent union which remained unrebutted. The petitioner
also posits that the CA and the NLRC erred in reversing the finding of the Labor Arbiter;
furthermore, there was no need for the respondent union to stage a strike on November 28,
1997 because it had filed an urgent motion with the DOLE for the enforcement and execution
of the decision of this Court in G.R. No. 118915.
The petition is meritorious.
We agree with the petitioner that the respondent Union failed to comply with the second
paragraph of Section 10, Rule XXII of the Omnibus Rules of the NLRC which reads:
Section 10. Strike or lockout vote. 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 the purpose. A decision to declare a lockout must be approved
by a majority of the Board of Directors of the employer, corporation or association or the
partners obtained by a secret ballot in a meeting called for the purpose.
The regional branch of the Board may, at its own initiative or upon the request of any affected
party, supervise the conduct of the secret balloting. In every case, the union or the employer
shall furnish the regional branch of the Board and notice of meetings referred to in the
preceding paragraph at least twenty-four (24) hours before such meetings as well as the results
of the voting at least seven (7) days before the intended strike or lockout, subject to the
cooling-off period provided in this Rule.
Although the second paragraph of Section 10 of the said Rule is not provided in the Labor
Code of the Philippines, nevertheless, the same was incorporated in the Omnibus Rules
Implementing the Labor Code and has the force and effect of law.[24]
Aside from the mandatory notices embedded in Article 263, paragraphs (c) and (f) of the
Labor Code, a union intending to stage a strike is mandated to notify the NCMB of the meeting
for the conduct of strike vote, at least twenty-four (24) hours prior to such meeting. Unless the
NCMB is notified of the date, place and time of the meeting of the union members for the
conduct of a strike vote, the NCMB would be unable to supervise the holding of the same, if
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and when it decides to exercise its power of supervision. In National Federation of Labor v.
NLRC,[25] the Court enumerated the notices required by Article 263 of the Labor Code and the
Implementing Rules, which include the 24-hour prior notice to the NCMB:
1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the
Regional Branch of the NCMB, copy furnished the employer of the union;
2) A cooling-off period must be observed between the filing of notice and the actual execution
of the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of
unfair labor practice. However, in the case of union busting where the unions existence is
threatened, the cooling-off period need not be observed.
4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with
a 24-hour prior notice to NCMB. The decision to declare a strike requires the secret-ballot
approval of majority of the total union membership in the bargaining unit concerned.
5) The result of the strike vote should be reported to the NCMB at least seven (7) days before
the intended strike or lockout, subject to the cooling-off period.
A union is mandated to notify the NCMB of an impending dispute in a particular bargaining
unit via a notice of strike. Thereafter, the NCMB, through its conciliator-mediators, shall call the
parties to a conference at the soonest possible time in order to actively assist them in exploring
all possibilities for amicable settlement. In the event of the failure in the conciliation/mediation
proceedings, the parties shall be encouraged to submit their dispute for voluntary arbitration.
However, if the parties refuse, the union may hold a strike vote, and if the requisite number of
votes is obtained, a strike may ensue. The purpose of the strike vote is to ensure that the
decision to strike broadly rests with the majority of the union members in general and not with
a mere minority, and at the same time, discourage wildcat strikes, union bossism and even
corruption.[26] A strike vote report submitted to the NCMB at least seven days prior to the
intended date of strike ensures that a strike vote was, indeed, taken. In the event that the
report is false, the seven-day period affords the members an opportunity to take the
appropriate remedy before it is too late.[27] The 15 to 30 day cooling-off period is designed to
afford the parties the opportunity to amicably resolve the dispute with the assistance of the
NCMB conciliator/mediator,[28] while the seven-day strike ban is intended to give the DOLE an
opportunity to verify whether the projected strike really carries the imprimatur of the majority
of the union members.[29]
The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24
hours before the meeting for the said purpose is designed to (a) inform the NCMB of the intent
of the union to conduct a strike vote; (b) give the NCMB ample time to decide on whether or
not there is a need to supervise the conduct of the strike vote to prevent any acts of violence
and/or irregularities attendant thereto; and (c) should the NCMB decide on its own initiative or
upon the request of an interested party including the employer, to supervise the strike vote, to
give it ample time to prepare for the deployment of the requisite personnel, including peace
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officers if need be. Unless and until the NCMB is notified at least 24 hours of the unions
decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot
determine for itself whether to supervise a strike vote meeting or not and insure its peaceful
and regular conduct. The failure of a union to comply with the requirement of the giving of
notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting will render
the subsequent strike staged by the union illegal.
In this case, the respondent Union failed to comply with the 24-hour prior notice
requirement to the NCMB before it conducted the alleged strike vote meeting on November 10,
1997. As a result, the petitioner complained that no strike vote meeting ever took place and
averred that the strike staged by the respondent union was illegal.
Conformably to Article 264 of the Labor Code of the Philippines [30] and Section 7, Rule XXII
of the Omnibus Rules Implementing the Labor Code,[31] no labor organization shall declare a
strike unless supported by a majority vote of the members of the union obtained by secret
ballot in a meeting called for that purpose. The requirement is mandatory and the failure of a
union to comply therewith renders the strike illegal.[32] The union is thus mandated to allege
and prove compliance with the requirements of the law.
In the present case, there is a divergence between the factual findings of the Labor Arbiter,
on the one hand, and the NLRC and the CA, on the other, in that the Labor Arbiter found and
declared in his decision that no secret voting ever took place in the parking lot fronting the
hospital on November 10, 1997 by and among the 300 members of the respondent Union.
Erwin Barbacena, the overseer of the only parking lot fronting the hospital, and security guards
Simon Tingzon and Reggie Barawid, declared in their respective affidavits that no secret voting
ever took place on November 10, 1997; 17 employees of the petitioner also denied in their
respective statements that they were not members of the respondent Union, and were asked
to merely sign attendance papers and unnumbered votes. The NLRC and the CA declared in
their respective decisions that the affidavits of the petitioners 17 employees had no probative
weight because the said employees merely executed their affidavits out of fear of losing their
jobs. The NLRC and the CA anchored their conclusion on their finding that the affidavits of the
employees were uniform and pro forma.
We agree with the finding of the Labor Arbiter that no secret balloting to strike was
conducted by the respondent Union on November 10, 1997 at the parking lot in front of the
hospital, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. This can be
gleaned from the affidavit of Barbacena and the joint affidavit of Tingzon and Barawid,
respectively:
1. That I am working as an overseer of a parking lot owned by Mrs. Madelaine Dionisio and
located right in front of the Capitol Medical Center, specifically at the corner of Scout
Magbanua Street and Panay Avenue, Quezon City;
2. That on November 10, 1997, during my entire tour of duty from 6:00 a.m. to 6:00 p.m., no
voting or election was conducted in the aforementioned parking space for employees of the
Capitol Medical Center and/or their guests, or by any other group for that matter. [33]
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1. That I, Simon J. Tingzon, am a security officer of Veterans Philippine Scout Security Agency
(hereinafter referred to as VPSSA), assigned, since July 1997 up to the present, as Security
Detachment Commander at Capitol Medical Center (hereinafter referred to as CMC) located at
Scout Magbanua corner Panay Avenue, Quezon City;
2. That my (Tingzon) functions as such include over-all in charge of security of all buildings and
properties of CMC, and roving in the entire premises including the parking lots of all the
buildings of CMC;
3. That I, Reggie B. Barawid, am a security guard of VPSSA, assigned, since June 1997 up to the
present, as security guard at CMC;
4. That my (Barawid) functions as such include access control of all persons coming in and out
of CMCs buildings and properties. I also sometimes guard the parking areas of CMC;
5. That on November 10, 1997, both of us were on duty at CMC from 7:00 a.m. to 7:00 p.m.,
with me (Barawid) assigned at the main door of the CMCs Main Building along Scout Magbanua
St.;
6. That on said date, during our entire tour of duty, there was no voting or election conducted
in any of the four parking spaces for CMC personnel and guests.[34]
The allegations in the foregoing affidavits belie the claim of the respondents and the
finding of the NLRC that a secret balloting took place on November 10, 1997 in front of the
hospital at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. The
respondents failed to prove the existence of a parking lot in front of the hospital other than the
parking lot across from it. Indeed, 17 of those who purportedly voted in a secret voting
executed their separate affidavits that no secret balloting took place on November 10, 1997,
and that even if they were not members of the respondent Union, were asked to vote and to
sign attendance papers. The respondents failed to adduce substantial evidence that the said
affiants were coerced into executing the said affidavits. The bare fact that some portions of the
said affidavits are similarly worded does not constitute substantial evidence that the petitioner
forced, intimidated or coerced the affiants to execute the same.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of the Court of
Appeals and NLRC are SET ASIDE AND REVERSED. The Decision of the Labor Arbiter is
REINSTATED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
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[1]
Penned by Associate Justice Portia Alio-Hormachuelos, with Associate Justices Angelina

Sandoval- Gutierrez (now an Associate Justice of the Supreme Court) and Elvi John S.
Asuncion, concurring.
[2]
Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers v.

Hon. Bienvenido E. Laguesma, G.R. No. 118915, 4 February 1997, 267 SCRA 503.
[3]
Rollo, pp. 105-106.
[4]
Id. at 124-125.
[5]
Id. at 189.
[6]
Id. at 140-141.
[7]
CA Rollo, p. 141.
[8]
Id. at 105.
[9]
Id. at 143-150.
[10]
Id. at 143.
[11]
Id. at 429.
[12]
Id. at 155.
[13]
Id. at 67-70.
[14]
Id. at 152-153.
[15]
Rollo, pp. 176-188.
[16]
Id. at 86-97.
[17]
Id. at 238-239.
[18]
Id. at 277-291.
[19]
Id. at 287-288.
[20]
Id. at 288-289.
[21]
Id. at 299.
[22]
Id. at 57-58.
[23]
Id. at 17-18.
[24]
Eastern Shipping Lines, Inc. v. POEA, G.R. No. L-76633, 18 October 1988, 166 SCRA 533.
[25]
G.R. No. 113466, 15 December 1997, 283 SCRA 275. (Emphasis supplied)
[26]
Primer on Strike, Picketing and Lockout, National Conciliation and Mediation Board
Department of Labor and Employment, Intramuros, Manila, 1996 ed., p. 6.
[27]
Id.
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[28]
Id.
[29]
Id. at 7.
[30]
No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Department 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.
[31]
Section 7. Strike or lockout vote. 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 of referenda called for the purpose. A decision to declare a
lockout must be approved by a majority of the board of directors of the employer
corporation or association or the partners in a partnership obtained by a secret ballot in
a meeting called for the purpose.
[32]
Samahang Manggagawa sa Sulpicio Lines v. Sulpicio Lines, Inc., G.R. No. 140992, 25 March
2004, 426 SCRA 379; Grand Boulevard Hotel v. Genuine Labor Organization of Workers
in Hotel, Restaurant and Allied Industries, 406 Phil. 688 (2003).
[33]
CA Rollo, p. 152.
[34]
Id. at 153.
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LAPANDAY WORKERS UNION VS NLRC

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.:
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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.
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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.
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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.
RAB-11-12-00780-88. 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-11-12-00779-88. 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-1109-00612-88 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
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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 rankand-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.
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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 15-daycooling-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
votingat 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.
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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
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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
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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.
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SAN MIGUEL CORP VS NLRC
FIRST DIVISION
[G.R. No. 119293. June 10, 2003]
SAN MIGUEL CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD NG
MANGGAGAWA (IBM), respondents.
DECISION
AZCUNA, J.:
Before us is a petition for certiorari and prohibition seeking to set aside the decision of the
Second Division of the National Labor Relations Commission (NLRC) in Injunction Case No.
00468-94 dated November 29, 1994,[1] and its resolution dated February 1, 1995[2] denying
petitioners motion for reconsideration.
Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng Manggagawa
(IBM), exclusive bargaining agent of petitioners daily-paid rank and file employees, executed a
Collective Bargaining Agreement (CBA) under which they agreed to submit all disputes to
grievance and arbitration proceedings. The CBA also included a mutually enforceable no-strike
no-lockout agreement. The pertinent provisions of the said CBA are quoted hereunder:
ARTICLE IV
GRIEVANCE MACHINERY
Section 1. - The parties hereto agree on the principle that all disputes between labor and
management may be solved through friendly negotiation;. . . that an open conflict in any form
involves losses to the parties, and that, therefore, every effort shall be exerted to avoid such an
open conflict. In furtherance of the foregoing principle, the parties hereto have agreed to
establish a procedure for the adjustment of grievances so as to (1) provide an opportunity for
discussion of any request or complaint and (2) establish procedure for the processing and
settlement of grievances.
xxx xxx xxx
ARTICLE V
ARBITRATION
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Section 1. Any and all disputes, disagreements and controversies of any kind between the
COMPANY and the UNION and/or the workers involving or relating to wages, hours of work,
conditions of employment and/or employer-employee relations arising during the effectivity of
this Agreement or any renewal thereof, shall be settled by arbitration through a Committee in
accordance with the procedure established in this Article. No dispute, disagreement or
controversy which may be submitted to the grievance procedure in Article IV shall be presented
for arbitration until all the steps of the grievance procedure are exhausted.
xxx xxx xxx
ARTICLE VI
STRIKES AND WORK STOPPAGES
Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of
work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down
strikes of any kind, sympathetic or general strikes, or any other interference with any of the
operations of the COMPANY during the term of this Agreement.
Section 2. The COMPANY agrees that there shall be no lockout during the term of this
Agreement so long as the procedure outlined in Article IV hereof is followed by the UNION.[3]
On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the
National Conciliation and Mediation Board (NCMB) a notice of strike, docketed as NCMB-NCRNS-04-180-94, against petitioner for allegedly committing: (1) illegal dismissal of union
members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being performed
by union members, (5) labor-only contracting, (6) harassment of union officers and
members, (7) non-recognition of duly-elected union officers, and (8) other acts of unfair labor
practice.[4]
The next day, IBM filed another notice of strike, this time through its president Edilberto
Galvez, raising similar grounds: (1) illegal transfer, (2) labor-only contracting, (3) violation of
CBA, (4) dismissal of union officers and members, and (5) other acts of unfair labor practice.
This was docketed as NCMB-NCR-NS-04-182-94.[5]
The Galvez group subsequently requested the NCMB to consolidate its notice of strike with
that of the Colomeda group,[6] to which the latter opposed, alleging Galvezs lack of authority in
filing the same.[7]
Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to
Dismiss, on the grounds that the notices raised non-strikeable issues and that they affected
four corporations which are separate and distinct from each other.[8]
After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that the real
issues involved are non-strikeable. Hence on May 2, 1994, he issued separate letter-orders to
both union groups, converting their notices of strike into preventive mediation. The said letterorders, in part, read:
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During the conciliation meetings, it was clearly established that the real issues involved are
illegal dismissal, labor only contracting and internal union disputes, which affect not only the
interest of the San Miguel Corporation but also the interests of the MAGNOLIA-NESTLE
CORPORATION, the SAN MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC.
Considering that San Miguel Corporation is the only impleaded employer-respondent, and
considering further that the aforesaid companies are separate and distinct corporate
entities, we deemed it wise to reduce and treat your Notice of Strike as Preventive Mediation
case for the four (4) different companies in order to evolve voluntary settlement of the
disputes. . . .[9] (Emphasis supplied)
On May 16, 1994, while separate preventive mediation conferences were ongoing, the
Colomeda group filed with the NCMB a notice of holding a strike vote. Petitioner opposed by
filing a Manifestation and Motion to Declare Notice of Strike Vote Illegal,[10] invoking the case
of PAL v. Drilon,[11] which held that no strike could be legally declared during the pendency of
preventive mediation. NCMB Director Ubaldo in response issued another letter to the
Colomeda Group reiterating the conversion of the notice of strike into a case of preventive
mediation and emphasizing the findings that the grounds raised center only on an intra-union
conflict, which is not strikeable, thus:
xxx xxx xxx
A perusal of the records of the case clearly shows that the basic point to be resolved entails the
question of as to who between the two (2) groups shall represent the workers for collective
bargaining purposes, which has been the subject of a Petition for Interpleader case pending
resolution before the Office of the Secretary of Labor and Employment. Similarly, the other
issues raised which have been discussed by the parties at the plant level, are ancillary issues to
the main question, that is, the union leadership...[12] (Emphasis supplied)
Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike against
petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional grounds were set forth therein,
including discrimination, coercion of employees, illegal lockout and illegal closure.[13] The NCMB
however found these grounds to be mere amplifications of those alleged in the first notice that
the group filed. It therefore ordered the consolidation of the second notice with the preceding
one that was earlier reduced to preventive mediation.[14] On the same date, the group likewise
notified the NCMB of its intention to hold a strike vote on May 27, 1994.
On May 27, 1994, the Colomeda group notified the NCMB of the results of their strike vote,
which favored the holding of a strike.[15] In reply, NCMB issued a letter again advising them that
by virtue of the PAL v. Drilon ruling, their notice of strike is deemed not to have been filed,
consequently invalidating any subsequent strike for lack of compliance with the notice
requirement.[16] Despite this and the pendency of the preventive mediation proceedings, on
June 4, 1994, IBM went on strike. The strike paralyzed the operations of petitioner, causing it
losses allegedly worth P29.98 million in daily lost production.[17]
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Two days after the declaration of strike, or on June 6, 1994, petitioner filed with public
respondent NLRC an amended Petition for Injunction with Prayer for the Issuance of Temporary
Restraining Order, Free Ingress and Egress Order and Deputization Order.[18] After due hearing
and ocular inspection, the NLRC on June 13, 1994 resolved to issue a temporary restraining
order (TRO) directing free ingress to and egress from petitioners plants, without prejudice to
the unions right to peaceful picketing and continuous hearings on the injunction case. [19]
To minimize further damage to itself, petitioner on June 16, 1994, entered into a
Memorandum of Agreement (MOA) with the respondent-union, calling for a lifting of the picket
lines and resumption of work in exchange of good faith talks between the management and the
labor management committees. The MOA, signed in the presence of Department of Labor and
Employment (DOLE) officials, expressly stated that cases filed in relation to their dispute will
continue and will not be affected in any manner whatsoever by the agreement.[20] The picket
lines ended and work was then resumed.
Respondent thereafter moved to reconsider the issuance of the TRO, and sought to dismiss
the injunction case in view of the cessation of its picketing activities as a result of the signed
MOA. It argued that the case had become moot and academic there being no more prohibited
activities to restrain, be they actual or threatened.[21] Petitioner, however, opposed and
submitted copies of flyers being circulated by IBM, as proof of the unions alleged threat to
revive the strike.[22] The NLRC did not rule on the opposition to the TRO and allowed it to lapse.
On November 29, 1994, the NLRC issued the challenged decision, denying the petition for
injunction for lack of factual basis. It found that the circumstances at the time did not constitute
or no longer constituted an actual or threatened commission of unlawful acts. [23] It likewise
denied petitioners motion for reconsideration in its resolution dated February 1, 1995. [24]
Hence, this petition.
Aggrieved by public respondents denial of a permanent injunction, petitioner contends
that:
A.
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY INJUNCTION,
THE PARTIES RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION AND NOT TO STRIKE.
B.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH IS THE
ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE
THAT ARBITRATION IS DESIGNED TO AVOID.
C.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE WITHOUT
RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION WITHOUT EXPRESSING THE
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FACTS AND THE LAW ON WHICH IT IS BASED AND ISSUING ITS DENIAL FIVE MONTHS AFTER THE
LAPSE OF THE TRO.[25]
We find for the petitioner.
Article 254 of the Labor Code provides that no temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be issued by any
court or other entity except as otherwise provided in Articles 218 and 264 of the Labor Code.
Under the first exception, Article 218 (e) of the Labor Code expressly confers upon the NLRC the
power to enjoin or restrain actual and threatened commission of any or all prohibited or
unlawful acts, or to require the performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party x x x. The second exception, on the other
hand, is when the labor organization or the employer engages in any of the prohibited activities
enumerated in Article 264.
Pursuant to Article 218 (e), the coercive measure of injunction may also be used to restrain
an actual or threatened unlawful strike. In the case of San Miguel Corporation v. NLRC,[26]where
the same issue of NLRCs duty to enjoin an unlawful strike was raised, we ruled that the NLRC
committed grave abuse of discretion when it denied the petition for injunction to restrain the
union from declaring a strike based on non-strikeable grounds. Further, in IBM v. NLRC,[27] we
held that it is the legal duty and obligation of the NLRC to enjoin a partial strike staged in
violation of the law. Failure promptly to issue an injunction by the public respondent was
likewise held therein to be an abuse of discretion.
In the case at bar, petitioner sought a permanent injunction to enjoin the respondents
strike. A strike is considered as the most effective weapon in protecting the rights of the
employees to improve the terms and conditions of their employment. However, to be valid, a
strike must be pursued within legal bounds.[28] One of the procedural requisites that Article 263
of the Labor Code and its Implementing Rules prescribe is the filing of a valid notice of strike
with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of
disputes,[29] this requirement has been held to be mandatory, the lack of which shall render a
strike illegal.[30]
In the present case, NCMB converted IBMs notices into preventive mediation as it found
that the real issues raised are non-strikeable. Such order is in pursuance of the NCMBs duty to
exert all efforts at mediation and conciliation to enable the parties to settle the dispute
amicably,[31] and in line with the state policy of favoring voluntary modes of settling labor
disputes.[32]In accordance with the Implementing Rules of the Labor Code, the said conversion
has the effect of dismissing the notices of strike filed by respondent.[33] A case in point is PAL v.
Drilon,[34]where we declared a strike illegal for lack of a valid notice of strike, in view of the
NCMBs conversion of the notice therein into a preventive mediation case. We ruled, thus:
The NCMB had declared the notice of strike as appropriate for preventive mediation. The effect
of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the
case from the docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there
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was no notice of strike. During the pendency of preventive mediation proceedings no strike
could be legally declared... The strike which the union mounted, while preventive mediation
proceedings were ongoing, was aptly described by the petitioner as an ambush. (Emphasis
supplied)
Clearly, therefore, applying the aforecited ruling to the case at bar, when the NCMB
ordered the preventive mediation on May 2, 1994, respondent had thereupon lost the notices
of strike it had filed. Subsequently, however, it still defiantly proceeded with the strike while
mediation was ongoing, and notwithstanding the letter-advisories of NCMB warning it of its
lack of notice of strike. In the case of NUWHRAIN v. NLRC,[35] where the petitioner-union
therein similarly defied a prohibition by the NCMB, we said:
Petitioners should have complied with the prohibition to strike ordered by the NCMB when the
latter dismissed the notices of strike after finding that the alleged acts of discrimination of the
hotel were not ULP, hence not strikeable. The refusal of the petitioners to heed said
proscription of the NCMB is reflective of bad faith.
Such disregard of the mediation proceedings was a blatant violation of the Implementing Rules,
which explicitly oblige the parties to bargain collectively in good faith and prohibit them from
impeding or disrupting the proceedings.[36]
The NCMB having no coercive powers of injunction, petitioner sought recourse from the
public respondent. The NLRC issued a TRO only for free ingress to and egress from petitioners
plants, but did not enjoin the unlawful strike itself. It ignored the fatal lack of notice of strike,
and five months after came out with a decision summarily rejecting petitioners cited
jurisprudence in this wise:
Complainants scholarly and impressive arguments, formidably supported by a long line of
jurisprudence cannot however be appropriately considered in the favorable resolution of the
instant case for the complainant. The cited jurisprudence do not squarely cover and apply in
this case, as they are not similarly situated and the remedy sought for were different.[37]
Unfortunately, the NLRC decision stated no reason to substantiate the above conclusion.
Public respondent, in its decision, moreover ruled that there was a lack of factual basis in
issuing the injunction. Contrary to the NLRCs finding, we find that at the time the injunction was
being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then
being circulated by the IBM-NCR Council which led the union. These flyers categorically
declared: Ipaalala nyo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at
anumang oras ay pwede nating muling itirik ang picket line.[38] These flyers were not denied by
respondent, and were dated June 19, 1994, just a day after the unions manifestation with the
NLRC that there existed no threat of commission of prohibited activities.
Moreover, it bears stressing that Article 264(a) of the Labor Code [39] explicitly states that a
declaration of strike without first having filed the required notice is a prohibited activity, which
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may be prevented through an injunction in accordance with Article 254. Clearly, public
respondent should have granted the injunctive relief to prevent the grave damage brought
about by the unlawful strike.
Also noteworthy is public respondents disregard of petitioners argument pointing out the
unions failure to observe the CBA provisions on grievance and arbitration. In the case of San
Miguel Corp. v. NLRC,[40] we ruled that the union therein violated the mandatory provisions of
the CBA when it filed a notice of strike without availing of the remedies prescribed therein.
Thus we held:
x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings
provided in the Collective Bargaining Agreement, the notice of strike should have been
dismissed by the NLRC and private respondent union ordered to proceed with the grievance
and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co., the court
declared as illegal the strike staged by the union for not complying with the grievance
procedure provided in the collective bargaining agreement. . . (Citations omitted)
As in the abovecited case, petitioner herein evinced its willingness to negotiate with the union
by seeking for an order from the NLRC to compel observance of the grievance and arbitration
proceedings. Respondent however resorted to force without exhausting all available means
within its reach. Such infringement of the aforecited CBA provisions constitutes further
justification for the issuance of an injunction against the strike. As we said long ago: Strikes held
in violation of the terms contained in a collective bargaining agreement are illegal especially
when they provide for conclusive arbitration clauses. These agreements must be strictly
adhered to and respected if their ends have to be achieved.[41]
As to petitioners allegation of violation of the no-strike provision in the CBA, jurisprudence
has enunciated that such clauses only bar strikes which are economic in nature, but not strikes
grounded on unfair labor practices.[42] The notices filed in the case at bar alleged unfair labor
practices, the initial determination of which would entail fact-finding that is best left for the
labor arbiters. Nevertheless, our finding herein of the invalidity of the notices of strike
dispenses with the need to discuss this issue.
We cannot sanction the respondent-unions brazen disregard of legal requirements
imposed purposely to carry out the state policy of promoting voluntary modes of settling
disputes. The states commitment to enforce mutual compliance therewith to foster industrial
peace is affirmed by no less than our Constitution.[43] Trade unionism and strikes are legitimate
weapons of labor granted by our statutes. But misuse of these instruments can be the subject
of judicial intervention to forestall grave injury to a business enterprise.[44]
WHEREFORE, the instant petition is hereby GRANTED. The decision and resolution of the
NLRC in Injunction Case No. 00468-94 are REVERSED and SET ASIDE. Petitioner and private
respondent are hereby directed to submit the issues raised in the dismissed notices of strike to
grievance procedure and proceed with arbitration proceedings as prescribed in their CBA, if
necessary. No pronouncement as to costs.
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SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Carpio, JJ., concur.
[1]
Entitled: San Miguel Corp. v. Ilaw at Buklod ng Manggagawa, et al., rollo, pp. 27-36.
[2]
Rollo, p. 37.
[3]
Rollo, pp.38-48.
[4]
Rollo, pp. 59-61.
[5]
Rollo, pp. 63-65.
[6]
Rollo, p. 66.
[7]
Rollo, pp. 67-72.
[8]
Rollo, pp. 82-89.
[9]
Rollo, pp. 90-93.
[10]
Rollo, pp. 123-127.
[11]
193 SCRA 223 (1991).
[12]
Rollo, pp. 128-129.
[13]
Rollo, p. 130.
[14]
Rollo, p. 137.
[15]
Rollo, p. 138.
[16]
Rollo, p. 139.
[17]
Rollo, p. 10.
[18]
Rollo, pp. 152-168.
[19]
Rollo, p.169.
[20]
Rollo, pp. 169-170.
[21]
Rollo, pp. 171-197.
[22]
Rollo, pp. 225-227.
[23]
Supra, note 1.
[24]
Supra, note 2.
[25]
Rollo, p. 12.
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[26]
304 SCRA 1(1999).
[27]
198 SCRA 586 (1991).
[28]
AIUP et al., v. NLRC et al., 305 SCRA 219 (1999).
[29]
NFSW v. Ovejera et al., 114 SCRA 354 (1982).
[30]
NFL et al., v. NLRC, et al., 283 SCRA 275 (1997), First City Interlink Transportation Co. v.
Confesor, 272 SCRA 124 (1997), Lapanday Workers Union v. NLRC, 248 SCRA 95 (1995).
[31]
Rules to Implement the Labor Code, Book V, Rule XXII, Sec. 6.
[32]
LABOR CODE, art. 211(a).
[33]
Rules to Implement the Labor Code, Book V, Rule XXII,
Sec. 1. Grounds for strike and lockout - A strike or lockout may be declared in cases of
bargaining deadlocks and unfair labor practice. Violations of collective bargaining
agreements, except flagrant and/or malicious refusal to comply with its economic
provisions, shall not be considered unfair labor practice and shall not be strikeable. No
strike or lockout may be declared on grounds involving inter-union and intra-union
disputes or on issues brought to voluntary or compulsory arbitration.
xxx xxx xxx
Sec. 3. Notice of Strike or Lockout - xxx Any notice which does not conform with the
requirements of this and the foregoing sections shall be deemed as not having been
filed and the party concerned shall be so informed by the regional branch of the Board.
[34]
Supra, note 11.
[35]
287 SCRA 192 (1998).
[36]
Rules to Implement the Labor Code, Book V, Rule XXII, Sec. 6.
[37]
Rollo, p. 35.
[38]
Rollo, p. 228.
[39]
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. (Emphasis supplied.)
[40]
Supra, note 26.
[41]
Insurefco Paper Pulp & Project Workers Union v. Insular Sugar Refining Corp., 95 Phil. 761
(1954).
[42]
MSMG-UWP v. Ramos, et al., 326 SCRA 428 (2000), citing Master Iron Labor Union et al., v.
NLRC et al., 219 SCRA 47(1993).
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[43]
CONSTITUTION, art. XIII, sec. 3.
[44]
Bulletin Publishing Corporation v. Sanchez, 144 SCRA 628 (1986).
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SARMIENTO VS TUICO
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
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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 firstmentioned 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
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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
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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 harmonious labor-management relations at the
company. 17
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.
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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
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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. 21These 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.
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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, JJ., concur.
Footnotes
1 Rollo, G.R. No. 77567, p. 233.
2 Ibid., p.15.
3 Id., p. 12.
4 Id., p. 13.
5 Id.
6 Id., p. 26.
7 Id., p. 83.
8 Id., p. 74.
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9 Id., pp. 81-86.

10 Id., p. 98.
11 Rollo, G.R. Nos. 75271-73, pp. 22-27.
12 Ibid., pp. 28-29.
13 Id., p. 30.
14 Id., pp. 31-32.
15 Id., pp. 63-64.
16 Id., p.176.
17 Rollo, G.R. No. 77567, p. 13.
18 80 Phil. 521.
19 Rollo, G.R. No. 77567, pp. 130-136.
20 Rollo, G.R. Nos. 75271-73, pp. 10-11, 66.
21 Ibid., pp. 151-153.
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STAMFORD MARKETING VS JULIAN

SECOND DIVISION
[G.R. No. 145496. February 24, 2004]
STAMFORD MARKETING CORP., GSP MANUFACTURING CORP., GIORGIO ANTONIO

MARKETING CORP., CLEMENTINE MARKETING CORP., ULTIMATE CONCEPTS PHILIPPINES,
INC., and ROSARIO G. APACIBLE, petitioners,
vs.
JOSEPHINE JULIAN, LEONOR AMBROSIO, MARILYN AQUINO, PURITA BARRO, ROSARIO
BASADA, HERMINIA BERGUELLES, ERLINDA CANARIA, SALVACION CIRUELOS, MARITESS
BALISARIO, JULIETA DOLONTAP, JOSEFINA DOMINGO, GLORIA FLORENDO, AMELITA
GRANDE, SIMONA MALUNES, CORAZON MARASIGAN, SUSANA OBNAMIA, LUCY PEREZ,
GINALYN PIDOY, CAROLINA REYNOSO, LETICIA SARMIENTO, ARCELY VILLEZA, MARIA SANCHO
LABIT, IMELDA RIVERA, ROWENA ALVARADO, VIOLETA ARRIOLA, VIRGINIA DE VERA, GIRLIE
DISCAYA, ADELAIDA LOMOD, MARILOU RABANAL, JOCELYN RUFILA, ELENA SUEDE, JACINTA
TEJADA, MELBA TOLOSA, LEZILDA CARANTO, JECINA BURABOD, LUCITA CASERO, MONICA
CRUZ, GLENDA MIRANDA, YOLANDA PANCHO, MYRNA RAGASA, FILOMENA MORALES, FELIPA VALENCIA,
CORAZON VIRTUZ, MARICEL BOLANGA, SONIA ANTILLA, LEONITA BINAL, GLORIA LARIOSA, LIZABETH
LUANGCO and JULIETA LEANO, respondents.
DECISION
QUISUMBING, J.:
For review on certiorari is the Court of Appeals Decision,[1] dated April 26, 2000, in CA-G.R.
SP No. 53169, as well as its Resolution,[2] dated October 11, 2000, denying the petitioners
Motion for Reconsideration. The Court of Appeals modified the Resolution, [3] dated August 27,
1998, of the National Labor Relations Commission (NLRC)-First Division which, in turn,
dismissed the petitioners appeal from the decision of Labor Arbiter Ramon Valentin C. Reyes in
three (3) consolidated cases, namely:
(1) Josephine Julian, et al. vs. Stamford Marketing Corp. (NLRC NCR Case No. 00-11-0812494);
(2) Philippine Agricultural, Commercial and Industrial Workers Union, et al. vs. GSP
Manufacturing Corp., et al. (NLRC NCR Case No. 00-03-02114-95); and
(3) Lucita Casero, et al. vs. GSP Manufacturing Corp., et al. (NLRC NCR Case No. 00-0110437-95).
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The instant controversy stemmed from a letter sent by Zoilo V. De La Cruz, Jr., president of
the Philippine Agricultural, Commercial and Industrial Workers Union (PACIWU-TUCP), on
November 2, 1994, to Rosario A. Apacible, the treasurer and general manager of herein
petitioners Stamford Marketing Corporation, GSP Manufacturing Corporation, Giorgio Antonio
Marketing Corporation, Clementine Marketing Corporation, and Ultimate Concept Phils., Inc.
Said letter advised Apacible that the rank-and-file employees of the aforementioned companies
had formed the Apacible Enterprise Employees Union-PACIWU-TUCP. The union demanded
that management recognize its existence. Shortly thereafter, discord reared its ugly head, and
rancor came hard on its wake.
Josephine Julian, et al. vs. Stamford Marketing Corp.

NLRC NCR Case No. 00-11-08124-94
On November 9, 1994, or just a day after Apacible received the letter of PACIWU-TUCP,
herein private respondents Josephine Julian, president of the newly organized labor union;
Jacinta Tejada, and Jecina Burabod, board member and member of the said union, respectively,
were effectively dismissed from employment.
Without further ado, the three dismissed employees filed suit with the Labor Arbiter. In
their Complaint, the three dismissed employees alleged that petitioners had not paid them
their overtime pay, holiday pay/premiums, rest day premium, 13 th month pay for the year
1994, salaries for services actually rendered, and that illegal deduction had been made without
their consent from their salaries for a cash bond.
For its part, herein petitioner Stamford alleged that private respondent Julian was a
supervising employee at the Patricks Boutique at Shoemart (SM) Northmall. In October 1994,
when she was four (4) to five (5) months pregnant, the management of SM Northmall asked her
to go on maternity leave, pursuant to company policy. Julian was then directed to report
atStamfords Head Office for reassignment. She was also asked to submit a medical certificate to
enable the company to approximate her delivery date. Julian, however, allegedly failed to
comply with these directives and instead, ceased to report for work without having given
notice. Stamford then allegedly asked Tejada to take over Julians position, but the former
inexplicably refused to comply with the management directive. Instead, like Julian, she
abandoned her work with nary a notice or an explanation.
As to Burabod, petitioner Giorgio Antonio Boutique (Giorgio) averred that she was
employed as one of its sales clerks at its SM Northmall branch. When directed to report to the
Giorgio branch at Robinsons Galleria, she defiantly questioned the validity of the directive and
refused to comply. Like Julian and Tejada, she then ceased to report for work without giving
notice.
Philippine Agricultural, Commercial and

Industrial Workers Union, et al. vs. GSP Manufacturing Corp.
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On March 17, 1995, PACIWU-TUCP, filed on behalf of fifty (50) employees allegedly illegally
dismissed for union membership by the petitioners, a Complaint before the Arbitration Branch
of NLRC, Metro Manila. PACIWU-TUCP charged petitioners herein with unfair labor practice.
The Complaint alleged that when Apacible received the letter of PACIWU-TUCP, management
began to harass the members of the local chapter, a move which culminated in their outright
dismissal from employment, without any just or lawful cause. It was a clear case of unionbusting, averred PACIWU-TUCP.
GSP Manufacturing Corporation (GSP) denied the unions averments. It claimed that it had
verified with the Bureau of Labor Relations (BLR) whether a labor organization with the name
Apacible Enterprises Employees Union was duly registered. It was informed that no such labor
organization was registered either as a local chapter of PACIWU or of the Trade Union Congress
of the Philippines (TUCP). GSP claimed that after unsuccessfully misrepresenting themselves,
herein private respondents then started making unjustified demands, abandoned their work,
and staged an illegal strike from November 1994 up to the filing of the Complaints. Petitioners
then asked the private respondents to lift their picket and return to work, but were only met
with a cold refusal.
Lucita Casero, et al. vs. GSP Manufacturing Corp., et al.

This separate case was also filed by the dismissed union members (complainants in NLRC
NCR Case No. 00-03-02114-95), against the petitioners herein for payment of their monetary
claims. The dismissed employees demanded the payment of (1) salary differentials due to
underpayment of wages; (2) unpaid salaries/wages for work actually rendered; (3) 13 thmonth
pay for 1994; (4) cash equivalent of the service incentive leave; and (5) illegal deductions from
their salaries for cash bonds.
Petitioner corporations, however, maintained that they have been paying complainants the
wages/salaries mandated by law and that the complaint should be dismissed in view of the
execution of quitclaims and waivers by the private respondents.
The Labor Arbiter ordered the three cases consolidated as the issues were interrelated and
the respondent corporations were under one management.
After due proceedings, Labor Arbiter Ramon Valentin C. Reyes rendered a decision, the
decretal portion of which reads as follows:
WHEREFORE, premises all considered, judgment is hereby rendered in the respective cases as
follows:
A. NLRC NCR CASE NO. 00-11-08124-94
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1. Holding the respondent guilty of unfair labor practice, and declaring complainants
dismissals illegal;
2. Ordering respondent to reinstate complainants to their former positions without
loss of seniority rights and other benefits;
3. Ordering the respondent to pay complainants their backwages from the date of
their termination up to the date of this decision;
4. Ordering the respondent to pay complainants their unpaid salaries, overtime pay,
holiday and rest day premium, unpaid 13th month pay and reimbursement of the
cash deposit deducted by the respondent from the salaries of complainants.
B. NLRC NCR CASE NO. 00-03-02114-95
1. Declaring the strike conducted by complainants to be illegal;
2. Declaring the officers of the union to have lost their employment status, and thus
terminating their employment with respondent companies;
3. Ordering the reinstatement of the complainants who are only members of the union
to their former positions with respondent companies, without backwages,
except individual complainants Cristeta De Luna, Luzviminda Recones, Eden
Revilla, and Jinky Dellosa.
C. NLRC NCR CASE NO. 00-01-10431[4]-95
1. Ordering respondents to pay individual complainants:
a. salary differentials resulting from underpayment of wages
b. unpaid salaries/wages for work actually rendered;
c. 13th month pay for the year 1994;
d. cash equivalent of the service incentive leave;
e. illegal deductions in the form of cash deposits
all in accordance with the computation submitted by the individual complainants.
2. Dismissing the complaint with regard to complainants Cristeta De Luna, Luzviminda
Recones, Eden Revilla, and Jinky Dellosa.
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All other claims are dismissed for lack of merit.

The Research and Information Division, this Commission, is hereby directed to effect the
necessary computation which shall form part of this Decision.
SO ORDERED.[5]
Labor Arbiter Reyes ruled the reassignment and transfer of complainants in NLRC NCR Case
No. 00-11-08124-94 as unfair labor practice, it being management interference in the
complainants formation and membership of union. He held that the protested reassignments
and transfers were highly suspicious, having been made right after management was informed
about the formation of the union. Such timing could not have been pure coincidence. The Labor
Arbiter also found that petitioners herein failed to substantiate their claim that private
respondents had abandoned their employment. He pointed out that the complainants filing of
a case immediately after their alleged dismissal militated against any claim of
abandonment.Moreover, petitioners did not furnish complainants with written notices of
dismissal. As to the unpaid wages and other monetary benefits claimed by private respondents
herein, the Labor Arbiter ruled that as petitioners herein did not present proof of their
payment, there is presumption of non-payment. Finally, Labor Arbiter Reyes found the cash
deposit of P2,000.00 unauthorized and illegal, without any showing that the same was
necessary and recognized in the business.
In NLRC NCR Case No. 00-03-02114-95, it was duly established that the employees union
was not registered with the Bureau of Labor Relations. Hence, private respondents had
engaged in an illegal strike since the right to strike maybe availed of only by a legitimate labor
organization. Labor Arbiter Reyes upheld the dismissal of the union officers for leading and
participating in an illegal strike, but ruled the dismissal of the union members to be improper
since they acted in good faith in the belief that their actions were within the bounds of law.
In NLRC NCR Case No. 00-01-10437-95, the Labor Arbiter found petitioners liable for salary
differentials and other monetary claims for petitioners failure to sufficiently prove that it had
paid the same to complainants as required by law. He likewise ordered the return of the cash
deposits to complainants, citing the same reasons as in NLRC NCR Case No. 00-11-08124-94.
Petitioners herein seasonably appealed the decision of Labor Arbiter Reyes. Subsequently,
the NLRC affirmed the decision in NLRC NCR Case Nos. 00-11-08124-94 and 00-01-1043795. However, the NLRC set aside the judgment with respect to NLRC NCR Case No. 00-0302114-95 and ordered the remand of the case for further proceedings, in view of the various
factual issues involved. The NLRC ruling reads:
WHEREFORE, finding the appeal unmeritorious, the same is hereby DISMISSED.
ACCORDINGLY, we hereby set aside the ruling in NLRC NCR CASE NO. 00-03-02114-95 as we
order the same remanded for further proceedings in view of the nature of the issues involved
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being purely factual in character. The awards in NLRC NCR CASE NO. 00-11-08-08124-94 and
NLRC NCR CASE NO. 00-01-10437-95 are hereby AFFIRMED.
SO ORDERED.[6]
Meanwhile, on May 14, 1996, petitioners herein filed a Petition to Declare the Strike Illegal
against their striking employees, docketed as NLRC NCR Case No. 05-03064-96 and raffled off to
Labor Arbiter Arthur L. Amansec.
On September 2, 1998, Labor Arbiter Amansec decided NLRC NCR Case No. 05-03064-96,
as follows:
WHEREFORE, judgment is hereby made finding the strike conducted by the respondents
from December 1, 1994 up to May 14, 1996 illegal and concomitantly, ordering respondents
who are established to have knowingly participated to have committed an illegal act to have
lost their employment status.
Other claims for lack of merit are ordered DISMISSED.
SO ORDERED.[7]
In declaring the strike illegal, Labor Arbiter Amansec noted that: (1) no prior notice to strike
had been filed; (2) no strike vote had been taken among the union members; and (3) the issue
involved was non-strikeable, i.e., a demand for salary increases.
Petitioners then moved for reconsideration of the NLRC ruling, citing the ruling in NLRC
NCR Case No. 05-03064-96 to support their position that respondents herein had conducted an
illegal strike and were liable for unlawful acts.
On March 12, 1999, the NLRC resolved to partly grant the Motion for Reconsideration,
thus:
WHEREFORE, prescinding from the foregoing premises, the Motion for Reconsideration is partly
given due course, in that the issues raised in NLRC NCR CASE No. 00-03-02114-95 is hereby
declared to have been rendered academic.
The rest of the dispositions in the questioned resolution remains.
SO ORDERED.[8]
Unwilling to let the matter rest there, petitioners then filed a special civil action for
certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 53169. The Court of Appeals
considered the following issues in resolving the petition, to wit: (a) the validity of the
respondents dismissal and entitlement to backwages, (b) the validity of the Release, waiver and
quitclaim executed by some of the respondents, and (c) the validity of the claims for nonpayment of salaries, overtime pay, holiday pay, premium pay, etc.
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On April 26, 2000, the appellate court disposed of CA-G.R. SP No. 53169 as follows:
WHEREFORE, premises studiedly considered, the Petition is partly given due course as the 12
March 1999 Resolution of the NLRC is hereby modified as follows:
1. In lieu of reinstatement, private respondents Josephine Julian, Jacinta Tejada, and the
rest of the officers of the Union shall be given separation pay at the rate of one
month pay for every year of service, with a fraction of at least six months of service
considered as one year, computed from the time they were first employed until
December 10, 1994;
2. Ordering petitioner corporations to reinstate, without loss of seniority, Jacina Burabod
and the rest of the Union members; plus payment of backwages;
The rest of the dispositions in the two (2) challenged resolutions remains.
SO ORDERED.[9]
The appellate court brushed aside petitioners theory that the illegality of strike makes the
respondents dismissal legal. It stressed that while the strike was illegal, marked as it was with
violence and for non-compliance with the requirements of the Labor Code, nonetheless, Julian,
Tejada, and Burabod (complainants in NLRC NCR Case No. 00-11-08124-94) were dismissed
prior to the staging of the strike. Said dismissal constitutes unfair labor practice. Moreover, said
dismissal was done without valid cause and due process. Thus, the complainants in NLRC NCR
Case No. 00-11-08124-94 are entitled to reinstatement and backwages, although separation
pay may be given in lieu of reinstatement due to strained relations with petitioners. The
appellate court also ruled that the quitclaims relied upon by petitioners herein are void, having
been executed under duress. Finally, the Court of Appeals affirmed the finding of the NLRC that
petitioners had failed to support their claim of having paid herein respondents their money
claims, because belated evidence presented by petitioners is bereft of any probative value.
Petitioners timely moved for reconsideration, but the appellate court denied said motion.
Hence, this petition alleging that the Court of Appeals committed palpable and reversible
errorS of law when:
I IT ORDERED THE RESPONDENTS, WHO ARE UNION MEMBERS, BE REINSTATED AND BE
PAID BACKWAGES, DESPITE THE FACT THAT IT CATEGORICALLY HELD THAT UNLAWFUL
ACTS ATTENDED THE STAGING OF THE ILLEGAL STRIKE IN CONTRAVENTION OF THE
CLEAR MANDATE OF ARTICLE 264(a) OF THE LABOR CODE.
II IT AWARDED BACKWAGES TO THE RESPONDENTS, WHO ARE UNION MEMBERS, DESPITE
THE FACT THAT THE ISSUE OF WHETHER OR NOT THE SAID UNION MEMBERS ARE
ENTITTLED TO BACKWAGES HAVE BEEN ANSWERED IN THE NEGATIVE BY THE
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DECISION DATED 15 APRIL 1996, PROMULGATED BY THE HONORABLE LABOR

ARBITER A QUO VALENTIN C. REYES AND SUCH RULING HAD ATTAINED FINALITY.
III IT AWARDED SEPARATION PAY AND BACKWAGES TO THE RESPONDENTS WHO ARE
OFFICERS OF THE UNION, NAMELY: ADELAIDA LUMOD, LUCITA CASERO, MYRNA
RAGASA, FELY MORALES, ELEN SUEDE, FELY VALENCIA AND VIOLETA ARRIOLA,
DESPITE THE FACT THAT IT WAS HELD IN THE DECISION DATED 15 APRIL 1996
PROMULGATED BY THE HONORABLE LABOR ARBITER A QUO VALENTIN C. REYES THAT
THE AFORENAMED UNION OFFICERS HAVE LOST THEIR EMPLOYMENT STATUS BY
STAGING AN ILLEGAL STRIKE AND SUCH RULING HAD ATTAINED FINALITY.
IV IT HELD THAT RESPONDENTS JULIAN, TEJADA AND BURABOD WERE ILLEGALLY
DISMISSED.
V IT FAILED TO UPHOLD THE VALIDITY OF THE RELEASE, WAIVER AND QUITCLAIM
EXECUTED BY THE RESPONDENTS CONCERNED.
VI IT REFUSED TO GIVE PROBATIVE VALUE ON THE VOLUMINOUS DOCUMENTARY
EVIDENCE SUBMITTED BY HEREIN PETITIONERS.[10]
In our view, considering the assigned errors, the following are the relevant issues for our
resolution:
1. Whether the respondents union officers and members were validly and legally dismissed
from employment considering the illegality of the strike;
2. Whether the respondents union officers and members are entitled to backwages,
separation pay and reinstatement, respectively.
On the first issue, petitioners argue that respondents were legally dismissed, pursuant to
Article 264[11] of the Labor Code in view of the determination by the Labor Arbiter that the
strike conducted by respondents are illegal and that illegal acts attended the mass action. The
respondents counter that the determination of the illegality of strike is inconsequential as the
conclusion by the appellate court on the illegality of dismissal was based on the petitioners
non-compliance with the due process requirements on terminating employees, which had
nothing to do with the legality of the strike.
Some elaboration on the legality of the strike is needed, though briefly. In ruling the strike
illegal, the NLRC observed that:
While the right to strike is specifically granted by law, it is a remedy which can only be availed
of by a legitimate labor organization. Absent a showing as to the legitimate status of the labor
organization, said strike would have to be considered as illegal.
A review of the records of this case does not show that the local union to which complainants
belong to has complied with these basic requirements necessary to clothe the union with a
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legitimate status. In fact, and as respondents claim, there is no record with the BLR that the
union complainants belong to have complied with the aforementioned requirements. This
Office then has no recourse but to consider the union of complainants as not being a legitimate
labor organization. It then follows that the strike conducted by complainants on respondent
companies is illegal, as the right to strike is afforded only to a legitimate labor organization. [12]
Indeed, the right to strike, while constitutionally recognized, is not without legal
restrictions.[13] The Labor Code regulates the exercise of said right by balancing the interests of
labor and management in the light of the overarching public interest. Thus, paragraphs (c) and
(f) of Article 263[14] mandate the following procedural steps to be followed before a strike may
be staged: filing of notice of strike, taking of strike vote, and reporting of the strike vote result
to the Department of Labor and Employment.[15] It bears stressing that these requirements are
mandatory, meaning, non-compliance therewith makes the strike illegal. The evident intention
of the law in requiring the strike notice and strike-vote report is to reasonably regulate the right
to strike, which is essential to the attainment of legitimate policy objectives embodied in the
law.[16]
In the instant case, we find no reason to disagree with the findings of the NLRC that the
strike conducted by the respondent union is illegal. First, it has not been shown to the
satisfaction of this Court that said union is a legitimate labor organization, entitled under Article
263 (c) to file a notice of strike on behalf of its members. Second, the other requirements under
Article 263 (c) and (f) were not complied with by the striking union. On this matter, the record is
bare of any showing to the contrary. Hence, what is left for this Court to do is to determine the
effects of the illegality of the strike on respondents union officers and members, specifically (a)
whether such would justify their dismissal from employment, and (b) whether they ceased to
be entitled to the monetary awards and other appropriate reliefs and remedies.
Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes
a distinction between union officers and members who participated thereon. Thus, knowingly
participating in an illegal strike is a valid ground for termination from employment of a union
officer. The law, however, treats differently mere union members. Mere participation in an
illegal strike is not a sufficient ground for termination of the services of the union members. The
Labor Code protects an ordinary, rank-and-file union member who participated in such a strike
from losing his job, provided that he did not commit an illegal act during the strike. [17] Thus,
absent any clear, substantial and convincing proof of illegal acts committed during an illegal
strike, an ordinary striking worker or employee may not be terminated from work.[18]
Recourse to the records show that the following respondents were the officers of the
union, namely: Josephine C. Julian (President), Adelaida Lomod (Vice President), Lucita Casero
(Secretary), Myrna Ragasa (Treasurer), Filomena Morales (Auditor), Elena Suede (Board
Member), Jacinta Tejada (Board Member), Felipa Valencia (Board Member) and Violeta Arriola
(P.R.O.).[19] Before us, petitioners insist that these employees were legally terminated for their
participation in an illegal strike and moreover, Julian and Tejada were validly dismissed for
abandoning their jobs after refusing to comply with transfer and reassignment orders.
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While holding the strike illegal, the Court of Appeals nonetheless still ruled that the union
officers and members were illegally dismissed for non-observance of due process requirements
and union busting by management. It likewise gave no credence to the charge of abandonment
against Julian and Tejada. Thus, it awarded separation pay in lieu of reinstatement to all union
officers including respondents Julian and Tejada and affirmed all other monetary awards by the
Labor Arbiter including backwages.
On this point, we affirm the findings of the appellate court that Julian and Tejada did not
abandon their employment. Petitioners utterly failed to show proof that Julian and Tejada had
the intent to abandon their work and sever their employment relationship with petitioners. It is
established that an employee who forthwith takes steps to protest his layoff cannot be said to
have abandoned his work.[20] However, we cannot sustain the appellate courts ruling that the
dismissal of Julian and Tejada was tantamount to unfair labor practice. There is simply nothing
on record to show that Julian and Tejada were discouraged or prohibited from joining any
union. Hence, the petitioners cannot be held liable for unfair labor practice.
With respect to union officers, however, there is no dispute they could be dismissed for
participating in an illegal strike. Union officers are duty- bound to guide their members to
respect the law.[21] Nonetheless, as in other termination cases, union officers must be given the
required notices for terminating an employment, i.e., notice of hearing to enable them to
present their side, and notice of termination, should their explanation prove
unsatisfactory. Nothing in Article 264 of the Labor Code authorizes an immediate dismissal of a
union officer for participating in an illegal strike. The act of dismissal is not intended to
happen ipso facto but rather as an option that can be exercised by the employer and after
compliance with the notice requirements for terminating an employee. In this case, petitioners
did not give the required notices to the union officers.
We must stress, however, the dismissals per se are not invalid but only ineffectual in
accordance with Serrano v. National Labor Relations Commission.[22] In said case, we held that
(1) the employers failure to comply with the notice requirement does not constitute denial of
due process, but mere failure to observe a procedure for termination of employment which
makes the termination merely ineffectual,[23] and (2) the dismissal shall be upheld but the
employer must be sanctioned for non-compliance with the prescribed procedure.[24] As to the
reliefs to be afforded, Serrano decreed that:
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the
termination of employment was due to an authorized cause, then the employee concerned
should not be ordered reinstated even though there is failure to comply with the 30-day notice
requirement. Instead, he must be granted separation pay in accordance with Art. 283
If the employees separation is without cause, instead of being given separation pay, he should
be reinstated. In either case, whether he is reinstated or only granted separation pay, he should
be paid full backwages if he has been laid off without written notice at least 30 days in advance.
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On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the
employee was dismissed for any of the just causes mentioned in said Art. 282, then, in
accordance with that article, he should not be reinstated. However, he must be paid backwages
from the time his employment was terminated until it is determined that the termination of
employment is for a just cause because the failure to hear him before he is dismissed renders
the termination of his employment without legal effect.[25]
Admittedly, Serrano does not touch on the termination of an employee who is a mere
union member, due to participation in an illegal strike. But it is settled that an employee who is
a mere union member does not lose his employment status by mere participation allegedly in
an illegal strike. If he is terminated, he is entitled to reinstatement. Moreover, where the
employee, whether a union member or officer, is not given any notice for termination such as
in this case, he is entitled to be paid backwages from the date of his invalid termination until
the final judgment of the case.
In the present case, we affirm the appellate courts ruling that the union members who are
parties herein were illegally dismissed and thus, entitled to reinstatement and payment of
backwages for lack of sufficient evidence that they engaged in illegal acts during the strike. They
were in good faith in believing that their actions were within the bounds of the law, since such
were meant only to secure economic benefits for themselves so as to improve their standard of
living. Besides, it is not the business of this Court to determine whether the acts committed by
them are illegal, for review of factual issues is not proper in this petition. Review of labor cases
elevated to this Court on a petition for review on certiorari is confined merely to questions of
law, and not of fact, as factual findings generally are conclusive on this Court. [26]
For the same reasons, we likewise affirm the Court of Appeals in upholding the findings of
both the NLRC and the Labor Arbiter regarding the validity or invalidity of quitclaims and the
award of other monetary claims. Questions on whether the quitclaims were voluntarily
executed or not are factual in nature. Thus, petitioners appeal for us to re-examine certain
pieces of documentary evidence concerning monetary claims cannot now be
entertained. Factual findings of labor officials, who are deemed to have acquired expertise in
matters within their respective jurisdiction, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence. It is not our function to assess
and evaluate the evidence all over again, particularly where the findings of both the Arbiter and
the Court of Appeals coincide.[27]
WHEREFORE, the assailed Decision of the Court of Appeals, dated April 26, 2000 and its
Resolution of October 11, 2000, in CA-G.R. SP No. 53169 are AFFIRMED with
MODIFICATION. Dismissal of the union officers is declared NOT INVALID, and the award of
separation pay to said union officers is hereby DELETED. However, as a sanction for noncompliance with notice requirements for lawful termination by the petitioners, backwages are
AWARDED to the union officers computed from the time they were dismissed until the final
entry of judgment of this case. The rest of the dispositions of the Court of Appeals in its
Decision of April 26, 2000, in CA-G.R. SP No. 53169, are hereby AFFIRMED. No pronouncement
as to costs.
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SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
[1]
Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Fermin A. Martin, Jr.,
and Romeo A. Brawner, concurring. Rollo, pp. 123-143.
[2]
Rollo, pp. 119-121.
[3]
Id. at 187-200.
[4]
Should read as NLRC NCR Case No. 00-01-10437-95. See Rollo, pp. 125, 407.
[5]
Rollo, pp. 425-427.
[6]
Id. at 243.
[7]
Id. at 521.
[8]
Id. at 248-249.
[9]
Id. at 29-30.
[10]
Id. at 65-67.
[11]
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
Department.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Secretary 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.
Any worker whose employment has been terminated as a 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.
(b) No person shall obstruct, impede, or interfere with by force, violence, coercion, threats or
intimidation any peaceful picketing by employees during any labor controversy or in the
exercise of the right of self-organization or collective bargaining, or shall aid or abet
such obstruction or interference.
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(c) No employer shall use or employ any strike-breaker, nor shall any person be employed as a
strike-breaker.
(d) No public official or employee, including officers and personnel of the New Armed Forces of
the Philippines or the Integrated National Police, or armed person, shall bring in,
introduce or escort in any manner any individual who seeks to replace strikers in
entering or leaving the premises of a strike area, or work in place of the strikers. The
police force shall keep out of the picket lines unless actual violence or other criminal
acts occur therein: Provided, That nothing herein shall be interpreted to prevent any
public officer from taking any measure necessary to maintain peace and order, protect
life and property, and/or enforce the law and legal order.
(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employers premises for lawful purposes,
or obstruct public thoroughfares.
[12]
Rollo, pp. 419, 422.
[13]
Great Pacific Life Employees Union v. Great Pacific Life Assurance Corp., 362 Phil. 452, 460
(1999).
[14]
ART. 263. Strikes, picketing and lockouts. -
(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a
notice of strike or the employer may file a notice of lockout with the Department at
least 30 days before the intended date thereof. In cases of unfair labor practice, the
period of 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 15-day
cooling-off period shall not apply and the union may take action immediately.
(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 Department may at its own
initiative or upon the request of any affected party, supervise the conduct of the secret
balloting. In every case, the union or the employer shall furnish the Department the
voting at least seven days before the intended strike or lockout, subject to the coolingoff period herein provided.
[15]
Lapanday Workers Union v. National Labor Relations Commission, G.R. Nos. 95494-97, 7
September 1995, 248 SCRA 95, 104.
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[16]
See CCBPI Postmix Workers Union v. NLRC, 359 Phil 741, 759 (1998).
[17]
Id. at 760-761.
[18]
Id. at 749.
[19]
Rollo, p. 166.
[20]
Columbus Philippines Bus Corporation v. NLRC, G.R. Nos. 114858-59, 7 September 2001, 364
SCRA 606, 623.
[21]
Association of Independent Unions in the Philippines v. NLRC, 364 Phil. 697, 708 (1999).
[22]
G.R. No. 117040, 27 January 2000, 323 SCRA 445. Stress supplied.
[23]
Id. at 472.
[24]
Id. at 463.
[25]
Id. at 475-476.
[26]
Ignacio v. Coca-Cola Bottlers Phils., Inc., G.R. No. 144400, 19 September 2001, 365 SCRA 418,
423.
[27]
Abalos v. Philex Mining Corporation, G.R. No. 140374, 27 November 2002, p. 9.
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ST. SCHOLASTICAS COLLEGE VS TORRES

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. Eskolastika-NAFTEU (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.
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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. 0012-06256-90.
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-towork 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.
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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
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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 nerve-wracking, 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
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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-towork 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).
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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 returnto-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 on-going 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.
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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
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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.
Footnotes
1 Rollo, p. 44.
2 Ibid., p. 34.
3 G.R. No 88210, 23 January 1991, 193 SCRA 223.
4 Nos. L-75271-73, 27 June 1988; 162 SCRA 676.
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5 G.R. Nos. 88710-12, 19 December 1990; 192 SCRA 397.

6 G.R. Nos. 92981-83, 9 January 1992.
7 Meycauayan College v. Drilon, G.R. No. 81144, 7 May 1990; 185 SCRA 50.
8 G.R. No. 78909, 30 June 1989; 174 SCRA 632.
9 G.R. No. 89920, 18 October 1990; 190 SCRA 759.
10 38 SCRA 372 (1971).
11 G.R. No. 80648, 15 August 1988, 164 SCRA 402.
12 No. L-49983, 20 April 1992.
13 G.R. Nos. 86917-18, 25 January 1991; 193 SCRA 365.
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MSF TIRE AND RUBBER, INC. VS CA

SUPREME COURT
Manila
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.
MENDOZA, J.:
Petitioner seeks a review of the decision1 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
petitioner's 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 Philtread's 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, entered into a Memorandum of
Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under the
Memorandum of Agreement, Philtread's 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 plant's fence.
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As the Union refused petitioner's request, petitioner filed on May 25, 1995 a complaint for injunction
with damages against the Union and the latter's officers and directors before the Regional Trial Court of
Makati, Branch 59 where the case was docketed as Civil Case No. 95-770.
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 petitioner's application for
injunction and dismissed the complaint. However, on petitioner's 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 reconsideration and set aside. Plaintiff's complaint is reinstated and
defendant's motion to dismiss is DENIED.
As regards plaintiff's application for the issuance of a writ of preliminary injunction, the Court
finds that the plaintiff has established a clear and sustaining 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 plaintiff's 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 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 Union's 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 Union's petition for its false
certification of non-forum shopping and the Union's 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 grounds that MSF did not have a clear and unmistakable right to entitle
it to a writ of preliminary injunction.
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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
Philtread's remaining operations in the country and allowed the Union to exercise its right to
communicate the facts of its labor dispute within MSF's 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 Union's failure to disclose the pendency of NCMB-NCR-NS-05-167-96 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 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 Union's petition for review on the
ground that the certification of non-forum shopping was false and perjurious as a result of the Union's
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.
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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
Union's petition in the Court of Appeals. The petition of the Union in the Court of Appeals was provoked
by petitioner's 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 Union's 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 petitioner's complaint mentions NCMB-NCR-NS-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 Philtread's.
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 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 court's 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)
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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, inPAFLU 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 bank's 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 union's strike because
Liwayway's 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 on 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 respondent's 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.
xxx
xxx
xxx
We stress that in so ruling, we have not touched on the issue of . . . whether or not private 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 to an injunctive writ. Since petitioner is not an "innocent
bystander", the trial court's 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.1wphi1.nt
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SO ORDERED.
Bellosillo, Quisumbing and Buena, JJ., concur.
Footnotes
Penned by Associate Justice Fidel P. Purisima and concurred in by Associate Justice Angelina
Sandoval Gutierrez and Associate Justice Conrado M. Vazquez, Jr.
2
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.
10
Rollo, p. 58.
11
27 SCRA 465 (1969).
12
Id., 472-473.
13
108 SCRA 161 (1981).
14
Rollo, pp. 38-39.
15
Indophil Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992).
16
Vda. de Sayman v. Court of Appeals, 121 SCRA 650 (1983).
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CEBU MARINE BEACH RESORT VS NLRC

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 143252
October 23, 2003
CEBU MARINE BEACH RESORT, OFELIA PELAEZ AND TSUYOSHI SASAKI, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), RIC RODRIGO RODRIGUEZ,
MANULITO VILLEGAS and LORNA G. IGOT, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Probationary employees need strong protection from the exploitation of employers since they are
usually the lowliest of the lowly and the most vulnerable to abuses of management, who would rather
suffer in silence than risk losing their jobs.1
At bar is a petition for review on certiorari seeking to reverse and set aside the Decision2 dated
November 5, 1999 and Resolution3 dated April 18, 2000 of the Court of Appeals in CA-G.R. SP No. 54548,
entitled "Cebu Marine Beach Resort, Ofelia Pelaez, and Tsuyoshi Sasaki vs. The Honorable National
Labor Relations Commission (Fourth Division), Ric Rodrigo Rodriguez, Manulita Villegas, and Lorna G.
Igot".
The facts as borne by the records are:
Cebu Marine Beach Resort (herein petitioner company), a single proprietorship owned by Victor Dualan,
commenced its operations sometime in January, 1990 with the recruitment of its employees, including
Ric Rodrigo Rodriguez, Manulita Villegas and Lorna G. Igot, respondents.
On the last week of March, 1990 when Japanese tourists began arriving at the resort, petitioner
company became fully operational.
Inasmuch as the beach resort was intended to cater principally to Japanese tourists, respondents had to
undergo a special training in Japanese customs, traditions, discipline as well as hotel and resort services.
This special training was supervised by Tsuyoshi Sasaki, also a petitioner.
During a seminar conducted on May 24, 1990, petitioner Sasaki suddenly scolded respondents and
hurled brooms, floor maps, iron trays, fire hoses and other things at them. In protest, respondents
staged a walk-out and gathered in front of the resort.
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Immediately, petitioner Sasaki reacted by shouting at them to go home and never to report back to
work. Heeding his directive, respondents left the premises. Eventually, they filed with the Regional
Arbitration Branch at Cebu City a complaint for illegal dismissal and other monetary claims against
petitioners.
On May 28, 1990, petitioner company, through its acting general manager, Ofelia Pelaez, also a
petitioner, sent letters to respondents requiring them to explain why they should not be terminated
from employment on the grounds of abandonment of work and failure to qualify with the standards for
probationary employees.
In due course, the Labor Arbiter rendered a Decision dated March 23, 1993 dismissing respondents
complaint but directing them to immediately report back to work.
On appeal, the National Labor Relations Commission (NLRC), in its Decision dated June 28, 1994,
reversed the Labor Arbiters Decision, declaring that the respondents were dismissed illegally and
ordering their reinstatement with payment of full backwages from May 24, 1990 up to their actual
reinstatement or in lieu thereof, the payment of their respective separation pay (equivalent to one
month salary) from May 24, 1990 up to the date they were supposed to be reinstated, as well as
attorneys fees (equivalent to 10% of the total monetary award).
On February 28, 1995, the NLRC issued a Resolution declaring that the backwages shall correspond only
to the period from May 24, 1990 (the date of their dismissal) until March 23, 1993 (when they were
ordered reinstated by the Labor Arbiter), subject to the deduction of their earnings from other sources
during the pendency of the appeal.1awphi1.nt
On March 22, 1995, petitioners filed with this Court a petition for certiorari, prohibition and injunction
with prayer for the issuance of a temporary restraining order.
Pursuant to our ruling in St. Martins Funeral Home vs. NLRC,4 we referred the petition to the Court of
Appeals for its appropriate action and disposition.
On November 5, 1999, the Court of Appeals rendered its Decision affirming with modification the
Decision and Resolution of the NLRC. The dispositive portion reads:
"WHEREFORE, the Decision, dated June 28, 1994, and the Resolution dated February 28, 1995, both
issued by the public respondent, are hereby AFFIRMED with the following modifications: the backwages
should be computed from the date of the dismissal of private respondents until the finality of this
Decision without deduction from earnings during the pendency of the appeal and the award of
separation pay must be equivalent to one-half months salary for every year of service commencing
likewise on the date of the dismissal of private respondents until the finality of this Decision. The
petition is dismissed. Costs against petitioners.
"SO ORDERED."
From the said Decision, petitioners filed a motion for reconsideration, but was denied.
Hence, this petition for review on certiorari.
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Petitioners contend that the Appellate Court committed a serious error when it unilaterally extended
the 6-month probationary employment contracts of the respondents by awarding them full backwages,
or in lieu of their reinstatement, when it ordered payment of their separation pay computed from the
time of their dismissal up to the finality of its Decision.
The sole legal issue for our Resolution is whether respondents were illegally dismissed from
employment by petitioner company.
We hold that the Court of Appeals did not err when it ruled that respondents were illegally dismissed
from the service.
It is settled that while probationary employees do not enjoy permanent status, they are entitled to the
constitutional protection of security of tenure. Their employment may only be terminated for just
cause or when they fail to qualify as regular employees in accordance with reasonable standards
made known to them by their employer at the time of engagement, and after due process.5
Here, petitioners terminated respondents probationary employment on the grounds of abandonment
and failure to qualify for the positions for which they were employed.
On this point, we quote with approval the findings of the Court of Appeals, thus:
"x x x. It is undisputed that Mr. Sasaki made an utterance to the effect that private respondents should
go home and never come back to work for the company again. Such utterance is tantamount to a
dismissal. Its meaning is also clear and unmistakable no matter which accent was used by Mr. Sasaki.
Considering further that Mr. Sasaki was in charge of the training of the private respondents, his words
carry authority and conviction. Even assuming for the sake of argument that Mr. Sasaki was never
vested with the power of dismissal, the petitioner company ratified Mr. Sasakis acts. When petitioner
company sent a strongly worded memorandum to private respondents asking them to explain why their
services should not be terminated for failure to live up to the companys expectations, it showed
intention to terminate. x x x:
"x x x
"The subsequent issuances of the memos were, as rightly interpreted by the public respondent, merely
an afterthought to escape the legal liability arising from the illegal termination of the private
respondents services. x x x:
"x x x
"The next three reasons adduced by the petitioners sought to prove the existence of a just cause for the
dismissal of private respondents, which is, abandonment. We are not convinced. The fact that private
respondents never came back to work despite the issuance of the memoranda by the petitioner does
not support the allegation of abandonment. x x x."
Indeed, we find no indication that respondents have shown by some overt acts their intention to sever
their employment in petitioner company. To constitute abandonment, there must be clear proof of
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deliberate and unjustified intent to sever the employer-employee relationship. Clearly, the operative
factor is still the employers ultimate act of putting an end to his employment.
Here, respondents did not report back for work because they were warned by petitioner Sasaki not to
return. But immediately, they filed with the Labor Arbiters Office a complaint for illegal dismissal. It is a
settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with the charge of
abandonment, for an employee who takes steps to protest his dismissal cannot by logic be said to have
abandoned his work.6
That respondents failed to qualify for their positions, suffice it to state that at the time they were
dismissed, they were still in a "trial period" or probationary period. Being in the nature of a "trial
period," the essence of a probationary period of employment fundamentally lies in the purpose or
objective sought to be attained by both the employer and the employee during said period. While the
employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is
qualified for permanent employment, the probationer, on the other hand, seeks to prove to the
employer that he has the qualifications to meet the reasonable standards for permanent employment
which obviously were made known to him.7 To reiterate, in the case at bar, far from allowing the
respondents to prove that they possessed the qualifications to meet the reasonable standards for their
permanent employment, petitioners peremptorily dismissed them from the service.
On another tack, petitioners argument that the Appellate Courts award of full backwages and
separation pay in effect unilaterally extended respondents 6-month probationary employment is bereft
of merit.
In Philippine Manpower Services, Inc. vs. NLRC,8 we held that "absent the grounds for termination of a
probationary employee, he is entitled to continued employment even beyond the probationary period."
On a similar note, our ruling in Lopez vs. Javier9 is quite explicit, thus:
"x x x, probationary employees who are unjustly dismissed from work during the probationary period
shall be entitled to reinstatement and payment of full backwages and other benefits and privileges
from the time they were dismissed up to their actual reinstatement, conformably with Article 279 of
the Labor Code, as amended by Section 34 of Republic Act No. 6715, which took effect on March 21,
1989:
x x x 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."
Verily, respondents who were unjustly dismissed from work are actually entitled to reinstatement
without loss of seniority rights and other privileges as well as to their full backwages, inclusive of
allowances, and to other benefits or their monetary equivalent computed from the time their
compensation was withheld from them up to the time of their actual reinstatement.10
However, the circumstances obtaining in this case do not warrant the reinstatement of respondents.
Antagonism caused a severe strain in the relationship between them and petitioner company. A more
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equitable disposition, as correctly held by the NLRC, would be an award of separation pay11 equivalent
to at least one month pay, or one month pay for every year of service, whichever is higher,12 in addition
to their full backwages, allowances and other benefits.1a\^/phi1.net
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals dated November 5, 1999 and
April 18, 2000 are hereby AFFIRMED WITH MODIFICATION in the sense that, in lieu of reinstatement,
respondents are awarded separation pay equivalent to at least one month pay, or one month pay for
every year of service, whichever is higher; and their full backwages, other privileges and benefits, or
their monetary equivalent during the period of their dismissal up to their supposed actual
reinstatement.
Costs against petitioners.
SO ORDERED.
Puno, (Chairman), Panganiban, Corona, and Carpio-Morales, JJ., concur.
Footnotes
1
See Central Negros Electric Cooperative, Inc. vs. NLRC, G.R. No. 106246, September 1, 1994,
236 SCRA 108.
2
Penned by Justice Teodoro P. Regino (retired) and concurred in by Justices Conrado M.

Vasquez, Jr. and Salome A. Montoya (retired); Annex "A", Petition, Rollo at 34-48.
3
Annex "B", Petition, Rollo at 49-50.
G.R. No. 130866, September 16, 1998, 295 SCRA 494, holding that the appeal from the NLRC
should be initially filed with the Court of Appeals, no longer with this Court, pursuant to the
doctrine of hierarchy of courts.
5
Secon Philippines, Ltd. vs. NLRC, G.R. No. 97399, December 3, 1999, 319 SCRA 685, 688, citing
Manlimos vs. NLRC, 242 SCRA 145, 155-156 (1995) and P.I. Manpower Placements, Inc. vs. NLRC,
276 SCRA 451, 457 (1997).
6
Samarca vs. Arc-Men Industries, Inc., G.R. No. 146118, October 8, 2003, citing KAMS
International, Inc. vs. NLRC, G.R. No. 128806, September 28, 1999, 315 SCRA 316.
7
See Grand Motor Parts Corp. vs. Minister of Labor, G.R. No. L-58958, July 16, 1984, 130 SCRA
436.
8
G.R. No. 98450, July 21, 1993, 224 SCRA 691, 700.
G.R. No. 102874, January 22, 1996, 252 SCRA 68, 77-78.
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10
See Damasco vs. NLRC, G.R. Nos. 115755 & 116101, December 4, 2000, 346 SCRA 714.
11
See Samarca vs. Arc-Men Industries, Inc., supra.
12
See Philippine Tobacco Flue-Curing and Redrying Corp. vs. NLRC, G.R. No. 127395, December
10, 1998, 300 SCRA 37.
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CALLANTA VS CARNATION PHIL.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 70615 October 28, 1986
VIRGILIO CALLANTA, petitioner,
vs.
CARNATION PHILIPPINES, INC., and NATIONAL LABOR RELATIONS COMMISSION [NLRC], respondents.
Danilo L. Pilapil for petitioner.
FERNAN, J.:
The issue raised in this petition for certiorari is whether or not an action for illegal dismissal prescribes in
three [3] years pursuant to Articles 291 and 292 of the Labor Code which provide:
Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations
issued pursuant thereto shall prescribe in three [3] years.
xxx xxx xxx
Art. 292. Money Claims. All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three [3] years from the
time the cause of action accrued; otherwise, they shall be forever barred.
xxx xxx xxx
Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc. [Carnation,
for brevity] in January 1974 as a salesman in the Agusan del Sur area. Five [51 years later or on June 1,
1979, respondent Carnation filed with the Regional Office No. X of the Ministry of Labor and
Employment [MOLE], an application for clearance to terminate the employment of Virgilio Callanta on
the alleged grounds of serious misconduct and misappropriation of company funds amounting to
P12,000.00, more or less.
Upon approval on June 26, 1979 by MOLE Regional Director Felizardo G. Baterbonia, of said clearance
application, petitioner Virgilio Callanta's employment with Carnation was terminated effective June 1,
1979.
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On July 5, 1982, Virgilio Callanta filed with the MOLE, Regional Office No. X, a complaint for illegal
dismissal with claims for reinstatement, backwages, and damages against respondent Carnation.
In its position paper dated October 5, 1982, respondent Carnation put in issue the timeliness of
petitioner's complaint alleging that the same is barred by prescription for having been filed more than
three [3] years after the date of Callanta's dismissal.
On March 24, 1983, Labor Arbiter Pedro C. Ramos rendered a decision finding the termination of
Callanta's employment to be without valid cause. Respondent Carnation was therefore ordered to
reinstate Virgilio Callanta to his former position with backwages of one [1] year without qualification
including all fringe benefits provided for by law and company policy, within ten [10] days from receipt of
the decision. It was likewise provided that failure on the part of respondent to comply with the decision
shall entitle complainant to full backwages and all fringe benefits without loss of seniority rights.
On April 18, 1983, respondent Carnation appealed to respondent National Labor Relations Commission
[NLRC] which in a decision dated February 25, 1985, 1 set aside the decision of the Labor Arbiter. It
declared the complaint for illegal dismissal filed by Virgilio Callanta to have already prescribed. Thus:
Records show that Virgilio Callanta was dismissed from his employment with
respondent company effective June 1, 1979; and that on 5 July 1982, he filed the instant
complaint against respondent for: Unlawful Dismissal with Backwages, etc.
The provisions of the Labor Code applicable are:
Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations
issued pursuant thereto shall prescribe in three [3] years.
Art. 292. Money claims. All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three [3] years from the
time the cause of action accrued; otherwise, they shall be forever barred.
Obviously, therefore, the causes of action, i.e., "Unlawful Dismissal" and "Backwages,
etc." have already prescribed, the complaint therefore having been filed beyond the
three-year period from accrual date.
With this finding, there is no need to discuss the other issues raised in the appeal.
WHEREFORE, in view of the foregoing, the Decision appealed from is hereby SET ASIDE
and another one entered, dismissing the complaint.
SO ORDERED.
Hence, this petition, which We gave due course in the resolution dated September 18, 1985. 2
Petitioner contends that since the Labor Code is silent as to the prescriptive period of an action for
illegal dismissal with claims for reinstatement, backwages and damages, the applicable law, by way of
supplement, is Article 1146 of the New Civil Code which provides a four [4]-year prescriptive period for
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an action predicated upon "an injury to the rights of the plaintiff" considering that an action for illegal
dismissal is neither a "penal offense" nor a mere "money claim," as contemplated under Articles 291
and 292, respectively, of the Labor Code. Petitioner further claims that an action for illegal dismissal is a
more serious violation of the rights of an employee as it deprives him of his means of livelihood; thus, it
should correspondingly have a prescriptive period longer than the three 13] years provided for in
"money claims."
Public respondent, on the other hand, counters with the arguments that a case for illegal dismissal falls
under the general category of "offenses penalized under this Code and the rules and regulations
pursuant thereto" provided under Article 291 or a money claim under Article 292, so that petitioner's
complaint for illegal dismissal filed on July 5, 1982, or three [3] years, one [1] month and five [5] days
after his alleged dismissal on June 1, 1979, was filed beyond the three-year prescriptive period as
provided under Articles 291 and 292 of the Labor Code, hence, barred by prescription; that while it is
admittedly a more serious offense as it involves an employee's means of livelihood, there is no logic in
assuming that it has a longer prescriptive period, as naturally, one who is truly aggrieved would
immediately seek the redress of his grievance; that assuming arguendo that the law does not provide for
a prescriptive period for the enforcement of petitioner's right, it is nevertheless beyond dispute that the
said right has already lapsed into a stale demand; and that considering the seriousness of the act
committed by petitioner, private respondent was justified in terminating the employment.
We find for petitioner.
Verily, the dismissal without just cause of an employee from his employment constitutes a violation of
the Labor Code and its implementing rules and regulations. Such violation, however, does not amount to
an "offense" as understood under Article 291 of the Labor Code. In its broad sense, an offense is an
illegal act which does not amount to a crime as defined in the penal law, but which by statute carries
with it a penalty similar to those imposed by law for the punishment of a crime. 3 It is in this sense that a
general penalty clause is provided under Article 289 of the Labor Code which provides that "... any
violation of the provisions of this code declared to be unlawful or penal in nature shall be punished with
a fine of not less than One Thousand Pesos [P1,000.00] nor more than Ten Thousand Pesos [10,000.00],
or imprisonment of not less than three [3] months nor more than three [3] years, or both such fine and
imprisonment at the discretion of the court." [Emphasis supplied.]
The confusion arises over the use of the term "illegal dismissal" which creates the impression that
termination of an employment without just cause constitutes an offense. It must be noted, however
that unlike in cases of commission of any of the probihited activities during strikes or lockouts under
Article 265, unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities under
Article 38, among others, which the Code itself declares to be unlawful, termination of an employment
without just or valid cause is not categorized as an unlawful practice.
Besides, the reliefs principally sought by an employee who was illegally dismissed from his employment
are reinstatement to his former position without loss of seniority rights and privileges, if any, backwages
and damages, in case there is bad faith in his dismissal. As an affirmative relief, reinstatement may be
ordered, with or without backwages. While ordinarily, reinstatement is a concomitant of backwages, the
two are not necessarily complements, nor is the award of one a condition precedent to an award of the
other. 4 And, in proper cases, backwages may be awarded without ordering reinstatement . In either
case, no penalty of fine nor improsonment is imposed on the employer upon a finding of illegality in the
dismissal. By the very nature of the reliefs sought, therefore, an action for illegal dismissal cannot be
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generally categorized as an "offense" as used under Article 291 of the Labor Code, which according to
public respondent, must be brought within the period of three[3] years from the time the cause of
action accrued, otherwise, the same is forever barred.
It is true that the "backwwages" sought by an illegally dismissed employee may be considered, by
reason of its practical effect, as a "money claim." However, it is not the principal cause of action in an
illegal dismissal case but the unlawful deprivation of the one's employment committed by the employer
in violation of the right of an employee. Backwages is merely one of the reliefs which an illegally
dismissed employee prays the labor arbiter and the NLRC to render in his favor as a consequence of the
unlawful act committed by the employer. The award thereof is not private compensation or
damages 5 but is in furtherance and effectuation of the public objectives of the Labor Code. 6 even
though the practical effect is the enrichment of the individual, the award of backwages is not inredness
of a private right, but, rather, is in the nature of a command upon the employer to make public
reparation for his violation of the Labor Code. 7
The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is
applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this
Court had occasion to hold that an action for damages involving a plaintiff seperated from his
employment for alleged unjustifiable causes is one for " injury to the rights of the plaintiff, and must be
brought within four [4] years. 8
In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court, thru then Chief Justice Enrique M.
Fernando, sustained the sand of the Solicitor General that the period of prescription mentioned under
Article 281, now Article 292, of the Labor Code, refers to and "is limited to money claims, an other cases
of injury to rights of a workingman being governed by the Civil Code." Accordingly, this Court ruled that
petitioner Marciana Santos, who sought reinstatement, had four [4] years within which to file her
complaint for the injury to her rights as provided under Article 1146 of the Civil Code.
Indeed there is, merit in the contention of petitioner that the four [4]-year prescriptive period under
Article 1146 of the New Civil Code, applies by way of supplement, in the instant case, to wit:
Art. 1146. The following actions must be instituted within four years.
[1] Upon an injury to the lights of the plaintiff.
xxx xxx xxx
[Emphasis supplied]
As this Court stated in Bondoc us. People's Bank and Trust Co., 9 when a person has no property, his job
may possibly be his only possession or means of livelihood, hence, he should be protected against any
arbitrary and unjust deprivation of his job. Unemployment, said the Court in Almira vs. B.F. Goodrich
Philippines, 10 brings "untold hardships and sorrows on those dependent on the wage earners. The
misery and pain attendant on the loss of jobs thus could be avoided if there be acceptance of the view
that under all the circumstances of this case, petitioners should not be deprived of their means of
livelihood."
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It is a principle in American jurisprudence which, undoubtedly, is well-recognized in this jurisdiction that

one's employment, profession, trade or calling is a "property right," and the wrongful interference
therewith is an actionable wrong. 11 The right is considered to be property within the protection of a
constitutional guaranty of due process of law. 12 Clearly then, when one is arbitrarily and unjustly
deprived of his job or means of livelihood, the action instituted to contest the legality of one's dismissal
from employment constitutes, in essence, an action predicated "upon an injury to the rights of the
plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4]
years.
In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3]
years, one [1] month and five [5] days after the alleged effectivity date of his dismissal on June 1, 1979
which is well within the four [4]-year prescriptive period under Article 1146 of the New Civil Code.
Even on the assumption that an action for illegal dismissal falls under the category of "offenses" or
"money claims" under Articles 291 and 292, Labor Code, which provide for a three-year prescriptive
period, still, a strict application of said provisions will not destroy the enforcement of fundamental rights
of the employees. As a statutory provision on limitations of actions, Articles 291 and 292 go to matters
of remedy and not to the destruction of fundamental rights. 13 As a general rule, a statute of limitation
extinguishes the remedy only. Although the remedy to enforce a right may be barred, that right may be
enforced by some other available remedy which is not barred. 14
More so, in the instant case, where the delay in filing the case was with justifiable cause. The threat to
petitioner that he would be charged with estafa if he filed a complaint for illegal dismissal, which private
respondent did after all on June 22, 1981, justifies, the delayed filing of the action for illegal dismissal
with the Regional Office No. X, MOLE on July 5, 1982. Laches will not in that sense strengthen the cause
of public respondent. Besides, it is deemed waived as it was never alleged before the Labor Arbiter nor
the NLRC.
Public respondent dismissed the action for illegal dismissal on the sole issue of prescription of actions. It
did not resolve the case of illegal dismissal on the merits. Nonetheless, to resolve once and for all the
issue of the legality of the dismissal, We find that petitioner, who has continuously served respondent
Carnation for five [5] years was, under the attendant circumstances, arbitrarily dismissed from his
employment. The alleged shortage in his accountabilities should have been impartially investigated with
all due regard for due process in view of the admitted enmity between petitioner and E.L. Corsino,
respondent's auditor. 15 Absent such an impartial investigation, the alleged shortage should not have
been attended with such a drastic consequence as termination of the employment relationship.
Outright dismissal was too severe a penalty for a first offense, considering that the alleged shortage was
explained to respondent's Auditor, E.L. Corsino, in accordance with respondent's accounting and
auditing policies.
The indecent haste of his dismissal from employment was, in fact, aggravated by the filing of the estafa
charge against petitioner with the City Fiscal of Butuan City on June 22, 1981, or two [2] years after his
questioned dismissal. After the case had remained pending for five [5] years, the Regional Trial Court of
Agusan del Norte and Butuan City, Branch V finally dismissed the same provisionally in an order dated
February 21, 1986 for failure of the prosecution's principal witness to appear in court. Admittedly, loss
of trust and confidence arising from the same alleged misconduct is sufficient ground for dismissing an
employee from his employment despite the dismissal of the criminal case. 16 However, it must not be
indiscriminately used as a shield to dismiss an employee arbitrarily. 17 For, who can stop the employer
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from filing all the charges in the books for the simple exercise of it, and then hide behind the pretext of
loss of confidence which can be proved by mere preponderance of evidence.
We grant the petition and the decision of the NLRC is hereby reversed and set aside. Although We are
strongly inclined to affirm that part of the decision of the Labor Arbiter ordering the reinstatement of
petitioner to his former position without loss of seniority rights and privileges, a supervening event,
which petitioner mentioned in his motion for early decision dated January 6, 1986 18 that is, FILIPRO,
Inc.'s taking over the business of Carnation, has legally rendered the order of reinstatement difficult to
enforce, unless there is an express agreement on assumption of liabilities 19 by the purchasing
corporation, FILIPRO, Inc. Besides, there is no law requiring that the purchasing corporation should
absorb the employees of the selling corporation. 20 In any case, the very concept of social justice dictates
that petitioner shall be entitled to backwages of three [3] years. 21
WHEREFORE, respondent Carnation Philippines, Inc. is hereby ordered to pay petitioner Virgilio Callanta
backwages for three [3] years without qualification and deduction. This decision is immediately
executory. No costs.
SO ORDERED.
Feria (Chairman), Alampay, Gutierrez, Jr., and Paras, JJ., concur.
Footnotes
1 PP. 13-14, Rollo.
2 Private respondent Carnation Phils. Inc. failed to file its comment on the petition. In
the same resolution of September 18, 1985, said comment was dispensed with by the
court, p. 32, Rollo.
3 Wickham vs. Pafumi, 256 N.Y.S. 2d 868, 871, 45 Misc 2d 344; People ex rel. Schidhaus
on Behalf of Weinstein vs. Warden of the City Prison, Borough of Manhattan, Bellevue
HOspital, 235 N.Y.S. 2d 531, 537, 37 Misc 2d 660; Application of Waldau, Sup., 125 N.Y.S.
2d 793, 796.
4 Rothenberg, On Labor Relations, p. 577.
5 Manseau vs. U.S. 52 F Supp. 395; NLRB vs. Newark MOrning Ledger, 120 F[2nd] 262.
6 NLRB vs. West Kentucky Coal Co., 116 F [2nd] 816.
7 NLRB vs. Agwilines, Inc. 87 F[2nd] 146.
8 Pars, Civil Code of the Philippines, Annotated, 10th Ed., Vol. IXC, p. 42.
9 103 SCRA 599 [1981].
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10 58 SCRA 120, 131 [1974].

11 Carter vs. Knapp Motor Co., 11 So. 2d 383, 384, 243 Ala. 600, 144 A.L.R. 1177;
Alabama State Federation of Labor vs. McAdory,18 So. 2d 810, 828, 246 Ala, 1; Lash vsState, 14 So. 2d 229, 232, 244 Ala. 48.
12 Fernando, Constitution of the Philippines, Second Edition [1977] pp. 512-513.
13 Chase Secur. Corp. vs. Donaldson, 325 US 304, 89 L Ed. 1628.
14 51 Am Jr 2d p. 607.
15 p. 4, Petitioner's Manifestation & Memorandum, p. 36, Rollo.
16 Sea-Land Service, Inc. vs. NLRC, 136 SCRA 544 [1985] Philippine Long Distance
Telephone Co. vs. NLRC, 129 SCRA 163 [1984]; San Miguel Corp. vs. NLRC, 128 SCRA 180
[1984].
17 Central Textile Mills, Inc. vs. NLRC, 95 SCRA 9[1979].
18 p. 49, Rollo.
19 Central Azucarera del Danao vs. Court of Appeals, 137 SCRA 294 [1985].
20 MDDII Supervisors and Confidential Employees Association [FFW] vs. Presidential
Assistant on Legal Affairs, 79 SCRA 40 [1977].
21 Lepanto Consolidated Mining Co. vs. Encarnacion, 136 SCRA 258 119851; Medical
Doctors, Inc. vs. NLRC, 136 SCRA 1 [1985]; Insular Life Assurance Co. Ltd. vs. NLRC, 135
SCRA 697 [1985].
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GUERRERO VS NLRC
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)[1] dismissing petitioners' complaints
for illegal dismissal against R.O.H. Auto Products Phils., Inc. and its president, Goeff Kemp.
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.
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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.[2]
This was affirmed by the NLRC in its Decision dated March 10, 1995.[3]
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) 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.[5] The burden of proof rests on the
employer.[6] 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.[7] As we held in Lopez Sugar Corporation vs.
Federation of Free Workers:[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
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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.[11] This
requirement is mandatory[12] 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.[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,[14] 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."
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.[15] No costs.
SO ORDERED.
Regalado (Chairman), Mendoza and Torres, Jr., JJ., concur.
Romero, J., on leave.
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[1]
Annex "A" of Petition; Rollo, pp. 20-27.
[2]
Rollo, p. 37.
[3]
Rollo, pp. 26-27.
[4]
Sebugero vs. NLRC, 248 SCRA 532 (1995).
[5]
Philippine School of Business Administration vs. NLRC, 223 SCRA 305 (1993); Balasbas vs. NLRC, 212
SCRA 803 (1992); Villena vs. NLRC, 193 SCRA 686 (1991); Lopez Sugar Corporation vs. Federation of Free
Workers, 189 SCRA 179 (1990).
[6]
Revidad vs. NLRC, 245 SCRA 356 (1995).
[7]
Balasbas vs. NLRC, 212 SCRA 803 (1992); Precision Electronics Corp. vs. NLRC, 178 SCRA 667 (1989).
[8]
189 SCRA 179 (1990).
[9]
Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179 (1990).
[10]
Radio Communications of the Phils., Inc. vs. NLRC, 210 SCRA 222 (1992); Lopez Sugar Corporation vs.
Federation of Free Workers, 189 SCRA 179 (1990).
[11]
Revidad vs. NLRC, 245 SCRA 356 (1995).
[12]
Union of Filipino Workers (UFW) vs. NLRC, 221 SCRA 267 (1993); Radio Communications of the Phils.,
Inc. vs. NLRC, 210 SCRA 222 (1992); AHS/Philippines Employees Union (FFW) vs. NLRC, 149 SCRA 5
(1987).
[13]
Union of Filipino Workers (UFW) vs. NLRC, 221 SCRA 267 (1993); AHS/Philippine Employees Union
(FFW) vs. NLRC, 149 SCRA 5 (1987).
[14]
100 SCRA 691 (1980).
[15]
See De Leon vs. NLRC, 100 SCRA 691 (1980).
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NFL VS NLRC
SECOND DIVISION
[G.R. No. 127718. March 2, 2000]
NATIONAL FEDERATION OF LABOR, ABELARDO SANGADAN, LUCIANO RAMOS, NESTOR TILASAN,
GREGORIO TILASAN, JOAQUIN GARCIA, ROGELIO SABAITAN, CASTRO LEONARDO, PILARDO
POTENCIANO, RONILLO POTENCIANO, SANTIAGO SABAITAN, JOVENCIO BARTOLOME, JUANITO
CONCERMAN, GEORGE TUMILAS, PATROCINIO DOMINGO, AVELINO FRANCISCO, MELITON
SANGADAN, ALEXANDER GERONIMO, JOAQUIN GERONIMO, RAMIL MACASO, LAMBERTO JOVEN,
CRISTINO GARINA, SAMMY GANTAAN, NACIAL USTALAN, EDWIN USTALAN, ROLAND POTENCIANO,
RODY CONCERMAN, ELMER DOMINGO, ARNAGUEZ SANGADAN, UNDING BOLENG, EDUARDO
BOLENG, ROBERTO PANEO and HENRY SANGADAN,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (5th Division), PATALON COCONUT ESTATE and/or
CHARLIE REITH as General Manager and SUSIE GALLE REITH, as owner, respondents.
DECISION
DE LEON, JR., J.:
Before us is a special civil action for certiorari to set aside and annul two (2) resolutions of the National
Labor Relations Commission[1] promulgated on April 24, 1996[2] and August 29, 1996[3] denying the
award of separation pay to petitioners.
The pertinent facts are as follows:
Petitioners are bona fide members of the National Federation of Labor (NFL), a legitimate labor
organization duly registered with the Department of Labor and Employment. They were employed by
private respondents Charlie Reith and Susie Galle Reith, general manager and owner, respectively, of the
354-hectare Patalon Coconut Estate located at Patalon, Zamboanga City. Patalon Coconut Estate was
engaged in growing agricultural products and in raising livestock.
In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), which mandated the compulsory acquisition of all covered
agricultural lands for distribution to qualified farmer beneficiaries under the so-called Comprehensive
Agrarian Reform Programme (CARP).
Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the Patalon Estate Agrarian
Reform Association (PEARA), a cooperative accredited by the Department of Agrarian Reform (DAR), of
which petitioners are members and co-owners.
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As a result of this acquisition, private respondents shut down the operation of the Patalon Coconut
Estate and the employment of the petitioners was severed on July 31, 1994. Petitioners did not receive
any separation pay.
On August 1, 1994, the cooperative took over the estate. A certain Abelardo Sangadan informed
respondents of such takeover via a letter which was received by the respondents on July 26, 1994. Being
beneficiaries of the Patalon Coconut Estate pursuant to the CARP, the petitioners became part-owners
of the land.[4]
On April 25, 1995, petitioners filed individual complaints before the Regional Arbitration Branch (RAB) of
the National Labor Relations Commission (NLRC) in Zamboanga City, praying for their reinstatement
with full backwages on the ground that they were illegally dismissed. The petitioners were represented
by their labor organization, the NFL.
On December 12, 1995, the RAB rendered a decision, the dispositive portion of which provides:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing
complainants charge for illegal dismissal for lack of merit, but ordering respondents thru
[sic] its owner-manager or its duly authorized representative to pay complainants
separation pay in view of the latters cessation of operations or forced sale, and for 13th
month differential pay in the amount, as follows, for:
Names Separation Pay 13th Mo. Pay Diff. Total
Abelardo Sangadan P23,879.06 N o n e P23,879.06
Luciano Ramos 43,605.24 P711.25 44,316.49
Nestor Tilasan 19,726.18 401.46 20,127.64
Gregorio Tilasan 25,955.50 N o n e 25,955.50
Joaquin Garcia 7,267.54 1,211.25 8,478.79
Rogelio Sabaitan 21,798.00 1,211.25 23,009.25
Castro Leonardo, Jr. 25,955.50 63.10 26,018.60
Pilardo Potenciano 5,191.10 911.25 6,102.35
Ronillo Potenciano 7,267.54 N o n e 7,267.54
Jovencio Bartolome 8,305.76 477.25 8,783.01
Santiago Sabaitan 4,152.88 1,011.25 5,164.13
Juanito Concerman 7,267.54 611.25 7,928.79
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George Tumilas 16,611.52 1,011.25 17,622.77

Patrocinio Domingo 2,076.44 1,011.25 3,087.69
Avelino Francisco 3,114.66 1,211.25 4,325.91
Meliton Sangadan 15,573.30 392.50 15,965.80
Alexander Geronimo 15,573.00 N o n e 15,573.30
Joaquin Geronimo 24,917.28 1,211.25 26,128.53
Ramil Macaso 6,229.32 861.25 7,090.57
Lamberto Joven 16,611.62 1,011.25 17,622.77
Cristino Garina 35,299.48 849.65 36,149.13
Sammy Gantaan 14,535.08 961.25 15,496.33
Nacial Ustalan 38,414.14 79.95 38,494.09
Edwin Ustalan 7,267.54 1,011.25 8,278.79
Roland Potenciano 5,191.10 911.25 6,102.35
Rody Concerman 7,267.54 691.25 7,958.79
Elmer Domingo 3,114.66 1,211.25 4,325.91
Aranquez Sangada 45,681.68 711.25 46,392.93
Unding Boleng 31,146.60 N o n e 31,146.60
Eduardo Boleng 35,299.48 759.30 36,058.78
Roberto Paneo 23,876.06 911.25 24,787.31
Henry Sangadan 16,611.52 1,011.25 17,622.77
Total Benefits P586,774.22
"FURTHER, complainants claim for Muslim Holiday, overtime pay and rest day pay
should be dismissed for lack of merit, too."[5]
Appeal was taken by private respondents to public respondent NLRC.[6]
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On April 24, 1996, the NLRC issued a resolution, the dispositive portion of which provides:
"WHEREFORE, the decision appealed from is hereby modified in favor of the following
findings:
1) Respondents are not guilty of illegally dismissing complainants. Respondents
cessation of operation was not due to a unilateral action on their part resulting in the
cutting off of the employment relationship between the parties. The severance of
employer-employee relationship between the parties came about INVOLUNTARILY, as a
result of an act of the State. Consequently, complainants are not entitled to any
separation pay.
2) The award of 13th month pay differential is, however, Set Aside. Any award of 13th
month pay differentials to complainants should be computed strictly based on their
reduced pay, equivalent to six (6) hours work, Monday to Friday, pursuant to what the
parties agreed in the November 18, 1991 Compromise Agreement."
SO ORDERED.[7]
Petitioners filed a motion for reconsideration which was denied by the NLRC in its resolution[8] dated
August 29, 1996.
The issue is whether or not an employer that was compelled to cease its operation because of the
compulsory acquisition by the government of its land for purposes of agrarian reform, is liable to pay
separation pay to its affected employees.
The petition is bereft of merit.
Petitioners contend that they are entitled to separation pay citing Article 283 of the Labor Code which
reads:
"ART. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the 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 as one (1) whole year."
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It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction
of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an
establishment nor a reduction of personnel as contemplated under the aforesaid article. When the
Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant
to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and
ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of
the Labor Code is not applicable to the case at bench.
Even assuming, arguendo, that the situation in this case were a closure of the business establishment
called Patalon Coconut Estate of private respondents, still the petitioners/employees are not entitled to
separation pay. The closure contemplated under Article 283 of the Labor Code is a unilateral and
voluntary act on the part of the employer to close the business establishment as may be gleaned from
the wording of the said legal provision that "The employer may also terminate the employment of any
employee due to...".[9] The use of the word "may," in a statute, denotes that it is directory in nature and
generally permissive only.[10] The "plain meaning rule" or verba legis in statutory construction is thus
applicable in this case. Where the words of a statute are clear, plain and free from ambiguity, it must be
given its literal meaning and applied without attempted interpretation.[11]
In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of the
business establishment is forced upon the employer and ultimately for the benefit of the employees.
As earlier stated, the Patalon Coconut Estate was closed down because a large portion of the said estate
was acquired by the DAR pursuant to the CARP. Hence, the closure of the Patalon Coconut Estate was
not effected voluntarily by private respondents who even filed a petition to have said estate exempted
from the coverage of RA 6657. Unfortunately, their petition was denied by the Department of Agrarain
Reform. Since the closure was due to the act of the government to benefit the petitioners, as members
of the Patalon Estate Agrarian Reform Association, by making them agrarian lot beneficiaries of said
estate, the petitioners are not entitled to separation pay. The termination of their employment was not
caused by the private respondents. The blame, if any, for the termination of petitioners employment
can even be laid upon the petitioner-employees themselves inasmuch as they formed themselves into a
cooperative, PEARA, ultimately to take over, as agrarian lot beneficiaries, of private respondents landed
estate pursuant to RA 6657. The resulting closure of the business establishment, Patalon Coconut
Estate, when it was placed under CARP, occurred through no fault of the private respondents.
While the Constitution provides that "the State x x x shall protect the rights of workers and promote
their welfare", that constitutional policy of providing full protection to labor is not intended to oppress
or destroy capital and management. Thus, the capital and management sectors must also be protected
under a regime of justice and the rule of law.
WHEREFORE, the petition is DISMISSED. The Resolutions of the National Labor Relations Commission
dated April 24, 1996 and August 29, 1996 are hereby AFFIRMED. No costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena JJ., concur.
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[1]
5th Division.
In NLRC Case No. RAB-09-04-00096-95, Rollo, pp. 23-39.
[3]
In NLRC CA No. M-002823-96, Rollo, pp. 41-51.
[4]
Rollo, pp. 43-44.
[5]
Id, pp. 38-39.
[6]
5th Division, Cagayan de Oro City.
[7]
Rollo, pp. 50-51.
[8]
Id, pp. 61-62.
[9]
Emphasis ours.
[10]
Agpalo, Ruben E., Statutory Construction, 1995 ed., p. 263.
[11]
Fianza vs. Peoples Law Enforcement Board, 243 SCRA 165, 178 (1995).
[2]
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NORTH DAVAO MINING VS NLRC

SUPREME COURT
Manila
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.
PANGANIBAN, J.:p
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 Commission 3(NLRC) in NLRC CA No. M-00139593.
The Resolution dated July 29, 1993 affirmed in toto the decision of the Labor Arbiter in RAB-11-0800672-92 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% privatelyowned 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 hold 81.8% of the common
stock and 100% of the preferred stock of said company. 4
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Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by
reason of the company's 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 1/2 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 separated 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. Attorney's fees
equivalent to ten percent (10%) thereof were also granted. 6
On appeal, respondent NLRC affirmed the decision in toto. Petitioner North Davao's motion for
reconsideration was likewise denied. Hence, this petition.
The Parties' Submissions and the Issues
In affirming the Labor Arbiter's 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 separation pay, then such company policy "has
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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 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-appellees' 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
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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 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 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 (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 underscored portion of Art. 283 governs the grant of separation benefits "in case of closures or
cessation of operation" of business establishments "NOT due to serious business losses or financial
reverses . . . ". Where, however, the closure was due to business losses as in the instant case, in which
the aggregate losses amounted to over P20 billion the Labor Code does not impose any obligation
upon the employer to pay separation benefits, for obvious reasons. 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 Davao's 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 Court's 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 (1/2) 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 month's 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. . . ."
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
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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 company's practice of giving one month's pay for every year of service
could no longer be continued precisely because the company could not afford it anymore. It was forced
to close down on account of accumulated losses of over P20 billion. 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
concern even if it was already losing heavily. As a going concern, its cash flow could still have sustained
the payment of such separation benefits. But when a business enterprise completely ceases
operations, i.e., upon its death as a going business concern, its vital lifeblood its cashflow literally
dries up. Therefore, the fact that less separation benefits ware 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
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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:
Sec. 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
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(Emphasis 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, . . . . 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 1/2 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 stand 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 ad
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.
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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, Jr., JJ., concur.
Footnotes
1 Rollo, pp. 33-45.
2 Rollo, pp. 51-52.
3 Fifth Division, Cagayan de Oro City, composed of Comm. Oscar N. Abella, ponente, Pres.
Comm. Musib M. Buat and Comm. Leon G. Gonzaga, Jr.
4 Rollo, pp. 35, 70 and 100.
5 Rollo, p. 98.
6 Rollo, pp. 33-34.
7 Rollo, p. 42.
8 221 SCRA 9, 12 (April 5, 1993).
9 152 SCRA 141, 145 (July 20, 1987).
10 Rollo, pp. 96-118.
11 69 Phil. 485, 486-487 (Jan. 30, 1940).
12 115 SCRA 329 (July 20, 1982).
13 156 SCRA 789, 800 (December 22, 1987).
14 This Court has pierced the veil of corporate fiction in numerous cases where it was used,
among others, to avoid a judgment credit (Sibagat Timber Corp. vs. Garcia, 216 SCRA 470
[December 11, 1992]; Tan Boon Bee & Co., Inc. vs. Jarencio, 163 SCRA 205 [June 30, 1988]); to
avoid inclusion of corporate assets as part of the estate of a decedent (Cease vs. CA, 93 SCRA
483 [October 18, 1979]); to avoid liability arising from debt (Arcilla vs. CA, 215 SCRA 120
[October 23, 1992]; Philippine Bank of Communications vs. CA, 195 SCRA 567 [March 22, 1991]);
or when made use of as a shield to perpetrate fraud and/or confuse legitimate issues (Jacinto vs.
CA, 198 SCRA 211 [June 6, 1991]); or to promote unfair objectives or otherwise to shield them
Villanueva vs. Adre, 172 SCRA 876 [April 27, 1989]).
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15 Wyeth-Suaco Laboratories, Inc. vs. National Labor Relations Commission, 219 SCRA 356
(March 2, 1993).
16 239 SCRA 508, 512 (December 28, 1994).
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MAC ADAMS METAL ENGG WORKERS UNION VS MAC ADAMS METAL ENGG
THIRD DIVISION
[G.R. No. 141615. October 24, 2003]
MAC ADAMS METAL ENGINEERING WORKERS UNION-INDEPENDENT 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 decision[1] dated July 9, 1999 of the
Court of Appeals affirming the decision[2] 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.
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In both complaints, petitioners

with backwages and/or separation pay.
prayed
for
alternative reliefs for
reinstatement
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
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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
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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 loss[5] 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 run-away 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.
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SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.
[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
Commissioner Victoriano R. Calalay.
[3]
Pedro C. Ramos.
[4]
Rollo, p. 19.
[5]
Catatista vs. NLRC, 247 SCRA 46 [1995].
[6]
Mobil Employees Association [MEA] and Inter-Island Labor Organization [ILO] vs. NLRC, et al., 183
SCRA 737 [1990].
Raul
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AGABON VS NLRC
SUPREME COURT
Manila
EN BANC
G.R. No. 158693
November 17, 2004
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and
VICENTE ANGELES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision1 of the Court of Appeals dated January 23, 2003, in
CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRCNCR Case No. 023442-00.
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, 19922 until February 23, 1999 when they were
dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on December
28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private
respondent to pay the monetary claims. The dispositive portion of the decision states:
WHEREFORE, premises considered, We find the termination of the complainants illegal.
Accordingly, respondent is hereby ordered to pay them their backwages up to November 29,
1999 in the sum of:
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
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and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of
service from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service incentive
leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest
days and Virgilio Agabon's 13th month pay differential amounting to TWO THOUSAND ONE
HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE
THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and
ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC,
Research and Computation Unit, NCR.
SO ORDERED.4
On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned
their work, and were not entitled to backwages and separation pay. The other money claims awarded by
the Labor Arbiter were also denied for lack of evidence.5
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court
of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had
abandoned their employment but ordered the payment of money claims. The dispositive portion of the
decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar
as it dismissed petitioner's money claims. Private respondents are ordered to pay petitioners
holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service
incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabon's 13th
month pay for 1998 in the amount of P2,150.00.
SO ORDERED.6
Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.7
Petitioners assert that they were dismissed because the private respondent refused to give them
assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on February
23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social
Security System (SSS) members. Petitioners also claim that private respondent did not comply with the
twin requirements of notice and hearing.8
Private respondent, on the other hand, maintained that petitioners were not dismissed but had
abandoned their work.9 In fact, private respondent sent two letters to the last known addresses of the
petitioners advising them to report for work. Private respondent's manager even talked to petitioner
Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific
Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not
report for work because they had subcontracted to perform installation work for another company.
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Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted,
petitioners stopped reporting for work and filed the illegal dismissal case.10
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only
respect but even finality if the findings are supported by substantial evidence. This is especially so when
such findings were affirmed by the Court of Appeals.11 However, if the factual findings of the NLRC and
the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and
examine for itself the questioned findings.12
Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners' dismissal
was for a just cause. They had abandoned their employment and were already working for another
employer.
To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins
the employer to give the employee the opportunity to be heard and to defend himself.13 Article 282 of
the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or
willful disobedience by the employee of the lawful orders of his employer or the latter's representative
in connection with the employee's work; (b) gross and habitual neglect by the employee of his duties; (c)
fraud or willful breach by the employee of the trust reposed in him by his employer or his duly
authorized representative; (d) commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized representative; and (e) other
causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.14 It is
a form of neglect of duty, hence, a just cause for termination of employment by the employer.15 For a
valid finding of abandonment, these two factors should be present: (1) the failure to report for work or
absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee
relationship, with the second as the more determinative factor which is manifested by overt acts from
which it may be deduced that the employees has no more intention to work. The intent to discontinue
the employment must be shown by clear proof that it was deliberate and unjustified.16
In February 1999, petitioners were frequently absent having subcontracted for an installation work for
another company. Subcontracting for another company clearly showed the intention to sever the
employer-employee relationship with private respondent. This was not the first time they did this. In
January 1996, they did not report for work because they were working for another company. Private
respondent at that time warned petitioners that they would be dismissed if this happened again.
Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee
relationship. The record of an employee is a relevant consideration in determining the penalty that
should be meted out to him.17
In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from work without
leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to
have abandoned his job. We should apply that rule with more reason here where petitioners were
absent because they were already working in another company.
The law imposes many obligations on the employer such as providing just compensation to workers,
observance of the procedural requirements of notice and hearing in the termination of employment. On
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the other hand, the law also recognizes the right of the employer to expect from its workers not only
good performance, adequate work and diligence, but also good conduct19 and loyalty. The employer
may not be compelled to continue to employ such persons whose continuance in the service will
patently be inimical to his interests.20
After establishing that the terminations were for a just and valid cause, we now determine if the
procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus
Rules Implementing the Labor Code:
Standards of due process: requirements of notice. In all cases of termination of employment,
the following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and
(c) 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.
In case of termination, the foregoing notices shall be served on the employee's last known
address.
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 backwages 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
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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 first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.
In the second and third situations where the dismissals are illegal, Article 279 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.
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 employee's last known address.21 Thus, it should be held liable for non-compliance
with the procedural requirements of due process.
A review and re-examination of the relevant legal principles is appropriate and timely to clarify the
various rulings on employment termination in the light of Serrano v. National Labor Relations
Commission.22
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any
notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,23 we reversed this
long-standing rule and held that the dismissed employee, although not given any notice and hearing,
was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and
insubordination, a just ground for termination under Article 282. The employee had a violent temper
and caused trouble during office hours, defying superiors who tried to pacify him. We concluded that
reinstating the employee and awarding backwages "may encourage him to do even worse and will
render a mockery of the rules of discipline that employees are required to observe."24 We further held
that:
Under the circumstances, the dismissal of the private respondent for just cause should be
maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as above
discussed. The dismissal of an employee must be for just or authorized cause and after due
process. Petitioner committed an infraction of the second requirement. Thus, it must be
imposed a sanction for its failure to give a formal notice and conduct an investigation as
required by law before dismissing petitioner from employment. Considering the circumstances
of this case petitioner must indemnify the private respondent the amount of P1,000.00. The
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measure of this award depends on the facts of each case and the gravity of the omission
committed by the employer.25
The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow
the due process requirement, the dismissal may be upheld but the employer will be penalized to pay an
indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the
violation by the employer of the notice requirement in termination for just or authorized causes was not
a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the
employer must pay full backwages from the time of termination until it is judicially declared that the
dismissal was for a just or authorized cause.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of
cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way
of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now
required payment of full backwages from the time of dismissal until the time the Court finds the
dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing full
backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the
Labor Code which states:
ART. 279. 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 reinstatement.
This means that the termination is illegal only if it is not for any of the justified or authorized causes
provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if
the employee was unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has
prompted us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of
rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be
deemed fundamental to a civilized society as conceived by our entire history. Due process is that which
comports with the deepest notions of what is fair and right and just.26 It is a constitutional restraint on
the legislative as well as on the executive and judicial powers of the government provided by the Bill of
Rights.
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Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the
valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing
Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I,
Sec. 2, as amended by Department Order Nos. 9 and 10.27 Breaches of these due process requirements
violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply
with constitutional due process.
Constitutional due process protects the individual from the government and assures him of his rights in
criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and
Implementing Rules protects employees from being unjustly terminated without just cause after notice
and hearing.
In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just and valid cause but
the employee was not accorded due process. The dismissal was upheld by the Court but the employer
was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the
facts of each case and the gravity of the omission committed by the employer.
In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee was not given
due process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for
just cause,albeit without due process, did not entitle the employee to reinstatement, backwages,
damages and attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations
Commission,30 which opinion he reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been properly observed by an
employer, it would not be right to order either the reinstatement of the dismissed employee or
the payment of backwages to him. In failing, however, to comply with the procedure prescribed
by law in terminating the services of the employee, the employer must be deemed to have
opted or, in any case, should be made liable, for the payment of separation pay. It might be
pointed out that the notice to be given and the hearing to be conducted generally constitute the
two-part due process requirement of law to be accorded to the employee by the employer.
Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the
above steps would be no more than a useless formality and where, accordingly, it would not be
imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay, nominal
damages to the employee. x x x.31
After carefully analyzing the consequences of the divergent doctrines in the law on employment
termination, we believe that in cases involving dismissals for cause but without observance of the twin
requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to
follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer.
Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be
able to achieve a fair result by dispensing justice not just to employees, but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not
complying with statutory due process may have far-reaching consequences.
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This would encourage frivolous suits, where even the most notorious violators of company policy are
rewarded by invoking due process. This also creates absurd situations where there is a just or authorized
cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case
where the employee is caught stealing or threatens the lives of his co-employees or has become a
criminal, who has fled and cannot be found, or where serious business losses demand that operations
be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also
discourage investments that can generate employment in the local economy.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the
employer when it is in the right, as in this case.32 Certainly, an employer should not be compelled to pay
employees for work not actually performed and in fact abandoned.
The employer should not be compelled to continue employing a person who is admittedly guilty of
misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The
law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the
employer.33
It must be stressed that in the present case, the petitioners committed a grave offense, i.e.,
abandonment, which, if the requirements of due process were complied with, would undoubtedly result
in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the
Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to
correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on
the recognition of the necessity of interdependence among diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a combined force in our social
and economic life, consistent with the fundamental and paramount objective of the state of promoting
the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest
number."34
This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related
cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and
circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management
relations and dispense justice with an even hand in every case:
We have repeatedly stressed that social justice or any justice for that matter is for the
deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in
case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the
Constitution fittingly extends its sympathy and compassion. But never is it justified to give
preference to the poor simply because they are poor, or reject the rich simply because they are
rich, for justice must always be served for the poor and the rich alike, according to the mandate
of the law.35
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Justice in every case should only be for the deserving party. It should not be presumed that every case of
illegal dismissal would automatically be decided in favor of labor, as management has rights that should
be fully respected and enforced by this Court. As interdependent and indispensable partners in nationbuilding, labor and management need each other to foster productivity and economic growth; hence,
the need to weigh and balance the rights and welfare of both the employee and employer.
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 v. National Labor Relations
Commission.36 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.
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.37
As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an employer is liable
to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in
effecting such dismissal, the employer fails to comply with the requirements of due process. The Court,
after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to
the employee's one month salary. This indemnity is intended not to penalize the employer but to
vindicate or recognize the employee's right to statutory due process which was violated by the
employer.39
The violation of the petitioners' right to statutory due process by the private respondent warrants the
payment of indemnity in the form of nominal damages. The amount of such damages is addressed to
the sound discretion of the court, taking into account the relevant circumstances.40 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.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners'
holiday pay, service incentive leave pay and 13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners' money claims. Private respondent is liable for
petitioners' holiday pay, service incentive leave pay and 13th month pay without deductions.
As a general rule, one who pleads payment has the burden of proving it. Even where the employee must
allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather
than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel
files, payrolls, records, remittances and other similar documents which will show that overtime,
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differentials, service incentive leave and other claims of workers have been paid are not in the
possession of the worker but in the custody and absolute control of the employer.41
In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave
pay, it could have easily presented documentary proofs of such monetary benefits to disprove the
claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented
cash vouchers showing payments of the benefit in the years disputed.42 Allegations by private
respondent that it does not operate during holidays and that it allows its employees 10 days leave with
pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to
discharge the onus probandi thereby making it liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month
pay, we find the same to be unauthorized. 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
same43 so as "to further protect the level of real wages from the ravages of world-wide
inflation."44 Clearly, as additional income, the 13th month pay is included in the definition of wage under
Article 97(f) of the Labor Code, to wit:
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money whether fixed or ascertained on a time, task,
piece , or commission basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of employment for work done
or to be done, or for services rendered or to be rendered and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee"
from which an employer is prohibited under Article 11345 of the same Code from making any deductions
without the employee's knowledge and consent. In the instant case, private respondent failed to show
that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th
month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact
that petitioner Virgilio Agabon included the same as one of his money claims against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering
the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to
1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of
P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of
P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals
dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and Virgilio Agabon
abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for
four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the
same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for
1998 in the amount of P2,150.00 isAFFIRMED with the MODIFICATION that private respondent Riviera
Home Improvements, Inc. is furtherORDERED to pay each of the petitioners the amount of P30,000.00
as nominal damages for non-compliance with statutory due process.
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No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona,
Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ., concur.
SEPARATE OPINION
TINGA, J:
I concur in the result, the final disposition of the petition being correct. There is no denying the
importance of the Court's ruling today, which should be considered as definitive as to the effect of the
failure to render the notice and hearing required under the Labor Code when an employee is being
dismissed for just causes, as defined under the same law. The Court emphatically reaffirms the rule that
dismissals for just cause are not invalidated due to the failure of the employer to observe the proper
notice and hearing requirements under the Labor Code. At the same time, The Decision likewise
establishes that the Civil Code provisions on damages serve as the proper framework for the appropriate
relief to the employee dismissed for just cause if the notice-hearing requirement is not met. Serrano v.
NLRC,1 insofar as it is controlling in dismissals for unauthorized causes, is no longer the controlling
precedent. Any and all previous rulings and statements of the Court inconsistent with these
determinations are now deemed inoperative.
My views on the questions raised in this petition are comprehensive, if I may so in all modesty. I offer
this opinion to discuss the reasoning behind my conclusions, pertaining as they do to questions of
fundamental importance.
Prologue
The factual backdrop of the present Petition for Review is not novel. Petitioners claim that they were
illegally dismissed by the respondents, who allege in turn that petitioners had actually abandoned their
employment. There is little difficulty in upholding the findings of the NRLC and the Court of Appeals that
petitioners are guilty of abandonment, one of the just causes for termination under the Labor Code. Yet,
the records also show that the employer was remiss in not giving the notice required by the Labor Code;
hence, the resultant controversy as to the legal effect of such failure vis--vis the warranted dismissal.
Ostensibly, the matter has been settled by our decision in Serrano2, wherein the Court ruled that the
failure to properly observe the notice requirement did not render the dismissal, whether for just or
authorized causes, null and void, for such violation was not a denial of the constitutional right to due
process, and that the measure of appropriate damages in such cases ought to be the amount of wages
the employee should have received were it not for the termination of his employment without prior
notice.3 Still, the Court has, for good reason, opted to reexamine the so-called Serrano doctrine through
the present petition
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Antecedent Facts
Respondent Riviera Home Improvements, Inc (Riviera Home) is engaged in the manufacture and
installation of gypsum board and cornice. In January of 1992, the Agabons were hired in January of 1992
as cornice installers by Riviera Home. According to their personnel file with Riviera Home, the Agabon
given address was 3RDS Tailoring, E. Rodriguez Ave., Moonwalk Subdivision, P-II Paraaque City, Metro
Manila.4
It is not disputed that sometime around February 1999, the Agabons stopped rendering services for
Riviera Home. The Agabons allege that beginning on 23 February 1999, they stopped receiving
assignments from Riviera Home.5 When they demanded an explanation, the manager of Riviera Homes,
Marivic Ventura, informed them that they would be hired again, but on a "pakyaw" (piece-work) basis.
When the Agabons spurned this proposal, Riviera Homes refused to continue their employment under
the original terms and agreement.6 Taking affront, the Agabons filed a complaint for illegal dismissal
with the National Labor Relations Commission ("NLRC").
Riviera Homes adverts to a different version of events leading to the filing of the complaint for illegal
dismissal. It alleged that in the early quarter of 1999, the Agabons stopped reporting for work with
Riviera. Two separate letters dated 10 March 1999, were sent to the Agabons at the address indicated in
their personnel file. In these notices, the Agabons were directed to report for work
immediately.7 However, these notices were returned unserved with the notation "RTS Moved." Then, in
June of 1999, Virgilio Agabon informed Riviera Homes by telephone that he and Jenny Agabon were
ready to return to work for Riviera Homes, on the condition that their wages be first adjusted. On 18
June 1999, the Agabons went to Riviera Homes, and in a meeting with management, requested a wage
increase of up to Two Hundred Eighty Pesos (P280.00) a day. When no affirmative response was offered
by Riviera Homes, the Agabons initiated the complaint before the NLRC.8
In their Position Paper, the Agabons likewise alleged that they were required to work even on holidays
and rest days, but were never paid the legal holiday pay or the premium pay for holiday or rest day.
They also asserted that they were denied Service Incentive Leave pay, and that Virgilio Agabon was not
given his thirteenth (13th) month pay for the year 1998.9
After due deliberation, Labor Arbiter Daisy G. Cauton-Barcelona rendered a Decision dated 28 December
1999, finding the termination of the Agabons illegal, and ordering Riviera Homes to pay backwages in
the sum of Fifty Six Thousand Two Hundred Thirty One Pesos and Ninety Three Centavos (P56,231.93)
each. The Labor Arbiter likewise ordered, in lieu of reinstatement, the payment of separation pay of one
(1) month pay for every year of service from date of hiring up to 29 November 1999, as well as the
payment of holiday pay, service incentive leave pay, and premium pay for holiday and restday, plus
thirteenth (13th) month differential to Virgilio Agabon.10
In so ruling, the Labor Arbiter declared that Riviera Homes was unable to satisfactorily refute the
Agabons' claim that they were no longer given work to do after 23 February 1999 and that their rehiring
was only on "pakyaw" basis. The Labor Arbiter also held that Riviera Homes failed to comply with the
notice requirement, noting that Riviera Homes well knew of the change of address of the Agabons,
considering that the identification cards it issued stated a different address from that on the personnel
file.11 The Labor Arbiter asserted the principle that in all termination cases, strict compliance by the
employer with the demands of procedural and substantive due process is a condition sine qua non for
the same to be declared valid.12
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On appeal, the NLRC Second Division set aside the Labor Arbiter's Decision and ordered the dismissal of
the complaint for lack of merit.13 The NLRC held that the Agabons were not able to refute the assertion
that for the payroll period ending on 15 February 1999, Virgilio and Jenny Agabon worked for only two
and one-half (2) and three (3) days, respectively. It disputed the earlier finding that Riviera Homes had
known of the change in address, noting that the address indicated in the
identification cards was not the Agabons, but that of the persons who should be notified in case of
emergency concerning the employee.14 Thus, proper service of the notice was deemed to have been
accomplished. Further, the notices evinced good reason to believe that the Agabons had not been
dismissed, but had instead abandoned their jobs by refusing to report for work.
In support of its conclusion that the Agabons had abandoned their work, the NLRC also observed that
the Agabons did not seek reinstatement, but only separation pay. While the choice of relief was
premised by the Agabons on their purported strained relations with Riviera Homes, the NLRC pointed
out that such claim was amply belied by the fact that the Agabons had actually sought a conference with
Riviera Homes in June of 1999. The NLRC likewise found that the failure of the Labor Arbiter to justify
the award of extraneous money claims, such as holiday and service incentive leave pay, confirmed that
there was no proof to justify such claims.
A Petition for Certiorari was promptly filed with the Court of Appeals by the Agabons, imputing grave
abuse of discretion on the part of the NLRC in dismissing their complaint for illegal dismissal. In
a Decision15 dated 23 January 2003, the Court of Appeals affirmed the finding that the Agabons had
abandoned their employment. It noted that the two elements constituting abandonment had been
established, to wit: the failure to report for work or absence without valid justifiable reason, and; a clear
intention to sever the employer-employee relationship. The intent to sever the employer-employee
relationship was buttressed by the Agabon's choice to seek not reinstatement, but separation pay. The
Court of Appeals likewise found that the service of the notices were valid, as the Agabons did not notify
Riviera Homes of their change of address, and thus the failure to return to work despite notice
amounted to abandonment of work.
However, the Court of Appeals reversed the NLRC as regards the denial of the claims for holiday pay,
service incentive leave pay, and the balance of Virgilio Agabon's thirteenth (13th) month pay. It ruled
that the failure to adduce proof in support thereof was not fatal and that the burden of proving that
such benefits had already been paid rested on Riviera Homes.16 Given that Riviera Homes failed to
present proof of payment to the Agabons of their holiday pay and service incentive leave pay for the
years 1996, 1997 and 1998, the Court of Appeals chose to believe that such benefits had not actually
been received by the employees. It also ruled that the apparent deductions made by Riviera Homes on
the thirteenth (13th) month pay of Virgilio Agabon violated Section 10 of the Rules and Regulations
Implementing Presidential Decree No. 851.17 Accordingly, Riviera Homes was ordered to pay the
Agabons holiday for four (4) regular holidays in 1996, 1997 and 1998, as well as their service incentive
leave pay for said years, and the balance of Virgilio Agabon's thirteenth (13th) month pay for 1998 in the
amount of Two Thousand One Hundred Fifty Pesos (P2,150.00).18
In their Petition for Review, the Agabons claim that they had been illegally dismissed, reasserting their
version of events, thus: (1) that they had not been given new assignments since 23 February 1999; (2)
that they were told that they would only be re-hired on a "pakyaw" basis, and; (3) that Riviera Homes
had knowingly sent the notices to their old address despite its knowledge of their change of address as
indicated in the identification cards.19Further, the Agabons note that only one notice was sent to each of
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them, in violation of the rule that the employer must furnish two written notices before termination
the first to apprise the employee of the cause for which dismissal is sought, and the second to notify the
employee of the decision of dismissal.20 The Agabons likewise maintain that they did not seek
reinstatement owing to the strained relations between them and Riviera Homes.
The Agabons present to this Court only one issue, i.e.: whether or not they were illegally dismissed from
their employment.21 There are several dimensions though to this issue which warrant full consideration.
The Abandonment Dimension
Review of Factual Finding of Abandonment
As the Decision points out, abandonment is characterized by the failure to report for work or absence
without valid or justifiable reason, and a clear intention to sever the employer-employee relationship.
The question of whether or not an employee has abandoned employment is essentially a factual
issue.22 The NLRC and the Court of Appeals, both appropriate triers of fact, concluded that the Agabons
had actually abandoned their employment, thus there is little need for deep inquiry into the correctness
of this factual finding. There is no doubt that the Agabons stopped reporting for work sometime in
February of 1999. And there is no evidence to support their assertion that such absence was due to the
deliberate failure of Riviera Homes to give them work. There is also the fact, as noted by the NLRC and
the Court of Appeals, that the Agabons did not pray for reinstatement, but only for separation
pay and money claims.23 This failure indicates their disinterest in maintaining the employer-employee
relationship and their unabated avowed intent to sever it. Their excuse that strained relations between
them and Riviera Homes rendered reinstatement no longer feasible was hardly given credence by the
NLRC and the Court of Appeals.24
The contrary conclusion arrived at by the Labor Arbiter as regards abandonment is of little bearing to
the case. All that the Labor Arbiter said on that point was that Riviera Homes was not able to refute the
Agabons' claim that they were terminated on 23 February 1999.25 The Labor Arbiter did not explain why
or how such finding was reachhy or how such finding was reachhe Agabons was more credible than that
of Riviera Homes'. Being bereft of reasoning, the conclusion deserves scant consideration.
Compliance with Notice Requirement
At the same time, both the NLRC and the Court of Appeals failed to consider the apparent fact that the
rules governing notice of termination were not complied with by Riviera Homes. Section 2, Book V, Rule
XXIII of the Omnibus Rules Implementing the Labor Code (Implementing Rules) specifically provides that
for termination of employment based on just causes as defined in Article 282, there must be: (1) written
notice served on the employee specifying the grounds for termination and giving employee reasonable
opportunity to explain his/her side; (2) a hearing or conference wherein the employee, with the
assistance of counsel if so desired, is given opportunity to respond to the charge, present his evidence or
rebut evidence presented against him/her; and (3) written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify termination.
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At the same time, Section 2, Book V, Rule XXIII of the Implementing Rules does not require strict
compliance with the above procedure, but only that the same be "substantially observed."
Riviera Homes maintains that the letters it sent on 10 March 1999 to the Agabons sufficiently complied
with the notice rule. These identically worded letters noted that the Agabons had stopped working
without permission that they failed to return for work despite having been repeatedly told to report to
the office and resume their employment.26 The letters ended with an invitation to the Agabons to report
back to the office and return to work.27
The apparent purpose of these letters was to advise the Agabons that they were welcome to return
back to work, and not to notify them of the grounds of termination. Still, considering that only
substantial compliance with the notice requirement is required, I am prepared to say that the letters
sufficiently conform to the first notice required under the Implementing Rules. The purpose of the first
notice is to duly inform the employee that a particular transgression is being considered against him or
her, and that an opportunity is being offered for him or her to respond to the charges. The letters served
the purpose of informing the Agabons of the pending matters beclouding their employment, and
extending them the opportunity to clear the air.
Contrary to the Agabons' claim, the letter-notice was correctly sent to the employee's last known
address, in compliance with the Implementing Rules. There is no dispute that these letters were not
actually received by the Agabons, as they had apparently moved out of the address indicated therein.
Still, the letters were sent to what Riviera Homes knew to be the Agabons' last known address, as
indicated in their personnel file. The Agabons insist that Riviera Homes had known of the change of
address, offering as proof their company IDs which purportedly print out their correct new address. Yet,
as pointed out by the NLRC and the Court of Appeals, the addresses indicated in the IDs are not the
Agabons, but that of the person who is to be notified in case on emergency involve either or both of the
Agabons.
The actual violation of the notice requirement by Riviera Homes lies in its failure to serve on the
Agabons the second notice which should inform them of termination. As the Decision notes, Riviera
Homes' argument that sending the second notice was useless due to the change of address is inutile,
since the Implementing Rules plainly require that the notice of termination should be served at the
employee's last known address.
The importance of sending the notice of termination should not be trivialized. The termination letter
serves as indubitable proof of loss of employment, and its receipt compels the employee to evaluate his
or her next options. Without such notice, the employee may be left uncertain of his fate; thus, its service
is mandated by the Implementing Rules. Non-compliance with the notice rule, as evident in this case,
contravenes the Implementing Rules. But does the violation serve to invalidate the Agabons' dismissal
for just cause?
The So-Called Constitutional Law Dimension
Justices Puno and Panganiban opine that the Agabons should be reinstated as a consequence of the
violation of the notice requirement. I respectfully disagree, for the reasons expounded below.
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Constitutional Considerations
Of Due Process and the Notice-Hearing
Requirement in Labor Termination Cases
Justice Puno proposes that the failure to render due notice and hearing prior to dismissal for just cause
constitutes a violation of the constitutional right to due process. This view, as acknowledged by Justice
Puno himself, runs contrary to the Court's pronouncement in Serrano v. NLRC28 that the absence of due
notice and hearing prior to dismissal, if for just cause, violates statutory due process.
The ponencia of Justice Vicente V. Mendoza in Serrano provides this cogent overview of the history of
the doctrine:
Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is
to overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of
1882 which gave either party to the employer-employee relationship the right to terminate their
relationship by giving notice to the other one month in advance. In lieu of notice, an employee
could be laid off by paying him a mesadaequivalent to his salary for one month. This provision
was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June
12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the
mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of
advance notice for every year of service.29
Under Section 1 of the Termination Pay Law, an employer could dismiss an employee without just cause
by serving written notice on the employee at least one month in advance or one-half month for every
year of service of the employee, whichever was longer.30 Failure to serve such written notice entitled
the employee to compensation equivalent to his salaries or wages corresponding to the required period
of notice from the date of termination of his employment.
However, there was no similar written notice requirement under the Termination Pay Law if the
dismissal of the employee was for just cause. The Court, speaking through Justice JBL Reyes, ruled
in Phil. Refining Co. v. Garcia:31
[Republic] Act 1052, as amended by Republic Act 1787, impliedly recognizes the right of the
employer to dismiss his employees (hired without definite period) whether for just case, as
therein defined or enumerated, or without it. If there be just cause, the employer is not
required to serve any notice of discharge nor to disburse termination pay to the employee.
xxx32
Clearly, the Court, prior to the enactment of the Labor Code, was ill-receptive to the notion that
termination for just cause without notice or hearing violated the constitutional right to due process.
Nonetheless, the Court recognized an award of damages as the appropriate remedy. In Galsim v.
PNB,33 the Court held:
Of course, the employer's prerogative to dismiss employees hired without a definite period may
be with or without cause. But if the manner in which such right is exercised is abusive, the
employer stands to answer to the dismissed employee for damages.34
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The Termination Pay Law was among the repealed laws with the enactment of the Labor Code in 1974.
Significantly, the Labor Code, in its inception, did not require notice or hearing before an employer could
terminate an employee for just cause. As Justice Mendoza explained:
Where the termination of employment was for a just cause, no notice was required to be given
to the employee. It was only on September 4, 1981 that notice was required to be given even
where the dismissal or termination of an employee was for cause. This was made in the rules
issued by the then Minister of Labor and Employment to implement B.P. Blg. 130 which
amended the Labor Code. And it was still much later when the notice requirement was
embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989.35
It cannot be denied though that the thinking that absence of notice or hearing prior to termination
constituted a constitutional violation has gained a jurisprudential foothold with the Court. Justice Puno,
in his Dissenting Opinion, cites several cases in support of this theory, beginning with Batangas Laguna
Tayabas Bus Co. v. Court of Appeals36 wherein we held that "the failure of petitioner to give the private
respondent the benefit of a hearing before he was dismissed constitutes an infringement on his
constitutional right to due process of law.37
Still, this theory has been refuted, pellucidly and effectively to my mind, by Justice Mendoza's
disquisition inSerrano, thus:
xxx There are three reasons why, on the other hand, violation by the employer of the notice
requirement cannot be considered a denial of due process resulting in the nullity of the
employee's dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on governmental
powers. It does not apply to the exercise of private power, such as the termination of
employment under the Labor Code. This is plain from the text of Art. III, 1 of the Constitution,
viz.: "No person shall be deprived of life, liberty, or property without due process of law. . . ."
The reason is simple: Only the State has authority to take the life, liberty, or property of the
individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is
consistent with what are considered civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before
the power of organized society are brought to bear upon the individual. This is obviously not the
case of termination of employment under Art. 283. Here the employee is not faced with an
aspect of the adversary system. The purpose for requiring a 30-day written notice before an
employee is laid off is not to afford him an opportunity to be heard on any charge against him,
for there is none. The purpose rather is to give him time to prepare for the eventual loss of his
job and the DOLE an opportunity to determine whether economic causes do exist justifying the
termination of his employment.
xxx
The third reason why the notice requirement under Art. 283 can not be considered a
requirement of the Due Process Clause is that the employer cannot really be expected to be
entirely an impartial judge of his own cause. This is also the case in termination of employment
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for a just cause under Art. 282 (i.e., serious misconduct or willful disobedience by the employee
of the lawful orders of the employer, gross and habitual neglect of duties, fraud or willful breach
of trust of the employer, commission of crime against the employer or the latter's immediate
family or duly authorized representatives, or other analogous cases).38
The Court in the landmark case of People v. Marti39 clarified the proper dimensions of the Bill of Rights.
That the Bill of Rights embodied in the Constitution is not meant to be invoked against acts of
private individuals finds support in the deliberations of the Constitutional Commission. True, the
liberties guaranteed by the fundamental law of the land must always be subject to protection.
But protection against whom? Commissioner Bernas in his sponsorship speech in the Bill of
Rights answers the query which he himself posed, as follows:
"First, the general reflections. The protection of fundamental liberties in the essence of
constitutional democracy. Protection against whom? Protection against the state. The
Bill of Rights governs the relationship between the individual and the state. Its concern
is not the relation between individuals, between a private individual and other
individuals. What the Bill of Rights does is to declare some forbidden zones in the
private sphere inaccessible to any power holder." (Sponsorship Speech of Commissioner
Bernas; Record of the Constitutional Commission, Vol. 1, p. 674; July 17,1986; Italics
supplied)40
I do not doubt that requiring notice and hearing prior to termination for just cause is an admirable
sentiment borne out of basic equity and fairness. Still, it is not a constitutional requirement that can
impose itself on the relations of private persons and entities. Simply put, the Bill of Rights affords
protection against possible State oppression against its citizens, but not against an unjust or repressive
conduct by a private party towards another.
Justice Puno characterizes the notion that constitutional due process limits government action alone
as "pass,"and adverts to nouvelle vague theories which assert that private conduct may be restrained
by constitutional due process. His dissent alludes to the American experience making references to the
post-Civil War/pre-World War II era when the US Supreme Court seemed overly solicitous to the rights
of big business over those of the workers.
Theories, no matter how entrancing, remain theoretical unless adopted by legislation, or more
controversially, by judicial opinion. There were a few decisions of the US Supreme Court that, ostensibly,
imposed on private persons the values of the constitutional guarantees. However, in deciding the cases,
the American High Court found it necessary to link the actors to adequate elements of the "State" since
the Fourteenth Amendment plainly begins with the words "No State shall"41
More crucially to the American experience, it had become necessary to pass legislation in order to
compel private persons to observe constitutional values. While the equal protection clause was deemed
sufficient by the Warren Court to bar racial segregation in public facilities, it necessitated enactment of
the Civil Rights Acts of 1964 to prohibit segregation as enforced by private persons within their property.
In this jurisdiction, I have trust in the statutory regime that governs the correction of private wrongs.
There are thousands of statutes, some penal or regulatory in nature, that are the source of actionable
claims against private persons. There is even no stopping the State, through the legislative cauldron,
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from compelling private individuals, under pain of legal sanction, into observing the norms ordained in
the Bill of Rights.
Justice Panganiban's Separate Opinion asserts that corporate behemoths and even individuals may now
be sources of abuses and threats to human rights and liberties.42 The concern is not unfounded, but
appropriate remedies exist within our statutes, and so resort to the constitutional trump card is not
necessary. Even if we were to engage the premise, the proper juristic exercise should be to examine
whether an employer has taken the attributes of the State so that it could be compelled by the
Constitution to observe the proscriptions of the Bill of Rights. But the strained analogy simply does not
square since the attributes of an employer are starkly incongruous with those of the State. Employers
plainly do not possess the awesome powers and the tremendous resources which the State has at its
command.
The differences between the State and employers are not merely literal, but extend to their very
essences. Unlike the State, the raison d'etre of employers in business is to accumulate profits. Perhaps
the State and the employer are similarly capacitated to inflict injury or discomfort on persons under
their control, but the same power is also possessed by a school principal, hospital administrator, or a
religious leader, among many others. Indeed, the scope and reach of authority of an employer pales in
comparison with that of the State. There is no basis to conclude that an employer, or even the employer
class, may be deemed a de facto state and on that premise, compelled to observe the Bill of Rights.
There is simply no nexus in their functions, distaff as they are, that renders it necessary to accord the
same jurisprudential treatment.
It may be so, as alluded in the dissent of Justice Puno, that a conservative court system overly solicitous
to the concerns of business may consciously gut away at rights or privileges owing to the labor sector.
This certainly happened before in the United States in the early part of the twentieth century, when the
progressive labor legislation such as that enacted during President Roosevelt's New Deal regime most
of them addressing problems of labor were struck down by an arch-conservative Court.43 The
preferred rationale then was to enshrine within the constitutional order business prerogatives,
rendering them superior to the express legislative intent. Curiously, following its judicial philosophy at
the time the U. S. Supreme Court made due process guarantee towards employers prevail over the
police power to defeat the cause of labor.44
Of course, this Court should not be insensate to the means and methods by which the entrenched
powerful class may maneuver the socio-political system to ensure self-preservation. However, the
remedy to rightward judicial bias is not leftward judicial bias. The more proper judicial attitude is to give
due respect to legislative prerogatives, regardless of the ideological sauce they are dipped in.
While the Bill of Rights maintains a position of primacy in the constitutional hierarchy,45 it has scope and
limitations that must be respected and asserted by the Court, even though they may at times serve
somewhat bitter ends. The dissenting opinions are palpably distressed at the effect of the Decision,
which will undoubtedly provoke those reflexively sympathetic to the labor class. But haphazard legal
theory cannot be used to justify the obverse result. The adoption of the dissenting views would give rise
to all sorts of absurd constitutional claims. An excommunicated Catholic might demand his/her
reinstatement into the good graces of the Church and into communion on the ground that
excommunication was violative of the constitutional right to due process. A celebrity contracted to
endorse Pepsi Cola might sue in court to void a stipulation that prevents him/her from singing the
praises of Coca Cola once in a while, on the ground that such stipulation violates the constitutional right
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to free speech. An employee might sue to prevent the employer from reading outgoing e-mail sent
through the company server using the company e-mail address, on the ground that the constitutional
right to privacy of communication would be breached.
The above concerns do not in anyway serve to trivialize the interests of labor. But we must avoid
overarching declarations in order to justify an end result beneficial to labor. I dread the doctrinal
acceptance of the notion that the Bill of Rights, on its own, affords protection and sanctuary not just
from the acts of State but also from the conduct of private persons. Natural and juridical persons would
hesitate to interact for fear that a misstep could lead to their being charged in court as a constitutional
violator. Private institutions that thrive on their exclusivity, such as churches or cliquish groups, could be
forced to renege on their traditional tenets, including vows of secrecy and the like, if deemed by the
Court as inconsistent with the Bill of Rights. Indeed, that fundamental right of all private persons to be
let alone would be forever diminished because of a questionable notion that contravenes with centuries
of political thought.
It is not difficult to be enraptured by novel legal ideas. Their characterization is susceptible to the same
marketing traps that hook consumers to new products. With the help of unique wrapping, a catchy
label, and testimonials from professed experts from exotic lands, a malodorous idea may gain wide
acceptance, even among those self-possessed with their own heightened senses of perception. Yet
before we join the mad rush in order to proclaim a theory as "brilliant," a rigorous test must first be
employed to determine whether it complements or contradicts our own system of laws and juristic
thought. Without such analysis, we run the risk of abnegating the doctrines we have fostered for
decades and the protections they may have implanted into our way of life.
Should the Court adopt the view that the Bill of Rights may be invoked to invalidate actions by private
entities against private individuals, the Court would open the floodgates to, and the docket would be
swamped with, litigations of the scurrilous sort. Just as patriotism is the last refuge of scoundrels, the
broad constitutional claim is the final resort of the desperate litigant.
Constitutional Protection of Labor
The provisions of the 1987 Constitution affirm the primacy of labor and advocate a multi-faceted state
policy that affords, among others, full protection to labor. Section 18, Article II thereof provides:
The State affirms labor as a primary social economic force. It shall protect the rights of workers
and promote their welfare.
Further, Section 3, Article XIII states:
The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equal 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 to security to tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
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The State shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.
The constitutional enshrinement of the guarantee of full protection of labor is not novel to the 1987
Constitution. Section 6, Article XIV of the 1935 Constitution reads:
The State shall afford protection to labor, especially to working women, and minors, and shall
regulate the relations between the landowner and tenant, and between labor and capital in
industry and in agriculture. The State may provide for compulsory arbitration.
Similarly, among the principles and state policies declared in the 1973 Constitution, is that provided in
Section 9, Article II thereof:
The State shall afford full 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 assure the rights of workers to selforganization, collective bargaining, security of tenure, and just and humane conditions of work.
The State may provide for compulsory arbitration.
On the other hand, prior to the 1973 Constitution, the right to security of tenure could only be found in
legislative enactments and their respective implementing rules and regulations. It was only in the 1973
Constitution that security of tenure was elevated as a constitutional right. The development of the
concept of security of tenure as a constitutionally recognized right was discussed by this Court in BPI
Credit Corporation v. NLRC,46 to wit:
The enthronement of the worker's right to security or tenure in our fundamental law was not
achieved overnight. For all its liberality towards labor, our 1935 Constitution did not elevate the
right as a constitutional right. For a long time, the worker's security of tenure had only the
protective mantle of statutes and their interpretative rules and regulations. It was as uncertain
protection that sometimes yielded to the political permutations of the times. It took labor nearly
four decades of sweat and tears to persuade our people thru their leaders, to exalt the worker's
right to security of tenure as a sacrosanct constitutional right. It was Article II, section 2 [9] of
our 1973 Constitution that declared as a policy that the State shall assure the right of worker's
to security tenure. The 1987 Constitution is even more solicitous of the welfare of labor. Section
3 of its Article XIII mandates that the State shall afford full protection to labor and declares that
all workers shall be entitled to security of tenure. Among the enunciated State policies are the
promotion of social justice and a just and dynamic social order. In contrast, the prerogative of
management to dismiss a worker, as an aspect of property right, has never been endowed with
a constitutional status.
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The unequivocal constitutional declaration that all workers shall be entitled to security of tenure
spurred our lawmakers to strengthen the protective walls around this hard earned right. The
right was protected from undue infringement both by our substantive and procedural laws.
Thus, the causes for dismissing employees were more defined and restricted; on the other hand,
the procedure of termination was also more clearly delineated. These substantive and
procedural laws must be strictly complied with before a worker can be dismissed from his
employment.47
It is quite apparent that the constitutional protection of labor was entrenched more than eight decades
ago, yet such did not prevent this Court in the past from affirming dismissals for just cause without valid
notice. Nor was there any pretense made that this constitutional maxim afforded a laborer a positive
right against dismissal for just cause on the ground of lack of valid prior notice. As demonstrated earlier,
it was only after the enactment of the Labor Code that the doctrine relied upon by the dissenting
opinions became en vogue. This point highlights my position that the violation of the notice requirement
has statutory moorings, not constitutional.
It should be also noted that the 1987 Constitution also recognizes the principle of shared responsibility
between workers and employers, and the right of enterprise to reasonable returns, expansion, and
growth. Whatever perceived imbalance there might have been under previous incarnations of the
provision have been obviated by Section 3, Article XIII.
In the case of Manila Prince Hotel v. GSIS,48 we affirmed the presumption that all constitutional
provisions are self-executing. We reasoned that to declare otherwise would result in the pernicious
situation wherein by mere inaction and disregard by the legislature, constitutional mandates would be
rendered ineffectual. Thus, we held:
As against constitutions of the past, modern constitutions have been generally ed upon a
different principle and have often become in effect extensive codes of laws intended to operate
directly upon the people in a manner similar to that of statutory enactments, and the function
of constitutional conventions has evolved into one more like that of a legislative body. Hence,
unless it is expressly provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are self-executing. If the
constitutional provisions are treated as requiring legislation instead of self-executing, the
legislature would have the power to ignore and practically nullify the mandate of the
fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has always
been, that
. . . in case of doubt, the Constitution should be considered self-executing rather than
non-self-executing. . . . Unless the contrary is clearly intended, the provisions of the
Constitution should be considered self-executing, as a contrary rule would give the
legislature discretion to determine when, or whether, they shall be effective. These
provisions would be subordinated to the will of the lawmaking body, which could make
them entirely meaningless by simply refusing to pass the needed implementing
statute.49
In further discussing self-executing provisions, this Court stated that:
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In self-executing constitutional provisions, the legislature may still enact legislation to facilitate
the exercise of powers directly granted by the constitution, further the operation of such a
provision, prescribe a practice to be used for its enforcement, provide a convenient remedy for
the protection of the rights secured or the determination thereof, or place reasonable
safeguards around the exercise of the right. The mere fact that legislation may supplement and
add to or prescribe a penalty for the violation of a self-executing constitutional provision does
not render such a provision ineffective in the absence of such legislation. The omission from a
constitution of any express provision for a remedy for enforcing a right or liability is not
necessarily an indication that it was not intended to be self-executing. The rule is that a selfexecuting provision of the constitution does not necessarily exhaust legislative power on the
subject, but any legislation must be in harmony with the constitution, further the exercise of
constitutional right and make it more available. Subsequent legislation however does not
necessarily mean that the subject constitutional provision is not, by itself, fully enforceable.50
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as selfexecuting in the sense that these are automatically acknowledged and observed without need for any
enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the
full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be
impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when
examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a
blanket shield in favor of labor against any form of removal regardless of circumstance. This
interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtlessbut still hardly within the contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights
of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial
bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the
Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable
right to stave off the dismissal of an employee for just cause owing to the failure to serve proper notice
or hearing. As manifested by several framers of the 1987 Constitution, the provisions on social justice
require legislative enactments for their enforceability. This is reflected in the record of debates on the
social justice provisions of the Constitution:
MS. [FELICITAS S.] AQUINO: We appreciate the concern of the Commissioner. But this
Committee [on Social Justice] has actually become the forum already of a lot of specific
grievances and specific demands, such that understandably, we may have been, at one time
or another, dangerously treading into the functions of legislation. Our only plea to the
Commission is to focus our perspective on the matter of social justice and its rightful place in the
Constitution. What we envision here is a mandate specific enough that would give impetus for
statutory implementation. We would caution ourselves in terms of the judicious exercise of
self-censorship against treading into the functions of legislation. (emphasis supplied)51
xxx
[FLORENZ D.] REGALADO: I notice that the 1935 Constitution had only one section on social
justice; the same is true with the 1973 Constitution. But they seem to have stood us in good
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stead; and I am a little surprised why, despite that attempt at self-censorship, there are
certain provisions here which are properly for legislation.52
xxx
BISHOP [TEODORO S.] BACANI: [I] think the distinction that was given during the presentation of
the provisions on the Bill of Rights by Commissioner Bernas is very apropos here. He spoke of
self-executing rights which belong properly to the Bill of Rights, and then he spoke of a new
body of rights which are more of claims and that these have come about largely through the
works of social philosophers and then the teaching of the Popes. They focus on the common
good and hence, it is not as easy to pinpoint precisely these rights nor the situs of the
rights. And yet, they exist in relation to the common good.53
xxx
MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of this kind of collaboration will be left
to legislation but the important thing now is the conservation, utilization or maximization of the
very limited resources. xxx
[RICARDO J.] ROMULO: The other problem is that, by and large, government services are
inefficient. So, this is a problem all by itself. On Section 19, where the report says that people's
organizations as a principal means of empowering the people to pursue and protect through
peaceful means, I do not suppose that the Committee would like to either preempt or
exclude the legislature, because the concept of a representative and democratic system really
is that the legislature is normally the principal means.
[EDMUNDO G.] GARCIA: That is correct. In fact, people cannot even dream of influencing the
composition or the membership of the legislature, if they do not get organized. It is, in fact, a
recognition of the principle that unless a citizenry is organized and mobilized to pursue its ends
peacefully, then it cannot really participate effectively.54
There is no pretense on the part of the framers that the provisions on Social Justice, particularly Section
3 of Article XIII, are self-executory. Still, considering the rule that provisions should be deemed selfexecuting if enforceable without further legislative action, an examination of Section 3 of Article XIII is
warranted to determine whether it is complete in itself as a definitive law, or if it needs future
legislation for completion and enforcement.55Particularly, we should inquire whether or not the
provision voids the dismissal of a laborer for just cause if no valid notice or hearing is attendant.
Constitutional Commissioner Fr. Joaquin G. Bernas makes a significant comment on Section 3, Article XIII
of the 1987 Constitution:
The [cluster] of rights guaranteed in the second paragraph are the right "to security of tenure,
humane conditions of work, and a living wage." Again, although these have been set apart by a
period (.) from the next sentence and are therefore not modified by the final phrase "as may be
provided by law," it is not the intention to place these beyond the reach of valid laws. xxx
(emphasis supplied)56
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At present, the Labor Code is the primary mechanism to carry out the Constitution's directives. This is
clear from Article 357 under Chapter 1 thereof which essentially restates the policy on the protection of
labor as worded in the 1973 Constitution, which was in force at the time of enactment of the Labor
Code. It crystallizes the fundamental law's policies on labor, defines the parameters of the rights granted
to labor such as the right to security of tenure, and prescribes the standards for the enforcement of such
rights in concrete terms. While not infallible, the measures provided therein tend to ensure the
achievement of the constitutional aims.
The necessity for laws concretizing the constitutional principles on the protection of labor is evident in
the reliance placed upon such laws by the Court in resolving the issue of the validity of a worker's
dismissal. In cases where that was the issue confronting the Court, it consistently recognized the
constitutional right to security of tenure and employed the standards laid down by prevailing laws in
determining whether such right was violated.58 The Court's reference to laws other than the
Constitution in resolving the issue of dismissal is an implicit acknowledgment that the right to security of
tenure, while recognized in the Constitution, cannot be implemented uniformly absent a law prescribing
concrete standards for its enforcement.
As discussed earlier, the validity of an employee's dismissal in previous cases was examined by the Court
in accordance with the standards laid down by Congress in the Termination Pay Law, and subsequently,
the Labor Code and the amendments thereto. At present, the validity of an employee's dismissal is
weighed against the standards laid down in Article 279, as well as Article 282 in relation to Article 277(b)
of the Labor Code, for a dismissal for just cause, and Article 283 for a dismissal for an authorized cause.
The Effect of Statutory Violation
Of Notice and Hearing
There is no doubt that the dismissal of an employee even for just cause, without prior notice or hearing,
violates the Labor Code. However, does such violation necessarily void the dismissal?
Before I proceed with my discussion on dismissals for just causes, a brief comment regarding dismissals
for authorized cause under Article 283 of the Labor Code. While the justiciable question
in Serrano pertained to a dismissal for unauthorized cause, the ruling therein was crafted as definitive to
dismissals for just cause. Happily, the Decision today does not adopt the same unwise tack. It should be
recognized that dismissals for just cause and dismissals for authorized cause are governed by different
provisions, entail divergent requisites, and animated by distinct rationales. The language of Article 283
expressly effects the termination for authorized cause to the service of written notice on the workers
and the Ministry of Labor at least one (1) month before the intended date of termination. This
constitutes an eminent difference than dismissals for just cause, wherein the causal relation between
the notice and the dismissal is not expressly stipulated. The circumstances distinguishing just and
authorized causes are too markedly different to be subjected to the same rules and reasoning in
interpretation.
Since the present petition is limited to a question arising from a dismissal for just cause, there is no
reason for making any pronouncement regarding authorized causes. Such declaration would be
merely obiter, since they are neither the law of the case nor dispositive of the present petition. When
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the question becomes justiciable before this Court, we will be confronted with an appropriate factual
milieu on which we can render a more judicious disposition of this admittedly important question.
B. Dismissal for Just Cause
There is no express provision in the Labor Code that voids a dismissal for just cause on the ground that
there was no notice or hearing. Under Section 279, the employer is precluded from dismissing an
employee except for a just cause as provided in Section 282, or an authorized cause under Sections 283
and 284. Based on reading Section 279 alone, the existence of just cause by itself is sufficient to validate
the termination.
Just cause is defined by Article 282, which unlike Article 283, does not condition the termination on the
service of written notices. Still, the dissenting opinions propound that even if there is just cause, a
termination may be invalidated due to the absence of notice or hearing. This view is anchored mainly on
constitutional moorings, the basis of which I had argued against earlier. For determination now is
whether there is statutory basis under the Labor Code to void a dismissal for just cause due to the
absence of notice or hearing.
As pointed out by Justice Mendoza in Serrano, it was only in 1989 that the Labor Code was amended to
enshrine into statute the twin requirements of notice and hearing.59 Such requirements are found in
Article 277 of the Labor Code, under the heading "Miscellaneous Provisions." Prior to the amendment,
the notice-hearing requirement was found under the implementing rules issued by the then Minister of
Labor in 1981. The present-day implementing rules likewise mandate that the standards of due process,
including the requirement of written notice and hearing, "be substantially observed."60
Indubitably, the failure to substantially comply with the standards of due process, including the notice
and hearing requirement, may give rise to an actionable claim against the employer. Under Article 288,
penalties may arise from violations of any provision of the Labor Code. The Secretary of Labor likewise
enjoys broad powers to inquire into existing relations between employers and employees. Systematic
violations by management of the statutory right to due process would fall under the broad grant of
power to the Secretary of Labor to investigate under Article 273.
However, the remedy of reinstatement despite termination for just cause is simply not authorized by
the Labor Code. Neither the Labor Code nor its implementing rules states that a termination for just
cause is voided because the requirement of notice and hearing was not observed. This is not simply an
inadvertent semantic failure, but a conscious effort to protect the prerogatives of the employer to
dismiss an employee for just cause. Notably, despite the several pronouncements by this Court in the
past equating the notice-hearing requirement in labor cases to a constitutional maxim, neither the
legislature nor the executive has adopted the same tack, even gutting the protection to provide that
substantial compliance with due process suffices.
The Labor Code significantly eroded management prerogatives in the hiring and firing of employees.
Whereas employees could be dismissed even without just cause under the Termination Pay Law61, the
Labor Code affords workers broad security of tenure. Still, the law recognizes the right of the employer
to terminate for just cause. The just causes enumerated under the Labor Code serious misconduct or
willful disobedience, gross and habitual neglect, fraud or willful breach of trust, commission of a crime
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by the employee against the employer, and other analogous causes are characterized by the harmful
behavior of an employee against the business or the person of the employer.
These just causes for termination are not negated by the absence of notice or hearing. An employee
who tries to kill the employer cannot be magically absolved of trespasses just because the employer
forgot to serve due notice. Or a less extreme example, the gross and habitual neglect of an employee
will not be improved upon just because the employer failed to conduct a hearing prior to termination.
In fact, the practical purpose of requiring notice and hearing is to afford the employee the opportunity
to dispute the contention that there was just cause in the dismissal. Yet it must be understood if a
dismissed employee is deprived of the right to notice and hearing, and thus denied the opportunity to
present countervailing evidence that disputes the finding of just cause, reinstatement will be valid not
because the notice and hearing requirement was not observed, but because there was no just cause in
the dismissal. The opportunity to dispute the finding of the just cause is readily available before the
Labor Arbiter, and the subsequent levels of appellate review. Again, as held in Serrano:
Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not
to comply with the Due Process Clause of the Constitution. The time for notice and hearing is at the trial
stage. Then that is the time we speak of notice and hearing as the essence of procedural due process.
Thus, compliance by the employer with the notice requirement before he dismisses an employee does
not foreclose the right of the latter to question the legality of his dismissal. As Art. 277(b) provides, "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.62
The Labor Code presents no textually demonstrable commitment to invalidate a dismissal for just cause
due to the absence of notice or hearing. This is not surprising, as such remedy will not restore the
employer or employee into equity. Absent a showing of integral causation, the mutual infliction of
wrongs does not negate either injury, but instead enforces two independent rights of relief.
The Damages' Dimensions
Award for Damages Must Have Statutory Basis
The Court has grappled with the problem of what should be the proper remedial relief of an employee
dismissed with just cause, but not afforded either notice or hearing. In a long line of cases, beginning
with Wenphil Corp. v. NLRC63 and up until Serrano in 2000, the Court had deemed an indemnification
award as sufficient to answer for the violation by the employer against the employee. However, the
doctrine was modified in Serrano.
I disagree with Serrano insofar as it held that employees terminated for just cause are to be paid
backwages from the time employment was terminated "until it is determined that the termination is for
just cause because the failure to hear him before he is dismissed renders the termination of his
employment without legal effect."64Article 279 of the Labor Code clearly authorizes the payment of
backwages only if an employee is unjustly dismissed. A dismissal for just cause is obviously antithetical
to an unjust dismissal. An award for backwages is not clearly warranted by the law.
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The Impropriety of Award for Separation Pay

The formula of one month's pay for every year served does have statutory basis. It is found though in
the Labor Code though, not the Civil Code. Even then, such computation is made for separation pay
under the Labor Code. But separation pay is not an appropriate as a remedy in this case, or in any case
wherein an employee is terminated for just cause. As Justice Vitug noted in his separate opinion
in Serrano, an employee whose employment is terminated for a just cause is not entitled to the
payment of separation benefits.65 Separation pay is traditionally a monetary award paid as an
alternative to reinstatement which can no longer be effected in view of the long passage of time or
because of the realities of the situation.66 However, under Section 7, Rule 1, Book VI of the Omnibus
Rules Implementing the Labor Code, "[t]he separation from work of an employee for a just cause does
not entitle him to the termination pay provided in the Code."67 Neither does the Labor Code itself
provide instances wherein separation pay is warranted for dismissals with just cause. Separation pay is
warranted only for dismissals for authorized causes, as enumerated in Article 283 and 284 of the Labor
Code.
The Impropriety of Equity Awards
Admittedly, the Court has in the past authorized the award of separation pay for duly terminated
employees as a measure of social justice, provided that the employee is not guilty of serious misconduct
reflecting on moral character.68 This doctrine is inapplicable in this case, as the Agabons are guilty of
abandonment, which is the deliberate and unjustified refusal of an employee to resume his
employment. Abandonment is tantamount to serious misconduct, as it constitutes a willful breach of the
employer-employee relationship without cause.
The award of separation pay as a measure of social justice has no statutory basis, but clearly emanates
from the Court's so-called "equity jurisdiction." The Court's equity jurisdiction as a basis for award, no
matter what form it may take, is likewise unwarranted in this case. Easy resort to equity should be
avoided, as it should yield to positive rules which pre-empt and prevail over such persuasions.69 Abstract
as the concept is, it does not admit to definite and objective standards.
I consider the pronouncement regarding the proper monetary awards in such cases as Wenphil Corp. v.
NLRC,70Reta,71 and to a degree, even Serrano as premised in part on equity. This decision is premised in
part due to the absence of cited statutory basis for these awards. In these cases, the Court deemed an
indemnity award proper without exactly saying where in statute could such award be derived at.
Perhaps, equity or social justice can be invoked as basis for the award. However, this sort of
arbitrariness, indeterminacy and judicial usurpation of legislative prerogatives is precisely the source of
my discontent. Social justice should be the aspiration of all that we do, yet I think it the more mature
attitude to consider that it ebbs and flows within our statutes, rather than view it as an independent
source of funding.
Article 288 of the Labor Code as a Source of Liability
Another putative source of liability for failure to render the notice requirement is Article 288 of the
Labor Code, which states:
Article 288 states:
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Penalties. Except as otherwise provided in this Code, or unless the acts complained of hinges
on a question of interpretation or implementation of ambiguous provisions of an existing
collective bargaining agreement, any violation of the provisions of this Code declared to be
unlawful or penal in nature shall be punished with a fine of not less than One Thousand Pesos
(P1,000.00) nor more than Ten Thousand Pesos (P10,000.00), or imprisonment of not less than
three months nor more than three years, or both such fine and imprisonment at the discretion
of the court.
It is apparent from the provision that the penalty arises due to contraventions of the provisions of the
Labor Code. It is also clear that the provision comes into play regardless of who the violator may be.
Either the employer or the employee may be penalized, or perhaps even officials tasked with
implementing the Labor Code.
However, it is apparent that Article 288 is a penal provision; hence, the prescription for penalties such as
fine and imprisonment. The Article is also explicit that the imposition of fine or imprisonment is at the
"discretion of the court." Thus, the proceedings under the provision is penal in character. The criminal
case has to be instituted before the proper courts, and the Labor Code violation subject thereof duly
proven in an adversarial proceeding. Hence, Article 288 cannot apply in this case and serve as basis to
impose a penalty on Riviera Homes.
I also maintain that under Article 288 the penalty should be paid to the State, and not to the person or
persons who may have suffered injury as a result of the violation. A penalty is a sum of money which the
law requires to be paid by way of punishment for doing some act which is prohibited or for not doing
some act which is required to be done.72 A penalty should be distinguished from damages which is the
pecuniary compensation or indemnity to a person who has suffered loss, detriment, or injury, whether
to his person, property, or rights, on account of the unlawful act or omission or negligence of another.
Article 288 clearly serves as a punitive fine, rather than a compensatory measure, since the provision
penalizes an act that violates the Labor Code even if such act does not cause actual injury to any private
person.
Independent of the employee's interests protected by the Labor Code is the interest of the State in
seeing to it that its regulatory laws are complied with. Article 288 is intended to satiate the latter
interest. Nothing in the language of Article 288 indicates an intention to compensate or remunerate a
private person for injury he may have sustained.
It should be noted though that in Serrano, the Court observed that since the promulgation of Wenphil
Corp. v. NLRC73 in 1989, "fines imposed for violations of the notice requirement have varied
from P1,000.00 to P2,000.00 to P5,000.00 to P10,000.00."74 Interestingly, this range is the same range of
the penalties imposed by Article 288. These "fines" adverted to in Serrano were paid to the dismissed
employee. The use of the term "fines," as well as the terminology employed a few other cases,75 may
have left an erroneous impression that the award implemented beginning with Wenphil was based on
Article 288 of the Labor Code. Yet, an examination of Wenphilreveals that what the Court actually
awarded to the employee was an "indemnity", dependent on the facts of each case and the gravity of
the omission committed by the employer. There is no mention in Wenphil of Article 288 of the Labor
Code, or indeed, of any statutory basis for the award.
The Proper Basis: Employer's Liability under the Civil Code
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As earlier stated, Wenphil allowed the payment of indemnity to the employee dismissed for just cause is
dependent on the facts of each case and the gravity of the omission committed by the employer.
However, I considered Wenphil flawed insofar as it is silent as to the statutory basis for the indemnity
award. This failure, to my mind, renders it unwise for to reinstate the Wenphil rule, and foster the
impression that it is the judicial business to invent awards for damages without clear statutory basis.
The proper legal basis for holding the employer liable for monetary damages to the employee
dismissed for just cause is the Civil Code. The award of damages should be measured against the loss
or injury suffered by the employee by reason of the employer's violation or, in case of nominal
damages, the right vindicated by the award. This is the proper paradigm authorized by our law, and
designed to obtain the fairest possible relief.
Under Section 217(4) of the Labor Code, the Labor Arbiter has jurisdiction over claims for actual, moral,
exemplary and other forms of damages arising from the employer-employee relations. It is thus the duty
of Labor Arbiters to adjudicate claims for damages, and they should disabuse themselves of any
inhibitions if it does appear that an award for damages is warranted. As triers of facts in a specialized
field, they should attune themselves to the particular conditions or problems attendant to employeremployee relationships, and thus be in the best possible position as to the nature and amount of
damages that may be warranted in this case.
The damages referred under Section 217(4) of the Labor Code are those available under the Civil Code.
It is but proper that the Civil Code serve as the basis for the indemnity, it being the law that regulates
the private relations of the members of civil society, determining their respective rights and obligations
with reference to persons, things, and civil acts.76 No matter how impressed with the public interest the
relationship between a private employer and employee is, it still is ultimately a relationship between
private individuals. Notably, even though the Labor Code could very well have provided set rules for
damages arising from the employer-employee relationship, referral was instead made to the concept of
damages as enumerated and defined under the Civil Code.
Given the long controversy that has dogged this present issue regarding dismissals for just cause, it is
wise to lay down standards that would guide the proper award of damages under the Civil Code in cases
wherein the employer failed to comply with statutory due process in dismissals for just cause.
First. I believe that it can be maintained as a general rule, that failure to comply with the statutory
requirement of notice automatically gives rise to nominal damages, at the very least, even if the
dismissal was sustained for just cause.
Nominal damages are adjudicated in order that a right of a plaintiff which has been violated or invaded
by another may be vindicated or recognized without having to indemnify the plaintiff for any loss
suffered by him.77 Nominal damages may likewise be awarded in every obligation arising from law,
contracts, quasi-contracts, acts or omissions punished by law, and quasi-delicts, or where any property
right has been invaded.
Clearly, the bare act of failing to observe the notice requirement gives rise to nominal damages
assessable against the employer and due the employee. The Labor Code indubitably entitles the
employee to notice even if dismissal is for just cause, even if there is no apparent intent to void such
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dismissals deficiently implemented. It has also been held that one's employment, profession, trade, or
calling is a "property right" and the wrongful interference therewith gives rise to an actionable wrong.78
In Better Buildings, Inc. v. NLRC,79 the Court ruled that the while the termination therein was for just and
valid cause, the manner of termination was done in complete disregard of the necessary procedural
safeguards.80 The Court found nominal damages as the proper form of award, as it was purposed to
vindicate the right to procedural due process violated by the employer.81 A similar holding was
maintained in Iran v. NLRC82 and Malaya Shipping v. NLRC.83 The doctrine has express statutory basis,
duly recognizes the existence of the right to notice, and vindicates the violation of such right. It is sound,
logical, and should be adopted as a general rule.
The assessment of nominal damages is left to the discretion of the court,84 or in labor cases, of the Labor
Arbiter and the successive appellate levels. The authority to nominate standards governing the award of
nominal damages has clearly been delegated to the judicial branch, and it will serve good purpose for
this Court to provide such guidelines. Considering that the affected right is a property right, there is
justification in basing the amount of nominal damages on the particular characteristics attaching to the
claimant's employment. Factors such as length of service, positions held, and received salary may be
considered to obtain the proper measure of nominal damages. After all, the degree by which a property
right should be vindicated is affected by the estimable value of such right.
At the same time, it should be recognized that nominal damages are not meant to be compensatory,
and should not be computed through a formula based on actual losses. Consequently, nominal damages
usually limited in pecuniary value.85 This fact should be impressed upon the prospective claimant,
especially one who is contemplating seeking actual/compensatory damages.
Second. Actual or compensatory damages are not available as a matter of right to an employee
dismissed for just cause but denied statutory due process. They must be based on clear factual and legal
bases,86 and correspond to such pecuniary loss suffered by the employee as duly proven.87 Evidently,
there is less degree of discretion to award actual or compensatory damages.
I recognize some inherent difficulties in establishing actual damages in cases for terminations validated
for just cause. The dismissed employee retains no right to continued employment from the moment just
cause for termination exists, and such time most likely would have arrived even before the employer is
liable to send the first notice. As a result, an award of backwages disguised as actual damages would
almost never be justified if the employee was dismissed for just cause. The possible exception would be
if it can be proven the ground for just cause came into being only after the dismissed employee had
stopped receiving wages from the employer.
Yet it is not impossible to establish a case for actual damages if dismissal was for just cause. Particularly
actionable, for example, is if the notices are not served on the employee, thus hampering his/her
opportunities to obtain new employment. For as long as it can be demonstrated that the failure of the
employer to observe procedural due process mandated by the Labor Code is the proximate cause of
pecuniary loss or injury to the dismissed employee, then actual or compensatory damages may be
awarded.
Third. If there is a finding of pecuniary loss arising from the employer violation, but the amount cannot
be proved with certainty, then temperate or moderate damages are available under Article 2224 of the
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Civil Code. Again, sufficient discretion is afforded to the adjudicator as regards the proper award, and
the award must be reasonable under the circumstances.88 Temperate or nominal damages may yet
prove to be a plausible remedy, especially when common sense dictates that pecuniary loss was
suffered, but incapable of precise definition.
Fourth. Moral and exemplary damages may also be awarded in the appropriate circumstances. As
pointed out by the Decision, moral damages are recoverable where the dismissal of the employee was
attended by bad faith, fraud, or was done in a manner contrary to morals, good customs or public policy,
or the employer committed an act oppressive to labor.89 Exemplary damages may avail if the dismissal
was effected in a wanton, oppressive or malevolent manner.
Appropriate Award of Damages to the Agabons
The records indicate no proof exists to justify the award of actual or compensatory damages, as it has
not been established that the failure to serve the second notice on the Agabons was the proximate
cause to any loss or injury. In fact, there is not even any showing that such violation caused any sort of
injury or discomfort to the Agabons. Nor do they assert such causal relation. Thus, the only appropriate
award of damages is nominal damages. Considering the circumstances, I agree that an award of Fifteen
Thousand Pesos (P15,000.00) each for the Agabons is sufficient.
All premises considered, I VOTE to:
(1) DENY the PETITION for lack of merit, and AFFIRM the Decision of the Court of Appeals dated
23 January 2003, with the MODIFICATION that in addition, Riviera Homes be
ORDERED to pay the petitioners the sum of Fifteen Thousand Pesos (P15,000.00) each, as
nominal damages.
(2) HOLD that henceforth, dismissals for just cause may not be invalidated due to the failure to
observe the due process requirements under the Labor Code, and that the only indemnity
award available to the employee dismissed for just cause are damages under the Civil Code as
duly proven. Any and all previous rulings and statements of the Court inconsistent with this
holding are now deemed INOPERATIVE.
DANTE O. TINGA
Associate Justice
Footnotes
1
Penned by Associate Justice Marina L. Buzon and concurred in by Associate Justices Josefina
Guevara-Salonga and Danilo B. Pine.
2
Rollo, p. 41.
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3
Id., pp. 13-14.
Id., p. 92.
Id., p. 131.
Id., p. 173.
Id., p. 20.
Id., pp. 21-23.
Id., p. 45.
10
Id., pp. 42-43.
11
Rosario v. Victory Ricemill, G.R. No. 147572, 19 February 2003, 397 SCRA 760, 767.
12
Reyes v. Maxim's Tea House, G.R. No. 140853, 27 February 2003, 398 SCRA 288, 298.
13
Santos v. San Miguel Corporation, G.R. No. 149416, 14 March 2003, 399 SCRA 172, 182.
14
Columbus Philippine Bus Corporation v. NLRC, 417 Phil. 81, 100 (2001).
15
De Paul/King Philip Customs Tailor v. NLRC, 364 Phil. 91, 102 (1999).
16
Sta. Catalina College v. NLRC, G.R. No. 144483, 19 November 2003.
17
Cosmos Bottling Corporation v. NLRC, G.R. No. 111155, 23 October 1997, 281 SCRA 146, 153154.
18
G.R. No. L-49875, 21 November 1979, 94 SCRA 472, 478.
19
Judy Philippines, Inc. v. NLRC, 352 Phil. 593, 606 (1998).
20
Philippine-Singapore Transport Services, Inc. v. NLRC, 343 Phil. 284, 291 (1997).
21
See Stolt-Nielsen Marine Services, Inc. v. NLRC, G.R. No. 128395, 29 December 1998, 300 SCRA
713, 720.
22
G.R. No. 117040, 27 January 2000, 323 SCRA 445.
23
G.R. No. 80587, 8 February 1989, 170 SCRA 69.
24
Id. at 76.
25
Id.
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26
Solesbee v. Balkcom, 339 U.S. 9, 16 (1950) (Frankfurter, J., dissenting). Due process is violated
if a practice or rule "offends some principle of justice so rooted in the traditions and conscience
of our people as to be ranked as fundamental;" Snyder v. Massachusetts, 291 U.S. 97, 105
(1934).
27
Department Order No. 9 took effect on 21 June 1997. Department Order No. 10 took effect on
22 June 1997.
28
G.R. No. 115394, 27 September 1995, 248 SCRA 535.
29
G.R. No. 122666, 19 June 1997, 274 SCRA 386.
30
G.R. No. 114313, 29 July 1996, 259 SCRA 699, 700.
31
Serrano, supra, Vitug, J., Separate (Concurring and Dissenting) Opinion, 323 SCRA 524, 529530 (2000).
32
Capili v. NLRC, G.R. No. 117378, 26 March 1997, 270 SCRA 488, 495.
33
Filipro, Inc. v. NLRC, G.R. No. L-70546, 16 October 1986, 145 SCRA 123.
34
Calalang v. Williams, 70 Phil. 726, 735 (1940).
35
Gelos v. Court of Appeals, G.R. No. 86186, 8 May 1992, 208 SCRA 608, 616.
36
G.R. No. 112100, 27 May 1994, 232 SCRA 613, 618.
37
Art. 2221, Civil Code.
38
G.R. No. 108405. April 4, 2003 citing Kwikway Engineering Works v. NLRC, G.R. No. 85014, 22
March 1991, 195 SCRA 526, 532; Aurelio v. NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432,
443; andSampaguita Garments Corporation v. NLRC, G.R. No. 102406, 17 June 1994, 233 SCRA
260, 265.
39
Id. citing Better Buildings, Inc. v. NLRC, G.R. No. 109714, 15 December 1997, 283 SCRA 242,
251; Iran v. NLRC, G.R. No. 121927, 22 April 1998, 289 SCRA 433, 442.
40
Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003.
41
Villar v. NLRC, G.R. No. 130935, 11 May 2000.
42
Rollo, pp. 60-71.
43
UST Faculty Union v. NLRC, G.R. No. 90445, 2 October 1990.
44
"Whereas" clauses, P.D. No. 851.
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45
"Art. 113. Wage deduction. - No employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees except:
(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium on
the insurance;
(b) For union dues, in cases where the right of the worker or his union to check off has
been recognized by the employer or authorized in writing by the individual worker
concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment.
TINGA, J:
1
380 Phil. 416 (2000).
Id.
Id. at 443, 445, 448.
Rollo, p. 42.
Id. at 32.
Ibid.
Id. at 59-60.
Id. at 15.
Id. at 34.
10
Id. at 92.
11
Id. at 91. The address indicated in the identification cards was "V 6 Cruz Iron Works, E.
Rodriguez Paraaque City."
12
Ibid citing PAL v. NLRC, 279 SCRA 533.
13
In a Decision dated 21 August 2000, penned by Commissioner V.R. Calaycay, and concurred in
by Presiding Commissioner R. Aquino and Commissioner A. Gacutan.
14
Rollo, p. 127.
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15
Penned by Associate Justice M. Buzon, concurred in by Associate Justices J. Guevara-Salonga

and D. Pine.
16
In their Petition for Certiorari before the Court of Appeals, the Agabons particularly claimed
that they were required to work on four holidays, namely, Araw Ng Kagitingan, National Heroes
Day, Bonifacio Day, and Rizal Day. See Rollo, p. 154.
17
Deducted from Virgilio Agabon's thirteenth (13th) month pay were his SSS loan and expenses
for shoes. Rollo, pp. 171-172.
18
Rollo, p. 173.
19
Id. at 22.
20
Id. at 23 citing Kingsize Manufacturing Corporation v. NLRC, 238 SCRA 349.
21
Rollo, p. 20.
22
Palencia v. NLRC, G.R. No. L-75763, 21 August 1987; Pure Blue Industries v. NLRC, G.R. No.
115879, 16 April 1997.
23
Rollo, pp. 129, 170.
24
Both the NLRC and the Court of Appeals noted that the 10 June 1999 conference between the
Agabons and Riviera Homes was at the behest of the Agabons, thus countering the claim of
strained relations. Rollo, pp. 130, 170-171.
25
Rollo, p. 91.
26
Supra note 6.
27
Id.
28
Supra note 1.
29
Supra note 1 at 446.
30
See Section 1, Republic Act No. 1052, which states:

Sec. 1. In cases of employment, without a definite period, in a commercial, industrial, or
agricultural establishment or enterprise, the employer or the employee may terminate
at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or
in the case of an employer, by serving such notice to the employee at least one month
in advance or one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.
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The employee, upon whom no such notice was served in case of termination of
employment without just cause shall be entitled to compensation from the date of
termination of his employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice.
31
124 Phil. 698 (1966).
32
Id. at 703.
33
139 Phil. 747 (1969).
34
Id. at 754.
35
Serrano v. NLRC, supra note 1 at 447.
36
G.R. No. L-38482, 18 June 1976, 71 SCRA 470.
37
38
Serrano, supra note 1 at 445-446.
39
G.R. No. 81561, 18 January 1991, 193 SCRA 57.
40
Id. at 67.
41
See G. Gunther and K. Sullivan, Constitutional Law (14th ed.) at 867.
42
Separate Opinion of Justice Panganiban, p. 12.
43
See e.g., Morehead v. State of New York, 298 U.S. 587 (1936), which affirmed the invalidity of
minimum wage laws as previously declared in Adkins v. Children's Hospital, 261 U.S. 525 (1923).
44
Famously justified by the Supreme Court as an assertion of the "liberty of contract", or "the
right to contract about one's affairs", as contained in the Fourteenth Amendment. Adkins v.
Children's Hospital, 261 U.S. 525, 545. (1923). But as Justice Holmes famously critiqued:
"Contract is not specially mentioned in the text (of the Fourteenth Amendment) that we have to
construe. It is merely an example of doing what you want to do, embodied in the word liberty.
But pretty much all law consists in forbidding men to do some things that they want to do, and
contract is no more exempt from law than other acts." Adkins v. Children's Hospital. Id. at 568.
45
See People v. Tudtud, G.R. No. 144037, 26 September 2003.
46
G.R. No. 106027, 234 SCRA 441, 25 July 1994.
47
Id. at 451-452.
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48
335 Phil. 82 (1997). The Court therein was divided, with twelve voting for, and three against
the decision. Interestingly, both Justices Puno and Panganiban adopted the dissenting position
that the provisions of Article XII of the Constitution alone were insufficient to accord the Filipino
bidder a preferential right to obtain the winning bid for Manila Hotel. Their concession as to the
enforceability of paragraph 2, Section 10, Article XII of the Constitution without enabling
legislation was in a situation wherein if the bids of the Filipino and the foreign entity were
tied. Id. at 154 (J. Puno, dissenting) and 154 (J. Panganiban,dissenting).
49
Id. at 102 citing 16 Am Jur. 2d 281.
50
Id. at 103-104 citing 16 Am Jur 2d 283-284.
51
II Record of the Constitutional Commission: Proceedings and Debates 613.
52
Id. at 617.
53
Id. at 626.
54
Id. at 644.
55
The test suggested by Justice Puno in the Manila Hotel case, supra note 47, is as definitive as
any proposed method of analysis could ever be. "A searching inquiry should be made to find out
if the provision is intended as a present enactment, complete in itself as a definitive law, or if it
needs future legislation for completion and enforcement. The inquiry demands a micro-analysis
and the context of the provision in question." J. Puno, dissenting, id. at 141-142. See also Rev.
Pamatong v. COMELEC, G.R. No. 161872, 13 April 2004.
56
J. Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary (1996), at
1064.
57
Article 3, Chapter I of the Labor Code declares:

Declaration of basic policy.The State shall afford full protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers. The State shall assure the rights
of workers to self-organization, collective bargaining, security of tenure and just and
humane conditions of work.
58
See Phil. Aeolus Automotive United Corp. v. NLRC, 387 Phil 250 (2000); Gonzales v. National
Labor Relations Commission, 372 Phil 39 (1999); Jardine Davies v. National Labor Relations
Commission, 370 Phil 310 (1999); Pearl S. Buck Foundation v. National Labor Relations
Commission, G.R. No. 80728, February 21, 1990, 182 SCRA 446; Bagong Bayan Corporation,
Realty Investors & Developers v. National Labor Relations Commission, G.R. No. 61272,
September 29, 1989, 178 SCRA 107; Labajo v. Alejandro, et al., G.R. No/ L-80383, September 26,
1988, 165 SCRA 747; D.M. Consunji, Inc. v. Pucan, et al., G.R. No. L-71413, March 21, 1988; 159
SCRA 107; Santos v. National Labor Relations Commission, G.R. No. L-76271,September 21,
1987, 154 SCRA 166; People's Bank & Trust Co. v. People's Bank & Trust Co. Employees Union,
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161 Phil 15 (1976); Philippine Movie Pictures Association v. Premiere Productions, 92 Phil. 843
(1953); Phil. Refining Co. v. Garcia, supra.
59
Serrano v. NLRC, supra note 1.
60
Section 2, Rule XXIII, Book V, Omnibus Rules Implementing the Labor Code.
61
Supra note 2.
62
63
G.R. No. 80587, 8 February 1989, 170 SCRA 69.
64
Serrano, supra note 1 at 453.
65
Serrano, supra note 1 at 485; J. Vitug, separate concurring and dissenting.
66
Balaquezon EWTU v. Zamora, G.R. No. L-46766-7, 1 April 1980, 97 SCRA 5, 8.
67
"xxx without prejudice, however, to whatever rights, benefits, and privileges he may have
under the applicable individual or collective bargaining agreement with the employer or
voluntary employer policy or practice". Section 7, Rule 1, Book VI, Omnibus Rules Implementing
the Labor Code.
68
See Philippine Rabbit Bus Lines, Inc. v. NLRC, G.R. No. 98137, 15 September 1997, 279 SCRA
106, 115, citing cases.
69
Aguila v. CFI, G.R. No. L-48335, 15 April 1988, 160 SCRA 352, 360. "For all its conceded merits,
equity is available only in the absence of law and not as its replacement. Equity is described as
justice outside legality, which simply means that it cannot supplant although it may, as often
happens, supplement the law." Id.
70
170 SCRA 69 (1989).
71
G.R. No. 112100, May 27, 1994, 232 SCRA 613.
72
Black's Law Dictionary, 1990 ed., p. 1133; citing Hidden Hollow Ranch v. Collins, 146 Mont.
321, 406 P.2d 365, 368.
73
170 SCRA 69 (1989).
74
75
See e.g., Reta v. NLRC, G.R. No. 112100, 27 May 1994, 232 SCRA 613, wherein the Court held
that "private respondents should pay petitioner P10,000.00 as penalty for failure to comply with
the due process requirement." Id. at 618.
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76
A. Tolentino, Civil Code of the Philippines (1990 ed.), at 11; citing 9 Fabres 10.
77
Article 2221, Civil Code.
78
Ferrer v. NLRC, G.R. No. 100898, 5 July 1993; citing Callanta vs. Carnation Philippines, Inc., 145
SCRA 268.
79
347 Phil. 521, 531 (1997).
80
Id. at 531.
81
Id.
82
G.R. No. 121927, 22 April 1998.
83
G.R. No. 121698, 26 March 1998. The ponente in all three cases was Justice Flerida Ruth
Romero.
84
See Article 2216, Civil Code. See also Saludo v. Court of Appeals, G.R. No. 95536, 23 March
1992.
85
In relation to Article 2224 of the Civil Code, nominal damages are less than
temperate/moderate damages or compensatory damages.
86
See De la Paz, Jr. v. IAC, 154 SCRA 65; Chavez v. Gonzales, 32 SCRA 547.
87
See Art. 2199, Civil Code.
88
Art. 2225, Civil Code.
89
Page 16, Decision, citing jurisprudence.
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JAKA FOOD PROCESSING CORP. VS PACOT

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 8 January 2002,[2] denying petitioners motion for reconsideration.
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.
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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 complainants-appellees 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 CAG.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. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED FULL BACKWAGES TO
RESPONDENTS.
II. 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.
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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 non-compliance 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]
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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 respondentappellant 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 respondentappellant 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 respondentappellants audited financial statement. Having established the loss incurred by the respondentappellant 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:
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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.
[1]
Annex C, Petition; Rollo, pp. 53, et seq.; Penned by Associate Justice Marina L. Buzon and concurred in
by Associate Justices Buenaventura J. Guerrero and Alicia L. Santos of the Third Division.
[2]
Annex E-1, Petition; Rollo, pp. 84, et seq.
[3]
Annex 1, Respondents Comment; Rollo, pp. 117, et seq.
[4]
Annex 2, Respondents Comment Rollo, pp. 123, et seq.
[5]
Annex B, Petition; Rollo, pp. 39, et seq.
[6]
Annex E, Petition; Rollo, pp. 80, et seq.
[7]
380 Phils. 416 [2000] and Resolution on the Motion for Reconsideration, 387 Phils. 345 [2000].
[8]
G.R. No. 158693, promulgated 17 November 2004.
[9]
ART. 283. x x x 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 of 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 as one (1) whole year.
[10]
Rollo, pp. 48-49.
[11]
271 SCRA 247, 254 [1997].

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CHIANG KAI SHEK COLLEGE VS CA

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 152988
August 24, 2004
CHIANG KAI SHEK COLLEGE, and CHIEN YIN SHAO, petitioners,

vs.
HON. COURT OF APPEALS; HON. NATIONAL LABOR RELATIONS COMMISSION; HON. COMMISSIONER
VICTORIANO R. CALAYLAY, HON. PRESIDING COMMISSIONER RAUL T. AQUINO, and HON.
COMMISSIONER ANGELITA A. GACUTAN; and MS. DIANA P. BELO, respondents.
DECISION
DAVIDE, JR., C.J.:

Assailed in this petition is the decision1 of 12 October 2001, as well as the resolution2 of 11 April 2002, of
the Court Appeals in CA-G.R. SP No. 59996, which affirmed the decision3 of 29 February 2000 of the
National Labor Relations Commission (NLRC) declaring that Diana P. Belo was illegally dismissed as a
teacher of petitioner Chiang Kai Shek College (CKSC).
The controversy began on 8 June 1992, when Ms. Belo, a teacher of CKSC since 1977, applied for a leave
of absence for the school year 1992-1993 because her children of tender age had no yaya to take care of
them. The then principal, Mrs. Joan Sy Cotio, approved her application. However, on 15 June 1992, Ms.
Belo received a letter dated 9 June 1992 of Mr. Chien Yin Shao, President of CKSC, informing her of the
schools existing policy; thus:
Regarding your letter of request for leave of absence dated June 8, 1992, we would like to
inform you of the existing policy of our school:
(1) We could not assure you of any teaching load should you decide to return in the future.
(2) Only teachers in service may enjoy the privilege and benefits provided by our school. Hence,
your children are no longer entitled to free tuition starting school year 1992-1993.4
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Ms. Belo, nonetheless, took her leave of absence. On 8 July 1992, she learned that Laurence, one of her
three children studying at the CKSC, was sent out of the examination room because his tuition fees were
not paid. This embarrassing incident impelled Ms. Belo to pay, allegedly under protest, all the school
fees of her children.5
In May 1993, after her one-year leave of absence, Ms. Belo presented herself to Ms. Cotio and signified
her readiness to teach for the incoming school year 1993-1994. She was, however, denied and not
accepted by Ms. Cotio. She then relayed the denial to Mr. Chien on 17 May 1993. On 21 July 1993, she
received the reply of Mr. Chien dated 1 July 1993 informing her that her confirmation to teach was filed
late and that there was no available teaching load for her because as early as April 21 of that year, the
school had already hired non-permanent teachers.6
Adversely affected by the development, Ms. Belo filed with the Labor Arbitration Office a complaint for
illegal dismissal; non-payment of salaries, 13th month pay, living allowance, teacher's day pay; loss of
income; and moral damages.
In his decision7 of 18 October 1995, Labor Arbiter Donato G. Quinto, Jr., dismissed the complaint,
reasoning that Ms. Belo was not dismissed but that there was simply no available teaching load for her.
When in May 1993 she signified her intention to teach, the school had already acted on the applications
or re-applications to teach of probationary teachers. The schools policies, which were articulated in Mr.
Chiens letter of 9 June 1992 to Ms. Belo, were management prerogatives which did not amount to her
dismissal. Said policies were also the consequences of her leave of absence and were not even
questioned by her. The Labor Arbiter thus offered a Solomonic solution by directing the petitioners to
give her a teaching load in the ensuing year 1996-1997 and the succeeding years without loss of
seniority rights.8
On appeal9 by the private respondent, the NLRC reversed the decision of the Labor Arbiter. It considered
as misplaced the Labor Arbiters utter reliance on Mr. Chiens letter to Ms. Belo enunciating the
questioned school policies. It reasoned that if the school policy was to extend free tuition fees to
children of teachers in school, then the petitioners must have considered her "already not in school or
summarily dismissed or separated the very moment [she] applied for leave," for, otherwise, her children
would have been granted that privilege. Thus, it directed the petitioners to immediately reinstate Ms.
Belo to her former position with full back wages from the time of her dismissal up to her actual
reinstatement. It, however, dismissed Ms. Belo's prayer for moral and exemplary damages and
attorney's fees for lack of evidence that the petitioners acted in bad faith and malice.
Their motion for reconsideration having been denied,10 the petitioners filed a petition for certiorari with
the Court of Appeals contending that the NLRC gravely abused its discretion amounting to lack of
jurisdiction in (a) overturning the factual determination of the Labor Arbiter despite the fact that Ms.
Belo stated in her Notice of Appeal that she was appealing only on a pure question of law; (b) holding
that Ms. Belo was constructively dismissed by the petitioners despite the uncontroverted evidence that
she was not illegally dismissed; and (c) granting Ms. Belo monetary awards.
On 12 October 2001, the Court of Appeals found that far from abusing its discretion, the NLRC acted
correctly when it ascertained that Ms. Belo was constructively dismissed. It declared as illegal, for being
violative of Ms. Belos right to security of tenure, the school policy that a teacher who goes on leave
cannot be assured of a teaching load. The school should have set aside a teaching load for her after the
expiration of her leave of absence. It would have been a different story, one indeed ripe for termination
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of her employment, had Ms. Belo failed to report for work. As for the schools contention that the NLRC
was barred from resolving factual issues because of Ms. Belo's statement that she was appealing the
case on a pure question of law, the Court of Appeals declared that such statement was a simple mistake
in terminology, which is insufficient to deny an employee of her rights under the law.
In its resolution dated 11 April 2002, the Court of Appeals denied the motion for reconsideration for lack
of merit.
Hence, on 11 June 2002,11 petitioner CKSC and its president Mr. Chien filed the present petition. They
claim that the Court of Appeals erred in affirming the NLRC decision which reversed the factual findings
of the Labor Arbiter even if the said findings were amply supported by clear and uncontroverted
evidence and had already attained finality, as Ms. Belo had appealed merely on a question of law. The
Court of Appeals also erred in upholding the NLRC decision which failed to point out specifically the
alleged particular portions of the records of the case, parties respective position papers, and pleadings,
much less particular testimonial and documentary evidence, that warrant the patently erroneous and
baseless conclusion that there was a "clear case of constructive dismissal." The NLRC decision is in
complete violation of Section 14, Article VIII of the Constitution, which provides: "No decision shall be
rendered by any court without expressing therein clearly and distinctly the facts and the laws on which
it is based." Likewise, the Court of Appeals has not only completely and arbitrarily ignored and
disregarded the facts and issues raised as an issue before it, but also decided on the illegality of the
schools policy, which was never raised before it or in any of the forums below. Anent the free tuition
fee benefit extended to children of teachers in service in petitioner school, the same is a privilege
granted not by law, but voluntarily by the said school. Hence, the petitioner school could determine the
conditions under which said privilege may be enjoyed, such as, that only teachers in actual service can
enjoy the privilege.
Amidst the convolution of issues proffered by the petitioners, the only issue that needs to be
determined and on which hinges the resolution of the other issues is whether the Court of Appeals
erred in affirming the NLRC decision that Ms. Belo was constructively, nay, illegally dismissed and is,
therefore, entitled to reinstatement and back wages.
It must be noted at the outset that Ms. Belo had been a full-time teacher in petitioner CKSC
continuously for fifteen years or since 1977 until she took a leave of absence for the school year 19921993. Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a
permanent status of employment and, therefore, be entitled to a security of tenure, the following
requisites must concur: (a) the teacher is a full-time teacher; (b) the teacher must have rendered three
consecutive years of service; and (c) such service must have been satisfactory.12
Since Ms. Belo has measured up to these standards, she therefore enjoys security of tenure. The
fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed
except for just and authorized cause provided by law and after due notice and hearing.13
We agree with the Court of Appeals that the NLRC did not commit any grave abuse of discretion in
finding that Ms. Belo was constructively dismissed when the petitioners, in implementing their policies,
effectively barred her from teaching for the school year 1993-1994. The three policies are (1) the nonassurance of a teaching load to a teacher who took a leave of absence; (2) the hiring of non-permanent
teachers in April to whom teaching loads were already assigned when Ms. Belo signified in May 1993
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her intention to teach; and (3) the non-applicability to children of teachers on leave of the free tuition
fee benefits extended to children of teachers in service.
Case law defines constructive dismissal as a cessation from work because continued employment is
rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay
or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to
the employee.14
When in the school year 1992-1993, the petitioners already applied to Ms. Belos children the policy of
extending free tuition fee benefits only to children of teachers in service, Ms. Belo was clearly
discriminated by them. True, the policy was made known to Ms. Belo in a letter dated 9 June 1992, but,
this only additionally and succinctly reinforced the clear case of discrimination. Notably, petitioners
statements of policies dated 13 March 1992 for the school year 1992-1993 did not include that policy;
thus:
To : All Teachers and Staff of Chiang Kai Shek College
From : The President
Pursuant to laws, rules and regulations promulgated by the proper government authorities of
the Philippines, the following procedure are hereby issued for proper compliance of all
concerned:
1. All teachers and staff who have rendered satisfactory service for a period of more than three
(3) full consecutive years (e.g. those who started working in June, 1988 or before) are
considered permanent employees and therefore need not re-apply for the forthcoming school
year 1992-1993.
2. However, should any teacher or staff of permanent status wish to resign or to retire after this
school year 1991-1992, he/she must file his/her written resignation or retirement application on
or before March 28, 1992, so that the school will have sufficient time to make the necessary
adjustments. Failure to file formal application on the part of the permanent employee shall be
construed as consent to work for another school year.
3. All probationary employees (e.g. those who started working after June, 1988) who wish to
continue their services in our school shall re-apply. Reapplications must be submitted on or
before March 28, 1992. Failure to submit reapplication shall be construed as not interested to
work for Chiang Kai Shek College in the coming school year 1992-1993.
4. All reapplications shall be acted upon and the decision of the administration will be conveyed
to the employees concerned on or before April 21, 1992. 15
It can be argued that the extension of free tuition fees to children of teachers in service was an informal
policy or custom. If it were so, there would have been no need to include this policy in the schools
written statement of policies dated 12 March 1993, which reads:
To : All Teachers and Staff of Chiang Kai Shek College
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From : The Office of the President

Pursuant to laws, rules and regulations promulgated by the proper government authorities of
the Philippines, the following procedure are hereby issued for proper compliance of all
concerned:
1. All teachers and staff who have rendered satisfactory service for a period of more than three
(3) full consecutive years (e.g. those who started working in June, 1989 or before) are
considered permanent employees and therefore need not re-apply for the forthcoming school
year 1993-1994.
2. However, should any teacher or staff of permanent status wish to resign, to retire, or to take
a leave of absence after this school year 1992-1993, he/she must file his/her written application
on or before March 27, 1993, so that the school will have sufficient time to make the necessary
adjustments. Failure to file formal application on the part of the permanent employee shall be
construed as consent to work for another school year.
In accordance with our school policy, employees not in service are not entitled to any benefit
extended by our school.
3. All probationary employees (e.g. those who started working after June 1989) who wish to
continue their services in our school shall re-apply. Reapplications must be submitted on or
before March 27, 1993. Failure to submit reapplication shall be construed as not interested to
work for Chiang Kai Shek College in the coming school year 1993-1994.
4. All reapplications shall be acted upon and the decision of the administration will be conveyed
to the employees concerned on or before April 21, 1993.16
A cursory analysis of the petitioners statements of policies dated 13 March 1992 and 12 March 1993
reveals that the lists of policies are essentially the same. Both are addressed to all teachers and staff of
petitioner school. However, the policy "that employees not in service are not entitled to any benefit
extended by the school" was not listed in the written statement of policies dated 13 March 1992. The
policy made its maiden appearance in petitioners statement of policies one year after or on 12 March
1993. It was, therefore, the policy of extending free tuition fees to children of teachers of the school,
whether on service or on leave, which existed as a matter of custom and practice. That is why the school
modified the privilege in written form.
Thus, when the petitioners retroactively applied the modified written policy to Ms. Belo, they
considered her already a teacher not in service. The NLRC was correct when it reasoned as follows: "[I]f
the school policy is to extend free tuition fees to children of teachers in school, then respondents
[petitioners herein] have considered [Ms. Belo] already not in school or summarily dismissed or
separated the very moment the latter applied for leave. Otherwise, [her] children should have been
granted the on-going privileges and benefits on free tuition fees, among others."
Ms. Belo was definitely singled out in the implementation of a future policy. This is grossly unfair and
unjust. The petitioners did not take heed of the principle enshrined in our labor laws that policies should
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be adequately known to the employees and uniformly implemented to the body of employees as a
whole and not in isolation.
The continued employment of Ms. Belo was also rendered unlikely by the insistence of the petitioners in
implementing the alleged policy that a teacher who goes on leave for one year is not assured of a
teaching load. While this alleged policy was mentioned in Mr. Chiens letter of 9 June 1992, it was not
included in the schools written statement of policies dated 13 March 1992. Hence, it was then a nonexistent policy. When a non-existent policy is implemented and, in this case, only to Ms. Belo, it
constitutes a clear case of discrimination.
Even if the policy of non-assurance of a teaching load existed as a matter of practice and custom, it still
glaringly contradicts petitioners written statement of policies dated 12 March 1993. Crystal clear
therefrom is the fact that only permanent teachers who wished "to resign, to retire, or to take a leave of
absence after the school year 1992-1993 must file their written application in March 1993." Those who
failed to file an application were expressly considered by the school as consenting to teach for the
succeeding school year. Additionally, the petitioners did not require permanent teachers with
satisfactory service to re-apply.
It, therefore, blows our mind why the petitioners would require Ms. Belo, a permanent teacher since
1977 with a satisfactory service record, to signify her intention to teach in March 1993. Plainly, the
petitioners violated their avowed policies. Since Ms. Belo was not retiring, resigning or filing another
leave of absence after the school year 1992-1993, the petitioners should have considered her as
consenting to teach for the incoming school year 1993-1994. In fact, they should not have required her
to re-apply to teach. In accordance with the written statement of policies dated 12 March 1993, only
probationary teachers are required by the petitioners to re-apply in March. Failure of probationary
teachers to re-apply in March is an indication of their lack of interest to teach again at the school.
Petitioners invocation of the third policy that of giving teaching assignments to probationary teachers
in April to justify their refusal to provide Ms. Belo a teaching load is, therefore, a lame excuse that
rings of untruth and dishonesty. Patently clear is the illegal manner by which the petitioners eased out
Ms. Belo from the teaching corps.
Thus, the Court of Appeals justification in upholding the NLRC ruling attains an added judicial and logical
sting:
When respondent Belo reported for work after the termination of her one-year leave of
absence, it was obligatory for petitioner school to give her a teaching load. It was improper for
petitioner school to farm out subjects of respondent Belo to provisionary [sic] teacher [sic]. The
petitioner school should have assumed that respondent Belo was returning for work after the
expiration of her leave. It would have been a different story, if after the start of classes,
respondent Belo failed to report for work, then the school had a right to institute the necessary
proceeding for the termination of her employment.17
Likewise, we do not find merit in petitioners assertion that the Court of Appeals should not have passed
upon the illegality of the school policy of non-assurance of a teaching load, since the alleged illegality
was never raised as an issue before the respondent court or in the forums below. As pointed out by the
private respondent, that policy was part of the defense invoked by the petitioners in the Arbiter level, in
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the NLRC, and in the respondent court to the charge of illegal dismissal; and, hence, it must necessarily
be passed upon and scrutinized. Besides, that policy is intimately intertwined with the main issue of
whether Ms. Belo was illegally dismissed.
We reject petitioners contention that "the NLRC decision failed to point out specifically the alleged
particular portions of the records of the case, parties respective position papers, and pleadings, much
less particular testimonial and documentary evidence, that warrant the patently erroneous and baseless
conclusion that there is a clear case of constructive dismissal." In fact, the NLRC considered the same
policies that the petitioners insist as their bases for maintaining that Ms. Belo was not dismissed. It
seems that the petitioners could only be persuaded if the reviewing bodies unearthed a document that
explicitly states that Ms. Belo was being constructively dismissed. This phantom paper chase unveils the
unsubstantiated and contrived claim of the petitioners. They need only to look, for example, at the
letter dated 9 June 1992 to Ms. Belo. The "policies" therein stated are discernibly non-existent, or if
existing as a matter of custom they grossly transgressed petitioners formal written policies dated 13
March 1992 and 12 March 1993. Clear, therefore, is the fact that the written formal policies apply to all
teachers and staff except Ms. Belo.
Hence, there is no need to belabor the point that the NLRC decision clearly complied with the
requirement expressed under Section 14, Article VIII of the Constitution. The decision speaks for itself.
Suffice it is to say, this case is an exception to the general rule that the factual findings and conclusions
of the Labor Arbiter are accorded weight and respect on appeal, and even finality. For one thing, the
findings of the NLRC and the Labor Arbiter are contrary to each other; hence, the reviewing court may
delve into the records and examine for itself the questioned findings.18
Further, we do not find merit in petitioners claim that Ms. Belos judicial admission that she was
appealing on a "pure question of law" precludes the review and reversal of the Labor Arbiters factual
finding that she was not illegally dismissed. Such claim is belied by the Notice of Appeal itself,19 wherein
Ms. Belo declared that she was appealing the decision of the Labor Arbiter to the NLRC "on a pure
question of law and for being contrary to law and jurisprudence applicable [to] the case and the
evidence on record, and rendered with grave abuse of discretion."20
Oddly, even the petitioners themselves maintain that to prove grave abuse of discretion, "it is necessary
to bring out questions of fact." Thus, in their own justification in resorting to both Rules 45 and 65 of the
Rules of Court for the review and the nullification of the decision of the Court of Appeals, they contend:
Clearly, petitioners remedy is two-fold under Rule 45 and 65. Under Rule 45, only questions of
law may be raised. Perhaps, respondents can now understand why petitioners have used both
Rules 45 and 65. And this is simply because by invoking said two rules, they are not limited to
raising questions of law, but they can raise both questions of fact and law. To show that grave
abuse of discretion has been committed under Rule 65, it is necessary to bring out questions
of fact, which was precisely done in the issues raised in page 2 of the petition.21
Indeed, Ms. Belo questioned the legality of her dismissal and the denial of her monetary claims, as well
as her claim for damages. Both are essentially factual issues, since their determination necessitates an
evaluation of proof and not only a consideration of the applicable statutory and case laws.
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Basic is the distinction between legal and factual issues. A question of law exists when the doubt or
controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when
the issue does not call for an examination of probative value of the evidence presented, the truth or
falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the
truth or falsehood of facts or when the query invites calibration of the whole evidence considering
mainly the credibility of witnesses, the existence and relevancy of specific surrounding circumstances, as
well as their relation to each other and to the whole, and the probability of the situation.22
More importantly, the Labor Arbiters conclusions are baseless, bereft of any rational basis, unsupported
by evidence on record, and glaringly erroneous. The decisions of the NLRC and the Court of Appeals are
the ones in harmony with the evidence on record.
In sum, we are convinced that Ms. Belo was unceremoniously and constructively dismissed by the
petitioners without just cause and without observing the twin requirements of due process, i.e., due
notice and hearing, in violation of the tenets of equity and fair play. Ms. Belo is, therefore, entitled to
reinstatement and back wages in accordance with the questioned Court of Appeals and NLRC decisions.
the petition is DENIED. The decision of 12 October 2001 and resolution of 11 April 2002 of the Court of
Appeals in CA-GR. SP No. 59996 are hereby AFFIRMED.
Costs against the petitioners.
SO ORDERED.
Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.
Carpio, J. on official leave.
Footnotes
1
Per Justice Hilarion L. Aquino, with Associate Justices Cancio C. Garcia and Jose L. Sabio, Jr.,
concurring. Rollo, 47-51.
2
Rollo, 53.
Per Commissioner Victoriano R. Calaycay, with Presiding Commissioner Raul T. Aquino and
Commissioner Angelita A. Gacutan concurring. Rollo, 62-66.
4
Rollo, 135.
Id., 48, 55.
Id., 48.
Rollo, 54.
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8
Id., 61.
Id., 70.
10
Rollo, 67.
11
Id., 11-42.
12
Alcuaz v. Philippine School of Business Administration, G.R. No. 76353, 29 September 1989,
178 SCRA 135; National Mines and Allied Workers Union v. San Ildefonso CollegeRVM Sisters
Administration, G. R. No. 125039, 20 November 1998, 299 SCRA 24.
13
Section 1, Rule XIV, Book V, Omnibus Rules Implementing the Labor Code.
14
Escobin v. NLRC, G.R. No. 118159, 15 April 1998, 289 SCRA 48; Blue Diary Corporation v. NLRC,
G.R. No. 129843, 14 September 1999, 314 SCRA 401; Globe Telecom, Inc. v. FlorendoFlores, G.R. No. 150092, 27 September 2002, 390 SCRA 201.
15
Rollo, 68.
16
Rollo, 69.
17
Rollo, 50.
18
Reyes v. Maxims Tea House, G.R. No. 140853, 27 February 2003, 398 SCRA 288; See
also Manila Electric Company v. NLRC, G.R. No. 114129, 24 October 1996, 263 SCRA 531.
19
Rollo, 70.
20
Underscoring and italics supplied.
21
Reply to "Memorandum for the Respondents,"2; Rollo, 280 (Underscoring supplied).
22
Republic v. Sandiganbayan, G.R. No. 102508, 30 January 2002, 375 SCRA 145.
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SUPERSTAR SECURITY AGENCY VS NLRC

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 81493
April 3, 1990
SUPERSTAR SECURITY AGENCY, INC. and/or Col. ARTURO ANDRADA, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and FILOMENA HERMOSA, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioners.
Federico C. Leynes for private respondent.
MEDIALDEA, J.:
This petition for review on certiorari seeks to reverse the decision of the public respondent National
Labor Relations Commission setting aside the decision of the Labor Arbiter and ordering the
reinstatement of private respondent with limited backwages of one (1) year. This is an opportune time
to stress once again that the appropriate remedy to assail the decisions of the National Labor Relations
Commission is through a petition forcertiorari under Rule 65 not Rule 45 of the Rules of Court. However,
in the interest of justice, We shall treat this petition as a special civil action for certiorari (De Asis, et al.
v. NLRC, G.R. No. 82478, September 7, 1989).
The antecedent facts are as follows:
On June 24, 1981, Filomena Hermosa (Hermosa, for short) was hired by petitioner Superstar Security
Agency (Agency, for short) as a Security Guard with a daily salary of P37.00 and an emergency cost of
living allowance of P510.00 per month. She was assigned to different detachments in premises owned
by the Agency's clients such as the Supergarment Malugay Yakal (SMY) or Rustan Commercial
Corporation Warehouse, Rustan Group of Companies consisting of Rustan Commercial Corporation
(Cubao and Makati Detachments), Tourist Duty Free Shop (FTI Detachment, Hyatt, Hilton and Sheraton
Detachments), and Rustan Supermarket Warehouse (Rockefeller Detachment). On February 1, 1985, the
Agency placed Hermosa on a temporary "off-detail." On March 5, 1985, Hermosa filed a complaint for
illegal dismissal. She claimed that she was unceremoniously dismissed on suspicion that she was the
author of an anonymous report about the irregularities committed by her fellow lady security guards;
that it was this precise reason why she was called to the headquarters by the Agency's Personnel
Supervisor, Rafael Fermo; that, thereafter, Fermo threatened and directed her to keep any information
regarding the matter to herself; that she was instructed not to report for duty at SMY effective February
1, 1985 as she would be given a new assignment; that she did as she was told but no new assignment
came despite repeated follow-ups; and that instead, the Agency informed her that the cause of her
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temporary "off-detail" was the cost-cutting program of the Rustan Group of Companies and the refusal
of Agency's clients to accept her allegedly due to poor performance, and lack of elementary courtesy
and tact. Finally, Hermosa averted that she was denied due process in that she was neither informed of
the alleged complaints against her nor afforded the opportunity to explain her side.
Petitioners, on the other hand, claimed that Hermosa was relieved of her SMY post due to the costcutting program of its clients; that while she was on temporary "off-detail" since February 1, 1985, the
Agency continued to look for an available assignment for her with the other detachments; that,
however, the respective Security Directors of the said detachments signified their unwillingness to
accept her because of her poor performance and undesirable conduct and behavior (Exhs. 6 to 13); that
the Agency did not dismiss her at all; that Mr. Fermo did not receive any anonymous report of any
irregularity committed by some security guards, hence, there was no basis for the supposed threat and
instruction to complainant to be silent; that the Agency usually welcomes any report, if it exists,
regarding the behavior of its personnel by conducting an inquiry thereon; that the Agency is committed
to maintain the trust placed upon it by its clients as well as heed the latter's demands for good service;
and that the complainant has been previously warned and reprimanded for breach or violation of the
Agency's rules on discipline (Exh. 16 to 22).
On April 7, 1986, the Labor Arbiter rendered a decision, to wit:
WHEREFORE, pursuant to the above premises, the respondent Superstar Security Agency, Inc. is
hereby ordered to pay the complainant the amount of P3,848.00 by way of separation pay.
SO ORDERED. (Rollo, p. 26)
On appeal to the respondent National Labor Relations Commission, the aforesaid decision was set aside
and a decision favorable to complainant was issued, as follows:
WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE, and another one
entered, ordering the respondents to reinstate the complainant to her former position without
loss of seniority rights and other related benefits but with a limited backwages of one (1) year
without deduction and qualification.
SO ORDERED. (Rollo, pp. 20-21)
Hence, this recourse.
The sole issue presented for resolution is whether or not the petitioners are guilty of illegal dismissal
(Memorandum of Petitioners, p. 6; Rollo, p. 71).
We resolve the issue in the negative. The charge of illegal dismissal was prematurely filed.1wphi1 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.
(TSN, January 14, 1980, p. 35) 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. v. NLRC, et al., G.R. Nos. 82823-24,
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July 31, 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 under
Article 287 (now Article 286) of the Labor Code (see Agro case, supra). We note that Hermosa's "offdetail" from SMY was due not to petitioners' machination but to a previous request of SMY which was
reiterated by the management on January 29, 1985 (Exhibit "22," Records, p. 69). Moreover, the
defenses raised by the petitioners, namely, their clients' cost reduction program and their refusal to
accept the complainant's services do not appear to Us as a "scheme to camouflage (Hermosa's) illegal
dismissal . . ." (NLRC decision, Records, p. 201). We simply cannot ignore the reality of the situation
obtaining in this case. In the business world, companies which offer contracts for services cater to the
whims and wishes of clients whether the same are reasonable or not. Clients are not expected to explain
the reason for their demands while these companies are not only expected but also are bound to
comply with their clients' directives. In the case at bar, We do not find it unusual for clients to resort to a
cost-cutting program in view of the prevailing economic condition and then to manifest their
preferences of people they want to work with in their establishments.
Hermosa maintains that her temporary "off-detail" is a mere cover-up since petitioners failed to present
evidence to support their clients' cost-cutting program. We do not think so. Petitioners are neither
involved in their clients' businesses nor do they exercise control over the latter's business operations.
They only provide security to their clients' establishments. Consequently, the Agency has no right at all
to demand the reasons for their clients' action. Faced with its clients' negative reaction to Hermosa's
detail, petitioners are practically powerless to disregard the position of its clients. To do otherwise
would mean an end to petitioners' business relationship with them. Considering that it was only
Hermosa among petitioners' employees who was affected by the clients' memoranda, it would be sheer
foolishness for petitioners to press for Hermosa's detail to the detriment of its business. Justice, fairness
and due process demand that an employer should not be penalized for situations where it had no
participation or control (see M.F Violago Oiler Tank Trucks v. The National Labor Relations Commission,
et. al., G.R. Nos. 56950-51, September 30, 1982, 117 SCRA 544 and A. Marquez v. Leogardo, Jr., G.R. No.
63227, March 15, 1984, 128 SCRA 244).
Hermosa further argues that the clients' memoranda refusing her services are self-serving pieces of
evidence since they contained a general statement of "undesirable conduct and behavior" which were
secured after the complaint was filed. We are unconvinced. It must be borne in mind that at this point
Hermosa was still placed on temporary "off-detail." The fact that the clients' memoranda came after the
complaint bolsters the petitioners' stance that they were indeed looking for an available post for
Hermosa but their clients formally turned down its request. Such refusal was not without basis. The
offer of exhibits of petitioners before the Labor Arbiter reveals reports on Hermosa's past misconduct
like: (1) inspecting a bag containing purchased items of a Tourist Duty-Free Shop (TDFS) customer;
flaring up and talking in a loud voice upon being informed that a customer without plane ticket was
allowed to, purchase (TDFS) goods, both violative of (TDFS) rules and regulations; (2) reading magazines
for sale and comics inside the store; (3) shouting at an employee of a client; (4) uttering unnecessary
remarks while on duty which triggered a misunderstanding; and (5) wearing sexy shoes (sic) with an
opening at the toes instead of the usual authorized shoes for lady security guards (Exh. "16," "17," "18",
and "l 9," pp. 63-66). In the above infractions, the clients' respective Security Directors pursuant to an
established practice took charge of the investigation and copies of the memorandum of the action taken
thereon were furnished Hermosa and the Agency. Thus, the general statement of undesirable conduct
and behavior need not be spelled out since petitioners already had information of Hermosa's previous
misdemeanor.
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Hermosa denies that she committed the foregoing acts of misconduct. She claims that the "evidence
were planned and fabricated to lend a semblance of legality to the cause of (her) dismissal."
(memorandum of Petitioners, Rollo, p. 87). Hermosa's supposition is untenable. A study of the records
reveals that other than her statement of denial, Hermosa did not present any corroborative evidence.
Upon the other hand, the subject memoranda contained detailed reports on the incidents which would
be difficult for petitioners to concoct. In the absence of a contrary evidence, the said memoranda are
credible.
Considering, therefore, the circumstances of this case, We are more inclined to sustain the Labor
Arbiter's award of separation pay than reinstatement. As the Labor Arbiter aptly puts it:
. . . (I)f by reason of complainant's justified placement under temporary off-detail no dismissal
then could be spoken of, yet, by reason of subsequent events whereby she was rejected by the
other detachments of the respondent Agency, it could be said that her continuing temporary
off-detail has already become a permanent one. For this reason, there is a need to extend to the
complainant separation pay equivalent to one (1) month pay for every year of service. (Decision
of the Labor Arbiter, Rollo, p. 26)
ACCORDINGLY, the decision of the NLRC dated October 30, 1987 is SET ASIDE and the decision of the
Labor Arbiter dated April 7, 1986 is hereby REINSTATED. No costs.
SO ORDERED.
Narvasa, Gancayco and Grio-Aquino, JJ., concur.
Cruz, J., took no part.
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PEREZ VS PTNT
SUPREME COURT
Manila
EN BANC
G.R. No. 152048
April 7, 2009
FELIX B. PEREZ and AMANTE G. DORIA, Petitioners,

vs.
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, Respondents.
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,
19932 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
documents.4 (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.
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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 petitioners8 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
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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:
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(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
(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.
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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 include an actual hearing, it is not limited to a formal hearing only.
In other words, the existence of an actual, formal "trial-type" hearing, although preferred, is not
absolutely necessary to satisfy the 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.
xxxxxxxxx
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.
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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. NLRC28 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 disputes29 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:
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(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 15-day 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 theMODIFICATION 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
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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
CONCHITA CARPIO MORALES

Associate Justice
DANTE O. TINGA
Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
PRESBITERO J. VELASCO, JR.

Associate Justice
ANTONIO EDUARDO B. NACHURA

Associate Justice
TERESITA J. LEONARDO-DE CASTRO

Associate Justice
ARTURO D. BRION
Associate Justice
DIOSDADO M. PERALTA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
decision had been reached in consultation before the case was assigned to the writer of the opinion of
the Court.
REYNATO S. PUNO
Chief Justice
Footnotes
*
On official leave.
Records, pp. 70-71.
Id., pp. 72-73.
Id., pp. 74-75.
Id., p. 76.
Id., p. 39.
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6
Decision penned by Commissioner Ireneo B. Bernardo, and concurred in by Presiding

Commissioner Lourdes C. Javier and Commissioner Joaquin A. Tanodra.
7
Decision of the Court of Appeals, penned by Associate Justice (now retired Associate Justice of
the Supreme Court) Ruben T. Reyes, and concurred in by Associate Justices Renato C. Dacudao
and Mariano C. del Castillo of the Ninth Division of the Court of Appeals.
8
Rollo, p. 34.
Records, p. 107.
10
Commercial Motors Corporation v. Commissioners, et al., G.R. No. 14762, 10 December 1990,
192 SCRA 191, 197.
11
Santos v. NLRC, G.R. No. L-76991, October 28, 1988, 166 SCRA 759, 765. De Leon v. NLRC, G.R.
No. 52056, October 30, 1980, 100 SCRA 691, 700.
12
Labor Code, Book VI, Title 1, Art. 282 (c).
13
G.R. No. L-42724, 9 April 1985, 135 SCRA 569, 578.
14
Imperial Textile Mills, Inc. v. NLRC, G.R. No. 101527, 19 January 1993, 217 SCRA 237, 244-245.
15
Starlite Plastic Industrial Corp. v. NLRC, G.R. No. 78491, 16 March 1989, 171 SCRA 315, 324.
16
Omnibus Rules Implementing the Labor Code, Book VI, Rule 1, Sec. 2 (a) and (c).
17
Section 2(d), Rule I, Implementing Rules of Book VI of the Labor Code.
18
See Conte v. Palma, 332 Phil. 20 (1996) citing Kilusang Mayo Uno Labor Center v. Garcia, Jr.,
G.R. No. 115381, 23 December 1994, 239 SCRA 386.
19
Id. citing Lina Jr. v. Cario, G.R. No. 100127, 23 April 1993, 221 SCRA 515.
20
Implementing rules and regulations may not enlarge, alter or restrict the provisions of the law
they seek to implement; they cannot engraft additional requirements not contemplated by the
legislature (Pilipinas Kao, Inc. v. Court of Appeals, 423 Phil. 834 [2001]).
21
Websters Third New Collegiate International Dictionary Of The English Language Unabridged,
p. 74, 1993 edition.
22
Cafeteria Workers v. McElroy, 367 U.S. 886 (1961).
23
Gonzales v. Commission on Elections, G.R. No. 52789, 19 December 1980, 101 SCRA 752.
In the landmark case on administrative due process, Ang Tibay v. Court of Industrial
Relations (69 Phil. 635 [1940]), this Court laid down seven cardinal primary rights:
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(1) The first of these rights is the right to a hearing, which includes the right of the
party interested or affected to present his own case and submit evidence in support
thereof. x x x (2) Not only must the party be given an opportunity to present his case
and to adduce evidence tending to establish the rights which he asserts but the
tribunal must consider the evidence presented. x x x
24
Rizal CommercialBanking Corporation v. Commissioner of Internal Revenue, G.R. No. 168498,

16 June 2006, 491 SCRA 213.
25
G.R. No. 166363, 15 August 2006, 498 SCRA 639.
26
353 Phil. 419 (1998).
27
G.R. No. 165995, 14 August 2007, 530 SCRA 132.
28
353 Phil. 551 (1998).
29
See Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985) (Brennan J., concurring in
part and dissenting in part) citing Arnett v. Kennedy, 416 U.S. 134 (1974) (Marshall J.,
dissenting).
30
Omnibus Rules Implementing the Labor Code, Book V, Rule XXIII, Sec. 9, as amended by
Department of Labor and Employment Order No. 9 (1997).
31
Agabon v. NLRC, G.R. No. 158693, 17 November 2004, 442 SCRA 573, 610.
32
Panday v. NLRC, G.R. No. 67664, 20 May 1992, 209 SCRA 122, 126-127.
33
Sealand Service, Inc. v. NLRC, G.R. No. 90500, 5 October 1990, 190 SCRA 347, 355.
The Lawphil Project - Arellano Law Foundation
SEPARATE CONCURRING AND DISSENTING OPINION

VELASCO, JR., J.:
I concur in my esteemed colleagues well-written ponencia, except in one issue, to which I hereby
register my dissent.
In gist, the facts as contained in the ponencia show that Felix B. Perez and Amante G. Doria were
dismissed by the Philippine Telegraph and Telephone Company without a hearing or conference for a
series of allegedly anomalous transactions.
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The only issue covered by my dissent is, are Perez and Doria entitled to a hearing or conference as
mandated by Section 2(b), Rule XXIII, Implementing Rules of Book V of the Labor Code?
The ponencia resolved this in the negative and held that Sec. 2(b), Rule XXIII, Implementing Rules of
Book V,1 by requiring a hearing, went beyond the terms and provisions of the Labor Code, particularly
Article 277(b) thereof that merely requires the employer to provide employees with ample opportunity
to be heard and to defend themselves with the assistance of their representatives if they so desire. The
ponencia, however, conceded that 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. I submit that the actual hearing or conference
is mandatory in ALL dismissal cases for the following reasons:
(1) Art. 277(b) of the Labor Code provides that:
(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 aforequoted provision states that employees are to be given "ample" opportunity to be
heard and defend themselves. However, the word "ample" is vague and not defined in the said
provision. Since the meaning of this word is unclear, then it should be given a liberal
construction to favor labor. "Ample" means "considerably more than adequate or
sufficient."2 Ample opportunity can be construed to be broad enough to encompass an actual
hearing or conference. To be sure, opportunity to be heard does not exclude an actual or formal
hearing since such requirement would grant more than sufficient chance for an employee to be
heard and adduce evidence. In this sense, I believe there is no discrepancy between Art. 277 and
the Implementing Rule in question.
The Implementing Rules thus makes available for employees a considerably or generously
sufficient opportunity to defend themselves through a hearing or conference. In Tanala v. NLRC,
we said that:
With respect to the issue of whether petitioner was denied due process in the administrative
procedure entailed in his dismissal, we agree with the labor arbiter that petitioner was indeed
denied procedural due process therein. His dismissal was not preceded by any notice of the
charges against him and a hearing thereon. The twin requirements of notice and hearing
constitute the essential elements of due process in cases of dismissal of employees. The purpose
of the first requirement is obviously to enable the employee to defend himself against the
charge preferred against him by presenting and substantiating his version of the facts.
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Contrary to the findings of the NLRC, the notice of preventive suspension cannot be considered
as an adequate notice. Even the fact that petitioner submitted a written explanation after the
receipt of the order of suspension is not the "ample opportunity to be heard" contemplated by
law. Ample opportunity to be heard is especially accorded to the employee sought to be
dismissed after he is informed of the charges in order to give him an opportunity to refute such
accusations levelled against him.
Furthermore, this Court has repeatedly held that to meet the requirements of due process, the
law requires that an employer must furnish the worker sought to be dismissed with two written
notices before termination of employment can be legally effected, that is, (1) a notice which
apprises the employee of the particular acts or omissions for which his dismissal is sought; and
(2) the subsequent notice, after due hearing, which informs the employee of the employers
decision to dismiss him.3 (Emphasis supplied.)
(2) The ponencia seems to underscore the absence of any mention of an "actual hearing" in Art.
277(b). It is conceded that there is no explicit mention of an actual hearing or conference in said
legal provision. As earlier discussed, the requisite hearing is captured in the phrase "ample
opportunity to be heard and to defend himself with the assistance of his representative if he so
desires." Even if the phrase "actual hearing" is not specified in Art. 277(b), the same thing is true
with respect to the second written notice informing the employee of the employers decision
which is likewise unclear in said provision. Thus, the fact that Art. 277(b) does not expressly
mention actual hearing in Art. 277(b) does not bar the Secretary of Labor from issuing a rule
(Sec. 2[d][ii], Rule I, Implementing Rules of Book VI of the Labor Code) implementing the
provision that what really is meant is an actual hearing or conference. It should be noted that
the Secretary of Labor also issued a rule on the need for a second written notice on the decision
rendered in the illegal dismissal proceedings despite the silence of Art. 277(b) on the need for a
written notice of the employers decision.
(3) The majority opinion cites the rule in statutory construction that in case of discrepancy
between the basic law and its implementing rules, the basic law prevails. In the case at bar, said
principle does not apply because precisely there is no clear-cut discrepancy between Art. 277(b)
of the Labor Code and Sec. 2(b), Rule XXIII, Implementing Rules of Book V of the Labor Code. To
the extent of being repetitive the phrase "ample opportunity to be heard" can be construed to
cover an actual hearing. This way, Sec. 2(b), Rule XXIII does not conflict with nor contravene Art.
277(b).
(4) Art. 4 of the Labor Code states that "all 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." Since the law itself invests the Department of Labor and Employment
(DOLE) the power to promulgate rules and regulations to set the standard guidelines for the
realization of the provision, then the Implementing Rules should be liberally construed to favor
labor. The Implementing Rules, being a product of such rule-making power, has the force and
effect of law. Art. 277 of the Labor Code granted the DOLE the authority to develop the
guidelines to enforce the process. In accordance with the mandate of the law, the DOLE
developed Rule I, Sec. 2(d) of the Implementing Rules of Book VI of the Labor Code which
provides that:
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For termination of employment based on just causes 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.
consideration of all the circumstances, grounds have been established to justify his
termination.
In any case, the standards of due process contained in Sec. 2(b), Rule XXIII, Implementing Rules
of Book V of the Labor Code, and now in Sec. 2(d)(ii), Rule I, Implementing Rules of Books VI of
the Labor Code, do not go beyond the terms and provisions of the Labor Code. The
Implementing Rules merely encapsulates a vague concept into a concrete idea. In what forum
can an employer provide employees with an ample opportunity to be heard and defend
themselves with the assistance of a representative? This situation can only take place in a formal
hearing or conference which the Implementing Rules provides. The employees may only be fully
afforded a chance to respond to the charges made against them, present their evidence, or
rebut the evidence presented against them in a formal hearing or conference. Therefore, in my
humble opinion, there is no discrepancy between the law and the rules implementing the Labor
Code.
(5) In addition, the hearing or conference requirement in termination cases finds support in the
long standing jurisprudence in Ang Tibay v. Court of Industrial Relations, wherein we declared
that the right to a hearing is one of the cardinal primary rights4 which must be respected even in
cases of administrative character. We held:
There are cardinal rights which must be respected even in proceedings of this character. The
first of these rights is the right to a hearing, which includes the right of the party interested or
affected to present his own case and submit evidence in support thereof. Not only must the
party be given an opportunity to present his case and to adduce evidence tending to establish
the rights which he asserts but the tribunal must consider the evidence presented.
This Court has recognized even the right of students to a summary proceeding, in which (a) the
students must be informed in writing of the nature and cause of any accusation against them;
(b) they shall have the right to answer the charges against them, with the assistance of counsel,
if they so desire; (c) they shall be informed of the evidence against them; (d) they shall have the
right to adduce evidence in their own behalf; and (e) the evidence must be duly considered by
the investigating committee or official designated by the school authorities to hear and decide
the case.5
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If administrative cases recognized that the right to a hearing is a "cardinal primary right" and
students are afforded the opportunity to defend themselves by allowing them to answer the
charges through their counsel and by adducing their evidence to rebut the charges, what more
for employees or laborers in the private sector who are specifically protected by the
Constitutions social justice provision? It would be unjust to the laborers if they are not afforded
the same chance given to students or even to employees in administrative cases.
(6) Removing the right of employees to a hearing prior to termination would deprive them the
opportunity to adduce their evidence. Notice can be taken of the limited opportunity given to
the employees by the directive in the first written notice that embodies the charges. More often
than not, the directive is only for the employees to explain their side without affording them the
right to present evidence. Furthermore, a hearing gives employees the chance to hire the
services of counsel whose presence is beneficial to employees during hearings because the
counsel knows the intricacies of the law and the strategies to defend the clientsomething
with which a lay person is most assuredly not familiar. A mere first notice is not sufficient
enough for employees to assemble evidence for their defense. Most often, the first notice
merely serves as or is limited to a general notice which cites the company rules that were
allegedly violated by the employees without explaining in detail the facts and circumstances
pertinent to the charges and without attaching the pieces of evidence supporting the same.
Lastly, the holding of an actual hearing will prevent the railroading of dismissal of employees as
the employers are obliged to present convincing evidence to support the charges. All in all, the
advantages far outweigh the disadvantages in holding an actual hearing.
(7) The indispensability of a hearing is advantageous to both the employer and the employee
because they are given the opportunity to settle the dispute or resort to the use of alternative
dispute resolution to deflect the filing of cases with the NLRC and later the courts. It is important
that a hearing is prescribed by the law since this is the best time that the possibility of a
compromise agreement or a settlement can be exhaustively discussed and entered into. During
this hearing, the relations of the parties may not be that strained and, therefore, they are more
likely receptive to a compromise. Once dismissal is ordered by the employer, the deteriorated
relationship renders the possibility of an amicable settlement almost nil. Thus, a hearing can
help the parties come up with a settlement that will benefit them and encourage an out-ofcourt settlement which would be less expensive, creating a "win-win" situation for them. Of
course the compromise agreement, as a product of the settlement, should be subscribed and
sworn to before the labor official or arbiter.
(8) Recent holdings of this Court have explained the propriety and necessity of an actual hearing
or conference before an employee is dismissed. In King of Kings Transport, Inc. v.
Mamac,6 reiterated in R.B. Michael Press v. Galit,7 we explained that the requirement of a
hearing or conference is a necessary and indispensable element of procedural due process in
the termination of employees, thus:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are
given the opportunity to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that
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management must accord to the employees to enable them to prepare adequately for
their defense. This should be construed as a period of at least five (5) calendar days
from receipt of the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve as basis for
the charge against the employees. A general description of the charge will not suffice.
Lastly, the notice should specifically mention which company rules, if any, are violated
and/or which among the grounds under Art. 282 is being charged against the
employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing
or conference wherein the employees will be given the opportunity to: (1) explain and
clarify their defenses to the charge against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or counsel of their
choice. Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered; and
(2) grounds have been established to justify the severance of their employment.8
(9) Lastly, a liberal interpretation of Art. 277(b) of the Labor Code would be in keeping with Art.
XIII of the Constitution which dictates the promotion of social justice and ordains full protection
to labor. The basic tenet of social justice is that "those who have less in life must have more in
law." Social justice commands the protection by the State of the needy and the less fortunate
members of society. This command becomes all the more firm in labor cases where security of
tenure is also an issue. In Rance v. NLRC, we declared that:
It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of the
New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social justice.
When a person has no property, his job may possibly be his only possession or means of livelihood.
Therefore, he should be protected against any arbitrary deprivation of his job. Article 280 of the Labor
Code has construed security of tenure as meaning that "the employer shall not terminate the services of
an employee except for a just cause or when authorized by" the code (Bundoc v. Peoples Bank and
Trust Company, 103 SCRA 599 [1981]). Dismissal is not justified for being arbitrary where the workers
were denied due process (Reyes v. Philippine Duplicators, Inc., 109 SCRA 489 [1981]) and a clear denial
of due process, or constitutional right must be safeguarded against at all times, (De Leon v. National
Labor Relations Commission, 100 SCRA 691 [1980]).9
Between an employer and an employee, the latter is oftentimes on the losing or inferior position.
Without the mandatory requirement of a hearing, employees may be unjustly terminated from their
work, effectively losing their means of livelihood. The right of persons to their work is considered a
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property right which is well within the meaning of the constitutional guarantee.10 Depriving employees
their job without due process essentially amounts to a deprivation of property without due process.
We have applied social justice even to cases of just dismissal to grant equitable relief to laborers who
were validly dismissed. We also termed social justice as "compassionate" justice.11 Thus, the State
should always show compassion and afford protection to those who are in most needthe laborers.
Knowing that poverty and gross inequality are among the major problems of our country, then laws and
procedures which have the aim of alleviating those problems should be liberally construed and
interpreted in favor of the underprivileged. Thus, social legislations, such as the Labor Code, should be
liberally construed to attain its laudable objectives.12
PRESBITERO J. VELASCO, JR.
Associate Justice
Footnotes
1
Now only Sec. 2(d)(ii), Rule I, Implementing Rules of Book VI of the Labor Code remains, as
amended by Department Order No. 40-03, Series of 2003.
2
Websters Third New International Dictionary of the English Language Unabridged 74 (1993).
G.R. No. 116588, January 24, 1996, 252 SCRA 314, 320-321.
69 Phil. 635, 641-644 (1940).
Guzman v. National University, No. L-68288, July 11, 1986, 142 SCRA 699, 706-707.
G.R. No. 166208, June 29, 2007, 526 SCRA 116.
G.R. No. 153510, February 13, 2008, 545 SCRA 23.
King of Kings Transport, Inc., supra at 125-126.
No. L-68147, June 30, 1988, 163 SCRA 279, 284-285.
10
Batangas Laguna Tayabas Bus Co. v. Court of Appeals, No. L-38482, June 18, 1976, 71 SCRA
470, 480.
11
Tanala, supra note 3, at 320.
12
Manahan v. Employees Compensation Commission, No. L-44899, April 22, 1981, 104 SCRA
198, 202.
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The Lawphil Project - Arellano Law Foundation
CONCURRING OPINION
BRION, J.:
I fully concur with the ponencia of my esteemed colleague, Associate Justice Renato C. Corona. I add
these views on the specific issue of whether actual hearing is a mandatory requirement in a termination
of employment situation.
The petitioners position that a formal hearing should be an absolute requirement whose absence
signifies the non-observance of procedural due process is an unduly strict view and is not at all what
procedural due process requires. This is not the intent behind the Labor Code whose pertinent provision
reads:
ART. 277.
xxx
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just or authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the workers 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 defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated pursuant
to the guidelines set by the Department of Labor and Employment. Any decision taken by the employer
shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by
filing a complaint with the regional branch of the National Labor Relations Commission. The burden of
proving that the termination was for a valid or authorized cause shall rest on the employer.
The Secretary of Labor and Employment may suspend the effects of the termination pending resolution
of the dispute in the event of prima facie finding by the appropriate official of the Department of Labor
and Employment before whom such dispute is pending that the termination may cause a serious labor
dispute or is in implementation of a mass layoff. (as amended by Republic Act No. 6715)
Historical Roots
At its most basic, procedural due process is about fairness in the mode of procedure to be followed. It is
not a novel concept, but one that traces its roots in the common law principle of natural justice.
Natural justice connotes the requirement that administrative tribunals, when reaching a decision, must
do so with procedural fairness. If they err, the superior courts will step in to quash the decision by
certiorari or prevent the error by a writ of prohibition.1 The requirement was initially applied in a purely
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judicial context, but was subsequently extended to executive regulatory fact-finding, as the
administrative powers of the English justices of the peace were transferred to administrative bodies that
were required to adopt some of the procedures reminiscent of those used in a courtroom. Natural
justice was comprised of two main sub-rules: audi alteram partem2 that a person must know the case
against him and be given an opportunity to answer it; and nemo judex in sua cause debe esse3 - the rule
against bias. Still much later, the natural justice principle gave rise to the duty to be fair to cover
governmental decisions which cannot be characterized as judicial or quasi-judicial in nature.4
While the audi alteram partem rule provided for the right to be notified of the case against him, the
right to bring evidence, and to make argument whether in the traditional judicial or the administrative
setting common law maintained a distinction between the two settings. "An administrative tribunal
had a duty to act in good faith and to listen fairly to both sides, but not to treat the question as if it were
a trial. There would be no need to examine under oath, nor even to examine witnesses at all. Any other
procedure could be utilized which would obtain the information required, as long as the parties had an
opportunity to know and to contradict anything which might be prejudicial to their case."5
In the U.S., the due process clause of the U.S. Constitution6 provides the guarantee for procedural due
process, and has used a general balancing formula to identify the procedural guarantees appropriate to
a particular context.7 In Mathews v. Eldridge,8 Justice Powell articulated this approach when he said:
In recent years this Court increasingly has had occasion to consider the extent to which due process
requires an evidentiary hearing prior to the deprivation of some type of property interest even if such
hearing is provided thereafter. In only one case, Goldberg v. Kelly, has the Court ruled that a hearing
closely approximating a judicial trial is necessary. In other cases requiring some type of pretermination
hearing as a matter of constitutional right, the Court has spoken sparingly about the requisite
procedures. [Our] decisions underscore the truism that "[d]ue process, unlike some legal rules, is not a
technical conception with a fixed content, unrelated to time, place and circumstances. [Due process] is
flexible and calls for such procedural protections as the particular situation demands." Accordingly, the
resolution of the issue whether the administrative procedures provided here are constitutionally
sufficient requires analysis of the governmental and private interests that are affected. More precisely,
our prior decisions indicate that identification of the specific dictates of due process generally requires
consideration of three distinct factors: first, the private interest that will be affected by the official
action; second, the risk of an erroneous deprivation of such interest through the procedures used, and
the probable value, if any, of additional or substitute procedural safeguards; and finally, the
Governments interest, including the function involved and the fiscal and administrative burdens that
the additional or substitute procedural requirement would entail.
Thus, the U.S. approach is to calibrate the procedural processes to be observed in administrative cases
based on specifically defined parameters.
Significantly in the U.S., the same common law root that gave rise to the concept of natural justice and
the duty to be fair, branched out into the doctrine of fair procedure applicable to specific private sector
actors due to their overwhelming economic power within certain fields (e.g., professional associations,
unions, hospitals, and insurance companies). The doctrine requires notice and hearing,9 but to an extent
slightly less than procedural due process; thus, when an association has clearly given a person the
benefit of far more procedural protections than he would have been entitled to from a government
entity, he has received the benefit of fair procedure and has no cause of action for the mildly adverse
action that resulted.10
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Philippine Due Process Requirement

Article III, Section 1 of the Philippine Constitution contains the constitutional guarantee against denial of
due process,11 and is a direct transplant from an American root the Bill of Rights of the American
Constitution.12 As in the U.S., our jurisprudence has distinguished between the constitutional guarantee
of due process that applies to state action, and the statutory due process guarantee under the Labor
Code that applies to private employers.13 The Labor Code provision, quoted above, is implemented
under the Rules Implementing the Labor Code which provides that
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.
For termination of employment as defined in Article 283 of the Labor Code, the requirement of due
process shall be deemed complied with upon service of a written notice to the employee and the
appropriate Regional Office of the Department of Labor and Employment at least thirty days before
effectivity of the termination, specifying the ground or grounds for termination.
If the termination is brought about by the completion of a contract or phase thereof, or by failure of an
employee to meet the standards of the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee within a reasonable time from the effective date
of termination.14
Jurisprudence has expounded on the guarantee and its implementation by reiterating that the employer
must furnish the worker to be dismissed with two written notices before termination of employment
can be effected: a first written notice that informs the worker of the particular acts or omissions for
which his or her dismissal is sought, and a second written notice which informs the worker of the
employers decision to dismiss him.15Between these two notices, the worker must be afforded ample
opportunity to be heard in the manner the ponencia has very ably discussed.
The Confusion and Submission
Apparently, confusion has resulted in construing what "ample opportunity to be heard" requires
because the implementing rules of the Labor Code themselves require that there be an actual hearing
despite the clear text of the Labor Code that only requires ample opportunity to be heard.
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I submit that in the absence of a clear legislative intent that what is intended is an actual hearing, the
Court cannot construe the statutory procedural due process guaranty as an absolute requirement for an
actual hearing in the way that at least two cases, namely King of Kings of Transport, Inc. v. Mamac16 and
R.B. Michael Press v. Galit17now require.
a. Historical Reason.
Procedural due process cannot be read completely dissociated from its roots. While the concept
of procedural fairness that it embodies originated as a requirement in judicial proceedings, the
concept has been extended to procedures that were not strictly judicial as regulatory factfinding
was devolved and delegated to administrative tribunals. The devolution was driven by need; it
was beyond the capability of the courts to attend to the ever-increasing demands of regulation
as society became increasingly complex. As discussed above, a trial-type procedure is not an
absolute necessity in administrative due process. In fact, in the U.S., not every administrative
decision-making requires a hearing.18 As the U.S. Supreme Court stated in the Mathews ruling
we quoted above: "[d]ue process, unlike some legal rules, is not a technical conception with a
fixed content unrelated to time, place and circumstances. [Due process] is flexible and calls for
such procedural protections as the particular situation demands."19 [Italics supplied]
b. Philippine Procedural Due Process Developments.
Our Constitution does not expressly define the principles that embody due process, as it is a
concept intended to counterbalance a flexible power of state police power. Early on,
jurisprudence has recognized distinctions between procedural due process in judicial
proceedings and in administrative proceedings.
In a long line of cases starting with Banco Espanol v. Palanca,20 the requirements of procedural
due process in judicial proceedings have been defined.21 In these proceedings, the quantum of
evidence that the prosecution must meet in criminal cases is proof beyond reasonable
doubt,22 while in civil cases the standard has been described as "preponderance of
evidence."23 The requirements of procedural due process in administrative proceedings have
been similarly defined in the early case of Ang Tibay v. CIR.24The proof required in these
proceedings is the lower standard of "substantial evidence."25
The quantum of evidence required in these proceedings impacts on their hearing requirements.
While both judicial and administrative proceedings require a hearing and the opportunity to be
heard, they differ with respect to the hearing required before a decision can be made. In
criminal cases where a constitutional presumption of innocence exists, procedural judicial due
process requires that judgment be rendered upon lawful hearing where factual issues are tested
through direct and cross-examination of witnesses to arrive at proof beyond reasonable doubt.
In civil cases, evidentiary hearings are likewise a must to establish the required preponderance
of evidence.26 Administrative due process, on the other hand, requires that the decision be
rendered on the evidence presented at the hearing, or at least contained in the record and
disclosed to the parties concerned.27 Thus, substantial reasons justify the variance in the hearing
requirements for these proceedings.
c. Due Process in the Private Employment Setting.
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Separately from the requirement of due process when State action is involved, the Constitution
also guarantees security of tenure to labor,28 which the Labor Code implements by requiring
that there be a just or authorized cause before an employer can terminate the services of a
worker.29 This is the equivalent of and what would have satisfied substantive due process had a
State action been involved. The equivalent of procedural due process is detailed under Article
277 of the Labor Code, heretofore quoted, which requires notice and ample opportunity to be
heard, both of which are fleshed out in the Implementing Rules of Book VI and in Rule XXIII of
Department Order No. 9, Series of 1997, of the Department of Labor.
Thus, from the concept of due process being a limitation on state action, the concept has been
applied by statute in implementing the guarantee of security of tenure in the private sector. In
Serrano v. NLRC,30 we had the occasion to draw the fine distinction between constitutional due
process that applies to governmental action, and the due process requirement imposed by a
statute as a limitation on the exercise of private power. Noting the distinctions between
constitutional due process and the statutory duty imposed by the Labor Code, the Court thus
decided in Agabon v. NLRC31 to treat the effects of failure to comply differently.
d. No Actual Hearing Requirement in the Labor Code.
That an actual hearing in every case is not intended by the Labor Code in dismissal situations is
supported by its express wording that only requires an "ample opportunity to be heard," not the
"hearing or conference" that its implementing rules require.
The "ample opportunity" required to be provided by the employer is similar in character to the process
required in administrative proceedings where, as explained above, an actual hearing is not an absolute
necessity. To be sure, it cannot refer to, or be compared with, the requirements of a judicial proceeding
whose strict demands necessarily require a formal hearing.
"Judicial declarations are rich to the effect that the essence of due process is simply an opportunity to
be heard, or as applied to administrative proceedings, an opportunity to explain ones side. A formal or
trial type hearing is not at all times and in all circumstances essential to due process, the requirements
of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their
side in the controversy."32 In Arboleda v. NLRC,33 we held that:
The requirement of notice and hearing in termination cases does not connote full adversarial
proceedings as elucidated in numerous cases decided by this Court. Actual adversarial proceedings
become necessary only for clarification or when there is a need to propound searching questions to
witnesses who give vague testimonies. This is a procedural right that the employee must ask for since it
is not an inherent right, and summary proceedings may be conducted thereon.
To the same effect is the following statement of Mr. Chief Justice Reynato S. Puno, albeit in a dissenting
opinion, in Agabon: "[t]his is not to hold that a trial-type proceeding is required to be conducted by
employers. Hearings before the employers prior to the dismissal are in the nature of and akin to
administrative due process which is free from the rigidity of certain procedural requirements," citing Mr.
Justice Laurels dictum in the landmark Ang Tibay v. Court of Industrial Relations. We have even held in
China Banking Corporation v. Borromeo34 that no formal administrative investigation is necessary in the
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process of dismissing an employee where the employee expressly admitted his infraction. All that is
needed is to inform the employee of the findings of management.
The identity of the actor should not also be lost on us in considering the "ample opportunity"
requirement. Judicial and quasi-judicial processes are undertaken by the state, while the dismissal action
the Labor Code regulates is undertaken by a private sector employer. A distinction between these actors
ought to be recognized and given a proper valuation in considering the processes required from each.
Due process in the private realm does not address an all-powerful State clothed with police power and
the powers of taxation and eminent domain; it merely addresses a private sector-employer who,
constitutionally, shares the same responsibility with the worker for industrial peace, and who is also
entitled to reasonable returns on investments and to expansion and growth.35Proportionality with the
power sought to be limited dictates that due process in its flexible signification be applied to a private
sector dismissal situation, ensuring only that there is fairness at all times so that the constitutional
guarantee of security of tenure is not defeated. Thus, the required processes in a private sector
dismissal situation should, at the most, be equivalent to those required in administrative proceedings;
whether an actual hearing would be required should depend on the circumstances of each case.
Last but not the least, reasonableness and practicality dictate against an actual hearing requirement in
every case of dismissal. There are simply too many variables to consider in the private sector dismissal
situation ranging from the circumstances of the employer, those of the employee, the presence of a
union, and the attendant circumstances of the dismissal itself so that a hard and fast actual hearing
requirement may already be unreasonable for being way beyond what the statutory procedural due
process requirement demands. Such a requirement can also substantially tie-up management
operations and defeat the efficiency, growth and the profits that management and employees mutually
need.
To recapitulate, the "ample opportunity to be heard" the Labor Code expressly requires does not mean
an actual hearing in every dismissal action by the employer; whether an actual hearing would be
required depends on the circumstances of each case as each particular situation demands. Thus, the
identical rulings in King of Kings of Transport, Inc. vs. Mamac36 and R.B. Michael Press vs. Galit37 that an
actual hearing is a mandatory requirement in employee dismissal should now be read with our present
ruling in mind. The Department of Labor and Employment should as well be on notice that this ruling is
the legally correct interpretation of Rule I, Section (2)(d)(ii) of Book VI of the Rules to Implement the
Labor Code.
ARTURO D. BRION
Associate Justice
Footnotes
1
See: Jones, D.P. and De Villars A., Principles of Administrative Law (1985 ed.), pp. 148-149.
Literally, "let the other side be heard."
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3
"No one can be the judge in his own cause."
Supra note 1, pp. 157-160, citing Ridge v. Baldwin, [1963] 2 All E.R. 66 (H.L.)
Supra note 1, p. 200.
UNITED STATES Constitution, 14th Amendment.
See: Gunther, Constitutional Law, (11th ed.), pp. 583-585.
425 U.S. 319 (1976).
See: Potvin v. Metropolitan Life Insurance Co., 22 Cal. 4th 1060 (2000).
10
Dougherty v. Haag, 165 Cal. App. 4th 315 (2008).
11
No person shall be denied the right to life, liberty or property without due process of law, nor
shall any person be denied the equal protection of the laws.
12
Supra note 6.
13
Serrano v. NLRC, G.R. No. 117040, January 27, 2000, 323 SCRA 44; Agabon v. NLRC, G.R. No.
158693, Nov. 17, 2004, 442 SCRA 573.
14
Implementing Rules of Book VI of the Labor Code, Rule 1, Section 2, as amended by

Department Order No. 10, series of 1997.
15
Tiu v. NLRC, G.R. No. 83433, November 12, 1992, 215 SCRA 540; see also: Serrano and Agabon
cases, supra note 13.
16
G.R. No. 166208, June 29, 2007, 526 SCRA 116.
17
18
Supra note 7.
19
Supra note 8.
20
37 Phil. 921 (1918).
21
The requirements of due process in judicial proceedings are as follows: 1) an impartial court or
tribunal clothed with judicial power to hear and determine the matter before it; 2) jurisdiction
lawfully acquired over the person of the defendant and over the property which is the subject
matter of the proceeding; 3) an opportunity to be heard afforded to the defendant; and 4)
judgment rendered upon lawful hearing.
22
People v. Berroya, G.R. No. 122487, December 12, 1997, 283 SCRA 111.
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23
Supreme Transliner, Incorporated v. Court of Appeals, G.R. No. 125356, November 21,
2001, 370 SCRA 41.
24
69 Phil. 635 (1940); the observance of due process in administrative proceedings requires the
following: (1) the right to a hearing, which includes the right of the party interested to present
his own case and submit evidence in support thereof; (2) the tribunal must consider the
evidence presented; (3) the decision must be supported by evidence; (4) the evidence must be
substantial; (5) the decision must be rendered on the evidence present at the hearing, or at
least contained in the record and disclosed to the parties affected; (6) the administrative body
or any of its judges must act on its or his own independent consideration of the law and facts of
the controversy, and not simply accept the views of a subordinate; and (7) the administrative
body should, in all controversial questions, render its decision in such a manner that the parties
to the proceeding can know the various issues involved, and the reasons for the decisions
rendered.
25
Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion. See Domasig v. National Labor Relations Commission, G.R. No. 118101,
September 16, 1996, 261 SCRA 779.
26
See People v. Dapitan, G.R. No. 90625, May 23, 1991, 197 SCRA 378, citing People v. Castillo,
76 Phil. 72 (1946); Banco Espaol de Filipino v. Palanca, supra at note 20; Macabingkil v. Yatco,
21 SCRA 150 (1967); Apurillo v. Garciano, 28 SCRA 1054 (1969); Shell Company of the
Philippines, Ltd. v. Enage, 49 SCRA 416 (1973); Lorenzana v. Cayetano, 68 SCRA 485 (1975).
27
Cuenca v. Atas, G.R. No. 146214, October 5, 2007, 535 SCRA 48; Alliance of Democratic Free
Labor Organization v. Laguesma, G.R. No. 108625, March 11, 1996, 254 SCRA 565.
28
CONSTITUTION, Article XIII, Section 3, par. 2.
29
LABOR CODE, Article 279.
30
Supra note 13.
31
G.R. No. 158693, November 17, 2004, 442 SCRA 573.
32
Neeco III v. NLRC, G.R. No. 157603, June 23, 2005, 461 SCRA 169.
33
34
G.R. No. 156515, October 19, 2004, 440 SCRA 621.
35
CONSTITUTION, Article XIII, Section 3, pars. 3 and 4.
36
Supra note 16.
37
Supra note 17.
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GLOBE MACKAY CABLE AND RADIO CORP. VS NLRC

SUPREME COURT
Manila
EN BANC
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.
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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?
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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
reinstatement. 6 (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
entitled to reinstatement without loss of seniority rights and to backwages." 7 (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 to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits is may be provided by law. 10 (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:
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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
humane conditions of work. The State may provide for compulsory arbitration. 11
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-avis 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,
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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 above-cited 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
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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.
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Paras, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr. and Nocon, JJ., concur.
Cruz, J., concurs in the result.
Gutierrez, Jr., Feliciano and Padilla, JJ., took no part.
Separate Opinions
MELENCIO-HERRERA, J., dissenting:

I believe there is just cause for dismissal per investigative findings. (See Decision, p. 2.)
Narvasa C.J., concurs
Separate Opinions
MELENCIO-HERRERA, J., dissenting:
I believe there is just cause for dismissal per investigative findings. (See Decision, p. 2.)
Narvasa C.J., concurs
Footnotes
1 Records, pp. 34-43.
2 Records, p. 22.
3 Ibid, p.121.
4 Rollo, p. 149.
5 Soriano v. NLRC, G.R. No. 75510, October 27, 1987, 155 SCRA 124.
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6 Pres. Decree No. 442, as amended by Rep. Act No. 6715.

7 LABOR CODE (1991), Book VI, Rule 1, Secs. 2 and 3.
8 CONST., Art. XIII, Sec. 1, par. (1).
9 CONST., Art. XIII.
10 CONST., Art. XIII, Sec. 3, pars. (1) and (2)
11 CONST. (1973), Art. II, Sec. 9.
12 CONCOM Record, Vol. 2, p. 681.
13 The following provision on security of tenure is embodied in Article 279, Labor Code,
reproduced herein but with the amendments inserted by Republic Act No. 6715
approved on March 2, 1989 in bold type:
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
reinstatement.
14 The application of Article 279 is illustrated in the following cases: Santos Salao v.
NLRC, G.R. No. 9O786, September 21, 1991; Morales v. NLRC, G.R. 91501, August 2,
1990, 188 SCRA 295; Carandang v. Dulay, G.R. 90492, July 30, 1990, 188 SCRA 792; and
Santos v. NLRC, No. 76721, September 21, 1987, 154 SCRA 166.
15 Webster's New Twentieth Century Dictionary.
16 Balaquezon EWTU v. Zamora, Nos. L-46766-7, April 1, 1980, 97 SCRA 5.
17 San Miguel Corporation v. Deputy Minister of Labor and Employmet, No. 58927,
October 27, 1986, 145 SCRA 204.
18 Hydro Resources Contractors Corporation v. Pagalibuan, G.R. 62909, April 18, 1989,
172 SCRA 404.
19 Century Textile Mills, Inc. v. NLRC, No. 77859, May 25, 1988, 161 SCRA 528.
20 Gubac v. NLRC, G.R. No. 81946, July 13, 1990, 187 SCRA 412
21 Sealand Service, Inc. v. NLRC, G.R. No. 90500, Occtober 5, 1990, 190 SCRA 347.
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22 Commercial Motors Corporation v. Commissioners, G.R. No. 74762, December 10,

1990, 192 SCRA 191; DeVera v. NLRC, G.R. No. 93212, November 22, 1990, 191 SCRA
632; Orcino v. Civil Service Commission, G.R. No. 92864, October 18, 1990, 190 SCRA
815; Maglutac v. NLRC/ Conmart v. NLRC,G.R. No. 78637, September 21, 1990,189 SCRA
767; Carandang v. Dulay, G.R. No. 90942, August 20, 1990, 188 SC RA 792; Esmalin v.
NLRC, G.R. No. 67880, September 15,1989, 177 SCRA 537; Fernandez v. NLRC, G.R. No.
84302, August 10, 1989, 176 SCRA 269; Quezon Electric Cooperative v. NLRC, G.R. Nos.
79718-22, April 12,1989, 172 SCRA 88, Bautista v. Inciong, No. 52824, March 16, 1988,
158 SCRA 665; Citytrust Finance Corp. v. NLRC, No.75740, January 15, 1988, 157 SCRA
87; Asiaworld Publishing House, Inc. v. Ople No. 56398, July 23, 1987, 152 SCRA 219; and
Divine Word High Schol v. NLRC, No. 72207, August 6, 1986, 143 SCRA 346
23 Chua Qua v. Clave, G.R.No. 49549, August 30,1990,189 SCRA 117; Gold City
Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, September 21, 1990 189 SCRA
881 ; ALU v. NLRC, G.R. Nos. 83886-87, September 20,1990, 189 SCRA 743; and Pizza Inn
v. NLRC, No. 74531, June 28, 1988, 162 SCRA 773.
24 Maglutac v. NLRC, G.R. No. 78345, September 21, 1990, 189 SCRA 767; Conmart v.
NLRC, G.R. No. 78637, 189 SCRA 767; De Vera v. NLRC, G.R. No. 93212, November 22,
1990, 191 SCRA 632; Commercial Motors Corp. v. Commissioners, G.R. No. 74762,
December 10, 1990, 192 SCRA 191; Sealand Service, Inc. v. NLRC, G.R. No. 90500,
October 5, 1990, 190 SRCA 347.
25 LABOR CODE, Art. 279.
26 R. AGPALO, STATUTORY CONSTRUCTION, p 94 (1990).
27 Aparri v. Court of Appeals , G.R. No. 30057, January 31, 1984 231 SCRA 241
28 Asiaworld Publishing House, Inc. v. Ople, No. 569393, July 23, 1987, 152 SCRA 219
29 Citytrust Finance Corp. v. NLRC, No. 75740, January 15, 1988, 157 SCRA 87
30 Bautista v. Inciong, No. 52824, March 16, 1988, 158 SCRA 665.
31 Esmalin v. NLRC, G.R. No. 67880, September 15, 1989, 177 SCRA 537.
32 Maglutac v. NLRC, G.R. No. 78345, September 21, 1990, 189 SCRA 767.
33 Anscor Transport and Terminals v. NLRC, G.R. No. 85894, September 28, 1990, 190
SCRA 147.
34 Sibal v. Notre Dame of Greater Manila, G.R. No. 75093, February 23, 1990 182 SCRA
538.
35 Reyes v. Zamora, No. L-46732, May 5, 1979, 90 SCRA 92; De Vera v. NLRC and BPI,
G.R. No. 93070, August 9, 1991.
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36 Rollo, pp. 29 and 35.
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BUSTAMANTE VS NLRC
SUPREME COURT
Manila
ENC BANC
G.R. No. 111651 November 28, 1996

OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE, MARIO D.
SUMONOD, and SABU J. LAMARAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and EVERGREEN FARMS,
INC.respondents.
RESOLUTION
PADILLA, J.:
On 15 March 1996, the Court (First Division) promulgated a decision in this case, the dispositive part of
which states:
WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May
1993 is modified in that its deletion of the award for backwages in favor of petitioners,
is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the
modification that backwages shall be paid to petitioners from the time of their illegal
dismissal on 25 June 1990 up to the date of their reinstatement. If reinstatement is no
longer feasible, a one-month salary shall be paid the petitioners as ordered in the labor
arbiter's decision, in addition to the adjudged backwages.
Private respondent now moves to reconsider the decision on grounds that (a) petitioners are not
entitled to recover backwages because they not actually dismissed but their probationary employment
was not converted to permanent employment; and (b) assuming that petitioners are entitled to
backwages, computation thereof should not start from cessation of work up to actual reinstatement,
and that salary earned elsewhere (during the period of illegal dismissal) should be deducted from the
award such backwages.
There is no compelling reason to reconsider the decision of the Court (First Division) dated 15 March
1996. However, we here clarify the computation of backwages due an employee on account of his illegal
dismissal from employment.
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This Court has, over the years, applied different methods in the computation of backwages. The first
labor relations law governing the award of backwages was Republic Act No. 875, the Industrial Peace
Act, approved on 17 June 1953. Sections 5 and 15 thereof provided thus:
Sec. 5. Unfair Labor Practice Cases.
(c) . . . If, after investigation, the Court shall be of the opinion that any person named in
the complaint has engaged in or is engaging in any unfair labor practice, then the Court
shall state its findings of fact and shall issue and cause to be served on such person an
order requiring such person to cease and desist from such unfair labor practice and take
such affirmative action as will effectuate the policies of this Act, including (but not
limited to) reinstatement of employees with or without back-pay and including rights of
the employees prior to dismissal including seniority.
. . . (emphasis supplied)
Sec. 15. Violation of Duty to Bargain Collectively. . . . Any employee whose work has
stopped as a consequence of such lockout shall be entitled to back-pay. (emphasis
supplied)
In accordance with these provisions, backpay (the same as backwages) could be awarded where, in the
opinion of the Court of Industrial Relations (CIR), such was necessary to effectuate the policies of the
Industrial Peace
Act. 1 Only in one case was backpay a matter of right, that was, when an employer had declared a
lockout without having first bargained collectively with his employees in accordance with the provisions
of the Act.
As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an
employee, it also had the implied power of mitigating (reducing) the backpay where backpay was
allowed. 2 Thus, in the exercise of its jurisdiction, the CIR increased or diminished the award of backpay,
depending on several circumstances, among them, the good faith of the employer, 3 the employee's
employment in other establishments during, the period of illegal dismissal, or the probability that the
employee could have realized net earnings from outside employment if he had exercised due diligence
to search for outside employment. 4 In labor cases decided during the effectivity of R.A. No. 875, this
Court acknowledged and upheld the CIR's authority to deduct any amount from the employee's
backwages, 5 including the discretion to reduce such award of backwages whatever earnings were
obtained by the employee elsewhere during the period of his illegal dismissal. 6 In the case of ItogonSuyoc Mines, Inc. v. Sagilo-Itogon Workers' Union, 7 this Court restated the guidelines for
determination of total backwages, thus:
First. To be deducted from the backwages accruing to each of the laborers to be
reinstated is the total amount of earnings obtained by him from other employment(s)
from the date of dismissal to the date of reinstatement. Should the laborer decide that
it is preferable not to return to work, the deduction should be made up to the time
judgment becomes final. And these, for the reason that employees should not be
permitted to enrich themselves at the expense of their employer. Besides, there is the
"law's abhorrence for double compensation".
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Second. Likewise, in mitigation of the damages that the dismissed respondents are
entitled to, account should be taken of whether in the exercise of due diligence
respondents might have obtained income from suitable remunerative employment. We
are prompted to give out this last reminder because it is really unjust that a discharged
employee should, with folded arms, remain inactive in the expectation that a windfall
would come to him. A contrary view would breed idleness; it is conducive to lack of
initiative on the part of a laborer. Both bear the stamp of undesirability.
From this ruling came the burden of disposing of an illegal dismissal case on its merits and of
determining whether or not the computation of the award of backwages is correct. In order not to
unduly delay the disposition of illegal dismissal cases, this Court found occasion in the case of Mercury
Drug Co., Inc., et al. v. CIR, et al. 8 to rule that a fixed amount of backwages without further qualifications
should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). This ruling
was grounded upon considerations of expediency in the execution of the decision. Former Justice
Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic,
reasonable and mutually beneficial solution" and "thus obviates the twin evils of idleness on the part of
the employees and attrition and undue delay in satisfying the award on the part of the
employer" 9 However, Justice Teehankee dissented from the majority view that the employee in said
case should be awarded backwages only for a period of 1 year, 11 months and 15 day which
represented the remainder of the prescriptive period after deducting the period corresponding to the
delay incurred by the employee in filing the complaint for unfair labor practice and reinstatement.
Justice Teehankee opined that:
. . . an award of back wages equivalent to three years (where the case is not terminated
sooner) should serve as the base figure for such awards without deduction, subject to
deduction where there are mitigating circumstances in favor of the employer but
subject to increase by way of exemplary damages where there are aggravating
circumstances (e.g. oppression or dilatory appeals) on the employer's part. 10
The proposal on the three-year backwages was subsequently adopted in later cases, among them, Feati
University Faculty Club (PAFLU) v. Feati University (No. L-31503, 15 August 1974, 58 SCRA 395), Luzon
Stevedoring Corporation v. CIR (No. L-34300, 22 November 1974, 61 SCRA 154), Danao Development
Corporation v. NLRC (Nos. L-40706 and L-40707, 16 February 1978, 81 SCRA 487), Associated AngloAmerican Tobacco Corporation v. Lazaro (No. 63779, 27 October 1983, 125 SCRA 463), Philippine
National Oil Company -Energy Development Corporation v. Leogardo (G.R. No. 58494, 5 July 1989, 175
SCRA 26).
Then came Presidential Decree No. 442 (the Labor Code of Philippines) which was signed into law on 1
May 1974 and which took effect on 1 November 1974. Its posture on the award of backwages, as
amended, was expressed as follows.
Art. 279. 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 to his back wages computed from the
time his compensation was withheld from him up to the time of his reinstatement.
(emphasis supplied).
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Under the abovequoted provision, it became mandatory to award backwages to illegally dismissed
regular employees. The law specifically declared that the award of backwages was to be computed from
the time compensation was withheld from the employee up to the time of his instatement. This
notwithstanding, the rule generally applied by the Court under the promulgation of the Mercury
Drug case, 11 and during the effectivity of P.D. No. 442 was still the Mercury Drug rule. A survey of causes
from 1974 until 1989, when the amendatory law to P.D. No. 442, namely, R.A. No. 6715 took effect,
supports this conclusion.
In the case of New Manila Candy Workers Union (Naconwa-Paflu) v. CIR (1978), 12 or after the Labor
Code (P.D. No. 442) had taken effect, the court still followed the Mercury Drug rule to avoid the
necessity of a hearing on earnings obtained elsewhere by the employee during the period of illegal
dismissal. In an even later case (1987) 13 the Court declared that the general principle is that an
employee is entitled to receive as backwages the amounts he may have received from the date of his
dismissal up to the time of his reinstatement. However, in compliance with the jurisprudential policy of
fixing the amount of backwages to a just and reasonable level, the award of backwages equivalent to
three (3) years, without qualification or deduction, was nonetheless followed in said case.
In a more direct approach to the rule on the award of backwages, this Court declared in the 1990 case
of Medado v. Court of Appeals 14 that "any decision or order granting backwages in excess of three (3)
years is null nad void as to the excess."
In sum, during the effectivity of P.D. 442, the Court enforced the Mercury Drug rule and, in effect,
qualified the provision under P.D. No. 442 by limiting the award of backwages to three (3) years.
On March 1989, Republic Act No. 6715 took effect, amending the Labor Code. Article 279 thereof states
in part :
Art. 279 Security of Tenure. . . . 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 is witheld from him up
to the time of his actual reinstatement. (emphasis supplied)
In accordance with the above provision, an illegally dismissed employee is entitled to his full backwages
from the time his compensation was witheld from him (which, as a rule, is from the time of his illegal
dismissal) up to the time of his actual reinstatement. It is true that this Court had ruled in the case of
Pines City Educational Center vs. NLRC (G.R. No. 96779, 10 November 1993, 227 SCRA 655) that "in
ascertaining the total amount of backwages payable to them (employees), we go back to the rule prior
to the Mercury Drug rule that the total amount derived from employment elsewhere by the employee
from the date of dismissal up to the date of reinstatement, if any, should be deducted
therefrom." 15 The rationale for such ruling was that, the earnings derived elsewhere by the dismissed
employee while litigating the legality of his dismissal, should be deducted from the full amount of
backwages which the law grants him upon reinstatement, so as not to unduly or unjustly enrich the
employee at the sense of the employer.
The Court deems it appropriate, however, to reconsider such earlier on the computation of backwages
as enunciated in said Pines City Educational Center case, by now holding that comformably with the
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evident legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to
an illegally dismissed employee, should not, as general rule, be diminished or reduced by the earnings
derived by him elsewhere during the period of his illegal dismissal. The underlying reason of this ruling is
that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to
support himself and family, while his backwages have to be paid by the employer as part of the price or
penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment
in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under
the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the
legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e.,
without deducting from backwages the earnings derived elsewhere by the concerned employee during
the period of his illegal dismissal. 16 In other words, the provision handling for "full backwages" to
illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied
without attempted or strained interpretation. Index animi sermo est. 17
Therefore, in accordance with R.A. No. 6715, petitioners are entitled on their full backwages, inclusive of
allowances and other benefits or their monetary equivalent, from the time their actual compensation
was withheld on them up to the time of their actual reinstatement.
As to reinstatement of petitioners, this Court has already ruled that reinstatement is no longer feasible,
because the company would be adjustly prejudiced by the continued employment of petitioners who at
present are overage, a separation pay equal to one-month salary granted to them in the Labor Arbiter's
decision was in order and, therefore, affirmed on the Court's decision of 15 March 1996. Furthermore,
since reinstatement on this case is no longer feasible, the amount of backwages shall be computed from
the time of their illegal termination on 25 June 1990 up to the time of finality of this decision. 18
ACCORDINGLY, private respondent's Motion for Reconsideration, dated 10 April 1996, is DENIED.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo Melo, Puno, Vitug, Kapunan, Mendoza, Francisco,
Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.
Footnotes
1 Perfecto V. Fernandez and Camilo D. Quiason, The Law of Labor Relations 477 (1963).
2 United Employees Welfare Association v. Isaac Peral Bowling Alleys, G.R. No.
L-16327, 30 September 1958, 104 Phil. 640.
3 Findlay Millar Timber Co., v. PLASLU, L-18217 and L-18222, 29, September 1962, 6 SCRA 227.
4 Republic Savings Bank v. CIR, L-20303, 31 October 1967, 21 SCRA 661.
5 Cromwell Commercial Employees and Laborers Union (PTUC) v. CIR, L-19778, 26 February
1965, 13 SCRA 258; Industrial Commercial-Agricultural Workers' Organization v. CIR, et al. L21645, 31 March 1966, 16 SCRA 562, 569; East Asiatic Company Ltd. v. CIR, L-29068, 31 August
1971, 40 SCRA 521.
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6 Mindanao Motor Line, Inc. v. CIR, L-18418, 29 November 1962, 65 SCRA 710, Rizal Labor
Union, et al., L-14779, 30 July 1966, 17 SCRA 858.
7 No. L-21489, 30 August 1968, 24 SCRA 873.
8 No. L-23357, 30 April 1974, 56 SCRA 694, 709.
9 Id at 711.
10 Id. at 712. Justice Teehankee's formula for the award of backwages equivalent to three (3)
years is based on the period for the trial of the case and resolution of the appeal one (1) year
for trial and resolution in the industrial court and two (2) years for briefs and decisions in this
Court.
11 It is noteworthy that the Mercury Drug case was promulgated on 30 April 1974, a day before
P.D. No. 442 was signed into law. Hence, at the time it was rendered, the law then effective was
R.A. No. 875.
12 No. L-29728, 30 October 1978, 86 SCRA 36.
13 Durabuilt Recapping Plant & Co. vs. NLRC, No. 76746, 27 July 1987, 152 SCRA 328.
14 G.R. No. 84664, 7 May 1990, 185 SCRA 80.
15 The Pines City Educational Center case merely reiterated the doctrine laid down in Ferrer v.
National Labor Relations Commission (G.R. No. 100898, 5 July 1993, 224 SCRA 410, 423) which
adopted the rule applied prior to the Mercury Drug Rule, "which is that the employer may,
however, deduct any amount which the employee may have earned during the period of his
illegal termination."
16 There is furthermore the practical consideration that a determination or the earnings derived
by an employee during the period of his illegal dismissal, could unduly delay and complicate the
proceedings for reinstatement with full backwages.
17 Agpalo, Ruben, Statutory Construction, p. 94
18 Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers' Union (No. L-24189, 30 August 1968, 24
SCRA 873, 887); Labor v. NLRC, (G.R. No. 110388, 14 September 1995, 248 SCRA 183); Gaco v.
NLRC, (G.R. No. 104690, 23 February 1994, 230 SCRA 260); Oscar Ledesma and Company v.
NLRC, (G.R. No. 110930, 13 July 1995, 246 SCRA 47); Reasonable v. NLRC, et al., (G.R. No.
117195, 20 February 1996.
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BRENT SCHOOL INC., VS ZAMORA

SUPREME COURT
Manila
EN BANC
G.R. No. L-48494 February 5, 1990
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,
vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and DOROTEO
R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.
NARVASA, J.:
The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor
Code, 2 as amended,3 have anathematized "fixed period employment" or employment for a term.
The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was
engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract
fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973,
and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971. 5
Some three months before the expiration of the stipulated period, or more precisely on April 20,1976,
Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground for the termination was
"completion of contract, expiration of the definite period of employment." And a month or so later, on
May 26, 1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the
phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor Conciliator of said report of termination of his
services, Alegre protested the announced termination of his employment. He argued that although his
contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary
and desirable in the usual business of his employer, and his employment had lasted for five years, he had
acquired the status of a regular employee and could not be removed except for valid cause. 6 The
Regional Director considered Brent School's report as an application for clearance to terminate
employment (not a report of termination), and accepting the recommendation of the Labor Conciliator,
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refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent
employee," to his former position without loss of seniority rights and with full back wages. The Director
pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the
complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No.
8, series of 1969, of the Bureau of Private Schools. 7
Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent
appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of
merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who
could not be dismissed except for just cause, and expiration of the employment contract was not one of
the just causes provided in the Labor Code for termination of services. 10
The School is now before this Court in a last attempt at vindication. That it will get here.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time
when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did
not come into effect until November 1, 1974, some three years after the perfection of the employment
contract, and rights and obligations thereunder had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity
of term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law,
R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that
In cases of employment, without a definite period, in a commercial, industrial, or
agricultural establishment or enterprise, the employer or the employee may terminate
at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or
in the case of an employer, by serving such notice to the employee at least one month
in advance or one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of termination of
employment without just cause, may hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of
employment without just cause, shall be entitled to compensation from the date of
termination of his employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also
enumerated what it considered to be just causes for terminating an employment without a definite
period, either by the employer or by the employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and
also implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided
that
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In cases in which the contract of employment does not have a fixed period, any of the
parties may terminate it, notifying the other thereof one month in advance.
The factor or shop clerk shall have a right, in this case, to the salary corresponding to
said month.
The salary for the month directed to be given by the said Article 302 of the Code of Commerce
to the factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When
Article 302 (together with many other provisions of the Code of Commerce) was repealed by the
Civil Code of the Philippines, Republic Act No. 1052 was enacted avowedly for the precise
purpose of reinstating the mesada.
Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on
August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and
with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of
Book IV. No prohibition against term-or fixed-period employment is contained in any of its articles or is
otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre on July
18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof
Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso
v. Victorias Milling Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co.
(Phil.) v. NLRC, promulgated on December 29, 1983. 14 TheThompson case involved an executive who
had been engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as
regards whom, the following pronouncement was made:
What is decisive is that petitioners (teachers) were well aware an the time that their
tenure was for a limited duration. Upon its termination, both parties to the employment
relationship were free to renew it or to let it lapse. (p. 254)
Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it
terminates on the expiration of such period." 16 "A contract of employment for a definite period
terminates by its own terms at the end of such period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor
Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at about
this time
Article 320, entitled "Probationary and fixed period employment," originally stated that the
"termination of employment of probationary employees and those employed WITH A FIXED
PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." The asserted
objective to was "prevent the circumvention of the right of the employee to be secured in their
employment as provided . . . (in the Code)."
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Article 321 prescribed the just causes for which an employer could terminate "an employment without a
definite period."
And Article 319 undertook to define "employment without a fixed period" in the following manner: 18
An employment shall be deemed to be without a definite period for purposes of this
Chapter 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 service to be performed is seasonal in nature and the
employment is for the duration of the season.
The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement
on a fixed term or period would be valid where the employee "has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer." The definition
seems a non sequitur. From the premise that the duties of an employee entail "activities which are
usually necessary or desirable in the usual business or trade of the employer the" conclusion does not
necessarily follow that the employer and employee should be forbidden to stipulate any period of time
for the performance of those activities. There is nothing essentially contradictory between a definite
period of an employment contract and the nature of the employee's duties set down in that contract as
being "usually necessary or desirable in the usual business or trade of the employer." The concept of the
employee's duties as being "usually necessary or desirable in the usual business or trade of the
employer" is not synonymous with or identical to employment with a fixed term. Logically, the decisive
determinant in term employment should not be the activities that the employee is called upon to
perform, but 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 must necessarily come,
although it may not be known when." 19 Seasonal employment, and employment for a particular
project are merely instances employment in which a period, where not expressly set down, necessarily
implied.
Of course, the term period has a definite and settled signification. It means, "Length of existence;
duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound;
conclusion; termination. A series of years, months or days in which something is completed. A time of
definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of
time which has an influence on an obligation as a result of a juridical act, and either suspends its
demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar
notion of a period, in the context of a contract of employment, takes no account at all of the nature of
the duties of the employee; it has absolutely no relevance to the character of his duties as being "usually
necessary or desirable to the usual business of the employer," or not.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the
reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The
article 22 now reads:
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. . . Probationary employment.Probationary employment shall not exceed six months

from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been
engaged in a probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a regular employee.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deletingmention of employment with a fixed or definite period, (b) adding a general exclusion clause
declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat
exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now
reads:
. . . 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 service to be employed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to he 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 is identical to Article 319 except that, as just mentioned, a clause has been
added, to wit: "The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties . . ." The clause would appear to be
addressed inter alia to agreements fixing a definite period for employment. There is withal no
clear indication of the intent to deny validity to employment for a definite period. Indeed, not
only is the concept of regular employment not essentially inconsistent with employment for a
fixed term, as above pointed out, Article 272 of the Labor Code, as amended by said PD 850, still
impliedly acknowledged the propriety of term employment: it listed the "just causes" for which
"an employer may terminate employment without a definite period," thus giving rise to the
inference that if the employment be with a definite period, there need be no just cause for
termination thereof if the ground be precisely the expiration of the term agreed upon by the
parties for the duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa
Bilang 130,24 to eliminate altogether reference to employment without a definite period. As lastly
amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may
terminate an employment for any of the following just causes: . . . " BP 130 thus completed the
elimination of every reference in the Labor Code, express or implied, to employment with a fixed or
definite period or term.
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It is in the light of the foregoing description of the development of the provisions of the Labor Code
bearing on term or fixed-period employment that the question posed in the opening paragraph of this
opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in
employment contracts laying down a definite period therefor? Are such stipulations in essence contrary
to public policy and should not on this account be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term or fixed-period
employment in the Labor Code, and the specific statement of the rule 25 that
. . . Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
of the employer except where the employment has been fixed for a specific project or
the engagement of the employee or where the work or service to be employed is
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,
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no
restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it
specie, goods or services, except the general admonition against stipulations contrary to law, morals,
good customs, public order or public policy. 26Under the Civil Code, therefore, and as a general
proposition, fixed-term employment contracts are not limited, as they are under the present Labor
Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they
also include those to which the parties by free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither for seasonal work
nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas
employment contracts, for one, to which, whatever the nature of the engagement, the concept of
regular employment will all that it implies does not appear ever to have been applied, Article 280 of the
Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational institutions, which are by practice or
tradition rotated among the faculty members, and where fixed terms are a necessity, without which no
reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy,
Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be
elected for what would amount to fixed periods, at the expiration of which they would have to stand
down, in providing that these officials," . . . may lose their jobs as president, executive vice-president or
vice-president, etc. because the stockholders or the board of directors for one reason or another did not
re-elect them."
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There can of course be no quarrel with the proposition that where from the circumstances it is apparent
that periods have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent
to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g.,
where it is indeed the employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite date of termination
is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema?
Would such an agreement come within the scope of Article 280 which admittedly was enacted "to
prevent the circumvention of the right of the employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of the Labor Code,
under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts
to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without
reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of
his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The
law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the
whole concept of term employment and subverting to boot the principle of freedom of contract to
remedy the evil of employer's using it as a means to prevent their employees from obtaining security of
tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off
the head.
It is a salutary principle in statutory construction that there exists a valid presumption
that undesirable consequences were never intended by a legislative measure, and that a
construction of which the statute is fairly susceptible is favored, which will avoid all
objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28
Nothing is better settled than that courts are not to give words a meaning which would
lead to absurd or unreasonable consequences. That s a principle that does back to In re
Allen decided oil October 27, 1903, where it was held that a literal interpretation is to
be rejected if it would be unjust or lead to absurd results. That is a strong argument
against its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that
the construction placed upon the statute by the appellants would lead to an absurdity is
another argument for rejecting it. . . ." 29
. . . We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must
prevail over the letter thereof, for whatever is within the spirit of a statute is within the
statute, since adherence to the letter would result in absurdity, injustice and
contradictions and would defeat the plain and vital purpose of the statute. 30
Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should
have no application to instances where a fixed period of employment was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon
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the employee and absent any other circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it
thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended
consequences.
Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of
employment as still good rulea rule reaffirmed in the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served
by her school a notice of termination following the expiration of the last of three successive fixed-term
employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive period.
At the expiration of the period stipulated in the contract, her appointment was deemed
terminated and the letter informing her of the non-renewal of her contract is not a
condition sine qua non before Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes' contract of employment was
due to expire and that the contract would no longer be renewed. It is not a letter of
termination. The interpretation that the notice is only a reminder is consistent with the
court's finding in Labajo supra. ... 32
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last
contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written
advice given the Department of Labor with copy to said petitioner was a mere reminder of the
impending expiration of his contract, not a letter of termination, nor an application for clearance to
terminate which needed the approval of the Department of Labor to make the termination of his
services effective. In any case, such clearance should properly have been given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent
Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the
expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the
other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs.
SO ORDERED.
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Corts, Grio-Aquino,
Medialdea and Regalado, JJ., concur.
Fernan, C.J., took no part.
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Separate Opinions
SARMIENTO, J., concurring and dissenting:

I am agreed that the Labor Code has not foresaken "term employments", held valid in Biboso V. Victorias
Milling Company, Inc. (No. L-44360, March 31, 1977, 76 SCRA 250). That notwithstanding, I can not liken
employment contracts to ordinary civil contracts in which the relationship is established by stipulations
agreed upon. Under the very Civil Code:
Art. 1700. The relations between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts are subject to the special laws on
labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.
xxx xxx xxx
Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living for the laborer.
The courts (or labor officials) should nevertheless be vigilant as to whether or not the termination of the
employment contract is done by reason of expiration of the period or to cheat the employee out of
office. The latter amounts to circumvention of the law.
Separate Opinions
SARMIENTO, J., concurring and dissenting:
I am agreed that the Labor Code has not foresaken "term employments", held valid in Biboso V. Victorias
Milling Company, Inc. (No. L-44360, March 31, 1977, 76 SCRA 250). That notwithstanding, I can not liken
employment contracts to ordinary civil contracts in which the relationship is established by stipulations
agreed upon. Under the very Civil Code:
Art. 1700. The relations between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts are subject to the special laws on
labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.
xxx xxx xxx
Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living for the laborer.
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The courts (or labor officials) should nevertheless be vigilant as to whether or not the termination of the
employment contract is done by reason of expiration of the period or to cheat the employee out of
office. The latter amounts to circumvention of the law.
Footnotes
1 Commenced by petition for certiorari under Rule 65, Rules of Court since, as
petitioners point out, "Presidential Decree No. 442, as amended, and its implementing
Rules and Regulations (in force at the time) do not provide for an appeal from the
decision of the President of the Philippines" in labor cases.
2 PD 442, eff. Nov. 1, 1974.
3 By inter alia PD 850, eff. Dec. 16, 1975, and BP 130, eff. Aug. 21, 1981.
4 Rollo, p. 38, Annex A, Petition for Review.
5 Petition for Review, Annexes D, B and C, Rollo, pp. 39-40.
6 Rollo, pp. 40-41, Re-Report of Termination, etc., Application for Clearance No. 2137,
Annex D, Petition for Review.
7 Id., p. 41. The circular is addressed "To Heads of all Chinese Schools" and entitled
"Standardization of Salaries and Stabilizations of Positions in Chinese Schools."
8 Id., p. 44, Annex F, Petition.
9 Id., p. 45, Annex G, Petition.
10 Id., pp. 6-10, Decision of the Presidential Assistant for Legal Affairs, O.P. Case No.
0308, Case No. 2137, June 13, 1978.
11 Eff. June 12, 1954.
12 Eff. June 21, 1957.
13 76 SCRA 250.
14 126 SCRA 458.
15 American law is the source of much of our own labor legislation. R.A. No. 875,
otherwise known as the Industrial Peace Act, the bulk of the provisions of which have
been incorporated in the Labor Code, was based on U.S. statutes: the National Labor
Relations Act, the Taft-Hartley Labor Act, etc.
16 17 Am Jur 2d 411, footnoting omitted.
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17 56 C.J.S., 74-75, footnoting omitted.

18 Emphasis supplied.
19 Article 1193 (third paragraph), Civil Code.
20 Capiral v. Manila Electric Co., 119 Phil. 124, cited in Phil. Law Dictionary, Moreno, 3d
ed.
21 Op. cit., citing Lirag Textile Mills Inc. v. Court of Appeals, 63 SCRA 382.
22 Subsequently renumbered Article 281 by B.P. Blg. 130, eff. Aug 21, 1981.
23 And still later renumbered ART. 280 by B.P. Big. 130, supra; emphasis supplied.
24 Eff. Aug 21, 1981.
25 Article 280 (formerly Art. 270 [and initially, Art. 319], Labor Code; emphasis supplied.
26 ART. l306, Civil Code.
27 Promulgated April 26, 1976, more than four months after the issuance of P.D. 850.
28 People vs. Purisima, 86 SCRA 542, 561.
29 Automotive Parts & Equipment Co., Inc. vs. Lingad, 30 SCRA 248, 255, citing cases;
footnotes omitted.
30 Hidalgo vs. Hidalgo 33 SCRA 105,115.
31 Supra, p. 4
32 Referring to Labajo vs. Alejandro, G.R. No. 80383, September 26, 1988, pp. 10-11.
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MERCADO SR. VS NLRC

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:
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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. 5Even 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, onand-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
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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 socalled casuals from enjoying the benefits of regular employees or to prevent casuals
from joining unions.
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This new concept should be strictly enforced to give meaning to the constitutional
guarantee of employment tenure. 16
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, 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. 21 (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:
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Focusing the spotlight of judicious scrutiny on the evidence on record and the
arguments of both parties, it is our well-discerned 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 onand-off hired to work to render services when needed. 25
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
of the employer, except where the employment has been fixed for a specific project or
the engagement of the employee or where the work or services to be performed is
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paragraph: Provided, That, any employee who has rendered at least one year of service
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
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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.
Footnotes
* Penned by Presiding Commissioner of the NLRC, Guillermo C. Medina and concurred in
by Commissioners Gabriel M. Gatchalian and Miguel B. Varela.
1 Rollo, p. 23.
2 Rollo, pp. 23-24.
3 Rollo, p. 24.
4 Rollo, pp. 24-25.
5 Rollo, p. 25.
6 Ibid.
7 lbid.
8 Rollo, pp. 25-26.
9 Rollo, p. 26 and Article 291, Labor Code of the Philippines.
10 Rollo, p. 26.
11 Rollo, pp. 27-30.
12 Rollo, pp. 31-33.
13 Rollo, p. 13.
14 Rollo, pp. 13-14.
15 The Labor Code of the Philippines and its Implementing Rules and Regulations
compiled, edited and published by Vicente B. Foz, p. 364 cited in Rollo, p. 14.
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16 Policy Instruction No. 12, The Labor Code of the Philippines and Its Implementing
Rules and Regulations compiled, edited and published by Vicente B. Foz, 1991 Edition, p.
364.
17 Rollo, p. 15.
18 Rollo, pp. 151-152.
19 Rollo, pp. 152-153.
20 Rollo, p. 169,
21 Article 280 of the Labor Code of the Philippines cited in Rollo, pp. 169-170.
22 Ang Tibay vs. CIR, 69 Phil. 635 as cited in Feliciano Timbancaya vs. Vicente, G.R. No. L19100, December 27, 1963, 9 SCRA 852.
23 Lao Tang Bun vs. Fabre, 81 Phil. 682 as cited in Feliciano Timbancaya vs. Vicente, G.R.
No. L-19100, December 27, 1963, 9 SCRA 852.
24 Lovina vs. Moreno, G.R. No. L-17821, November 29, 1963, 9 SCRA 557.
25 Rollo, pp. 24-26.
26 Philippine National Construction Corporation vs. National Labor Relations
Commission, G.R. No. 85323, 20 June 1989, 174 SCRA 191.
27 Statutory Construction by Ruben Agpalo, 1986 ed., p. 173.
28 Chinese Flour Importers Association vs. Price Stabilization Board, 89 Phil. 469 (1951);
Arenas v. City of San Carlos, G.R. No. 24024, April 5, 1978, 82 SCRA 318 (1978).
29 Commissioner of Internal Revenue v. Filipinas Compania de Seguros, 107 Phil. 1055
(1960).
30 PNOC Exploration Corporation vs. National Labor Relations Commission, G.R.
71711, 18 August 1988, 164 SCRA 501.
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HACIENDA FATIMA VS NATIONAL FEDERATION OF SUGARCANE WORKERS

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 Commission (NLRC) Decision,[3] upheld by the CA,
disposed in this wise:
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 hereby ORDERED 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:
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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:
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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. Luisa Rombo
2. Ramona Rombo
3. Bobong Abrega
4. 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. Jose Dagle 7. Alejandro Tejares
2. Rico Dagle 8. Gaudioso Rombo
3. Ricardo Dagle 9. Martin Alas-as Jr.
4. Jesus Silva 10. Cresensio Abrega
5. Fernando Silva 11. Ariston Eruela Sr.
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6. Ernesto Tejares 12. 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.[5] (Citations omitted)
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.
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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
natureand 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
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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.
xxxxxxxxx
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 petitioners 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 selforganization.[17]
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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 the assailed Decision AFFIRMED. Costs against
petitioners.
SO ORDERED.
Puno, J., (Chairman), Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.
[1]
Eighth Division, composed of Justices Ramon A. Barcelona (chairman and ponente), Rodrigo V. Cosico
and Alicia L. Santos (members).
[2]
Assailed CA Decision, p. 7; rollo, p. 36.
[3]
Fourth Division, composed of Commissioner Bernabe S. Batuhan (ponente), Presiding Commissioner

Irenea E. Ceniza and Commissioner Amorito V. Canete.
[4]
NLRC Decision, pp. 9-10; rollo, pp. 63-64; records, pp. 28-29.
[5]
NLRC Decision, pp. 5-9; rollo, pp. 59-63; records, pp. 24-28. Italics provided.
[6]
Assailed CA Decision, p. 6; rollo, p. 35.
[7]
This case was deemed submitted for resolution on April 30, 2002, upon receipt by the Court of
petitioners Memorandum, which was signed by Atty. Teodoro V. Cortes. Respondents
Memorandum, signed by Attys. Francisco D. Yap and Whelma F. Siton-Yap, was received by the
Court on March 7, 2002.
[8]
Petitioners Memorandum, p. 6; rollo, p. 275.
[9]
Viloria v. Court of Appeals, 309 SCRA 529, June 30, 1999.
[10]
Cebu Shipyard and Engineering Works, Inc. v. William Lines, Inc., 306 SCRA 762, May 5, 1999; Villarico
v. Court of Appeals, 309 SCRA 193, June 28, 1999; Alipoon v. Court of Appeals, 305 SCRA 118,
March 22, 1999;Baguio v. Republic, 301 SCRA 450, January 21, 1999.
[11]
Ropali Trading Corporation v. National Labor Relations Commission, 296 SCRA 309, September 25,
1998.
[12]
Chua v. National Labor Relations Commission, 267 SCRA 196, January 30, 1997.
[13]
346 SCRA 293, November 29, 2000.
[14]
Id., pp. 304-305, per De Leon Jr., J.
[15]
201 SCRA 332, September 5, 1991.

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[16]
Valiant Machinery and Metal Corp. v. National Labor Relations Commission, 252 SCRA 369, January
25, 1996, per Mendoza, J.
[17]
NLRC Decision, p. 9; rollo, p. 63; records, p. 28.
[18]
C. Planas Commercial v. National Labor Relations Commission, 303 SCRA 49, February 11, 1999.
[19]
Barros v. National Labor Relations Commission, 315 SCRA 23, September 22, 1999.
[20]
Tan v. National Labor Relations Commission, supra.
[21]
Nueva Ecija I Electric Cooperative, Inc. v. National Labor Relations Commission, 323 SCRA 86, January
24, 2000.
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ABASOLO VS NLRC
SECOND DIVISION
[G.R. No. 118475. November 29, 2000]
ELVIRA ABASOLO, ANTONIO ABAY, et., al., 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
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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.
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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 ofMercado, 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
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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 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
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
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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[31] 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.
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 fortyfive (45) days from notice of this decision.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.
[1]
Penned by Commissioner Ireneo B. Bernardo and concurred in by Presiding Commissioner Lourdes C.

Javier and Commissioner Joaquin A. Tanodra in NLRC CN. RAB-I-03-1055-93, RAB-I-03-1056-93 and RABI-03-1100-93 CA No. L-001300, Rollo, pp. 37-55.
[2]
Rollo, pp. 27-36.
[3]
Rollo, pp. 56-64.
[4]
Docketed as NLRC Case No. RAB-I-03-1055-93, Rollo, pp. 69-75.
[5]
Filed on March 25, 1993 and June 15, 1993, docketed as NLRC Case Nos. RAB-I-03-1056-93 and RAB-I03-1100-93, respectively, Rollo, pp. 65-68.
[6]
Rollo, pp. 85-86.

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[7]
Ibid.
[8]
Rollo, p. 87.
[9]
Article 283. Closure of establishment and reduction of personnel.
x x x in cases of closure and 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 as one (1) whole year.
[10]
Rollo, pp. 61-64.
[11]
Rollo, pp. 90-102.
[12]
Rollo, pp. 103-109.
[13]
See Note No. 1, supra.
[14]
Rollo, p. 50.
[15]
Rollo, pp. 51-52.
[16]
See Note No. 2, supra.
[17]
Rollo, p. 304.
[18]
Rollo, p. 305.
[19]
Rollo, pp. 239-240.
[20]
Rollo, p. 236.
[21]
201 SCRA 332, 343 [1991].
[22]
PASVIL/Pascual Liner, Inc., Workers Union-NAFLU v. NLRC, 311 SCRA 444, 457 [1999].
[23]
See San Felipe Neri School of Mandaluyong, Inc. v. NLRC, 201 SCRA 478 [1991] citing Central
Azucarera del Danao v. Court of Appeals, 137 SCRA 295 [1985].
[24]
Pascua v. NLRC (Third Division), 287 SCRA 554, 567 [1998]; see Tacloban Sagkahan Rice and Corn Mills
Co. v. NLRC, 183 SCRA 425 [1990].
[25]
De Leon v. NLRC, 176 SCRA 615, 621 [1989].
[26]
Bernardo v. NLRC, 310 SCRA 186, 201 [1999].
[27]
Maraguinot, Jr. v. NLRC (Second Division), 284 SCRA 539, 556 [1998].
[28]
Bacolod-Murcia Milling Co., Inc. v. NLRC, 204 SCRA 155, 158 [1991]; Visayan Stevedore
Transportation Company v. CIR, 19 SCRA 426 [1967]; Industrial-Commercial Agricultural Workers
Organization (ICAWO) v. CIR, 16 SCRA 562, 565-566 [1966]; Manila Hotel Company v. Court of Industrial
Relations, 9 SCRA 184, 186 [1963].
[29]
Coca-Cola Bottlers (Phils.), Inc. v. NLRC 194 SCRA 592, 599 [1991].
[30]
300 SCRA 37, 63 65 [1998].
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[31]
Book Six of the Labor Code contains the provisions pertaining to termination of employment and
computation of separation pay.
[32]
See Note No. 30.
[33]
(a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings
for the recovery of the wages, attorneys fees, which exceed ten percent of the amount of wages
recovered.
[34]
Attorneys fees in any judicial or administrative proceedings for the recovery of wages shall not
exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning
party.
[35]
In absence of stipulation, attorneys fees and expenses of litigation, other than judicial consist, cannot
be recovered, except:
xxx (7) In actions for the recovery of wages of household helpers, laborers and skilled workers xxx.
[36]
Marsaman Manning Agency, Inc. v. NLRC, 313 SCRA 88, 99-100 [1999] citing Philippine National
Construction Corporation v. NLRC, 277 SCRA 91, 105 [1997]; Sebuguero v. NLRC, 248 SCRA 532, 548
[1995].
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ROWELL INDUSTRIAL CORP. VS CA

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 167714
March 7, 2007
ROWELL INDUSTRIAL CORPORATION, Petitioner,

vs.
HON. COURT OF APPEALS and JOEL TARIPE, Respondents.
DECISION
CHICO-NAZARIO, J.:
This case is a Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to
set aside the Decision1and Resolution2of the Court of Appeals in CA-G.R. SP No. 74104, entitled, Rowell
Industrial Corp., and/or Edwin Tang vs. National Labor Relations Commission and Joel Taripe, dated 30
September 2004 and 1 April 2005, respectively, which affirmed the Resolutions3of the National Labor
Relations Commission (NLRC) dated 7 June 2002 and 20 August 2002, finding herein respondent Joel
Taripe (Taripe) as a regular employee who had been illegally dismissed from employment by herein
petitioner Rowell Industrial Corp. (RIC), thereby ordering petitioner RIC to reinstate respondent Taripe
with full backwages, subject to the modification of exonerating Edwin Tang, the RIC General Manager
and Vice President, from liability and computing the backwages of herein respondent Taripe based on
the prevailing salary rate at the time of his dismissal. The NLRC Resolutions reversed the Decision4of the
Labor Arbiter dated 29 September 2000, which dismissed respondent Taripe's complaint.
Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of consumer
products, e.g., foods, paints, among other things. Respondent Taripe was employed by petitioner RIC on
8 November 1999 as a "rectangular power press machine operator" with a salary of P223.50 per day,
until he was allegedly dismissed from his employment by the petitioner on 6 April 2000.
The controversy of the present case arose from the following facts, as summarized by the NLRC and the
Court of Appeals:
On [17 February 2000], [herein respondent Taripe] filed a [C]omplaint against [herein petitioner RIC] for
regularization and payment of holiday pay, as well as indemnity for severed finger, which was amended
on [7 April 2000] to include illegal dismissal. [Respondent Taripe] alleges that [petitioner RIC] employed
him starting [8 November 1999] as power press machine operator, such position of which was occupied
by [petitioner RIC's] regular employees and the functions of which were necessary to the latter's
business. [Respondent Taripe] adds that upon employment, he was made to sign a document, which
was not explained to him but which was made a condition for him to be taken in and for which he was
not furnished a copy. [Respondent Taripe] states that he was not extended full benefits granted under
the law and the [Collective Bargaining Agreement] and that on [6 April 2000], while the case for
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regularization was pending, he was summarily dismissed from his job although he never violated any of
the [petitioner RIC's] company rules and regulations.
[Petitioner RIC], for [its] part, claim[s] that [respondent Taripe] was a contractual employee, whose
services were required due to the increase in the demand in packaging requirement of [its] clients for
Christmas season and to build up stock levels during the early part of the following year; that on [6
March 2000], [respondent Taripe's] employment contract expired. [Petitioner RIC] avers that the
information update for union members, which was allegedly filled up by [respondent Taripe] and
submitted by the Union to [petitioner] company, it is stated therein that in the six (6) companies where
[respondent Taripe] purportedly worked, the latter's reason for leaving was "finished contract," hence,
[respondent Taripe] has knowledge about being employed by contract contrary to his allegation that the
document he was signing was not explained to him. [Petitioner RIC] manifest[s] that all benefits,
including those under the [Social Security System], were given to him on [12 May 2000].5
On 29 September 2000, the Labor Arbiter rendered a Decision dismissing respondent Taripe's Complaint
based on a finding that he was a contractual employee whose contract merely expired. The dispositive
portion of the said Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered declaring this complaint of [herein
respondent Taripe] against [herein petitioner RIC] and Mr. Edwin Tang for illegal dismissal DISMISSED for
lack of merit. However, on ground of compassionate justice, [petitioner RIC and Mr. Edwin Tang] are
hereby ordered to pay [respondent Taripe] the sum of PHP5,811.00 or one month's salary as financial
assistance and holiday pay in the sum of PHP894.00, as well as attorney's fees of 10% based on holiday
pay (Article 110, Labor Code).6
Aggrieved, respondent Taripe appealed before the NLRC. In a Resolution dated 7 June 2002, the NLRC
granted the appeal filed by respondent Taripe and declared that his employment with the petitioner
was regular in status; hence, his dismissal was illegal. The decretal portion of the said Resolution reads
as follows:
WHEREFORE, premises considered, [herein respondent Taripe's] appeal is GRANTED. The Labor Arbiter's
[D]ecision in the above-entitled case is hereby REVERSED. It is hereby declared that [respondent
Taripe's] employment with [herein petitioner RIC and Mr. Edwin Tang] is regular in status and that he
was illegally dismissed therefrom.
[Petitioner RIC and Mr. Edwin Tang] are hereby ordered to reinstate [respondent Taripe] and to jointly
and severally pay him full backwages from the time he was illegally dismissed up to the date of his actual
reinstatement, less the amount of P1,427.67. The award of P894.00 for holiday pay is AFFIRMED but the
award of P5,811.00 for financial assistance is deleted. The award for attorney's fees is hereby adjusted
to ten percent (10%) of [respondent Taripe's] total monetary award.7
Dissatisfied, petitioner RIC moved for the reconsideration of the aforesaid Resolution but it was denied
in the Resolution of the NLRC dated 20 August 2002.
Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil
Procedure before the Court of Appeals with the following assignment of errors:
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I. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT
MISINTERPRETED ARTICLE 280 OF THE LABOR CODE AND IGNORED JURISPRUDENCE WHEN IT DECIDED
THAT [RESPONDENT TARIPE] IS A REGULAR EMPLOYEE AND THUS, ILLEGALLY DISMISSED.
II. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT
ORDERED [EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY LIABLE FOR MONETARY CLAIMS OF
[RESPONDEN TARIPE].
III. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT
ORDERED PAYMENT OF MONETARY CLAIMS COMPUTED ON AN ERRONEOUS WAGE RATE.8
The Court of Appeals rendered the assailed Decision on 30 September 2004, affirming the Resolution of
the NLRC dated 7 June 2002, with modifications. Thus, it disposed WHEREFORE, the Resolutions dated [7 June 2002] and [20 August 2002] of [the NLRC] are affirmed,
subject to the modification that [Edwin Tang] is exonerated from liability and the computation of
backwages of [respondent Taripe] shall be based on P223.50, the last salary he received.9
A Motion for Reconsideration of the aforesaid Decision was filed by petitioner RIC, but the same was
denied for lack of merit in a Resolution10of the Court of Appeals dated 1 April 2005.
Hence, this Petition.
Petitioner RIC comes before this Court with the lone issue of whether the Court of Appeals
misinterpreted Article 280 of the Labor Code, as amended, and ignored jurisprudence when it affirmed
that respondent Taripe was a regular employee and was illegally dismissed.
Petitioner RIC, in its Memorandum,11argues that the Court of Appeals had narrowly interpreted Article
280 of the Labor Code, as amended, and disregarded a contract voluntarily entered into by the parties.
Petitioner RIC emphasizes that while an employee's status of employment is vested by law pursuant to
Article 280 of the Labor Code, as amended, said provision of law admits of two exceptions, to wit: (1)
those employments which have 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 employment; and (2)
when the work or services to be performed are seasonal; hence, the employment is for the duration of
the season. Thus, there are certain forms of employment which entail the performance of usual and
desirable functions and which exceed one year but do not necessarily qualify as regular employment
under Article 280 of the Labor Code, as amended.
The Petition is unmeritorious.
A closer examination of Article 280 of the Labor Code, as amended, is imperative to resolve the issue
raised in the present case.
In declaring that respondent Taripe was a regular employee of the petitioner and, thus, his dismissal was
illegal, the Court of Appeals ratiocinated in this manner:
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In determining the employment status of [herein respondent Taripe], reference must be made to Article
280 of the Labor Code, which provides:
xxxx
Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer; and (2) those
who have rendered at least one year of service, whether continuous or broken, with respect to the
activity in which they are employed. [Respondent Taripe] belonged to the first category of regular
employees.
The purported contract of employment providing that [respondent Taripe] was hired as contractual
employee for five (5) months only, cannot prevail over the undisputed fact that [respondent Taripe] was
hired to perform the function of power press operator, a function necessary or desirable in [petitioner's]
business of manufacturing tin cans. [Herein petitioner RIC's] contention that the four (4) months length
of service of [respondent Taripe] did not grant him a regular status is inconsequential, considering that
length of service assumes importance only when the activity in which the employee has been engaged
to perform is not necessary or desirable to the usual business or trade of the employer.
As aptly ruled by [the NLRC]:
"In the instant case, there is no doubt that [respondent Taripe], as power press operator, has been
engaged to perform activities which are usually necessary or desirable in [petitioner RIC's] usual
business or trade of manufacturing of tin cans for use in packaging of food, paint and others. We also
find that [respondent Taripe] does not fall under any of the abovementioned exceptions. Other that (sic)
[petitioner RIC's] bare allegation thereof, [it] failed to present any evidence to prove that he was
employed for a fixed or specific project or undertaking the completion of which has been determined at
the time of his engagement or that [respondent Taripe's] services are seasonal in nature and that his
employment was for the duration of the season."12
Article 280 of the Labor Code, as amended, 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 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 exists. [Emphasis supplied]
The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories,
namely: (1) regular employees or those whose work is necessary or desirable to the usual business of
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the employer; (2) project employees or those 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 services to be performed is seasonal in nature and
the employment is for the duration of the season; and (3) casual employees or those who are neither
regular nor project employees.13
Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular
employees by years of service.14The former refers to those employees who perform a particular activity
which is necessary or desirable in the usual business or trade of the employer, regardless of their length
of service; while the latter refers to those employees who have been performing the job, regardless of
the nature thereof, for at least a year.15
The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an
employment contract with a fixed period. It does not necessarily follow that where the duties of the
employee consist of activities usually necessary or desirable in the usual business of the employer, the
parties are forbidden from agreeing on a period of time for the performance of such activities. There is
nothing essentially contradictory between a definite period of employment and the nature of the
employee's duties.16What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of
some unscrupulous and covetous employers who wish to circumvent the law that protects lowly
workers from capricious dismissal from their employment. The aforesaid provision, however, should not
be interpreted in such a way as to deprive employers of the right and prerogative to choose their own
workers if they have sufficient basis to refuse an employee a regular status. Management has rights
which should also be protected.17
In the case at bar, respondent Taripe signed a contract of employment prior to his admission into the
petitioner's company. Said contract of employment provides, among other things:
4. That my employment shall be contractual for the period of five (5) months which means that the end
of the said period, I can (sic) discharged unless this contract is renewed by mutual consent or terminated
for cause.18
Based on the said contract, respondent Taripe's employment with the petitioner is good only for a
period of five months unless the said contract is renewed by mutual consent. And as claimed by
petitioner RIC, respondent Taripe, along with its other contractual employees, was hired only to meet
the increase in demand for packaging materials during the Christmas season and also to build up stock
levels during the early part of the year.
Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must,
nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security
of tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the
parties, without any force, duress or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer
and employee dealt with each other on more or less equal terms with no moral dominance whatever
being exercised by the former on the latter.19
In the present case, it cannot be denied that the employment contract signed by respondent Taripe did
not mention that he was hired only for a specific undertaking, the completion of which had been
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determined at the time of his engagement. The said employment contract neither mentioned that
respondent Taripe's services were seasonal in nature and that his employment was only for the duration
of the Christmas season as purposely claimed by petitioner RIC. What was stipulated in the said contract
was that respondent Taripe's employment was contractual for the period of five months.
Likewise, as the NLRC mentioned in its Resolution, to which the Court of Appeals agreed, other than the
bare allegations of petitioner RIC that respondent Taripe was hired only because of the increase in the
demand for packaging materials during the Christmas season, petitioner RIC failed to substantiate such
claim with any other evidence. Petitioner RIC did not present any evidence which might prove that
respondent Taripe was employed for a fixed or specific project or that his services were seasonal in
nature.
Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the
contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which
the terms are prepared by only one party and the other party merely affixes his signature signifying his
adhesion thereto is called contract of adhesion.20It is an agreement in which the parties bargaining are
not on equal footing, the weaker party's participation being reduced to the alternative "to take it or
leave it."21In the present case, respondent Taripe, in need of a job, was compelled to agree to the
contract, including the five-month period of employment, just so he could be hired. Hence, it cannot be
argued that respondent Taripe signed the employment contract with a fixed term of five months
willingly and with full knowledge of the impact thereof.
With regard to the second guideline, this Court agrees with the Court of Appeals that petitioner RIC and
respondent Taripe cannot be said to have dealt with each other on more or less equal terms with no
moral dominance exercised by the former over the latter. As a power press operator, a rank and file
employee, he can hardly be on equal terms with petitioner RIC. As the Court of Appeals said, "almost
always, employees agree to any terms of an employment contract just to get employed considering that
it is difficult to find work given their ordinary qualifications."22
Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed term
employment contract, it can be safely stated that the aforesaid contract signed by respondent Taripe for
a period of five months was a mere subterfuge to deny to the latter a regular status of employment.
Settled is the rule that the primary standard of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the casual 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.23
Given the foregoing, this Court agrees in the findings of the Court of Appeals and the NLRC that, indeed,
respondent Taripe, as a rectangular power press machine operator, in charge of manufacturing covers
for "four liters rectangular tin cans," was holding a position which is necessary and desirable in the usual
business or trade of petitioner RIC, which was the manufacture of tin cans. Therefore, respondent Taripe
was a regular employee of petitioner RIC by the nature of work he performed in the company.
Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor Code, as
amended, because it was not proven by petitioner RIC that he was employed only for a specific project
or undertaking or his employment was merely seasonal. Similarly, the position and function of power
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press operator cannot be said to be merely seasonal. Such position cannot be considered as only needed
for a specific project or undertaking because of the very nature of the business of petitioner RIC. Indeed,
respondent Taripe is a regular employee of petitioner RIC and as such, he cannot be dismissed from his
employment unless there is just or authorized cause for his dismissal.
Well-established is the rule that regular employees enjoy security of tenure and they can only be
dismissed for just cause and with due process, notice and hearing.24And in case of employees' dismissal,
the burden is on the employer to prove that the dismissal was legal. Thus, respondent Taripe's summary
dismissal, not being based on any of the just or authorized causes enumerated under Articles
282,25283,26and 28427of the Labor Code, as amended, is illegal.
Before concluding, we once more underscore the settled precept that factual findings of the NLRC,
having deemed to acquire expertise in matters within its jurisdiction, are generally accorded not only
respect but finality especially when such factual findings are affirmed by the Court of Appeals;28hence,
such factual findings are binding on this Court.
WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution
of the Court of Appeals dated 30 September 2004 and 1 April 2005, respectively, which affirmed with
modification the Resolutions of the NLRC dated 7 June 2002 and 20 August 2002, respectively, finding
herein respondent Taripe as a regular employee who had been illegally dismissed from employment by
petitioner RIC, are hereby AFFIRMED. Costs against petitioner RIC.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
(On Leave)
ROMEO J. CALLEJO, SR.
Asscociate Justice
MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
ANTONIO EDUARDO B. NACHURA

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.
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Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it is
hereby certified that the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1
Penned by Associate Justice Fernanda Lampas Peralta with Associate Justices Conrado M.
Vasquez, Jr. and Josefina Guevara-Salonga, concurring, rollo, pp. 17-27.
2
Id. at 28.
Penned by Commissioner Victoriano R. Calaycay with Presiding Commissioner Raul T. Aquino

and Commissioner Angelita A. Gacutan, concurring, id. at 36-48; NLRC Records, pp. 147-148.
4
Penned by Labor Arbiter Natividad M. Roma, id. at 29-35.
Id. at 18-19.
Id. at 35.
Id. at 45-46.
Id. at 21.
Id. at 26.
10
Supra note 2.
11
Rollo, pp. 98-104.
12
Id. at 22-23.
13
Pangilinan vs. General Milling Corporation, G.R. No. 149329, 12 July 2004, 434 SCRA 159, 169.
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14
E. Ganzon, Inc. vs. National Labor Relations Commission, G.R. No. 123769, 22 December 1999,
321 SCRA 434, 440.
15
Pangilinan vs. General Milling Corporation, supra note 13 at 169-170.
16
Id. at 170.
17
Pantranco North Express, Inc. vs. NLRC, G.R. No. 106654, 16 December 1994, 239 SCRA 272,
279.
18
CA rollo, p. 27.
19
Philippine National Oil Co.-Energy Dev't. Corp. vs. NLRC, G.R. No. 97747, 31 March 1993, 220
SCRA 695, 699.
20
Fabrigas vs. San Francisco del Monte, Inc., G.R. No. 152346, 25 November 2005, 476 SCRA 247,
263.
21
Qua Chee Gan vs. Law Union and Rock Insurance Co., Ltd., 98 Phil. 85, 95 (1955).
22
Rollo, p. 25.
23
Lopez vs. Metropolitan Waterworks and Sewerage System, G.R. No. 154472, 30 June 2005, 462
SCRA 428, 453.
24
Philippine Amusement and Gaming Corporation vs. Angara, G.R. No. 142937, 15 November
2005, 475 SCRA 41, 61.
25
ART. 282. TERMINATION BY EMPLOYER. - 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;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representatives;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and
Other causes analogous to the foregoing.
26
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,
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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 [now Secretary of Labor] 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 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 as one (1) whole year.
27
ART. 284. DISEASE AS GROUND FOR TERMINATION. - An employer may terminate the services
of an employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his coemployees: Provided, That he is paid separation pay equivalent to at least one (1) month salary
or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.
28
Land and Housing Development Corporation vs. Esquillo, G.R. No. 152012, 30 September 2005,
471 SCRA 488, 494.
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VIERNES VS NLRC
SECOND DIVISION
[G.R. No. 108405. April 4, 2003]
JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO, DANILO C. BALANAG, FERDINAND DELLA,
EDWARD A. ABELLERA, ALEXANDER ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA, ARTHUR M.
ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT A. ORDOO, BERNARD V. JULARBAL, IGNACIO C.
ALINGBAS and LEODEL N. SORIANO, petitioner,
vs
. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), and BENGUET ELECTRIC
COOPERATIVE, INC. (BENECO) respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari seeking to annul the decision promulgated by the National
Labor Relations Commission (NLRC) on July 2, 1992 in NLRC CA No. L-000384-92,[1] and its resolution
dated September 24, 1992 denying petitioners motion for reconsideration.
The factual background of this case, as summarized by the Labor Arbiter, is as follows:
Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment of wages and claim
for indemnity pay against a common respondent, the Benguet Electric Cooperative, Inc., (BENECO for
short) represented by its Acting General Manager, Gerardo P. Versoza.
Complainants services as meter readers were contracted for hardly a months duration, or from October
8 to 31, 1990. Their employment contracts, couched in identical terms, read:
You are hereby appointed as METER READER (APPRENTICE) under BENECO-NEA Management with
compensation at the rate of SIXTY-SIX PESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day from
October 08 to 31, 1990.
x x x. (Annex B, Complainants Joint Position Paper)
The said term notwithstanding, the complainants were allowed to work beyond October 31, 1990, or
until January 2, 1991. On January 3, 1991, they were each served their identical notices of termination
dated December 29, 1990. The same read:
Please be informed that effective at the close of office hours of December 31, 1990, your services with
the BENECO will be terminated. Your termination has nothing to do with your performance. Rather, it is
because we have to retrench on personnel as we are already overstaffed.
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x x x. (Annex C, CJPP)
On the same date, the complainants filed separate complaints for illegal dismissal. And following the
amendment of said complaints, they submitted their joint position paper on April 4, 1991. Respondent
filed its position paper on April 2, 1991.
It is the contention of the complainants that they were not apprentices but regular employees whose
services were illegally and unjustly terminated in a manner that was whimsical and capricious. On the
other hand, the respondent invokes Article 283 of the Labor Code in defense of the questioned
dismissal.[2]
On October 18, 1991, the Labor Arbiter rendered a decision, the dispositive portion of which reads
as follows:
WHEREFORE, judgment is hereby rendered:
1. Dismissing the complaints for illegal dismissal filed by the complainants for lack of merit. However in
view of the offer of the respondent to enter into another temporary employment contract with the
complainants, the respondent is directed to so extend such contract to each complainant, with the
exception of Jaime Viernes, and to pay each the amount of P2,590.50, which represents a months salary,
as indemnity for its failure to give complainants the 30-day notice mandated under Article 283 of the
Labor Code; or, at the option of the complainants, to pay each financial assistance in the amount
ofP5,000.00 and the P2,590.50 above-mentioned.
2. Respondent is also ordered:
A. To pay complainants the amount representing underpayment of their wages:
a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, Francisco Bayuga, Arthur Oribello,
Buenaventura de Guzman, Jr., Robert Ordoo, Bernard Jularbal and Leodel Soriano, P1,994.25 each;
b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and
c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each.
B. To extend to complainant Jaime Viernes an appointment as regular employee for the position of
meter reader, the job he held prior to his termination, and to pay him P2,590.50 as indemnity, plus the
underpayment of his wages as above stated.
C. To pay P7,000.00 as and for attorneys fees.
No damages.
SO ORDERED.[3]
Aggrieved by the Labor Arbiters decision, the complainants and the respondent filed their
respective appeals to the NLRC.
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On July 2, 1992, the NLRC modified its judgment, to wit:

WHEREFORE, premises considered, judgment is hereby rendered modifying the appealed decision by
declaring complainants dismissal illegal, thus ordering their reinstatement to their former position as
meter readers or to any equivalent position with payment of backwages limited to one year and deleting
the award of indemnity and attorneys fees. The award of underpayment of wages is hereby AFFIRMED.
SO ORDERED.[4]
On August 27, 1992, complainants filed a Motion for Clarification and Partial Reconsideration.[5] On
September 24, 1992, the NLRC issued a resolution denying the complainants motion for
reconsideration.[6]
Hence, complainants filed herein petition.
Private respondent BENECO filed its Comment; the Office of the Solicitor General (OSG) filed a
Manifestation and Motion in Lieu of Comment; public respondent NLRC filed its own Comment; and
petitioners filed their Manifestation and Motion In Lieu of Consolidated Reply. Public respondent NLRC,
herein petitioners, and private respondent filed their respective memoranda, and the OSG, its
Manifestation in 1994.
Pursuant to our ruling in Rural Bank of Alaminos Employees Union vs. NLRC,[7] to wit:
in the decision in the case of St. Martin Funeral Homes vs. National Labor Relations Commission, G.R.
No. 130866, promulgated on September 16, 1998, this Court pronounced that petitions
for certiorarirelating to NLRC decisions must be filed directly with the Court of Appeals, and labor cases
pending before this Court should be referred to the appellate court for proper disposition. However, in
cases where the Memoranda of both parties have been filed with this Court prior to the promulgation of
the St. Martin decision, the Court generally opts to take the case itself for its final disposition.[8]
and considering that the parties have filed their respective memoranda as of 1994, we opt to resolve the
issues raised in the present petition.
The parties raised the following issues:
1. Whether the respondent NLRC committed grave abuse of discretion in ordering the reinstatement of
petitioners to their former position as meter readers on probationary status in spite of its finding that
they are regular employees under Article 280 of the Labor Code.
2. Whether the respondent NLRC committed grave abuse of discretion in limiting the backwages of
petitioners to one year only in spite of its finding that they were illegally dismissed, which is contrary to
the mandate of full backwages until actual reinstatement but not to exceed three years.
3. Whether the respondent NLRC committed grave abuse of discretion in deleting the award of
indemnity pay which had become final because it was not appealed and in deleting the award of
attorneys fees because of the absence of a trial-type hearing.
4. Whether the mandate of immediately executory on the reinstatement aspect even pending appeal as
provided in the decision of Labor Arbiters equally applies in the decision of the National Labor Relations
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Commission even pending appeal, by means of a motion for reconsideration of the order reinstating a
dismissed employee or pending appeal because the case is elevated on certiorari before the Supreme
Court.[9]
We find the petition partly meritorious.
As to the first issue: We sustain petitioners claim that they should be reinstated to their former
position as meter readers, not on a probationary status, but as regular employees.
Reinstatement means restoration to a state or condition from which one had been removed or
separated.[10] In case of probationary employment, Article 281 of the Labor Code requires the employer
to make known to his employee at the time of the latters engagement of the reasonable standards
under which he may qualify as a regular employee.
A review of the records shows that petitioners have never been probationary employees. There is
nothing in the letter of appointment, to indicate that their employment as meter readers was on a
probationary basis. It was not shown that petitioners were informed by the private respondent, at the
time of the latters employment, of the reasonable standards under which they could qualify as regular
employees. Instead, petitioners were initially engaged to perform their job for a limited duration, their
employment being fixed for a definite period, from October 8 to 31, 1990.
Private respondents reliance on the case of Brent School, Inc. vs. Zamora,[11] wherein we held as
follows:
Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employees right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should
have no application to instances where a fixed period of employment was agreed upon knowingly and
the employee and absent any other circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.[12]
is misplaced.
The principle we have enunciated in Brent applies only with respect to fixed term
employments. While it is true that petitioners were initially employed on a fixed term basis as their
employment contracts were only for October 8 to 31, 1990, after October 31, 1990, they were allowed
to continue working in the same capacity as meter readers without the benefit of a new contract or
agreement or without the term of their employment being fixed anew. After October 31, 1990, the
employment of petitioners is no longer on a fixed term basis. The complexion of the employment
relationship of petitioners and private respondent is thereby totally changed. Petitioners have attained
the status of regular employees.
Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer, or a casual
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employee who has rendered at least one year of service, whether continuous or broken, with respect to
the activity in which he is employed.
In De Leon vs. NLRC,[13] and Abasolo vs. NLRC,[14] we laid down the test in determining regular
employment, to wit:
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
is considered regular, but only with respect to such activity and while such activity exists.[15]
Clearly therefrom, there are two separate instances whereby it can be determined that an
employment is regular: (1) The particular activity performed by the employee is necessary or desirable
in the usual business or trade of the employer; or (2) if the employee has been performing the job for at
least a year.
Herein petitioners fall under the first category. They were engaged to perform activities that are
necessary to the usual business of private respondent. We agree with the labor arbiters pronouncement
that the job of a meter reader is necessary to the business of private respondent because unless a meter
reader records the electric consumption of the subscribing public, there could not be a valid basis for
billing the customers of private respondent. The fact that the petitioners were allowed to continue
working after the expiration of their employment contract is evidence of the necessity and desirability of
their service to private respondents business. In addition, during the preliminary hearing of the case on
February 4, 1991, private respondent even offered to enter into another temporary employment
contract with petitioners. This only proves private respondents need for the services of herein
petitioners. With the continuation of their employment beyond the original term, petitioners have
become full-fledged regular employees. The fact alone that petitioners have rendered service for a
period of less than six months does not make their employment status as probationary.
Since petitioners are already regular employees at the time of their illegal dismissal from
employment, they are entitled to be reinstated to their former position as regular employees, not
merely probationary.
As to the second issue, Article 279 of the Labor Code, as amended by R.A. No. 6715, which took
effect on March 21, 1989, provides that an illegally dismissed employee is entitled to 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. Since petitioners
were employed on October 8, 1990, the amended provisions of Article 279 of the Labor Code shall apply
to the present case. Hence, it was patently erroneous, tantamount to grave abuse of discretion on the
part of the public respondent in limiting to one year the backwages awarded to petitioners.
With respect to the third issue, an employer becomes liable to pay indemnity to an employee who
has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of
due process.[16] The indemnity is in the form of nominal damages intended not to penalize the employer
but to vindicate or recognize the employees right to procedural due process which was violated by the
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employer.[17] Under Article 2221 of the Civil Code, nominal damages are adjudicated in order that a right
of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
We do not agree with the ruling of the NLRC that indemnity is incompatible with the award of
backwages. These two awards are based on different considerations. Backwages are granted on grounds
of equity to workers for earnings lost due to their illegal dismissal from work.[18] On the other hand, the
award of indemnity, as we have earlier held, is meant to vindicate or recognize the right of an employee
to due process which has been violated by the employer.
In the present case, the private respondent, in effecting the dismissal of petitioners from their
employment, failed to comply with the provisions of Article 283 of the Labor Code which requires an
employer to serve a notice of dismissal upon the employees sought to be terminated and to the
Department of Labor, at least one month before the intended date of termination.Petitioners were
served notice on January 3, 1991 terminating their services, effective December 29, 1990, or
retroactively, in contravention of Article 283. This renders the private respondent liable to pay
indemnity to petitioners.
Thus, we find that the NLRC committed grave abuse of discretion in deleting the award of
indemnity. In Del Val vs. NLRC,[19] we held that the award of indemnity ranges from P1,000.00
to P10,000.00 depending on the particular circumstances of each case. In the present case, the amount
of indemnity awarded by the labor arbiter is P2,590.50, which is equivalent to petitioners one-month
salary. We find no cogent reason to modify said award, for being just and reasonable.
As to the award of attorneys fees, the same is justified by the provisions of Article 111 of the Labor
Code, to wit:
Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the culpable party may be
assessed attorneys fees equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings
for the recovery of the wages, attorneys fees which exceed ten percent of the amount of wages
recovered.
As to the last issue, Article 223 of the Labor Code is plain and clear that the decision of the NLRC
shall be final and executory after ten (10) calendar days from receipt thereof by the parties. In addition,
Section 2(b), Rule VIII of the New Rules of Procedure of the NLRC provides that should there be a motion
for reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be
executory after ten calendar days from receipt of the resolution on such motion.
We find nothing inconsistent or contradictory between Article 223 of the Labor Code and Section
2(b), Rule VIII, of the NLRC Rules of Procedure. The aforecited provision of the NLRC Rules of Procedure
merely provides for situations where a motion for reconsideration is filed. Since the Rules allow the
filing of a motion for reconsideration of a decision of the NLRC, it simply follows that the ten-day period
provided under Article 223 of the Labor Code should be reckoned from the date of receipt by the parties
of the resolution on such motion. In the case at bar, petitioners received the resolution of the NLRC
denying their motion for reconsideration on October 22, 1992. Hence, it is on November 2, 1992 that
the questioned decision became executory.
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WHEREFORE, the petition is partially GRANTED. The decision of the National Labor Relations
Commission dated July 2, 1992 is MODIFIED. Private respondent Benguet Electric Cooperative, Inc.
(BENECO) is hereby ordered to reinstate petitioners to their former or substantially equivalent position
as regular employees, without loss of seniority rights and other privileges appurtenant thereto, with full
backwages from the time of their dismissal until they are actually reinstated. The amount of P2,590.50
awarded by the labor arbiter as indemnity to petitioners is REINSTATED. Private respondent is also
ordered to pay attorneys fees in the amount of ten percent (10%) of the total monetary award due to
the petitioners. In all other respects the assailed decision and resolution are AFFIRMED.
Costs against private respondent BENECO.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Callejo, Sr., JJ., concur.
[1]
Entitled, Jaime D. Viernes, et al., Complainants-Appellants, versus Benguet Electric Cooperative, Inc.
represented by Gerardo P. Verzosa, Acting General Manager, Respondent-Appellant.
[2]
NLRC Records, p. 110.
[3]
Ibid.
[4]
NLRC Records, p. 325.
[5]
Id., at p. 328.
[6]
Id., at p. 371.
[7]
317 SCRA 669 (1999).
[8]
Id., at p. 678.
[9]
Petition, Rollo, p. 26.
[10]
Judy Philippines, Inc. vs. NLRC, 289 SCRA 755, 767 (1998); De Guzman vs. NLRC, 312 SCRA 266, 274
(1999).
[11]
181 SCRA 702 (1990).
[12]
Id., at p. 716.
[13]
176 SCRA 615, (1989).
[14]
346 SCRA 293 (2000).
[15]
Id., at p. 304.
[16]
Kwikway Engineering Works vs. NLRC, 195 SCRA 526, 532 (1991); Aurelio vs. NLRC, 221 SCRA 432, 443
(1993); Sampaguita Garments Corporation vs. NLRC, 233 SCRA 260, 265 (1994).
[17]
Better Buildings, Inc. vs. NLRC, 283 SCRA 242, 251 (1997); Iran vs. NLRC (Fourth Division), 289 SCRA
433, 442 (1998).
[18]
Paguio vs. PLDT, G.R. No. 154072, December 3, 2002.
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[19]
296 SCRA 283, 290 (1998).
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CARTAGENAS VS ROMAGO ELECTRIC COMPANY

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 82973 September 15, 1989
MARIO CARTAGENAS, JESUS N. MIRABALLES, VICTOR C. MONSOD and VICENTE BARROA, petitioners,
vs.
ROMAGO ELECTRIC COMPANY, INC., NATIONAL LABOR RELATIONS COMMISSION (Fifth
Division),respondents.
Isidro G. Pasana for petitioners.
Constantino B. de Jesus & Associates for private respondent.
GRINO-AQUIO, J.:
he issue in this case is whether the petitioners are project employees of the private respondent Romago
Electric Company, Inc., as found by the National Labor Relations Commission, or regular employees as
found by the Labor Arbiter.
The facts are recited in the decision of the NLRC as follows:
Respondent Romago is a general contractor engaged in contracting and sub-contracting
of specific building construction projects or undertaking such as electrical, mechanical
and civil engineering aspects in the repair of buildings and from other kindred services.
Individual complainants are employed by the respondent in connection with particular
construction projects and they are as follows:
1. Jesus N. Miraballes Project Assigned Period Covered
L. Towers 4/23/79-2/26/80
Nat'l Bookstore 2/26/80-8/28/80
PNRC-MHQ Bldg. 8/29/80-9/09/80
A. Payumo's Res. 9/10/80
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State Center 3/05/81-7/13/81

FEBTC Bldg. 7/14/81-9/21/81
SMC Complex 9/22/81-9/10/84
PNB Finance Complex 9/11/84-7/12/86
(Annexes 1 to 25, respondent's Position Paper)
2. Victor C. Monsod
Project Assigned Period Covered
MMRH Project 4/13/76-2/02/80
Manila Hotel 2/03/80-7/19/81
PNB Project 7/20/81-7/16/84
Manila Hotel 7/17/84-7/02/84
PNB Finance Center 10/3/84-7/12/86
(Annexes 30 to 41, Ibid)
3. Vicente Barroa
SMC Hoc. Project 7/5/82-1/21/85
4. Mario Cartagenas
Effective July 12,1986, individual complainants and Lawrence Deguit were temporarily
laid-off by virtue of a memorandum issued by the respondent. In said memorandum
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they were also informed that a meeting regarding the resumption of operation will be
held on July 16, 1986 and that they will be notified as to when they will resume work.
On July 28, 1986, complainants filed the instant case for illegal dismissal but before the
respondent could receive a copy of the complaint and the notification and summons
issued by the NLRC National Capital Region (actually received only on August 22, 1986,
page 4, records) individual complainants re-applied with the respondent and were
assigned to work with its project at Robinson-EDSA, specifically on the following dates,
to wit:
1. Mirabelles and Monsod
August 2/86
2. Barroa
August 11/86
3. Cartagenas
August 4/86
(Annexes 26 to 29-B; '39-4l'; 48 to 51 -B; '55 to 58-A', Ibid)
In hiring the herein complainants to be assigned to a particular project they have to fill
up an employment application form and are subjected to a pre-hiring examination. If
evaluated to be qualified they sign at the end portion of their employment application
form that:
AGREEMENT
I hereby agree to the foregoing conditions and accept my employment for a fixed period
and from the above mentioned Project/Assignment only.
The conditions of employment to which the complainant agreed are mentioned in the
right upper portion of the same page of said application form, an example of which
reads:
Assigned to
FEBTC G.P. FORMOSO Project
Position
Electrician
Effectivity
7-14-81
Salary
P18.50/day & allowance
Conditions
Hired for above project only
Approved:
Signed
Personnel Manager
7/14/81
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Date
(Employment Application Form of MIRABALLES JESUS NIEVA dated July 14,1981, Annex
16; 16-A and 16-B, Ibid)
Thereafter the hired employee is given by the respondent an assignment slip, an
example of which reads:
ASSIGNMENT SLIP
DATE: July 14, 1981
Engr. C.A. Castro
Project In-Charge
FEFTC
Name of Project
The bearer, Mr. Jesus N. Miraballes will work under you as electrician effective 14 July
81. His employment will terminate upon completion/stoppage of the project or
terminated earlier for cause.
Signed
GUDIOSO PLATA
Chief Engineer
CONFORME:
SGD. JESUS N. MIRABALLES
(Assignment slip of Jesus N. Miraballes, Annex 17, Ibid.)
xxx xxx xxx
... Respondent introduced documentary exhibits that the complainant have invariably
been issued appointment from project to projects and were issued notice of temporary
lay-off when the PNB Finance Center project was suspended due to lack of funds and
that when work was available particularly respondent's project at Robinson-EDSA they
were rehired and assigned to this project. (pp. 16-19; 21-22, Rollo.)
The NLRC held that the complainants were project employees because their appointments were "coterminus with the phase or item of work assigned to them in said project," It held further:
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The fact that the complainants worked for the respondent under different project
employment contracts for so many years could not be made a basis to consider them as
regular employees for they remain project employees regardless of the number of
projects in which they have worked. (p. 22, Rollo.)
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual Employment.- The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreements of the parties, an
paragraph: Provided, That, any employee who has rendered at least one year of service,
while such actually exists (Emphasis supplied). (p. 46, Rollo.)
As an electrical contractor, the private respondent depends for its business on the contracts it is able to
obtain from real estate developers and builders of buildings. Since its work depends on the availability
of such contracts or "projects," necessarily the duration of the employment of its work force is not
permanent but co-terminus with the projects to which they are assigned and from whose payrolls they
are paid. It would be extremely burdensome for their employer who, like them, depends on the
availability of projects, if it would have to carry them as permanent employees and pay them wages
even if there are no projects for them to work on. We hold, therefore, that the NLRC did not abuse its
discretion in finding, based on substantial evidence in the records, that the petitioners are only project
workers of the private respondent.
This case is similar to Sandoval Shipyards, Inc. vs. NLRC, 136 SCRA 675 (1985), where we held:
We feel that there is merit in the contention of the applicant corporation. To our mind,
the employment of the employees concerned were fixed for a specific project or
undertaking. For the nature of the business the corporation is engaged into is one which
will not allow it to employ workers for an indefinite period. "It is significant to note that
the corporation does not construct vessels for sale or otherwise which will demand
continuous productions of ships and will need permanent or regular workers. It merely
accepts contracts for ship-building or for repair of vessels from third parties and, only,
on occasion when it has work contract of this nature that it hires workers to do the job
which, needless to say, lasts only for less than a year or longer.
The completion of their work or project automatically terminates their employment, in
which case, the employer is, under the law, only obliged to render a report on the
termination of the employment. (P. 48, Rollo.)
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Petitioners' invocation of the resolution of this Court in Romago Electric Company, Inc, vs. Romago
Electric United Workers Union-Christian Labor Organization, (REWU-CLOP), et al., G.R. No. 79774,
February 1, 1988, where this Court dismissed the petition, is not well taken. As pointed out by the public
respondent, the issue in that case was whether the members of the union may properly participate in
the holding of a certification election. Since the petitioners in their complaint for illegal dismissal dated
July 28, 1986 (Annex A of petition) averred that they do not belong to any union, the ruling in Romago
vs, REWU-CLOP may not apply to them. In their Reply to the public respondents' Comment in this case,
they disclosed that they are members and officers of a new union which they organized on March 13,
1988 (pp. 62-63, Rollo). That supervening fact, however, has no relevance to this case.
We find no reason to depart from the well-settled rule that findings of fact of labor officials are generally
conclusive and binding upon this Court when supported by substantial evidence, as in this case (Edi-Staff
Builders International, Inc. vs, Leogardo, Jr., 152 SCRA 453; Asiaworld Publishing House, Inc. vs. Ople,
152 SCRA 219; National Federation of Labor Union vs. Ople, 143 SCRA 124; Dangan vs. NLRC, 127 SCRA
706; Special Events & Central Shipping Office Workers Union vs. San Miguel Corp., 122 SCRA 557;
Mamerto vs. Inciong, 118 SCRA 265; Phil. Labor Alliance Council vs. Bureau of Labor Relations, 75 SCRA
162).
WHEREFORE, the petition for certiorari is dismissed for lack of merit. No costs.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
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MARAGUINOT VS NLRC
FIRST DIVISION
[G.R. No. 120969. January 22, 1998]
ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners,

Vs
. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding
Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner VICTORIANO R.
CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FILMS, respondents.
DECISION
DAVIDE, JR., J.:
By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners seek
to annul the 10 February 1995 Decision[1] of the National Labor Relations Commission (hereafter NLRC),
and its 6 April 1995 Resolution[2] denying the motion to reconsider the former in NLRC-NCR-CA No.
006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case No. 00-07-03994-92.
The parties present conflicting sets of facts.
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18
July 1989 as part of the filming crew with a salary of P375.00 per week. About four months later, he was
designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00 in May
1990. In June 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, which
was increased to P593.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as
a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May
1991, then to P475.00 on 21 December 1991.[3]
Petitioners tasks consisted of loading, unloading and arranging movie equipment in the shooting
area as instructed by the cameraman, returning the equipment to Viva Films warehouse, assisting in the
fixing of the lighting system, and performing other tasks that the cameraman and/or director may
assign.[4]
Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria
Cesario, to facilitate their request that private respondents adjust their salary in accordance with the
minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would
agree to increase their salary only if they signed a blank employment contract.As petitioners refused to
sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when
he reported for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the company payroll
from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank
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employment contract, and when he still refused, private respondents terminated his services on 20 July
1992.[5] Petitioners thus sued for illegal dismissal[6] before the Labor Arbiter.
On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of
Viva Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies -- but
not in the business of making movies; in the same vein, private respondent Vic del Rosario is merely an
executive producer, i.e., the financier who invests a certain sum of money for the production of movies
distributed and exhibited by VIVA.[7]
Private respondents assert that they contract persons called producers -- also referred to as
associate producers[8] -- to produce or make movies for private respondents; and contend that
petitioners are project employees of the associate producers who, in turn, act as independent
contractors. As such, there is no employer-employee relationship between petitioners and private
respondents.
Private respondents further contend that it was the associate producer of the film Mahirap Maging
Pogi, who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only
then that Maraguinot was released upon payment of his last salary, as his services were no longer
needed. Anent petitioner Enero, he was hired for the movie entitled Sigaw ng Puso, later re-titled Narito
ang Puso. He went on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992,
shooting for the movie had already been completed.[9]
After considering both versions of the facts, the Labor Arbiter found as follows:
On the first issue, this Office rules that complainants are the employees of the respondents. The
producer cannot be considered as an independent contractor but should be considered only as a laboronly contractor and as such, acts as a mere agent of the real employer, the herein respondents.
Respondents even failed to name and specify who are the producers. Also, it is an admitted fact that the
complainants received their salaries from the respondents. The case cited by the respondents, Rosario
Brothers, Inc. vs. Ople, 131 SCRA 72 does not apply in this case.
It is very clear also that complainants are doing activities which are necessary and essential to the
business of the respondents, that of movie-making. Complainant Maraguinot worked as an electrician
while complainant Enero worked as a crew [member].[10]
Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:
WHEREFORE, judgment is hereby rendered declaring that complainants were illegally dismissed.
Respondents are hereby ordered to reinstate complainants to their former positions without loss [of]
seniority rights and pay their backwages starting July 21, 1992 to December 31, 1993 temporarily
computed in the amount of P38,000.00 for complainant Paulino Enero and P46,000.00 for complainant
Alejandro Maraguinot, Jr. and thereafter until actually reinstated.
Respondents are ordered to pay also attorneys fees equivalent to ten (10%) and/or P8,400.00 on top of
the award.[11]
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Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its
decision[12] of 10 February 1995, the NLRC found the following circumstances of petitioners work clearly
established:
1. Complainants [petitioners herein] were hired for specific movie projects and their employment
was co-terminus with each movie project the completion/termination of which are pre-determined,
such fact being made known to complainants at the time of their engagement.
xxx
2. Each shooting unit works on one movie project at a time. And the work of the shooting units, which
work independently from each other, are not continuous in nature but depends on the availability of
movie projects.
3. As a consequence of the non-continuous work of the shooting units, the total working hours logged
by complainants in a month show extreme variations... For instance, complainant Maraguinot worked
for only 1.45 hours in June 1991 but logged a total of 183.25 hours in January 1992. Complainant Enero
logged a total of only 31.57 hours in September 1991 but worked for 183.35 hours the next month,
October 1991.
4. Further shown by respondents is the irregular work schedule of complainants on a daily basis.
Complainant Maraguinot was supposed to report on 05 August 1991 but reported only on 30 August
1991, or a gap of 25 days. Complainant Enero worked on 10 September 1991 and his next scheduled
working day was 28 September 1991, a gap of 18 days.
5. The extremely irregular working days and hours of complainants work explain the lump sum payment
for complainants services for each movie project. Hence, complainants were paid a standard weekly
salary regardless of the number of working days and hours they logged in. Otherwise, if the principle of
no work no pay was strictly applied, complainants earnings for certain weeks would be very negligible.
6. Respondents also alleged that complainants were not prohibited from working with such movie
companies like Regal, Seiko and FPJ Productions whenever they are not working for the independent
movie producers engaged by respondents... This allegation was never rebutted by complainants and
should be deemed admitted.
The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together,
indicated that complainants (herein petitioners) were project employees.
After their motion for reconsideration was denied by the NLRC in its Resolution[13] of 6 April 1995,
petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees; (2)
ruling that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter.
To support their claim that they were regular (and not project) employees of private respondents,
petitioners cited their performance of activities that were necessary or desirable in the usual trade or
business of private respondents and added that their work was continuous, i.e., after one project was
completed they were assigned to another project. Petitioners thus considered themselves part of a work
pool from which private respondents drew workers for assignment to different projects. Petitioners
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lamented that there was no basis for the NLRCs conclusion that they were project employees, while the
associate producers were independent contractors; and thus reasoned that as regular employees, their
dismissal was illegal since the same was premised on a false cause, namely, the completion of a project,
which was not among the causes for dismissal allowed by the Labor Code.
Private respondents reiterate their version of the facts and stress that their evidence supports the
view that petitioners are project employees; point to petitioners irregular work load and work schedule;
emphasize the NLRCs finding that petitioners never controverted the allegation that they were not
prohibited from working with other movie companies; and ask that the facts be viewed in the context of
the peculiar characteristics of the movie industry.
The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners
raise questions of fact, particularly, the NLRCs finding that petitioners were project employees, a finding
supported by substantial evidence; and submits that petitioners reliance on Article 280 of the Labor
Code to support their contention that they should be deemed regular employees is misplaced, as said
section merely distinguishes between two types of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain benefits.
The OSG likewise rejects petitioners contention that since they were hired not for one project, but
for a series of projects, they should be deemed regular employees. Citing Mamansag v. NLRC,[14] the
OSG asserts that what matters is that there was a time-frame for each movie project made known to
petitioners at the time of their hiring. In closing, the OSG disagrees with petitioners claim that the NLRCs
classification of the movie producers as independent contractors had no basis in fact and in law, since,
on the contrary, the NLRC took pains in explaining its basis for its decision.
As regards the propriety of this action, which the Office of the Solicitor General takes issue with, we
rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for
one who complains that the NLRC acted in total disregard of evidence material to or decisive of the
controversy.[15] In the instant case, petitioners allege that the NLRCs conclusions have no basis in fact
and in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.
The judicious resolution of this case hinges upon, first, the determination of whether an employeremployee relationship existed between petitioners and private respondents or any one of private
respondents. If there was none, then this petition has no merit; conversely, if the relationship existed,
then petitioners could have been unjustly dismissed.
A related question is whether private respondents are engaged in the business of making motion
pictures. Del Rosario is necessarily engaged in such business as he finances the production of
movies. VIVA, on the other hand, alleges that it does not make movies, but merely distributes and
exhibits motion pictures. There being no further proof to this effect, we cannot rely on this self-serving
denial. At any rate, and as will be discussed below, private respondents evidence even supports the view
that VIVA is engaged in the business of making movies.
We now turn to the critical issues. Private respondents insist that petitioners are project employees
of associate producers who, in turn, act as independent contractors. It is settled that the contracting out
of labor is allowed only in case of job contracting. Section 8, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code describes permissible job contracting in this wise:
Sec. 8. Job contracting. -- There is job contracting permissible under the Code if the following conditions
are met:
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(1) The contractor carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner and method,
free from the control and direction of his employer or principal in all matters connected
with the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of
his business.
Assuming that the associate producers are job contractors, they must then be engaged in the
business of making motion pictures. As such, and to be a job contractor under the preceding description,
associate producers must have tools, equipment, machinery, work premises, and other materials
necessary to make motion pictures. However, the associate producers here have none of these. Private
respondents evidence reveals that the movie-making equipment are supplied to the producers and
owned by VIVA. These include generators,[16] cables and wooden platforms,[17] cameras and shooting
equipment;[18] in fact, VIVA likewise owns the trucks used to transport the equipment.[19] It is thus clear
that the associate producer merely leases the equipment from VIVA.[20] Indeed, private respondents
Formal Offer of Documentary Evidence stated one of the purposes of Exhibit 148 as:
To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to finish their
films.[21]
While the purpose of Exhibits 149, 149-A and 149-B was:
[T]o prove that the movies of Viva Films were contracted out to the different independent Producers
who rented Shooting Unit No. 3 with a fixed budget and time-frame of at least 30 shooting days or 45
days whichever comes first.[22]
Private respondents further narrated that VIVAs generators broke down during petitioners last
movie project, which forced the associate producer concerned to rent generators, equipment and crew
from another company.[23] This only shows that the associate producer did not have substantial capital
nor investment in the form of tools, equipment and other materials necessary for making a
movie. Private respondents in effect admit that their producers, especially petitioners last producer, are
not engaged in permissible job contracting.
If private respondents insist that their associate producers are labor contractors, then these
producers can only be labor-only contractors, defined by the Labor Code as follows:
Art. 106. Contractor or subcontractor.-- x x x
There is labor-only contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
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A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code:
Sec. 9. Labor-only contracting. -- (a) Any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually
employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as
contractor shall be considered merely as an agent or intermediary of the employer who
shall be responsible to the workers in the same manner and extent as if the latter were
directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine through
appropriate orders whether or not the contracting out of labor is permissible in the light
of the circumstances of each case and after considering the operating needs of the
employer and the rights of the workers involved. In such case, he may prescribe
conditions and restrictions to insure the protection and welfare of the workers.
As labor-only contracting is prohibited, the law considers the person or entity engaged in the same
a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate
producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire
the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of
VIVA, who recruited crew members from an available group of free-lance workers which includes the
complainants Maraguinot and Enero.[24]And in their Memorandum, private respondents declared that
the associate producer hires the services of... 6) camera crew which includes (a) cameraman; (b) the
utility crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc....[25] This clearly
showed that the associate producers did not supply the workers required by the movie project.
The relationship between VIVA and its producers or associate producers seems to be that of
agency,[26] as the latter make movies on behalf of VIVA, whose business is to make movies. As such, the
employment relationship between petitioners and producers is actually one between petitioners and
VIVA, with the latter being the direct employer.
The employer-employee relationship between petitioners and VIVA can further be established by
the control test. While four elements are usually considered in determining the existence of an
employment relationship, namely: (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct,
the most important element is the employers control of the employees conduct, not only as to the
result of the work to be done but also as to the means and methods to accomplish the same.[27] These
four elements are present here. In their position paper submitted to the Labor Arbiter, private
respondents narrated the following circumstances:
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[T]he PRODUCER has to work within the limits of the budget he is given by the company, for as long as
the ultimate finish[ed] product is acceptable to the company...
To ensure that quality films are produced by the PRODUCER who is an independent contractor, the
company likewise employs a Supervising PRODUCER, a Project accountant and a Shooting unit
supervisor. The Companys Supervising PRODUCER is Mr. Eric Cuatico, the Project accountant varies from
time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario.
The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive Producer to
monitor the progress of the PRODUCERs work accomplishment. He is there usually in the field doing the
rounds of inspection to see if there is any problem that the PRODUCER is encountering and to assist in
threshing out the same so that the film project will be finished on schedule. He supervises about 3 to 7
movie projects simultaneously [at] any given time by coordinating with each film PRODUCER. The
Project Accountant on the other hand assists the PRODUCER in monitoring the actual expenses incurred
because the company wants to insure that any additional budget requested by the PRODUCER is really
justified and warranted especially when there is a change of original plans to suit the tast[e] of the
company on how a certain scene must be presented to make the film more interesting and more
commercially viable. (emphasis ours)
VIVAs control is evident in its mandate that the end result must be a quality film acceptable to the
company. The means and methods to accomplish the result are likewise controlled by VIVA, viz., the
movie project must be finished within schedule without exceeding the budget, and additional expenses
must be justified; certain scenes are subject to change to suit the taste of the company; and the
Supervising Producer, the eyes and ears of VIVA and del Rosario, intervenes in the movie-making
process by assisting the associate producer in solving problems encountered in making the film.
It may not be validly argued then that petitioners are actually subject to the movie directors
control, and not VIVAs direction. The director merely instructs petitioners on how to better comply with
VIVAs requirements to ensure that a quality film is completed within schedule and without exceeding
the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rankand-file employees with control ultimately resting on the employer.
Moreover, appointment slips [28] issued to all crew members state:
During the term of this appointment you shall comply with the duties and responsibilities of your
position as well as observe the rules and regulations promulgated by your superiors and by Top
Management.
The words superiors and Top Management can only refer to the superiors and Top Management of
VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the
appointment slips only emphasize VIVAs control over petitioners.
Aside from control, the element of selection and engagement is likewise present in the instant case
and exercised by VIVA. A sample appointment slip offered by private respondents to prove that
members of the shooting crew except the driver are project employees of the Independent
Producers[29] reads as follows:
VIVA PRODUCTIONS, INC.
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16 Sct. Albano St.

Diliman, Quezon City
PEDRO NICOLAS Date: June 15, 1992
__________________
APPOINTMENT SLIP
You are hereby appointed as SOUNDMAN for the film project entitled MANAMBIT. This appointment
shall be effective upon the commencement of the said project and shall continue to be effective until
the completion of the same.
For your services you shall receive the daily/weekly/monthly compensation of P812.50.
During the term of this appointment you shall comply with the duties and responsibilities of your
position as well as observe the rules and regulations promulgated by your superiors and by Top
Management.
Very truly yours,
(an illegible signature)
CONFORME:
___________________
Name of appointee
Signed in the presence of:
_____________________
Notably, nowhere in the appointment slip does it appear that it was the producer or associate
producer who hired the crew members; moreover, it is VIVAs corporate name which appears on the
heading of the appointment slip. What likewise tells against VIVA is that it paid petitioners salaries as
evidenced by vouchers, containing VIVAs letterhead, for that purpose.[30]
All the circumstances indicate an employment relationship between petitioners and VIVA alone,
thus the inevitable conclusion is that petitioners are employees only of VIVA.
The next issue is whether petitioners were illegally dismissed. Private respondents contend that
petitioners were project employees whose employment was automatically terminated with the
completion of their respective projects. Petitioners assert that they were regular employees who were
illegally dismissed.
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It may not be ignored, however, that private respondents expressly admitted that petitioners were
part of a work pool;[31] and, while petitioners were initially hired possibly as project employees, they had
attained the status of regular employees in view of VIVAs conduct.
A project employee or a member of a work pool may acquire the status of a regular employee
when the following concur:
1) There is a continuous rehiring of project employees even after cessation of a project;[32] and
2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the
usual business or trade of the employer.[33]
However, the length of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment.[34]
In the instant case, the evidence on record shows that petitioner Enero was employed for a total of
two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed
for some three (3) years and worked on at least twenty-three (23) projects.[35] Moreover, as petitioners
tasks involved, among other chores, the loading, unloading and arranging of movie equipment in the
shooting area as instructed by the cameramen, returning the equipment to the Viva Films warehouse,
and assisting in the fixing of the lighting system, it may not be gainsaid that these tasks were vital,
necessary and indispensable to the usual business or trade of the employer. As regards the underscored
phrase, it has been held that this is ascertained by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety.[36]
A recent pronouncement of this Court anent project or work pool employees who had attained the
status of regular employees proves most instructive:
The denial by petitioners of the existence of a work pool in the company because their projects were not
continuous is amply belied by petitioners themselves who admit that: xxx
A work pool may exist although the workers in the pool do not receive salaries and are free to seek
other employment during temporary breaks in the business, provided that the worker shall be available
when called to report for a project. Although primarily applicable to regular seasonal workers, this setup can likewise be applied to project workers insofar as the effect of temporary cessation of work is
concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of
coddling labor at the expense of capital and at the same time enables the workers to attain the status of
regular employees. Clearly, the continuous rehiring of the same set of employees within the framework
of the Lao Group of Companies is strongly indicative that private respondents were an integral part of a
work pool from which petitioners drew its workers for its various projects.
In a final attempt to convince the Court that private respondents were indeed project employees,
petitioners point out that the workers were not regularly maintained in the payroll and were free to
offer their services to other companies when there were no on-going projects. This argument however
cannot defeat the workers status of regularity. We apply by analogy the case of Industrial-CommercialAgricultural Workers Organization v. CIR [16 SCRA 562, 567-68 (1966)] which deals with regular seasonal
employees. There we held: xxx
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Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of
work. Of course, no compensation can be demanded from the employer because the stoppage of
operations at the end of a project and before the start of a new one is regular and expected by both
parties to the labor relations. Similar to the case of regular seasonal employees, the employment
relation is not severed by merely being suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186
(1963)] The employees are, strictly speaking, not separated from services but merely on leave of
absence without pay until they are reemployed. Thus we cannot affirm the argument that non-payment
of salary or non-inclusion in the payroll and the opportunity to seek other employment denote project
employment.[37] (underscoring supplied)
While Lao admittedly involved the construction industry, to which Policy Instruction No.
20/Department Order No. 19[38] regarding work pools specifically applies, there seems to be no
impediment to applying the underlying principles to industries other than the construction
industry.[39] Neither may it be argued that a substantial distinction exists between the projects
undertaken in the construction industry and the motion picture industry. On the contrary, the raison d'
etre of both industries concern projects with a foreseeable suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a
duty to re-hire a project employee even after completion of the project for which he was hired. The
import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire
project employees. What this decision merely accomplishes is a judicial recognition of the employment
status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous
re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable
to the employers usual business or trade. Let it not be said that this decision coddles labor, for
as Lao has ruled, project or work pool employees who have gained the status of regular employees are
subject to the no work-no pay principle, to repeat:
A work pool may exist although the workers in the pool do not receive salaries and are free to seek
other employment during temporary breaks in the business, provided that the worker shall be available
when called to report for a project. Although primarily applicable to regular seasonal workers, this setup can likewise be applied to project workers insofar as the effect of temporary cessation of work is
concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of
coddling labor at the expense of capital and at the same time enables the workers to attain the status of
regular employees.
The Courts ruling here is meant precisely to give life to the constitutional policy of strengthening
the labor sector,[40] but, we stress, not at the expense of management. Lest it be misunderstood, this
ruling does not mean that simply because an employee is a project or work pool employee even outside
the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that
once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired
by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be deemed a
regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise would
allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No.
20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by
project or work pool employees who have already gained the status of regular employees by the
employers conduct.
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In closing then, as petitioners had already gained the status of regular employees, their dismissal
was unwarranted, for the cause invoked by private respondents for petitioners dismissal, viz.,
completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the Labor
Code. As such, petitioners are now entitled to back wages and reinstatement, without loss of seniority
rights and other benefits that may have accrued.[41] Nevertheless, following the principles of suspension
of work and no pay between the end of one project and the start of a new one, in computing petitioners
back wages, the amounts corresponding to what could have been earned during the periods from the
date petitioners were dismissed until their reinstatement when petitioners respective Shooting Units
were not undertaking any movie projects, should be deducted.
Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in
effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the Philippines
and Bustamante v. NLRC,[42] petitioners are entitled to receive full back wages from the date of their
dismissal up to the time of their reinstatement, without deducting whatever earnings derived elsewhere
during the period of illegal dismissal, subject, however, to the above observations.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations
Commission in NLRC NCR CA No. 006195-94 dated 10 February 1995, as well as its Resolution dated 6
April 1995, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of
discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-07-03994-92 is REINSTATED,
subject, however, to the modification above mentioned in the computation of back wages.
No pronouncement as to costs.
SO ORDERED.
Bellosillo, Vitug, and Kapunan, JJ., concur.
[1]
Per Commissioner Victoriano R. Calaycay, with Commissioners Raul T. Aquino and Rogelio I. Rayala,
concurring. Annex A of Petition, Rollo, 20-29.
[2]
Rollo, 30.
[3]
Complaint, 1; Original Record (OR), 2; Rollo, 3-4.
[4]
Position Paper for Complainant, 1; OR, 37; Rollo, 4.
[5]
Position Paper for Complainant, 2; OR, 38; Petition, 3-4; Rollo, 4-5.
[6]
OR, 2-4.
[7]
Respondents Position Paper, 1; OR, 8; Comment, 1; Rollo, 47.
[8]
Annexes 4 and 4-A, Private Respondents Position Paper before the Labor Arbiter; OR, 28- 29.
[9]
Respondents Position Paper, 5-6; OR, 12-13; Comment, 4-6; Rollo, 50-52.
[10]
Quoted from Petition, 7; Rollo, 8.
[11]
Quoted from NLRC decision, Annex A of Petition; Rollo, 20.
[12]
Supra. note 1.
[13]
Supra note 2.
[14]
218 SCRA 722 [1993].
[15]
See Sajonas v. NLRC, 183 SCRA 182, 186 [1990].
[16]
TSN, 12 October 1992, 9-10; OR, 106-107; TSN, 25 January 1993, 12; OR, 246.
[17]
TSN, 25 January 1993, 54-55; OR, 288-289.
[18]
Id., 12, 14-15; Id., 246, 248-249.
[19]
Id., 12-13; Id., 246-247.
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[20]
Respondents Position Paper, 12; OR, 19.

OR, 340.
[22]
Id., 341.
[23]
[24]
[25]
Memorandum, 3; Rollo, 118.
[21]
[26]
The Civil Code defines a contract of agency in this wise:
Art. 1868. By the contract of agency a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter.
[27]
Encyclopedia Britannica (Phils.) v. NLRC, 264 SCRA 1, 7 [1996]; Aurora Land Projects Corporation v.
NLRC, G.R. No. 114733, 2 January 1997, 5-6.
[28]
Annexes 5, 5-A to 5-D of Respondents Position Paper; OR, 30-34.
[29]
OR, 389.
[30]
Exhibits 155, 155-A, 155-B, 156, to 164, inclusive, OR, 351-356.
[31]
Respondents Position Paper, 4; OR, 11; Supplemental Position Paper, 1; OR, 301.
[32]
Philippine National Construction Corp.v NLRC, 174 SCRA 191, 193 [1989].
[33]
Capitol Industrial Construction Groups v. NLRC, 221 SCRA 469, 473-474 [1993].
[34]
Tomas Lao Construction, et al. v. NLRC, et al., G.R. No. 116781, 5 September 1997, at 7.
[35]
According to private respondents (Annex 4 of Respondents Position Paper; OR, 28), Enero was part of
Shooting Unit II, which worked on the following films:
FILM
DATE
STARTED
DATE
COMPLETED
ASSOCIATE
PRODUCER
LOVE AT FIRST
SIGHT
1/3/90
2/16/90
MARIVIC ONG
PAIKOT-IKOT
1/26/90
3/11/90
EDITH MANUEL
ROCKY & ROLLY
2/13/90
3/29/90
M. ONG
PAIKOT-IKOT (addl. 3/12/90

)
4/3/90
E. MANUEL
ROCKY & ROLLY

(2nd contract)
4/6/90
5/20/90
M.ONG
NARDONG
TOOTHPICK
4/4/90
5/18/90
JUN CHING
BAKIT KAY TAGAL

NG SANDALI
6/26/90
8/9/90
E. MANUEL
BAKIT KAY TAGAL
8/10/90
9/23/90
E. MANUEL
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(2ndcontract)
HINUKAY KO NA
9/6/90
ANG LIBINGAN MO
10/20/90
JUN CHING
MAGING SINO KA
MAN
12/8/90
SANDY STA.
MARIA
M. SINO KA
12/9/90
nd
MAN(2 contract)
1/22/91
SANDY S.
NOEL JUICO
1/29/91
3/14/91
JUN CHING
NOEL JUICO
(2nd contract)
3/15/91
4/6/91
JUN CHING
ROBIN GOOD
5/7/91
6/20/91
M. ONG
UTOL KONG
HOODLUM #1
6/23/91
8/6/91
JUN CHING
KAPUTOL NG ISANG 8/18/91

AWIT
10/2/91
SANDY S.
DARNA
10/4/91
11/18/91
E. MANUEL
DARNA (addl. )
11/20/91
12/12/91
E. MANUEL
MAGNONG REHAS 12/13/91
1/27/92
BOBBY GRIMALT
M. REHAS
(2ndcontract)
1/28/92
3/12/92
B. GRIMALT
HIRAM NA MUKHA 3/15/92
4/29/92
M. ONG
HIRAM (2ndcontract)5/1/92
6/14/92
M. ONG
KAHIT AKOY
BUSABOS
7/7/92
JERRY OHARA
10/25/90
5/28/92
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SIGAW NG PUSO
7/1/92
8/4/92
M. ONG
SIGAW (addl )
8/15/92
9/5/92
M. ONG
NGAYON AT
KAILANMAN
9/6/92
10/20/92
SANDY STAMARIA
While Maraguinot was a member of Shooting Unit III, which made the following movies (Annex 4-A of
Respondents Position Paper; OR, 29):
FILM
DATE
DATE COMPLETED ASSOCIATE
STARTED
PRODUCER
GUMAPANG KA 1/27/90
SA LUSAK
3/12/90
JUN CHING
PETRANG
KABAYO
2/19/90
4/4/90
RUTH GRUTA
LUSAK
(2ndcontract)
3/14/90
4/27/90
JUN CHING
P. KABAYO (addl 4/21/90

contract)
5/13/90
RUTH GRUTA
BADBOY
6/15/90
7/29/90
EDITH MANUEL
BADBOY
(2ndcontract)
7/30/90
8/21/90
E. MANUEL
ANAK NI BABY
AMA
9/2/90
10/16/90
RUTH GRUTA
A. B. AMA (addl ) 10/17/90
11/8/90
RUTH GRUTA
A. B. AMA (addl 11/9/90

2nd )
12/1/90
R. GRUTA
BOYONG
MANALAC
1/14/91
MARIVIC ONG
3/5/91
EDITH MANUEL
11/30/90
HUMANAP KA NG 1/20/91
PANGET
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H. PANGET
(2ndcontract)
3/10/91
4/23/91
E. MANUEL
B. MANALAC
(2nd contract)
5/22/91
7/5/91
M. ONG
ROBIN GOOD
(2nd contract)
7/7/91
8/20/91
M. ONG
PITONG GAMOL 8/30/91
10/13/91
M. ONG
P. GAMOL
(2ndcontract)
10/14/91
11/27/91
M. ONG
GREASE GUN
GANG
12/28/91
2/10/92
E. MANUEL
ALABANG GIRLS 3/4/92

(1/2 contract)
3/26/92
M. ONG
BATANG RILES
3/30/92
BOBBY GRIMALT
UTOL KONG
3/22/92
HOODLUM (part
2)
5/6/92
B. GRIMALT
UTOL (addl.
contract)
5/7/92
5/29/92
B. GRIMALT
MANDURUGAS
(2nd contract)
5/25/92
7/8/92
JERRY OHARA
MAHIRAP
MAGING POGI
7/2/92
8/15/92
M. ONG
3/9/92
[36]
De Leon v. NLRC, 176 SCRA 615, 621 [1989].

Tomas Lao, Supra note 34, at 7-9.
[38]
The former was issued by then Secretary of Labor Blas F. Ople, while the latter, superseding the
former, is dated 1 April 1993.
[39]
See for instance Chua v. Civil Service Commission, 206 SCRA 65, 76 [1992], where the Court was
ready to appreciate the badges of regular employment even against Government as an employer.
[40]
Section 3, Article XIII, 1987 Constitution.
[41]
Section 3, Rule I, Book VI, Omnibus Rules Implementing the Labor Code.
[42]
265 SCRA 61 [1996].
[37]
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PHILIPPINE VILLAGE HOTEL VS NLRC

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 105033 February 28, 1994

PHILIPPINE VILLAGE HOTEL, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) AND TUPAS LOCAL CHAPTER NO.
1362, JUANITO ACUIN, MAMERTA MANGUBAT, RAUL SONON, ELGAR PEMIS, ORLANDO PARAGUISON,
FERDINAND VELASCO, MIKE ASTULERO, MAGNO DECALSO, NENITA OROSEA, JOSE TIMING, ANTONIO
MANALILI, RODELIO QUERIA and REYNALDO SANTOS, respondents.
Ponce Enrile, Cayetano, Reyes Manalastas for petitioner.
Tupaz & Associates and Alfredo L. Bentulan for private respondents.
NOCON, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court with a prayer for the issuance of a
temporary restraining order to annul and set aside the decision 1 promulgated November 7, 1991 by the
National Labor Relations Commission (NLRC) of Manila reversing the decision dated December 19, 1989
of the Labor Arbiter Cornelio L. Linsangan.
It appears on record that private respondents Juanito Acuin, Mamerta Mangubat, Raul Sonon, Elgar
Pemis, Orlando Paraguison, Ferdinand Velasco, Mike Astulero, Magno Decalso, Nenita Orosea, Jose
Timing, Antonio Manalili, Rodelio Queria and Reynaldo Santos were employees of petitioner Philippine
Village Hotel. However, on May 19, 1986, petitioner had to close and totally discontinue its operations
due to serious financial and business reverses resulting in the termination of the services of its
employees.
Thereafter, the Philippine Village Hotel Employees and Workers Union filed against petitioner a
complaint for separation pay, unfair labor practice and illegal lock-out.
On May 27, 1987, the Labor Arbiter issued and Order finding the losses suffered by petitioner to be
actual, genuine and of such magnitude as to validly terminate the services of private respondents but
directed petitioner "to give priority to the complainants (herein private respondents) in [the] hiring of
personnel should they resume their business operations in the future." 2
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On appeal, the NLRC affirmed the validity of the closure of petitioner but ordered petitioner to pay
private respondent separation pay at the rate of 1/2 month pay every year of service. However, there is
nothing in the records to show that private respondents received their separation pay as the decision of
the NLRC remained unenforced as of this date.
On February 1, 1989, petitioner decided to have a one (1) month dry-run operation to ascertain the
feasibility of resuming its business operations. In order to carry out its dry-run operation, petitioner
hired casual workers, including private respondents, for a one (1) month period, or from February 1,
1989 to March 1, 1989, as evidenced by the latter's Contract of Employment. 3
After evaluating the individual performance of all the employees and upon the lapse of the contractual
one-month period or on March 2, 1989, petitioner terminated the services of private respondents.
On April 6, 1989, private respondents and Tupas Local Chapter No. 1362 filed a complaint against
petitioner for illegal dismissal and unfair labor practice with the NLRC-NCR Arbitration Branch in NLRC
Case No.
00-04-01665-89.
On December 19, 1989, the Labor Arbiter rendered a decision, the dispositive portion of which reads, as
follows:
WHEREFORE, finding the above-entitled complaint to be without factual and legal basis,
judgment is hereby rendered dismissing the same. 4
Thereafter, private respondents appealed to the public respondent NLRC.
On November 7, 1991, public NLRC reversed the decision of the Labor Arbiter, the dispositive portion of
which reads as follows:
WHEREFORE, under the premises, let the decision appealed from be, as it is hereby
reversed, and a new judgment rendered, hereby ordering the respondent Philippine
Village Hotel to reinstate the above-named complainants to their former or substantially
equivalent positions without loss of seniority rights plus full backwages from the time
they were actually dismissed on 02 March 1989 up to the time of their actual
reinstatement, but which period of time should not exceed three (3) years.
The complaint for unfair labor practice is hereby dismissed for lack of adequate factual
basis. 5
On March 5, 1992, petitioners Motion for Reconsideration was denied for lack of merit.
Hence, this petition alleging grave abuse of discretion on the part of the public respondent NLRC in
finding that private respondents are regular employees of petitioner considering that the latter's
services were already previously terminated in 1986 and that their employment contracts specifically
provided only for a temporary one-month period of employment.
The petition is impressed with merit.
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An examination of the contents of the private respondents' contracts of employment shows that indeed
private respondents voluntarily and knowingly agreed to be employed only for a period of one (1)
month or from February 1, 1989 to March 1, 1989.
The fact that private respondents were required to render services usually necessary or desirable in the
operation of petitioner's business for the duration of the one (1) month dry-run operation period does
not in any way impair the validity of the contractual nature of private respondents' contracts of
employment which specifically stipulated that the employment of the private respondents was only for
one (1) month.
In upholding the validity of a contract of employment with a fixed or specific period, we have held that
the decisive determinant in term employment should not be the activities that the employee is called
upon to perform, but theday certain agreed upon by the parties for the commencement and
termination of their employment relationship, a day certain being understood to be that which must
necessarily come, although it may not be known when. The term period was further defined to be the
length of existence; duration. A point of time marking a termination as of a cause or an activity; an end,
a limit, a bound; conclusion; termination. A series of years, months or days in which something is
completed. A time of definite length or the period from one fixed date to another fixed date. 6 This ruling
is only in consonance with Article 280 of the Labor Code which 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
paragraph:Provided, That, any employee who has rendered at least one year of service,
Inasmuch as private respondents' contracts of employment categorically provided a fixed period and
their termination had already been agreed upon at the time of their engagement, private respondents'
employment was one with a specific period or day certain agreed upon by the parties. In Philippine
National Oil Company-Energy Development Corporation vs. NLRC, 7 we held that:
As can be gleaned from the said case (Brent School, Inc. vs. Zamora, 181 SCRA 702), the
two guidelines by which fixed contracts of employments can be said NOT to circumvent
security of tenure, are either:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the
parties, without any force, duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or
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2. It satisfactorily appears that the employer and employee dealt with each other on
more or less equal terms with no moral dominance whatever being exercised by the
former on the latter."
In the instant case, private respondents were validly terminated by the petitioner when the latter had to
close its business due to financial losses. Following the directives of the NLRC to give priority in hiring
private respondents should it resume its business, petitioner hired private respondents during their one
(1) month dry-run operation. However, this does not mean that private respondents were deemed to
have continued their regular employment status, which they had enjoyed before their aforementioned
termination due to petitioner's financial losses. As stated by the Labor Arbiter in his decision:
It should be borne in mind that when complainants were first terminated as a result of
the company's cessation from operation in May, 1986 the employer-employee
relationship between the parties herein was totally and completely severed. Such being
the case, respondent acted well within its discretion when in rehiring the complainants
(herein private respondents) it made them casual and for a specific period. The
complainants are no better than the new employees of respondent (petitioner) for the
matter of what status or designation to be given them exclusively rests in the discretion
of management. 8
Besides, the previous decision of the public respondent NLRC in Case No. 8-3277-86 finding the
termination of private respondents' employment to be valid has long become final and executory. Public
respondent NLRC cannot anymore argue that the temporary cessation of the petitioner's operation due
to financial reverses merely suspended private respondents' employment. The employee-employer
relationship had come to an end when the employer had closed its business and ceased operations. The
hiring of new employees when it re-opened after three (3) years is valid and to be expected. The prior
employment which was terminated cannot be joined or tacked to the new employment for purposes of
security of tenure.
While it is true that security of tenure is a constitutionally guaranteed right of the employees, it does
not, however, mean perpetual employment for the employee because our law, while affording
protection to the employee, does not authorize oppression or destruction of an employer. It is well
settled that the employer has the right or is at liberty to choose who will be hired and who will be
denied employment. The right of a laborer to sell his labor to such persons as he may choose is, in its
essence, the same as the right of an employer to purchase labor from any person whom it chooses. The
employer and the employee have an equality of right guaranteed by the Constitution. If the employer
can compel the employee to work against the latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will, this is oppression. 9
Thus, public respondent NLRC had indubitably committed grave abuse of discretion when it modified
the final decision of the NLRC Case No. 8-3277-86 which remain unenforced as of this date. Private
respondents' remedy is to file a motion for execution, if it is still within the reglementary 5-year period,
or to file an action to enforce said decision. (Article 224(a), Labor Code)
WHEREFORE, this petition for certiorari is GRANTED and the questioned of the public respondent NLRC
is hereby SET ASIDE thereby dismissing the complaint against petitioner.
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SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.
#Footnotes
1 Penned by Commissioner Edna Bonto-Perez with the concurrence of Commissioner
Domingo H. Zapanta and Commissioner Rustico L. Diokno.
2 Rollo, p. 24.
3 Id., at pp. 35-41, Annex "C", "I".
4 Id., at 45.
5 Id., at pp. 32-33.
6 Escareal vs. National Labor Relations Commission, 213 SCRA 472 [1992].
7 G.R. No. 97747, promulgated on March 31, 1993.
8 Rollo, pp. 44-45.
9 International Catholic Migration Commission vs. NLRC 169 SCRA 606, January 30,
1989.
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PAGUIO VS NLRC
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 P30,000.00monthly 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.
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"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
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
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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 nonconcurrence, 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
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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 Azcuna, JJ., concur.
Footnotes
1
The letter contract dated 22 June 1992 read Dear Mr. Paguio:
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This letter is to appoint you as Account Executive for The Manila Times for a period of
twelve (12) months effective July 1, 1992 to June 30, 1993, and to set forth the terms
and conditions of your contract.
1. As account executive, you will use your best efforts to obtain advertisements
exclusively for us and for such projects that The Manila Times may decide to do from
time to time.
2. You are authorized to solicit advertisements and quote advertising rates in
accordance with and subject to all the terms and conditions in our rate cards.
3. All advertisements are subject to acceptance by us and we reserve the right in our
absolute discretion to reject or omit any advertisements.
4. You will be paid fifteen (15) percent commission on direct advertisements less
corresponding withholding tax.
5. You will be paid ten (10) percent commission on agency advertisements based on
gross ad revenues less agency commission and corresponding withholding tax.
6. Walk-in advertisements, not solicited by the Advertising staff, are not
commissionable.
7. All payments must be paid direct to Metromedia Times Corporation. In no case,
however, will commission be paid until and unless the advertisements, whether agency
or direct, have been paid for, subject to the corresponding withholding taxes authorized
by law.
8. Commissions earned on paid advertisements covering the period from the first (1st) to
the fifteenth (15) of every month shall be payable at the end of the same month;
commissions earned on paid advertisements covering the period from the sixteenth
(16th ) to the end of the month shall be payable on the fifteenth (15) of the succeeding
month.
9. You will be entitled to a monthly allowance of P2,000.00 provided that you meet a
monthly quota of P30,000.00 in advertising lineage. But should you fail to meet your
quota, your allowance shall be charged against your future account.
10 For all ex-deal arrangements, the barter agreement and your commission will be
subject to the written approval of the President and Treasurer on a case-to-case basis.
11. You will be paid your approved commission only after the payment for the
liquidation (sold and/or consumed) of the goods received from the advertiser has been
completed.
12. You are not an employee of Metromedia Times Corporation nor does the Company
have any obligations towards anyone you may employ, nor any responsibility for your
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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 the effectivity of termination.
If these terms and conditions are acceptable to you, please indicate your conformity by
signing below. (Rollo, pp. 41-42.)
2
Rollo, p. 42.
Rollo, p. 43.
Article 1642 of the Civil Code provides: "The contract of lease may be of things, or of work and
service."
Article 1644 provides: "In the lease of work or service, one of the parties binds himself to
execute a piece of work or to render to the other some service for a price certain, but the
relation of principal and agent does not exist between them."
5
Rollo, NLRC Decision dated 15 December 1998, p. 82.
Rollo, p. 85.
Rollo, p. 18.
Hijos de F. Escano, Inc., vs. NLRC G.R. No. 59229, 22 August 1991, 201 SCRA 63; Ecal vs. NLRC,
G.R. Nos. 92777-78, 13 March 1991, 195 SCRA 224.
9
Iloilo Chinese Commercial School vs. Fabrigar, L-16600, 27 December 1961, 3 SCRA 712.
10
Cosmopolitan Funeral Homes, Inc., vs. Maalat, G.R. No. 86693, 02 July 1990, 187 SCRA 108.
11
Article 280, Labor Code.
12
A.M. Oreta and Co., Inc., vs. NLRC, et al., G.R. No. 74004, 10 August 1989, 176 SCRA 218.
13
Cielo vs. NLRC, G.R. No. 78693, 28 January 1991, 193 SCRA 410.
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UST VS NLRC
SUPREME COURT
Manila
EN BANC
G.R. No. 85519 February 15, 1990
UNIVERSITY OF STO. TOMAS, FR. MAXIMO MARINA O.P. AND GILBERTO L. GAMEZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE LABOR ARBITER BIENVENIDO S.
HERNANDEZ AND BASILIO E. BORJA, respondents.
Abad, Leao & Associates for petitioners.
Antonio B. Fidelino for private respondent.
GANCAYCO, J.:
The herein private respondent Dr. Basilio E. Borja was first appointed as "affiliate faculty" in the Faculty
of Medicine and Surgery at the University of Sto. Tomas (UST for short) on September 29, 1976. In the
second semester of the school year 1976-77 he was appointed instructor with a load of twelve (12)
hours a week. He was reappointed instructor for the school year 1977-78 with a load of nine (9) hours a
week in the first semester and two (2) hours a week in the second. On June 10, 1978 he was appointed
as Instructor III for the school year 1978-79. His load for the first semester was eight (8) hours a week,
and for the second semester, seven (7) hours a week.
On March 19, 1979 Dean Gilberto Gamez observed that Dr. Borja should not be reappointed based on
the evaluation sheet that shows his sub-standard and inefficient performance. 1 Nevertheless in view of
the critical shortage of staff members in the Department of Neurology and Psychiatry Dr. Gamez
recommended the reappointment of Dr. Borja, after informing the latter of the negative feedbacks
regarding his teaching and his promise to improve his performance. Thus on July 27, 1979 he was
extended a reappointment as Instructor III in the school year 1979-80. He was given a load of six (6)
hours a week. In all these appointments he was a part time instructor.
At the end of the academic year, it appearing that Dr. Borja had not improved his performance in spite
of his assurances of improvement, his reappointment was not recommended.
In July, 1982 he filed a complaint in the National Labor Relations Commission (NLRC for short) for illegal
dismissal against the UST. After the submission of the pleadings and due proceedings the labor arbiter
rendered a decision on July 19, 1984, the dispositive part of which reads as follows:
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WHEREFORE this Office finds in favor of the complainant. The respondents (sic)
university are hereby ordered to effect the immediate reinstatement of complainant to
his former position with full backwages, rights and benefits appertaining thereto.
Respondent university is likewise ordered to pay the complainant the sum of FIVE
HUNDRED THOUSAND PESOS (P500,000.00) as and by way of moral damages and
another 1 0% of the gross amount due him, and as and by way of attorney's fees.
Respondents are hereby ordered to effect this decision immediately. 2
The UST appealed therefrom to the NLRC which in due course rendered a decision on September 30,
1988, modifying the appealed decision as follows:
WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED with a
modification limiting the backwages to three (3) years without qualification or
deduction, computed at P660.00 per month, ordering respondents to pay complainant
P100,000.00 as and for actual or compensatory damages, ordering respondents to pay
complainant P300,000.00 as and for moral damages, and further ordering them to pay
complainant P100,000.00 as and for exemplary damages.
Finally, respondents are ordered to pay to complainant the sum of ten (10%) percent of
the total sum due as and for attorney's fees. 3
Hence the instant petition for certiorari and prohibition with a prayer for the issuance of a writ of
preliminary injunction and restraining order that was filed by the UST and its officers wherein it is
alleged that the public respondent NLRC committed the following errors:
I
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED SERIOUS
REVERSIBLE ERRORS OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION
AND/OR LACK OR EXCESS OF JURISDICTION IN FINDING THAT BASILIO E. BORJA
ACQUIRED TENURE, THE SAID FINDING BEING CLEARLY CONTRARY TO THE EVIDENCE AT
HAND AND DEVOID OF BASIS IN LAW.
II
THE HONORABLE NLRC COMMITTED A SERIOUS AND REVERSIBLE ERROR AND GRAVELY
ABUSED ITS DISCRETION IN HOLDING THAT THE SERVICES OF BASILIO E. BORJA HAD
BEEN CONSTRUCTIVELY TERMINATED, HIS APPOINTMENT HAVING MERELY LAPSED IN
ACCORDANCE WITH ITS TERMS AS ACCEPTED BY THE COMPLAINANT-APPELLEE BORJA.
III
THE HONORABLE NLRC COMMITTED A SERIOUS AND GRAVE ERROR IN AFFIRMING,
ALBEIT REDUCING THE AWARD OF THE HONORABLE LABOR ARBITER A QUO OF CLEARLY
EXCESSIVE, UNJUST, UNCONSCIONABLE AND SHOCKING MORAL DAMAGES OF
P300,000.00 AND IN AWARDING MOTU PROPIO EXEMPLARY DAMAGES IN THE
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AMOUNT OF P100,000.00 IN GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO EXCESS

OF JURISDICTION. 4
The petition is impressed with merit.
In the questioned decision of the public respondent NLRC it found that private respondent had earned
to his credit eight (8) semesters or four (4) academic years of professional duties with the UST and that
he has met the requirements to become a regular employee under the three (3) years requirement in
the Manual of Regulations for Private Schools.
The appealed decision is correct insofar as it declares that it is the Manual of Regulations for Private
Schools, not the Labor Code, that determines the acquisition of regular or permanent status of faculty
members in an educational institution, but the Court disagrees with the observation that it is only the
completion of three (3) years of service that is required to acquire such status.
According to Policy Instructions No. 11 issued by the Department of Labor and Employment, "the
probationary employment of professors, instructors and teachers shall be subject to standards
established by the Department of Education and Culture." Said standards are embodied in paragraph 75
of the Manual of Regulations for Private Schools, to wit:
75. Full time teachers who have rendered three consecutive years of satisfactory service
shall be considered permanent." (Emphasis supplied)
The legal requisites, therefore, for acquisition by a teacher of permanent employment, or security of
tenure, are as follows:
1) the teacher is a full time teacher;
2) the teacher must have rendered three (3) consecutive years of service; and
3) such service must have been satisfactory.
Now, the Manual of Regulations also states that "a full-time teacher" is "one whose total working day is
devoted to the school, has no other regular remunerative employment and is paid on a regular monthly
basis regardless of the number of teaching hours" (Par. 77); and that in college, "the nominal teaching
load of a full-time instructor shall be eighteen hours a week" (par. 78).
It follows that a part-time member of the faculty cannot acquire permanence in employment under the
Manual of Regulations in relation to the Labor Code.
Hence, the crucial question is whether or not the private respondent was a full-time or parttime member of the faculty during the three (3) years that he served in the petitioner-university's
College of Medicine. Stated otherwise, the question is (1) whether or not the said respondent's "total
working day ..... (was) devoted to the school" and he had "no other regular remunerative employment"
and was "paid on a regular monthly basis regardless of the number of teaching hours;" and/or (2)
whether or not his normal teaching load was eighteen (18) hours a week.
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It cannot be said that respondent's total working day was devoted to the school alone. It is clear from
the record that he was practising his profession as a doctor and maintaining a clinic in the hospital for
this purpose during the time that he was given a teaching load. In other words, he had another regular
remunerative work aside from teaching. His total working day was not, therefore, devoted to the school.
Indeed, his salaries from teaching were computed by the respondent Commission itself at only an
average of P660.00 per month; he, therefore, had to have other sources of income, and this of course
was his self-employment as a practising psychiatrist. That the compensation for teaching had to be
averaged also shows that he was not paid on a regular monthly basis. Moreover, there is absolutely no
evidence that he performed other functions for the school when not teaching. All things considered, it
would appear that teaching was only a secondary occupation or "sideline," his professional practice as a
psychiatrist being his main vocation.
The record also discloses that he never had a normal teaching load of eighteen (18) hours a week during
the time that he was connected with the university. The only evidence on this equally vital issue was
presented by the petitioner through the affidavit of Dr. Gilberts Gamez who was the dean of the medical
school during the time material to the proceedings at bar. His sworn declaration is to the effect that as
"affiliate faculty" member of the Department of Neurology and Psychiatry from September 29,1976,
private respondent had no teaching functions: that in fact, when he was appointed in September, 1976,
classes for the first semester were already nearing their end; that as "affiliate faculty" he was merely an
observer acquainting himself with the functions of an instructor while awaiting issuance of a formal
appointment as such; that in the school year 1977-78 he had a teaching load of nine (9) hours a week in
the first semester and two (2) hours a week in the second semester; that in the school year 1978-1979
he had a load of eight (8) hours a week in the first semester and seven (7) hours a week in the second
semester; that in the school year 1979-1980 he had a load of six (6) hours a week in each semester. This
evidence does not appear to have been refuted at all by the private respondent, and has inexplicably
been ignored by public respondent. No discussion of this particular point is found in the decisions of the
Labor Arbiter or the NLRC.
The private respondent, therefore, could not be regarded as a full- time teacher in any aspect. He could
not be regarded as such because his total working day was not devoted to the school and he had other
regular remunerative employment. Moreover, his average teaching load was only 6.33 hours a week.
In view of the explicit provisions of the Manual of Regulations above-quoted, and the fact that private
respondent was not a full- time teacher, he could not have and did not become a permanent employee
even after the completion of three (3) years of service.
Having found that private respondent did not become a permanent employee of petitioner UST, it
correspondingly follows that there was no duty on the part of petitioner UST to reappoint private
respondent as Instructor, the temporary appointment having lapsed. Such appointment is a matter
addressed to the discretion of said petitioner.
The findings, therefore, of the public respondent NLRC that private respondent was constructively
terminated is without lawful basis. By the same token, the order for reinstatement of private
respondent with backwages plus an award of actual or compensatory, moral and exemplary damages
must be struck down.
WHEREFORE, the petition is hereby GRANTED. The questioned orders of public respondent NLRC dated
September 13, 1988 and public respondent labor arbiter Bienvenido S. Hernandez dated July 19,1988
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are hereby SET ASIDE and another judgment is hereby rendered DISMISSING the complaint of private
respondent, without pronouncement as to costs.
SO ORDERED.
Fernan (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Cortes, Grio-Aquino,
Medialdea and Regalado, JJ., concur.
Narvasa and Padilla, JJ., took no part.
Separate Opinions
SARMIENTO, J., dissenting:

I vote to deny this petition for lack of merit.
From the records, it appears, that:
Complainant is a Doctor of Medicine with well-rounded experience in the field of Psychiatry. In
consideration of his impressive qualifications, respondents appointed him as a faculty member in the
UST Faculty of Medicine and Surgery, Department of Neurology and Psychiatry. His services in
respondent university are: Affiliate Faculty member for the school year 1976-77; Instructor I in 19761977; Instructor III on January 5, 1977 and for the school year 1978-1979; professor-in-charge of
Psychiatry II for the school year 1978-1979; and Instructor II for the school year 1979-1980. He was also
allowed by respondents to hold his clinic in the UST Hospital by virtue of a contract which started in
1978, renewable from year to year. Complainant claims that respondents failed without justifiable
reason to give him a teaching load for the school year 1980-1981, and, therefore, he called the attention
of the Head of Academic Affairs and the Dean of the Faculty who referred the matter to the University
Rector. He further wrote a letter to the respondents on August 12, 1981, but the same was not
answered at all, and so he went to the Rector's Office on March 16 and 18, 1982, but was told that the
Rector could not see or talk to him. For these reasons, the complainant charged respondents of illegal
dismissal as he was not given a teaching load for the school year 1980-1981. He further alleged that the
door leading to his clinic was locked twice without notice. Based on the above allegations, complainant
seeks recovery of actual and moral damages allegedly suffered by him by reason of his dismissal by the
respondents. Most importantly, he alleges that he was also denied practice of his profession in the
hospital.
Respondents traversed complainant's charges alleging that complainant had not yet acquired tenure of
employment under the provisions of the UST Faculty Code as he had not completed four (4) academic
years of service; hence, his services in the university were no longer renewed upon its expiration.
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Respondents likewise denied complainant's allegation that the door leading to his clinic in the hospital
was locked. (Rollo, 68-70.)
The issues are:
1. Whether or not complainant's services in the university had been constructively
terminated by the respondents when the former was not given a teaching load for the
school year 1980-1981; and
2. Whether or not complainant's claims for actual, moral and exemplary damages as
well as attorney's fees are supported by the facts and jurisprudence.
It is Our considered opinion that complainant's services as a member of the faculty in
respondent university were terminated without just cause. (Id., 70.)
As I have indicated, I sustain the NLRC. No grave abuse of discretion, so I find, has been successfully
attributed to it to warrant the extraordinary remedy of certiorari.
There is no question that under the Manual of Regulations for Private Schools, employees on probation
status have three years within which to serve their probation. Within that period they may not be
terminated unless for just cause.
From the records, the private respondent had been with the petitioner-university as instructor since
1976, when in 1980, he was laid off. He was also informed that there had been "previous negative
feedbacks regarding his teaching." (Id., 6.) That notwithstanding, I submit he had acquired security of
tenure after his three-year probation. The fact that it was extended another year means, in my view,
that the school had been satisfied of his performance. The petitioner-university can not now be heard to
say otherwise.
I am agreed that:
The records show that the ground relied upon by the respondents in not renewing
complainant's last appointment when no teaching load for the school year 1980-1981
was assigned to him was due to the alleged termination of his appointment and there
was no obligation on the part of respondents to extend to him a permanent
appointment in accordance with the provisions of the UST Faculty Code or Manual of
Regulations for private Schools. We do not agree with respondents' view. Complainant
was first employed as Affiliate Faculty of respondent University in the first semester of
the school year 1976-1977 or on September 29, 1976 as shown in his appointment
signed by the Dean of the Faculty of Medicine and Surgery of UST. (Annexes 'A" & 'B",
Reply to Respondent's Position Paper.) Additional evidences which will fortify the fact of
complainant having rendered forty (40) months of eight (8) semesters could be gleaned
from the Faculty Statement of Earnings and Deductions (Exhibits "D', 'E" and 'H" to 'H38", for complainant). Most likely, complainant's early appointment (supra) had been
deliberately omitted by the respondents to confuse the Labor Arbiter a quo in believing
that the former had not yet acquired the tenurial rights under the Faculty Code. This, to
our mind, is a scheme resorted to by the respondents to preclude complainant from
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becoming a regular professor of the University. We find complainant to have earned to

his credit eight (8) semesters or four (4) academic years of professional duties with the
respondents. Suffice it to say, therefore, complainant met the requirement to become a
regular employee under the 3 years requirement in the Manual of Regulations for
Private Schools (par. 75), and, as such, complainant should not have been deprived of
subject load by the respondents for the school year 1980-1981. (Decision, 4-6.)
The university's contention that under the UST Faculty Code, tenure is acquired after four years in office,
has no merit. First, the code can not prevail over the Manual of Regulations for Private Schools, which
has the character and force of law. Under the Manual:
75). Full-time teachers who have rendered three consecutive years of satisfactory
service shall be considered permanent.
What "full-time" means is stated as follows:
76. ... For this purpose, a full-time teacher should be one whose total working day is
devoted to the school. has no other regular remunerative employment, and is paid on a
regular monthly basis regardless of the number of teaching hours.
It is true that under paragraph 78 of the Manual, "the normal teaching load of a full-time instructor shall
be eighteen hours a week." It is my reading of this provision, however, that a full-time instructor can not
merely be made to teach for longer hours. Hence, the succeeding paragraph states:
79. Any teaching assignment in excess of the foregoing must be taken up with the
Bureau, which case shall be considered only on the basis of educational qualifications,
experience, efficiency rating, and subject preparations of the teachers concerned.
It is my understanding of paragraph 78 that it operates as a restraint upon schools against a grant of
excessive manhours, although school authorities may prescribe a longer period, but provided that it has
the imprimatur of the Bureau of Private Schools. A lesser number of hours, however, does not make an
instructor part-time, if he has otherwise complied with the requisites of paragraph 76. The decision of
the NLRC indicates that the private respondent worked on a full-time basis whatever the number of
teaching hours given to him and we can not disturb its findings. (See Decision, id., 6.)
Second, assuming that the four-year rule is permissible, the private respondent's tenure during that
period was nevertheless secure, which could only be perished by a valid cause. "Negative feedbacks,"
short of actual violations of the faculty code, are no excuse for termination.
The rule is that, unless otherwise provided by contract, a probationary employee can not be dismissed
(during the three-year period), unless dismissal is compelled by a just cause or causes. However, if
thereafter, the school finds the employee's performance unsatisfactory, it is at liberty to rehire or not
the employee, unless a grave abuse of discretion has been committed. Here, the fact that the private
respondent was allowed to stay one year more gave the latter security of tenure.
I must not be understood, however, as holding that schools may or can not enter into contracts for
specific periods (less or more than three years; see also Manual, par. 74) with teaching applicants. Here,
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however, there is no "contract" to speak of, other than the implied agreement between the parties. In
that case, the Manual is applicable.
The closure of the doctor's clinic, finally, is a valid basis for the award of moral and exemplary damages,
and attorney's fees.
Hence, I cast this dissenting vote.
Separate Opinions
SARMIENTO, J., dissenting:
I vote to deny this petition for lack of merit.
From the records, it appears, that:
Complainant is a Doctor of Medicine with well-rounded experience in the field of Psychiatry. In
consideration of his impressive qualifications, respondents appointed him as a faculty member in the
UST Faculty of Medicine and Surgery, Department of Neurology and Psychiatry. His services in
respondent university are: Affiliate Faculty member for the school year 1976-77; Instructor I in 19761977; Instructor III on January 5, 1977 and for the school year 1978-1979; professor-in-charge of
Psychiatry II for the school year 1978-1979; and Instructor II for the school year 1979-1980. He was also
allowed by respondents to hold his clinic in the UST Hospital by virtue of a contract which started in
1978, renewable from year to year. Complainant claims that respondents failed without justifiable
reason to give him a teaching load for the school year 1980-1981, and, therefore, he called the attention
of the Head of Academic Affairs and the Dean of the Faculty who referred the matter to the University
Rector. He further wrote a letter to the respondents on August 12, 1981, but the same was not
answered at all, and so he went to the Rector's Office on March 16 and 18, 1982, but was told that the
Rector could not see or talk to him. For these reasons, the complainant charged respondents of illegal
dismissal as he was not given a teaching load for the school year 1980-1981. He further alleged that the
door leading to his clinic was locked twice without notice. Based on the above allegations, complainant
seeks recovery of actual and moral damages allegedly suffered by him by reason of his dismissal by the
respondents. Most importantly, he alleges that he was also denied practice of his profession in the
hospital.
Respondents traversed complainant's charges alleging that complainant had not yet acquired tenure of
employment under the provisions of the UST Faculty Code as he had not completed four (4) academic
years of service; hence, his services in the university were no longer renewed upon its expiration.
Respondents likewise denied complainant's allegation that the door leading to his clinic in the hospital
was locked. (Rollo, 68-70.)
The issues are:
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1. Whether or not complainant's services in the university had been constructively

terminated by the respondents when the former was not given a teaching load for the
school year 1980-1981; and
2. Whether or not complainant's claims for actual, moral and exemplary damages as
well as attorney's fees are supported by the facts and jurisprudence.
It is Our considered opinion that complainant's services as a member of the faculty in
respondent university were terminated without just cause. (Id., 70.)
As I have indicated, I sustain the NLRC. No grave abuse of discretion, so I find, has been successfully
attributed to it to warrant the extraordinary remedy of certiorari.
There is no question that under the Manual of Regulations for Private Schools, employees on probation
status have three years within which to serve their probation. Within that period they may not be
terminated unless for just cause.
From the records, the private respondent had been with the petitioner-university as instructor since
1976, when in 1980, he was laid off. He was also informed that there had been "previous negative
feedbacks regarding his teaching." (Id., 6.) That notwithstanding, I submit he had acquired security of
tenure after his three-year probation. The fact that it was extended another year means, in my view,
that the school had been satisfied of his performance. The petitioner-university can not now be heard to
say otherwise.
I am agreed that:
The records show that the ground relied upon by the respondents in not renewing
complainant's last appointment when no teaching load for the school year 1980-1981
was assigned to him was due to the alleged termination of his appointment and there
was no obligation on the part of respondents to extend to him a permanent
appointment in accordance with the provisions of the UST Faculty Code or Manual of
Regulations for private Schools. We do not agree with respondents' view. Complainant
was first employed as Affiliate Faculty of respondent University in the first semester of
the school year 1976-1977 or on September 29, 1976 as shown in his appointment
signed by the Dean of the Faculty of Medicine and Surgery of UST. (Annexes 'A" & 'B",
Reply to Respondent's Position Paper.) Additional evidences which will fortify the fact of
complainant having rendered forty (40) months of eight (8) semesters could be gleaned
from the Faculty Statement of Earnings and Deductions (Exhibits "D', 'E" and 'H" to 'H38", for complainant). Most likely, complainant's early appointment (supra) had been
deliberately omitted by the respondents to confuse the Labor Arbiter a quo in believing
that the former had not yet acquired the tenurial rights under the Faculty Code. This, to
our mind, is a scheme resorted to by the respondents to preclude complainant from
becoming a regular professor of the University. We find complainant to have earned to
his credit eight (8) semesters or four (4) academic years of professional duties with the
respondents. Suffice it to say, therefore, complainant met the requirement to become a
regular employee under the 3 years requirement in the Manual of Regulations for
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Private Schools (par. 75), and, as such, complainant should not have been deprived of
subject load by the respondents for the school year 1980-1981. (Decision, 4-6.)
The university's contention that under the UST Faculty Code, tenure is acquired after four years in office,
has no merit. First, the code can not prevail over the Manual of Regulations for Private Schools, which
has the character and force of law. Under the Manual:
75). Full-time teachers who have rendered three consecutive years of satisfactory
service shall be considered permanent.
What "full-time" means is stated as follows:
76. ... For this purpose, a full-time teacher should be one whose total working day is
devoted to the school. has no other regular remunerative employment, and is paid on a
regular monthly basis regardless of the number of teaching hours.
It is true that under paragraph 78 of the Manual, "the normal teaching load of a full-time instructor shall
be eighteen hours a week." It is my reading of this provision, however, that a full-time instructor can not
merely be made to teach for longer hours. Hence, the succeeding paragraph states:
79. Any teaching assignment in excess of the foregoing must be taken up with the
Bureau, which case shall be considered only on the basis of educational qualifications,
experience, efficiency rating, and subject preparations of the teachers concerned.
It is my understanding of paragraph 78 that it operates as a restraint upon schools against a grant of
excessive manhours, although school authorities may prescribe a longer period, but provided that it has
the imprimatur of the Bureau of Private Schools. A lesser number of hours, however, does not make an
instructor part-time, if he has otherwise complied with the requisites of paragraph 76. The decision of
the NLRC indicates that the private respondent worked on a full-time basis whatever the number of
teaching hours given to him and we can not disturb its findings. (See Decision, id., 6.)
Second, assuming that the four-year rule is permissible, the private respondent's tenure during that
period was nevertheless secure, which could only be perished by a valid cause. "Negative feedbacks,"
short of actual violations of the faculty code, are no excuse for termination.
The rule is that, unless otherwise provided by contract, a probationary employee can not be dismissed
(during the three-year period), unless dismissal is compelled by a just cause or causes. However, if
thereafter, the school finds the employee's performance unsatisfactory, it is at liberty to rehire or not
the employee, unless a grave abuse of discretion has been committed. Here, the fact that the private
respondent was allowed to stay one year more gave the latter security of tenure.
I must not be understood, however, as holding that schools may or can not enter into contracts for
specific periods (less or more than three years; see also Manual, par. 74) with teaching applicants. Here,
however, there is no "contract" to speak of, other than the implied agreement between the parties. In
that case, the Manual is applicable.
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The closure of the doctor's clinic, finally, is a valid basis for the award of moral and exemplary damages,
and attorney's fees.
Hence, I cast this dissenting vote.
Footnotes
1 Annexes E to E-I to Petition.
2 Page 103, Rollo.
3 Page 81, Rollo.
4 Pages 3 to 4, Rollo.
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KILUSAN VS DRILON
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-77629 May 9, 1990

KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISM-ORGANIZED
LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE (KILUSAN-OLALIA), ROQUE JIMENEZ,
MARIO C. RONGALEROS and OTHERS, petitioners,
vs.
HON. FRANKLIN M. DRILON, KIMBERLY-CLARK PHILIPPINES, INC., RODOLFO POLOTAN, doing business
under the firm name "Rank Manpower Co." and UNITED KIMBERLY-CLARK EMPLOYEES UNIONPHILLIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (UKCEU-PTGWO), respondents.
KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVITISM AND NATIONALISM-OLALIA
(KILUSAN-OLALIA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MANUEL AGUILAR, MA. ESTRELLA ALDA, CAPT. REY L.
LANADA, COL. VIVENCIO MANAIG and KIMBERLY-CLARK PHILIPPINES, INC., respondents.
REGALADO, J.:
Before us are two consolidated petitions for certiorari filed by the above-named petitioner union
(hereinafter referred to as KILUSAN-OLALIA, for conciseness) and individual complainants therein, to wit
(a) G.R. 77629, which seeks to reverse and set aside the decision, dated November 13, 1986, 1 and the
resolution, dated January 9, 1987, 2 respectively handed down by the two former Ministers of Labor,
both rendered in BLR Case No. NS-5-164-86; and (b) G.R. No. 78791, which prays for the reversal of the
resolutions of the National Labor Relations Commission, dated May 25, 1987 3 and June 19,1987 4 issued
in Injunction Case No. 1442 thereof.
Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective bargaining
agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and General
Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986.
Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal
of the aforementioned CBA, some members of the bargaining unit formed another union called
"Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor
Association in Line Industries and Agriculture (KILUSAN-OLALIA)."
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On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in Regional Office No. IV,
Ministry of Labor and Employment (MOLE), docketed as Case No. RO4-OD-M-415-86. 5 KIMBERLY and
(UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion of
the so-called contractual workers whose employment with KIMBERLY was coursed through an
independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters.
Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a
notice of strike on May 7, 1986 with the Bureau of Labor Relations, docketed as BLR Case No. NS-5-16486, 6 charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal of
union members (KILUSAN-OLALIA); (2) non-regularization of casuals/contractuals with over six months
service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) non-payment of minimum
wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendency of a
petition for certification election. This was later amended to withdraw the charge of coercion but to
add, as new charges, the dismissal of Roque Jimenez and the non-payment of backwages of the
reinstated Emerito Fuentes . 7
Conciliation proceedings conducted by the bureau proved futile, and KILUSAN-OLALIA declared a strike
at KIMBERLY's premises in San Pedro, Laguna on May 23, 1986.
On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdiction over the labor dispute. On May 30,
1986, finding that the labor dispute would adversely affect national interest, then Minister Augusto S.
Sanchez issued an assumption order, the dispositive portion whereof reads:
Wherefore, premises considered, immediately upon receipt of this order, the striking
union and its members are hereby enjoined to lift the picket and remove all obstacles to
the free ingress to and egress from the company premises and to return to work,
including the 28 contractual workers who were dismissed; likewise, the company is
directed to resume its operations immediately thereafter and to accept all the
employees back under the same terms and conditions of employment prevailing prior to
the industrial action. Further, all issues in the notice of strike, as amended, are hereby
assumed in this assumption order, except for the representation issue pending in Region
IV in which the Med-Arbiter is also enjoined to decide the same the soonest possible
time. 8
In obedience to said assumption order, KILUSAN-OLALIA terminated its strike and picketing activities
effective June 1, 1986 after a compliance agreement was entered into by it with KIMBERLY. 9
On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case
(RO4-OD-M-4-1586), issued an order 10 declaring the following as eligible to vote in the certification
election, thus:
1. The regular rank-and-file laborers/employees of the respondent company consisting
of 537 as of May 14, 1986 should be considered qualified to vote;
2. Those casuals who have worked at least six (6) months as appearing in the payroll
months prior to the filing of the instant petition on April 21, 1986; and
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3. Those contractual employees who are allegedly in the employ of an independent

contractor and who have also worked for at least six (6) months as appearing in the
payroll month prior to the filing of the instant petition on April 21, 1986.
During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEUPTGWO) on the ground that they are not employees, of KIMBERLY but of RANK. It was agreed by all the
parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated
and subject to challenge proceedings. The certification election was conducted on July I., 1986, with the
following results: 11
1. KILUSAN-OLALIA = 246 votes
2. (UKCEU-PTGWO) = 266 votes
3. NO UNION = 1 vote
4. SPOILED BALLOTS = 4 votes
5. CHALLENGED BALLOTS = 64 votes
TOTAL 581 votes

On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count
Challenged Votes" 12 on the ground that the 64 workers are employees of KIMBERLY within the meaning
of Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and
motion, asserting that there is no employer-employee relationship between the casual workers and the
company, and that the med-arbiter has no jurisdiction to rule on the issue of the status of the
challenged workers which is one of the issues covered by the assumption order. The med-arbiter opted
not to rule on the protest until the issue of regularization has been resolved by
MOLE. 13
On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-164-86, 14 the
disposition wherein is summarized as follows:
1. The service contract for janitorial and yard maintenance service between KIMBERLY
and RANK was declared legal;
2. The other casual employees not performing janitorial and yard maintenance services
were deemed labor-only contractual and since labor-only contracting is prohibited, such
employees were held to have attained the status of regular employees, the
regularization being effective as of the date of the decision;
3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as
the exclusive bargaining representative of KIMBERLY's employees;
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4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered;

5. Roque Jimenez was ordered reinstated without backwages, the period when he was
out of work being considered as penalty for his misdemeanor;
6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes
with backwages was declared as already final and unappealable; and
7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983.
On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization
of contractual workers, the appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letter
dated November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation
of the November 13, 1986 decision but only with respect to the regularization of the casual workers. 16
On December 11, 1986, KILUSAN-OLALIA filed a motion for reconsideration questioning the authority of
the Minister of Labor to assume jurisdiction over the representation issue. In the meantime, KIMBERLY
and UKCEU-PTGWO continued with the negotiations on the new collective bargaining agreement (CBA),
no restraining order or junctive writ having been issued, and on December 18, 1986, a new CBA was
concluded and ratified by 440 out of 517 members of the bargaining unit. 17
In an order dated January 9, 1987, former Labor Minister Franklin Drilon denied both motions for
reconsideration filed by KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the new CBA executed
between KIMBERLY and UKCEU-PTGWO was signed.
On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in this Court docketed as G.R. No.
77629, seeking to set aside the aforesaid decision, dated November 13, 1986, and the order, dated
January 9, 1987, rendered by the aforesaid labor ministers.
On March 25, 1987, this Court issued in G.R. No. 77629 a temporary restraining order, enjoining
respondents from enforcing and/or carrying out the decision and order above stated, particularly that
portion (1) recognizing respondent UKCEU-PTGWO as the exclusive bargaining representative of all
regular rank-and-file employees in the establishment of respondent company, (2) enforcing and/or
implementing the alleged CBA which is detrimental to the interests of the members of the petitioner
union, and (3) stopping respondent company from deducting monthly dues and other union
assessments from the wages of all regular rank-and-file employees of respondent company and from
remitting the said collection to respondent UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled,
"In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the Department of Labor and Employment,
Manila, 19
In its comment, 20 respondent company pointed out certain events which took place prior to the filing of
the petition in G.R. No. 77629, to wit:
1. The company and UKCEU-PTGWO have concluded a new collective bargaining
agreement which had been ratified by 440 out of 517 members of the bargaining unit;
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2. The company has already granted the new benefits under the new CBA to all its
regular employees, including members of petitioner union who, while refusing to ratify
the CBA nevertheless readily accepted the benefits arising therefrom;
3. The company has been complying with the check-off provision of the CBA and has
been remitting the union dues to UKCEU-PTGWO
4. The company has already implement the decision of November 13, 1986 insofar as
the regularization of contractual employees who have rendered more than one (1) year
of service as of the filing of the Notice of Strike on May 7, 1986 and are not engaged in
janitorial and yard maintenance work, are concerned
5. Rank Manpower Company had already pulled out, reassigned or replaced the
contractual employees engaged in janitorial and yard maintenance work, as well as
those with less than one year service; and
6. The company has reinstated Roque Jimenez as of January 11, 1987.
In G.R. No. 78791, the records 21 disclose that on May 4, 1987, KILUSAN-OLALIA filed another notice of
strike with the Bureau of Labor Relations charging respondent company with unfair labor practices. On
May 8, 1987, the bureau dismissed and considered the said notice as not filed by reason of the
pendency of the representation issue before this Court in G.R. No. 77629. KILUSAN-OLALIA moved to
reconsider said order, but before the bureau could act on said motion, KILUSAN-OLALIA declared a strike
and established a picket on respondent company's premises in San Pedro, Laguna on May 17, 1987.
On May 18, 1987, KIMBERLY filed a petition for injunction with the National Labor Relations Commission
(NLRC), docketed as Injunction Case No. 1442. A supplement to said petition was filed on May 19, 1987.
On May 26, 1987, the commission en banc issued a temporary restraining order (TRO) on the basis of
the ocular inspection report submitted by the commission's agent, the testimonies of KIMBERLY's
witnesses, and pictures of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the ground of
lack of jurisdiction.
Immediately after the expiration of the first TRO on June 9, 1987, the striking employees returned to
their picket lines and reestablished their barricades at the gate. On June 19, 1987, the commission en
banc issued a second TRO.
On June 25, 1987, KILUSAN-OLALIA filed another petition for certiorari and prohibition with this Court,
docketed as G.R. No. 78791, questioning the validity of the temporary restraining orders issued by the
NLRC on May 26, 1987 and June 19, 1987. On June 29, 1987, KILUSAN-OLALIA filed in said case an urgent
motion for a TRO to restrain NLRC from implementing the questioned orders. An opposition, as well as a
reply thereto, were filed by the parties.
Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion for the issuance of a writ of
preliminary injunction when the strikers returned to the strike area after the second TRO expired. After
due hearing, the commission issued a writ of preliminary injunction on July 14, 1987, after requiring
KIMBERLY to post a bond in the amount of P20,000.00.
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Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No. 78791 a second urgent motion for the
issuance of a TRO by reason of the issuance of said writ of preliminary injunction, which motion was
opposed by KIMBERLY.
Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early
resolution 23 filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had
terminated its strike and picketing activities and that the striking employees had unconditionally offered
to return to work, although they were refused admission by KIMBERLY. By reason of this supervening
development, the petition in G.R. No. 78791, questioning the propriety of the issuance of the two
temporary restraining orders and the writ of injunction therein, has been rendered moot and academic.
In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the respondent Secretary of Labor and/or
the former Minister of Labor have acted with grave abuse of discretion and/or without jurisdiction in (1)
ruling on the issue of bargaining representation and declaring respondent UKCEU-PTGWO as the
collective bargaining representative of all regular rank-and-file employees of the respondent company;
(2) holding that petitioners are not entitled to vote in the certification election; (3) considering the
regularization of petitioners (who are not janitors and maintenance employees) to be effective only on
the date of the disputed decision; (4) declaring petitioners who are assigned janitorial and yard
maintenance work to be employees of respondent RANK and not entitled to be regularized; (5) not
awarding to petitioners differential pay arising out of such illegal work scheme; and (6) ordering the
mere reinstatement of petitioner Jimenez.
The issue of jurisdiction actually involves a question of whether or not former Minister Sanchez
committed a grave abuse of discretion amounting to lack of jurisdiction in declaring respondent UKCEUPTGWO as the certified bargaining representative of the regular employees of KIMBERLY, after ruling
that the 64 casual workers, whose votes are being challenged, were not entitled to vote in the
certification election.
KILUSAN-OLALIA contends that after finding that the 64 workers are regular employees of KIMBERLY,
Minister Sanchez should have remanded the representation case to the med-arbiter instead of declaring
UKCEU-PTGWO as the winner in the certification election and setting aside the med-arbiter's order
which allowed the 64 casual workers to cast their votes.
Respondents argue that since the issues of regularization and representation are closely interrelated
and that a resolution of the former inevitably affects the latter, it was necessary for the former labor
minister to take cognizance of the representation issue; that no timely motion for reconsideration or
appeal was made from his decision of November 13, 1986 which has become final and executory; and
that the aforesaid decision was impliedly accepted by KILUSAN-OLALIA when it demanded from
KIMBERLY the issuance of regular appointments to its affected members in compliance with said
decision, hence petitioner employees are now stopped from questioning the legality thereof.
We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the
regularization of the 64 casual workers, which fact is not even disputed by KILUSAN-OLALIA as may be
gleaned from its request for an interim order in the notice of strike case (BLR-NS-5-164-86), asking that
the regularization issue be immediately resolved. Furthermore, even the med-arbiter who ordered the
holding of the certification election refused to resolve the protest on the ground that the issue raised
therein correctly pertains to the jurisdiction of the then labor minister. No opposition was offered by
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KILUSAN-OLALIA. We hold that the issue of regularization was properly addressed to the discretion of
said former minister.
However, the matter of the controverted pronouncement by former Minister Sanchez, as reaffirmed by
respondent secretary, regarding the winner in the certification election presents a different situation.
It will be recalled that in the certification election, UKCEU-PTGWO came out as the winner, by garnering
a majority of the votes cast therein with the exception of 64 ballots which were subject to challenge. In
the protest filed for the opening and counting of the challenged ballots, KILUSAN-OLALIA raised the
main and sole question of regularization of the 64 casual workers. The med-arbiter refused to act on the
protest on the ground that the issue involved is within the jurisdiction of the then Minister of Labor.
KILUSAN-OLALIA then sought an interim order for an early resolution on the employment status of the
casual workers, which was one of the issues included in the notice of strike filed by KILUSAN-OLALIA in
BLR Case No. NS-5-164-86. Consequently, Minister Sanchez rendered the questioned decision finding
that the workers not engaged in janitorial and yard maintenance service are regular employees but that
they became regular only on the date of his decision, that is, on November 13, 1986, and, therefore,
they were not entitled to vote in the certification election. On the basis of the results obtained in the
certification election, Minister Sanchez declared UKCEU-PTGWO as the winner.
The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance
service, became regular employees of KIMBERLY.
We find and so hold that the former labor minister gravely abused his discretion in holding that those
workers not engaged in janitorial or yard maintenance service attained the status of regular employees
only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote
in the certification election and choose their rightful bargaining representative.
The Labor Code defines who are regular employees, as follows:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary not withstanding and regardless of the oral agreements of the parties, an
under 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.
paragraph:Provided, That any employee who has rendered at least one year of service,
while such activity exists.
The law thus provides for two. kinds of regular employees, namely: (1) those who are engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service, whether continuous or broken,
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with respect to the activity in which they are employed. The individual petitioners herein who have been
adjudged to be regular employees fall under the second category. These are the mechanics, electricians,
machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons It is
not disputed that these workers have been in the employ of KIMBERLY for more than one year at the
time of the filing of the Petition for certification election by KILUSAN-OLALIA.
Owing to their length of service with the company, these workers became regular employees, by
operation of law, one year after they were employed by KIMBERLY through RANK. While the actual
regularization of these employees entails the mechanical act of issuing regular appointment papers and
compliance with such other operating procedures as may be adopted by the employer, it is more in
keeping with the intent and spirit of the law to rule that the status of regular employment attaches to
the casual worker on the day immediately after the end of his first year of service. To rule otherwise,
and to instead make their regularization dependent on the happening of some contingency or the
fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by
law.
That the first stated position is the situation contemplated and sanctioned by law is further enhanced by
the absence of a statutory limitation before regular status can be acquired by a casual employee. The
law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular
employee with respect to the activity in which he is employed. The law does not provide the
qualification that the employee must first be issued a regular appointment or must first be formally
declared as such before he can acquire a regular status. Obviously, where the law does not distinguish,
no distinction should be drawn.
The submission that the decision of November 13, 1986 has become final and executory, on the grounds
that no timely appeal has been made therefrom and that KILUSAN-OLALIA has impliedly acceded
thereto, is untenable.
Rule 65 of the Rules of Court allows original petitions for certiorari from decisions or orders of public
respondents provided they are filed within a reasonable time. We believe that the period from January
9, 1987, when the motions for reconsideration separately filed by KILUSAN-OLALIA and KIMBERLY were
denied, to March 16, 1987, when the petition in G.R. No. 77629 was filed, constitutes a reasonable time
for availing of such recourse.
We likewise do not subscribe to the claim of respondents that KILUSAN-OLALIA has impliedly accepted
the questioned decision by demanding compliance therewith. In the letter of KILUSAN-OLALIA dated
November 24, 1986 24 addressed to the legal counsel of KIMBERLY, it is there expressly and specifically
pointed out that KILUSAN-OLALIA intends to file a motion for reconsideration of the questioned decision
but that, in the meantime, it was demanding the issuance of regular appointments to the casual workers
who had been declared to be regular employees. The filing of said motion for reconsideration of the
questioned decision by KILUSAN-OLALIA, which was later denied, sustains our position on this issue and
denies the theory of estoppel postulated by respondents.
On the basis of the foregoing circumstances, and as a consequence of their status as regular employees,
those workers not perforce janitorial and yard maintenance service were performance entitled to the
payment of salary differential, cost of living allowance, 13th month pay, and such other benefits
extended to regular employees under the CBA, from the day immediately following their first year of
service in the company. These regular employees are likewise entitled to vote in the certification
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election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial
and yard maintenance service, which form part of the 64 challenged votes, should be opened, counted
and considered for the purpose of determining the certified bargaining representative.
We do not find it necessary to disturb the finding of then Minister Sanchez holding as legal the service
contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and
yard maintenance service, which is supported by substantial and convincing evidence. Besides, we take
judicial notice of the general practice adopted in several government and private institutions and
industries of hiring a janitorial service on an independent contractor basis. Furthermore, the occasional
directives and suggestions of KIMBERLY are insufficient to erode primary and continuous control over
the employees of the independent contractor. 25 Lastly, the duties performed by these workers are not
independent and integral steps in or aspects of the essential operations of KIMBERLY which is engaged
in the manufacture of consumer paper products and cigarette paper, hence said workers cannot be
considered regular employees.
The reinstatement of Roque Jimenez without backwages involves a question of fact best addressed to
the discretion of respondent secretary whose finding thereon is binding and conclusive upon this Court,
absent a showing that he committed a grave abuse in the exercise thereof.
WHEREFORE, judgment is hereby rendered in G.R. No. 77629:
1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open and count the 64 challenged votes,
and that the union with the highest number of votes be thereafter declared as the duly elected certified
bargaining representative of the regular employees of KIMBERLY;
2. Ordering KIMBERLY to pay the workers who have been regularized their differential pay with respect
to minimum wage, cost of living allowance, 13th month pay, and benefits provided for under the
applicable collective bargaining agreement from the time they became regular employees.
All other aspects of the decision appealed from, which are not so modified or affected thereby, are
hereby AFFIRMED. The temporary restraining order issued in G.R. No. 77629 is hereby made permanent.
The petition filed in G.R. No. 78791 is hereby DISMISSED.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.
Footnotes
* The other petitioners not specifically named in the title of this case consist of 97 other
alleged members of petitioner union (eclusive of petitioners Roque Jimenez and Mario
C. Rongaleros) who are enumerated in the "Amendment List of Petitioners" which is
indicated as Annex "A" of the basic petition filed herein.
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1 Petition, G.R. No. 77629, Annex B; Rollo, 62-79.

2 Id., Id., Annex C; Ibid., 80-81.
3 Petition, G.R. No. 78791, Annex A; Rollo, 42-43.
4 Id., Id., Annex B; Ibid., 44-45.
5 Petition, G.R. No. 77629, Annex D; Rollo, 82-83.
6 Id., Id., Annex F; Ibid., 86.
7 Memorandum of Public Respondent, G.R. No. 77629; Rollo, 458-459.
8 Petition, G.R. No. 77629, Annex G; Ibid., 87-88.
9 Id., Id., Annex "H" Ibid., 89.
10 Id., Id., Annex J; Ibid., 114-117.
11 Rollo, G.R. No. 77629, 66.
12 Ibid., Id., 18.
13 Ibid., Id., 19, 68, 461.
14 Ibid., Id., 62-79.
15 lbid., Id., 461-462.
16 Petition, G.R. No. 77629, Annex M, ibid., 125.
17 Rollo G.R. No. 77629; 462-463.
18 Ibid., Id., 161-162.
19 Ibid., Id., 134-135.
20 Ibid., Id., 171-190.
21 Rollo, G.R. No. 78791, 327-339.
22 Rollo, G.R. No. 78791, 350-402.
23 Ibid., id., 406.
24 Footnote 16, ante.
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25 Wirtz vs. San Francisco & Oakland Helicopter Air Inc., 244 F. Supp. 680.
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