LABOR REL: WENPHIL SERRANO AGABON DOCTRINE Distinguished

THE DISMISSAL IS FOR A JUST OR AUTHORIZED CAUSE BUT DUE PROCESS WAS NOT
OBSERVED.

Due Process to be Observed by The Employer - For termination of the employment based on
the any of the just causes for termination, the requirements of due process that an employer must
comply with are: (TWIN NOTICES)
1. Written notice should be served to the employee specifying the ground or grounds for
termination and giving the said employee reasonable opportunity within which to explain;
2. A hearing or conference should be held during which the employee concerned, with the
assistance of counsel, if the employee so desires, is given the opportunity to respond to the
charge, present his evidence and present the evidence presented against him;
3. A written notice of termination, if termination is the decision of the employer, should be served
on the employee indicating that upon due consideration of all the circumstances, grounds have
been established to justify his termination.
For termination of employment based on authorized causes, the requirements 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
the effectivity of the termination specifying the grounds for termination.

NOTE:
Under the so-called WENPHIL DOCTRINE if the services of the employee was terminated due
to a just or authorized cause but the affected employees right to due process has been violated,
the dismissal is legal but the employee is entitled to damages by way of indemnification for the
violation of the right.
SERRANO vs. ISETANN et. al. abandoned the WENPHIL DOCTRINE and ruled that if the
employee is dismissed under just or authorized cause but the affected employees right to due
process has been violated, his dismissal becomes ineffectual. Therefore, the employee is
entitled to backwages from the time he was dismissed until the determination of the justness of
the cause of the dismissal.
AGABON vs. NLRC (Nov. 17, 2004) abandoned the Serrano doctrine and REINSTATED THE
WENPHIL DOCTRINE. The sanctions, however must be stiffer than that imposed in Wenphil.

Synopsis on the developments in the law.

In the last couple of decades, the Supreme Court has grappled with the legal effect and the
corresponding sanction in cases where there exists a just and valid ground to justify the dismissal
but the employer fails to comply with the due process requirement of the law. Prior to the
promulgation in 1989 of Wenphil v. NLRC, [170 SCRA 69, February 8, 1989], the prevailing
doctrine held that dismissing employees without giving them proper notices and an opportunity to
be heard was illegal and that, as a consequence thereof, they were entitled to reinstatement plus
full backwages. Wenphil abandoned this jurisprudence and ruled that if the dismissal was for a
just or an authorized cause but done without due process, the termination was valid but the
employer should be sanctioned with the payment of indemnity ranging from P1,000.00 to
P10,000.00.

In 2000, the Supreme Court promulgated Serrano v. NLRC, [G.R. No. 117040, January 27, 2000],
which modified Wenphil. It considered such termination ineffectual (not illegal) and sanctioned
the employer with payment of full backwages plus nominal and moral damages, if warranted by
the evidence. In case the dismissal was for an authorized cause, separation pay in accordance
with Article 283 of the Labor Code should be awarded.

In 2004, the Supreme Court in Agabon v. NLRC, [G.R. No. 158693, November 17, 2004],
abandoned Serrano and effectively reverted to Wenphil (known also as the Belated Due Process
Rule) and held that a dismissal due to abandonment - a just cause - was not illegal or ineffectual,
even if done without due process; but the employer should indemnify the employee with nominal
damages for non-compliance with statutory due process. (Glaxo Wellcome Phils., Inc. v.
Nagkakaisang Empleyado ng Wellcome-DFA, G.R. No. 149349, March 11, 2005).
WENPHIL CORPORATION V. NATIONAL LABOR RELATIONS COMMISSION 170 SCRA 69

WENPHIL DOCTRINE (Belated Due Process Rule) - if the services of the employee was
terminated due to a just or authorized cause but the affected employees right to due process has
been violated, the dismissal is legal but the employee is entitled to damages by way of
indemnification for the violation of the right.

FACTS
1. Private respondent Roberto Mallare was hired by petitioner Wenphil as a crewmember at its
Cubao Branch. He thereafter became the assistant head of the Backroom Department.

2. On May 20, 1985, private respondent had an altercation with a co-employee, Job Barrameda
regarding the tending of the salad bar. Mallare slapped Barramedas cap, stepped on the latters
foot, and picked up the ice scooper and brandished it against the latter.

3. The incident was reported to the assistant manager, Delilah Hermosura, who immediately
asked Mallare to see her. Mallare refused to see Hermosura and it took the security guard to bring
him to her. Mallare then shouted profane words instead of making an explanation before her. He
stated that the matter should be settled only by him and Barrameda.

4. The store manager, on the basis of Hermosuras report, suspended Mallare and Barrameda
until further notice. Later that day, the store manager issued a memorandum suspending
Barrameda for one week and dismissing Mallare from service, in accordance with their Personnel
Manual. The notice of dismissal was served on Mallare on May 25, 1985.

5. Respondent Mallare filed a complaint against petitioner Wenphil for unfair labor practice, illegal
suspension, and illegal dismissal.

6. Petitioner contended that under its Personnel Manual, which had been read and understood
by respondent Mallare, an investigation shall only be conducted if the offense committed by the
erring employee is punishable with a penalty higher than suspension of fifteen says and the erring
employee requests for an investigation of the incident. Petitioner alleged that since respondent
Mallare did not ask for an investigation, he is deemed to have waived such right.

7. The Labor Arbiter dismissed the complaint for lack of merit, since hearing cannot be conducted
due to the repeated absence of private respondents counsel.
8. The NLRC set aside the appealed decision and ordered the reinstatement of the private
respondent to his former position, without loss of seniority and other benefits and one (1) year
backwages without qualification and deduction. Hence, the instant petition for review.

ISSUES
a. Whether or not petitioner Wenphil has a just and valid cause to dismiss private respondent
Roberto Mallare.

b. Whether or not the due process requirement in the manner of dismissal has been complied
with.

c. Whether or not private respondent is entitled to reinstatement without loss of seniority rights
and with payment of full backwages for 3 years, without qualification, in case he was dismissed
for a cause but without due process.

HELD:
a. YES. The Supreme Court ruled with the Labor Arbiter that the dismissal of private respondent
Mallare was for a just cause. He was found guilty of grave misconduct and insubordination. This
is borne by the sworn statements of witnesses.

b. NO. The aforementioned provision of the Personnel Manual of Wenphil which may effectively
deprive its employees of the right to due process is clearly against the law and hence, null and
void. The security of tenure of a laborer or employee is enshrined in the Constitution, the Labor
Code and other related laws.

c. NO. The Supreme Court held that said policy must be reexamined. .It will be highly prejudicial
to the interests of the employer to impose on him the services of an employee who has been
shown guilty of the charges that warranted his dismissal from employment. Indeed, it will
demoralize the rank and file if the undeserving, if not the undesirable, remains in the service.
Thus, in the present case, where the private respondent, who appears to be of violent temper,
caused trouble during office hours and even defied his superiors as they tried to pacify him, should
not be rewarded with reemployment and backwages. It may encourage him to do even worse and
will render a mockery of the rules of discipline that employees are required to observe. Under the
circumstances, the dismissal of the private respondent should be maintained, He has no right to
return to his former employer.
 That in all things, God may be glorified.

Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, no
worker shall be dismissed except for a just and authorized cause provided by the law and after
due process. Sections 2, 5, 6, and 7 of the same Rules require that before an employee may
dismiss an employee, the latter must be given a written notice stating the particular act or omission
constituting the grounds thereof; that the employee may answer the allegations with a reasonable
period; that the employer shall afford him ample opportunity to be heard and to defend oneself
with the assistance of his representative, if he so desires; and that it is only then that the employer
may dismiss the employee by notifying him of the decision in writing, stating clearly the reasons
therefor. The failure of petitioner Wenphil to give private respondent Roberto Mallare the benefit
of a hearing before he was dismissed constitutes an infringement of his constitutional right to due
process of law and equal protection of the laws. 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. Petitioner must be imposed a sanction for said failure. Considering the
circumstances of the case, petitioner must indemnify the private respondent the amount of P1,
000.00. The measure of this ward depends on the facts of each case and the gravity of the
omission committed by the employer. The petition is granted.
Serrano vs. NLRC / ISETANN - GR No. 117040 Case Digest

SERRANO DOCTRINE - if the employee is dismissed under just or authorized cause but the
affected employees right to due process has been violated, his dismissal becomes ineffectual.
Therefore, the employee is entitled to backwages from the time he was dismissed until the
determination of the justness of the cause of the dismissal.

FACTS:

Serrano was a regular employee of Isetann Department Store as the head of Security Checker.
In 1991, as a cost-cutting measure, Isetann phased out its entire security section and engaged
the services of an independent security agency. Petitioner filed a complaint for illegal dismissal
among others. Labor arbiter ruled in his favor as Isetann failed to establish that it had retrenched
its security section to prevent or minimize losses to its business; that private respondent failed to
accord due process to petitioner; that private respondent failed to use reasonable standards in
selecting employees whose employment would be terminated. NLRC reversed the decision and
ordered petitioner to be given separation pay.

ISSUE:

Whether or not the hiring of an independent security agency by the private respondent to replace
its current security section a valid ground for the dismissal of the employees classed under the
latter.

RULING:

An employers good faith in implementing a redundancy program is not necessarily put in doubt
by the availment of the services of an independent contractor to replace the services of the
terminated employees to promote economy and efficiency. Absent proof that management acted
in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an
employer.

If termination of employment is not for any of the causes provided by law, it is illegal and the
employee should be reinstated and paid backwages. To contend that even if the termination is
for a just cause, the employee concerned should be reinstated and paid backwages would be to
amend Art 279 by adding another ground for considering dismissal illegal.
If it is shown that the employee was dismissed for any of the causes mentioned in Art 282, the in
accordance with that article, he should not be reinstated but 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
without legal effect.
Agabon vs. NLRC / Riviera Home - GR No. 158693 Case Digest

AGABON vs. NLRC (Nov. 17, 2004) - dismissal due to abandonment - a just cause - was not
illegal or ineffectual, even if done without due process; but the employer should indemnify the
employee with nominal damages for non-compliance with statutory due process.
- abandoned the Serrano doctrine and REINSTATED THE WENPHIL DOCTRINE. The
sanctions, however must be stiffer than that imposed in Wenphil.

FACTS:

Petitioners were employed by Riviera Home as gypsum board and cornice installers from January
1992 to February 23, 1999 when they were dismissed for abandonment of work. Petitioners filed
a complaint for illegal dismissal and was decided in their favor by the Labor Arbiter. Riviera
appealed to the NLRC contending just cause for the dismissal because of petitioners
abandonment of work. NLRC ruled there was just cause and petitioners were not entitled to
backwages and separation pay. The CA in turn ruled that the dismissal was not illegal because
they have abandoned their work but ordered the payment of money claims.

ISSUE:

Whether or not petitioners were illegally dismissed.

RULING:

To dismiss an employee, the law required not only the existence of a just and valid cause but also
enjoins the employer to give the employee the right to be heard and to defend himself.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.
For a valid finding or abandonment, two factors are considered: failure to report for work without
a valid reason; and, 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.

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 Doctrine or the Belated Due process Rule.
Art. 279 means that the termination is illegal if it is not for any of the justifiable or authorized by
law. Where the dismissal is for a just cause, the lack of statutory due process should not nullify
the dismissal but the employer should indemnify the employee for the violation of his statutory
rights. The indemnity should be stiffer to discourage the abhorrent practice of dismiss now, pay
later which we sought to deter in Serrano ruling. The violation of employees rights warrants the
payment of nominal damages.
Landmark Case: CHUA QUA vs. CLAVE G.R. No. L-49549 August 30, 1990 (Case Digest)
A truly remarkable case wherein the Supreme Court ruled in favor of love. The setting of the
case was in when marriage between minors was still legal, way before the Family Code. In this
case, a 30 year old teacher had married her student which prompted the school to terminate her.
And against odds the Supreme Court Ruled in favor of here, hence, creating this Landmark Case.
Truism: the heart has reasons of its own which reason does not know.

FACTS:
This would have been just another illegal dismissal case were it not for the controversial and
unique situation that the marriage of herein petitioner, then a classroom teacher, to her student
who was fourteen (14) years her junior, was considered by the school authorities as sufficient
basis for terminating her services.
The case was about an affair and marriage of 30 years old teacher Evelyn Chua in Tay Tung High
School in Bacolod City to her 16 years old student. The petitioner teacher was suspended without
pay and was terminated of his employment for Abusive and Unethical Conduct Unbecoming of
a Dignified School Teacher which was filed by a public respondent as a clearance for termination.

ISSUE:
Was her dismissal valid?
Whether or not there is substantial evidence to prove that the antecedent facts which culminated
in the marriage between petitioner and her student constitute immorality and or grave
misconduct?

RULING:
The Supreme Court declared the dismissal illegal saying:
Private respondent [the school] utterly failed to show that petitioner [30-year old lady teacher]
took advantage of her position to court her student [16-year old]. If the two eventually fell in love,
despite the disparity in their ages and academic levels, this only lends substance to the truism
that the heart has reasons of its own which reason does not know. But, definitely, yielding to this
gentle and universal emotion is not to be so casually equated with immorality. The deviation of
the circumstances of their marriage from the usual societal pattern cannot be considered as a
defiance of contemporary social mores.
Finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged
violation of Code of Ethics governing school teachers would have no basis. Private respondent
utterly failed to show that petitioner took advantage of her position to court her student. The
deviation of the circumstances of their marriage from the usual societal pattern cannot be
considered as a defiance of contemporary social mores.
HOMEOWNERS SAVINGS AND LOAN ASSOCIATION, INC. VS. NLRC 262 SCRA 406

FACTS
1. Private respondent Marilyn Cabatbat, a full-fledged Certified Public Accountant was employed
and had started working as Branch Accountant in petitioner's branch office in San Carlos City
(Pangasinan) on September 10, 1975.
2. In 1981, she was re-assigned to the Sta. Barbara, Pangasinan branch office of petitioner. After
a brief stint in Sta. Barbara, she was returned to her old post in San Carlos City, for the same
position.
3. Petitioner issued a memorandum announcing managements decision to promote five (5) junior
officers and to move four (4) of its employees to new assignments. Private respondent was among
those moved from her old post in San Carlos branch.
4. She was transferred to the petitioners branch in Urdaneta, also in Pangasinan. Both the
promoted and the transfer employees received corresponding increases in their salaries.
5. Private respondent made a letter requesting for the deferment of her new assignment, citing
as her reason the fact that she was on her sixth month of pregnancy. The request was granted.
6. After private respondents delivery, petitioner again ordered private respondent to report to her
new assignment. She again requested that the order to re-assign her be reconsidered because
of some very personal reasons. She protested that her new assignment will entail additional
expenses and physical exhaustion as Urdaneta is too far for her to commute daily
7. Thereafter, she wrote petitioner a letter, this time bluntly refusing her assignment on the pretext
that her new assignment was a promotion, in which case, she has the option to reject or accept
the same. She was given a warning by petitioner that her continued defiance will be dealt with
according to law. However, she continued reporting to the San Carlos branch.
8. Private respondent was issued a notice of termination. She then filed a complaint for illegal
dismissal against petitioner. Labor Arbiter dismissed the complaint, which was reversed on appeal
to the NLRC. Hence, this petition.

ISSUE
1. Whether or not private respondents re-assignment from San Carlos branch to Urdaneta
involved a promotion which she can rightfully decline without being guilty of willful disobedience,
a just cause for termination.
2. Whether or not she was illegally dismissed.

HELD
1. NO. A cursory reading of the memorandum unmistakably shows that Marilyn Cabatbat was
among the four employees that were considered for movement from the San Carlos branch to
Urdaneta branch with no corresponding change in her position as branch accountant. Henceforth,
the clear intention of the petitioner corporation was merely to transfer, and not to promote, the
private respondent to a new post.
2. NO. Of relevant significance is the right of the employer to transfer employees in their work
station. It is the employers prerogative, based on its assessment and perception of its employees
qualifications, aptitudes and competence to move them around in the various areas of its business
operations in order to ascertain where they will function with maximum benefit to the company.
The rationale for this rule is that an employees right to security of tenure does not give him such
a vested right in his position as would deprive the company of its prerogative to change his
assignment or transfer him where he will be most useful. Of course, the managerial prerogative
must be exercised without grave abuse of discretion and putting to mind the basic elements of
justice and fair play. Thus, it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker nor to penalize an employee. Private respondent's refusal to obey the transfer
order constitutes willful disobedience of a lawful order of her employer sanctioned under Article
282 (Now Art. 297) of the Labor Code and, therefore, warrants dismissal. No doubt, private
respondent was accorded due process.
Art. 282 Termination by employer An employer may terminate an employment for any of the
following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
No less than seven (7) memoranda were issued to private respondent urging her to follow the
directive of management transferring her to the Urdaneta Branch coupled with a generous offer
by the petitioner to pay or reimburse her for the actual cost of transportation that she may incur
as a result of the new assignment. WHEREFORE, the petition is GRANTED and the Decision of
public respondent NLRC dated November 26, 1990 is hereby nullified and set aside. The Decision
of the Executive Labor Arbiter dated June 26, 1985 is reinstated.
PT&T v. Court of Appeals

Facts:
1. The petitioner company is engaged in providing telegraph and communication services through
its different branches while the Private Respondents are its employees. After conducting a study,
the petitioner implemented a relocation restructuring program wherein the private respondents
were given options to choose a branch where they will transfer. Those who accept will be offered
allowances and other benefits.
2. The private respondents however, rejected the offer on the ground that the transfer would
cause difficulties since the branches were far and would entail separation from their respective
families. The petitioner considered the refusal as insubordination and willful disobedience and
thus dismissed the private respondents. This prompted the respondents to file a complaint for
illegal dismissal while the union filed a ULP case against the company.
3. The petitioner alleged that the transfer was an exercise of management prerogative and was
done in good faith aimed at decongesting surplus employees. The Labor Arbiter dismissed the
complaint for lack of merit but the NLRC reversed the decision and held that the respondents
were illegally dismissed. It interpreted the transfers as a promotion, hence the respondents had
the right to accept or refuse. They could not be dismissed on the ground of refusing a promotion.

Issue: Whether or not there is a valid ground to dismiss the private respondents/Whether or not
the transfers are considered as promotions

RULING: Yes, the transfers are in fact promotions. An employee cannot be promoted without his
consent. Moreover, there is no law compelling an employee to accept a promotion because it is
in the nature of a gift or rewarrd which he can refuse. His refusal cannot therefore be considered
as an insubordination or willful disobedience of a lawful order of an employer. Hence, there is no
valid cause for the private respondents' dismissal.
BLUE DAIRY CORPORATION vs. NLRC

Facts:
Blue Dairy Corporation, engaged in the processing of dairy and chocolate products, juices
and vegetables, hired on private respondent Elvira R. Recalde as a food technologist in its
laboratory.
On 21 October 1994 Recalde allegedly accompanied Production Manager Editha Nicolas
in conducting a sensory evaluation of vanilla syrup in one of the outlets of a client. While on their
way back to the office a post fell on the company vehicle they were riding due to a raging typhoon
damaging the vehicle's windshield and side mirror.
Recalde was then transferred from the laboratory to the vegetable processing section and
was restricted from entering the laboratory. She was unhappy and considered her new job
humiliating and menial. She stopped reporting for work.
Recalde filed a complaint against petitioner Blue Dairy Corporation for constructive
dismissal.
Petitioner Blue Dairy contended that Recalde was given a less sensitive assignment
outside of the laboratory on account of her dishonesty which resulted in loss of trust and
confidence. They seriously took into account the result of the investigation concerning the 21
October incident that Recalde was actually scouting for a new residence using company vehicle
without prior permission from the General Manager and during office hours. Petitioner accorded
credence to the narrations of the company driver, to that effect which act of dishonesty could
even have merited dismissal from employment had they adhered simply to jurisprudential rule but
took into account instead the spirit of the approaching Christmas season.
The Labor Arbiter was convinced that petitioner Blue Dairy was guilty of constructive
dismissal as he found the justification for Recaldes transfer unreasonable.
Petitioner Blue Dairy insist that the transfer of Recalde from the laboratory to the
vegetable processing section was effected in the exercise of management prerogative. It did not
amount to a constructive dismissal as Recalde erroneously maintained.
The NLRC affirmed the ruling of the Labor Arbiter.

Issue: Whether Blue Dairy Corporation was guilty of constructive dismissal.

Held:
YES. Indeed, it is the prerogative of management to transfer an employee from one office to
another within the business establishment based on its assessment and perception of the
employees qualifications, aptitudes and competence, and in order to ascertain where he can
function with maximum benefit to the company. But, like other rights, there are limits thereto. The
managerial prerogative to transfer personnel must be exercised without grave abuse of discretion,
bearing in mind the basic elements of justice and fair play. Having the right should not be
confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge
by the employer to rid himself of an undesirable worker. In particular, the employer must be able
to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.
Should the employer fail to overcome this burden of proof, the employees transfer shall be
tantamount to constructive dismissal, which has been defined as a quitting because continued
employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in
rank and diminution in pay.
In the present case, petitioner Blue Dairy failed to justify Recaldes transfer from the position of
food technologist in the laboratory to a worker in the vegetable processing section. It does not
appear that Recalde was provided an opportunity to refute the reason for the transfer. Petitioners
merely relied on the narrations of the company driver. Nor was Recalde notified in advance of
her impending transfer which was, as we shall elucidate later, a demotion in rank.
Further, petitioner overstretched the effect of Recaldes claimed wrongdoing. We have ruled that
breach of trust and confidence as a ground for dismissal from employment must be related to the
performance of the duties of the employee such as would show him to be thereby unfit to continue
working for the employer. By analogy, breach of trust and confidence as a ground for
reassignment must be related to the performance of the duties of the employee such as would
show him to be thereby unfit to discharge the same task. Clearly, the act of dishonesty imputed
to Recalde has no bearing at all to her work in the laboratory.
Petitioner Blue Dairy failed to realize that it was not relief from dismissal which they provided
to Recalde when they assigned her to the vegetable processing section but discomfiture.
ASIAN ALCOHOL v NLRC

FACTS:

Private respondents filed complaints for illegal dismissal with prayer for reinstatement with
backwages, moral damages and attorneys fees. They alleged that petitioner used the
retrenchment program as a subterfuge for union busting. They also alleged that petitioner was
not bankrupt as it has engaged in an aggressive scheme of contractual hiring. The Labor Arbiter
dismissed the complaints ruling that the dismissal of private respondents on ground of
redundancy/retrenchment was valid.

The Labor Arbiter found petitioners claim that it incurred substantial losses in its business
operations prior to the implementation of its retrenchment program as supported by documents
such as audited Balance Sheet and Statement of Income and Deficit as well as Income Tax
Return indicating an accumulated deficit. Private respondents appealed to the NLRC. The NLRC,
in its decision, rejected the evidence offered by petitioner to prove its business reversals. It faulted
petitioner for retrenching private respondents on the ground of mere possible future losses.
Moreover, the NLRC ruled that the positions of private respondents were not redundant for the
simple reason that they were casuals. Thus, the NLRC declared that private respondents were
illegally dismissed and directed their reinstatement with full backwages, and attorneys fees.
Petitioners motion for reconsideration was denied. Hence, this petition.

ISSUE:

W/N private respondents were illegally dismissed

HELD:

NO. Article 283 of the Labor Code, as amended, governs the right of management to dismiss
workers during the period of business recession and to install labor saving devices to prevent
losses. The condition of business losses is normally shown by audited financial documents. In
the instant case, private respondents never contested the veracity of the audited financial
documents offered by petitioner. Neither did they object to their admissibility. They show that
petitioner had accumulated losses and showing no sign of abating in the near future. The
Supreme Court also found that petitioners reorganizational plan and comprehensive cost saving
program to turn the business around were not designed to bust the union. Union and non-union
members were treated alike.

An employers good faith in implementing a redundancy program is not necessarily destroyed by

availment of the services of an independent contractor to replace the services of the terminated
employees. The reduction of the number of workers in a company made necessary by the
introduction of the services of an independent contractor is justified when the latter is undertaken
in order to effectuate more economic and efficient methods of production. Private respondents
failed to proffer any proof that the management acted in malicious or arbitrary manner in engaging
the services of an independent contractor.
Absent any such proof, the Court had no basis to interfere with the bonafide decision of
management to effect more and efficient methods of production. Thus, the Supreme Court
dismissed the complaints for illegal dismissal filed by private respondents.
UNIWIDE SALES WAREHOUSE CLUB and VIVIAN M. APDUHAN, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and AMALIA P. KAWADA, respondents

FACTS:
Private respondent was a Full Assistant Store Manager at Uniwide. Later, Uniwide, through Store
Manager Apduhan, issued a Memorandum addressed to Kawada summarizing the various
reported incidents signifying unsatisfactory performance on the latters part which include the
commingling of good and damaged items, sale of a voluminous quantity of damaged toys and
ready-to-wear items at unreasonable prices, and failure to submit inventory reports. On an earlier
setting on the investigation of her case, Kawada filed a sick leave, thus causing the
hearing/investigation to be rescheduled. Again, upon rescheduling, Kawada, despite notice and
warning that failure to appear would mean abandonment of her work, did not appear, this time
coming up with the excuse that she had been already constructively dismissed. Uniwide
terminated her work.
Private respondent claims that from the months of February to June 1998, she had been
subjected to constant harassment, ridicule and inhumane treatment by Apduhan, with the hope
that the latter can get the private respondent to resign. The harassment allegedly came in the
form of successive memoranda which private respondent would receive almost every week,
enumerating a litany of offenses and maligning her reputation and spreading rumors among the
employees that private respondent shall be dismissed soon. The last straw of the imputed
harassment was the July 31, 1998 incident wherein private respondents life was put in danger
when she lost consciousness due to hypertension as a result of Apduhans alleged hostility and
shouting. She filed a case for illegal dismissal.
LA dismissed the case but NLRC ruled in favor of Kawada. Upon appeal by Uniwide, CA affirmed
NLRCs decision.

ISSUE:
WON as a managerial employee, one may be dismissed by reason of mere existence of a basis
for believing that such employee has breached the trust of his employer.

HELD:
Yes.
With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in question, and that mere uncorroborated
assertions and accusations by the employer will not be sufficient. But, as regards a managerial
employee, mere existence of a basis for believing that such employee has breached the trust of
his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss
of confidence, such as when the employer has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of trust and confidence demanded by his position.
The evasive attitude of Kawada more than enough supports the impression that she could be
guilty or is guilty of the charges against her and believes that she might not be able to defend
herself. This is even bolstered by the information that complainant called on several of the
witnesses against her, simply to influence them and their testimonies. She could not have been
constructively dismissed.
Case law defines constructive dismissal as a cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution
in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes
unbearable to the employee.
The test of constructive dismissal is whether a reasonable person in the employees position
would have felt compelled to give up his position under the circumstances. It is an act amounting
to dismissal but made to appear as if it were not. In fact, the employee who is constructively
dismissed may be allowed to keep on coming to work. Constructive dismissal is therefore a
dismissal in disguise. The law recognizes and resolves this situation in favor of employees in
order to protect their rights and interests from the coercive acts of the employer.
PHILIPPINE WIRELESS INC. (Pocketbell) and/or JOSE LUIS SANTIAGO, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and GOLDWIN LUCILA, respondents.

FACTS:
Petitioner Philippine Wireless, Inc. hired respondent Goldwin Lucila since 1976 until he was
promoted in 1990 as Superintendent, Project Management. On December 28, 1990, he tendered
his resignation. In 1991, he filed with the Arbitration Branch, National Labor Relations
Commission (NLRC), a complaint for illegal/constructive dismissal. He alleged that he was
constructively dismissed inasmuch as his last promotion was demeaning, illusory and humiliating.
The basis of his allegation was the fact that he was not given any secretary, assistant and/or
subordinates. The Labor Arbiter rendered a decision declaring that respondent actually resigned
and dismissed the complaint for lack of merit. Public respondent NLRC reversed the findings of
the labor arbiter, and ordered respondents reinstatement with back wages or separation pay.
Petitioners filed a motion for reconsideration, which the NLRC denied. Hence, this petition.

ISSUE:
W/n private respondent was demoted

HELD:
The respondent considered his promotion as a demotion due to the fact that he had no support
staff to assist him and whom he could supervise. The Supreme Court ruled that there was no
demotion where there was no reduction in position, rank or salary as a result of the transfer. In
fact, respondent was promoted three times from the time he was hired until his resignation from
work. The petition herein was therefore granted. The decision of the labor arbiter is reinstated
and affirmed.

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS;

TERMINATION OF EMPLOYMENT; BY EMPLOYER; CONSTRUCTIVE DISMISSAL,
DEFINED. The Court has held that constructive dismissal is an involuntary resignation resorted
to when continued employment is rendered impossible, unreasonable or unlikely; when there is
a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee.

2. ID.; ID.; ID.; ID.; VOLUNTARY RESIGNATION, DEFINED. Voluntary resignation is defined
as the act of an employee who finds himself in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service and he has no other choice but to
disassociate himself from his employment.