CASES IN LABOR LAW
FIRST WEEK, JANUARY 11, 2017
GATCHALIAN, NICOLE JAIME D. 3ALM ATTY. DAGUINOD
On August 13, 1970, she opted to extend the
lease contract for another ten (10) years (Ibid, pp.
Republic of the Philippines 26-27).
SUPREME COURT
Manila During the existence of the lease, she employed
the herein private respondents. Private
EN BANC respondent Ricardo Dionele, Sr. has been a
regular farm worker since 1949 and he was
G.R. No. 71813 July 20, 1987 promoted to Cabo in 1963. On the other hand,
private respondent Romeo Quitco started as a
ROSALINA PEREZ ABELLA/HDA. DANAO- regular employee in 1968 and was promoted to
RAMONA, petitioners, Cabo in November of the same year.
vs.
THE HONORABLE NATIONAL LABOR Upon the expiration of her leasehold rights,
RELATIONS COMMISSION, ROMEO QUITCO petitioner dismissed private respondents and
and RICARDO DIONELE, SR., respondents. turned over the hacienda to the owners thereof
on October 5, 1981, who continued the
PARAS, J.: management, cultivation and operation of the
farm (Rollo, pp. 33; 89).
This is a petition for review on certiorari of the
April 8, 1985 Resolution of the Ministry of Labor On November 20, 1981, private respondents filed
and Employment affirming the July 16, 1982 a complaint against the petitioner at the Ministry
Decision of the Labor Arbiter, which ruled in favor of Labor and Employment, Bacolod City District
of granting separation pay to private Office, for overtime pay, illegal dismissal and
respondents. reinstatement with backwages. After the parties
had presented their respective evidence, Labor
On June 27, 1960, herein petitioner Rosalina Arbiter Manuel M. Lucas, Jr., in a Decision dated
Perez Abella leased a farm land in Monteverde, July 16, 1982 (Ibid, pp. 29-31), ruled that the
Negros Occidental, known as Hacienda Danao- dismissal is warranted by the cessation of
Ramona, for a period of ten (10) years, business, but granted the private respondents
renewable, at her option, for another ten (10) separation pay. Pertinent portion of the
years (Rollo, pp. 16-20). dispositive portion of the Decision reads:
In the instant case, the respondent closed
its business operation not by reason of
business reverses or losses. Accordingly,
the award of termination pay in
complainants' favor is warranted.
WHEREFORE, the respondent is hereby
ordered to pay the complainants
separation pay at the rate of half-month
salary for every year of service, a fraction
of six (6) months being considered one (1)
year. (Rollo pp. 29-30)
On appeal on August 11, 1982, the National
Labor Relations Commission, in a Resolution
dated April 8, 1985 (Ibid, pp. 3940), affirmed the
decision and dismissed the appeal for lack of
merit.
On May 22, 1985, petitioner filed a Motion for
Reconsideration (Ibid, pp. 41-45), but the same
was denied in a Resolution dated June 10, 1985
(Ibid, p. 46). Hence, the present petition (Ibid, pp.
3-8).
The First Division of this Court, in a Resolution
dated September 16, 1985, resolved to require
the respondents to comment (Ibid, p. 58). In
compliance therewith, private respondents filed
their Comment on October 23, 1985 (Ibid, pp. 53-
55); and the Solicitor General on December 17,
1985 (Ibid, pp. 71-73-B).
On February 19, 1986, petitioner filed her
Consolidated Reply to the Comments of private
and public respondents (Ibid, pp. 80-81).
The First Division of this Court, in a Resolution
dated March 31, 1986, resolved to give due
course to the petition; and to require the parties
to submit simultaneous memoranda (Ibid., p. 83).
In compliance therewith, the Solicitor General
filed his Memorandum on June 18, 1986 (Ibid,
pp. 89-94); and petitioner on July 23, 1986 (Ibid,
pp. 96-194).
The petition is devoid of merit.
The sole issue in this case is —
WHETHER OR NOT PRIVATE RESPONDENTS
ARE ENTITLED TO SEPARATION PAY.
Petitioner claims that since her lease agreement
had already expired, she is not liable for payment
of separation pay. Neither could she reinstate the
complainants in the farm as this is a complete
cessation or closure of a business operation, a
just cause for employment termination under
Article 272 of the Labor Code.
On the other hand, the legal basis of the Labor
Arbiter in granting separation pay to the private
respondents is Batas Pambansa Blg. 130,
amending the Labor Code, Section 15 of which,
specifically provides:
Sec 15 Articles 285 and 284 of the Labor
Code are hereby amended to read as
follows:
xxx xxx xxx
Art. 284. 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 establisment
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 closure 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.1avvphi1
There is no question that Article 284 of the Labor
Code as amended by BP 130 is the law
applicable in this case.
Article 272 of the same Code invoked by the
petitioner pertains to the just causes of
termination. The Labor Arbiter does not argue the
justification of the termination of employment but
applied Article 284 as amended, which provides
for the rights of the employees under the
circumstances of termination.
Petitioner then contends that the aforequoted
provision violates the constitutional guarantee
against impairment of obligations and contracts,
because when she leased Hacienda Danao-
Ramona on June 27, 1960, neither she nor the
lessor contemplated the creation of the obligation
to pay separation pay to workers at the end of the
lease.
Such contention is untenable.
This issue has been laid to rest in the case of
Anucension v. National Labor Union (80 SCRA
368-369 [1977]) where the Supreme Court ruled:
It should not be overlooked, however, that
the prohibition to impair the obligation of
contracts is not absolute and unqualified.
The prohibition is general, affording a
broad outline and requiring construction to
fill in the details. The prohibition is not to
read with literal exactness like a
mathematical formula for it prohibits
unreasonable impairment only. In spite of
the constitutional prohibition the State
continues to possess authority to
safeguard the vital interests of its people.
Legislation appropriate to safeguard said
interest may modify or abrogate contracts
already in effect. For not only are existing
laws read into contracts in order to fix the
obligations as between the parties but the
reservation of essential attributes of
sovereign power is also read into contracts
as a postulate of the legal order. All
 contracts made with reference to any
matter that is subject to regulation under
the police power must be understood as
made in reference to the possible exercise
of that power. Otherwise, important and
valuable reforms may be precluded by the
simple device of entering into contracts for
the purpose of doing that which otherwise
maybe prohibited. ...
In order to determine whether legislation
unconstitutionally impairs contract of
obligations, no unchanging yardstick,
applicable at all times and under all
circumstances, by which the validity of
each statute may be measured or
determined, has been fashioned, but every
case must be determined upon its own
circumstances. Legislation impairing the
obligation of contracts can be sustained
when it is enacted for the promotion of the
general good of the people, and when the
means adopted must be legitimate, i.e.
within the scope of the reserved power of
the state construed in harmony with the
constitutional limitation of that power.
(Citing Basa vs. Federacion Obrera de la
Industria Tabaquera y Otros Trabajadores
de Filipinas [FOITAF] [L-27113],
November 19, 1974; 61 SCRA 93,102-
113]).
The purpose of Article 284 as amended is
obvious-the protection of the workers whose
employment is terminated because of the closure
of establishment and reduction of personnel.
Without said law, employees like private
respondents in the case at bar will lose the
benefits to which they are entitled — for the thirty
three years of service in the case of Dionele and
fourteen years in the case of Quitco. Although
they were absorbed by the new management of
the hacienda, in the absence of any showing that
the latter has assumed the responsibilities of the
former employer, they will be considered as new
employees and the years of service behind them
would amount to nothing.
Moreover, to come under the constitutional
prohibition, the law must effect a change in the
rights of the parties with reference to each other
and not with reference to non-parties.
As correctly observed by the Solicitor General,
Article 284 as amended refers to employment
benefits to farm hands who were not parties to
petitioner's lease contract with the owner of
Hacienda Danao-Ramona. That contract cannot
have the effect of annulling subsequent
legislation designed to protect the interest of the
working class.
In any event, it is well-settled that in the
implementation and interpretation of the
provisions of the Labor Code and its
implementing regulations, the workingman's
welfare should be the primordial and paramount
consideration. (Volshel Labor Union v. Bureau of
Labor Relations, 137 SCRA 43 [1985]). It is the
kind of interpretation which gives meaning and
substance to the liberal and compassionate spirit
of the law as provided for in Article 4 of the New
Labor Code which states that "all doubts in the
implementation and interpretation of the
provisions of this Code including its implementing
rules and regulations shall be resolved in favor of
labor." The policy is to extend the applicability of
the decree to a greater number of employees
who can avail of the benefits under the law,
which is in consonance with the avowed policy of
the State to give maximum aid and protection to
labor. (Sarmiento v. Employees Compensation
Commission, 144 SCRA 422 [1986] citing
Cristobal v. Employees Compensation
Commission, 103 SCRA 329; Acosta v.
Employees Compensation Commission, 109
SCRA 209).
PREMISES CONSIDERED, the instant petition is
hereby DISMISSED and the July 16, 1982
Decision of the Labor Arbiter and the April 8,
1985 Resolution of the Ministry of Labor and
Employment are hereby AFFIRMED.
SO ORDERED.
Teehankee, C.J., Yap, Fernando, Narvasa,
Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento and Cortes,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-58639 August 12, 1987
CEBU ROYAL PLANT (SAN MIGUEL
CORPORATION), petitioner,
vs.
THE HONORABLE DEPUTY MINISTER OF
LABOR and RAMON PILONES, respondents.
CRUZ, J.:
The private respondent was removed by the
petitioner and complained to the Ministry of
Labor. His complaint was dismissed by the
regional director, who was, however, reversed by
the public respondent. Required to reinstate the
separated employee and pay him back wages,
the petitioner has come to us, faulting the Deputy
Minister with grave abuse of discretion. We have
issued in the meantime a temporary restraining
order. 1
The public respondent held that Ramon Pilones,
the private respondent, was already a permanent
employee at the time of his dismissal and so was
entitled to security of tenure. The alleged ground
for his removal, to wit, "pulmonary tuberculosis
minimal," was not certified as incurable within six
months as to justify his separation. 2 Additionally,
the private respondent insists that the petitioner
should have first obtained a clearance, as
required by the regulations then in force, for the
termination of his employment.
The petitioner for its part claims that the private
respondent was still on probation at the time of
his dismissal and so had no security of tenure.
His dismissal was not only in conformity with
company policy but also necessary for the
protection of the public health, as he was
handling ingredients in the processing of soft
drinks which were being sold to the public. It is
also argued that the findings of the regional
director, who had direct access to the facts,
should not have been disturbed on appeal. For
these same reasons, it contends, the employee's
reinstatement as ordered by the public
respondent should not be allowed.
The original findings were contained in a one-
page order 3 reciting simply that "complainant
was employed on a probationary period of
employment for six (6) months. After said period,
he underwent medical examination for
qualification as regular employee but the results
showed that he is suffering from PTB minimal.
Consequently, he was informed of the
termination of his employment by respondent."
The order then concluded that the termination
was "justified." That was all.
As there is no mention of the basis of the above
order, we may assume it was the temporary
payroll authority 4submitted by the petitioner
showing that the private respondent was
employed on probation on February 16, 1978.
Even supposing that it is not self- serving, we find
nevertheless that it is self-defeating. The six-
month period of probation started from the said
date of appointment and so ended on August 17,
1978, but it is not shown that the private
respondent's employment also ended then; on
the contrary, he continued working as usual.
Under Article 282 of the Labor Code, "an
employee who is allowed to work after a
probationary period shall be considered a regular
employee." Hence, Pilones was already on
permanent status when he was dismissed on
August 21, 1978, or four days after he ceased to
be a probationer.
The petitioner claims it could not have dismissed
the private respondent earlier because the x-ray
examination was made only on August 17, 1978,
and the results were not immediately available.
That excuse is untenable. We note that when the
petitioner had all of six months during which to
conduct such examination, it chose to wait until
exactly the last day of the probation period. In the
light of such delay, its protestations now that
reinstatement of Pilones would prejudice public
health cannot but sound hollow and hypocritical.
By its own implied admission, the petitioner had
exposed its customers to the employee's disease
because of its failure to examine him before
entrusting him with the functions of a "syrup
man." Its belated concern for the consuming
public is hardly persuasive, if not clearly insincere
and self-righteous.
There is proof in fact that the private respondent
was first hired not on February 16, 1978, but
earlier in 1977. This is the 1977 withholding tax
statement 5 issued for him by the petitioner itself
which it does not and cannot deny. The petitioner
stresses that this is the only evidence of the
private respondent's earlier service and notes
that he has not presented any co-worker to
substantiate his claim. This is perfectly
understandable. Given the natural reluctance of
many workers to antagonize their employers, we
need not wonder why none of them testified
against the petitioner.
We are satisfied that whether his employment
began on February 16, 1978, or even earlier as
he claims, the private respondent was already a
regular employee when he was dismissed on
August 21, 1978. As such, he could validly claim
the security of tenure guaranteed to him by the
Constitution and the Labor Code.
The applicable rule on the ground for dismissal
invoked against him is Section 8, Rule I, Book VI,
of the Rules and Regulations Implementing the
Labor Code reading as follows:
 Sec. 8. Disease as a ground for
dismissal. — Where the employee
suffers from a disease and his
continued employment is prohibited
by law or prejudicial to his health or
to the health of his co-employees,
the employer shall not terminate his
employment unless there is a
certification by a competent public
health authority that the disease is
of such nature or at such a stage
that it cannot be cured within a
period of six (6) months even with
proper medical treatment. If the
disease or ailment can be cured
within the period, the employer shall
not terminate the employee but
shall ask the employee to take a
leave. The employer shall reinstate
such employee to his former
position immediately upon the
restoration of his normal health.
The record does not contain the certification
required by the above rule. The medical
certificate offered by the petitioner came from its
own physician, who was not a "competent public
health authority," and merely stated the
employee's disease, without more. We may
surmise that if the required certification was not
presented, it was because the disease was not of
such a nature or seriousness that it could not be
cured within a period of six months even with
proper medical treatment. If so, dismissal was
unquestionably a severe and unlawful sanction.
It is also worth noting that the petitioner's
application for clearance to terminate the
employment of the private respondent was filed
with the Ministry of Labor only on August 28, and disdain that bends his back but does not bow
1978, or seven days after his dismissal. 6 As the his head.
NLRC has repeatedly and correctly said, the prior
clearance rule (which was in force at that time) WHEREFORE, the petition is DISMISSED and
was not a "trivial technicality." It required "not just the temporary restraining order of November 18,
the mere filing of a petition or the mere attempt to 1981, is LIFTED. The Order of the public
procure a clearance" but that "the said clearance respondent dated July 14, 1981, is AFFIRMED,
be obtained prior to the operative act of but with the modification that the backwages shall
termination. 7 be limited to three years only and the private
respondent shall be reinstated only upon
We agree that there was here an attempt to certification by a competent public health
circumvent the law by separating the employee authority that he is fit to return to work. Costs
after five months' service to prevent him from against the petitioner.
becoming a regular employee, and then rehiring
him on probation, again without security of SO ORDERED.
tenure. We cannot permit this subterfuge if we
are to be true to the spirit and mandate of social Teehankee (Chairman), C.J., Narvasa, Paras
justice. On the other hand, we have also the and Gancayco, JJ., concur.
health of the public and of the dismissed
employee himself to consider. Hence, although Republic of the Philippines
we must rule in favor of his reinstatement, this SUPREME COURT
must be conditioned on his fitness to resume his Manila
work, as certified by competent authority.
FIRST DIVISION
We take this opportunity to reaffirm our concern
for the lowly worker who, often at the mercy of his G.R. No. L-48926 December 14, 1987
employers, must look up to the law for his
protection. Fittingly, that law regards him with MANUEL SOSITO, petitioner,
tenderness and even favor and always with faith vs.
and hope in his capacity to help in shaping the AGUINALDO DEVELOPMENT
nation's future. It is error to take him for granted. CORPORATION, respondent.
He deserves our abiding respect. How society
treats him will determine whether the knife in his
hands shall be a caring tool for beauty and
progress or an angry weapon of defiance and CRUZ, J.:
revenge. The choice is obvious, of course. If we
cherish him as we should, we must resolve to We gave due course to this petition and required
lighten "the weight of centuries" of exploitation the parties to file simultaneous memoranda on
the sole question of whether or not the petitioner
is entitled to separation pay under the
retrenchment program of the private respondent.
The facts are as follows:
Petitioner Manuel Sosito was employed in 1964
by the private respondent, a logging company,
and was in charge of logging importation, with a
monthly salary of P675.00, 1 when he went on
indefinite leave with the consent of the company
on January 16, 1976. 2 On July 20, 1976, the
private respondent, through its president,
announced a retrenchment program and offered
separation pay to employees in the active service
as of June 30, 1976, who would tender their
resignations not later than July 31, 1976. The
petitioner decided to accept this offer and so
submitted his resignation on July 29, 1976, "to
avail himself of the gratuity benefits"
promised. 3 However, his resignation was not
acted upon and he was never given the
separation pay he expected. The petitioner
complained to the Department of Labor, where
he was sustained by the labor arbiter. 4 The
company was ordered to pay Sosito the sum of P
4,387.50, representing his salary for six and a
half months. On appeal to the National Labor
Relations Commission, this decision was
reversed and it was held that the petitioner was
not covered by the retrenchment program. 5 The
petitioner then came to us.
For a better understanding of this case, the
memorandum of the private respondent on its
retrenchment program is reproduced in full as
follows:
July 20, 1976
Memorandum To: ALL EMPLOYEES
Re: RETRENCHMENT PROGRAM
As you are all aware, the operations
of wood-based industries in the
Philippines for the last two (2) years
were adversely affected by the
worldwide decline in the demand for
and prices of logs and wood
products. Our company was no
exception to this general decline in
the market, and has suffered
tremendous losses. In 1975 alone,
such losses amounted to nearly
P20,000,000.00.
The company has made a general
review of its operations and has
come to the unhappy decision of
the need to make adjustments in its
manpower strength if it is to survive.
This is indeed an unfortunate and
painful decision to make, but it
leaves the company no alternative
but to reduce its tremendous and
excessive overhead expense in
order to prevent an ultimate
closure.
Although the law allows the
Company, in a situation such as
this, to drastically reduce it
manpower strength without any
obligation to pay separation
benefits, we recognize the need to
provide our employees some
financial assistance while they are
looking for other jobs.
The Company therefore is adopting
a retrenchment program whereby
employees who are in the active
service as of June 30, 1976 will be
paid separation benefits in an
amount equivalent to the
employee's one-half (1/2) month's
basic salary multiplied by his/her
years of service with the Company.
Employees interested in availing of
the separation benefits offered by
the Company must manifest such
intention by submitting written
letters of resignation to the
Management not later than July 31,
1976. Those whose resignations
are accepted shall be informed
accordingly and shall be paid their
separation benefits.
After July 31, 1976, this offer of payment of
separation benefits will no longer be available.
Thereafter, the Company shall apply for a
clearance to terminate the services of such
number of employees as may be necessary in
order to reduce the manpower strength to such
desired level as to prevent further losses.
(SGD.) JOSE G. RICAFORT
President
N.B.
For additional information
and/or resignation forms,
please see Mr. Vic Maceda
or Atty. Ben Aritao. 6
It is clear from the memorandum that the offer of
separation pay was extended only to those who
were in the active service of the company as of
June 30, 1976. It is equally clear that the
petitioner was not eligible for the promised
gratuity as he was not actually working with the
company as of the said date. Being on indefinite
leave, he was not in the active service of the
private respondent although, if one were to be
technical, he was still in its employ. Even so,
during the period of indefinite leave, he was not
entitled to receive any salary or to enjoy any
other benefits available to those in the active
service.
It seems to us that the petitioner wants to enjoy
the best of two worlds at the expense of the
private respondent. He has insulated himself
from the insecurities of the floundering firm but at
the same time would demand the benefits it
offers. Being on indefinite leave from the
company, he could seek and try other
employment and remain there if he should find it
acceptable; but if not, he could go back to his
former work and argue that he still had the right
to return as he was only on leave.
There is no claim that the petitioner was
temporarily laid off or forced to go on leave; on
the contrary, the record shows that he voluntarily
sought the indefinite leave which the private
respondent granted. It is strange that the
company should agree to such an open-ended
arrangement, which is obviously one-sided. The WHEREFORE, the petition is DISMISSED and
company would not be free to replace the the challenged decision AFFIRMED, with costs
petitioner but the petitioner would have a right to against the petitioner.
resume his work as and when he saw fit.
SO ORDERED.
We note that under the law then in force the
private respondent could have validly reduced its Teehankee, C.J., Narvasa, Paras and Gancayco,
work force because of its financial reverses JJ., concur.
without the obligation to grant separation pay.
This was permitted under the original Article Republic of the Philippines
272(a), of the Labor Code, 7 which was in force at SUPREME COURT
the time. To its credit, however, the company Manila
voluntarily offered gratuities to those who would
agree to be phased out pursuant to the terms and EN BANC
conditions of its retrenchment program, in
recognition of their loyalty and to tide them over G.R. No. L-2779 October 18, 1950
their own financial difficulties. The Court feels
that such compassionate measure deserves DANIEL SANCHEZ, ET AL., plaintiffs-appellees,
commendation and support but at the same time vs.
rules that it should be available only to those who HARRY LYONS CONSTRUCTION, INC., ET
are qualified therefore. We hold that the petitioner AL., defendants-appellants.
is not one of them.
Gibbs, Gibbs, Chuidian and Quasha for appellant
While the Constitution is committed to the policy Harry Lyons Construction, Inc.
of social justice and the protection of the working Cecilio I. Lim and Antonio M. Castro for
class, it should not be supposed that every labor appellees.
dispute will be automatically decided in favor of
labor. Management also has its own rights which,
as such, are entitled to respect and enforcement
in the interest of simple fair play. Out of its
concern for those with less privileges in life, this MORAN, C. J.:
Court has inclined more often than not toward the
worker and upheld his cause in his conflicts with This case originated in the Municipal Court of
the employer. Such favoritism, however, has not Manila upon a complaint filed on March 9, 1948,
blinded us to the rule that justice is in every case by the herein appellees as plaintiffs, against the
for the deserving, to be dispensed in the light of herein appellants as defendants, for the sum of
the established facts and the applicable law and P2,210 plus interest, which plaintiffs claimed as
doctrine. one month advance pat due them. On April 28,
1948, the parties entered into a stipulation of
facts upon which said municipal court rendered
judgment for the plaintiffs. Upon denial of their
motion for reconsideration of this judgment, the
defendants filed an appeal to the Court of First
Instance of Manila, wherein the parties submitted
the case upon the same facts agreed upon in the
Municipal Court. On October 2, 1948, the Court
of First Instance of Manila rendered its decision
holding for plaintiffs, as follows:
Wherefore judgment is hereby rendered —
From this judgment, defendants filed an appeal
with this court purely upon a question of law. The
stipulation of facts entered into by the parties on
April 28, 1948, is as follows:lawphil.net
STIPULATION OF FACTS.
Come now the plaintiffs and the
defendants, by their respective
undersigned attorneys and to this
Honorable Court, respectfully submit the
following stipulation of facts:
Faustino Aquillo....do....do.... 5 a day
Godofredo Diamante..do.... do... 5 a day
Marcial Lazaro.... do.... do.... 5 a day
Ambrosio de la Cruz....do....do....5 a day
Marcelino Macada ... do.... do.... 5 a day
as per contracts of employment, copies of
which are attached to defendants' answer
marked Exhibits 1 to 11 inclusive
2. That in said contracts of employment
the plaintiff agreed as follows:

1. Ordering defendant Material
Distributors, Inc. to pay plaintiff Enrique
Ramirez the sum of P360 and plaintiff
Juan Ramirez the sum of P250 with legal
interest on each of the said sums from the
date of the filing of the complaint in the
Municipal Court of Manila until the date of
full payment thereof; and
2. Ordering defendant Harry Lyons
Construction, Inc. to pay plaintiff Daniel
Sanchez the sum of P250, and plaintiff
Mariano Javier, Venancio Diaz, Esteban
Bautista, Faustino Aquillo, Godofredo
Diamante, Marcial Lazaro, Ambrosio de la
Cruz, and Marcelino Maceda the sum of
P150 each, with legal interest on each of
the said sums from the date of the filing of
the complaint in the Municipal Court of
Manila until the date of full payment
thereof.
One half of the costs is to be paid by
Material Distributors, Inc. and the other
half by Harry Lyons Construction, Inc.
1. That the plaintiffs were respectively "I accept the foregoing appointment, and
employed as follows: in consideration thereof I hereby agree
that such employment may be terminated
EMPLOYED BY DEFENDANT MATERIAL at any time, without previous notice, and I
DISTRIBUTORS, INC. further agree that salary and wages, shall
be computed and paid at the rate specified
Name Date of Position Salary up to the date of such termination.
employment
Enrique Ramirez .... 12/16/46 "Also in consideration of such employment
Warehouseman P450 a mo. I hereby expressly waive the benefit of
Juan Ramirez ..... do do 250 a mo. article 302 of the Code of Commerce and
that of any other law, ruling, or custom
NOTE. — The salary of Enrique Ramirez which might require notice of discharge or
was later reduced to P360 per month. This payment of salary or wages after date of
was the amount he was receiving at the the termination of such employment."
time of his dismissal.
3. That the plaintiffs were dismissed by the
EMPLOYED BY DEFENDANT HARRY defendants on December 31, 1947 without
LYONS CONSTRUCTION, INC. one months' previous notice.
Daniel Sanchez 1/1/47 Carpenter- P250 a 4. That each of the plaintiffs demanded
mo. payment of one month's salary from the
Foreman defendants and that the latter refused to
Mariano Javier ....do.... Guard.... 5 a day pay the same.
Venancio Diaz ....do....do.... 5 a day
Esteban Bautista ....do....do.... 5 a day
 WHEREFORE, it is respectfully prayed
that judgment on the foregoing stipulation
of facts be rendered by this Honorable
Court.
The points in issue herein are: first, whether
plaintiffs, both those paid on a monthly and daily
basis, are entitled to the benefit granted in article
302 of the Code of Commerce; and secondly, if
they are so entitled, was their waiver of such
benefits legal and valid?
Article 302 of the Code of Commerce reads as
follows:
ART. 302. In cases in which no special
time is fixed in the contracts of service,
any one of the parties thereto may cancel
it, advising the other party thereof one
month in advance.
The factor or shop clerk shall be entitled,
in such case, to the salary due for said
month.
It is a clear doctrine, as gleaned from the
provision of the law and settled
jurisprudence, 1 that in a mercantile contract of
service in which no special time is fixed, any one
of the parties may cancel said contract upon
giving of a one-month notice, called a mesada, to
the other party. The law gives an added proviso
that in the case of factors or shop clerks, these
shall be entitled to salary during this one month
of standing notice. In any case, the one-month
notice must be given to any employee, whether
factor, shop clerk or otherwise, so long as the two
conditions concur, namely, that no special time is
fixed in the contract of service, and that said
employee is a commercial employee. And when
such notice is not given under these conditions,
not only the factor or shop clerk but any
employee discharged without cause, is entitled to
indemnity which may be one month's salary. 2
In the instant case, there lies no doubt that
plaintiffs are commercial employees of appellant
corporations, rendering service as
warehousemen, carpenter-foreman and guards.
There is likewise no doubt as can be seen from
the contracts of employment submitted as
exhibits, that no special time has been fixed in
the contracts of services between plaintiffs-
appellees and defendants-appellants. The stated
computation or manner of payment, whether
monthly or daily, does not represent nor
determine a special time of employment. Thus, a
commercial employee may be employed for one
year and yet receive his salary on the daily or
weekly or monthly or other basis.
Appellants allege that the use of the word
"temporary" in the contracts of services of some
of the plaintiffs shows that their employment was
with a term, and the term was "temporary, on a
day to day basis." The record discloses that this
conclusion is unwarranted. The contracts simply
say — "You are hereby employed as temporary
guard with a compensation at the rate of P5 a
day . . . ." The word "temporary" as used herein
does not mean the special time fixed in the
contracts referred to in article 302 of the Code of
Commerce. The daily basis therein stipulated is
for the computation of pay, and is not necessarily
the period of employment. Hence, this Court
holds that plaintiffs-appellants come within the
purview of article 302 of the Code of Commerce.
Now, as the second question, namely, the validity
of plaintiffs' waiver of the benefits given them by
said article 302. This court holds that such a
waiver, made in advance, is void as being
contrary to public policy. Granting that the
"mesada" given in article 302 of the Code of
Commerce, is for the bilateral benefit of both
employer and employee, nevertheless, this does
not preclude the finding that a waiver of such
"mesada" in advance by the employee is contrary
to public policy.
Public policy, with regard to labor, is clearly
stated in article II, section 5, of the Philippine
Constitution, which reads —
The promotion of social justice to insure
the well-being and economic security of all
the people should be the concern of the
State.
and article XIV, section 6, which reads —
The State shall afford protection to labor,
especially to working women and minors,
and shall regulate the relations between
land-owner and tenant, and between labor
and capital in industry and in agriculture. .
..
Article 302 of the Code of Commerce must be
applied in consonance with these provisions of
our constitution. In the matter of employment
bargaining, there is no doubt that the employer
stands on higher footing than the employee. First
of all, there is greater supply than demand for
labor. Secondly, the need for employment by
labor comes from vital and even desperate,
necessity. Consequently, the law must protect
labor, at least, to the extent of raising him to
equal footing in bargaining relations with capital
and to shield him from abuses brought about by
the necessity for survival. It is safe to presume
therefore, that an employee or laborer who
waives in advance any benefit granted him by
law does so, certainly not in his interest or
through generosity but under the forceful
intimidation of urgent need, and hence, he could
not have so acted freely and voluntarily.
For all the foregoing, this court hereby affirms the
decision of the lower court, with costs against
appellants.
Ozaeta, Paras, Feria, Pablo, Tuason, Bengzon
and Reyes, JJ., concur.
FIRST DIVISION
[G.R. No. 155421. July 7, 2004]
ELMER M. MENDOZA, petitioner, vs. RURAL
BANK OF LUCBAN, respondent.
DECISION
PANGANIBAN, J.:
The law protects both the welfare of
employees and the prerogatives of
management. Courts will not interfere with
business judgments of employers, provided they
do not violate the law, collective bargaining
agreements, and general principles of fair play
and justice. The transfer of personnel from one
area of operation to another is inherently a
managerial prerogative that shall be upheld if
exercised in good faith -- for the purpose of
advancing business interests, not of defeating or
circumventing the rights of employees.
The Case
The Court applies these principles in
resolving the instant Petition for Review[1] under
Rule 45 of the Rules of Court, assailing the June
14, 2002 Decision[2] and September 25, 2002
Resolution[3] of the Court of Appeals (CA) in CA-
GR SP No. 68030. The assailed Decision
disposed as follows:
WHEREFORE, the petition for certiorari is
hereby DISMISSED for lack of merit.[4]
The challenged Resolution denied petitioners
Motion for Reconsideration.
The Facts
On April 25, 1999, the Board of Directors of
the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, which read:
Board Res. No. 99-52
RESOLVED AS IT IS HEREBY RESOLVED that
in line with the policy of the bank to familiarize
bank employees with the various phases of bank
operations and further strengthen the existing
internal control system[,] all officers and
employees are subject to reshuffle of
assignments. Moreover, this resolution does not
preclude the transfer of assignment of bank
officers and employees from the branch office to
the head office and vice-versa.
Board Res. No. 95-53
Pursuant to Resolution No. 99-52, the following
branch employees are hereby reshuffled to their
new assignments without changes in their
compensation and other benefits.
NAME OF EMPLOYEES PRESENT
ASSIGNMENT NEW ASSIGNMENT
JOYCE V. ZETA Bank Teller C/A Teller
CLODUALDO ZAGALA C/A Clerk Actg.
Appraiser
ELMER L. MENDOZA Appraiser Clerk-
Meralco Collection
CHONA R. MENDOZA Clerk-
Meralco Bank Teller[5]
Collection
In a letter dated April 30, 1999, Alejo B.
Daya, the banks board chairman, directed Briccio
V. Cada, the manager of the banks Tayabas
branch, to implement the reshuffle.[6] The new
assignments were to be effective on May 1, 1999
without changes in salary, allowances, and other
benefits received by the aforementioned
employees.[7]
On May 3, 1999, in an undated letter
addressed to Daya, Petitioner
Elmer Mendoza expressed his opinion on the
reshuffle, as follows:
RE: The recent reshuffle of employees as per
Board Resolution dated April 25, 1999
Dear Sir:
This is in connection with the aforementioned
subject matter and which the undersigned
received on April 25, 1999.
Needless to state, the reshuffling of the
undersigned from the present position as
Appraiser to Clerk-Meralco Collection is deemed
to be a demotion without any legal basis. Before
this action on your part[,] the undersigned has
been besieged by intrigues due to [the] malicious
machination of a certain public official who is
bruited to be your good friend. These malicious
insinuations were baseless and despite the fact
that I have been on my job as Appraiser for the
past six (6) years in good standing and never
involved in any anomalous conduct, my being
reshuffled to [C]lerk-[M]eralco [C]ollection is a
blatant harassment on your part as a prelude to
my termination in due time. This will constitute an
unfair labor practice.
Meanwhile, may I beseech your good office that I
may remain in my position as Appraiser until the
reason [for] my being reshuffled is made clear.
Your kind consideration on this request will be
highly appreciated.[8]
On May 10, 1999, Daya replied:
Dear Mr. Mendoza,
Anent your undated letter expressing your
resentment/comments on the recent
managements decision to reshuffle the duties of
bank employees, please be informed that it was
never the intention (of management) to
downgrade your position in the bank considering
that your due compensation as Bank Appraiser is
maintained and no future reduction was intended.
Aside from giving bank employees a wider
experience in various banking operations, the
reshuffle will also afford management an effective
tool in providing the bank a sound internal control
system/check and balance and a basis in
evaluating the performance of each employee. A
continuing bankwide reshuffle of employees shall
be made at the discretion of management which
may include bank officers, if necessary as
expressed in Board Resolution No. 99-53, dated
April 25, 1999. Management merely shifted the
duties of employees, their position title [may be]
retained if requested formally.
Being a standard procedure in maintaining an
effective internal control system recommended
by the Bangko Sentral ng Pilipinas, we believe
that the conduct of reshuffle is also a prerogative
of bank management.[9]
On June 7, 1999, petitioner submitted to the
banks Tayabas branch manager a letter in which
he applied for a leave of absence from work:
Dear Sir:
I wish I could continue working but due to the
ailment that I always feel every now and then, I
have the honor to apply for at least ten (10) days
sick leave effective June 7, 1999.
Hoping that this request [merits] your favorable
and kind consideration and understanding.[10]
On June 21, 1999, petitioner again submitted
a letter asking for another leave of absence for
twenty days effective on the same date.[11]
On June 24, 1999, while on his second leave
of absence, petitioner filed a Complaint before
Arbitration Branch No. IV of the National Labor
Relations Commission (NLRC). The Complaint --
for illegal dismissal, underpayment, separation
pay and damages -- was filed against the Rural
Bank of Lucban and/or its president, Alejo B.
Daya; and its Tayabas branch manager, Briccio
V. Cada. The case was docketed as NLRC Case
SRAB-IV-6-5862-99-Q.[12]
The labor arbiters June 14, 2000 Decision
upheld petitioners claims as follows:
WHEREFORE, premises considered, judgment is
hereby rendered as follows:
1. Declaring respondents guilty of illegal
dismissal.
2. Ordering respondents to reinstate complainant
to his former position without loss of seniority
rights with full backwages from date of dismissal
to actual reinstatement in the amount
of P55,000.00 as of June 30, 2000.
3. Ordering the payment of separation pay if
reinstatement is not possible in the amount
of P30,000.00 in addition to 13th month pay
of P5,000.00 and the usual P10,000.00 annual
bonus afforded the employees.
4. Ordering the payment of unpaid salary for the
period covering July 1-30, 1999 in the amount
of P5,000.00
5. Ordering the payment of moral damages in the
amount of P50,000.00.
6. Ordering the payment of exemplary damages
in the amount of P25,000.00
7. Ordering the payment of Attorneys fees in the
amount of P18,000.00 which is 10% of the
monetary award.[13]
On appeal, the NLRC reversed the labor
arbiter.[14] In its July 18, 2001 Resolution, it held:
We can conceive of no reason to ascribe bad
faith or malice to the respondent bank for its
implementation of its Board Resolution directing
the reshuffle of employees at its Tayabas branch
to positions other than those they were
occupying. While at first the employees thereby
affected would experience difficulty in adjusting to
their new jobs, it cannot be gainsaid that the
objective for the reshuffle is noble, as not only
would the employees obtain additional
knowledge, they would also be more well-
rounded in the operations of the bank and thus
help the latter further strengthen its already
existing internal control system.
The only inconvenience, as [w]e see it, that the
[petitioner] may have experienced is that from an
appraiser he was made to perform the work of a
clerk in the collection of Meralco payments, which
he may have considered as beneath him and his
experience, being a pioneer employee. But it
cannot be discounted either that other employees
at the Tayabas branch were similarly
reshuffled. The only logical conclusion therefore
is that the Board Resolution was not aimed solely
at the [petitioner], but for all the other employees
of the x x x bank as well. Besides, the
complainant has not shown by clear, competent
and convincing evidence that he holds a vested
right to the position of Appraiser. x x x.
How and by what manner a business concern
conducts its affairs is not for this Commission to
interfere with, especially so if there is no showing,
as in the case at bar, that the reshuffle was
motivated by bad faith or ill-will. x x x.[15]
After the NLRC denied his Motion for
Reconsideration,[16] petitioner brought before the
CA a Petition for Certiorari[17] assailing the
foregoing Resolution.
Ruling of the Court of Appeals
Finding that no grave abuse of discretion
could be attributed to the NLRC, the CA Decision
ruled thus:
The so-called harassment which Mendoza
allegedly experienced in the aftermath of the
reshuffling of employees at the bank is but a
figment of his imagination as there is no evidence
extant on record which substantiates the
same. His alleged demotion, the cold shoulder
stance, the things about his chair and table, and
the alleged reason for the harassment are but
allegations bereft of proof and are perforce
inadmissible as self-serving statements and can
never be considered repositories of truth nor
serve as foundations of court decisions anent the
resolution of the litigants rights.
When Mendoza was reshuffled to the position of
clerk at the bank, he was not demoted as there
was no [diminution] of his salary benefits and
rank. He could even retain his position title, had
he only requested for it pursuant to the reply of
the Chairman of the banks board of directors
to Mendozas letter protesting the reshuffle. There
is, therefore, no cause to doubt the reasons
which the bank propounded in support of its
move to reshuffle its employees, viz:
1. to familiarize bank employees with the various
phases of bank operations, and
2. to further strengthen the existing internal
control system of the bank.
The reshuffling of its employees was done in
good faith and cannot be made the basis of a
finding of constructive dismissal.
The fact that Mendoza was no longer included in
the banks payroll for July 1 to 15, 1999 does not
signify that the bank has dismissed the former
from its employ. Mendoza separated himself from
the banks employ when, on June 24, 1999, while
on leave, he filed the illegal dismissal case
against his employer for no apparent reason at
all.[18]
Hence, this Petition.[19]
The Issues
 Petitioner raises the following issues for our
consideration:
I. Whether or not the petitioner is deemed to
have voluntarily separated himself from the
service and/or abandoned his job when he filed
his Complaint for constructive and consequently
illegal dismissal;
II. Whether or not the reshuffling of private
respondent[s] employees was done in good faith
and cannot be made as the basis of a finding of
constructive dismissal, even as the [petitioners]
demotion in rank is admitted by both parties;
III. Whether or not the ruling in the landmark case
of Ruben Serrano vs. NLRC [and Isetann
Department Store (323 SCRA 445)] is applicable
to the case at bar;
IV. Whether or not the Court of Appeals erred in
dismissing the petitioners money claims,
damages, and unpaid salaries for the period July
1-30, 1999, although this was not disputed by the
private respondent; and
V. Whether or not the entire proceedings before
the Honorable Court of Appeals and the NLRC
are a nullity since the appeal filed by private
respondent before the NLRC on August 5, 2000
was on the 15thday or five (5) days beyond the
reglem[e]ntary period of ten (10) days as
provided for by law and the NLRC Rules of
Procedure.[20]
In short, the main issue is whether petitioner
was constructively dismissed from his
employment.
The Courts Ruling
The Petition has no merit.
Main Issue:
Constructive Dismissal
Constructive dismissal is defined as an
involuntary resignation resorted to when
continued employment is rendered impossible,
unreasonable or unlikely; when there is a
demotion in rank or a diminution of pay; or when
a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the
employee.[21] Petitioner argues that he was
compelled to file an action for constructive
dismissal, because he had been demoted from
appraiser to clerk and not given any work to do,
while his table had been placed near the toilet
and eventually removed.[22] He adds that the
reshuffling of employees was done in bad faith,
because it was designed primarily to force him to
resign.[23]
Management Prerogative
to Transfer Employees
Jurisprudence recognizes the exercise of
management prerogatives. For this reason,
courts often decline to interfere in legitimate
business decisions of employers.[24] Indeed, labor
laws discourage interference in employers
judgments concerning the conduct of their
business.[25] The law must protect not only the
welfare of employees, but also the right of
employers.
In the pursuit of its legitimate business
interest, management has the prerogative to
transfer or assign employees from one office or
area of operation to another -- provided there is
no demotion in rank or diminution of salary,
benefits, and other privileges; and the action is
not motivated by discrimination, made in bad
faith, or effected as a form of punishment or
demotion without sufficient cause.[26] This
privilege is inherent in the right of employers to
control and manage their enterprise
[27]
effectively. The right of employees to security
of tenure does not give them vested rights to their
positions to the extent of depriving management
of its prerogative to change their assignments or
to transfer them.[28]
Managerial prerogatives, however, are
subject to limitations provided by law, collective
bargaining agreements, and general principles of
fair play and justice.[29] The test for determining
the validity of the transfer of employees was
explained in Blue Dairy Corporation v.
[30]
NLRC as follows:
[L]ike 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. Likewise, constructive dismissal exists when
an act of clear discrimination, insensibility or
disdain by an employer has become so
unbearable to the employee leaving him with no
option but to forego with his continued
employment.[31]
Petitioners Transfer Lawful
The employer bears the burden of proving
that the transfer of the employee has complied
with the foregoing test. In the instant case, we
find no reason to disturb the conclusion of the
NLRC and the CA that there was no constructive
dismissal. Their finding is supported by
substantial evidence -- that amount of relevant
evidence that a reasonable mind might accept as
justification for a conclusion.[32]
Petitioners transfer was made in pursuit of
respondents policy to familiarize bank employees
with the various phases of bank operations and
further strengthen the existing internal control
system[33] of all officers and employees. We have
previously held that employees may be
transferred -- based on their qualifications,
aptitudes and competencies -- to positions in
which they can function with maximum benefit to
the company.[34] There appears no justification for
denying an employer the right to transfer
employees to expand their competence and
maximize their full potential for the advancement
of the establishment. Petitioner was not singled
out; other employees were also reassigned
without their express consent.
Neither was there any demotion in the rank of
petitioner; or any diminution of his salary,
privileges and other benefits. This fact is clear in
respondents Board Resolutions, the April 30,
1999 letter of Bank President Daya to Branch
Manager Cada, and the May 10, 1999 letter of
Daya to petitioner.
On the other hand, petitioner has offered no
sufficient proof to support his allegations. Given
no credence by both lower tribunals was his bare
and self-serving statement that he had been
positioned near the comfort room, made to work
without a table, and given no work
assignment.[35] Purely conjectural is his claim that
the reshuffle of personnel was a harassment in
retaliation for an alleged falsification case filed by
his relatives against a public official.[36] While the
rules of evidence prevailing in courts of law are
not controlling in proceedings before the
NLRC,[37] parties must nonetheless submit
evidence to support their contentions.
Secondary Issues:
Serrano v. NLRC Inapplicable
Serrano v. NLRC[38] does not apply to the
present factual milieu. The Court ruled therein
that the lack of notice and hearing made the
dismissal of the employee ineffectual, but not
necessarily illegal.[39] Thus, the procedural
infirmity was remedied by ordering payment of
his full back wages from the time of his
dismissal.[40] The absence of constructive
dismissal in the instant case precludes the
application of Serrano. Because herein petitioner
was not dismissed, then he is not entitled to his
claimed monetary benefits.
Alleged Nullity of NLRC
and CA Proceedings
Petitioner argues that the proceedings before
the NLRC and the CA were void, since
respondents appeal before the NLRC had
allegedly been filed beyond the reglementary
period.[41]A careful scrutiny of his Petition for
Review[42] with the appellate court shows that this
issue was not raised there. Inasmuch as the
instant Petition challenges the Decision of the
CA, we cannot rule on arguments that were not
brought before it. This ruling is consistent with the
due-process requirement that no question shall
be entertained on appeal, unless it has been
raised in the court below.[43]
WHEREFORE, this Petition is DENIED, and
the June 14, 2002 Decision and the September
25, 2002 Resolution of the Court of Appeals
are AFFIRMED. Costs against petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-
Santiago, Carpio, and Azcuna, JJ., concur.
Republic of the Philippines Industries Phils., Inc. (hereinafter referred to as The most important aspect that
SUPREME COURT GELMART) sometime in 1971. As such, his work should be considered in interpreting
Manila consisted of the repair of engines and this rule (referring to the company's
underchassis, as well as trouble shooting and rules on theft and pilferages) is the
FIRST DIVISION overhauling of company vehicles. He is likewise deprivation of the company of
entrusted with some tools and spare parts in property belonging to it without any
G.R. No. 85668 August 10, 1989 furtherance of the work assigned to him. compensation. Hence, the property
that must be stolen or pilfered must
GELMART INDUSTRIES PHILS., On April 11, 1987, private respondent was caught be property which has value.
INC., petitioner, by the security guards taking out of GELMART's
vs. premises one (1) plastic container filled with x x x.
THE HON. NATIONAL LABOR RELATIONS about 16 ounces of "used' motor oil, without the
COMMISSION AND FELIX necessary gate pass to cover the same as x x x.
FRANCIS, respondents. required under GELMART's rules and
regulations. By reason thereof, petitioner, on April In the respondent company, ... the
Bienvenido S. Hernandez & Associates for 13, 1987, was placed under preventive used oil is thrown away by the
petitioner. suspension pending investigation for violation of mechanics. ... In other words, the
company rules and regulations. Under the said taking by complainant of the subject
Koronado B. Apuzen for private respondent. rules, theft and/or pilferage of company property 16 ounces of used oil did not
merits an outright termination from employment. deprive the respondent company of
anything. As it appears, the said
After due investigation, or on May 20, 1987, used oil for as part of the waste that
GANCAYCO, J.: private respondent was found guilty of theft of should be thrown away and the
company property. As a consequence, his respondent company had no use
At issue in this petition is whether or not the services were severed. for the same, hence, the
National Labor Relations Commission respondent company was not
(hereinafter referred to as NLRC) committed a Thereafter, private respondent filed a complaint deprived of any property ...
grave abuse of discretion amounting to lack or for illegal dismissal before the NLRC. In a and, therefore, and (sic) it is the
excess of jurisdiction in ordering the decision dated February 26, 1988, Labor Arbiter position of this Labor Arbiter
reinstatement of private respondent to his former Ceferina J. Diosana ruled that private respondent that there was no stealing or
position with payment of backwages equivalent to was illegally dismissed and, accordingly, ordered pilferage to speak of. 3 (Emphasis
six (6) months. 1 the latter's reinstatement with full backwages supplied.)
from April 13, 1987 up to the time of actual
As revealed by the records, the background facts reinstatement. 2 From this decision, GELMART interposed an
are as follows: appeal with the NLRC. In its decision dated
The ground relied upon by the labor arbiter in her October 21, 1988, the NLRC affirmed with
Private respondent Felix Francis started working decision is worth quoting hereunder, to wit: modification the ruling of Labor Arbiter
as an auto-mechanic for petitioner Gelmart Diosana, 4 the dispositive portion of which reads
as follows:
 WHEREFORE, in view of the
foregoing, the decision is hereby
MODIFIED. Respondent-appellant
is hereby directed to reinstate
complainant-appellee to his former
position without loss of seniority
rights and to pay him backwages
equivalent to six (6) months.
SO ORDERED. 5
On December 12, 1988, GELMART filed before
this Court a special civil action for certiorari with a
prayer for the issuance of a temporary restraining
order.
On January 18, 1989, this Court, without
necessarily giving due course to the petition,
issued a temporary restraining order enjoining
respondents from enforcing the assailed
decision. On the same date, this Court required
respondents to comment on the petition.
Aside from the substantive issues raised in their
comment which will be discussed later on in this
decision, public respondent pointed to a
procedural error allegedly committed by
petitioner. 6 The Solicitor General contends that
petitioner failed to exhaust "[t]he administrative
remedies afforded by law ... before resort can be
had to the courts ... 7 More specifically, our
attention is called to the fact that no motion for
reconsideration of the NLRC decision was filed
by petitioner. The Solicitor General then
concludes that "[s]ince petitioners failed to avail
of the plain, speedy and adequate remedy
accorded to them in the ordinary course of law ...,
the instant petition for certiorari ran is
prematurely filed, and hence, does not state a
cause of action. 8
The legal provision pertinent to this issue is found
in Article 223 of the Labor Code which provides,
in part:
ART. 223. Appeal. ... .
x x x.
The decision of the Commission
shall be immediately executory
even pending appeal ... (Emphasis
supplied.)
From this provision, it can be gleaned that the
filing of a motion for reconsideration may not
prove to be an adequate remedy. For one,
assuming that a motion for reconsideration is
filed, nowhere does it state that the filing thereof
would automatically suspend the execution of the
decision. Second, although a motion for
reconsideration has often been considered a
condition precedent for granting the writ
of certiorari, this rule, however, finds exception in
cases where execution had been ordered and the
need for relief is extremely urgent. 9
This Court is not unaware of Section 2, Rule XI of
the Revised Rules of the National Labor
Relations Commission which provides in
paragraphs (a) and (b) thereof:
See. 2. Finality of Decisions of the
Commission —
(a) The decisions, resolutions or
orders of the Commission shall
become executory after ten (10)
calendar days from receipt of the
same.
(b) Should there be a motion for
reconsideration in accordance with
Sec. 9, Rule X of these Rules, the
decision shall be executory after 10
days from receipt of the resolution
on such motion.
x x x.
However, this Court has already ruled against the
validity of the abovecited rule, particularly Section
2, Rule XI, paragraph (a) in Juan vs.
Musngi. 10 Interpreting the word "immediately" in
Article 223 of the Labor Code to mean "without
interval of time" or "without delay," this Court
declared that the NLRC rules which provide that
decisions, resolutions or orders of the
Commission shall become executory after ten
(10) calendar days from receipt thereof cannot
prevail over Article 223 of the Labor Code.
Further amplifying on this ruling, this Court stated
that administrative regulations under legislative
authority by a particular department must be in
harmony with the provision of the law for the sole
purpose of carrying into effect its general
provisions. 11 Otherwise stated, no period of time
need elapse before the decision of the NLRC
becomes executory.
From the foregoing, it will be seen that a motion
for reconsideration may not be a plain, speedy
and adequate remedy. Hence, a petition for
certiorari with this Court with a prayer for the
issuance of a temporary restraining order is but a
proper remedy to forestall the immediate
execution of the assailed decision.
The Court will now look into the substance of this
petition. In their petition, GELMART ascribes
grave abuse of discretion on the part of the
NLRC for rendering a decision that is contrary to
law and existing jurisprudence.
We find no merit in this petition.
Consistent with the policy of the State to bridge
the gap between the underprivileged workingmen
and the more affluent employers, the NLRC
rightfully tilted the balance in favor of the
workingmen — and this was done without being
blind to the concomitant right of the employer to
the protection of his property. The NLRC went on
to say as follows:
We do not fully concur with the
findings of the Labor Arbiter.
Complainant-appellee's suspension
prior to termination had sufficient
basis. We disagree with the
conclusion that complainant-
appellee did not violate respondent-
appellant's rule requiring a gate
pass for taking out company
property as the used motor oil was
not really in a sense ' International Ceramics Mfg. Co., Inc., "[w]here a
property' considering that it was
plain waste and had no commercial
value. ... Used motor oil is not plain
waste because it had its use to
respondent-appellant's motor pool.
... Besides, it is not for complainant-
appellee to interpret the rule
according to his own
understanding. Respondent
appellant had the right to interpret
the rule and ... to exact discipline ...
in the light of its policy to instill
discipline on its 6,000 workforce.
We find however, complainant-
appellee's dismissal unwarranted.
... The penalty of preventive
suspension was sufficient
punishment for the violation under
the circumstances. ... 12 (Emphasis
supplied)
Thus, without being too harsh to the employer, on
the one hand, and naively liberal to labor, on the
other, the NLRC correctly pointed out that private
respondent cannot totally escape liability for what
is patently a violation of company rules and
regulations.
To reiterate, be it of big or small commercial
value, intended to be re-used or altogether
disposed of or wasted, the "used" motor oil still
remains, in legal contemplation, the property of
GELMART. As such, to take the same out of
GELMART's premises without the corresponding
gate pass is a violation of the company rule on
theft and/or pilferage of company property.
However, as this Court ruled in Meracap vs.
penalty less punitive would suffice, whatever
missteps may be committed by labor ought not to
be visited with a consequence so severe. 13 On
this score, it is very difficult for this Court to
discern grave abuse of discretion on the part of
the NLRC in modifying the appealed decision.
The suspension imposed upon private
respondent is a sufficient penalty for the
misdemeanor committed.
As stated earlier, petitioner assails the NLRC
decision on the ground that the same is contrary
to existing jurisprudence, particularly citing in
support thereof Firestone Tire and Rubber Co. of
the Phil. vs. Lariosa 14Petitioner contends that by
virtue of this ruling they have the right to dismiss
private respondent from employment on the
ground of breach of trust or loss of confidence
resulting from theft of company property.
We believe otherwise.
There is nothing in Firestone which categorically
gives management an unhampered right in
terminating an employee's services. The,
decision in Firestone specifically focuses only on
the legality of a dismissal by reason of acts of
dishonesty in the handling of company property
for what was involved in that case is theft of
sixteen (16) flannel swabs which were supposed
to be used to clean certain machineries in the
company. 15 In fact, a careful review of the cases
cited in Firestone 16 will readily reveal that the
underlying reason behind sustaining the
personam. of dismissal or outright termination is
that, under the circumstances obtaining in those
cases, there exists ample reason to distrust the
employees concerned.
Thus, in upholding the dismissal of a cashier
found guilty of misappropriating corporate funds,
this Court, in Metro Drug," 17 made, a distinction
between managerial personnel and-in other
employees occupying positions of trust and-in
confidence from ordinary employees. On the
other hand, in Dole Philippines, 18 this Court
spoke of the "nature of participation" which
renders one absolutely unworthy of the trust and-
in confidence demanded by the position in
upholding the dismissal of employee found guilty
of illegally selling for their philosophy benefit two
(2) drums of crude oil belonging to the company.
Additionally, in Firestone, it clearly appears that
to retain the employee would "[i]n the long run,
endanger the company's viability. 19
The, Court rules that these circumstances are not
present in this instant case.
Contrary to the assertion of petitioner, the ruling
in Firestone does not preclude the NLRC from
looking into the particular facts of the case to
determine if there is ample reason to dismiss an
employee charged and subsequently found guilty
of theft of company property. The, said decision
cannot be deemed as a limitation on the right of
the State in the exercise of its paramount police
power to regulate or temper the prerogative of
management to dismiss an erring
employee. 20 Consequently, even when there
exists some rules agreed upon between the
employer and-in the employee, it cannot preclude
the State from inquiring on whether or not its rigid
application would work too harshly on the
employee.
or is patently inimical to the company's interest, it
is more in consonance with the policy of the
State, as embodied in the Constitution, to resolve
all doubts in favor of labor. This is our ruling
in Philippine Air Lines, Inc. vs. Philippine Air
Lines Employees Association 21 involving as it
does essentially the same facts and in
circumstances. At this point, this Court does not
see any reason to deviate from the said ruling.
WHEREFORE, in view of the foregoing, the
petition is DISMISSED for lack of merit. The,
restraining order issued by this Court on January
18, 1989 enjoining the enforcement of the
questioned decision of the National Labor
Relations Commission is hereby lifted. No
pronouncement as to costs.
SO ORDERED.
Narvasa, Cruz, Griñ;o-Aquino and-in Medialdea,
JJ., concur.

Considering that private respondent herein has

no previous derogatory record in his fifteen (15)
years of service with petitioner GELMART the
value of the property pilfered (16 ounces of used
motor oil) is very minimal, plus the fact that
petitioner failed to reasonably establish that non-
dismissal of private respondent would work
undue prejudice to the viability of their operation