1. G.R. No.

71664 February 28, 1992

BAGUIO COUNTRY CLUB CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ASSOCIATED LABOR UNION (ALU) and
JIMMY CALAMBA, respondents.
Guillermo B. Bandonill and A.N. Bolinao, Jr. for petitioner.
Jose C. Evangelista for Jimmy Calamba.

MEDIALDEA, J.:
Petitioner Baguio Country Club Corporation (corporation) is a recreational establishment certified by the
ministry of labor and employment as an “entertainment-service” establishment.

Private respondent Jimmy Calamba was employed by corporation on a day to day basis in various
capacities as laborer and diswasher for a period of ten months. Calamba was hired again as a gardener
and rehired as such when he was dismissed by the petitioner corporation.

Calamba filed a complaint against petitioner corporation with the ministry of labor (DOLE) for unfair
labor practice, illegal dismissal and non-payment of 13th month pay. The executive labor arbiter ruled in
favor of Calamba, declaring the latter as a regular employee and ordering petitioner corporation to
reinstate Calamba to the position of gardener without loss of seniority and with full backwages, benefits
and privileges from the time of his dismissal up to the reinstatement including 13th month pay.

Petitioner corporation filed an appeal to the NLRC contending that Calamba was a contractual employee
whose employment was for a fixed and specific period as set forth and evidenced by Calamba’s
contracts of employment. However, the NLRC dismissed the appeal for lack of merit. The latter argued
that Calamba having rendered services as laborer, gardener,and dishwasher for more than one year,
was a regular employee at the time his employment was terminated.

Hence, this petition.

Issue: whether or not Calamba is a regular employee at the time his employment was terminated.

Ruling: YES

The court held that an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade of
the employer. Also, if the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and continuing need
for its performance as sufficient evidence of the necessity if not indespensability of that activity to the
business. Hence, the employment is also considered regular, but ony with respect to such activity and
while such activity exists.

In the case at bar, the records reveal that Calamba was repeatedly re-hired to perform tasks ranging
from dishwasing and gardening, aside from performing maintenace work. Such repeated rehiring and
the continuing need for his service are sufficient evidence of the necessity and indespensability of his
service to the petitioner’s business or trade.
Owing to Calamba’s length of service with the petitioner’s corporation, he bacame a regular employee,
by operation of law, one year after he was employed.

The employment contracts entered into by Calamba with the petitioner have the purpose of
circumventing the employee’s security of tenure. The court therefore, rigorously disapproves said
contracts which demonstrate a clear attempt to exploit the employee and deprive him of the protection
sanctioned by the labor code.

It is noteworthy that what determines whether a cetain employment is regular or casual is not the will
and word of the employer, it is the nature of the activities performed in relation to the particular
business or trade considering all circumstances, and in some cases the length of time of its performance
and its continued existence.

2. G.R. Nos. 82643-67 August 30, 1990

PHILIPPINE GEOTHERMAL, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, TEODULO C. CUEBILLAS, ARMANDO CILOT, MARIANO
CORULLO, YOLANDA CAL, EFREN CLERIGO, FELICISSIMO VARGAS, et al., respondents.

Romulo, Mabanta, Buenaventura, Sayoc and De los Angeles for petitioner.

Napoleon Banzuela, Jr. for private respondents.

PARAS, J.:
Facts: The petitioner started working with said corporation as a messenger way back in 1949. He held
various positions therein, such as bookkeeper, accountant, general office supervisor and Assistant-
Manager. He then rose to the position as Assistant VicePresident-Manager (Makati Office) in 1913 and
held it continuously up to 1977. Prior to his dismissal, he was in the service for more than 28 years. In
October 1976, the petitioner was sent to Korea on an officialbusiness for the respondent corporation.
Before that, the respondentAlfredo Benedicto, president and general manager of thecorporation,
verbally intimated to petitioner that the latter would soon be appointed as Assistant Vice President for
Finance, preparatory to his assuming the position of Vice President for Finance upon the resignation of
the then incumbent. In early November 1976, petitioner was instructed to attend the staff meeting at
Bacolod every second and fourth Tuesdays of every month starting January 1977. The petitioner alleged
that he had not at any time or in any manner applied for retirement and that the requirement of due
process was not observed, thus making his dismissal illegal and unjustified. Also, he stated that the
respondents did not explain to him any cause or reason for his dismissal, that no specific charges were
made against him and no formal investigation was conducted to afford him opportunity

to acquit himself of any charges. Finally, the money offered by the corporation does not constitute
estoppel or waiver on his part, considering that his acceptance was without prejudice to all his rights
resulting from his illegal dismissal. Issue: Whether or not the acceptance of separation pay is a bar to
contesting the legality of dismissal. Held: No. The contention of respondents that petitioner is barred
from contesting the illegality of his dismissal since he has already received his separation pay cannot be
sustained. Since he was forced to retire, he suddenly found himself jobless with a family of eight (8)
children to support. He had no alternative but to accept what was offered to him; he needed money to
support his family. He had to grab whatever was offered as he accepted less than what was offered to
show his non-acquiescence to what amounted to dismissal. Employees who received their separation
pay are not barred from contesting the legality of their dismissal. The acceptance of those benefits
would not amount to estoppels. Having been illegally dismissed, the petitioner is entitled to
reinstatement with back wages corresponding to a period of three (3) years without qualification minus
the amount of P26, 492. 63 he was forced to receive as retirement gratuity pay.

3. [G.R. No. 149793. April 15, 2005]

WACK WACK GOLF & COUNTRY CLUB, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, MARTINA G. CAGASAN, CARMENCITA F. DOMINGUEZ,
and BUSINESS STAFFING AND MANAGEMENT, INC., respondents.

DECISION

CALLEJO, SR., J.:

FACTS:

A fire destroyed a large portion of the main clubhouse of the Wack Wack Golf and Counrty Club
(wack Wack)., including its kitchen. In view of the reconstruction of the whole clubhouse
complex, Wack Wack had to suspend the operations of the Food and Beverages Department
which required the suspension of 54 employees. The Wack Wack Employee’s Union found the
suspension arbitrary and constitutive of union-busting, and went to strike.

The parties soon entered into an agreement and formulated a “special separation
benefir/remittance privilege” which contained, among other things, the following provision:

“4. All qualified employees who may have been separated from the service under the above
package shall be considered under a priority basis for employment by concessionaires and/or
contractors, and even by the Club upon full resumption of operations, upon the recommendation
of the UNION. The Club may even persuade an employee-applicant for availment under the
package to remain on his/her job, or be assigned to another position.”

Three employees, namely: Martina B. Cagasan, Carmencita F. Dominguez, and Crisanto

Baluyot, Sr. availed of the aforementioned privilege.

Soon after, Wack Wack entered into a Management Contract with Business Staffing and
Management, Inc. (BSMI) whereby the latter will provide management services to Wack Wack.
Cagasan, Dominguez, and Baluyot, Sr. were among those hired by BMSI.
Wack Wack also engaged with several contractors which were assigned in various operating
functions of the club. Due to these various management service contracts, BSMI undertook an
organizational analysis and manpower evaluation. In the course of the assessment, it was decided
that the services of Cagasan, Domingues, and Baluyot, Sr. were no longer needed. They were
then dismissed from service. Later, these employees individually filed an illegal dismissal
complaint against Wack Wack before the NLRC.

The Labor Arbiter dismissed the complaints of Cagasan and Domingues for lack of cause of
action. As to Baluyot, Sr., the Arbiter found that his dismissal was illegal. Upon appeal by
Cagasan and Dominguez, the NLRC decided in their favor. It held that BMSI is only a labor-
only contractor and hence, had nothing to do with the grievance of the complainants. It ordered
Wack Wack to reinstate Cagasan and Dominguez.

ISSUE:

WoN BSMI is a labor-only contractor.

HELD:

NO. An independent contractor is one who undertakes job contracting, i.e., a person who: (a)
carries on an independent business and undertakes the contract work on his own account under
his own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of the work
except as to the results thereof; and (b) has substantial capital or investment in the form of tools,
equipments, machineries, work premises and other materials which are necessary in the conduct
of the business.

There is indubitable evidence showing that BSMI is an independent contractor, engaged in the
management of projects, business operations, functions, jobs and other kinds of business
ventures, and has sufficient capital and resources to undertake its principal business. It had
provided management services to various industrial and commercial business establishments. Its
Articles of Incorporation proves its sufficient capitalization. In December 1993, Labor Secretary
Bienvenido Laguesma, in the case of In re Petition for Certification Election Among the Regular
Rank-and-File Employees Workers of Byron-Jackson (BJ) Services International Incorporated,
Federation of Free Workers (FFW)-Byron Jackson Services Employees Chapter, recognized
BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to
the existence of an employer-employee relationship between the contractor and the workers.

4. [G.R. No. 116781. September 5, 1997]

TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION, THOMAS and

JAMES DEVELOPERS (PHIL.), INC., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, MARIO O. LABENDIA, SR., ROBERTO LABENDIA, NARCISO ADAN,
FLORENCIO GOMEZ, ERNESTO BAGATSOLON, SALVADOR BABON, PATERNO
BISNAR, CIPRIANO BERNALES, ANGEL MABULAY, SR., LEO SURIGAO, and ROQUE
MORILLO, respondents.
DECISION

BELLOSILLO, J.:

Facts:Private respondents were filed complaints for illegal dismissal against petitioners with
NLRC.Respondents were hired for various periods as construction workers in different capacities
theydescribed in the terms. They alternately worked for Tomas Lao Corp., Tomas and James
Developer, LVM Construction, altogether as Lao Group of Companies. They engaged in
construction of public roads andbridges. Each one would also allow the utilization of the
employees. With the arrangement workerswere transferred whenever necessary to on-going
projects of the same company or rehired after thecompletion of the project or project phase
which they were assigned. In 1989 issued memorandumrequiring all workers and company
personnel to sign employment contracts forms and clearances. Toensure compliance with the
directive, the company ordered the withholding of the salary of anyemployee who refused to
sign. All respondents refused to sign contending that this scheme wasdesigned by their employer
to downgrade their status from their regular employees to mere projectemployees. Their salaries
were withheld. Since the workers stood firm in their refusal to comply withthe directives their
services were terminated. The NLRC dismissed the complaint finding thatrespondents were
project employees whose employees could be terminated upon the completion of the project.
However the decision of LA was reversed on appeal finding that respondents were
regularemployees who were dismissed without just cause and denied due process. The
petitionersexpostulation is that respondents have no valid cause to complain about their
employment contractssince documents formalized their status as project employees. They cite
Policy Instruction No. 20 of DOLE which defines project employees as those employed in
connection with particular constructionproject.

ISSUE: W/N dismissal of private respondents were illegal

RULING: The court ruled that, the principal test in determining whether particular employees
are projectemployees distinguished from regular employees is whether the project employees are
assigned to carryout specific project or undertaking, the duration of which are specified at the
time of the employees areengaged for the project. Project in the realm of industry and business
refers to a particular job orundertaking that it is within the regular or usual business of employer,
but which is distinct and separateand identifiable as such from the undertakings of the company.
They allowed to workers hired forspecific projects and hence can be classified as project
employees, the repeated re-hiring and thecontinuing need for the services over a long span of
time have undeniably made them regularemployees. Length of time may not be a controlling test
for project employment, it can be a strongfactor in determining whether the employee was hired
for a specific undertaking or in fact tasked toperform functions which are vital, necessary and
indispensable to the usual business or trade of theemployer. In the case at bar, private
respondents had already gone through the status of projectemployees. But their employments
became non-coterminous with specific projects when they started tobe continuously re-hired due
to demands of petitioners business and were re-engaged for many moreprojects without
interruption.The denial by petitioners of the existence of a work pool in the company because
their projects werenot continuous. A work pool may exist although the workers in the pool do
not receive salaries and arefree to seek other employment during temporary breaks in the
business, provided that the worker shallbe available when called to report for a project. The court
finds that the continuous re- hiring of of thesame set of employees within the framework is
strongly indicative that private respondents were anintegral part of a work pool in which
petitioners drew its workers for its various projects

5. G.R. No. 79869 September 5, 1991

FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR.,

ANTONIO MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA,
ANITA MERCADO, MARINA MERCADO, JULIANA CABRAL, GUADALUPE
PAGUIO, BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA,
ROMEO MERCADO and LEON SANTILLAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR
ARBITER LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO
DE BORJA and LETICIA DE BORJA; and STO. NIÑO REALTY, INCORPORATED,
respondents.

Servillano S. Santillan for petitioners.

Luis R. Mauricio for private respondents.

PADILLA, J.:

Facts:

1. Petitioners were agricultural workers of the private respondent's sugar land who were
dismissed. They had worked in all agriculture phases for several years in the said sugar land. The
respondent denied that petitioners were regular employees alleging that their services were
engaged through 'mandarols' or supply workers to do a particular phase of the agricultural work.

2. As a result, the petitioners filed a complaint for illegal dismissal. The Labor Arbiter held that
the petitioners were not regular employees and the NLRC affirmed this ruling.

Issue: W/N the petitioners are regular and permanent farm workers
RULING: No, they are project/seasonal employees. A project employee is one whose
employment has been fixed for a specific project or undertaking, the completion has been
determined at the time of engagement, or where work or service is seasonal in nature and
employment is for the duration of the season.

As such, the termination of employment cannot be considered as illegal dismissal. The

petitioners are free to contract their services to work for other farm owners.

6. G.R. No. L-48494 February 5, 1990

BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,

vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the
President, and DOROTEO R. ALEGRE, respondents.

Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioners.

Mauricio G. Domogon for respondent Alegre.

NARVASA, J.:

FACTS:

Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner Brent
School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its
existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July
17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and
September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971.

On April 20,1976, Alegre was given a copy of the report filed by Brent School with the
Department of Labor advising of the termination of his services effective on July 16, 1976. The
stated ground for the termination was "completion of contract, expiration of the definite period of
employment." Although protesting the announced termination stating that his services were
necessary and desirable in the usual business of his employer, and his employment lasted for 5
years - therefore he had acquired the status of regular employee - Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for
the period May 16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an application for clearance to
terminate employment (not a report of termination), and accepting the recommendation of the
Labor Conciliator, refused to give such clearance and instead required the reinstatement of
Alegre, as a "permanent employee," to his former position without loss of seniority rights and
with full back wages.

ISSUE:

Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period
employment" or employment for a term.

RULING:

Respondent Alegre's contract of employment with Brent School having lawfully terminated with
and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to
reinstatement.

The employment contract between Brent School and Alegre was executed on July 18, 1971, at a
time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. At that
time, the validity of term employment was impliedly recognized by the Termination Pay Law,
R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce (Article 302)
which governed employment without a fixed period, and also implicitly acknowledged the
propriety of employment with a fixed period. The Civil Code of the Philippines, which was
approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations
with a period. No prohibition against term-or fixed-period employment is contained in any of its
articles or is otherwise deducible therefrom.

It is plain then that when the employment contract was signed between Brent School and Alegre,
it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof
Stipulations for a term were explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under
the Labor Code (PD 442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at
about this time.

Article 320 originally stated that the "termination of employment of probationary employees and
those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary
of Labor may prescribe." Article 321 prescribed the just causes for which an employer could
terminate "an employment without a definite period." And Article 319 undertook to define
"employment without a fixed period" in the following manner: …where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season.

Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential Decree No. 850, effective December 16, 1975.

Article 320, dealing with "Probationary and fixed period employment," was altered by
eliminating the reference to persons "employed with a fixed period," and was renumbered
(becoming Article 271).

As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not
only fails to exhaust the gamut of employment contracts to which the lack of a fixed period
would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right
of an employee to freely stipulate with his employer the duration of his engagement, it logically
follows that such a literal interpretation should be eschewed or avoided. The law must be given a
reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept
of term employment and subverting to boot the principle of freedom of contract to remedy the
evil of employer's using it as a means to prevent their employees from obtaining security of
tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by
lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of
employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being
served by her school a notice of termination following the expiration of the last of three
successive fixed-term employment contracts, the Court held:

Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment
was probationary, contractual in nature, and one with a definitive period. At the expiration of the
period stipulated in the contract, her appointment was deemed terminated and the letter
informing her of the non-renewal of her contract is not a condition sine qua non before Reyes
may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder
that Reyes' contract of employment was due to expire and that the contract would no longer be
renewed. It is not a letter of termination.

Paraphrasing Escudero, respondent Alegre's employment was terminated upon the

expiration of his last contract with Brent School on July 16, 1976 without the necessity of any
notice. The advance written advice given the Department of Labor with copy to said petitioner
was a mere reminder of the impending expiration of his contract, not a letter of termination, nor
an application for clearance to terminate which needed the approval of the Department of Labor
to make the termination of his services effective. In any case, such clearance should properly
have been given, not denied.

7. G.R. No. 127395. December 10, 1998]

PHILIPPINE TOBACCO FLUE-CURING & REDRYING CORPORATION, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, et al , respondents.,

PANGANIBAN, J.:

FACTS:

There are two groups of employees, namely, the Lubat group and the Luris group. The Lubat
group is composed of petitioner’s seasonal employees who were not rehired for the 1994 tobacco
season. At the start of that season, they were merely informed that their employment had been
terminated at the end of the 1993 season. They claimed that petitioner’s refusal to allow them to
report for work without mention of any just or authorized cause constituted illegal dismissal. In
their Complaint, they prayed for separation pay, back wages, attorney’s fees and moral damages.

On the other hand, the Luris group is made up of seasonal employees who worked during the
1994 season. On August 3, 1994, they received a notice informing them that, due to serious
business losses, petitioner planned to close its Balintawak , Quezon City plant and transfer its
tobacco processing and redrying operations to Ilocos Sur. Although the closure was to be
effective September 15, 1994, they were no longer allowed to work starting August 4,
1994. Instead, petitioner awarded them separation pay computed according to the following
formula:

total no. of days actually worked

—————————————————– x daily rate x 15 days

total no. of working days in one year

The cases were consolidated.

ISSUES:

1. Did petitioner prove “serious business losses,” its justification for the nonpayment of
separation pay
2. Was the dismissal of the employees valid

III. How should the separation pay of illegally dismissed seasonal employees be computed.

RULING:

The petition is not meritorious.

1. Serious Business Losses Not Proven

Article 283 of the Labor Code prescribes the requisites and the procedure for an employee’s
dismissal arising from the closure or cessation of operation of the establishment.

The present case involves the closure of merely a unit or division, not the whole business of an
otherwise viable enterprise. Although Article 283 uses the phrase “closure or cessation of
operation of an establishment or undertaking,” , the said statutory provision applies in cases of
both complete and partial cessation of the business operation.
The ‘loss’ referred to in Article 283 cannot be just any kind or amount of loss; otherwise, a
company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted
employees. To guard against this possibility of abuse, the Court laid down the following
standard which a company must meet to justify retrenchment:

1. the losses expected should be substantial and not merely de minimis in extent. If the loss
purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial
and inconsequential in character, the bonafide nature of the retrenchment would appear to
be seriously in question.
2. the substantial loss apprehended must be reasonably imminent, as such imminence can be
perceived objectively and in good faith by the employer. There should, in other words,
be a certain degree of urgency for the retrenchment, which is after all a drastic recourse
with serious consequences for the livelihood of the employees retired or otherwise laid
off.
3. it must be reasonably necessary and likely to effectively prevent the expected losses.
4. alleged losses if already realized, and the expected imminent losses sought to be
forestalled, must be proved by sufficient and convincing evidence.

Petitioner did not actually close its entire business. It merely transferred or relocated its tobacco
processing and redrying operations. Moreover, it was also engaged in, among others, corn and
rental operations, which were unaffected by the closure of its Balintawak plant. Petitioner was
not able to prove serious financial losses arising from its tobacco operations.

Petitioner was not able to establish that the closure of its business operations in its Balintawak
plant was in fact due to serious financial losses. Therefore, under the last two sentences of
Article 283 of the Labor Code, the dismissed employees belonging to the Luris group are entitled
to separation pay “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.”

1. Lubat Group Illegally Dismissed

Petitioner illegally dismissed the members of the Lubat group when it refused to allow them to
work during the 1994 season. The nature of the relationship of seasonal workers is such that
during off season they are temporarily laid off but during summer season they are re-employed,
or when their services may be needed. They are not strictly speaking separated from the service
but are merely considered as on leave of absence without pay until they are re-employed. The
Court considered a seasonal worker “in regular employment” in cases involving the
determination of an employer-employee relationship and security of tenure.

The employer-employee relationship between herein petitioner and members of the Lubat group
was not terminated at the end of the 1993 season. From the end of the 1993 season until the
beginning of the 1994 season, they were considered only on leave but nevertheless still in the
employ of petitioner.
Petitioner is liable for illegal dismissal and should be responsible for the reinstatement of the
Lubat group and the payment of their back wages. However, since reinstatement is no longer
possible as petitioner has already closed its Balintawak plant, respondent members of the said
group should instead be awarded normal separation pay (in lieu of reinstatement) equivalent to at
least one month pay, or one month pay for every year of service, whichever is higher. It must
be stressed that the separation pay being awarded to the Lubat group is due to illegal dismissal;
hence, it is different from the amount of separation pay provided for in Article 283 in case of
retrenchment to prevent losses or in case of closure or cessation of the employer’s business, in
either of which the separation pay is equivalent to at least 1 month or 1/2 month pay for every
year of service, whichever is higher.

III. Amount of Separation Pay

Petitioner posits that the separation pay of a seasonal worker, who works for only a fraction of a
year, should not be equated with that of a regular worker. Positing that the total number of
working days in one year is 303 days, petitioner submits the following formula for the
computation of a seasonal worker’s separation pay:

Total No. of Days Actually Worked

8. G.R. No. 122653. December 12, 1997]

PURE FOODS CORPORATON, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, RODOLFO CORDOVA, VIOLETA CRUSIS, ET AL.,* respondents.

DECISION

DAVIDE, JR., J.:

FACTS:

The private respondents (numbering 906) were hired by petitioner Pure Foods Corporation to
work for a fixed period of five months at its tuna cannery plant in Tambler, General Santos City.
After the expiration of their respective contracts of employment in June and July 1991, their
services were terminated. They forthwith executed a “Release and Quitclaim” stating that they
had no claim whatsoever against the petitioner. On December 1992, Private respondents filed
before the NLRC a complaint for illegal dismissal against the petitioner and its plant manager,
Marciano Aganon.
The Labor Arbiter dismissed the complaint on the ground that the private respondents were mere
contractual workers, and not regular employees; hence, they could not avail of the law on
security of tenure. The private respondents appealed from the decision to the NLRC which
affirmed the Labor Arbiter's decision. On private respondents’ motion for reconsideration, the
NLRC rendered another decision on 30 January 1995 vacating and setting aside its earlier
decision and held that the private respondents and their co-complainants were regular employees.
It declared that the contract of employment for five months was a “clandestine scheme employed
by [the petitioner] to stifle [private respondents’] right to security of tenure” and should therefore
be struck down and disregarded for being contrary to law, public policy, and morals. Hence,
their dismissal on account of the expiration of their respective contracts was illegal.

Petitioner’s motion for reconsideration was denied; hence, this appeal.

Petitioner’s submission before the Court: the private respondents are now estopped from
questioning their separation from petitioner’s employ in view of their express conformity with
the five-month duration of their employment contracts. In the instant case, the private
respondents were employed for a period of five months only. In any event, private respondents'
prayer for reinstatement is well within the purview of the “Release and Quitclaim” they had
executed wherein they unconditionally released the petitioner from any and all other claims
which might have arisen from their past employment with the petitioner.

ISSUE: Whether or not the 5-month period specified in private respondents’ employment
contract is invalid and is therefore violative of their constitutional right to security of tenure.

Ruling:

The five-month period specified in private respondents’ employment contract is invalid. In

the leading case of Brent School, Inc. v. Zamora, although the Court has upheld the legality of
fixed-term employment, the Court also held that where from the circumstances it is apparent that
the periods have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy and morals.

Brent also laid down the criteria under which term employment cannot be said to be in
circumvention of the law on security of tenure: 1) The fixed period of employment was
knowingly and voluntarily agreed upon by the parties without any force, duress, or improper
pressure being brought to bear upon the employee and absent any other circumstances vitiating
his consent; or 2) It satisfactorily appears that the employer and the employee dealt with each
other on more or less equal terms with no moral dominance exercised by the former or the latter.

None of these criteria had been met in the present case. It could not be supposed that private
respondents and all other so-called “casual” workers of [the petitioner] KNOWINGLY and
VOLUNTARILY agreed to the 5-month employment contract.

The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of its
workforce consisted of its so-called “casual” employees; (2) that as of July 1991, “casual”
workers numbered 1,835; and regular employees, 263; (3) that the company hired “casual”
every month for the duration of five months, after which their services were terminated and they
were replaced by other “casual” employees on the same five-month duration; and (4) that these
“casual” employees were actually doing work that were necessary and desirable in petitioner’s
usual business.

This scheme of the petitioner was apparently designed to prevent the private respondents and the
other “casual” employees from attaining the status of a regular employee. It was a clear
circumvention of the employees’ right to security of tenure and to other benefits like minimum
wage, cost-of-living allowance, sick leave, holiday pay, and 13th month pay. Indeed, the
petitioner succeeded in evading the application of labor laws. Also, it saved itself from the
trouble or burden of establishing a just cause for terminating employees by the simple expedient
of refusing to renew the employment contracts.

The five-month period specified in private respondents’ employment contracts having been
imposed precisely to circumvent the constitutional guarantee on security of tenure should,
therefore, be struck down or disregarded as contrary to public policy or morals. To uphold the
contractual arrangement between the petitioner and the private respondents would, in effect,
permit the former to avoid hiring permanent or regular employees by simply hiring them on a
temporary or casual basis, thereby violating the employees’ security of tenure in their jobs.

The NLRC was correct in finding that the private respondents were regular employees and that
they were illegally dismissed from their jobs. Under Article 279 of the Labor Code and the
recent jurisprudence, the legal consequence of illegal dismissal is reinstatement without loss of
seniority rights and other privileges, with full back wages computed from the time of dismissal
up to the time of actual reinstatement, without deducting the earnings derived elsewhere pending
the resolution of the case.

However, since reinstatement is no longer possible because the petitioner's tuna cannery plant
had, admittedly, been closed in November 1994, the proper award is separation pay equivalent to
one month pay or one-half month pay for every year of service, whichever is higher, to be
computed from the commencement of their employment up to the closure of the tuna cannery
plant. The amount of back wages must be computed from the time the private respondents were
dismissed until the time petitioner's cannery plant ceased operation.
Decision: WHEREFORE, for lack of merit, the instant petition is DISMISSED and the
challenged decision of 30 January 1995 of the National Labor Relations Commission in NLRC
CA No. M-001323-93 is hereby AFFIRMED subject to the above modification on the
computation of the separation pay and back wages.

9. G.R. No. L-63316 July 31, 1984

ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and MA. MERCEDES P.

INTENGAN, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of the
Ministry of Labor & Employment, and GENERAL TELEPHONE DIRECTORY, CO.,
respondents.

Jimenez, Apolo & Leynes Law Office for petitioners.

The Solicitor General for respondent Deputy Minister.

Abad, Legayada & Associates for private respondent.

GUERRERO, J.:

FACTS: Iluminada Ver Buiser, Ma. Cecilia Rilloacuña, and Ma. Mercedes P. Intengan all
entered into an eighteen month probationary contract of employment with General Telephone
Directory Company (GTPD), a business concerned with telephone directories, as sales
representative charged with soliciting advertisements to include in the telephone directories. All
respondents were terminated after the period for failing to meet their sales quotas. Though they
appealed to the Ministry of Labor of and Employment, they were both dismissed by the regional
director and Deputy Minister Leogardo, and ruled that they have not attained regular status, the
stipulated probationary period was justified and valid, and that the termination was valid because
they have not reached their required sales quotas. Petitioners contend that Leogardo committed a
grave abuse of discretion in rendering the decision in favor of Mariwasa and that, by law,
probationary period cannot exceed 6 months, meaning that the probationary period of GTPD was
illegal. Hence this petition.

ISSUE: Whether or not the stipulated eighteen month probationary period is violative of the
Labor Code.

DECISION: The decision was rendered in favor of GTPD. According to the Labor Code, while
the 6 month general rule on probationary period is stated, it still allows parties to stipulate the
terms of the employment provided that they can come into agreement. Given that parties signed
and agreed that the 18 month period is the law between them, petitioners cannot impugn this by
partially implying the provision of the Labor Code in their favor. Additionally, the grounds for
their dismissal was just because it was proven that they did, in fact fail to meet their sales quotas.
Hence, this petition is dismissed.

10. G.R. No. 74246 January 26, 1989

MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO, petitioners,

vs.

HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry of Labor and
Employment judgment, and JOAQUIN A. DEQUILA, respondents.

NARVASA, J.:

FACTS:

Joaquin A. Dequila (or Dequilla) was hired on probation by Mariwasa Manufacturing, Inc. as a
general utility worker on January 10, 1979. After 6 months, he was informed that his work was
unsatisfactory and had failed to meet the required standards. To give him another chance, and
with Dequila’s written consent, Mariwasa extended Dequila’s probationary period for another
three months: from July 10 to October 9, 1979. Dequila’s performance, however, did not
improve and Mariwasa terminated his employment at the end of the extended period.

Dequila filed a complaint for illegal dismissal against Mariwasa and its VP for Administration,
Angel T. Dazo, and violation of Presidential Decrees Nos. 928 and 1389.

DIRECTOR OF MINISTRY OF LABOR: Complaint is dismissed. Termination is justified.

Thus, Dequila appeals to the Minister of Labor.

MINISTER OF LABOR: Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a
regular employee at the time of his dismissal, thus, he was illegally dismissed. (Initial order:
Reinstatement with full backwages. Later amended to direct payment of Dequila’s backwages
from the date of his dismissal to December 20, 1982 only.)
ISSUE: WON employer and employee may, by agreement, extend the probationary period of
employment beyond the six months prescribed in Art. 282 of the Labor Code?

RULING: YES, agreements stipulating longer probationary periods may constitute lawful
exceptions to the statutory prescription limiting such periods to six months.

The SC in its decision in Buiser vs. Leogardo, Jr. (1984) said that “Generally, the probationary
period of employment is limited to six (6) months. The exception to this general rule is when the
parties to an employment contract may agree otherwise, such as when the same is established by
company policy or when the same is required by the nature of work to be performed by the
employee. In the latter case, there is recognition of the exercise of managerial prerogatives in
requiring a longer period of probationary employment, such as in the present case where the
probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981
inclusive, especially where the employee must learn a particular kind of work such as selling, or
when the job requires certain qualifications, skills experience or training.”

In this case, the extension given to Dequila could not have been pre-arranged to avoid the legal
consequences of a probationary period satisfactorily completed. In fact, it was ex gratia, an act
of liberality on the part of his employer affording him a second chance to make good after
having initially failed to prove his worth as an employee. Such an act cannot now unjustly be
turned against said employer’s account to compel it to keep on its payroll one who could not
perform according to its work standards.

By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any
benefit attaching to the completion of said period if he still failed to make the grade during the
period of extension. By reasonably extending the period of probation, the questioned agreement
actually improved the probationary employee’s prospects of demonstrating his fitness for regular
employment.

Petition granted. Order of Deputy Minister Leogardo reversed.

G.R. No. 88636 October 3, 1991

LINA B. OCTAVIANO, petitioner

vs.
10. NATIONAL LABOR RELATIONS COMMISSION and GENERAL DIESEL POWER
CORPORATION, respondents.

D.R. Dando & Associates Law Offices for petitioner.

K.V. Faylona & Associates for private respondent.

SARMIENTO, J.:

The petitioner, Lina Octaviano, assails the decision of the National Labor Relations Commission
(NLRC), Fourth Division, dated March 20, 1989, affirming with modification the decision of the
labor arbiter reducing her award of full backwages to only one (1) year.

The facts in brief are:

The private respondent, General Diesel Power Corporation, hired Lina as a component mechanic
and issued a temporary employment as such from November 21, 1984 up to May 21, 1985. 1 She
was however made to work, in fact, as a secretary and parts clerk. 2

On May 22, 1985, the private respondent exyended her another contract of employment
providing a probationary period of six (6) months. 3 On November 21, 1985, she was terminated
as management decided to end her probationary employment. 4 On January 20, 1986, she was
rehired as a parts clerk. 5 Pursuant to management's prior arrangement, she was issued a six-
month probationary employment. On June 5, 1986, she was again dismissed. 6

On July 8, 1986, she lodged a complaint for illegal dismissal and then filed an amended
complaint on January 30, 1987.

On May 22, 1988, Labor Arbiter Felipe T. Garduque II ordered her reinstatement without loss of
seniority rights and privileges, with full backwages from her dismissal on June 5, 1986 up to her
actual reinstatement, including her legal holiday pay for ten regular holidays, and unpaid wages
and allowance from June 1-15, 1986 in the amounts of P500.00 and P215.00, respectively, and
13th month pay in the sum of P416.00 less P213.70 for advances and canteen bills, with ten
(10)% thereof as attorney's fee. 7 All other claims were dismissed. The respondent corporation
appealed to the NLRC interposing grave abuse of discretion.The NLRC affirmed the labor
arbiter's ruling but reduced the award of full backwages to only one year. Ironically, the NLRC
cited in particular Lina's educational background to justify the reduction. We quote:

It is not disputed that herein complainant is a graduate of chemical engineering and that the
periods of her separate employment contracts range from six (6) months to one (1) year. Having
technical engineering background, it would not be difficult for complainant find a job during her
period of lay-off. As such, she is therefore not expected to remain Idle and wait for a windfall for
this would be tantamount awarding her for her Idleness during her lay off. It is therefore more
rasonable to limit her backwages to one (1) year effective from her termination from the service
on June 15, 1986. *

The petitioner now complains that the NLRC erred in limiting the award of backwages to one
year. She invokes Article 279 of the Labor Code which guarantees security of tenure to a regular
employee, prohobiting his termination, except for a just cause, and entitling an unjustly
dismissed worker to reinstatement with full backwages.

We find the petition meritorious and we grant it. We rule that the NLRC gravely abused its
discretion in limiting the award of backwages to one year.

The facts of the case as indicated by the arbiter and the NLRC are uncorroborated- Lina was
unjustly and unlawfully terminated even after she had already completed successively three six-
month probationary periods of employment which should have converted her status to that of a
regular employee. Her termination, therefore, violated her right to security of tenure in her
employment. But even probationary employees are protected by law. For one, probationary
should not exceed six (6) months from the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating a longer period. 8 True, the services of an
employee who has been engaged on a probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with the reasonable standards made
known by the employer to the employee at the time of his employment. 9 But the law is explicit
that an employee who is allowed to work after a probabtionary period shall be considered a
regular employee. 10

It is clear from the foregoing that Lina should be considered a regular employee on all counts.
First, the nature of her job as a parts clerk required her to perform activities which were deemed
necessary and desirable in the usual business of General Diesel Power Corporation, in
connection with dealing in parts, sales, and services. (She was neither contracted for a specified
project nor required to perform work that was seasonable in nature.) Under Article 280 of the
Labor Code, when one performs such activities, he is deemed a regular employee, "[tlhe
provisions of written agreement to the contrary notwithstanding . . ." Second, her employment
was not covered by any apprenticeship agreement. Third, she was rehired on May 22, 1985 and
on January 20, 1986. This fact of rehiring negates management's claims that she failed to qualify
as a regular employee. On the contrary, management promoted her to parts clerk. Finally, at the
risk of being repetitious, Lina had been re-hired to work not only after her first six-month
probationary period from November 21, 1984 to May 21, 1985, she had been also re-hired to
work immediately after her second six-month probationary period from May 22, 1985 to
November 21, 1985; and then again on January 20, 1986, she was rehired on a probationary
status - her third - and was again terminated on June 5, 1986. Thus, we can readily see that Lina
had been hired and again and again rehired and again and again and again fired. We perceive
these successive hirings and firings as a ploy to avoid the obligations imposed by law on
employers for the protection and benefit of probationary employees, who, more often than not,
are kept in the bondage, so to speak, of unending probationary employment without any
complaint due to the serious unemployment problem besetting our country today. The Court can
not countenance this overreaching. No member of the country's work force must be allowed to
be taken advantage of by any employer.

An employee who is allowed to work after a probationary period, shall be considered a regular
employee. 11 The fact that Lina worked on a contract-to-contract basis can not alter the character
of her employment, because contracts can not override the mandate of law. 12 Hence, by
operation of law, she has likewise, become a regular employee. 13

We find self-defeating the private respondent's arguments that the petitioner, while in her
probationary periods, had failed to measure up to the standards of her work and had been found
unfit for her job, in the light of the circumstance discussed earlier. Second, the private respondent
failed to establish that there had been reasonable standards set forth by the company by which
Lina would measure up to as a regular employee. If indeed there were, the respondent should
have attached copies of those standards, as annexes to its pleadings; the records reveal nothing of
the sort, hence, we dismiss such trivial justifications.

We agree with the petitioner that she was unceremoniously terminated by the respondent
company to prevent her from becoming a regular employee and exc4ude her from all the benefits
thereto. As we previously stated, this is not only a common but a convenient practice of
unscrupulous employers to circumvent the law on security of tenure. Security of tenure, which is
a right of paramount value guaranteed by the Constitution, should not be denied to the workers
bv such a stratagem. We can not permit such a subterfuge, if we are to be true to the law and
social justice. The law and social justice mandate that an emplovee whose termination was
illelyal is enntitled to reinstatement with full backwages. 14
Under Article 279 of the Code, "[a]n employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of
compensation that should have been earned but were not collected because of unjust dismissal.
15 Such being the case, the award of backwages computed from the time of Lina's dismissal up
to the time of her reinstatement is not tantamount to rewarding idleness but to enable her to
recover her loss of income during her lack of employment caused by her dismissal. Clearly then,
the NLRC committed a grave abuse of discretion when it reduced the award of backwages to one
year and compounded that abuse by giving the reason that the petitioner could have easily landed
a better-paying job if she seriously looked for one, she being a chemical engineering graduate.

Worth noting is the manifestation of the Solicitor General when required to comment by the
Court: that "[H]e does not agree with the position of the public respondent, NLRC and cannot
represent said public respondent in this case without, in his honest belief and understanding,
going against the law, the evidence and jurisprudence."

The respondent also argues that the petitioner should not be entitled to backwages because she
was given separation pay upon termination of her employment. Furthermore, she also signed a
quitclaim discharging the company from any liability.

These arguments are devoid of merit. The fact that the petitioner received separation pay should
not be taken against her for it is but natural for her to accept whatever amounts the company
would give her. Her receipt of separation pay does not relieve the company of its obligations
under the law. Backwages and separation pay are reliefs distinct and separate from each other.
Payment of backwages in the forin of rehef that restores the income that was lost by reason of
unlawful dismissal is distinguished from separation pay which provides the employee money
during the period in which he is locating a new job. 16 We have moreover held that a quitclaim
wfll not estop a dismissed employee from complaining to the authorities. 17

We have consistently adopted the policy of awarding back wages to illegally dismissed
employees equivalent to three years without qualification or deduction, in order to avoid
protracted delay in the execution of the award for backwage due to extended hearings and
unavoidable delays and difficul ties encountered in determining the earnings of laid-off
employees ordered to be reinstated with backwages during the pendency of the case for purposes
of deducting the same from the gross backwages awarded. 18 In the case at bar, we can not find
good reason why we should depart from this established policy The company had unlawfully
terminated the petitioner fro her work. We take this opportunity to reaffirm our concern fo the
lowly worker who, like the petitioner, is often at the mere of her employer, by reinstating her to
her previous position or its equivalent, with backwages.

WHEREFORE, the petition is GRANTED. The private respondent is ORDERED to

REINSTATE the petitioner to her former position without loss of seniority rights and other
privileges, with backwages equivalent to three years without deduction or qualification.

Costs against the private respondent.

SO ORDERED.

11. G.R. No. 107320. January 19, 2000]

A PRIME SECURITY SERVICES, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION (SECOND DIVISION), HON. ARBITER
VALENTIN GUANIO, and OTHELLO MORENO, respondents.

DECISION

PURISIMA, J.: 

FACTS: PR had been working for a year as a security guard with the
Sugarland Security Services, Inc., a sister company of petitioner. He was
hired on January 1, 1988 as he was among those absorbed by petitioner
when it took over the security contract of its sister company, Sugarland,
with the U.S. Embassy. He was forced by the petitioner to sign a new
probationary contract for 6 mos; and on August 1, 1998, his employment
was terminated. Labor Arbiter for the petitioner.

ISSUES:
1. Whether PR’s employment with A’ Prime Securities was just a continuation
of his employment with Sugarland.

2. Whether PR is a regular employee and thereby illegally dismissed.

HELD:
1. Yes. The allegations of respondent that Sugarland and A’ Prime were
sister companies were never denied nor controverted by petitioner before
the Labor Arbiter. It belatedly contended that they were distinct juridical
entities, but such fact lacks any legal basis. The Court cannot sanction
the practice of companies that affects the transfer of its employees to
another entity whose owners are the same, in order to deprive subject
employees of the benefits he is entitled to under the law.

2. Yes. PR became a regular employee upon competition of his six-month

period of probation. He started working on January 30, 1988; and the
end of the period of probation was on July 27, 1988. When he was
dismissed on August 1, he was already a regular employee with security
tenure. PR’s alleged violations of sleeping on post and quarrelling with a
worker were first infractions and do not amount to valid grounds for
terminating employment.

12. G.R. No. 85519 February 15, 1990

UNIVERSITY OF STO. TOMAS, FR. MAXIMO MARINA O.P. AND GILBERTO L.

GAMEZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE LABOR ARBITER
BIENVENIDO S. HERNANDEZ AND BASILIO E. BORJA, respondents.

Abad, Leaño & Associates for petitioners.

Antonio B. Fidelino for private respondent.

GANCAYCO, J.:

The herein private respondent Dr. Basilio E. Borja was first appointed as "affiliate
faculty" in the Faculty of Medicine and Surgery at the University of Sto. Tomas (UST for
short) on September 29, 1976. In the second semester of the school year 1976-77 he
was appointed instructor with a load of twelve (12) hours a week. He was reappointed
instructor for the school year 1977-78 with a load of nine (9) hours a week in the first
semester and two (2) hours a week in the second. On June 10, 1978 he was appointed
as Instructor III for the school year 1978-79. His load for the first semester was eight (8)
hours a week, and for the second semester, seven (7) hours a week.

On March 19, 1979 Dean Gilberto Gamez observed that Dr. Borja should not be
reappointed based on the evaluation sheet that shows his sub-standard and inefficient
performance. 1 Nevertheless in view of the critical shortage of staff members in the
Department of Neurology and Psychiatry Dr. Gamez recommended the reappointment
of Dr. Borja, after informing the latter of the negative feedbacks regarding his teaching
and his promise to improve his performance. Thus on July 27, 1979 he was extended a
reappointment as Instructor III in the school year 1979-80. He was given a load of six
(6) hours a week. In all these appointments he was a part time instructor.

At the end of the academic year, it appearing that Dr. Borja had not improved his
performance in spite of his assurances of improvement, his reappointment was not
recommended.

In July, 1982 he filed a complaint in the National Labor Relations Commission (NLRC
for short) for illegal dismissal against the UST. After the submission of the pleadings
and due proceedings the labor arbiter rendered a decision on July 19, 1984, the
dispositive part of which reads as follows:

WHEREFORE this Office finds in favor of the complainant. The

respondents (sic) university are hereby ordered to effect the immediate
reinstatement of complainant to his former position with full backwages,
rights and benefits appertaining thereto. Respondent university is likewise
ordered to pay the complainant the sum of FIVE HUNDRED THOUSAND
PESOS (P500,000.00) as and by way of moral damages and another 1
0% of the gross amount due him, and as and by way of attorney's fees.

Respondents are hereby ordered to effect this decision immediately. 2

The UST appealed therefrom to the NLRC which in due course rendered a decision on
September 30, 1988, modifying the appealed decision as follows:

WHEREFORE, premises considered, the appealed decision is hereby

AFFIRMED with a modification limiting the backwages to three (3) years
without qualification or deduction, computed at P660.00 per month,
ordering respondents to pay complainant P100,000.00 as and for actual or
 compensatory damages, ordering respondents to pay complainant
P300,000.00 as and for moral damages, and further ordering them to pay
complainant P100,000.00 as and for exemplary damages.

Finally, respondents are ordered to pay to complainant the sum of ten

(10%) percent of the total sum due as and for attorney's fees. 3

Hence the instant petition for certiorari and prohibition with a prayer for the issuance of
a writ of preliminary injunction and restraining order that was filed by the UST and its
officers wherein it is alleged that the public respondent NLRC committed the following
errors:

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION

COMMITTED SERIOUS REVERSIBLE ERRORS OF SUBSTANCE
AMOUNTING TO GRAVE ABUSE OF DISCRETION AND/OR LACK OR
EXCESS OF JURISDICTION IN FINDING THAT BASILIO E. BORJA
ACQUIRED TENURE, THE SAID FINDING BEING CLEARLY
CONTRARY TO THE EVIDENCE AT HAND AND DEVOID OF BASIS IN
LAW.

II

THE HONORABLE NLRC COMMITTED A SERIOUS AND REVERSIBLE

ERROR AND GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT
THE SERVICES OF BASILIO E. BORJA HAD BEEN CONSTRUCTIVELY
TERMINATED, HIS APPOINTMENT HAVING MERELY LAPSED IN
ACCORDANCE WITH ITS TERMS AS ACCEPTED BY THE
COMPLAINANT-APPELLEE BORJA.

III

THE HONORABLE NLRC COMMITTED A SERIOUS AND GRAVE

ERROR IN AFFIRMING, ALBEIT REDUCING THE AWARD OF THE
HONORABLE LABOR ARBITER A QUO OF CLEARLY EXCESSIVE,
UNJUST, UNCONSCIONABLE AND SHOCKING MORAL DAMAGES OF
P300,000.00 AND IN AWARDING MOTU PROPIO EXEMPLARY
DAMAGES IN THE AMOUNT OF P100,000.00 IN GRAVE ABUSE OF
ITS DISCRETION AMOUNTING TO EXCESS OF JURISDICTION. 4

The petition is impressed with merit.

In the questioned decision of the public respondent NLRC it found that private
respondent had earned to his credit eight (8) semesters or four (4) academic years of
professional duties with the UST and that he has met the requirements to become a
regular employee under the three (3) years requirement in the Manual of Regulations
for Private Schools.

The appealed decision is correct insofar as it declares that it is the Manual of

Regulations for Private Schools, not the Labor Code, that determines the acquisition of
regular or permanent status of faculty members in an educational institution, but the
Court disagrees with the observation that it is only the completion of three (3) years of
service that is required to acquire such status.

According to Policy Instructions No. 11 issued by the Department of Labor and

Employment, "the probationary employment of professors, instructors and teachers
shall be subject to standards established by the Department of Education and Culture."
Said standards are embodied in paragraph 75 of the Manual of Regulations for Private
Schools, to wit:

75. Full time teachers who have rendered three consecutive years of
satisfactory service shall be considered permanent." (Emphasis supplied)

The legal requisites, therefore, for acquisition by a teacher of permanent employment,

or security of tenure, are as follows:

1) the teacher is a full time teacher;

2) the teacher must have rendered three (3) consecutive years of service; and

3) such service must have been satisfactory.

Now, the Manual of Regulations also states that "a full-time teacher" is "one whose total
working day is devoted to the school, has no other regular remunerative employment
and is paid on a regular monthly basis regardless of the number of teaching hours" (Par.
77); and that in college, "the nominal teaching load of a full-time instructor shall be
eighteen hours a week" (par. 78).

It follows that a part-time member of the faculty cannot acquire permanence in

employment under the Manual of Regulations in relation to the Labor Code.

Hence, the crucial question is whether or not the private respondent was a full-time or
part-time member of the faculty during the three (3) years that he served in the
petitioner-university's College of Medicine. Stated otherwise, the question is (1) whether
or not the said respondent's "total working day ..... (was) devoted to the school" and he
had "no other regular remunerative employment" and was "paid on a regular monthly
basis regardless of the number of teaching hours;" and/or (2) whether or not his normal
teaching load was eighteen (18) hours a week.

It cannot be said that respondent's total working day was devoted to the school alone. It
is clear from the record that he was practising his profession as a doctor and
maintaining a clinic in the hospital for this purpose during the time that he was given a
teaching load. In other words, he had another regular remunerative work aside from
teaching. His total working day was not, therefore, devoted to the school. Indeed, his
salaries from teaching were computed by the respondent Commission itself at only an
average of P660.00 per month; he, therefore, had to have other sources of income, and
this of course was his self-employment as a practising psychiatrist. That the
compensation for teaching had to be averaged also shows that he was not paid on a
regular monthly basis. Moreover, there is absolutely no evidence that he performed
other functions for the school when not teaching. All things considered, it would appear
that teaching was only a secondary occupation or "sideline," his professional practice as
a psychiatrist being his main vocation.

The record also discloses that he never had a normal teaching load of eighteen (18)
hours a week during the time that he was connected with the university. The only
evidence on this equally vital issue was presented by the petitioner through the affidavit
of Dr. Gilberts Gamez who was the dean of the medical school during the time material
to the proceedings at bar. His sworn declaration is to the effect that as "affiliate faculty"
member of the Department of Neurology and Psychiatry from September 29,1976,
private respondent had no teaching functions: that in fact, when he was appointed in
September, 1976, classes for the first semester were already nearing their end; that as
"affiliate faculty" he was merely an observer acquainting himself with the functions of an
instructor while awaiting issuance of a formal appointment as such; that in the school
year 1977-78 he had a teaching load of nine (9) hours a week in the first semester and
two (2) hours a week in the second semester; that in the school year 1978-1979 he had
a load of eight (8) hours a week in the first semester and seven (7) hours a week in the
second semester; that in the school year 1979-1980 he had a load of six (6) hours a
week in each semester. This evidence does not appear to have been refuted at all by
the private respondent, and has inexplicably been ignored by public respondent. No
discussion of this particular point is found in the decisions of the Labor Arbiter or the
NLRC.

The private respondent, therefore, could not be regarded as a full- time teacher in any
aspect. He could not be regarded as such because his total working day was not
devoted to the school and he had other regular remunerative employment. Moreover,
his average teaching load was only 6.33 hours a week.

In view of the explicit provisions of the Manual of Regulations above-quoted, and the
fact that private respondent was not a full- time teacher, he could not have and did not
become a permanent employee even after the completion of three (3) years of service.

Having found that private respondent did not become a permanent employee of
petitioner UST, it correspondingly follows that there was no duty on the part of petitioner
UST to reappoint private respondent as Instructor, the temporary appointment having
lapsed. Such appointment is a matter addressed to the discretion of said petitioner.
The findings, therefore, of the public respondent NLRC that private respondent was
constructively terminated is without lawful basis. By the same token, the order for
reinstatement of private respondent with backwages plus an award of actual or
compensatory, moral and exemplary damages must be struck down.

WHEREFORE, the petition is hereby GRANTED. The questioned orders of public

respondent NLRC dated September 13, 1988 and public respondent labor arbiter
Bienvenido S. Hernandez dated July 19,1988 are hereby SET ASIDE and another
judgment is hereby rendered DISMISSING the complaint of private respondent, without
pronouncement as to costs.

SO ORDERED.

Fernan (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Cortes, G

13. G.R. No. 78277 May 12, 1989

SAN MIGUEL CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR ARBITER
ILDEFONSO AGBUYA and FERNANDO M. ALMONICAR, respondents.

Siguion Reyna, Montecillo & Ongsiako for petitioner.

The Solicitor General for public respondent.

Edgardo A. Camello for private respondent.

CORTES, J.:

Under the Labor Code, as amended, the requirements for the lawful dismissal of an
employee by his employer are two-fold: the substantive and the procedural. Not only
must the dismissal be for a valid or authorized cause as provided by law (Arts. 279, 281,
282-284), but the rudimentary requirements of due process — notice and hearing —
must also be observed before an employee may be dismissed [Art. 277 (b).] One
cannot go without the other, for otherwise the termination would, in the eyes of the law,
be illegal.

The resolution of the instant case hinges on the determination of whether or not
petitioner had complied with the procedural requirements before it dismissed private
respondent.

The antecedents of this case, as summarized with particularity by the Solicitor General,
are as follows:
1. Private respondent, Fernando M. Almonicar, had been an employee of
the petitioner corporation for almost ten years preceding his termination on
August 15, 1982. He started working for the petitioner on October 1, 1973
as Route Helper in the Company's Beer Marketing Division, Cotabato
Sales Office, Cotabato City; and since then, he was promoted twice before
his elevation to his last position of Route Salesman.

2. During his period of employment, Almonicar had a clean record until at

around 5:30 o'clock in the afternoon of February 22, 1982, after arriving
from his day's work, he was approached at the Sales Office inside the
company's warehouse in Cotabato City by another company Route
Salesman named Abdulkadil Dumamba. Then and there, in the presence
of the company warehousemen, Dumamba requested Almonicar if the
latter could transfer to his account the 100 cases of empty regular beer
bottles and 100 cases of empty Beer Grande bottles worth P3,340.00,
which were returned allegedly for cash refund by Dumamba's customer,
but that Dumamba did not have sufficient sales/collections for the refund.

3. Finding nothing wrong with Dumamba's proposition, as in fact, it was

then a common practice among salesmen whenever one of them did not
have sufficient sales/collection to pay for the value of beer empties
returned for cash refund. Almonicar agreed to the proposition. Forthwith,
Almonicar handed to Dumamba the P3,340.00 out of his sales/collections,
and issued in the name of Dumamba's customer the corresponding cash
refund invoice (Annex "B", Petition). Whereupon, Almonicar advised the
warehouseman to reflect in his Checker's Stock Report said returned beer
empties.

4. It turned out, however, that the beer empties were returned not for cash
refund, but to be credited to the customer's account with the petitioner
company. For which, Dumamba issued to the customer a charge refund
invoice (Annex "A", Petition), but which was not recorded in the latter's
account ledger card because Dumamba did not include it in his sales
report to make his transaction records appear to be in order.

5. Consequently, when a verification was made on February 25, 1982, of

the account of Dumamba's customer, the latter refused to sign the
confirmation slip (Annex "C", Petition) of his account with the petitioner
company, claiming that the same did not tally with his record. As a result,
an inquiry was conducted wherein it was found out that the discrepancy
lies in Dumamba's failure to include in his report the charge refund invoice
he issued for the return of said beer empties, and the misappropriation for
his personal use [of] the cash intended for the refund of the value thereof
which was extended to him by Almonicar out of the latter's
sales/collections. This, resulted in the recommendation for the grounding
of Dumamba until further investigation (Annex "D", Petition).
6. Thereafter, an investigation was conducted sometime in March 1982 in
connection with several acts of defalcation allegedly committed by
Dumamba during the year 1982, one of which was the misappropriation of
the P3,340.00 covered by a cash refund invoice issued by Almonicar.

7. It was for the purpose of helping the Company in the investigation

against Dumamba, particularly with respect to the above-mentioned cash
refund, as he was made to understand by Regional Sales Manager
Romeo A. Reyes who conducted the investigation, that Almonicar gave
his statement (Annex "F", Petition) in the early morning of March 4, 1982.

8. As a result of said investigation, Dumamba was immediately grounded.

Almonicar on the other hand was even recommended by the company's
sales supervisor, Ranulfo Mabacho, for promotion to Salesman in-Charge
of the Midsayap (North Cotabato) Sales Office. He was likewise entrusted
to act as Salesman-in-Charge of the Cotabato Sales Office whenever the
regular salesman was absent.

9. However, to Almonicar's shock and astonishment, he received on July

26, 1982, a letter dated July 21, 1982 from their Regional Manager,
advising him that, "after due investigation of your recent case, we have
decided to separate you from service at the close of business on August
15, 1982."

10. Immediately, Almonicar sought an explanation from the Regional

Manager but the latter told him that the "decision" came from the
company's head office in Manila. However, when the Regional Manager
was asked for copies of the alleged "investigation" and "decision", the
latter simply told him that the pertinent papers will be forwarded to the
Ministry of Labor.

11. This prompted Almonicar to file on October l6, 1982 a complaint for
illegal dismissal with the Labor Ministry's Regional Office No. 12 in
Cotabato City against the herein petitioner and Regional Sales Manager
Romeo A. Reyes.

12. After efforts of conciliation with the Labor's Regional Office in Cotabato
City failed, the case was indorsed for compulsory arbitration to the
Executive Labor Arbiter in Cagayan de Oro City, wherein the parties,
through their respective counsels, agreed at the hearing called on October
26, 1983 to submit their case for decision on the bases of their position
papers and supporting evidence.

13. Pursuant thereto, complainant Almonicar (herein private respondent)

duly filed his position paper and supporting documents on January 23,
1984. Anent the respondent (herein petitioner), its counsel filed a
Manifestation and Motion asking for an extension of twenty (20) days from
Jan. 20, 1984 within which to file its position paper. Subsequently, another
motion was filed asking for a final extension of twenty (20) days from
February 10, 1984 within which to file its position paper, but the petitioner
failed to file even until Executive Labor Arbiter rendered his decision
(Annex "G", Petition) on May 30, 1984 finding private respondent's dismiss
to be without basis and, therefore, entitled to full back wages with all fringe
benefits from the time of his termination up to the promulgation of the
decision. However, since private respondent's reinstatement was no
longer feasible, he was awarded a separation pay corresponding to his ten
(10) years of service at 1/2 month pay for every year of service based on
the last salary. In addition, petitioner was ordered to pay private
respondent's counsel 10% of the total award.

14. From the foregoing decision, both parties appealed to the respondent
Commission. In its appeal, petitioner alleged that the Executive Labor
Arbiter abused his discretion and erred in his findings of fact and
conclusion of law by introducing for the first time evidence in refutation of
private respondent's position paper. For his part, private respondent
assailed the Executive Labor Arbiter's decision for not ordering his
reinstatement, despite the finding that his dismissal was without basis and
no evidence whatsoever was shown that this was no longer possible.

15. The respondent Commission, which apparently overlooked private

respondent's appeal and was misled into appreciating petitioners evidence
presented for the first time on appeal, promulgated on December 10, 1985
a decision (Annex "J", Petition), finding private respondent guilty of the
offense imputed to him. However, considering his ten (10) years of
unblemished record with the company, he was awarded a separation of
1/2 month's pay for every year of service, instead of reinstatement, without
back wages.

16. So that, on a Motion for Reconsideration (Annex "K", Petition) filed by

private respondent, the respondent Commission rectified its errors by
reversing and setting aside its previous decision of December 10, 1985
and instead, promulgated on March 30, 1987 another decision (Annex "L",
Petition) the dispositive portion of which reads:

WHEREFORE, premises considered the respondents are

hereby ordered to reinstate complainant to his former
position with full backwages with all of the benefits legal and
by contract and without loss of seniority rights and other
privileges, computed from the date of his dismissal up to his
actual reinstatement. Consequently, respondent is directed
to show proof of immediate compliance to the mandate of
 the decision after ten (10) days from receipt of this
Resolution. [Rollo, pp. 121-128.]

Without seeking reconsideration of the NLRC's decision of March 30, 1987, petitioner
filed the instant petition seeking the reversal of said decision on the ground that public
respondents had gravely abused their discretion.

The Court finds the petition unmeritorious.

The pleadings filed by petitioner and the annexes to its petition glaringly reveal a fatal
lapse on its part — the failure, prior to private respondent's dismissal, to furnish him
written notice and to afford him the opportunity to be heard and to defend himself as
mandated by the Labor Code, as amended. Thus, the code provides that "the employer
shall furnish the worker whose employment is sought to be terminated a written notice
containing a statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative if
he so desires" [Art. 277(b); formerly, Art, 278 (b).] In implementation of this requirement,
the amended rules and regulations promulgated by the Secretary of Labor provides:

Sec. 1. Security of tenure and due process. — No worker shall be

dismissed except for a just or authorized cause provided by law and after
due process.

Sec. 2. Notice of dismissal. — Any employer who seeks to dismiss a

worker shall furnish him a written notice stating the particular acts or
omission constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the worker's last
known address.

xxx

Sec. 5. Answer and hearing. — The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable period
from receipt of such notice. The employer shall afford the worker ample
opportunity to be heard and to defend himself with the assistance of his
representative, if he so desires.

Sec. 6. Decision to dismiss. — The employer shall immediately notify a

worker in writing of a decision to dismiss him stating clearly the reasons
therefor.

xxx

[Rule XIV, Book V, Rules and Regulations Implementing the Labor Code;
Emphasis supplied.]
In the instant case, after giving his statement as a witness for the company in
connection with the investigation on the alleged acts of defalcation committed by
Dumamba, private respondent was unexpectedly dismissed, without even being
investigated in connection with the violation attributed to him, much less notified that the
company intended to dismiss him for the alleged violation.

It is therefore apparent that private respondent's dismissal was an afterthought. He was

asked to make a statement in connection with the investigation against Dumamba and
when it became subsequently apparent to those in the head office in Manila that his act
of issuing the invoice in the name of Dumamba's customer constituted a possible
violation of company rules and regulations he was unceremoniously meted the penalty
of dismissal. Even the tenor of his statement [Annex "F", Petition; Rollo, pp. 30-32],
which was in the form of question and answer, indicates that it was being given in
connection with the investigation of Dumamba's misappropriation of the money given by
the private respondent for the refund of the empty bottles. There is no indication in said
statement that private respondent was also under investigation. In contrast, Dumamba's
statement [Annex "E", Petition; Rollo, pp. 27-29] clearly stated that he was the subject
of the investigation. Thus, it was prefaced by a paragraph entitled "Preliminaries", which
provides:

We are investigating you to shed light on reported beer empties that were
retrieved from United Grocery, situated at Supermarket, Cotabato City,
and it (sic) were not credited to the account of said outlet. . . [Rollo, p. 27;
Emphasis supplied.]

Moreover, that the company did not contemplate conducting an administrative

proceeding against private respondent was bolstered by the undisputed fact that he was
allowed to continue with his regular duties after he gave his statement, and even
recommended for promotion some time before his sudden dismissal, contrasted with
the immediate grounding of Dumamba. The failure of petitioner to afford private
respondent due process, as required by the Labor Code, in effecting his termination, is
thus patent.

No grave abuse of discretion could therefore be attributed to the NLRC for holding that
private respondent was illegally terminated and ordering his reinstatement with
backwages, as such was fully supported by the facts and the law. The reinstatement of
private respondent, as ordered by the NLRC, in lieu of the payment of separation pay,
as directed by the Labor Arbiter, is even made more imperative by the fact that he was
arbitrarily deprived of his employment at the early age of thirty-two (32) when he was
just approaching the prime of his life, causing his family economic dislocation and untold
hardship as he pursued his case through the years.

Neither can grave abuse of discretion be ascribed to the Executive Labor Arbiter for
basing his findings of fact and, consequently, his decision exclusively on private
respondent's position paper. It will be recalled that the parties agreed to submit the case
for decision on the basis of their position papers and that in spite of the extension
granted it, petitioner failed to file its position paper, forcing the arbiter to decide the case
without it. Moreover Art. 221 of the Labor Code, which provides that the technical rules
of evidence are not controlling in proceedings before Labor Arbiters, allows the latter to
decide the case on the basis of position papers and other documents submitted by the
parties [Manila Doctors Hospital v. NLRC, G.R. No. 64897, February 28, 1985, 135
SCRA 262; Asiaworld Publishing House, Inc. v. Ople, G.R. No. 56398, July 23, 1987,
152 SCRA 219.]

No grave abuse of discretion warranting the issuance of the corrective writ of certiorari
having been established, the dismissal of the petition is in order.

A final word. While the Court finds no cogent reason to set aside the NLRC's decision,
We are not, however, disregarding or in any way diminishing the employer's prerogative
to instill discipline in his employees and to impose reasonable penalties, including
dismissal, on erring employees pursuant to company rules and regulations [Soco V.
Mercantile Corporation of Davao, G.R. Nos. 53364-65, March 16, 1987, 148 SCRA
526.] Neither is the Court deviating from the established rules that an employer cannot
be compelled to continue with the employment of workers guilty of acts of misfeasance
or malfeasance, and whose continuance in the service of the employer is clearly
inimical to his interests, and that the law, in protecting the rights of workers, authorizes
neither the oppression nor self-destruction of employers [Manila Trading & Supply Co.
v. Zulueta, 69 Phil. 485 (1940); San Miguel Brewery, Inc. v. National Labor Union, 97
Phil. 378 (1955); Colgate Palmolive Philippines v. Ople, G.R. No. 73681, June 30,
1988.] But it must be emphasized nevertheless that due process must be observed in
effecting an employee's dismissal. And rightfully so, because the dismissal of an
employee affects not only his position but also his means of livelihood and his
dependents' sustenance. The employee must be informed of the alleged violation and
given an opportunity to be heard before he is dismissed. Strict adherence to the
requirements set forth in the Labor Code, as amended, is essential. Thus, the Court in
the recent case of Century Textile Mills, Inc., et al, v. NLRC, et al. [G.R. No. 77857, May
25, 19881 stated:

The twin requirements of notice and hearing constitute essential elements

of due process in cases of employee dismissal: the requirement of notice
is intended to inform the employee concerned of the employer's intent to
dismiss and the reason for the proposed dismissal; upon the other hand,
the requirement of hearing affords the employee an opportunity to answer
his employer's charges against him and accordingly to defend himself
therefrom before dismissal is effected. Neither of these two requirements
can be dispensed with without running afoul of the due process
requirement of the 1987 Constitution.

WHEREFORE, the instant petition is hereby DISMISSED and the decision of the NLRC
dated March 30, 1987 is AFFIRMED with the modification that the award of backwages
is fixed at three (3) years, without qualification or deduction, in line with current
jurisprudence. The temporary restraining order issued by the Court on May 20, 1987 is
LIFTED and SET ASIDE. This decision is IMMEDIATELY EXECUTORY.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

14. [G.R. No. 76645. July 23, 1991.]

PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION, Petitioner, v. ALICIA LAPLANA, Hon.

RICARDO ENCARNACION, and NATIONAL LABOR RELATIONS COMMISSION, Respondents.

NARVASA, J.

PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

[G.R. No. 76645. July 23, 1991.]

PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION, Petitioner, v. ALICIA LAPLANA, Hon.

RICARDO ENCARNACION, and NATIONAL LABOR RELATIONS COMMISSION, Respondents.

D.P. Mercado & Associates for Petitioner.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR LAWS; EMPLOYMENT; TRANSFER OF EMPLOYEES,

EMPLOYER’S PREROGATIVE; CONDITION. — There can be no quarrel with the Arbiter’s formulation of
the general principle governing an employer’s prerogative to transfer his employees from place to
place or from one position to another. The Arbiter acknowledges "the inherent right of an employer to
transfer or assign an employee in the pursuit of its legitimate business interests" subject only to the
condition that it be not "motivated by discrimination or (made) in bad faith, or . . . effected as a form
of punishment or demotion without sufficient cause." This is a principle uniformly adhered to by this
Court (Dosch v. NLRC, G.R. No. 51182, July 5, 1983).

2. ID.; ID.; ID.; DOCTRINE ENUNCIATED IN DOSCH v. NLRC (G.R. No. 51182, July 5, 1983) NOT
APPLICABLE TO CASE AT BAR. — In Dosch v. NLRC, supra, this Court found itself unable to agree with
the NLRC that the petitioner employee was guilty of disobedience and insubordination in refusing to
accept transfer from the Philippines to an overseas post. In this case, the employee (Laplana) had to
all intents and purposes resigned from her position. She had unequivocally asked that she be
considered dismissed, herself suggesting the reason therefor — retrenchment. When so dismissed, she
accepted separation pay. On the other hand, the employer has not been shown to be acting otherwise
than in good faith, and in the legitimate pursuit of what it considered its best interests, in deciding to
transfer her to another office. There is no showing whatever that the employer was transferring
Laplana to another work place, not because she would be more useful there, but merely "as a
subterfuge to rid . . . (itself) of an undesirable worker," or "to penalize an employee for . . . union
activities . . . ." The employer was moreover not unmindful of Laplana’s initial plea for reconsideration
of the directive for her transfer to Laoag; in fact, in response to that plea not to be moved to the Laoag
Office, the employer opted instead to transfer her to Manila, the main office, offering at the same
time the normal benefits attendant upon transfer from an office to another.

DECISION

NARVASA, J.:

Alicia Laplana was the cashier of the Baguio City Branch Office of the Philippine Telegraph and
Telephone Corporation (hereafter, simply PT & T). Sometime in March 1984, PT & T’s treasurer, Mrs.
Alicia A. Arogo, directed Laplana to transfer to the company’s branch office at Laoag City. Laplana
refused the reassignment and proposed instead that qualified clerks in the Baguio Branch be trained
for the purpose. She set out her reasons therefor in her letter to Mrs. Arogo dated March 27, 1984,
viz.:jgc:chanrobles.com.ph
"1. I have established Baguio City as my permanent residence. Working in Laoag will involve
additional expenses like for my board and lodgingly, fare, and other miscellaneous expenses. My
salary alone will not be enough — there will be no savings and my family will spend more on account
of my transfer.

"2. I will be away from my family. A far assignment would be a big sacrifice on my part keeping me
away from my husband and family which might affect my efficiency.

"3. Since I have been with PT & T for more than six years already, I have learned to work with my co-
employees here more effectively. Working in another place with entirely different environment will
require long adjustment period, thereby affecting performance of my job."cralaw virtua1aw library

On April 12, 1984, Mrs. Arogo reiterated her directive for Laplana’s transfer to the Laoag Branch, this
time in the form of a written Memorandum, informing Laplana that "effective April 16, 1984, you will
be reassigned to Laoag branch assuming the same position of branch cashier," and ordering her "to
turn over your accountabilities such as PCF, undeposited collections, used and unused official receipts,
other accountable forms and files to Rose Caysido who will be in charge of cashiering in
Baguio."cralaw virtua1aw library

Apparently Laplana was not allowed to resume her work as Cashier of the Baguio Branch when April
16, 1984 came. She thereupon wrote again to Mrs. Arogo advising that the directed transfer was
unacceptable, reiterating the reasons already given by her in her first letter dated March 27, 1984. On
April 30, 1984, Laplana received a telegram from Mrs. Arogo reading as follows:jgc:chanrobles.com.ph

"PLEASE REPORT TO MANILA ON MAY 2, 1984 FOR NEW JOB ASSIGNMENT.

IF YOU DON’T REPORT ON MAY 2, 1984, WE WILL CONSIDER THIS AS ABANDONMENT OF YOUR JOB
AND THIS MIGHT CONSTRAIN US TO IMPOSE DISCIPLINARY ACTION AGAINST YOU.

YOU CAN GET YOUR CASH ADVANCE FOR TRANSPORTATION FROM MRS. BAUTISTA TODAY."cralaw
virtua1aw library
On May 8, 1984, Laplana in turn sent a telex message to Mrs. Arogo which reads as
follows:jgc:chanrobles.com.ph

"I LOVE WORKING FOR OUR COMPANY HOWEVER I AM SORRY I CANNOT ACCEPT YOUR JOB OFFER IN
MANILA THANK YOU AND RETRENCH ME INSTEAD. MY BEST REGARDS."cralaw virtua1aw library

Thereafter, Laplana sent a letter to Mrs. Arogo on May 15, 1984, expatiating on her telex message
and reiterating her request to "be retrenched," as follows:jgc:chanrobles.com.ph

"Dear Mrs. Arogo:chanrob1es virtual 1aw library

Thank you for the job in Manila. However, I cannot accept the said offer because I have established
Baguio City as my permanent residence. Considering the high cost of living in Manila it will surely
involve additional expenses on my part. My salary alone will not be enough to sustain my expenses.
Furthermore, a far assignment will be a big sacrifice on my part keeping me away from my husband
which might affect my health due to an entirely new environment and climate, thereby affecting my
efficiency.

In view of the above reasons, I hereby request management to retrench me.

x x x"

Termination of Laplana’s employment on account of retrenchment thereupon followed. On May 19,

1984, PT & T issued an "Employees’s Service Report" which contained the following remarks regarding
Laplana: "Services terminated due to retrenchment with corresponding termination pay effective May
16, 1984." And on June 30, 1984, Mrs. Arogo sent a Memorandum to the company’s Baguio Branch
Manager embodying the computation of the separation and 13th month pay due to Laplana, together
with a check for the amount thereof, P2,512.50 and a quitclaim deed, and instructing said manager to
"have the quitclaim signed by Alicia Laplana before releasing the check and return all copies of said
form . . . immediately." On July 4, 1984, Laplana signed the quitclaim and received the check
representing her 13th month and separation pay.
On October 9, 1984, Laplana filed with the Labor Arbiters’ Office at Baguio City, thru the CLAO, a
complaint against PT & T, its "Baguio Northwestern Luzon Branch, Baguio City," and Paraluman
Bautista, Area Manager. In her complaint, she set forth substantially the facts just narrated, and
alleged, as right of action, that "when she insisted on her right of refusing to be transferred, the
Defendants made good its warning by terminating her services on May 16, 1984 on alleged ground of
`retrenchment’ although the truth is, she was forced to be terminated and that there was no ground
at all for the retrenchment;" that the company’s "act of transferring is not only without any valid
ground but also arbitrary and without any purpose but to harass and force . . . (her) to eventually
resign."cralaw virtua1aw library

In answer, the defendants alleged that —

1) Laplana "was being transferred to Laoag City because of increase in sales due to the additional
installations of vodex line;

"2) in connection with her transfer, Laplana had been informed "that she would be given ten (10) days
relocation allowance and transportation expense from Baguio to Laoag City;

"3) the company "was exercising management prerogatives in transferring complainant . . . and there
is no showing that this exercise was arbitrarily and whimsically done;

"4) Laplana’s services were terminated on her explicit declaration that "she was willing to be
retrenched rather than be assigned to Laoag City or Manila;

"5) in any event, the company had been actually suffering losses; in fact, in June, 1984, several
employees "were retrenched because of losses incurred due to rising costs in wages, rentals,
production supplies and other operational costs.

Upon the issues thus raised, judgment was rendered on March 28, 1985 by the Labor Arbiter in
Laplana’s favor. 1 The Arbiter’s verdict was made to rest essentially on the following pronouncements
(made avowedly in reliance on the doctrine laid down by this Court in Helmut Dosch v. NLRC and
Northwest Airlines, Inc., G.R. No. 51182, July 5, 1983 2), to wit:jgc:chanrobles.com.ph

"Transferring an employee from one place to another is not by itself unlawful. It is within the inherent
right of an employer to transfer or assign an employee in the pursuit of its legitimate business
interests. However, this right is not absolute.

Transfer becomes unlawful where it is motivated by discrimination or in bad faith, or is effected as a

form of punishment or demonition without sufficient cause.

The transfer of the complainant from Baguio City to Laoag City or to Manila is patently a demotion
and a form of punishment without just cause and would cause untold suffering on the part of the
complainant. . . ."cralaw virtua1aw library

With these premises in mind, the Arbiter ruled "that the complainant was illegally dismissed . . . (and
her) acceptance of separation pay . . . cannot cure the illegality of her dismissal because it was forced
upon her — she was compelled to accept the lesser evil," and that there was "no evidence to show
that the complainant was retrenched to prevent losses," but that on the contrary, "it is continuously
expanding and improving its facilities, and hiring new employees." Accordingly, he ordered —

1) PT & T "to reinstate immediately the complainant, Alicia R. Laplana, to her former position or
equivalent position without loss of seniority rights and benefits earned with full backwages and
benefits less P2,512.50, the amount she received as separation, from the time her compensation was
suspended until reinstated;

"2) the dismissal of the claim for moral and exemplary damages for lack of merit; and

3) the dismissal of the case against Mrs. Paraluman Bautista also for lack of merit.

The National Labor Relations Commission affirmed the Arbiter’s judgment and dismissed the
respondents’ appeal, by Resolution dated August 5, 1986. 3
There can be no quarrel with the Arbiter’s formulation of the general principle governing an
employer’s prerogative to transfer his employees from place to place or from one position to another.
The Arbiter acknowledges "the inherent right of an employer to transfer or assign an employee in the
pursuit of its legitimate business interests" subject only to the condition that it be not "motivated by
discrimination or (made) in bad faith, or . . . effected as a form of punishment or demotion without
sufficient cause." This is a principle uniformly adhered to by this Court. 4

The case law on the matter is succinctly set out by a noted commentator on Labor Relations Law as
follows: 5

". . . Except as limited by special laws, the employer is free to regulate, according to his own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods, time,
place and manner of work, tools to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and the discipline, dismissal
and recall of workers. This flows from the established rule that labor law does not authorize the
substitution of the judgment of the employer in the conduct of his business and does not deprive the
employer of the right to select or dismiss his employees for any cause, except in cases of unlawful
discrimination (NLU v. Insular-Yebana Tobacco Corp., 2 SCRA 924, 931; Republic Savings Bank v. CIR,
21 SCRA 226, 235).

". . . The employer has the prerogative of making transfers and reassignment of employees to meet
the requirements of the business. Thus, where the rotation of employees from the day shift to the
might shift was a standard operating procedure of management, an employee who had been on the
day shift for some time may be transferred to the night shift (Castillo v. CIR, 39 SCRA 81). Similarly,
transfers effected pursuant to a company policy to transfer employees from one theater to other
theaters operated by the employer, in order to prevent connivance among them, was sustained
(Cinema, Stage and Radio Entertainment Free Workers v. CIR, 18 SCRA 1071). Similar transfers and re-
assignments of employees have been upheld such as the reassignment of one from a position of
supervisor to that of engineer at the power house (Interwood Employees Assn. v. Interwood, 99 Phil.
82), or the transfer of the union president from his position of messenger clerk in a hotel to purely
office work and two other unionists from the position of hotel guard to line and elevator men, without
diminution of pay or other employees’ rights (Bay View Hotel Employees Union v. Bay View Hotel, L-
10393, March 30, 1960), or the temporary assignment of a sales clerk to another section of the store
(Marcaida v. PECO, 63 O.G. 8559)."cralaw virtua1aw library
Subsequent decisions of this Court have made no deviation from the doctrine. In Philippine Japan
Active Carbon Corp. v. NLRC , promulgated on March 8, 1989, 6 this Court made the following
pronouncement, to wit:jgc:chanrobles.com.ph

"It is the employer’s 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. An
employee’s 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. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it
does not involve a demotion in rank or diminution of his salaries, benefits, and other privileges, the
employee may not complain that it amounts to a constructive dismissal.

In Yuco Chemical Industries, Inc. v. MOLE, Et. Al. (judgment promulgated on May 28, 1990), 7 the same
"general principles on transfer" were restated. The Court said:jgc:chanrobles.com.ph

". . . In a number of cases, the Court has recognized and upheld the prerogative of management to
transfer an employee from one office to another within the business establishment provided that
there is no demotion in rank or diminution of his salary, benefits and other privileges. This is a
privilege inherent in the employer’s right to control and manage its enterprise effectively. Even as the
law is solicitous of the employees’ welfare, it cannot ignore the right of the employer to exercise what
are clearly and obviously management prerogatives. The freedom of management to conduct its
business operations to achieve its purpose cannot be denied.

But like all other rights, there are limits. The managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair
play. Having the right should not be confused with the manner in which that right must be exercised.
Thus it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. Nor
when the real reason is to penalize an employee for his union activities and thereby defeat his right to
self-organization. But the transfer can be upheld when there is no showing that it is unnecessary,
inconvenient and prejudicial to the displaced employee."cralaw virtua1aw library

The acceptability of the proposition that transfers made by an employer for an illicit or underhanded
purpose — e.g., to evade the duty to bargain collectively, or to defeat the employees’ right of
collective bargaining, or discriminate against one or some of them on account of their union activities
— is self-evident and cannot be gainsaid. The difficulty lies in the situation where no such illicit,
improper or underhanded purpose can be ascribed to the employer, the objection to the transfer being
ground solely upon the personal inconvenience or hardship that will be caused to the employee by
reason of the transfer. What then?

In Dosch v. NLRC, supra, this Court found itself unable to agree with the NLRC that the petitioner
employee was guilty of disobedience and insubordination in refusing to accept his transfer from the
Philippines to an overseas post. Said the Court:chanrobles.com:cralaw:red

". . . The only piece of evidence on which (respondent employer) Northwest bases the charge of
contumacious refusal is petitioner’s letter dated August 28, 1975 to R.C. Jenkins wherein petitioner
acknowledged receipt of the former’s memorandum dated August 18, 1975, appreciated his
promotion to Director of International Sales but at the same time regretted `that at this time for
personal reasons and reasons of my family, I am unable to accept the transfer from the Philippines’
and thereafter expressed his preference to remain in my position of Manager-Philippines until such
time that my services in that capacity are no longer required by Northwest Airlines.’ From this
evidence, We cannot discern even the slightest hint of defiance, much less imply insubordination on
the part of petitioner."cralaw virtua1aw library

Withal, it is evident that the courteous tone of the employee’s letter did not alter the actuality of his
refusal to accept the transfer decreed by his employer in the exercise of its sound business judgment
and discretion; and that the transfer of an employee to an overseas post cannot be likened to a
transfer from a city to another within the country, as in the case at bar.

In this case, the employee (Laplana) had to all intents and purposes resigned from her position. She
had unequivocally asked that she be considered dismissed, herself suggesting the reason therefor —
retrenchment. When so dismissed, she accepted separation pay. On the other hand, the employer has
not been shown to be acting otherwise than in good faith, and in the legitimate pursuit of what it
considered its best interests, in deciding to transfer her to another office. There is no showing
whatever that the employer was transferring Laplana to another work place, not because she would
be more useful there, but merely "as a subterfuge to rid . . . (itself) of an undesirable worker," or "to
penalize an employee for . . . union activities . . ." The employer was moreover not unmindful of
Laplana’s initial plea for reconsideration of the directive for her transfer to Laoag; in fact, in response
to that plea not to be moved to the Laoag Office, the employer opted instead to transfer her to
Manila, the main office, offering at the same time the normal benefits attendant upon transfers from
an office to another.

The situation here presented is of an employer transferring an employee to another office in ,the
exercise of what it took to be sound business judgment and in accordance with pre-determined and
established office policy and practice, and of the latter having what was believed to be legitimate
reasons for declining that transfer, rooted in considerations of personal convenience and difficulties
for the family. Under these circumstances, the solution proposed by the employee herself, of her
voluntary termination of her employment and the delivery to her of corresponding separation pay,
would appear to be the most equitable. Certainly, the Court cannot accept the proposition that when
an employee opposes his employer s decision to transfer him to another work place, there being no
bad faith or underhanded motives on the part of either party, it is the employee’s wishes that should
be made to prevail. In adopting that proposition by way of resolving the controversy, the respondent
NLRC gravely abused its discretion.

WHEREFORE, the writ of certiorari prayed for is GRANTED and the Resolution of August 5, 1986 of
respondent NLRC is thereby nullified and set aside, and the termination of services of private
respondent is declared legal and proper. No costs.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Endnotes:

1. Rollo, pp. 44-45. The decision was written by Labor Arbiter Ricardo Q. Encarnacion.

2. 123 SCRA 296.

3. Rollo, pp. 74-79. The resolution was promulgated by the Third Division, composed of Presiding
Commissioner Guillermo C. Medina, Commissioner Miguel B. Varela, and Commissioner Gabriel M.
Gatchalian, the first two concurring "IN THE RESULTS."cralaw virtua1aw library
 4. The rule is the same in American Law: 51A CJS, 225-226; 48 Am Jur 2d, 745-746: e.g., while it is
"the normal right of an employer to transfer employees in the course of business, the transfer of an
employee, or the change in status of an employee from permanent to temporary, traceable to
membership or non-membership in a labor union, or to activities on behalf of a bargaining agency,
constitutes discrimination within the interdiction of the statute . . ."cralaw virtua1aw library

5. Fernandez, P.V., Labor Relations Law, 1985 ed., pp. 44, 45.

6. By the First Division, Griño-Aquino, J., ponente: 171 SCRA 164.

7. By the Third Division, Fernan, C.J., ponente: 185 SCRA 727.

15. G.R. No. 77859 May 25, 1988

CENTURY TEXTILE MILLS, INC. and ALFREDO T. ESCAÑO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER FELIPE P.
PATI, and EDUARDO CALANGI, respondents.

Melanio L. Zoreta for petitioners.

The Solicitor General for public respondent.

Alfonso P. Ancheta, Jr. for private respondent.

FELICIANO, J.: ccording to Rodolfo Marin (a factory co-worker of private

respondent Calangi), at around 12:15 a.m. on 4 June 1983 and within company
premises, he chanced upon "Gatchie" Torrena (a machine operator at petitioner's
factory) and noticed the latter mixing some substance with the drinking water
contained in a pitcher from which Meliton and Santos regularly drank. Before
anyone could take a drink from the pitcher, Marin reported what he had observed
to Meliton who, in turn, informed Santos of the same. Soon after, Meliton and
Santos took possession of the pitcher of water and filed a formal report of the
incident with company management. 2 The contents of the pitcher were
subsequently brought to and analyzed by chemists at the Philippine
Constabulary Crime Laboratory at Camp Crame, Quezon City who found the
presence of a toxic chemical (formaldehyde) therein. 3
In the police investigation that followed, Torrena confessed that private
respondent Calangi personally instructed him, and he agreed, to place
formaldehyde in the pitcher of water. Torrena also admitted that he and private
respondent were then motivated by a desire to avenge themselves upon Meliton
and Santos, both of whom had instigated their (i.e., Torrena's and private
respondent's) suspension from work several times in the past. 4 These
circumstances moved petitioner Corporation preventively to suspend Torrena
and private respondent Calangi, and eventually to dismiss them from its employ.
Additionally, criminal charges for attempted murder were filed against these two
employees with the Office of the Provincial Fiscal of Rizal.

On 11 October 1983, private respondent Calangi filed a Complaint 5 for illegal

dismissal (docketed as Case No. NLRC-NCR-10-4518-83) with the Arbitration
Branch, National Capital Region, of the then Ministry of Labor and Employment.
Among other things, private respondent alleged in his complaint that "[p]rior to
his preventive suspension neither the company nor any of its officers furnished
him [with] a copy of their charges, if any, nor afforded him the opportunity to
answer the same and defend himself." Hence, private respondent claimed
entitlement to the following:

A. Moral damages

P50,000.00

Actual damages
a) Wages for 3 years

P6,520.80

b) ECOLA for 3 years

3, 841.60

c) 13th month pay for

3 years

903.60

d) Vacation and Sick

Leave of 15 days each

627.00

11,893.00

Exemplary damages

25,000.00

Attorney's fees

17,398.60
TOTAL

P104,291.60

A prayer for "such other reliefs and remedies consequent upon the premises"
was likewise set out in the complaint.

In a Decision 6 dated 16 August 1984, the Labor Arbiter dismissed private

respondent's Complaint. The Labor Arbiter found that not only was the evidence
against private respondent Calangi "so overwhelming" and "sufficient enough" to
justify his dismissal, but that private respondent had himself failed inexplicably to
deny or controvert the charges against him.

An appeal was brought by private respondent Calangi before the public

respondent National Labor Relations Commission, which agency, on 3 December
1985, rendered a Decision, 7 the dispositive portion of which reads:

WHEREFORE, with all the foregoing considerations, let the appealed decision
dated 27 August 1984 be, as it is hereby REVERSED. Accordingly, complainant's
dismissal is hereby declared to be illegal, and consequently, respondents
[petitioners] are hereby ordered to reinstate Eduardo Calangi to his former or
equivalent position without loss of seniority and other benefits, with full
backwages from 27 July 1983 until he is actually reinstated.
SO ORDERED.

Petitioner Corporations' Motion for Reconsideration was denied on 4 April 1986.

Sometime in November of 1986, the Labor Arbiter issued a writ of execution
directing petitioners to pay private respondent Calangi the amount of P54,747.74
representing the latter's backwages, 13th month pay, living allowance, and
vacation and sick leave — i.e., actual damages.

The present Petition for certiorari with Preliminary Injunction or Restraining Order
was filed with this Court on 3 April 1987. The Court issued a Temporary
Restraining Orders 8 on 8 April 1987 and, on 24 August 1987, issued a Resolution
9 giving due course to the Petition and directing the parties to submit their
respective memoranda.

The Petition at bar raises the following issues for consideration: (1) whether or
not private respondent Calangi was illegally dismissed from his job as machine
operator; and (2) assuming he was illegally dismissed, whether or not petitioner
Corporation can be ordered legally (a) to reinstate private respondent Calangi to
his former position in the company, with full backwages and without loss of
seniority rights and other benefits, considering that such relief had not been
sought by private respondent in his complaint, and (b) to pay private respondent
an amount for actual damages in excess of what had been claimed by the latter in
his Complaint.

We sustain the ruling of public respondent Commission that private respondent

Calangi had been dismissed without just cause from his employment by
petitioner Corporation.

Public respondent Commission found that private respondent Calangi was

effectively denied his right to due process in that, prior to his preventive
suspension and the termination of his services, he had not been given the
opportunity either to affirm or refute the charges proferred against him by
petitioner Corporation. Petitioners allege however that private respondent
Calangi had been previously informed of and given the chance to answer the
company's accusations against him, but that he had "kept silent" all the while.
The following Memorandum issued by petitioner's Personnel Manager on 10 June
1983 (Calangi's first day of preventive suspension) was cited in this connection:

MEMO: TO ALL CONCERNED

SUBJ.: Under Preventive Suspension Employees. Please be advised that the

following employees are under preventive suspension (indefinite) namely:

1. Eduardo Calangi--effective June 10, 1983

2. Gatchie Torrena--effective June 10, 1983

GROUND

Policy Instruction No. 10 of the New Labor Code of the Philippines, Revised
Edition 1982.

NOTE: Decision about the indebtedness suspension of concerned employees

was reached after the meeting between the union and the management.

Be guided accordingly.

MANAGEMENT

(SGD.) Jovencio G. Tolentino

Personnel Manager

Petitioners contend that the above Memorandum "clearly shows that prior
investigation and consultation with the union was made," and "will therefore
negate the theory of respondents that respondent Calangi was not afforded the
chance to present his side for the memo itself speaks otherwise."

The procedure that an employer wishing to terminate the services of an employee

must follow, is spelled out in the Labor Code:

ART. 278. Miscellaneous provisions. —

xxx xxx xxx

However, the employer shall fumish the worker whose employment is sought to
be terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to
guidelines set by the [Department] of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the worker to contest
the validity and legality of his dismissing by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that
the termination was for a valid or authorized cause shall rest on the employer.
The [Department] may suspend the effects of the termination pending resolution
of the case in the event of a prima facie finding by the Ministry that the
termination may cause a serious labor dispute or is in implementation of a mass
lay-off.

xxx xxx xxx

(Emphasis supplied)

Rule XIV, Book V of the Rules and Regulations Implementing the Labor Code
reiterates the above requirements:

xxx xxx xxx

Sec. 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall
furnish him a written notice stating the particular acts or omission constituting
the grounds for his dismissal. In case of abandomment of work, the notice shall
be served at the worker's last known address.

xxx xxx xxx

Sec. 5. Answer and hearing. — The worker may answer the allegations stated
against him in the notice of dismissal within a reasonable period from receipt of
such notice. The employer shall afford the worker ample opportunity to be heard
and to defend himself with the assistance of his representative, if he so desires.

SEC. 6. Decision to dismiss. — The employer shall immediately notify a worker in

writing of a decision to dismiss him stating clearly the reasons therefor.

xxx xxx xxx

(Emphasis supplied)

The twin requirements of notice and hearing constitute essential elements of due
process in cases of employee dismissal: the requirement of notice is intended to
inform the employee concerned of the employer's intent to dismiss and the
reason for the proposed dismissal; upon the other hand, the requirement of
hearing affords the employee an opportunity to answer his employer's charges
against him and accordingly to defend himself therefrom before dismissal is
effected. Neither of these two requirements can be dispensed with without
running afoul of the due process requirement of the 1987 Constitution.

The record of this case is bereft of any indication that a hearing or other
gathering was in fact held where private respondent Calangi was given a
reasonable opportunity to confront his accuser(s) and to defend against the
charges made by the latter. Petitioner Corporation's "prior consultation" with the
labor union with which private respondent Calangi was affiliated, was legally
insufficient. So far as the record shows, neither petitioner nor the labor union
actually advised Calangi of the matters at issue. The Memorandum of petitioner's
Personnel Manager certainly offered no helpful particulars. It is important to
stress that the rights of an employee whose services are sought to be terminated
to be informed beforehand of his proposed dismissal (or suspension) as well as
of the reasons therefor, and to be afforded an adequate opportunity to defend
himself from the charges levelled against him, are rights personal to the
employee. Those rights were not satisfied by petitioner Corporation's obtaining
the consent of or consulting with the labor union; such consultation or consent
was not a substitute for actual observance of those rights of private respondent
Calangi. The employee can waive those rights, if he so chooses, but the union
cannot waive them for him. That the private respondent simply 'kept silent" all the
while, is not adequate to show an effective waiver of his rights. Notice and
opportunity to be heard must be accorded by an employer even though the
employee does not affirmatively demand them.

Investigation of the alleged attempt to poison the drinking water of the two (2)
supervisors of the private respondent was conducted by the Cainta police
authorities. These authorities interrogated and took the sworn statements of
Messrs. Marin, Torrena, Meliton and Santos who, in one way or another, had been
involved in such incident. Petitioners argue that the decision to place private
respondent Calangi under preventive suspension and subsequently to terminate
his services was arrived at only after the incident complained of, and Mr. Calangi,
had been investigated by the company. There is, once again, nothing in the
record to show that private respondent Calangi been interrogated by the Cainta
police authorities or by anyone else; indeed, it appears that practically
everybody, save Calangi, was so interrogated by the police. If petitioner
Corporation did notify and investigate private respondent and did hold a hearing,
petitioners have succeeded in keeping such facts off the record. It needs no
documentation, but perhaps it should be stressed, that this Court can act only on
the basis of matters which have been submitted in evidence and made part of the
record.

Additionally, the Court notes that the application filed by petitioner Corporation
with the Ministry of Labor and Employment for clearance to suspend or terminate
the services of Mr. Calangi, cited as ground therefor "[Calangi's] frustrated plan
to poison Mr. Antonio Santos and Mr. Melchor Meliton last June 5, 1983." This
ground, so far as can be gathered from the allegations of petitioners in their
pleadings and from the evidence of record, both in the public respondent
Commission and in this Court, is anchored mainly, if not wholly on Mr. Torrena's
sworn statement, given to the Cainta police authorities, that both he (Torrena)
and private respondent had conspired with each other to inflict physical harm
upon the persons of Messrs. Meliton and Santos. A finding of private
respondent's participation in the alleged criminal conspiracy cannot, however, be
made to rest solely on the unilateral declaration of Mr. Torrena himself a
confirmed "co-conspirator." Such declaration must be corroborated by other
competent and convincing evidence. In. the absence of such other evidence, Mr.
Torrena's "confession" implicating Mr. Calangi must be received with
considerable caution. The very least that petitioner Corporation should have done
was to confront private respondent with Torrena's sworn statement; the record
does not show that petitioner Corporation did so. The burden of showing the
existence of a just cause for terminating the services of private respondent
Calangi lay on the petitioners. Petitioners have not discharged that burden.

It remains only to note that the criminal complaint for attempted murder against
Mr. Calangi was dismissed by the Provincial Fiscal of Rizal. 10

Coming now to the second issue raised by petitioners in their Pleadings, Article
280 of the Labor Code, as amended states:

Art. 280. -Security of Tenure. — In case of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and to his backwages
computed from the time his compensation was withheld from him up to the time
of his reinstatement. (Emphasis supplied)
We have held in the past that both reinstatement, without loss of seniority rights,
and payment of backwages are the normal consequences of a finding that an
employee has been illegaly dismissed, and which remedies together make the
dismissed employee whole. 11 A finding of illegal dismissal having been correctly
made in this case by public respondent Commission, private respondent is, as a
matter of right, entitled to receive both types of relief made available in Article 280
of the Labor Code, as amended. It matters not that private respondent Calangi
had omitted in his complaint filed in Case No. NLRC-NCR-10-4518-83 a claim for
reinstatement without loss of seniority rights for he is entitled to such relief as
the facts alleged and proved warrant. 12

In view of the finding of illegal dismissal in this case, petitioner Corporation is

liable to private respondent Calangi for payment of the latter's backwages for
three (3) years, without qualification and deduction. Considering the
circumstances of this case, however, the Court beheves that reinstatement of
private respondent to his former position—or to any other equivalent position in
the company — will not serve the best interests of the parties involved. Petitioner
Corporation should not be compelled to take back in its fold an employee who, at
least in the minds of his employers, poses a significant threat to the lives and
safety of company workers. Consequently, we hold that private respondent
should be given his separation pay in lieu of such reinstatement. The amount of
separation pay shall be equal to private respondent's one-half (1/2) month's
salary for every year of service, to be computed from 13 December 1974 (date of
first employment) until 10 June 1986 (three years after date of illegal dismissal).
13

WHEREFORE, the Petition for certiorari is DISMISSED. The Temporary

Restraining Order and the Resolutions issued on 8 April 1987 and 24 August
1987, respectively, by the Court in this case are WITHDRAWN. The Decision of
public rAshville respondent Commission in Case No. NLRC-NCR-10-4518-83 is
hereby AFFIRMED, subject the the modifications that petitioners shall pay private
respondent Calangi: (a) three (3) years backwages without qualification or
deduction, and (b) separation pay, computed as above indicated, in lieu of
reinstatement. No pronouncement as to costs.

SO ORDERED.

Fernan (Chairman), Gutierrez, Jr., Bidin and Cortes, JJ., concur.

16. THIRD DIVISION

[G.R. No. 138956. August 7, 2003]

LOADSTAR SHIPPING CO., INC. and TEODORO G. BERNARDINO, petitioners, vs.

ROMEO MESANO, respondent.

DECISION

SANDOVAL-GUTIERREZ, J.:

Employers should respect and protect the rights of their employees, which include the right to
labor.1[1] Towards this end, due process must be observed in dismissing an employee because it
affects not only his position but also his means of livelihood.2[2]

At bar is a petition for review on certiorari seeking to nullify the Decision3[3] dated March 11,
1999 and Resolution4[4] dated June 4, 1999 of the Court of Appeals which set aside the decision
dated November 11, 1996 of the National Labor Relations Commission (NLRC) and ordered
petitioner Loadstar Shipping Company, Inc. to pay private respondent Romeo Mesano his
separation pay (in lieu of reinstatement), full backwages and other monetary benefits.

The facts as borne by the records are:

Loadstar Shipping Co., Inc., petitioner, is a domestic corporation engaged in the operation of
shipping vessels, which included the M/V Beaver.

On November 4, 1980, Romeo R. Mesano, respondent, was employed by petitioner as a seaman.

Subsequently, he occupied the position of bosun/boatswin in charge of the care and custody of
the entire vessel as well as its accessories and cargo.

On January 22, 1995, respondent brought out from the vessel M/V Beaver a colored television
set and a telescope. This incident prompted petitioner company to conduct an investigation.

Malayang Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) et al. vs. Ramos,

1[1]
G.R. No. 113907, February 28, 2000, 326 SCRA 428, 462, citing Cario vs. NLRC, G.R. No.
91086, May 8, 1990, 185 SCRA 177.

2[2] Id.

3[3] Rollo at 34-42.

4[4] Id. at 44-45.

Immediately, respondent voluntarily submitted his written explanation asking for forgiveness. He
explained that he intended to have the television repaired. However, when it could not be done,
he returned the unit to the vessel.

On February 24, 1995, respondent asked from petitioner a disembarking clearance from his
accountabilities. But what petitioner handed to respondent was a disembarkation order dated
March 1, 1995 terminating his services effective February 28, 1995.

Feeling aggrieved, respondent filed with the Labor Arbiter a complaint for illegal dismissal
against petitioner and Teodoro G. Bernardino, its president and/or general manager.

On April 23, 1996, the Labor Arbiter rendered a decision dismissing respondents complaint for
lack of merit.

On appeal, the NLRC affirmed the Arbiters decision.

Consequently, on February 17, 1997, respondent filed with this Court a petition for certiorari
under Rule 65 of the 1997 Rules of Procedure, as amended. In a Resolution dated November 25,
1998, this Court referred the petition to the Court of Appeals.

In due course, the Court of Appeals issued the assailed Decision5[5] dated March 11, 1999, setting
aside the decision of the NLRC, thus:

We find the Petition replete with merits.

Section 1 of Rule XIV of the Implementation Regulations provides that no worker shall be
dismissed except for a just or authorized cause provided by law and after due process.

The two facets of this legal provision are: (a) the legality of the act of dismissal, that is dismissal
under the grounds provided for under Article 283 (now 282) of the New Labor Code; and (b)
legality in manner of dismissal (Shoemart Inc. vs. NLRC, G.R. No. 74225, August 11, 1989).

Anent the first issue, the law requires that the employer must furnish the worker sought to be
dismissed with two written notices before termination of employment can be legally effected: (1)
notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employers decision to
dismiss him. (Section 13, BP 130; Section 2, Rule XIV, Book V, Rules and Regulations of the
Labor Code, as amended). Failure to comply with the requirements taints the dismissal with
illegality. This procedure is mandatory, in the absence of which any judgment reached by
management is void and inexistent.

Penned by Justice Eloy R. Bello, Jr. and concurred in by Justices Salome A. Montoya and
5[5]
Ruben T. Reyes.
In the instant case, no written charge prior to the dismissal was ever furnished the petitioner.
Respondent Loadstar tries to answer this by reasoning that, considering that petitioner submitted
to respondent his handwritten explanation in which he categorically admitted his bringing down
of the subject television set without prior permission from the company, then no notice was
required.

We cannot accept this contention. The law is clear. The High Court has repeatedly held that the
two notice- requirement is mandatory. Moreover, the twin requirements of notice and hearing
constitute essential elements of due process in cases of employee dismissal (Century Textile
Mills, Inc., et al. vs. NLRC, G.R. No. 77859, May 25, 1988).

In the present case, there is no showing that petitioner was ever given ample opportunity to be
heard between the time after his handwritten explanation dated February 15, 1995 was submitted
and his disembarkation order dated March 1, 1995. Respondent Loadstar insists that petitioners
handwritten explanation is a categorical admission of his guilt. We are not persuaded. A cursory
reading of the said letter would show that, petitioner was merely explaining his actions, but did
not categorically admit having stolen the item. In any case, the fact remains that no hearing was
made to hear petitioners side. Respondent Loadstar virtually made an assumption on the basis of
petitioners letter alone that considering the time and the manner in which the taking was made,
then petitioner is guilty of stealing and, therefore, should be dismissed. No notice was ever given
to inform petitioner that his dismissal is being sought and by which he could be apprised on the
full consequence of his acts. And neither was a hearing conducted, in order that he be given an
opportunity to refute the accusations leveled against him. Ample opportunity is meant every kind
of assistance that management must accord to the employee to enable him to prepare adequately
for his defense (Diosdado Duffy vs. NLRC and Central Azucarera, G.R. No. 84193, February 15,
1990).

In this case, although the interregnum between the date of the notice of dismissal and the date of
effectivity ostensibly provided the petitioner time within which to defend himself, there really
was no hearing conducted, and hence no opportunity to defend himself.

In a long line of decisions, the Supreme Court has ruled that not even consultations or
conferences can be substituted for the actual observance of notice and hearing and neither is a
notice of preventive suspension and investigation in relation thereto (Pepsi Cola Bottling Co. vs.
NLRC, supra; Norman de Vera vs. NLRC and Bank of the Philippine Islands, Inc., G.R. No.
93070, August 9, 1991).

With more reason then must we condemn its virtual absence in the case at bar.

Anent the second issue, private respondent Loadstar posits that petitioners act of taking the
television without permission constitutes gross misconduct and a breach of trust of the
confidence reposed on him which justified his dismissal.

xxx xxx xxx

In the case at bar, we note that the intention of the employee to steal the item has not been fully
established considering the absence of any investigation and hearing conducted. Hence,
considering that petitioner had no derogatory record in the 15 years he was in service with
respondent Loadstar, it is therefore arbitrary to make an immediate conclusion on his guilt. More
importantly, we agree with petitioner that the penalty of dismissal was too harsh. In Gold City
Integrated Port Services, Inc. vs. NLRC, G.R. No. 86000, September 21, 1990, it was ruled that
there must be reasonable proportionality between the offense and the penalty imposed therefor.

Considering that the television, a minimal item at that, was immediately restored and that
petitioner immediately forwarded his letter of apology with explanation, and considering further
that it was his first time to commit the charge leveled against him, a penalty of suspension could
have just sufficed.

Viewing from the foregoing, the dismissal of the employee was clearly illegal.

With the finding that the petitioner was illegally dismissed, the order for reinstatement with full
backwages should follow as a matter of right. In this case, however, considering the strained
relations between the parties, the Court deemed it best to award separation pay in lieu of
reinstatement. Other monetary claims, rights and benefits, as prayed for and as granted by law
and the shipping company, should also be awarded.

xxx xxx xxx

WHEREFORE, the decision of public respondent National Labor Relations Commission is

hereby SET ASIDE. Private respondent Loadstar Shipping Co. is hereby ordered to pay
petitioner separation pay in lieu of reinstatement, as well as full backwages from the time his
compensation was withheld from him up to the finality of this decision, plus other monetary
benefits which may be due petitioner.

SO ORDERED.

On April 5, 1999, petitioner filed a motion for reconsideration but was denied.

In this petition for review on certiorari, petitioner alleged that respondent was not deprived of his
right to due process considering that he was given the opportunity to present his side through his
written explanation wherein he admitted his guilt and pleaded for forgiveness. Petitioner further
claimed that respondent failed to live up to the standard of responsibility and honesty called for
by his position. Thus, gauged by any moral standard, his dismissal is not tainted with illegality.

A rule deeply embedded in our jurisprudence is that (i)n order to constitute a valid dismissal, two
requisites must concur: (a) the dismissal must be for any of the causes expressed in Art. 282 of
the Labor Code; and (b) the employee must be accorded due process, basic of which is the
opportunity to be heard and to defend himself.6[6]

Simply put, the twin requirements of due process, substantive and procedural, must be complied
with before a dismissal can be considered valid.

In Cruz vs. NLRC,7[7] we held:

The law requires that an employee sought to be dismissed must be served two written notices
before termination of his employment. The first notice is to apprise the employee of the
particular acts or omissions by reason of which his dismissal has been decided upon; and the
second notice is to inform the employee of the employer's decision to dismiss him. Failure to
comply with the requirement of two notices makes the dismissal illegal. The procedure is
mandatory. Non-observance thereof renders the dismissal of an employee illegal and void.

The mandatory first notice is undeniably absent in the case at bar. Prior to respondent's
termination from the service, he was neither apprised of the particular acts for which his
dismissal is sought, nor was he directed to explain why he should not be dismissed for taking out
from the vessel company property.

While it is true that respondent voluntarily submitted his written explanation, nonetheless, he did
not expressly acknowledge that he committed any offense. In fact, being in charge of the
companys vessel and its accessories and cargo, his intention in taking out the TV set was to have
it repaired.

Even granting that by submitting his written explanation, he was considered to have been
notified of the charge, still there was no investigation or hearing conducted wherein he could
have presented evidence and adequately defended himself.

As gleaned from the foregoing circumstances, the Court of Appeals correctly ruled that
respondent was deprived of his right to due process and, therefore, his termination from the
service is illegal.

WHEREFORE, the petition is DENIED. The Decision dated March 11, 1999 and Resolution
dated June 4, 1999 of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.

Puno, (Chairman), Panganiban, Corona, and Carpio-Morales, JJ., concur.

Ala Mode Garments, Inc. vs. NLRC, G.R. No. 122165, February 17, 1997, 268 SCRA 497,
6[6]
505, citing Oania vs. NLRC, G.R. Nos. 97162-64, June 1, 1995, 244 SCRA 668.

7[7] G.R. No. 116384, February 7, 2000, 324 SCRA 770.

17. G.R. No. 82249 February 7, 1991

WILTSHIRE FILE CO., INC., petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T. ONG,
respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Jose R. Millares & Associates for private respondent.

FELICIANO, J.:

Wiltshire File Co. Inc. v. NLRC | Kat

February 7, 1991

WILTSHIRE FILE CO., INC., petitioner, vs.

THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T. ONG,

respondents.

FELICIANO, J.

SUMMARY: Ong, a sales manager of Wiltshire was terminated on the ground of

redundancy which was stated in a letter given to him. Claiming that nobody was
performing the same duties, he filed for illegal dismissal. While the case was
pending in the LA, the company informed the Regional Director that the company
was permanently closing due to substantial business losses. LA and NLRC ruled
in favor of Ong. The SC reversed and ruled in favor of the company. It held that
Wiltshire had serious financial difficulties that lead to closing down its
operations. 1. The letter to Ong meant that because of the financial losses,
retrenchment was necessary, which retrenchment resulted in the redundancy of
Ong’s position. 2. A position is redundant where it is superfluous. 3. The
characterization of Ong's services as no longer necessary or sustainable was an
exercise of business judgment on the part of the company. The SC also ruled that
Ong is not entitled to moral damages. A hearing on causes for termination under
LC 283 in unnecessary. The proper forum to contest such is with the DOLE.
DOCTRINE: Where, as in the instant case, the ground for dismissal or termination
of services does not relate to a blameworthy act or omission on the part of the
employee, there appears to us no need for an investigation and hearing to be
conducted by the employer who does not, to begin with, allege any malfeasance
or non-feasance on the part of the employee. There are no allegations which the
employee should refute and defend himself from

FACTS:

• Vicente T. Ong: Sales Manager of Wiltshire File Co., Inc. ("Wiltshire") from
16 March 1981 up to 18 June 1985.

o Salary P14,375/month

o Commissions P5,000/month

o Vacation leave with pay P7,187.50 /year,

o Hospitalization privileges P10,000/ year

• 13 June 1985: upon Ong's return from a business and pleasure trip abroad,
he was informed by the President of Wiltshire that his services were being
terminated.

• Ong maintains that he tried to get an explanation from management of his

dismissal but to no avail.

• 18 June 1985: Ong again tried to speak with the President but the
company's security guard handed him a letter which formally informed him that
his services were being terminated upon the ground of redundancy.

• 21 October 1985: Ong filed a complaint before the LA for illegal dismissal

• Ong: His position could not be redundant because nobody (save himself)
in the company was then performing the same duties. Retrenching him could not
prevent further losses because it was in fact through his remarkable performance
as Sales Manager that the Company had an unprecedented increase in domestic
market share the preceding year. For that accomplishment, he was promoted to
Marketing Manager and was authorized by to hire 4 Sales Executives 5 months
prior to his termination.

• Wiltshire: The termination of Ong's services was a cost-cutting measure. In

December 1984, the company had experienced an unusually low volume of
orders. It was forced to rotate its employees to save the company but continued
to experience financial losses and Ong’s position became redundant.
Redundancy as a cause for termination does not necessarily mean duplication of
work but a "situation where the services of an employee are in excess of what is
demanded by the needs of an undertaking

• 2 December 1986: During the proceedings before the LA, Whiltshire, in a

letter addressed to the Regional Director of the then Ministry of Labor and
Employment, notified that official that effective 2 January 1987, Wiltshire would
close its doors permanently due to substantial business losses.

• LA: Termination illegal; Wiltshire to pay Ong backwages and unpaid

salaries, accumulated sick and vacation leaves, hospitalization benefit package,
unpaid commission, moral damages and attorney's fees.

• NLRC affirmed LA. The supposed duplication of work that would justify
redundancy of Ong and Mr. Deliva, the Vice-President is absent. Ong was not
given any opportunity to explain his position on the matter. The termination was
attended by malice and bad faith on the part of Wiltshire, considering the manner
of private respondent was ordered by the President to pack up and remove his
personal belongings from the office. Ong was embarrassed before his immediate
family and other acquaintance due to his inability to explain the reasons behind
the termination of his services.

ISSUE: W/N there was authorized cause for termination? YES

RATIO:

• Indeed Wiltshire had serious financial difficulties before, during and after
the termination of the services of Ong.

o The financial statements of Wilshire for 1983-1984 and 1984-1985 both

showed a deficit or capital impairment of P2M and P6M and for the latter year, a
net loss of P4M

• Finally shutting down business operations constitutes strong confirmatory

evidence of Wiltshire's previous financial distress.

• The Court finds it very difficult to suppose that Wiltshire would take the
final and irrevocable step of closing down its operations in the Philippines simply
for the sole purpose of easing out a particular officer or employee.

• 1. While the letter informing Ong of the termination of his services used the
word "redundant", that letter also referred to the company having "incurred
financial losses which in fact has compelled it to resort to retrenchment to
prevent further losses". The letter was saying that because of financial losses,
retrenchment was necessary, which retrenchment in turn resulted in the
redundancy of Ong’s position.

• 2. Redundancy in an employer's personnel force does not necessarily or

even ordinarily refer to duplication of work. Redundancy, for purposes of our
Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. A position is
redundant where it is superfluous, and superfluity of a position or positions may
be the outcome of a number of factors, such as overhiring of workers, decreased
volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.

o The employer has no legal obligation to keep in its payroll more employees
than are necessary for the operation of its business.

• 3. Wiltshire, in view of the contraction of its volume of sales and in order to

cut down its operating expenses, effected some changes in its organization by
abolishing some positions and thereby effecting a reduction of its personnel.
Thus, the position of Sales Manager was abolished and the duties previously
discharged by the Sales Manager simply added to the duties of the General
Manager, to whom the Sales Manager used to report.

o It is of no legal moment that the financial troubles of the company were not
of Ong's making.

o The characterization of Ong's services as no longer necessary or

sustainable, and therefore properly terminable, was an exercise of business
judgment on the part of the company.

o The wisdom or soundness of such characterization or decision was not

subject to discretionary review on the part of the Labor Arbiter nor of the NLRC
so long as violation of law or merely arbitrary and malicious action is not shown.

o The position held by Ong, Sales Manager, was clearly managerial in

character.

o D.M. Consunji, Inc. v. NLRC: An employer has a much wider discretion in

terminating the employment relationship of managerial personnel as compared to
rank and file employees. However, such prerogative of management to dismiss or
lay off an employee must be made without abuse of discretion, for what is at
stake is not only the private respondent's position but also his means of
livelihood.

o The determination of the continuing necessity of a particular officer or

position in a business corporation is management's prerogative, and the courts
will not interfere with the exercise of such so long as no abuse of discretion or
merely arbitrary or malicious action on the part of management is shown.

ISSUE: W/N Ong is entitled to moral damages? NO

RATIO:

• Wiltshire: The dismissal was not done in bad faith. It had complied with the
one-month notice required by law; that there was no need for Ong to be heard in
his own defense considering that the termination of his services was for a
statutory or authorized cause; and that whatever humiliation might have been
suffered by private respondent arose from a lawful cause and hence could not be
the basis of an award of moral damages.

• Termination of an employee's services because of retrenchment to prevent

further losses or redundancy, is governed by Article 283 of the LC

• Termination of services for any of the causes described under Article 283
should be distinguished from termination of employment by reason of some
blameworthy act or omission on the part of the employee, in which case the
applicable provision is Article 282 of the LC

• Section 2 of Rule XIV requires the notice to specify "the particular acts or
omissions constituting the ground for his dismissal", a requirement which is
obviously applicable where the ground for dismissal is the commission of some
act or omission falling within Article 282 of the Labor Code.

• Section 5 gives the employee the right to answer and to defend himself
against "the allegations stated against him in the notice of dismissal". It is such
allegations by the employer and any counter-allegations that the employee may
wish to make that need to be heard before dismissal is effected. Thus, Section 5
may be seen to envisage charges against an employee constituting one or more
of the just causes for dismissal listed in Article 282 of the Labor Code.

• Where, as in the instant case, the ground for dismissal or termination of

services does not relate to a blameworthy act or omission on the part of the
employee, there appears to us no need for an investigation and hearing to be
conducted by the employer who does not, to begin with, allege any malfeasance
or non-feasance on the part of the employee. There are no allegations which the
employee should refute and defend himself from.

• This is not to say that the employee may not contest the reality or good
faith character of the retrenchment or redundancy asserted as grounds for
termination of services. The appropriate forum for such controversion would,
however, be the DOLE and not an investigation or hearing to be held by the
employer itself.
o It is precisely for this reason that an employer seeking to terminate
services of an employee or employees because of "closure of establishment and
reduction of personnel", is legally required to give a written notice not only to the
employee but also to the DOLE at least one month before effectivity date of the
termination.

o Ong did controvert before the appropriate labor authorities the grounds for
termination of services set out in the company’s 's letter to him

• Moral damages are simply a species of damages awarded to compensate

one for injuries brought about by a wrongful act.

• There is in this case no clear and convincing evidence of record showing

that the termination of Ong’s services, while due to an authorized or statutory
cause, had been carried out in an arbitrary, capricious and malicious manner,
with evident personal ill-will. Embarrassment, even humiliation, that is not
proximately caused by a wrongful act does not constitute a basis for an award of
moral damages.

• Ong is entitled to separation pay and other benefits under Act 283 of the
Labor Code and Wiltshire's letter dated 17 June 1985.

18. G.R. No. 80609 August 23, 1988

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY,
respondents.

Nicanor G. Nuevas for petitioner.

CRUZ, J.:

Marilyn Abucay has been an employee of the Philippine Long Distance Telephone
Company (PLDT) for ten years when it was discovered that she accepted “bribes” from certain
customers in order to facilitate the phone connections of said customers. PLDT terminated her
employment. A labor case was filed by Abucay. The National Labor Relations Commission
(NLRC) found the dismissal to be valid but nevertheless, the NLRC ordered PLDT to pay
Abucay separation pay equivalent to one month pay for every year of service.

PLDT assailed the said decision. PLDT averred that separation pay is only available in cases
where the employee has been illegally dismissed and reinstatement is no longer possible. PLDT
further argued that to award Abucay separation pay is tantamount to rewarding her misdeeds.
The Solicitor General, arguing for the NLRC, cited numerous previous cases where separation
pay has been awarded by the Supreme Court even if the employee’s dismissal were due to just
and authorized causes.

ISSUE: Whether or not Abucay is entitled to separation pay.

HELD: No. In this case, the Supreme Court finally set the rules as to when separation pay is
proper in cases where the employee is dismissed for valid reasons.

As a rule, and under the Labor Code, a person dismissed for just and authorized causes is not
entitled to separation pay. However, based on equity, an exception can be made if the employee
is dismissed for causes other than serious misconduct or those reflecting on his moral
character. Where the reason for the valid dismissal is, for example, habitual intoxication or an
offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice.

In the case at bar, the reason for Abucay’s dismissal is due to her acceptance of a “bribe” which
is dishonesty and is immoral. The fact that she has worked with the PLDT for more than a
decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack
of loyalty that she should have strengthened instead of betraying during all of her 10 years of
service with the company. The court also made a pronouncement:

Compassion for the poor is an imperative of every humane society but only when the recipient is
not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the punishment of the guilty. Those
who invoke social justice may do so only if their hands are clean and their motives blameless and
not simply because they happen to be poor.

19. ENNY M. AGABON and G.R. No. 158693

VIRGILIO C. AGABON,

Petitioners, Present:

Davide, Jr., C.J.,

Puno,

Panganiban,

Quisumbing,

Ynares-Santiago,

Sandoval-Gutierrez,

- versus - Carpio,

Austria-Martinez,

Corona,

Carpio-Morales,

Callejo, Sr.,

Azcuna,
Tinga,

Chico-Nazario, and

Garcia, JJ.

NATIONAL LABOR RELATIONS

COMMISSION (NLRC), RIVIERA

HOME IMPROVEMENTS, INC. Promulgated:

and VICENTE ANGELES,

Respondents. November 17, 2004

x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SAN acts:

Private respondent Riviera Home Improvements, Inc. is engaged in the business

of selling and installing ornamental and construction materials. It employed
petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992[2] until February 23, 1999 when they were dismissed
for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money
claims[3] and on December 28, 1999, the Labor Arbiter rendered a decision
declaring the dismissals illegal and ordered private respondent to pay the
monetary claims.

On appeal, the NLRC reversed the Labor Arbiter because it found that the
petitioners had abandoned their work, and were not entitled to backwages and
separation pay.

Upon denial of their motion for reconsideration, petitioners filed a petition for
certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not
illegal because they had abandoned their employment but ordered the payment of
money claims.

Petitioners also claim that private respondent did not comply with the twin
requirements of notice and hearing.
Private respondent, on the other hand, maintained that petitioners were not
dismissed but had abandoned their work.

Issues:

whether petitioners were illegally dismissed.

Ruling:

To dismiss an employee, the law requires not only the existence of a just and
valid cause but also enjoins the employer to give the employee the opportunity to
be heard and to defend himself.

Abandonment is the deliberate and unjustified refusal of an employee to resume

his employment.[14] It is a form of neglect of duty, hence, a just cause for
termination of employment by the employer.[15] For a valid finding... of
abandonment, these two factors should be present: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to
sever employer-employee relationship, with the second as the more
determinative factor which is manifested by... overt acts from which it may be
deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.

an employee who deliberately absented from work without leave or permission

from his employer, for the purpose of looking for a job elsewhere, is considered
to have abandoned his job.

The dismissal should be upheld because it was established that the petitioners
abandoned their jobs to work for another company. Private respondent, however,
did not follow the notice requirements and instead... argued that sending notices
to the last known addresses would have been useless because they did not
reside there anymore. Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice requirements to the employee's
last... known address.[21] Thus, it should be held liable for non-compliance with
the procedural requirements of due process.

that in cases involving dismissals for cause but without observance of the twin
requirements of notice and hearing, the better rule is to abandon the

Serrano doctrine and to follow Wenphil by holding that the dismissal was for just
cause but imposing sanctions on the employer. Such sanctions, however, must
be stiffer than that imposed in Wenphil.

Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights

Under the Civil Code, nominal damages is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.

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

Considering the prevailing circumstances in the case at bar, we deem it proper to

fix it at P30,000.00.

Riviera Home Improvements, Inc. is further ORDERED to pay each of the

petitioners the amount of P30,000.00 as nominal damages for non-compliance
with statutory due process.
Principles:

Labor Law

Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights

Political Law... we affirmed the presumption that all constitutional provisions are
self-executing.

to declare otherwise would result in the pernicious situation wherein by mere

inaction and... disregard by the legislature, constitutional mandates would be
rendered ineffectual.

In self-executing constitutional provisions, the legislature may still enact

legislation to facilitate the exercise of powers directly granted by the constitution,
further the operation of such a provision, prescribe a practice to be used for its
enforcement, provide... a convenient remedy for the protection of the rights
secured or the determination thereof, or place reasonable safeguards around the
exercise of the right. The mere fact that legislation may supplement and add to or
prescribe a penalty for the violation of a self-executing... constitutional provision
does not render such a provision ineffective in the absence of such legislation.
The omission from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was not
intended to be... self-executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on the subject, but
any legislation must be in harmony with the constitution, further the exercise of
constitutional right and make it more available.
Subsequent legislation however does not necessarily mean that the subject
constitutional provision is not, by itself, fully enforceable.

Thus, the constitutional mandates of protection to labor and security of tenure

may be deemed as self-executing in the sense that these are automatically
acknowledged and observed without need for any enabling legislation. However,
to declare that the constitutional provisions... are enough to guarantee the full
exercise of the rights embodied therein, and the realization of ideals therein
expressed, would be impractical, if not unrealistic. The espousal of such view
presents the dangerous tendency of being overbroad and exaggerated. The
guarantees... of "full protection to labor" and "security of tenure", when examined
in isolation, are facially unqualified, and the broadest interpretation possible
suggests a blanket shield in favor of labor against any form of removal regardless
of circumstance. This interpretation... implies an unimpeachable right to
continued employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to define the
parameters of these guaranteed rights to ensure the protection and promotion,
not... only the rights of the labor sector, but of the employers' as well. Without
specific and pertinent legislation, judicial bodies will be at a loss, formulating
their own conclusion to approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a

positive enforceable right to stave off the dismissal of an employee for just cause
owing to the failure to serve proper notice or hearing. As manifested by several
framers of the 1987

Constitution, the provisions on social justice require legislative enactments for

their enforceability.TIAGO, J.:

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

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT,

ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO
and JONATHAN CAGABCAB, respondents.

DECISION
GARCIA, J.:

FACTS:

Respondents were hired by JAKA until their termination on August 29, 1997
because the Corporation was “in dire financial straits”. It was not disputed that
they were terminated without complying with the requirement under Art. 283 of
the Labor Code regarding the service of notice upon the employees and DOLE at
least one month before the intended date of termination.

ISSUE:

Whether or not full backwages and separation pay be awarded to respondents

when employers effected termination without complying with the twin notice rule.

RULING:

The dismissal of the respondents was for an authorized cause under Article 283.
A dismissal for authorized cause does not necessarily imply delinquency or
culpability on the part of the employee. Instead, the dismissal process is initiated
by the employer’s exercise of his management prerogative, i.e. when the
employer opts to install labor-saving devices, when he decides to cease business
operations or when… he undertakes to implement a retrenchment program.

Accordingly, it is wise to hold that:

1) if the dismissal is based on a just cause but the employer failed to comply with
the notice requirement, the sanction to be imposed upon him should be tempered
because the dismissal was initiate by an act imputable to the employee.
2) if the dismissal is based on an authorized cause but the employer fails to
comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer’s exercise of his management
prerogative. Thus, dismissal was upheld but ordered JAKA to pay each of the
respondents the amount of PhP 50,000.00 representing nominal damages for non-
compliance with statutory due process.