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Republic of the Philippines and convenience of the public.

and convenience of the public. In enacting said law, therefore, the National Assembly was prompted
SUPREME COURT by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion
Manila of traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom
of the enactment of said law, and the state in order to promote the general welfare may interfere with
FIRST DIVISION personal liberty, with property, and with business and occupations. Persons and property may be
subjected to all kinds of restraints and burdens, in order to secure the general comfort, health, and
[G.R. No. 47800. December 2, 1940.] prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our
Government the rights of the individual are subordinated. Liberty is a blessing without which life is a
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents. misery, but liberty should not be made to prevail over authority because then society will fall into
anarchy. Neither should authority be made to prevail over liberty because then the individual will fall
Maximo Calalang in his own behalf. into slavery. The citizen should achieve the required balance of liberty and authority in his mind
through education and, personal discipline, so that there may be established the resultant equilibrium,
Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents Williams, which means peace and order and happiness for all. The moment greater authority is conferred upon
Fragante and Bayan the government, logically so much is withdrawn from the residuum of liberty which resides in the
people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means
City Fiscal Mabanag for the other respondents. of insuring its preservation.

SYLLABUS 3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor atomism,
nor anarchy," but the humanization of laws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least be approximated.
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648;
DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS Social justice means the promotion of the welfare of all the people, the adoption by the Government of
AND SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE measures calculated to insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the members of the
RULES AND REGULATIONS. — The provisions of section 1 of Commonwealth Act No. 648 do not
confer legislative power upon the Director of Public Works and the Secretary of Public Works and community, constitutionally, through the adoption of measures legally justifiable, or extra-
Communications. The authority therein conferred upon them and under which they promulgated the constitutionally, through the exercise of powers underlying the existence of all governments on the
time-honored principle of salus populi est suprema lex. Social justice, therefore, must be founded on
rules and regulations now complained of is not to determine what public policy demands but merely to
carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote the recognition of the necessity of interdependence among divers and diverse units of a society and of
safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts of the protection that should be equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and paramount objective of the state of
the National Assembly or by executive orders of the President of the Philippines" and to close them
temporarily to any or all classes of traffic "whenever the condition of the road or the traffic thereon promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the
makes such action necessary or advisable in the public convenience and interest." The delegated greatest number."
power, if at all, therefore, is not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the application of said law is to be predicated.
To promulgate rules and regulations on the use of national roads and to determine when and how long DECISION
a national road should be closed to traffic, in view of the condition of the road or the traffic thereon and
the requirements of public convenience and interest, is an administrative function which cannot be
directly discharged by the National Assembly. It must depend on the discretion of some other LAUREL, J.:
government official to whom is confided the duty of determining whether the proper occasion exists
for executing the law. But it cannot be said that the exercise of such discretion is the making of the
law. Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this
court this petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. — National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting
Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the paramount Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila;
police power of the state. Said Act, by virtue of which the rules and regulations complained of were and Juan Dominguez, as Acting Chief of Police of Manila.
promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest
It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940,
1
resolved to recommend to the Director of Public Works and to the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations to regulate and control the use
Communications that animal-drawn vehicles be prohibited from passing along Rosario Street of and traffic on such roads and streets. Such rules and regulations, with the approval of the President,
extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and may contain provisions controlling or regulating the construction of buildings or other structures
from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo within a reasonable distance from along the national roads. Such roads may be temporarily closed to
Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the opening any or all classes of traffic by the Director of Public Works and his duly authorized representatives
of the Colgante Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, whenever the condition of the road or the traffic thereon makes such action necessary or advisable in
1940 recommended to the Director of Public Works the adoption of the measure proposed in the the public convenience and interest, or for a specified period, with the approval of the Secretary of
resolution aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which Public Works and Communications."cralaw virtua1aw library
authorizes said Director of Public Works, with the approval of the Secretary of Public Works and
Communications, to promulgate rules and regulations to regulate and control the use of and traffic on The above provisions of law do not confer legislative power upon the Director of Public Works and the
national roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the Secretary of Public Works and Communications. The authority therein conferred upon them and under
Secretary of Public Works and Communications, recommended to the latter the approval of the which they promulgated the rules and regulations now complained of is not to determine what public
recommendation made by the Chairman of the National Traffic Commission as aforesaid, with the policy demands but merely to carry out the legislative policy laid down by the National Assembly in
modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the said Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and streets designated
portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on as national roads by acts of the National Assembly or by executive orders of the President of the
August 10, 1940, the Secretary of Public Works and Communications, in his second indorsement Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of
addressed to the Director of Public Works, approved the recommendation of the latter that Rosario the road or the traffic makes such action necessary or advisable in the public convenience and interest."
Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely
the hours as above indicated, for a period of one year from the date of the opening of the Colgante the ascertainment of the facts and circumstances upon which the application of said law is to be
Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and predicated. To promulgate rules and regulations on the use of national roads and to determine when
caused to be enforced the rules and regulations thus adopted; that as a consequence of such and how long a national road should be closed to traffic, in view of the condition of the road or the
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places traffic thereon and the requirements of public convenience and interest, is an administrative function
above-mentioned to the detriment not only of their owners but of the riding public as well. which cannot be directly discharged by the National Assembly. It must depend on the discretion of
some other government official to whom is confided the duty of determining whether the proper
It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the
Works, with the approval of the Secretary of Public Works and Communications, is authorized to making of the law. As was said in Locke’s Appeal (72 Pa. 491): "To assert that a law is less than a law,
promulgate rules and regulations for the regulation and control of the use of and traffic on national because it is made to depend on a future event or act, is to rob the Legislature of the power to act
roads and streets is unconstitutional because it constitutes an undue delegation of legislative power. wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed,
This contention is untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro or to things future and impossible to fully know." The proper distinction the court said was this: "The
(39 Phil, 660, 700), "The rule has nowhere been better stated than in the early Ohio case decided by Legislature cannot delegate its power to make the law; but it can make a law to delegate a power to
Judge Ranney, and since followed in a multitude of cases, namely: ’The true distinction therefore is determine some fact or state of things upon which the law makes, or intends to make, its own action
between the delegation of power to make the law, which necessarily involves a discretion as to what it depend. To deny this would be to stop the wheels of government. There are many things upon which
shall be, and conferring an authority or discretion as to its execution, to be exercised under and in wise and useful legislation must depend which cannot be known to the law-making power, and, must,
pursuance of the law. The first cannot be done; to the latter no valid objection can be made.’ therefore, be a subject of inquiry and determination outside of the halls of legislation." (Field v. Clark,
(Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief 143 U. S. 649, 694; 36 L. Ed. 294.)
Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the Legislature to an
executive department or official. The Legislature may make decisions of executive departments or In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June 12,
subordinate officials thereof, to whom it has committed the execution of certain acts, final on questions 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065,
of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence promulgated June 26, 1940, this Court had occasion to observe that the principle of separation of
to the ’necessity’ of the case."cralaw virtua1aw library powers has been made to adapt itself to the complexities of modern governments, giving rise to the
adoption, within certain limits, of the principle of "subordinate legislation," not only in the United
Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph States and England but in practically all modern governments. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of governmental regulations, and the
"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as increased difficulty of administering the laws, the rigidity of the theory of separation of governmental
national roads by acts of the National Assembly or by executive orders of the President of the powers has, to a large extent, been relaxed by permitting the delegation of greater powers by the
Philippines, the Director of Public Works, with the approval of the Secretary of Public Works and legislative and vesting a larger amount of discretion in administrative and executive officials, not only
2
in the execution of the laws, but also in the promulgation of certain rules and regulations calculated to Government of measures calculated to insure economic stability of all the competent elements of
promote public interest. society, through the maintenance of a proper economic and social equilibrium in the interrelations of
the members of the community, constitutionally, through the adoption of measures legally justifiable,
The petitioner further contends that the rules and regulations promulgated by the respondents pursuant or extra-constitutionally, through the exercise of powers underlying the existence of all governments
to the provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate on the time-honored principle of salus populi est suprema lex.
business or trade and abridge the right to personal liberty and freedom of locomotion. Commonwealth
Act No. 548 was passed by the National Assembly in the exercise of the paramount police power of Social justice, therefore, must be founded on the recognition of the necessity of interdependence
the state. among divers and diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the
Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all
promote safe transit upon and avoid obstructions on national roads, in the interest and convenience of persons, and of bringing about "the greatest good to the greatest number."cralaw virtua1aw library
the public. In enacting said law, therefore, the National Assembly was prompted by considerations of
public convenience and welfare. It was inspired by a desire to relieve congestion of traffic. which is, to In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the
say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said petitioner. So ordered.
law, and the state in order to promote the general welfare may interfere with personal liberty, with
property, and with business and occupations. Persons and property may be subjected to all kinds of Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
restraints and burdens, in order to secure the general comfort, health, and prosperity of the state (U.S.
v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the individual
are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to
prevail over authority because then society will fall into anarchy. Neither should authority be made to
prevail over liberty because then the individual will fall into slavery. The citizen should achieve the
required balance of liberty and authority in his mind through education and personal discipline, so that
there may be established the resultant equilibrium, which means peace and order and happiness for all.
The moment greater authority is conferred upon the government, logically so much is withdrawn from
the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of
Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a
continuing one, and a business lawful today may in the future, because of the changed situation, the
growth of population or other causes, become a menace to the public health and welfare, and be
required to yield to the public good." And in People v. Pomar (46 Phil., 440), it was observed that
"advancing civilization is bringing within the police power of the state today things which were not
thought of as being within such power yesterday. The development of civilization, the rapidly
increasing population, the growth of public opinion, with an increasing desire on the part of the masses
and of the government to look after and care for the interests of the individuals of the state, have
brought within the police power many questions for regulation which formerly were not so
considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being and economic
security of all the people. The promotion of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is "neither communism, nor despotism, nor
atomism, nor anarchy," but the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption by the
3
Republic of the Philippines employees dismissed under the Code be reinstated and their cases subjected to further hearing; and that
SUPREME COURT PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14, Record.)
Manila
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe rules
THIRD DIVISION and regulations regarding employess' conduct in carrying out their duties and functions, and alleging
that by implementing the Code, it had not violated the collective bargaining agreement (CBA) or any
provision of the Labor Code. Assailing the complaint as unsupported by evidence, PAL maintained
that Article 253 of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA
which was inapplicable as indeed the current CBA had been negotiated.
G.R. No. 85985 August 13, 1993

PHILIPPINE AIRLINES, INC. (PAL), petitioner, In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was
vs. violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I of
Chapter II of the Code as defective for, respectively, running counter to the construction of penal laws
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P.
and making punishable any offense within PAL's contemplation. These provisions are the following:
ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA),
respondents.
Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and
regulations of the company. Every employee is bound to comply with all applicable
Solon Garcia for petitioner.
rules, regulations, policies, procedures and standards, including standards of quality,
productivity and behaviour, as issued and promulgated by the company through its
Adolpho M. Guerzon for respondent PALEA. duly authorized officials. Any violations thereof shall be punishable with a penalty to
be determined by the gravity and/or frequency of the offense.

Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative.


MELO, J.: The penalty for an offense shall be determined on the basis of his past record of
offenses of any nature or the absence thereof. The more habitual an offender has
In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation been, the greater shall be the penalty for the latest offense. Thus, an employee may
of a Code of Discipline among employees is a shared responsibility of the employer and the be dismissed if the number of his past offenses warrants such penalty in the
employees. judgment of management even if each offense considered separately may not warrant
dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand,
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of due regard shall be given to the length of time between commission of individual
Discipline. The Code was circulated among the employees and was immediately implemented, and offenses to determine whether the employee's conduct may indicate occasional
some employees were forthwith subjected to the disciplinary measures embodied therein. lapses (which may nevertheless require sterner disciplinary action) or a pattern of
incorrigibility.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint
before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7- Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to
2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present
Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a
position paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that no
of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor unfair labor practice had been committed. However, the arbiter held that PAL was "not totally fault
Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being penal free" considering that while the issuance of rules and regulations governing the conduct of employees
in nature the Code must conform with the requirements of sufficient publication, and that the Code was is a "legitimate management prerogative" such rules and regulations must meet the test of
arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all
the Code be held in abeyance; that PAL should discuss the substance of the Code with PALEA; that embracing and all encompassing provision that makes punishable any offense one can think of in the
company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule against

4
double jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp. 38-39, The complainant union in this case has the right to feel isolated in the adoption of the
Rollo.) New Code of Discipline. The Code of Discipline involves security of tenure and loss
of employment — a property right! It is time that management realizes that to attain
The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." effectiveness in its conduct rules, there should be candidness and openness by
Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported by Management and participation by the union, representing its members. In fact, our
documentary evidence, she stated that such "failure" on the part of PAL resulted in the imposition of Constitution has recognized the principle of "shared responsibility" between
penalties on employees who thought all the while that the 1966 Code was still being followed. Thus, employers and workers and has likewise recognized the right of workers to
the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds participate in "policy and decision-making process affecting their rights . . ." The
application only after it has been conclusively shown that the law was circulated to all the parties latter provision was interpreted by the Constitutional Commissioners to mean
concerned and efforts to disseminate information regarding the new law have been exerted. (p. 39, participation in "management"' (Record of the Constitutional Commission, Vol. II).
Rollo.) She thereupon disposed:
In a sense, participation by the union in the adoption of the code if conduct could
WHEREFORE, premises considered, respondent PAL is hereby ordered as follows: have accelerated and enhanced their feelings of belonging and would have resulted
in cooperation rather than resistance to the Code. In fact, labor-management
1. Furnish all employees with the new Code of Discipline; cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original
Record.)
2. Reconsider the cases of employees meted with penalties under the New Code of
Respondent Commission thereupon disposed:
Discipline and remand the same for further hearing; and

WHEREFORE, premises considered, we modify the appealed decision in the sense


3. Discuss with PALEA the objectionable provisions specifically tackled in the body
of the decision. that the New Code of Discipline should be reviewed and discussed with complainant
union, particularly the disputed provisions [.] (T)hereafter, respondent is directed to
furnish each employee with a copy of the appealed Code of Discipline. The pending
All other claims of the complainant union (is) [are] hereby, dismissed for lack of cases adverted to in the appealed decision if still in the arbitral level, should be
merit. reconsidered by the respondent Philippine Air Lines. Other dispositions of the Labor
Arbiter are sustained.
SO ORDERED. (p. 40, Rollo.)
SO ORDERED. (p. 5, NLRC Decision.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with
Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of PAL then filed the instant petition for certiorari charging public respondents with grave abuse of
unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge. Nonetheless, discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of
the NLRC made the following observations: Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with
the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsider
Indeed, failure of management to discuss the provisions of a contemplated code of pending cases still in the arbitral level (p. 7, Petition; p. 8, Rollo.)
discipline which shall govern the conduct of its employees would result in the
erosion and deterioration of an otherwise harmonious and smooth relationship As stated above, the Principal issue submitted for resolution in the instant petition is whether
between them as did happen in the instant case. There is no dispute that adoption of management may be compelled to share with the union or its employees its prerogative of formulating
rules of conduct or discipline is a prerogative of management and is imperative and a code of discipline.
essential if an industry, has to survive in a competitive world. But labor climate has
progressed, too. In the Philippine scene, at no time in our contemporary history is the
PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the
need for a cooperative, supportive and smooth relationship between labor and
management more keenly felt if we are to survive economically. Management can no sharing of responsibility therefor between employer and employee.
longer exclude labor in the deliberation and adoption of rules and regulations that
will affect them. Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article
211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the participation
5
of workers in decision and policy-making processes affecting the rights, duties and welfare." However, The Association recognizes the right of the Company to determine matters of
even in the absence of said clear provision of law, the exercise of management prerogatives was never management it policy and Company operations and to direct its manpower.
considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held that management's Management of the Company includes the right to organize, plan, direct and control
prerogatives must be without abuse of discretion. operations, to hire, assign employees to work, transfer employees from one
department, to another, to promote, demote, discipline, suspend or discharge
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the employees for just cause; to lay-off employees for valid and legal causes, to
company's right to implement a new system of distributing its products, but gave the following caveat: introduce new or improved methods or facilities or to change existing methods or
facilities and the right to make and enforce Company rules and regulations to carry
out the functions of management.
So long as a company's management prerogatives are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid The exercise by management of its prerogative shall be done in a just reasonable,
agreements, this Court will uphold them. humane and/or lawful manner.
(at p. 28.)
Such provision in the collective bargaining agreement may not be interpreted as cession of employees'
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is rights to participate in the deliberation of matters which may affect their rights and the formulation of
circumscribed by limitations found in law, a collective bargaining agreement, or the general principles policies relative thereto. And one such mater is the formulation of a code of discipline.
of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as
enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be duly established that Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the
the prerogative being invoked is clearly a managerial one. discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442)
was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) To promote
A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business- the enlightenment of workers concerning their rights and obligations . . . as employees." This was, of
oriented nor do they concern the management aspect of the business of the company as in the San course, amplified by Republic Act No 6715 when it decreed the "participation of workers in decision
Miguel case. The provisions of the Code clearly have repercusions on the employee's right to security and policy making processes affecting their rights, duties and welfare." PAL's position that it cannot be
of tenure. The implementation of the provisions may result in the deprivation of an employee's means saddled with the "obligation" of sharing management prerogatives as during the formulation of the
of livelihood which, as correctly pointed out by the NLRC, is a property right (Callanta, vs Carnation Code, Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p.
Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case which border on 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was
infringement of constitutional rights, we must uphold the constitutional requirements for the protection formulated, the attainment of a harmonious labor-management relationship and the then already
of labor and the promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt existing state policy of enlightening workers concerning their rights as employees demand no less than
"the scales of justice when there is doubt, in favor of the worker" (Employees Association of the the observance of transparency in managerial moves affecting employees' rights.
Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).
Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the
Verily, a line must be drawn between management prerogatives regarding business operations per se nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business
and those which affect the rights of the employees. In treating the latter, management should see to it demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever
that its employees are at least properly informed of its decisions or modes action. PAL asserts that all disciplinary measures are adopted cannot be properly implemented in the absence of full cooperation
its employees have been furnished copies of the Code. Public respondents found to the contrary, which of the employees. Such cooperation cannot be attained if the employees are restive on account, of their
finding, to say the least is entitled to great respect. being left out in the determination of cardinal and fundamental matters affecting their employment.

PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special
PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules and pronouncement is made as to costs.
regulations to carry out the functions of management without having to discuss the same with PALEA
and much less, obtain the latter's conformity thereto" (pp. 11-12, Petitioner's Memorandum; pp 180- SO ORDERED. Feliciano, Bidin, Romero and Vitug, JJ., concur.
181, Rollo.) Petitioner's view is based on the following provision of the agreement:

6
Republic of the Philippines For your strict compliance."
SUPREME COURT
Baguio City In answer to the aforesaid memo, complainant explained:

THIRD DIVISION "Sa dahilan po na ako ay hindi nakapagpaalam sainyo (sic) dahil
inuwi ko ang mga anak ko sa Samar dahil ang asawa ko ay
lumayas at walang mag-aalaga sa mga anak ko. Kaya naman hindi
ako naka long distance or telegrama dahil wala akong pera at
G.R. No. 119243 April 17, 1997 ibinili ko ng gamot ay puro utang pa.

BREW MASTER INTERNATIONAL INC., petitioner, Finding said explanation unsatisfactory, on 16 June 1993, respondent thru its Sales
vs. Manager, Mr. Henry A. Chongco issued a Notice of Termination which reads:
NATIONAL FEDERATION OF LABOR UNIONS (NAFLU), ANTONIO D. ESTRADA and
HONORABLE NATIONAL LABOR RELATIONS COMMISSION, (Third Division), "We received your letter of explanation dated May 21, 1993 but
respondents. we regret to inform you that we do not consider it valid. You are
aware of the company Rules and Regulations that absence without
permission for six (6) consecutive working days is considered
abandonment of work.
DAVIDE, JR., J.:
In view of the foregoing, the company has decided to terminate
your employment effective June 17, 1993 for abandonment of
This is a special civil action for certiorari seeking the reversal of the 7 October 1994 decision1 of the
National Labor Relations Commission (NLRC) in NLRC Case No. 00-06-04136-93 (CA No. L- work.
007370-94), which modified the 11 July 1994 decision2 of the Labor Arbiter by directing there
instatement of private respondent Antonio D. Estrada, the complainant, without loss of seniority rights Hence, this complaint.
and benefits.
Complainants contend that individual complainant's dismissal was done without just
Private respondent National Federation of Labor Unions (NAFLU), a co-complainant in the labor case, cause; that if was not sufficiently established that individual complainant's absence
is a labor union of which complainant is a member. from April 19, 1993 to June 16, 1993 are unjustified; that the penalty of dismissal for
such violation is too severe; that in imposing such. penalty, respondent should have
The factual and procedural antecedents are summarized in the decision of the Labor Arbiter which we taken into consideration complainant's length of service and as a first offender, a
penalty less punitive will suffice such as suspension for a define period, (Position
quote verbatim:
Paper, complainants).
Complainant was first employed by respondent on 16 September 1991 as route
helper with the latest daily wage of P119.00. From 19 April 1993 up to 19 May Upon the other hand, respondent contends that individual complainant was dismissed
1993, for a period of one (1) month, complainant went on absent without permission for cause allowed by the company Rules and Regulations and the Labor Code; that
the act of complainant in absenting from work for one (1) month without official
(AWOP). On 20 May 1993, respondent thru Mr. Rodolfo Valentin, sent a Memo to
complainant, to wit: leave is deleterious to the business of respondent; that it will result to stoppage of
production which will not only destructive to respondent's interests but also to the
interest of its employees in general; that the dissmisal of complainant from the
"Please explain in writing within 24 hours of your receipt of this service is legal, (Position Paper, respondent).3
memo why no disciplinary action should be taken against you for
the following offense:
The Labor. Arbiter dismissed the complaint for lack of merit, citing the principle of managerial
control, which recognizes the employer's prerogative to prescribe reasonable rules and regulations to
You were absent since April 19, 1993 up to May 19, 1993. govern the conduct of his employees. The principle allows the imposition of disciplinary measures
7
which are necessary for the efficiency of both the employer and the employees. In complainant's case, complainant-appellant was not dismissed for unauthorized absences and eventually
he persisted in not reporting for work until 16 June 1993 notwithstanding his receipt of the reinstated anterior to his second dismissal for the same offense nor was he given a
memorandum requiring him to explain his absence without approval. The Labor Arbiter, relying on second chance which he could have ignored.
Sheomart, Inc. vs. NLRC,4 thus concluded:
Otherwise stated, the difference between the two cases greatly lies [in] the fact that
Verily, it is crystal clear that individual complainant has indeed abandoned his work. complainant in the Shoemart Case in the language of the Supreme Court was "an
The filing of the complaint on 25 June 1993 or almost two (2) months from the date inveterate absentee who does not deserve reinstatement" compared to herein
complainant failed to report for work affirms the findings of this Office and complainant-appellant who is a first offender9
therefore, under the law and jurisprudence which upholds the right of an employer to
discharge an employee who incurs frequent, prolonged and unexplained absences as The NLRC then decreed as follows:
being grossly remiss in his duties to the employer and is therefore, dismissed for
cause, (Shoemart, Inc. vs. NLRC, 176 SCRA 385). An employee is deemed to have PREMISES CONSIDERED, and [sic] the Decision of the Labor Arbiter, dated 11
abandoned his position or to have resigned from the same, whenever he has been
July 1994 is hereby MODIFIED, by directing the reinstatement of complainant-
absent therefrom without previous permission of the employer for three consecutive
appellant to his former position without loss of seniority rights and other benefits,
days or more. This justification is the obvious harm to employer's interest, resulting but without backwages. The other findings in tile appealed decision stand
from [sic] the non-availability of the worker's services, (Supra). (Emphasis
AFFIRMED. 10
supplied)5
Petitioner's motion for the reconsideration 11 was denied by the NLRC in its 7 December 1994
and ruled that complainant's termination from his employment was "legal, the same with just resolution.12 Petitioner thus filed this special civil action contending that the NLRC committed grave
or authorized cause and due process."6 abuse of discretion in ordering complainant's reinstatement, which in effect countenances the
reinstatement of an employee who is found guilty of "excessive" absences without pior approval. It
Complainant appealed to the NLRC, alleging that the immediate filing of a complaint for illegal further argued that the NLRC failed to consider the rationale behind petitioner's Rules and Regulations;
dismissal verily indicated that he never intended to abandon his work, then cited Policarpio v. Vicente that it was deprived of its prerogative to enforce them; and that complainant's reinstatement would
Dy Sun, Jr.,7 where the NLRC ruled that prolonged, absence does not, by itself, necessarily mean adversely affect its business and send the wrong signals to its employees.
abandonment. Accordingly, there must be a concurrence of intention and overt acts from which it can
be inferred that the employee is no longer interested in working. Complainant likewise invoked
In its comment13 for public respondent NLRC, the Office of the Solicitor General maintained that
compassion in the application of sanctions, as dismissal from employment brings untold hardship and dismissal from employment was too severe a penalty for a first time offender like complainant.
sorrows on the dependents of the wage earners. In his case, a penalty less punitive than dismissal could Although he violated petitioner's rules and regulations, his absences were justified: he had to bring his
have sufficed.
children to Samar, his home province, as his wife deserted him. While that by itself might not excuse
the failure to seek permission, the Office of the Solicitor General submitted, however, that "it would be
In the assailed decision8 of 7 October 1994, the NLRC modified the Labor Arbiter's decision and held at [sic] the height of callousness if one, considering his plight under the circumstance[s], would not
that complainant's dismissal was invalid for the following reasons: give due consideration to [complainant's] explanation. There has to be an exception."14

Complainant appellant's prolonged absences, although unauthorized, may not Applying Itogon-Suyoc Mines, Inc. v. NLRC,15 the Office of the Solicitor General recommended
amount to gross neglect or abandonment of work to warrant outright termination of complainant's reinstatement, which would be more harmonious to the dictates of social justice and
employment. Dismissal is too severe a penalty. For one, the mere fact that equity. It further emphasized that the reinstatement should not be considered a condonation of
complainant-appellant is a first offender must be considered in his favor. Besides, it complainant's irresponsible behavior, rather, it must be viewed as a mitigation of the severity of the
is generally impossible for an employee to anticipate when he would be ill or penalty of dismissal. Accordingly, it prays that this petition be dismissed.
compelled to attend to some family problems or emergency like in the case at bar.
In its reply,16 petitioner disputed the application of Itogon-Suyoc because: (1) the employee involved
Reliance on the ruling enunciated in the cited case of Shoemart Inc. vs. National therein had been in the service for twenty-three years while complainant herein had served petitioner
Labor Relations, 176 SCRA 385, is quite misplaced because of the obvious for only two years; and (2) the offense in Itogon-Suyoc was limited to a single act of high grading
dissimilarities of the attendant circumstances in the said case vis-a-vis those while complainant herein committed a series of unexcused absences.
obtaining in the case at bar. Unlike in the aforecited Shoemart Case, herein
8
We gave due course to the petition and dispensed with complainant's comment. We then conclude that complainant's "prolonged" absence without approval does not fall within the
definition of abandonment and that his dismissal was unjustified. While we do not decide here the
The sole issue to be resolved is whether the NLRC committed grave abuse of discretion in modifying validity of petitioner's Rules and Regulations on continuous, unauthorized absences, what is plain is
the, decision of the Labor Arbiter. that it was wielded with undue haste resulting in a deprivation of due process, thus not allowing for a
determination of just cause or abandonment. In this light, petitioner's dismissal was illegal. This is not
to say that his absence should go unpunished, as impliedly noted by the NLRC in declining to award
The answer must be in the negative.
back wages. In the absence of the appropriate offense which defines complainant's infraction in the
company's Rules and Regulations, equity dictates that a penalty commensurate to the infraction be
A scrutiny of the facts discloses that complainant's absence was precipitated by grave family problem imposed.
as his wife unexpectedly deserted him and abandoned the family. Considering that he had a full-time
job, there was no one to whom to the could entrust the children and he was thus compelled to bring
WHEREFORE, the petition is hereby DISMISSED and the decision of the National Labor Relations
them to the province. It would have been extremely difficult for him to have been husband and
wife/father and mother at the same time to the children in the metropolis. He was then under Commission in NLRC Case No. 06-04136-93 is hereby AFFIRMED. No pronouncement as to costs.
emotional, psychological, spiritual and physical stress and strain. The reason for his absence is, under
these circumstances, justified. While his failure to inform and seek petitioner's approval was an SO ORDERED.
omission which must be corrected and chastised, he did not merit the severest penalty of dismissal
from the service. Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur

Petitioner's finding that complainant was guilty of abandonment is misplaced. Abandonment as a just
and valid ground for dismissal requires the deliberate, unjustified refusal of the employee to resume his
employment. Two elements must then be satisfied: (1) the failure to report for work or absence without
valid or justifiable reason; and (2) a clear intention to sever the employer-employee relation. The
second element is the more determinative factor and must be evinced by overt acts.17 Likewise, the
burden of proof is on the employer to show the employee's clear and deliberate intent to discontinue
his employment without any intention of returning,18 mere absence is not
sufficient. 19 These elements are not present here. First, as held above, complainant's absence was
justified under the circumstances. As to the second requisite, we are not convinced that complainant
ever intended to sever the employer-employee relationship. Complainant immediately complied with
the memo requiring him to explain his absence, and upon knowledge of his termination, immediately
sued for illegal dismissal. These plainly refuted any claim that he was no longer interested in returning
to work.20 Without doubt, the intention is lacking.

Moreover, petitioner failed to discharge the burden of proof that complainant was guilty of
abandonment. No evidence other than complainant's letter explaining his absence was presented.
Needless to state, the letter did not indicate, in the least, that complainant was no longer interested in
returning to work. On the contrary, complainant sought petitioner's understanding. In declaring him
guilty of abandonment, petitioner merely relied on its Rules and Regulations which limited its
application to a six-day continuous absence, contrary to the purpose of the law. While the employer is
not precluded from prescribing rules and regulations to govern the conduct of his employees, these
rules and their implementation must be fair, just and reasonable. It must be underscored that no less
than our Constitution looks with compassion on the workingman and protects his rights not only under
a general statement of a state policy,21 but under the Article on Social Justice and Human Rights,22
thus placing labor contracts on a higher plane and with greater safeguards. Verily, relations between
capital and labor are not merely contractual. They are impressed with public interest and labor
contracts must, perforce, yield to the common good.23

9
Republic of the Philippines d. Was the individual hired abroad specifically to work in the School and was the School
SUPREME COURT responsible for bringing that individual to the Philippines?2
Manila
Should the answer to any of these queries point to the Philippines, the faculty member is classified as a
FIRST DIVISION local hire; otherwise, he or she is deemed a foreign-hire.

G.R. No. 128845 June 1, 2000 The School grants foreign-hires certain benefits not accorded local-hires.1avvphi1 These include
housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference
vs. on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and factor" and (b) limited tenure. The School explains:
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of
Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of A foreign-hire would necessarily have to uproot himself from his home country, leave his
International School-Manila; and INTERNATIONAL SCHOOL, INC., respondents. family and friends, and take the risk of deviating from a promising career path — all for the
purpose of pursuing his profession as an educator, but this time in a foreign land. The new
KAPUNAN, J.: foreign hire is faced with economic realities: decent abode for oneself and/or for one's family,
effective means of transportation, allowance for the education of one's children, adequate
Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent insurance against illness and death, and of course the primary benefit of a basic
School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their salary/retirement compensation.
colleagues in other schools is, of course, beside the point. The point is that employees should be given
equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a Because of a limited tenure, the foreign hire is confronted again with the same economic
principle that rests on fundamental notions of justice. That is the principle we uphold reality after his term: that he will eventually and inevitably return to his home country where
today.1âwphi1.nêt he will have to confront the uncertainty of obtaining suitable employment after along period
in a foreign land.
Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree
732, is a domestic educational institution established primarily for dependents of foreign diplomatic The compensation scheme is simply the School's adaptive measure to remain competitive on
personnel and other temporary residents.1 To enable the School to continue carrying out its educational an international level in terms of attracting competent professionals in the field of
program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School international education.3
to employ its own teaching and management personnel selected by it either locally or abroad, from
Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
regulations attending their employment, except laws that have been or will be enacted for the International School Alliance of Educators, "a legitimate labor union and the collective bargaining
protection of employees. representative of all faculty members"4 of the School, contested the difference in salary rates between
foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the in the appropriate bargaining unit, eventually caused a deadlock between the parties.
same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine
whether a faculty member should be classified as a foreign-hire or a local hire: On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and
Mediation Board to bring the parties to a compromise prompted the Department of Labor and
a. What is one's domicile? Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting
Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in
favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's
b. Where is one's home economy?
motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this Court.
c. To which country does one owe economic allegiance?
Petitioner claims that the point-of-hire classification employed by the School is discriminatory to
Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.
10
The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an
with nationalities other than Filipino, who have been hired locally and classified as local hires.5 The established principle of constitutional law that the guarantee of equal protection of the laws is
Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the not violated by legislation or private covenants based on reasonable classification. A
Filipino local-hires. classification is reasonable if it is based on substantial distinctions and apply to all members
of the same class. Verily, there is a substantial distinction between foreign hires and local
The compensation package given to local-hires has been shown to apply to all, regardless of hires, the former enjoying only a limited tenure, having no amenities of their own in the
race. Truth to tell, there are foreigners who have been hired locally and who are paid equally Philippines and have to be given a good compensation package in order to attract them to join
as Filipino local hires.6 the teaching faculty of the School.7

The Acting secretary upheld the point-of-hire classification for the distinction in salary rates: We cannot agree.

The Principle "equal pay for equal work" does not find applications in the present case. The That public policy abhors inequality and discrimination is beyond contention. Our Constitution and
international character of the School requires the hiring of foreign personnel to deal with laws reflect the policy against these evils. The Constitution8 in the Article on Social Justice and
different nationalities and different cultures, among the student population. Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and
enhance the right of all people to human dignity, reduce social, economic, and political inequalities."
We also take cognizance of the existence of a system of salaries and benefits accorded to The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in
foreign hired personnel which system is universally recognized. We agree that certain the performance of his duties, [to] act with justice, give everyone his due, and observe honesty and
good faith.
amenities have to be provided to these people in order to entice them to render their services
in the Philippines and in the process remain competitive in the international market.
International law, which springs from general principles of law,9 likewise proscribes discrimination.
Furthermore, we took note of the fact that foreign hires have limited contract of employment General principles of law include principles of equity, 10 i.e., the general principles of fairness and
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and justice, based on the test of what is reasonable. 11 The Universal Declaration of Human Rights, 12 the
International Covenant on Economic, Social, and Cultural Rights, 13 the International Convention on
other benefits would also require parity in other terms and conditions of employment which
include the employment which include the employment contract. the Elimination of All Forms of Racial Discrimination, 14 the Convention against Discrimination in
Education, 15 the Convention (No. 111) Concerning Discrimination in Respect of Employment and
Occupation 16 — all embody the general principle against discrimination, the very antithesis of
A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of
and professional compensation wherein the parties agree as follows: its national laws.

All members of the bargaining unit shall be compensated only in accordance with In the workplace, where the relations between capital and labor are often skewed in favor of capital,
Appendix C hereof provided that the Superintendent of the School has the discretion inequality and discrimination by the employer are all the more reprehensible.
to recruit and hire expatriate teachers from abroad, under terms and conditions that
are consistent with accepted international practice.
The Constitution 17 specifically provides that labor is entitled to "humane conditions of work." These
conditions are not restricted to the physical workplace — the factory, the office or the field — but
Appendix C of said CBA further provides: include as well the manner by which employers treat their employees.

The new salary schedule is deemed at equity with the Overseas Recruited Staff The Constitution 18 also directs the State to promote "equality of employment opportunities for all."
(OSRS) salary schedule. The 25% differential is reflective of the agreed value of Similarly, the Labor Code 19 provides that the State shall "ensure equal work opportunities regardless
system displacement and contracted status of the OSRS as differentiated from the of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State,
tenured status of Locally Recruited Staff (LRS). in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its
eyes to unequal and discriminatory terms and conditions of employment. 20
To our mind, these provisions demonstrate the parties' recognition of the difference in the
status of two types of employees, hence, the difference in their salaries. Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for
example, prohibits and penalizes 21 the payment of lesser compensation to a female employee as
11
against a male employee for work of equal value. Article 248 declares it an unfair labor practice for an "salary" means a recompense or consideration made to a person for his pains or industry in
employer to discriminate in regard to wages in order to encourage or discourage membership in any another man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
labor organization. the pay of the Roman soldier, it carries with it the fundamental idea of compensation for
services rendered. (Emphasis supplied.)
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7
thereof, provides: While we recognize the need of the School to attract foreign-hires, salaries should not be used as an
enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires
The States Parties to the present Covenant recognize the right of everyone to the enjoyment of and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor"
just and favourable conditions of work, which ensure, in particular: and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates.
The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain
benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping
a. Remuneration which provides all workers, as a minimum, with:
costs, taxes and home leave travel allowances.
(i) Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of The Constitution enjoins the State to "protect the rights of workers and promote their welfare," 25 "to
afford labor full protection." 26 The State, therefore, has the right and duty to regulate the relations
work not inferior to those enjoyed by men, with equal pay for equal work;
between labor and capital. 27 These relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining agreements included, must yield to the
xxx xxx xxx common good. 28 Should such contracts contain stipulations that are contrary to public policy, courts
will not hesitate to strike down these stipulations.
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism
of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort In this case, we find the point-of-hire classification employed by respondent School to justify the
and responsibility, under similar conditions, should be paid similar salaries. 22 This rule applies to the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no
School, its "international character" notwithstanding. reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of
the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does
The School contends that petitioner has not adduced evidence that local-hires perform work equal to not deserve the sympathy of this Court.1avvphi1
that of foreign-hires. 23 The Court finds this argument a little cavalier. If an employer accords
employees the same position and rank, the presumption is that these employees perform equal work. We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires.
This presumption is borne by logic and human experience. If the employer pays one employee less
than the rest, it is not for that employee to explain why he receives less or why the others receive more.
That would be adding insult to injury. The employer has discriminated against that employee; it is for A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the
entire body of employees, consistent with equity to the employer, indicate to be the best suited to serve
the employer to explain why the employee is treated unfairly.
the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 29
The factors in determining the appropriate collective bargaining unit are (1) the will of the employees
The employer in this case has failed to discharge this burden. There is no evidence here that foreign- (Globe Doctrine); (2) affinity and unity of the employees' interest, such as substantial similarity of
hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests
functions and responsibilities, which they perform under similar working conditions. Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 30 The basic test
of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the which will best assure to all employees the exercise of their collective bargaining rights. 31
distinction in salary rates without violating the principle of equal work for equal pay.
It does not appear that foreign-hires have indicated their intention to be grouped together with local-
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services hires for purposes of collective bargaining. The collective bargaining history in the School also shows
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration that these groups were always treated separately. Foreign-hires have limited tenure; local-hires enjoy
paid at regular intervals for the rendering of services." In Songco v. National Labor Relations security of tenure. Although foreign-hires perform similar functions under the same working
Commission, 24 we said that: conditions as the local-hires, foreign-hires are accorded certain benefits not granted to local-hires.
These benefits, such as housing, transportation, shipping costs, taxes, and home leave travel allowance,
12
are reasonably related to their status as foreign-hires, and justify the exclusion of the former from the
latter. To include foreign-hires in a bargaining unit with local-hires would not assure either group the
exercise of their respective collective bargaining rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART.
The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are
hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of
according foreign-hires higher salaries than local-hires.

SO ORDERED.

13
Republic of the Philippines WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and the
SUPREME COURT Decision of the Court of Appeals dated 24 May 2005 is hereby AFFIRMED. Costs against the
Manila petitioner.6

THIRD DIVISION On 29 April 2008, Tirazona moved for reconsideration7 of our afore-mentioned Decision. She argued
therein that the Court failed to consider the length of her service to PET in affirming her termination
G.R. No. 169712 January 20, 2009 from employment. She prayed that her dismissal be declared illegal. Alternatively, should the Court
uphold the legality of her dismissal, Tirazona pleaded that she be awarded separation pay and
MA. WENELITA S. TIRAZONA, Petitioner, retirement benefits, out of humanitarian considerations.
vs.
PHILIPPINE EDS TECHNO- SERVICE INC. (PET INC.) AND/OR KEN KUBOTA, In our Resolution8 dated 23 June 2008, we denied Tirazona’s Motion for Reconsideration, as the same
MAMORU ONO and JUNICHI HIROSE, Respondents. did not present any substantial arguments that would warrant a modification of our previous ruling. We
thus decreed:
RESOLUTION
ACCORDINGLY, the Court resolves to DENY the motion for reconsideration with FINALITY for
lack of merit.
CHICO-NAZARIO, J.:

Before Us is a Motion for Leave to File [a] Second Motion for Reconsideration,1 with the Second On 21 August 2008, Tirazona filed the instant Motion for Leave to File [a] Second Motion for
Reconsideration, with the Second Motion for Reconsideration incorporated therein, raising essentially
Motion for Reconsideration incorporated therein, where petitioner Ma. Wenelita Tirazona (Tirazona)
seeks the reconsideration of the Resolution2 of this Court dated 23 June 2008. Said Resolution denied the same arguments and prayers contained in her first Motion for Reconsideration.
for lack of merit petitioner’s previous Motion for Reconsideration,3 which sought the reversal of our
Decision4 dated 14 March 2008 or, in the alternative, modification thereof by awarding her separation The Court thereafter required PET to comment on the above motion. On 19 November 2008, PET filed
pay and retirement benefits under existing laws. its Comment/Opposition,9 to which Tirazona filed her Reply10 on 8 December 2008.

In our 14 March 2008 Decision, we subscribed to the factual findings of the National Labor Relations After thoroughly scrutinizing the averments of the present Motion, the Court unhesitatingly declares
Commission (NLRC) and the Court of Appeals that Tirazona, being the Administrative Manager of the same to be completely unmeritorious.
Philippine EDS Techno-Service, Inc. (PET), was a managerial employee who held a position of trust
and confidence; that after PET officers/directors called her attention to her improper handling of a Section 2, Rule 52 of the Rules of Court explicitly decrees that no second motion for reconsideration of
situation involving a rank-and-file employee, she claimed that she was denied due process for which a judgment or final resolution by the same party shall be entertained. Accordingly, a second motion for
she demanded ₱2,000,000.00 indemnity from PET and its officers/directors; that she admitted to reconsideration is a prohibited
reading a confidential letter addressed to PET officers/directors containing the legal opinion of the pleading,http://www.supremecourt.gov.ph/resolutions/2006/july/122472.htm - _ftn6 which shall not be
counsel of PET regarding her case; and that she was validly terminated from her employment on the allowed, except for extraordinarily persuasive reasons and only after an express leave shall have first
ground that she willfully breached the trust and confidence reposed in her by her employer. In the end, been obtained.11 In this case, we fail to find any such extraordinarily persuasive reason to allow
we concluded that: Tirazona’s Second Motion for Reconsideration.

Tirazona, in this case, has given PET more than enough reasons to distrust her. The arrogance and As a general rule, an employee who has been dismissed for any of the just causes enumerated under
hostility she has shown towards the company and her stubborn, uncompromising stance in almost all Article 28212 of the Labor Code is not entitled to separation pay.13 In Sy v. Metropolitan Bank & Trust
instances justify the company’s termination of her employment. Moreover, Tirazona’s reading of what Company,14 we declared that only unjustly dismissed employees are entitled to retirement benefits and
was supposed to be a confidential letter between the counsel and directors of the PET, even if it other privileges including reinstatement and backwages.
concerns her, only further supports her employer’s view that she cannot be trusted. In fine, the Court
cannot fault the actions of PET in dismissing petitioner.5 Although by way of exception, the grant of separation pay or some other financial assistance may be
allowed to an employee dismissed for just causes on the basis of equity,15 in Philippine Long Distance
Hence, the fallo of our 14 March 2008 Decision reads: Telephone Company v. National Labor Relations Commission,16 we set the limits for such a grant and
gave the following ratio for the same:
14
[S]eparation pay shall be allowed as a measure of social justice only in those instances where the Tirazona also failed to persuade us to consider in her favor her length of service to PET.
employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. x x x. In the Motion for Reconsideration filed on 29 April 2008 and in the instant motion, Tirazona prays for
this Court to grant her separation and other retirement benefits, should we uphold the legality of her
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than dismissal. She anchors her claim on the fact that she had allegedly been in the employ of PET for
punishing the erring employee for his offense. And we do not agree that the punishment is his twenty-six (26) years and that the Court must give due consideration to the length of her service to the
dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of company.17 However, in her Reply to the Comment/Opposition to the instant motion filed by PET,
course it has. Indeed, if the employee who steals from the company is granted separation pay even as Tirazona retracted the above allegation and stated that the claim of twenty-six (26) years of
he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment employment with PET was an error committed through inadvertence. She then averred that the length
because he thinks he can expect a like leniency if he is again found out. This kind of misplaced of her employment with PET should indeed be counted from July 1999, which up to the present time
compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks will result in a period of eight (8) years, more or less.
by those who do not deserve the protection and concern of the Constitution.
We find that the above statement is still inaccurate. As this Court ruled in our Decision dated 14 March
The policy of social justice is not intended to countenance wrongdoing simply because it is committed 2008, Tirazona was validly terminated from her employment on 22 April 2002. Therefore, counting
by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. from the time when Tirazona was employed by PET on 19 July 1999 up to the time when she was
Compassion for the poor is an imperative of every humane society but only when the recipient is not a dismissed, she had only rendered a little more than two (2) years and nine (9) months of service to
rascal claiming an undeserved privilege. Social justice cannot be permitted to be [a] refuge of PET.
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 Finally, the cases cited by Tirazona hardly support her cause.
simply because they happen to be poor. This great policy of our Constitution is not meant for the
protection of those who have proved they are not worthy of it, like the workers who have tainted the
In Soco v. Mercantile Corporation of Davao18 and Firestone Tire and Rubber Company of the
cause of labor with the blemishes of their own character. (Emphasis ours.) Philippines v. Lariosa,19 separation pay was granted to the dismissed employees, as they were mere
rank-and-file employees who did not have any previous derogatory record with their companies and in
In accordance with the above pronouncements, Tirazona is not entitled to the award of separation pay. equitable regard for their long years of service spanning more than ten (10) years.

Contrary to her exaggerated claims, Tirazona was not just "gracelessly expelled" or "simply In Farrol v. Court of Appeals,20 separation pay was awarded because the penalty of dismissal was held
terminated" from the company on 22 April 2002. She was found to have violated the trust and to be harsh and disproportionate to the offense committed and the dismissed employee had been at the
confidence reposed in her by her employer when she arrogantly and unreasonably demanded from PET service of the company for twenty four (24) years.
and its officers/directors the exorbitant amount of ₱2,000,000.00 in damages, coupled with a threat of a
lawsuit if the same was not promptly paid within five days. This unwarranted imposition on PET and In Negros Navigation Co. Inc. v. National Labor Relations Commission,21 separation pay was awarded
its officers/directors was made after the company sent Tirazona a letter, finding her handling of the
to the employee dismissed, as it was the employer itself that prayed for the award of the same, in lieu
situation involving a rank-and-file employee to be less than ideal, and merely reminding her to be more of the employee’s reinstatement.
circumspect when dealing with the more delicate concerns of their employees. To aggravate the
situation, Tirazona adamantly and continually refused to cooperate with PET’s investigation of her
case and to provide an adequate explanation for her actions. Lastly, in Philippine Commercial International Bank v. Abad,22 separation pay was ordered granted to
a dismissed managerial employee because there was an express finding that the violation of the bank
policies was not perpetrated for the employee’s self-interest, nor did the employee exhibit any lack of
Verily, the actions of Tirazona reflected an obdurate character that is arrogant, uncompromising, and moral depravity. The employee had also been in the service of the company for twenty-five (25) years.
hostile. By immediately and unreasonably adopting an adverse stance against PET, she sought to
impose her will on the company and placed her own interests above those of her employer. Her motive
for her actions was rendered even more questionable by her exorbitant and arbitrary demand for Obviously, Tirazona’s reliance upon the above-cited cases is misleading, as the circumstances therein
₱2,000,000.00 payable within five days from demand. Her attitude towards her employer was clearly are markedly different from those in the case at bar.
inconsistent with her position of trust and confidence. Her poor character became even more evident
when she read what was supposed to be a confidential letter of the legal counsel of PET to PET In sum, we hold that the award of separation pay or any other kind of financial assistance to Tirazona,
officers/directors expressing his legal opinion on Tirazona’s administrative case. PET was, therefore, under the guise of compassionate justice, is not warranted in this case. To hold otherwise would only
fully justified in terminating Tirazona’s employment for loss of trust and confidence.
15
cause a disturbance of the sound jurisprudence on the matter and a perversion of the noble dictates of
social justice.

While the Court commiserates with the plight of Tirazona, who has recently manifested23 that she has
since been suffering from her poor health condition, the Court cannot grant her plea for the award of
financial benefits based solely on this unfortunate circumstance. For all its conceded merit, equity is
available only in the absence of law and not as its replacement. Equity as an exceptional extenuating
circumstance does not favor, nor may it be used to reward, the indolent24 or the wrongdoer, for that
matter. This Court will not allow a party, in the guise of equity, to benefit from its own fault.25

WHEREFORE, the Motion for Leave to File [a] Second Motion for Reconsideration is hereby
DENIED for lack of merit and the Second Motion for Reconsideration incorporated therein is NOTED
WITHOUT ACTION in view of the denial of the former.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

16
Republic of the Philippines NATIONAL LABOR RELATIONS COMMISSION, 5TH DIVISION, CAGAYAN DE ORO
SUPREME COURT CITY, AGUSAN PLANTATION INC., AND/OR CHANG CHEE KONG, respondents.
Manila

FIRST DIVISION
BELLOSILLO, J.:

The State is bound under the Constitution to afford full protection to labor and when conflicting
G.R. No. 110017 January 2, 1997 interests of labor and capital are to be weighed on the scales of social justice the heavier influence of
the latter should be counterbalanced with the sympathy and compassion the law accords the less
RODOLFO FUENTES, RAINERIO DURON, JULIET VISTAL, ELENA DELLOMES, privileged workingman. This is only fair if the worker is to be given the opportunity and the right to
LEODEGARIO BALHINON, ROGELIO MALINAO, LILY BASANEZ, MALIZA ELLO, assert and defend his cause not as a subordinate but as part of management with which he can negotiate
VILMA NOQUERA, JESSICA CASTILLO, ROGELIO TABLADILLO, REMELDA on even plane. Thus labor is not a mere employee of capital but its active and equal partner.1
VISCAYA, MELANIA VISCAYA, CELIA LUBRICO, EDITH LLACUNA, ELPIDIO
FERRER, NORBERTO MIRANDA, FERNANDO MIRANDA, CORDIO DUMAY, Petitioners, numbering seventy-five (75) in all, seek to set aside the decision of respondent National
LEONARDO DELA VEGA, ISIDRO ALIDO, AQUINO MACABEHA, LEOPOLDO ABAA, Labor Relations Commission dated 27 November 1992 reversing that of the Labor Arbiter which
PAULINO ASIS, JR., REYNALDO BLANCO, MADILYN FABON, MARCIANA OSOK, granted their claims, for having been rendered with grave abuse of discretion amounting to lack or
BEBIANO OSOK, FRANCISCO SEMULTA, MARCIA LLAMES, PRINCIPE DANIEL, excess of jurisdiction.
MARIA BAYA, NENITA RASONABLY, SORIANO PENALOSA, JOSE PENALOSA,
RODOLFO VILLAR, REMEGIAS DEMINGOY, TEODORO TUGOGON, DIONISIO Petitioners were regular employees of private respondent Agusan Plantations, Inc., which was engaged
APOLINARIO, EDYING DE LA CRUZ, RODOLFO BUTAUAN, CRISPIN FABON, in the operation of a palm tree plantation in Trento, Agusan del Sur, since September 1982. Claiming
ARCADIO FABON, NENITA SARDINOLA, ALEX LICAYAN, MARIO DAL, BADON that it was suffering business losses which resulted in the decision of the head office in Singapore to
EDUARDO, FELISA VILLAREL, EMILY GARAN, ROGELIO GARAN, RODOLFO undertake retrenchment measures, private respondent sent notices of termination to petitioners and the
COLITE, RODOLFO MENIANO, ROMERO TERRY, ZOILO VALLEJOS, VIRGINIA Department of Labor and Employment (DOLE).
BANDERA, BLANDINA LUNA, FLAXIANA CARLON, CRESENCIO CARLON, NOTARTE
LEONARDA, EFREN CANTERE, ROWENA CAGUMAY, ALFONSO PARAJES, VIOLETA On 31 October 1990 petitioners filed with the DOLE office in Cagayan de Oro City a complaint for
MONTECLAR, NESTOR ALLADO, JR., APOLINARIO CULATAS, LANNIE CAPARAS, illegal dismissal with prayer for reinstatement, backwages and damages against private respondent
ANGELICO NUNEZ, JR., NICOLAS CANAL, HERMOGENA TAGLOCOP, ALEJO Agusan Plantation, Inc., and/or Chang Chee Kong. In their answer respondents denied the allegations
BAUMBAD, CARLITO DE LA PENA, AMANCIO ABOYLO, JERRY PARALES, LYDIA of petitioners and contended that upon receipt of instructions from the head office in Singapore to
ALLADO, AGAPITO ODAL, MAGNO BARIOS, FLORENDO MARIANO, SOLATORIO implement retrenchment, private respondents conducted grievance conferences or meetings with
BONIFACIO, RENE DEMINGOY, FELIMON ADORNO, VIRGILIO INOCENCIO, RUEL petitioners' representative labor organization, the Association of Trade Unions through its national
INOCENCIO, AVELINO LUNA, ALLAN MARCELLANA, FELIX SANCHEZ, AVELINO president Jorge Alegarbes, its local president and its board of directors. Private respondents also
PANDI, VILLA SORIO, NOEL LAS PENAS, FRANCISCO GARDO, ROGELIO CULLABA, contended that the 30-day notices of termination were duly sent to petitioners.
GEORGE RAGAR, CARMELITO CABRIADAS, ANANIAS MELLORIA, ALFONSO
ALLADO, MARLINO MARTINEZ, LINO MARTINEZ, ERNESTO OLARAN, JOHNNY
JOSAYAN, ANECITO SOBIONO, MARGARITO DUMALAGAN, FRANCISCO CABALES, After both parties submitted their position papers articulating their respective theses, the Labor Arbiter
FELIX ROCERO, PABLITO DAPAR, FRANCISCA CABALHIN, FORTUNATA BAUMBAD, rendered a decision on 27 May 1992 in favor of petitioners ordering private respondents to pay the
CARMEN RADAY, NICOLAS TAMON, REYNALDO CANTORIA, ELMER NAPONE, former separation pay equivalent to fifteen (15) days pay for every year of service plus salary
ANTONIO VALLAR, BERNADITH TOLOZA, EMETERIA FERRER, CLANICA CABALES, differentials and attorney's fees.
CLAUDIO OJUYLAN, ERLINDA BLANCO, ROSITA DURON, FRANCISCA ADLAWON,
CARDINAL MAGLISANG, JOVEN ASIS, JOSE FLORES, ALICIA FLORES, JULIETO On appeal by respondents to the National Labor Relations Commission, the decision of the Labor
ADORNO, LORENZO CANINES, ISAAC CELLASAY, ANDRES INDIABLE, ARSENIO Arbiter was reversed on 27 November 1992.
DURON, NARCISA MALASPINA, ROQUE SUBAAN, GRACE DURON, JAIME
BALMORIA, PEDRO PECASALES, PRIMITORAGAS and GRACE GOMA, petitioners, Petitioners elevated their plight to this Court on a special civil action for certiorari under Rule 65 of
vs. the Rules of Court alleging that respondent NLRC gravely abused its discretion amounting to lack or
17
excess of jurisdiction in ruling that petitioners were legally terminated from their employment. They There is no question that an employer may reduce its work force to prevent losses. However, these
argued that their dismissal or retrenchment did not comply with the requirements of Art. 283 of the losses must be serious, actual and real.3 Otherwise, this ground for termination of employment would
Labor Code. be susceptible to abuse by scheming employers who might be merely feigning losses in their business
ventures in order to ease out employees.4
We sustain petitioners. The ruling of the Labor Arbiter that there was no valid retrenchment is correct.
Article 283 of the Labor Code clearly states: Indeed, private respondents failed to prove their claim of business losses. What they submitted to the
Labor Arbiter were mere self-serving documents and allegations. Private respondents never adduced
Art. 283. Closure of establishment and reduction of personnel. — The employer may also evidence which would show clearly the extent of losses they suffered as a result of lack of capital
terminate the employment of any employee due to the installation of labor-saving devices, funding, which failure is fatal to their cause.
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the As regards the requirement of notices of termination to the employees, it is undisputed that the Notice
provisions of the title, by serving a written notice on the workers and the Ministry of Labor of Retrenchment was submitted to the Department of Labor and Employment on 12 September 19905
and Employment at least one (1) month before the intended date thereof. In case of The findings of both the Labor Arbiter and NLRC show that petitioners were terminated on the
termination due to the installation of labor-saving devices or redundancy, the worker affected following dates in 1990 after they received their notices of termination, to wit:
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In case of Name of Employee Date of Notice of Effectivity of
retrenchment to prevent losses and in case of closure or cessation of operations of Termination Termination
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay 1. Noquera, Vilma 22 Sept. 25 Sept.
for every year of service, whichever is higher. A fraction of at least six (6) months shall be 2. Dumalagan, Margarito 22 Sept. 30 Sept.
considered one (1) whole year.
3. Osok, Marciano 20 Sept. 30 Sept.
4. Abaa, Leopoldo 01 Sept. 30 Sept.
Under Art. 283 therefore retrenchment may be valid only when the following requisites are met: (a) it 5. Aboylo, Amancio 01 Sept. 30 Sept.
is to prevent losses; (b) written notices were served on the workers and the Department of Labor and 6. Allado, Nestor Jr. 01 Sept. 30 Sept.
Employment (DOLE) at least one (1) month before the effective date of retrenchment; and, (c) 7. Bandera, Verginia 01 Sept. 30 Sept.
separation pay is paid to the affected workers. 8. Basanez, Lily 01 Sept. 30 Sept.
9. Baumbad, Alejo 01 Sept. 30 Sept.
The closure of a business establishment is a ground for the termination of the services of an employee 10. Blanco, Myrna 01 Sept. 30 Sept.
unless the closing is for the purpose of circumventing pertinent provisions of the Labor Code. But 11. Blanco, Reynaldo 01 Sept. 30 Sept.
while business reverses can be a just cause for terminating employees, they must be sufficiently proved 12. Canal, Marieto 01 Sept. 30 Sept.
by the employer.2 13. Fabon, Madilyn 01 Sept. 30 Sept.
14. Ferrer, Elpidio 01 Sept. 30 Sept.
In the case before us, private respondents merely alleged in their answer and position paper that after 15. Meniano, Rodolfo 01 Sept. 30 Sept.
their officials from the head office had visited the plantation respondent manager Chang Chee Kong 16. Nunez, Angelico 01 Sept. 30 Sept.
received a letter from the head office directing him to proceed immediately with the termination of 17. Osok, Bebiano 01 Sept. 30 Sept.
redundant workers and staff, and change the operations to contract system against direct employment. 18. Penaloga, Jose Jr. 01 Sept. 30 Sept.
They also alleged that after five (5) years of operations, the return of investments of respondent 19. Taglocop, Hermogena 01 Sept. 30 Sept.
company was meager; that the coup attempt in August 1987 as well as that of December 1989 20. Allado, Lydio 22 Aug. 30 Sept.
aggravated the floundering financial state of respondent company; that the financial losses due to lack 21. Baya, Maria 22 Aug. 30 Sept.
of capital funding resulted in the non-payment of long-overdue accounts; that the untimely cut in the 22. Carlon, Flaviana 22 Aug. 30 Sept.
supply of fertilizers and manuring materials and equipment parts delayed the payment of salaries and 23. Carlon, Cresencio 22 Aug. 30 Sept.
the implementation of weekly job rotations by the workers. Except for these allegations, private 24. Culaba, Rogelio 22 Aug. 30 Sept.
respondents did not present any other documentary proof of their alleged losses which could have been 25. Cabriades, Carmelito 22 Aug. 30 Sept.
easily proven in the financial statements which unfortunately were not shown. 26. Dellomes, Elma 22 Aug. 30 Sept.
27. Fabon, Arcadio 22 Aug. 30 Sept.
18
28. Gordo, Francisco 22 Aug. 30 Sept. REINSTATED. Consequently, the decision of the National Labor Relations Commission dated 27
29. Inocencio, Virgilio 22 Aug. 30 Sept. September 1992 is REVERSED and SET ASIDE.
30. Inocencio, Ruel 22 Aug. 30 Sept.
31. Luna, Blandina 22 Aug. 30 Sept. SO ORDERED.
32. Luna, Avelino 22 Aug. 30 Sept.
33. Lubrico, Celia 22 Aug. 30 Sept.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.
34. Monteclar, Violeta 22 Aug. 25 Sept.
35. Macabecha, Aquino 22 Aug. 25 Sept.
36. Melloria, Ananian 22 Aug. 25 Sept.
37. Malinao, Rogelio 22 Aug. 25 Sept.
38. Leonarda, Notarte 22 Aug. 25 Sept.
39. Parejas, Jerry 22 Aug. 25 Sept.
40. Parejas, Alfonso 22 Aug. 25 Sept.
41. Sardinola, Alfonso 22 Aug. 25 Sept.
42. Solaterio, Bonifacio 22 Aug. 25 Sept.

Culled from the above data, the termination of petitioners could not have validly taken effect either on
25 or 30 September 1990. The one-month notice of retrenchment filed with the DOLE and served on
the workers before the intended date thereof is mandatory. Private respondents failed to comply with
this requisite. The earliest possible date of termination should be 12 October 1990 or one (1) month
after notice was sent to DOLE unless the notice of termination was sent to the workers later than the
notice to DOLE on 12 September 1990, in which case, the date of termination should be at least one
(1) month from the date of notice to the workers. Petitioners were terminated less than a month after
notice was sent to DOLE and to each of the workers.

We agree with the conclusion of the Labor Arbiter that the termination of the services of petitioners
was illegal as there was no valid retrenchment. Respondent NLRC committed grave abuse of discretion
in reversing the findings of the Labor Arbiter and ruling that there was substantial compliance with the
law. This Court firmly holds that measures should be strictly implemented to ensure that such
constitutional mandate on protection to labor is not rendered meaningless by an erroneous
interpretation of applicable laws.

We uphold the monetary award of the Labor Arbiter for: (a) the balance of the separation pay benefits
of petitioners equivalent to fifteen (15) days for every year of service after finding that reinstatement is
no longer feasible under the circumstances, and (b) the salary differentials for complainants who were
relieved during the pendency of the case before the Labor Arbiter and full back wages for the rest of
the complainants. This is in accord with Art. 279 of the Labor Code as amended by R.A. 6715 under
which petitioners who were unjustly dismissed from work shall be entitled to full back wages inclusive
of allowances and other benefits or their monetary equivalent computed from the time their
compensation was withheld up to the date of this decision.

WHEREFORE, the Petition is GRANTED. The decision of the Labor Arbiter of 27 March 1992
granting petitioners their claim for the balance of their separation pay benefits equivalent to fifteen (15)
days for every year of service, and salary differentials for complainants who were relieved during the
pendency of the case before the Labor Arbiter, and full back wages for the rest of the complainants is
19
Republic of the Philippines The petitioners were its employees who were either members of the NASECO Employees Union
SUPREME COURT (NASECO-EU) or of the Alliance of Concerned Workers of NASECO (ACW-NASECO). On
Manila November 19, 1988, they were among those who staged a strike and picketed the premises of the PNB.

FIRST DIVISION On November 21, 1988, the PNB filed a complaint for damages with preliminary injunction against the
labor unions with the Regional Trial Court of Manila. It was docketed as Civil Case No. 88-46938 in
Branch 22. On December 5, 1988, the court granted the application for a preliminary injunction and
issued the writ ordering the lifting of the picket.
G.R. No. 110518 August 1, 1994
NASECO also filed on November 21, 1988, a petition with the National Labor Relations Commission
to declare the strike illegal. This was docketed as NLRC Case No. 00-11-04766-88. On February 17,
JOSE L. GARCIA, EDUARDO ALAS, NOEL APAYA, RICARDO, MARCOS AVEJERO,
1989, the NLRC rendered its decision sustaining NASECO.1 The union officers who knowingly and
REYNALDO BANTIGUE, ROMEO BORRAS, MARGARITO CABICUELAS, ROLANDO
actively participated in the strike, as well as the members of the respondent union who committed
CAMUA, JOSE DENNIS CASTILLO, DICOROSO CARBO, FELIPE COSCULLA,
illegal acts in the course of the strike, were deemed to have legally lost their employment status.
EDUARDO DE GUZMAN, SEVILLA DEMLO, DIONALDO TEODOLFO, ADEMAR
DUPINO, JOSE ESCOBAR, REYNALDO FLORES, DELFIN GARCIA, FEDERICO
GATDULA, FELOMINO GUTIERREZ, HILARIO EUGENIO, EUGENIO ILANO, JR., The rest of the striking members, including the herein fifty-one petitioners, were ordered to report for
WILFREDO JALLA, RAMON LASQUITE, CESARIANO LIM, AUGUSTO LUMBANG, work immediately.
SALVADOR MACARAEG, ERNESTO MARQUEZ, LAURO MIRAVALLES, FRED ONIA,
REYNALDO ORTIZ, LEONIZA PALALIMPA, ALFREDO ROMEO, LECERIO ROSARIO, The complaint of the labor union against the PNB for unfair labor practice and illegal lockout was
ARMANDO SABIDURIA, RONILO SACE, REGONDOLA SANTOS, ERNESTO SALVATUS, dismissed on the ground that there was no employer-employee relationship between the PNB and the
ENRICO SANDOVAL, EUFEMIO SATURAY, VIRGILIO TINAMISAN, MACARIO labor unions.2
VALDEZ, JOSE VILLARICA, SANTOS VIRAY, FLORENDO LOPEZ, JOSE SEGISMUNDO,
DIZON GERONIMO, RUPERTO CLAVIO, JR., SEFARIN DYTIOCO, FIDEL TAGULAM, On March 1, 1989, the petitioners reported for work at the NASECO office but they could not be given
and EDITHA R. JUAN, petitioners, assignments because the PNB had meanwhile contracted with another company to fill the positions
vs. formerly held by the petitioners.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL SERVICE
CORPORATION, respondents. NASECO inquired from the PNB whether or not the petitioners could still be accepted to their former
positions in light of the Service Agreement between NASECO and the PNB giving the latter the right
Samson S. Alcantara for petitioners. to reject or replace any and all of NASECO's employees assigned to it, for inefficiency or other valid
reasons.
Vidal Corpus & Associates for private respondent.
In reply, the PNB manifested that it was no longer accepting the petitioners back to their former
positions as these were no longer vacant.

CRUZ, J.: NASECO then sought new assignments for the petitioners with its other clients, but the petitioners
insisted on their reassignment to the PNB. In the meantime, starting April 1, 1989, NASECO paid the
The main issue before the Court in this petition for certiorari is the validity of the retrenchment of the salaries and other benefits of the petitioners although they were not actually working.3
fifty-one petitioners by private respondent National Service Corporation (NASECO) as upheld by the
Labor Arbiter and later by the National Labor Relations Commission. On October 13, 1989, the petitioners received notice of separation from NASECO, effective thirty days
thereafter. The reason given was the financial losses NASECO was incurring at that time due mainly to
NASECO is a government-owned or controlled corporation engaged in providing manpower services the salaries being paid to the employees who could not be posted despite efforts to place them.4
such as security guards, radio operators, janitors and clerks, principally for the Philippine National
Bank.

20
Conformably to Art. 283 of the Labor Code, the Department of Labor and Employment was likewise The petitioners assert that NASECO failed to show with convincing evidence that the incurred losses,
given a 30-day notice of the intended retrenchment. if any, were substantial. The claimed losses were belied by the fact that NASECO hired new personnel
before and after the dismissal of the petitioners. NASECO also failed to pursue other measures to
The management of NASECO even offered a better separation package equivalent to three-fourths of forestall losses, short of dismissing the petitioners. It did not follow the "first in, last out" rule that in
the estimated new basic monthly salary for every year of service, compared to the statutory cases of retrenchment, employees with long years of service with the company, like the petitioners,
requirement of only 1/2 month pay for every year of service. 5 should not be the first to be retrenched. They attribute their dismissal to their participation in the strike
of November 19, 1988. Thus, their dismissal was an act of unfair labor practice for being
The petitioners refused to acknowledge receipt of the notice and instead, on October 26, 1989, filed discriminatory and violative of their rights to self-organization and to engage in concerted activities.
with NLRC a complaint against NASECO for unfair labor practice, illegal dismissal, non-payment of
wages and damages.6 We have to disagree.

On November 13, 1989, NASECO sent notice to the petitioners that their termination from the service The losses incurred by NASECO for the year 1989 amounted to P1,457,700.42 and were adequately
would take effect not on November 16, 1989, but on November 30, 1989, for humanitarian proved by it.11 These losses were directly caused by the salaries and other benefits paid to the
considerations. The effective date was again extended to December 15, 1989, and finally to December petitioners during the period from April 1 to December 31, 1989. The amount of these payments is not
31, 1989. insubstantial in light of the economic difficulties of the country during that year when several coups d'
etat adversely affected the nation's economic growth.
On June 22, 1990, Labor Arbiter Potenciano Canizares Jr. rendered a decision finding that the
petitioners had been "fairly discharged by the respondent (NASECO) in a valid act of simple It is also not true that respondent NASECO did not look for other measures to cut back on its losses.
retrenchment."7 NASECO had in fact tried to place the petitioners with its other clients but it was the petitioners
themselves who refused reassignment.
On July 11, 1990, the petitioners appealed to the NLRC. On September 11, 1992, they filed a
manifestation that the private respondent had been hiring new personnel, but no proof was offered to The particular facts of this case preclude application of the "first in, last out" rule in the retrenchment
support the charge. of employees. There was no discrimination against the petitioners. NASECO could not compel the
PNB to take the petitioners back to their former positions in view of its contractual right to reject any
employee of NASECO for inefficiency and other valid reasons. The PNB had already filled the
On December 21, 1992, the NLRC issued a resolution affirming the decision of the labor arbiter.8 A
motion for reconsideration filed by the petitioners on January 15, 1993, was denied by the NLRC on vacated positions of the petitioners during the strike, to ensure the continued operation of its business.
February 10, 1993.9
The monetary claim under RA 6640 and RA 6727 is another matter. RA 6640, which took effect on
It is now asserted in this petition that the NLRC gravely abused its discretion in holding that the December 14, 1987, and RA 6727, which took effect on July 1, 1989, provide for P10.00 and a P25.00
increases respectively in the minimum wage of laborers. The NLRC denied this claim on the ground
petitioners were validly dismissed on the ground of retrenchment; that NASECO is not guilty of unfair
labor practice; and that their monetary claims for increases under Republic Acts 6640 and 6727, as that the petitioners had failed to include it in their basic complaint. This contention is not acceptable
well as for moral and exemplary damages and attorney's fees, should be denied. because the claim was clearly included and prayed for in their position paper.

On the first two issues, the petitioners fault the NLRC for completely disregarding the requisites of a The Revised Rules of the NLRC provide under Sec. 3, Rule V, that parties should not be allowed to
allege facts not referred to or included in the complaint, or position paper, affidavits and other
valid retrenchment as laid down in Lopez Sugar Corporation vs. Federation of Free Workers. 10
documents. This would mean that although not contained in the complaint, any claim can still be
averred in the position paper, as was done by the petitioners, or in an affidavit or other documents.
The requisites are: 1) the losses expected should be substantial and not merely de minimis in extent; 2)
the substantial losses apprehended must be reasonably imminent; 3) the retrenchment must be
We also hold that the increases in the petitioners' minimum wage under RA 6640 and RA 6720 should
reasonably necessary and likely to effectively prevent the expected losses; and 4) the alleged losses, if
be granted since they became effective before the petitioners' retrenchment. Said increases should be
already incurred, and the expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence. considered in the computation of their separation pay in accordance with Art. 283 of the Labor Code.

Moral damages are recoverable only where the dismissal of the employee was attended by bad faith or
fraud or constituted an act oppressive to labor or was done in a manner contrary to morals, good
21
customs or public policy.12 Exemplary damages may be awarded only if the dismissal was effected in
a wanton, oppressive or malevolent manner. 13 None of these grounds has been proven. However, the
Court will grant the claim for attorney's fees in an amount equivalent to 10% of the total amount
awarded to the petitioner as authorized by the Labor Code. 14

The constitutional policy of providing full protection to labor is not intended to oppress or destroy
management. The employer cannot be compelled to retain employees it no longer needs, to be paid for
work unreasonably refused and not actually performed. NASECO bent over backward and exerted
every effort to help the petitioners look for other work, postponed the effective date of their separation,
and offered them a generous termination pay package. The unflagging commitment of this Court to the
cause of labor will not prevent us from sustaining the employer when it is in the right, as in this case.

WHEREFORE, the decision of the Labor Arbiter dated June 22, 1990, and the resolutions of the
NLRC dated December 21, 1992, and February 10, 1993, are AFFIRMED, with the modification that
the monetary claim under RA 6640 and RA 6720, and for attorney's fees, should be and is hereby
granted. The award of moral and exemplary damages is disallowed.

SO ORDERED.

22
Republic of the Philippines counter cashier. Thereafter, she was transferred to "Young Un Department Store" as
SUPREME COURT an assistant to the money changer. Later on, or in 1985, she was transferred to
Manila Isetann, Cubao Branch where she worked as a Store Cashier till her dismissal on
August 31, 1990.
FIRST DIVISION
Both complainants were receiving a salary of P4,182.00 for eight (8) hours work at
the time of their dismissal.

G.R. No. 112630 September 5, 1997 Respondent Isetann Department Store on the other hand, is a corporation duly
organized and existing under the laws of the Philippines and is engaged in retail
CORAZON JAMER and CRISTINA AMORTIZADO, petitioners, trade and the department store business. Individual respondent, John Go is the
vs. President/General (Manager) of respondent Department Store.
NATIONAL LABOR RELATIONS COMMISSION, ISETANN DEPARTMENT STORE and/or
JOHN GO, respondents. This complaint arose from the dismissal of the complainants by the respondents.
They were both dismissed on August 31, 1990 on the alleged ground of dishonesty in
their work as Store Cashiers.

Complainant's (sic) function as Store Cashiers is to accumulate, at the end of daily


HERMOSISIMA, JR., J.:
operations, the cash sales receipts of the selling floor cash register clerks. At the
close of business hours, all the cash sales of the floor cash register clerks are turned
The decision1 of public respondent National Labor Relations Commission (NLRC)2 in NLRC NCR over by them to the Store Cashiers, complainants herein, together with the tally
CA 002074-91,3 promulgated on November 12, 1993, is herein sought to be annulled for having been sheets prepared by the cash register clerks. Thereafter, complainants will reconcile
rendered with grave abuse of discretion, it having reversed and set aside the decision4 of Labor Arbiter the cash sales with the tally sheets to determine shortages or coverages (sic) and
Pablo C. Espiritu, Jr. by dismissing the petitioners' complaint for illegal dismissal against private deposit the same with the bank depositor(sic) of respondent's company. Thereafter,
respondent Isetann Department Store (Isetann, for brevity). The decretal part of the NLRC decision the recorded transactions are forwarded to the main branch of respondent's company
reads: at Carriedo for counter-checking.

WHEREFORE, premises considered, the appealed decision is hereby set aside and On July 16, 1990, complainants discovered a shortage of P15,353.78. It was
new one promulgated declaring that the dismissal from the service of complainants complainant Corazon Jamer who first discovered the shortage. In fact at first, she
Corazon Jamer and Cristina Amortizado was valid and for cause. Consequently, the thought that it was merely a P1,000.00 shortage but when she reconciled the cash
order of reinstatement with backwages and attorney's fees are likewise vacated and receipts, from the cash register counters, with the tally sheets and the actual money
set aside.5 on hand, the shortage amounted to P15,353.78. She informed her co-store cashier,
complainant Cristina Amortizado, about the shortage. Cristina Amortizado also
Although the Labor Arbiter6 and the NLRC reached contrary conclusions, both agree on the following reconciled and re-counted the sale previous to July 16, 1990 and she also confirmed
facts: that there was a discrepancy or a shortage of P15,353.78. They did not, (sic)
immediately report the shortage to management hoping to find the cause of the
Complainant, Corazon Jamer was employed on February 10, 1976 as a Cashier at shortage but to no avail they failed to reconcile the same. Hence, they had no other
"Joy Mart," a sister company of Isetann. After two (2) years, she was later on alternative but to report the same to the management on July 17, 1990.
promoted to the position of counter supervisor. She was transferred to Isetann,
Carriedo Branch, as a money changer. In 1982 she was transferred to the Cubao Complainants, together with another Store Cashier, Lutgarda Inducta, were asked to
Branch of Isetann, as a money changer, till her dismissal on August 31, 1990. explain and they submitted their respective written explanations for the shortage of
P15,353.78 and the P450.00 under deposit last July 14, 1990.
Complainant Cristina Amortizado, on the other hand, was employed also at "Joy
Mart" in May, 1977 as a sales clerk. In 1980 she was promoted to the position as
23
Respondents placed both complainants and their co-store cashier Lutgarda Inducta Isetann, finding the appellees and Mrs. Inducta responsible for said
under preventive suspension for the alleged shortages. Thereafter, respondents shortages and consequently requiring them to restitute the same to
conducted an administrative investigation. Finding the explanation of the respondent Isetann. This Decision and the notices of termination
complainants to be unsatisfactory, respondent dismissed the complainants from the were seat by respondent Isetann to the appellees, and which the
service on August 31, 1990. Aggrieved and not satisfied with the decision of latter admittedly received.
management terminating their services, complainants instituted this present action on
September 26, 1990 for illegal dismissal praying for reinstatement with payment of On the other hand, the complainants account of the factual antecedents that let (sic)
backwages and other benefits.7 to their dismissal is as follows:

In justifying complainants' dismissal from their employment, respondents alleged: Aside from the foregoing persons, Alex Mejia had and was
allowed by management to have uncontrolled access to the said
When the transactions for July 15, 1990 were being reconciled, a room including the vault. Ostensibly, the purpose was to assist in
shortage of P15,353.78 was discovered. Also uncovered was an the bringing in or taking out of coin bags, monies, etc.
under-deposit of P450.00 of cash receipts for July 14, 1990.
There were therefore, at a minimum at least six (6) persons who
Considering that the foregoing deficits were attributable to herein could have had access to the company funds. To ascribe liability to
appellees and to another store cashier, Mrs. Lutgarda Inducta, who the store cashiers alone, in the absence of a clear proof of any
were the ones on duty those days respondent Isetann's Human wrongdoing is not only unfair and discriminatory but is likewise
Resources Division Manager, Teresita A. Villanueva, issued letters illegal.
(Exhs. "1" and "5") individually addressed to herein appellees and
Mrs. Inducta requiring them to submit written explanations in Parenthetically, and within the parameters of their assigned tasks,
regard to their above malfeasance within 48 hours from receipt herein complainants could not be faulted in any way for the said
thereof. Pursuant to said letters, they were likewise placed under shortage as there is no showing that the loss occurred at the time
preventive suspension. they were in control of the funds concerned.

Thereafter, the Committee on Discipline of appellant Isetann Complainants do not dispute the fact that there appeared to be a
conducted a series of investigations probing appellees' and Mrs. shortage of P15,373.78 (sic) for the July 15, 1990 (a Sunday) sales
Inducta's aforestated shortages. In addition to the shortage of and which were tallied and the loss discovered on the following
P15,738.58 (sic) and underdeposit of P450.00, said investigation day, July 16, 1990. They however vehemently deny any culpability
also included the following sums which appellees failed to or participation in any kind, directly or indirectly, in regard to the
turnover or account for: said loss or shortage. Given the kind of trust reposed upon them by
respondents for fourteen and thirteen years respectively they were
a) P1,000.00 — amount not about, although they could have done so before given the
borrowed by Lutgarda negligence and laxity of management in regard to the control and
Inducta from Corazon Jamer; handling of funds of the store, to break said trust.

b) P70.00 — over At the time the persons who had access either to the vault the
replenishment of petty cash money and/or the keys aside from herein complainants, were: 1)
expenses incurred by Cristina Lutgarda Inducta, also a store cashier on duty at the time; 2) the
Amortizado. SOM Mrs. Samonte, the supervisor in charge; 3) Alex Mejia, an
employee assigned as utility man; and 4) Boy Cabatuando.
After the administrative investigation, the Committee on Discipline
rendered its decision (Exhs, "3," "3-A," to "3-D") dated August 23, There where(sic) three (3) keys to the money changer's room, and
1990 duly approved by the General Manager of respondent these keys were assigned and distributed to: a) master key is or was
24
with the SOM's (Mrs. Samonte) room at the 3rd floor of the Corazon Jamer the amount of P125,460.00 and Cristina Amortizado the amount of
building; b) another key is or was in the possession of the keeper P125,460.00, representing full backwages from the time of their dismissal (August
of the keys, i.e. Boy Cabatuando; and c) the third and last key is 31, 1990) till actual or payroll reinstatement at the option of the respondent
any of the store cashiers depending on who is on duty at the time. (computed until promulgation only). Respondents are also hereby further ordered to
reinstate the complainants to their former position as Store Cashiers without loss of
Likewise, there were four (4) persons who were aware and knew of seniority rights, privileges and benefits, failure to do so backwages shall continue to
the vault combination. These were the three store cashiers, i.e. run but in no case to exceed three (3) years.
herein complainants, Lutgarda Inducta and their SOM, Mrs.
Samonte. 8 Respondents are also ordered to pay complainants the amount of P25,092.00
representing 10% attorney's fees based in the total judgement (sic) award of
On July 23, 1991, Labor Arbiter Nieves V. de Castro, to whom the instant controversy was originally P250,920.00.
assigned, rendered a decision9 in favor of herein petitioners, finding that petitioners had been illegally
dismissed, the dispositive portion of which reads: SO ORDERED. 14

WHEREFORE, respondents are hereby directed to reinstate complainants to service Dissatisfied over the decision of the Labor Arbiter which struck private respondents as grossly contrary
effective August 1, 1991 with full backwages and without loss of seniority rights. to the evidence presented, the herein private respondents once again appealed to the NLRC. And, as
earlier stated, the NLRC rendered the challenged decision 15 on November 12, 1993, vacating the
SO ORDERED. 10 decision of the Labor Arbiter and entering a new one dismissing the petitioners' complaint.

Expectedly, respondents Isetann and John Go appealed the aforesaid decision to the NLRC. On Hence, this petition wherein the main issue to be resolved is whether NLRC committed grave abuse of
January 31, 1992, the NLRC issued a resolution 11 remanding this case to the NLRC National Capital discretion in finding that petitioners were validly dismissed on the ground of loss of trust and
Region Arbitration Branch for further proceedings in the following manner: confidence.

WHEREFORE, premises considered, the challenged decision is hereby SET ASIDE At the outset, the Court notes petitioners inexcusable failure to move for the reconsideration of
and VACATED. respondent NLRC's decision. Thus, the present petition suffers from a procedural defect that warrants
its outright dismissal. While in some exceptional cases we allowed the immediate recourse to this
Court, we find nothing herein that could warrant an exceptional treatment to this petition which will
The entire records of this case is hereby remanded to the NLRC National Capital
Regional Arbitration Branch for further proceedings. justify the omission. This premature action of petitioners constitutes a fatal infirmity as ruled in a long
line of decisions, 16 most recently in the case of Building Care Corporation vs. National Labor
Relations Commission, et al.: 17
Considering that the Labor Arbiter a quo rendered a decision in this case and in order
to dispel any suspicion of pre-judgment of this case, the Executive Labor Arbiter is
The filing of such a motion is intended to afford public respondent an opportunity to
hereby directed to have this case re-raffled to another Labor Arbiter.
correct any actual or fancied error attributed to it by way of a re-examination of the
legal and factual aspects of the case. Petitioner's inaction or negligence under the
SO ORDERED. 12 circumstances is tantamount to a deprivation of the right and opportunity of the
respondent Commission to cleanse itself of an error unwittingly committed or to
Consequently, the present case was then re-raffled to Labor Arbiter Pablo C. Espiritu, Jr. After a full- vindicate itself of an act unfairly imputed. . . .
blown trial, the said Labor Arbiter found for the petitioners and declared that there was no justification,
whether in fact or in law, for their dismissal. The decretal part of the decision 13 dated March 31, . . . And for failure to avail of the correct remedy expressly provided by law,
1993, states: petitioner has permitted the subject Resolution to become final and executory after
the lapse of the ten day period within which to file such motion for reconsideration.
WHEREFORE, above premises considered, judgement (sic) is hereby rendered
finding the dismissal of complainants, Cristina Amortizado and Corazon Jamer to be
illegal and concomitantly, (r)espondents are hereby ordered to pay complainants,
25
Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings, the exercise of its jurisdiction is not correctible through the original special civil action of certiorari.
as in this case, will not prosper. 18 Rule 65, Section 1 of the Rules of Civil Procedure, as 22
amended, clearly provides that:
On the merits, we find and so hold that substantial evidence exists to warrant the finding that
When any tribunal, board or officer exercising judicial or quasi-judicial functions has petitioners were validly dismissed for just cause and after observance of due process.
acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee by his
speedy, and adequate remedy in the ordinary course of law, a person aggrieved employer are two-fold: the substantive and the procedural. Not only must the dismissal be for a valid
thereby may file a verified petition in the proper court, alleging the facts with or authorized cause as provided by law (Articles 282, 283 and 284, of the Labor Code, as amended),
certainty and praying that judgment be rendered annulling or modifying the but the rudimentary requirements of due process, basic of which are the opportunity to be heard and to
proceedings of such tribunal, board or officer, . . . defend himself, must be observed before an employee may be dismissed. 23

The unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal or any With respect to the first requisite, Article 282 of the Labor Code, as amended, provides:
other plain, speedy and adequate remedy in the ordinary course of law against the acts of respondent.
19 In the case at bench, the plain and adequate remedy referred to in Rule 65, Section 1, is a motion for
Art. 282. Termination by Employer. — An employer may terminate an employment
reconsideration of the challenged decision and the resolution thereof, which was expected to provide for any of the followings causes:
an adequate and a more speedy remedy than the present petition for certiorari.
(a) Serious misconduct or willful disobedience by the employee of
Petitioners asseverate that respondent NLRC committed a grave abuse of discretion when it reversed the lawful orders of his employer or representative in connection
the findings of facts of the Labor Arbiter.
with his work;

We find said submissions untenable.


(b) Gross and habitual neglect by the employee of his duties;

In asserting that there was grave abuse of discretion, petitioners advert to alleged variances in the
(c) Fraud or willful breach by the employee of the trust reposed in
factual findings of the Labor Arbiter and the respondent NLRC. This is inept and erroneous. Firstly, him by his employer or duly authorized representative;
errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a special
civil action for certiorari. 20 Secondly, a careful reading of the records of this case would readily show
that if there is any error by public respondent in its analysis of the facts and its evaluation of the (d) Commission of a crime or offense by the employee against the
evidence, it is not of such a degree as may be stigmatized as a grave abuse of discretion. Grave abuse person of his employer or any immediate member of his family or
of discretion is committed when the judgment is rendered in a capricious, whimsical, arbitrary or his duly authorized representative; and
despotic manner. An abuse of discretion does not necessarily follow just because there is a reversal by
the NLRC of the decision of the Labor Arbiter. Neither does the mere variance in the evidentiary (e) Other causes analogous to the foregoing. (Emphasis supplied).
assessment of the NLRC and that of the Labor Arbiter would, as a matter of course, so warrant another
full review of the facts. The NLRC's decision, so long as it is not bereft of support from the records, In the instant case, we find no difficulty in agreeing with the findings of the public respondent that the
deserves respect from the Court. 21 herein petitioners were guilty of acts of dishonesty by incurring several occurrences of shortages in the
amounts of P15,353.78, P1,000.00, P450.00 and P70.00 which they failed to turnover and account
We must once more reiterate our much repeated but not well-heeded rule that the special civil action for/and in behalf of respondent Isetann. Fittingly, the findings of the NLRC are worth stressing at this
for certiorari is a remedy designed for the correction of errors of jurisdiction and not errors of point, to wit:
judgment. The rationale for this rule is simple. When a court exercises its jurisdiction an error
committed while so engaged does not deprive it of the jurisdiction being exercised when the error is With regard to the several occurrences of shortages of the amounts of P15,353.78,
committed. If it did, every error committed by a court would deprive it of its jurisdiction and every P1,000.00 and P70.00, the Labor Arbiter has failed to consider the fact that
erroneous judgment would be a void judgment. This cannot be allowed. The administration of justice complainants-appellees were accorded the chance to explain their side as to the
would not countenance such a rule. Consequently, an error of judgment that the court may commit in shortages and that they have utterly failed to do so providing basis for their valid

26
dismissal. This fact has been established by the respondents-appellants in the Total cash admitted P65,428.05
findings of the Committee on Discipline on Exhibits "3", 3-A" to "3-D", as follows: (cash in drawer)

a) On the Shortage of P15,353.78: Total cash remitted 64,978.05


(per tally sheet) —————
The 3 respondents, Lutgarda Inducta, Cristy Amortizado and
Corazon Jamer denied any involvement in the loss of P15,353.78. Overage P450.00
Although the money is under their responsibility, not one of them
gave any explanation about the shortage or loss. d) On the P70.00 Over Replenishment of Petty Cash Expenses:

b) On the amount of P1,000.00 borrowed by Inducta from Jamer: During the 3rd Administrative hearing, the Committee informed
Mrs. Amortizado regarding the over replenishment of petty cash
On July 18, 1990, Lutgarda Inducta borrowed money from expenses as revealed by the Finance Manager last August 10,
respondents (sic) Jamer amounting to P1,000.00 to cover her 1990.
shortage.
Mrs. Amortizado readily admitted and explained that she forgot to
Ms. Jamer said that Ms. Inducta paid the amount on that day. But inform Mrs. Inducta regarding the P70.00. She admitted her failure
Ms. Jamer did not report the shortage. to correct the amount from P100.00 to P30.00 (total expenses spent
for the taxi fair).
c) On the Underdeposit of Cash = P450.00.
She added the she previously incurred a shortage amounting to
The computation of Ms. Amortizado's sales collections last July P100.00. Then she used the P70.00 to cover for the shortage. The
14, 1990 resulted to an overage of P350.00. Amortizado turned remaining balance of P30.00 was paid by Amortizado.
over the amount of P350.00, to cover up a shortage incurred by her
and Mrs. Inducta. Amortizado informed the Committee that she is willing to refund
the P70.00 shortage. (Emphasis supplied). 24
Jamer used the money given to her by Amortizado (P350.00), and
borrowed (P150.00) from the change fund to cover the total From the foregoing premises, it is crystal clear that the failure of petitioners to report the aforequoted
shortage amounting to P500.00 which she had then. shortages and overages to management as soon as they arose resulted in the breach of the fiduciary
trust reposed in them by respondent company, thereby causing the latter to lose confidence in them.
Jamer cannot trace how the shortage came about. Inducta and This warrants their dismissal. Moreover, it must be pointed out that herein petitioners have in fact
Jamer shouldered the total shortage amounting to P500.00, admitted the underpayment of P450.00 not only in their "Sinumpaang Salaysay" but also during the
P330.00 for Jamer and P200.00 for Inducta. Jamer claimed that she hearing conducted before Labor Arbiter Pablo C. Espirutu. 25 And, the record shows that the
returned the P350.00 in the box. However, the claim of respondent petitioners in fact made a last ditch effort to conceal the same. Were it not for its timely discovery by
was further verified from the payroll section which revealed that a private respondents' trusted employees, the incident could not have been discovered at all.
value slip was issued last July 1990. Jamer and Inducta were Furthermore, it is worth stressing at this juncture that the petitioners have also expressly admitted the
charged for P200.00 each. A value slip was issued last August 10, shortage of P15,353.78 — a substantial amount — in their respective sworn statements, and they were
1990 charging P100.00 to Amortizado. not able to satisfactorily explain such shortage. 26 The Court is convinced that these particular acts or
omissions provided Isetann with enough basis to forfeit its trust and confidence over herein petitioners.
Jamer admitted that she failed to inform the Audit Staff regarding
the 350.00 overage which she received from Amortizado. A(s) per The NLRC, therefore, did not act with grave abuse of discretion in declaring that petitioners were
report of Ms. Agnes Gonzales dated 26 July 1990, there was a total legally dismissed from employment. The failure of petitioners to report to management the
under deposit of cash amounting to P450.00. aforementioned irregularities constitute "fraud or willful breach of the trust reposed in them by their

27
employer or duly authorized representative" — one of the just causes in terminating employment as them. They aver therefore, that there was a serious flaw and laxity in the supervision and handling of
provided for by paragraph (c), Article 282 of the Labor Code, as amended. company funds by respondent Isetann. 34

In other words, petitioners' admissions in their sworn statements, together with the other documentary We also find this contention devoid of merit.
evidences on record, constituted breach of trust on their part which justifies their dismissal. Private
respondents Isetann Department Store and Mr. John Go cannot be compelled to retain employees who First, it must be pointed out that the petitioners' remark that there was laxity in the accounting
are clearly guilty of malfeasance as their continued employment will be prejudicial to the formers' best procedures of the company is a matter addressed to the respondent employer. However, this does not
interest. 27 The law, in protecting the rights of the employees, authorizes neither oppression nor self- excuse dishonesty of employees and should not in any case hamper the right of the employer to
destruction of the employer. 28 terminate the employment of petitioners on the ground of loss of confidence or breach of trust.
Precisely, the accounting procedure which called for improvements was based primarily on trust and
The cause of social justice is not served by upholding the interest of petitioners in disregard of the right confidence. 35
of private respondents. Social justice ceases to be an effective instrument for the "equalization of the
social and economic forces" by the State when it is used to shield wrongdoing. 29 While it is true that Secondly, it must be noted that the herein petitioners were store cashiers and as such, a special and
compassion and human consideration should guide the disposition of cases involving termination of unique employment relationship exists between them and the respondent company. More than most
employment since it affects one's source or means of livelihood, it should not be overlooked that the key positions, that of cashier calls for the utmost trust and confidence because their primary function
benefits accorded to labor do not include compelling an employer to retain the services of an employee involves basically the handling of a highly essential property of the respondent employer — the sales
who has been shown to be a gross liability to the employer. It should be made clear that when the law and revenues of the store. Employers are consequently given wider latitude of discretion in terminating
tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality the employment of managerial employees or other personnel occupying positions of responsibility,
between labor and management. The intent is to balance the scale of justice; to put the two parties on such as in the instant case, than in the case of ordinary rank-and-file employees, whose termination on
relatively equal positions. There may be cases where the circumstances warrant favoring labor over the the basis of these same grounds requires proof of involvement in the malfeasance in question. Mere
interests of management but never should the scale be so tilted if the result is an injustice to the uncorroborated assertions and accusations by the employer will not suffice. 36 In that respect, we
employer, Justicia remini regarda est (Justice is to be denied to none). 30 quote with approval the observations of the NLRC:

Thus, this Court has held time and again, in a number of decisions, 31 that: To expound further, for the position of a cashier, the honesty and integrity of the
persons assuming said position are the primary considerations for the nature of her
Loss of confidence is a valid ground for dismissing an employee and proof beyond work requires that her actuation's should be beyond suspicion as they are accorded
reasonable doubt of the employee's misconduct is not required to dismiss him on this the responsibility of handling money and whatever they would do to such property of
charge. It is sufficient if there is "some basis" for such loss of confidence or if the the employer largely depend on their trustworthiness. Hence, the right of the
employer has reasonable ground to believe or to entertain the moral conviction that employer to dismiss a cashier guilty of breach of trust and confidence should be
the employee concerned is responsible for the misconduct and that the nature of his recognized. In a case decided by the Supreme Court it has been ruled that:
participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position. 32 Honesty and integrity are the primary considerations in petitioner's
position. The nature of his work requires that the actuations should
Parenthetically, the fact that petitioners Jamer and Amortizado had worked for respondent company for be beyond suspicion. Our empathy with the cause of labor should
fourteen (14) and thirteen (13) years, respectively, should be taken against them. The infractions that not blind us to the rights of management. As we have held, this
they committed, notwithstanding their long years of service with the company, reflects a regrettable Court should help stamp out, rather than tolerate, the commission
lack of loyalty — loyalty that they should have strengthened instead of betrayed. If the petitioners' of irregular acts whenever these are noted. Malpractices should not
length of service is to be regarded as a justifying circumstance in moderating the dismissal, it will be allowed to continue but should be rebuked. (Del Carmen vs.
actually become a prize for disloyalty, perverting the meaning of social justice and undermining the NLRC, 203 SCRA 245) 37
efforts of labor to cleanse its ranks of all undesirables. 33
Finally, we are convinced that the NLRC did not commit grave abuse of discretion in evaluating the
Petitioners also maintain that the NLRC acted with grave abuse of discretion when it failed to consider evidence. Petitioners merely denied the charges against them. Denials are weak forms of defenses,
the fact that, other than petitioners themselves, there were four (4) other persons who had access to the particularly when they are not substantiated by clear and convincing evidence. 38 The petitioners'
company vaults, and hence, could have been responsible for the aforesaid cash shortages imputed to failure to satisfactorily explain the cash shortages, for which sums they are responsible, given their
28
respective positions in respondent company, is enough reason to warrant their dismissal on the ground themselves and air their side before the Committee on Discipline, having been notified by respondent
of loss of confidence. They cannot place the burden on somebody else given the factual circumstances Isetann's Human Resources Division Manager, Teresita A. Villanueva, on August 2, 1990 through
of this case. As succinctly put by the NLRC: letters individually sent to them. However, when the petitioners were confronted with reports of the
anomalies, they offered no explanation or theory which could account for money lost in their
That there were other persons who had access to the vaults of the appellant company possession. Hence, the company had no other alternative but to terminate their employment. As we
implying that these other persons could have been responsible for the loss of the elucidated in the case of Philippine Savings Bank vs. National Labor Relations Commission, 43 to wit:
P15,353.78 is of no moment inasmuch as the appellees were the ones who took first
custody of the possession of said collections. As store cashiers, it is expected of them . . . the requirement of due process is satisfied when a fair and reasonable
to exercise ordinary prudence to count the collection and record the same in the tally opportunity to explain his side of the controversy is afforded the party. A formal or
sheet before depositing to said vault to avoid a slightest suspicion of having pocketed trial-type hearing is not at all times and in all circumstances essential, especially
part of it should a shortage arise. They did not exert efforts to exercise such prudence when the employee chooses not to speak.
demanded of their positions hence, appellants should not be blamed when they were
called for an investigation when said shortage was discovered. WHEREFORE, the assailed decision of the National Labor Relations Commission in NLRC NCR CA
002074-91 is hereby AFFIRMED. The petition is DISMISSED for lack of merit.
xxx xxx xxx
SO ORDERED.
That the occurrence of shortages is merely an isolated one and therefore should not
be taken against the complainant-appellees as a ground for loss of trust and Bellosillo, Vitug and Kapunan, JJ., concur.
confidence that would cause their termination cannot be given any credence. The
shortages having been established and admitted has provided the employer sufficient
basis for loss of confidence and whether such occurrence is merely an isolated one or
has been repeatedly committed is no longer material. The bone of contention here is
whether there is "some basis" for such loss of trust and confidence and if the
employer has reasonable ground to believe or to entertain the moral conviction that
the employee concerned is responsible for the misconduct which in the instant case
has been established. 39

We reiterate the rule that in cases of dismissal for breach of trust and confidence, proof beyond doubt
of the employees' misconduct is not required. It is sufficient that the employer had reasonable ground
to believe that the employees are responsible for the misconduct which renders him unworthy of the
trust and confidence demanded by their position. 40 In the case at hand, it cannot be doubted that
respondents succeeded in discharging its burden of proof.

As regards to the second requisite, the law requires that the employer must furnish the worker sought
to be dismissed with two (2) written notices before termination may be validly effected: first, a notice
apprising the employee of the particular acts or omission for which his dismissal is sought and, second,
a subsequent notice informing the employee of the decision to dismiss him. 41

In accordance with this requirement, petitioners were given the required notices, on August 2, 1990
and then on August 23, 1990. The Court finds that petitioners were accorded due process before they
were dismissed on August 31, 1990. It is a well-established rule that the essence of due process is
simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to
explain one's side or an opportunity to seek a reconsideration of the action or ruling complained of. 42
It is evident from the records, that herein petitioners were given all the opportunities to defend
29
Republic of the Philippines Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters
SUPREME COURT by INNODATA. The parties executed an employment contract denominated as a "Contract of
Manila Employment for a Fixed Period," stipulating that the contract shall be for a period of one year,3 to wit:

THIRD DIVISION CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD

CHERRY J. PRICE, STEPHANIE G. G.R. No. 178505 xxxx


DOMINGO AND LOLITA ARBILERA,
Petitioners, Present: WITNESSETH: That

- versus - YNARES-SANTIAGO, J., WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in the course thereof
Chairperson, and represented himself/herself to be fully qualified and skilled for the said position;
INNODATA PHILS. INC.,/ INNODATA
CORPORATION, LEO RABANG AND JANE AUSTRIA-MARTINEZ, WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is desirous of engaging that
NAVARETTE, Respondents. CHICO-NAZARIO, the (sic) services of the EMPLOYEE for a fixed period;
NACHURA, and
REYES, JJ. NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have mutually
agreed as follows:
Promulgated:
September 30, 2008 TERM/DURATION

x------------------------------------------------x The EMPLOYER hereby employs, engages and hires the EMPLOYEE and the EMPLOYEE hereby
accepts such appointment as FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period of
DECISION ONE YEAR.

CHICO-NAZARIO, J.: xxxx

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision1 dated TERMINATION
25 September 2006 and Resolution2 dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No.
72795, which affirmed the Decision dated 14 December 2001 of the National Labor Relations 6.1 In the event that EMPLOYER shall discontinue operating its business, this CONTRACT shall also
Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that petitioners were not ipso facto terminate on the last day of the month on which the EMPLOYER ceases operations with the
illegally dismissed by respondents. same force and effect as is such last day of the month were originally set as the termination date of this
Contract. Further should the Company have no more need for the EMPLOYEE’s services on account
The factual antecedents of the case are as follows: of completion of the project, lack of work (sic) business losses, introduction of new production
processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract
Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee.
corporation engaged in the data encoding and data conversion business. It employed encoders,
indexers, formatters, programmers, quality/quantity staff, and others, to maintain its business and 6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the completion of the project, this
accomplish the job orders of its clients. Respondent Leo Rabang was its Human Resources and contract shall automatically terminate.
Development (HRAD) Manager, while respondent Jane Navarette was its Project Manager.
INNODATA had since ceased operations due to business losses in June 2002. 6.3 COMPANY’s Policy on monthly productivity shall also apply to the EMPLOYEE.

30
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, petitioners were estopped from asserting a position contrary to the contracts which they had
by giving at least Fifteen – (15) notice to that effect. Provided, that such pre-termination shall be knowingly, voluntarily, and willfully agreed to or entered into. There being no illegal dismissal,
effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE. respondents likewise maintained that petitioners were not entitled to reinstatement and backwages.

6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding petitioners’ complaint for illegal
and conditions hereof by giving at least Fifteen (15) days written notice. Termination with cause under dismissal and damages meritorious. The Labor Arbiter held that as formatters, petitioners occupied
this paragraph shall be effective without need of judicial action or approval.4 jobs that were necessary, desirable, and indispensable to the data processing and encoding business of
INNODATA. By the very nature of their work as formatters, petitioners should be considered regular
During their employment as formatters, petitioners were assigned to handle jobs for various clients of employees of INNODATA, who were entitled to security of tenure. Thus, their termination for no just
INNODATA, among which were CAS, Retro, Meridian, Adobe, Netlib, PSM, and Earthweb. Once or authorized cause was illegal. In the end, the Labor Arbiter decreed:
they finished the job for one client, they were immediately assigned to do a new job for another client.
FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants’
On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners informing them of their dismissal illegal and ordering respondent INNODATA PHILS. INC./INNODATA CORPORATION
last day of work. The letter reads: to reinstate them to their former or equivalent position without loss of seniority rights and benefits.
Respondent company is further ordered to pay complainants their full backwages plus ten percent
RE: End of Contract (10%) of the totality thereof as attorney’s fees. The monetary awards due the complainants as of the
date of this decision are as follows:
Date: February 16, 2000
A. Backwages
Please be informed that your employment ceases effective at the end of the close of business hours on
February 16, 2000.5 1. Cherry J. Price

According to INNODATA, petitioners’ employment already ceased due to the end of their contract. 2/17/2000 – 10/17/2000 at 223.50/day

On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and damages against respondents. P5,811.00/mo/ x 8 mos. P46,488.00
Petitioners claimed that they should be considered regular employees since their positions as
formatters were necessary and desirable to the usual business of INNODATA as an encoding, 2. Stephanie Domingo 46,488.00
conversion and data processing company. Petitioners also averred that the decisions in Villanueva v.
National Labor Relations Commission7 and Servidad v. National Labor Relations Commission,8 in (same computation)
which the Court already purportedly ruled "that the nature of employment at Innodata Phils., Inc. is
regular,"9 constituted stare decisis to the present case. Petitioners finally argued that they could not be 3. Lolita Arbilera 46,488.00
considered project employees considering that their employment was not coterminous with any project
or undertaking, the termination of which was predetermined.
(same computation)

On the other hand, respondents explained that INNODATA was engaged in the business of data
Total Backwages P139,464.00
processing, typesetting, indexing, and abstracting for its foreign clients. The bulk of the work was data
processing, which involved data encoding. Data encoding, or the typing of data into the computer,
included pre-encoding, encoding 1 and 2, editing, proofreading, and scanning. Almost half of the B. Attorney’s fees (10% of total award) 13,946.40
employees of INNODATA did data encoding work, while the other half monitored quality control.
Due to the wide range of services rendered to its clients, INNODATA was constrained to hire new Total Award P153,410.40
employees for a fixed period of not more than one year. Respondents asserted that petitioners were not
illegally dismissed, for their employment was terminated due to the expiration of their terms of Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC. The NLRC, in its
employment. Petitioners’ contracts of employment with INNODATA were for a limited period only, Decision dated 14 December 2001, reversed the Labor Arbiter’s Decision dated 17 October 2000, and
commencing on 6 September 1999 and ending on 16 February 2000.10 Respondents further argued that absolved INNODATA of the charge of illegal dismissal.
31
The NLRC found that petitioners were not regular employees, but were fixed-term employees as did not commit illegal dismissal for terminating petitioners’ employment upon the expiration of their
stipulated in their respective contracts of employment. The NLRC applied Brent School, Inc. v. contracts.
Zamora13 and St. Theresa’s School of Novaliches Foundation v. National Labor Relations
Commission,14 in which this Court upheld the validity of fixed-term contracts. The determining factor The Court of Appeals adjudged:
of such contracts is not the duty of the employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship. The NLRC observed that the
WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001 of
petitioners freely and voluntarily entered into the fixed-term employment contracts with INNODATA. the National Labor Relations Commission declaring petitioners were not illegally dismissed is
Hence, INNODATA was not guilty of illegal dismissal when it terminated petitioners’ employment AFFIRMED.17
upon the expiration of their contracts on 16 February 2000.
The petitioners filed a Motion for Reconsideration of the afore-mentioned Decision of the Court of
The dispositive portion of the NLRC Decision thus reads:
Appeals, which was denied by the same court in a Resolution dated 15 June 2007.

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET
Petitioners are now before this Court via the present Petition for Review on Certiorari, based on the
ASIDE and a new one entered DISMISSING the instant complaint for lack of merit.15 following assignment of errors:

The NLRC denied petitioners’ Motion for Reconsideration in a Resolution dated 28 June 2002.16 I.

In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW
petitioners prayed for the annulment, reversal, modification, or setting aside of the Decision dated 14
AND GRAVE ABUSE OF DISCRETION WHEN IT DID NOT APPLY THE SUPREME
December 2001 and Resolution dated 28 June 2002 of the NLRC.lawphil.net COURT RULING IN THE CASE OF NATIVIDAD & QUEJADA THAT THE NATURE
OF EMPLOYMENT OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO
On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the RULED IN AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC.
NLRC that petitioners were not illegally dismissed.
II.
The Court of Appeals ratiocinated that although this Court declared in Villanueva and Servidad that the
employees of INNODATA working as data encoders and abstractors were regular, and not contractual,
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
petitioners admitted entering into contracts of employment with INNODATA for a term of only one RULING THAT THE STIPULATION OF CONTRACT IS GOVERNING AND NOT THE
year and for a project called Earthweb. According to the Court of Appeals, there was no showing that NATURE OF EMPLOYMENT AS DEFINED BY LAW.
petitioners entered into the fixed-term contracts unknowingly and involuntarily, or because
INNODATA applied force, duress or improper pressure on them. The appellate court also observed
that INNODATA and petitioners dealt with each other on more or less equal terms, with no moral III.
dominance exercised by the former on latter. Petitioners were therefore bound by the stipulations in
their contracts terminating their employment after the lapse of the fixed term. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DID NOT
The Court of Appeals further expounded that in fixed-term contracts, the stipulated period of CONSIDER THE EVIDENCE ON RECORD SHOWING THAT THERE IS CLEAR
employment is governing and not the nature thereof. Consequently, even though petitioners were CIRCUMVENTION OF THE LAW ON SECURITY OF TENURE THROUGH
performing functions that are necessary or desirable in the usual business or trade of the employer, CONTRACT MANIPULATION.18
petitioners did not become regular employees because their employment was for a fixed term, which
began on 16 February 1999 and was predetermined to end on 16 February 2000. The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on the
question of whether petitioners were hired by INNODATA under valid fixed-term employment
The appellate court concluded that the periods in petitioners’ contracts of employment were not contracts.
imposed to preclude petitioners from acquiring security of tenure; and, applying the ruling of this
Court in Brent, declared that petitioners’ fixed-term employment contracts were valid. INNODATA

32
After a painstaking review of the arguments and evidences of the parties, the Court finds merit in the However, it is also true that while certain forms of employment require the performance of usual or
present Petition. There were no valid fixed-term contracts and petitioners were regular employees of desirable functions and exceed one year, these do not necessarily result in regular employment under
the INNODATA who could not be dismissed except for just or authorized cause. Article 280 of the Labor Code.23 Under the Civil Code, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects
The employment status of a person is defined and prescribed by law and not by what the parties say it with predetermined dates of completion; they also include those to which the parties by free choice
should be.19 Equally important to consider is that a contract of employment is impressed with public have assigned a specific date of termination.24
interest such that labor contracts must yield to the common good.20 Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves The decisive determinant in term employment is the day certain agreed upon by the parties for the
and their relationships from the impact of labor laws and regulations by simply contracting with each commencement and termination of their employment relationship, a day certain being understood to be
other.21 that which must necessarily come, although it may not be known when. Seasonal employment and
employment for a particular project are instances of employment in which a period, where not
Regular employment has been defined by Article 280 of the Labor Code, as amended, which reads: expressly set down, is necessarily implied.25

Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary Respondents maintain that the contracts of employment entered into by petitioners with INNDOATA
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to were valid fixed-term employment contracts which were automatically terminated at the expiry of the
be regular where the employee has been engaged to perform activities which are usually necessary or period stipulated therein, i.e., 16 February 2000.
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 The Court disagrees.
time of engagement of the employee or where the work or services to be performed is seasonal in
nature and employment is for the duration of the season. While this Court has recognized the validity of fixed-term employment contracts, it has consistently
held that this is the exception rather than the general rule. More importantly, a fixed-term employment
An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, is valid only under certain circumstances. In Brent, the very same case invoked by respondents, the
That, any employee who has rendered at least one year of service, whether such service is continuous Court identified several circumstances wherein a fixed-term is an essential and natural
or broken, shall be considered a regular employee with respect to the activity in which he is employed appurtenance, to wit:
and his employment shall continue while such activity exists. (Underscoring ours).
Some familiar examples may be cited of employment contracts which may be neither for seasonal
Based on the afore-quoted provision, the following employees are accorded regular status: (1) those work nor for specific projects, but to which a fixed term is an essential and natural appurtenance:
who are engaged to perform activities which are necessary or desirable in the usual business or trade of overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept
the employer, regardless of the length of their employment; and (2) those who were initially hired as of regular employment with all that it implies does not appear ever to have been applied, Article 280 of
casual employees, but have rendered at least one year of service, whether continuous or broken, with the Labor Code notwithstanding; also appointments to the positions of dean, assistant dean, college
respect to the activity in which they are employed. secretary, principal, and other administrative offices in educational institutions, which are by practice
or tradition rotated among the faculty members, and where fixed terms are a necessity without which
Undoubtedly, petitioners belong to the first type of regular employees. no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy
Instructions No. 8 of the Minister of Labor implicitly recognize that certain company officials may be
Under Article 280 of the Labor Code, the applicable test to determine whether an employment should elected for what would amount to fixed periods, at the expiration of which they would have to stand
down, in providing that these officials, "x x may lose their jobs as president, executive vice-president
be considered regular or non-regular is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer.22 or vice president, etc. because the stockholders or the board of directors for one reason or another did
not reelect them."26
In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The
As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that
primary business of INNODATA is data encoding, and the formatting of the data entered into the
computers is an essential part of the process of data encoding. Formatting organizes the data encoded, where, from the circumstances, it is apparent that the period was imposed to preclude the acquisition of
making it easier to understand for the clients and/or the intended end users thereof. Undeniably, the tenurial security by the employee, then it should be struck down as being contrary to law, morals, good
customs, public order and public policy.27
work performed by petitioners was necessary or desirable in the business or trade of INNODATA.

33
After considering petitioners’ contracts in their entirety, as well as the circumstances surrounding Commission,28 to the effect that where a contract of employment, being a contract of adhesion, is
petitioners’ employment at INNODATA, the Court is convinced that the terms fixed therein were ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. The
meant only to circumvent petitioners’ right to security of tenure and are, therefore, invalid. Court is, thus, compelled to conclude that petitioners’ contracts of employment became effective on 16
February 1999, and that they were already working continuously for INNODATA for a year.
The contracts of employment submitted by respondents are highly suspect for not only being
ambiguous, but also for appearing to be tampered with. Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends
that petitioners were project employees whose employment ceased at the end of a specific project or
Petitioners alleged that their employment contracts with INNODATA became effective 16 February undertaking. This contention is specious and devoid of merit.
1999, and the first day they reported for work was on 17 February 1999. The Certificate of
Employment issued by the HRAD Manager of INNODATA also indicated that petitioners Price and In Philex Mining Corp. v. National Labor Relations Commission,29 the Court defined "project
Domingo were employed by INNODATA on 17 February 1999. employees" as those workers hired (1) for a specific project or undertaking, and wherein (2) the
completion or termination of such project has been determined at the time of the engagement of the
However, respondents asserted before the Labor Arbiter that petitioners’ employment contracts were employee.
effective only on 6 September 1999. They later on admitted in their Memorandum filed with this Court
that petitioners were originally hired on 16 February 1999 but the project for which they were Scrutinizing petitioners’ employment contracts with INNODATA, however, failed to reveal any
employed was completed before the expiration of one year. Petitioners were merely rehired on 6 mention therein of what specific project or undertaking petitioners were hired for. Although the
September 1999 for a new project. While respondents submitted employment contracts with 6 contracts made general references to a "project," such project was neither named nor described at all
September 1999 as beginning date of effectivity, it is obvious that in one of them, the original therein. The conclusion by the Court of Appeals that petitioners were hired for the Earthweb project is
beginning date of effectivity, 16 February 1999, was merely crossed out and replaced with 6 not supported by any evidence on record. The one-year period for which petitioners were hired was
September 1999. The copies of the employment contracts submitted by petitioners bore similar simply fixed in the employment contracts without reference or connection to the period required for the
alterations. completion of a project. More importantly, there is also a dearth of evidence that such project or
undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact,
The Court notes that the attempt to change the beginning date of effectivity of petitioners’ contracts petitioners alleged - and respondents failed to dispute that petitioners did not work on just one project,
was very crudely done. The alterations are very obvious, and they have not been initialed by the but continuously worked for a series of projects for various clients of INNODATA.
petitioners to indicate their assent to the same. If the contracts were truly fixed-term contracts, then a
change in the term or period agreed upon is material and would already constitute a novation of the In Magcalas v. National Labor Relations Commission,30 the Court struck down a similar claim by the
original contract. employer therein that the dismissed employees were fixed-term and project employees. The Court here
reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in
Such modification and denial by respondents as to the real beginning date of petitioners’ employment favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has the
contracts render the said contracts ambiguous. The contracts themselves state that they would be burden of proof. This burden was not discharged in the present case.
effective until 16 February 2000 for a period of one year. If the contracts took effect only on 6
September 1999, then its period of effectivity would obviously be less than one year, or for a period of As a final observation, the Court also takes note of several other provisions in petitioners’ employment
only about five months. contracts that display utter disregard for their security of tenure. Despite fixing a period or term of
employment, i.e., one year, INNODATA reserved the right to pre-terminate petitioners’ employment
Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period under the following circumstances:
of less than one year. The only reason the Court can discern from such a move on respondents’ part is
so that they can preclude petitioners from acquiring regular status based on their employment for one 6.1 x x x Further should the Company have no more need for the EMPLOYEE’s services on account
year. Nonetheless, the Court emphasizes that it has already found that petitioners should be considered of completion of the project, lack of work (sic) business losses, introduction of new production
regular employees of INNODATA by the nature of the work they performed as formatters, which was processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract
necessary in the business or trade of INNODATA. Hence, the total period of their employment maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee.
becomes irrelevant.
xxxx
Even assuming that petitioners’ length of employment is material, given respondents’ muddled
assertions, this Court adheres to its pronouncement in Villanueva v. National Labor Relations
34
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not
by giving at least Fifteen – (15) [day] notice to that effect. Provided, that such pre-termination shall be personally liable for their official acts, because a corporation, by legal fiction, has a personality
effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE. (Emphasis separate and distinct from its officers, stockholders and members. Although as an exception, corporate
ours.) directors and officers are solidarily held liable with the corporation, where terminations of employment
are done with malice or in bad faith,33 in the absence of evidence that they acted with malice or bad
Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure, faith herein, the Court exempts the individual respondents, Leo Rabang and Jane Navarette, from any
even for the supposedly one-year period of employment provided in their contracts, because they can personal liability for the illegal dismissal of petitioners.
still be pre-terminated (1) upon the completion of an unspecified project; or (2) with or without cause,
for as long as they are given a three-day notice. Such contract provisions are repugnant to the basic WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25
tenet in labor law that no employee may be terminated except for just or authorized cause. September 2006 and Resolution dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No.
72795are hereby REVERSED and SET ASIDE. RespondentInnodata Philippines, Inc./Innodata
Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of Corporation is ORDERED to pay petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita
security of tenure and free them from the bondage of uncertainty of tenure woven by some employers Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one month pay for every year of
into their contracts of employment. This was exactly the purpose of the legislators in drafting Article service, to be computed from the commencement of their employment up to the date respondent
280 of the Labor Code – to prevent the circumvention by unscrupulous employers of the employee’s Innodata Philippines, Inc./Innodata Corporation ceased operations; (b) full backwages, computed from
right to be secure in his tenure by indiscriminately and completely ruling out all written and oral the time petitioners’ compensation was withheld from them up to the time respondent Innodata
agreements inconsistent with the concept of regular employment. Philippines, Inc./Innodata Corporation ceased operations; and (3) 10% of the total monetary award as
attorney’s fees. Costs against respondent Innodata Philippines, Inc./Innodata Corporation.
In all, respondents’ insistence that it can legally dismiss petitioners on the ground that their term of
employment has expired is untenable. To reiterate, petitioners, being regular employees of SO ORDERED.
INNODATA, are entitled to security of tenure. In the words of Article 279 of the Labor Code:
MINITA V. CHICO-NAZARIO
ART. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the Associate Justice
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.

By virtue of the foregoing, an illegally dismissed employee is entitled to 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.

Considering that reinstatement is no longer possible on the ground that INNODATA had ceased its
operations in June 2002 due to business losses, the proper award is separation pay equivalent to one
month pay31 for every year of service, to be computed from the commencement of their employment
up to the closure of INNODATA.

The amount of back wages awarded to petitioners must be computed from the time petitioners were
illegally dismissed until the time INNODATA ceased its operations in June 2002.32

Petitioners are further entitled to attorney’s fees equivalent to 10% of the total monetary award herein,
for having been forced to litigate and incur expenses to protect their rights and interests herein.

35
Republic of the Philippines However, the response to the program was nil. There were only a few takers. To avert further losses,
SUPREME COURT private respondents were constrained to look into the companies' organizational set-up in order to
Manila streamline operations. Consequently, the early retirement program was converted into a special
redundancy program intended to reduce the work force to an optimum number so as to make
FIRST DIVISION operations more viable.

In December 1991, a total of sixty-nine (69) employees from the two companies availed of the special
redundancy program.
G.R. No. 106256 December 28, 1994
On January 17, 1992, the two companies sent letters to sixty-six (66) employees informing them that
their respective positions had been declared redundant. The notices likewise stated that their services
MAYA FARMS EMPLOYEES ORGANIZATION, MAYA REALTY AND LIVESTOCK
would be terminated effective thirty (30) days from receipt thereof. Separation benefits, including the
SUPERVISORY UNION, MAYA FARMS EMPLOYEES ASSOCIATION, and MAYA
conversion of all earned leave credits and other benefits due under existing CBAs were thereafter paid
FARMS, INC. SUPERVISORY UNION, petitioners,
vs. to those affected.
NATIONAL LABOR RELATIONS COMMISSION, MAYA REALTY & LIVESTOCK, INC.,
MAYA FARMS, INC., and LIBERTY FLOUR MILLS, INC., respondents. On January 24, 1992, a notice of strike was filed by the petitioners which accused private respondents,
among others, of unfair labor practice, violation of CBA and discrimination. Conciliation proceedings
Paterno D. Menzon Law Office for petitioners. were held by the National Conciliation and Mediation Board (NCMB) but the parties failed to arrive at
a settlement.
Angara, Abello, Concepcion, Regala & Cruz for private respondents.
On February 6, 1992, the two companies filed a petition with the Secretary of Labor and Employment
asking the latter to assume jurisdiction over the case and/or certify the same for compulsory arbitration.
Thus, on February 12, 1992, the then Acting Labor Secretary (now Secretary) Nieves Confesor
certified the case to herein public respondent for compulsory arbitration.
KAPUNAN, J.:
On March 4, 1992, the parties were called to a hearing to identify the issues involved in the case.
This petition for review on certiorari seeks to set aside the decision of public respondent National Thereafter, they were ordered to submit their respective position papers.
Labor Relations Commission (NLRC) which upheld the legality of the separation of sixty-six (66)
employees who are members of petitioner unions, thereby dismissing petitioners' complaint against In their position paper, petitioners averred that in the dismissal of
private respondents for violation of collective bargaining agreement (CBA) and unfair labor practice. sixty-six (66) union officers and members on the ground of redundancy, private respondents
circumvented the provisions in their CBA, more particularly, Section 2, Article III thereof. Said
Private respondents Maya Farms, Inc. and Maya Realty and Livestock Corporation belong to the provision reads:
Liberty Mills group of companies whose undertakings include the operation of a meat processing plant
which produces ham, bacon, cold cuts, sausages and other meat and poultry products. Sec. 2. LIFO RULE. — In all cases of lay-off or retrenchment resulting in
termination of employment in the line of work, the
Petitioners, on the other hand, are the exclusive bargaining agents of the employees of Maya Farms, Last-In-First-Out (LIFO) Rule must always be strictly observed.
Inc. and the Maya Realty and Livestock Corporation.
Petitioners also alleged that the companies' claim that they were in economic crisis was fabricated
On April 12, 1991, private respondents announced the adoption of an early retirement program as a because in 1990, a net income of over 83 million pesos was realized by Liberty Flour Mills Group of
cost-cutting measure considering that their business operations suffered major setbacks over the years. Companies.2 Furthermore, with the termination of the sixty-six (66) employees pursuant to the special
The program was voluntary and could be availed of only by employees with at least eight (8) years of redundancy program, the remaining work force, especially the drivers, became overworked and
service.1 Dialogues were thereafter conducted to give the parties an opportunity to discuss the details overburdened so much so that they found themselves doing overtime work and reporting for duty even
of the program. Accordingly, the program was amended to reduce the minimum requirement of eight during rest days.
(8) years of service to only five (5) years.
36
Invoking the workers' constitutional right to security of tenure, petitioners prayed for the reinstatement The termination of the sixty-six employees was done in accordance with Article 283 of the Labor
of the sixty-six (66) employees and the payment of attorney's fees as they were constrained to hire the Code. The basis for this was the companies' study to streamline operations so as to make them more
services of counsel in order to protect the workers' rights. viable. Positions which overlapped each other, or which are in excess of the requirements of the
service, were declared redundant.
On their part, private respondents contend that their decision to implement a special redundancy
program was an exercise of management prerogative which could not be interfered with unless it is Article 283 provides:
shown to be tainted with bad faith and ill motive. Private respondents explained that they had no
choice but to reduce their work force, otherwise, they would suffer more losses. Furthermore, they Art. 283. Closure of establishment and reduction of personnel. — The employer may
denied that the program violated CBA provisions. also terminate the employment of any employee due to the installation of labor-
saving devises, redundancy, retrenchment to prevent losses or the closing or
On June 29, 1992, public respondent rendered a decision, 3 the dispositive portion of which reads: cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing in the provisions of this title, by serving a written
WHEREFORE, in view of the foregoing, judgment is hereby rendered confirming notice on the workers and the Department of Labor and Employment at least one (1)
the legality of the separation of the 66 employees of management thereby dismissing month before the intended date thereof. In case of retrenchment to prevent losses of
the charges of violation of CBA and unfair labor practice on the part of management. operations of establishment or undertaking not due to serious business losses or
Accordingly, Maya Farms Incorporated and Maya Realty and Livestocks Inc. are financial reverses, the one (1) month pay or at least
hereby ordered to comply with its (sic) undertaking per the notice of termination one-half (1/2) pay for every year of service, whichever is higher. A fraction of at
dated January 17, 1992 issued to the remaining fifty three (53) employees paying least six (6) months shall be considered one (1) whole year.
them their respective separation benefits as listed in the attached sheet considered
part of this Decision. Said awards (sic) is in addition to other benefits as extended by We fully agree with the findings and conclusions of the public respondent on the issue of termination,
the companies in the letter of termination. to wit:

SO ORDERED.4 We sustain the companies' prerogative to adopt the alleged redundancy/retrenchment


program to minimize if not, to avert losses in the conduct of its operations. This has
Not satisfied with the above-quoted decision, petitioners interposed the instant petition. been recognized in a line of cases. (Wiltshire File Co. vs. NLRC, G.R. No. L-82249,
February 7, 1991). However, the companies' decision on this matter is not absolute.
Petitioners maintain that public respondent grossly erred and gravely abused its discretion when it The basis for such an action must be far from being whimsical and the same must be
proved by substantial evidence. In addition, the implementation of such a decision or
ruled that: (a) the termination of the sixty-six (66) employees was in accordance with the LIFO rule in
the CBA; (b) the termination of the sixty-six (66) employees was in accordance with Article 283 of the policy must be in accordance with existing laws, rules and procedure and provisions
Labor Code; and (c) the payment or offer of payment can substitute for the 30-day required notice prior of the CBA between the parties, if there be any. Short of any of these conditions,
management policy to pursue and terminate its employees allegedly to avert losses,
to termination.5
must fail.
A close scrutiny of these assigned errors however, shows that the same primarily deal with the factual
findings of public respondent which we are not at liberty to set aside in the absence of grave abuse of In subject case, the 66 complaining employees were separated from service as a
discretion amounting to lack or in excess of jurisdiction. result of the decision of management to limit its operations and streamline positions
and personnel requirements.
This Court has consistently ruled that findings of fact of administrative agencies and quasi-judicial
In the case of Maya Farms, Inc. its meat processing department, prior to the adoption
bodies which have acquired expertise because their jurisdiction is confined to specific matters are
generally accorded not only respect but even finality6 and are binding upon this Court unless there is a of special redundancy program had four (4) sections each of which is headed by an
assistant superintendent. These 3 sections are: (a) meat processing; (b)
showing of grave abuse of discretion,7 or where it is clearly shown that they were arrived at arbitrarily
or in disregard of the evidence on record.8 slaughterhouse; (c) packing. With the implementation of the decision of management
to limit meat processing with sausages as the only output, only one position for
assistant superintendent was retained that of Asst. Superintendent for meat
Nevertheless, we will look into the factual findings of public respondent if only to determine whether processing held by Lydia Bandong. (Plantilla attached to the letter of May 24, 1992;
there was grave abuse of discretion amounting to lack or in excess of jurisdiction.
37
also Exh. "E." Likewise, positions of slicer/seater operator, debonner/skinner, ham It is not disputed that the LIFO rule applies to termination of employment in the line of work. 12
and bacon operative, were scrapped. Similarly, positions for packers were decreased Verily, what is contemplated in the LIFO rule is that when there are two or more employees occupying
retaining only five positions out of 21 packers. Also affected were the positions of the same position in the company affected by the retrenchment program, the last one employed will
egg sorters/stockers as only 4 positions were retained out of ten (10) positions. necessarily be the first to go.

A close examination of the positions retained by management show that said Moreover, the reason why there was no violation of the LIFO rule was amply explained by public
positions such as egg sorter, debonner were but the minimal positions required to respondent in this wise:
sustain the limited functions/operations of the meat processing department. In the
absence of any evidence to prove bad faith on the part of management in arriving at . . . . The LIFO rule under the CBA is explicit. It is ordained that in cases of
such decision, which records on hand failed to show in instant case, the rationality of retrenchment resulting in termination of employment in line of work, the employee
the act of management in this regard must be sustained. While it may be true that the who was employed on the latest date must be the first one to go. The provision
Liberty Flour Mills Group of Companies as a whole posted a net income of P83.3 speaks of termination in the line of work. This contemplates a situation where
Million, it is admitted that with respect to operations of the meat processing and employees occupying the same position in the company are to be affected by the
livestock which were undertaken by herein companies sustained losses in the sum of retrenchment program. Since there ought to be a reduction in the number of
P2,257,649.88 (Exh. "3"). This is the reason, as advanced by management, for its personnel in such positions, the length of service of each employees is the
decision to streamline positions resulting in the reduction of manpower compliment determining factor, such that the employee who has a longer period of employment
(sic).9 will be retained.

In Abbott Laboratories (Phils.) Inc. vs. NLRC, 10 we had occasion to uphold the employer in its In the case under consideration, specifically with respect to Maya Farms, several
exercise of what are clearly management prerogatives, thus: positions were affected by the special involuntary redundancy program. These are
packers, egg sorters/stockers, drivers. In the case of packers, prior to the involuntary
The hiring, firing, transfer, demotion, and promotion of employees has been redundancy program,
traditionally, identified as a management prerogative subject to limitations found in twenty-one employees occupied the position of packers. Out of this number, only 5
law, a collective bargaining agreement or general principles of fair play and justice. were retained. In this group of employees, the earliest date of employment was
This is a function associated with the employer's inherent right to control and October 27, 1969, and the latest packer was employed in 1989. The most senior
manage effectively its enterprise. Even as the law is solicitous of the welfare of the employees occupying the position of packers who were retained are as follows:
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business Santos, Laura C. Oct. 27, 1969
affairs to achieve its purpose cannot be denied (see Dangan vs. National Labor Estrada, Mercedes Aug. 20, 1970
Relations Commission, 127 SCRA 706). Hortaleza, Lita June 11, 1971
Jimenez, Lolita April 25, 1972
The rule is well-settled that labor laws discourage interference with an employer's judgment in the Aquino, Teresita June 25, 1975
conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect
the right of an employer to exercise what are clearly management prerogatives. As long as the All the other packers employed after June 2, 1975 (sic) were separated from the
company's exercise of the same is in good faith to advance its interest and not for the purpose of service.
defeating or circumventing the rights of employees under the laws or valid agreements, such exercise
will be upheld. 11
The same is true with respect to egg sorters. The egg sorters employed on or before
April 26, 1972 were retained. All those employed after said date were separated.
The NLRC correctly held that private respondents did not violate the LIFO rule under Section 2,
Article III of the CBA which provides: With respect to the position of drivers, there were eight drivers prior to the
involuntary redundancy program. Thereafter only 3 positions were retained.
Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment resulting in termination Accordingly, the three drivers who were most senior in terms of period of
of employment in the line of work, the employment, were retained. They are: Ceferino D. Narag, Efren Macaraig and
Last-in-First-Out (LIFO) Rule must always be strictly observed. Pablito Macaraig.
38
The case of Roberta Cabrera and Lydia C. Bandong, Asst. Superintendent for
packing and Asst. Superintendent for meat processing respectively was presented by
the union as an instance where the LIFO rule was not observed by management. The
union pointed out that Lydia Bandong who was retained by management was
employed on a much later date than Roberta Cabrera, and both are Assistant
Superintendent. We cannot sustain the union's argument. It is indeed true that
Roberta Cabrera was employed earlier (January 28, 1961) and (sic) Lydia Bandong
(July 9, 1966). However, it is maintained that in meat processing department there
were 3 Asst. Superintendents assigned as head of the 3 sections thereat. The reason
advanced by the company in retaining Bandong was that as Asst. Superintendent for
meat processing she could "already take care of the operations of the other sections."
The nature of work of each assistant superintendent as well as experience were taken
into account by management. Such criteria was not shown to be whimsical nor
carpricious (sic). 13 (Emphasis supplied).

Finally, contrary to petitioners' contention, there is nothing on record to show that the 30-day notice of
termination to the workers was disregarded and that the same substituted with separation pay by
private respondents. As found by public respondent, written notices of separation were sent to the
employees on January 17, 1992. The notices expressly stated that the termination of employment was
to take effect one month from receipt thereof. Therefore, the allegation that separation pay was given
in lieu of the 30-day notice required by law is baseless.

WHEREFORE, finding no grave abuse of discretion amounting to lack or in excess of jurisdiction on


the part of public respondent, the instant petition is hereby DISMISSED.

SO ORDERED.

Padilla, Davide, Jr., Bellosillo and Quiason, JJ., concur.

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