1. G.R. No. 147080.

April 26, 2005

CAPITOL MEDICAL CENTER, INC., Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, JAIME IBABAO, JOSE BALLESTEROS, RONALD
CENTENO, NARCISO SARMIENTO, EDUARDO CANAVERAL, SHERLITO DELA CRUZ, SOFRONIO
COMANDAO, MARIANO GALICIA, RAMON MOLOD, CARMENCITA SARMIENTO, HELEN MOLOD,
ROSA COMANDAO, ANGELITO CUIZON, ALEX MARASIGAN, JESUS CEDRO, ENRICO ROQUE, JAY
PERILLA, HELEN MENDOZA, MARY GLADYS GEMPEROSO, NINI BAUTISTA, ELENA MACARUBBO,
MUSTIOLA SALVACION DAPITO, ALEXANDER MANABE, MICHAEL EUSTAQUIO, ROSE AZARES,
FERNANDO MANZANO, HENRY VERA CRUZ, CHITO MENDOZA, FREDELITA TOMAYAO, ISABEL
BRUCAL, MAHALKO LAYACAN, RAINIER MANACSA, KAREN VILLARENTE, FRANCES ACACIO,
LAMBERTO CONTI, LORENA BEACH, JUDILAH RAVALO, DEBORAH NAVE, MARILEN
CABALQUINTO, EMILIANA RIVERA, MA. ROSARIO URBANO, ROWENA ARILLA, CAPITOL MEDICAL
CENTER EMPLOYEES ASSOCIATION-AFW, GREGORIO DEL PRADO, ARIEL ARAJA, and JESUS
STA. BARBARA, JR., Respondents.
This is a petition for review of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 57500 and its
Resolution denying the motion for reconsideration thereof.
The Antecedents2
Whether the respondent Capitol Medical Center Employees Association-Alliance of Filipino Workers (the
Union, for brevity) was the exclusive bargaining agent of the rank-and-file employees of the petitioner
Capitol Medical Center, Inc. had been the bone of contention between the Union and the petitioner. The
petitioners refusal to negotiate for a collective bargaining agreement (CBA) resulted in a union-led strike on
April 15, 1993.
The Union had to contend with another union the Capitol Medical Center Alliance of Concerned
Employees (CMC-ACE) which demanded for a certification election among the rank-and-file employees of
the petitioner. Med-Arbiter Brigida Fadrigon granted the petition, and the matter was appealed to the
Secretary of Labor and Employment (SOLE). Undersecretary Bienvenido E. Laguesma rendered a
Resolution on November 18, 1994 granting the appeal. He, likewise, denied the motion filed by the petitioner
and the CMC-ACE. The latter thereafter brought the matter to the Court which rendered judgment on
February 4, 1997 affirming the resolution of Undersecretary Laguesma, thus:
1. Dismissing the petition for certification election filed by the Capitol Medical Center Alliance of Concerned
Employees-United Filipino Services Workers for lack of merit; and
2. Directing the management of the Capitol Medical Center to negotiate a CBA with the Capitol Medical
Center Employees Association-Alliance of Filipino Workers, the certified bargaining agent of the rank-andfile employees.3
The decision of the Court became final and executory. Thereafter, in a Letter dated October 3, 1997
addressed to Dr. Thelma N. Clemente, the President and Director of the petitioner, the Union requested for a
meeting to discuss matters pertaining to a negotiation for a CBA, conformably with the decision of the
Court.4 However, in a Letter to the Union dated October 10, 1997, Dr. Clemente rejected the proposed
meeting, on her claim that it was a violation of Republic Act No. 6713 and that the Union was not a legitimate
one. On October 15, 1997, the petitioner filed a Petition for the Cancellation of the Unions Certificate of
Registration with the Department of Labor and Employment (DOLE) on the following grounds:
3) Respondent has failed for several years to submit annually its annual financial statements and other
documents as required by law. For this reason, respondent has long lost its legal personality as a union.
4) Respondent also engaged in a strike which has been declared illegal by the National Labor Relations
Commission.5
Apparently unaware of the petition, the Union reiterated its proposal for CBA negotiations in a Letter dated
October 16, 1997 and suggested the date, time and place of the initial meeting. The Union further reiterated
its plea in another Letter6 dated October 28, 1997, to no avail.
Instead of filing a motion with the SOLE for the enforcement of the resolutions of Undersecretary Laguesma
as affirmed by this Court, the Union filed a Notice of Strike on October 29, 1997 with the National
Conciliation and Mediation Board (NCMB), serving a copy thereof to the petitioner. The Union alleged as

grounds for the projected strike the following acts of the petitioner: (a) refusal to bargain; (b) coercion on
employees; and (c) interference/ restraint to self-organization. 7
A series of conferences was conducted before the NCMB (National Capital Region), but no agreement was
reached. On November 6, 1997, the petitioner even filed a Letter with the Board requesting that the notice of
strike be dismissed;8 the Union had apparently failed to furnish the Regional Branch of the NCMB with a
copy of a notice of the meeting where the strike vote was conducted.
On November 20, 1997, the Union submitted to the NCMB the minutes 9 of the alleged strike vote
purportedly held on November 10, 1997 at the parking lot in front of the petitioners premises, at the corner
of Scout Magbanua Street and Panay Avenue, Quezon City. It appears that 178 out of the 300 union
members participated therein, and the results were as follows: 156 members voted to strike; 14 members
cast negative votes; and eight votes were spoiled. 10
On November 28, 1997, the officers and members of the Union staged a strike. Subsequently, on December
1, 1997, the Union filed an ex parte motion with the DOLE, praying for its assumption of jurisdiction over the
dispute. The Union likewise prayed for the imposition of appropriate legal sanctions, not limited to contempt
and other penalties, against the hospital director/president and other responsible corporate officers for their
continuous refusal, in bad faith, to bargain collectively with the Union, to adjudge the same hospital
director/president and other corporate officers guilty of unfair labor practices, and for other just, equitable
and expeditious reliefs in the premises.11
On December 4, 1997, the SOLE issued an Order, assuming jurisdiction over the ongoing labor dispute. The
decretal portion of the order reads:
WHEREFORE, this Office now assumes jurisdiction over the labor disputes at Capitol Medical Center
pursuant to Article 263(g) of the Labor Code, as amended. Consequently, all striking workers are directed to
return to work within twenty-four (24) hours from the receipt of this Order and the management to resume
normal operations and accept back all striking workers under the same terms and conditions prevailing
before the strike. Further, parties are directed to cease and desist from committing any act that may
exacerbate the situation.
Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and
counter-proposals leading to the conclusion of the collective bargaining agreements in compliance with
aforementioned Resolution of the Office as affirmed by the Supreme Court.
SO ORDERED.12
In obedience to the order of the SOLE, the officers and members of the Union stopped their strike and
returned to work.
For its part, the petitioner filed a petition13 to declare the strike illegal with the National Labor Relations
Commission (NLRC), docketed as NLRC NCR Case No. 00-12-08644-97. In its position paper, the petitioner
appended the affidavit of Erwin Barbacena, the overseer of the property across the hospital which was being
used as a parking lot, at the corner of Scout Magbanua Street and Panay Avenue, Quezon City. Also
included were the affidavits of Simon J. Tingzon and Reggie B. Barawid, the petitioners security guards
assigned in front of the hospital premises. They attested to the fact that no secret balloting took place at the
said parking lot from 6:00 a.m. to 7:00 p.m. of November 10, 1997. 14 The petitioner also appended the
affidavit of Henry V. Vera Cruz, who alleged that he was a member of the Union and had discovered that
signatures on the Statements of Cash Receipt Over Disbursement submitted by the Union to the DOLE
purporting to be his were not his genuine signatures; 15the affidavits of 17 of its employees, who declared that
no formal voting was held by the members of the Union on the said date, were also submitted. The latter
employees also declared that they were not members of any union, and yet were asked to sign documents
purporting to be a strike vote attendance and unnumbered strike vote ballots on different dates from
November 8 to 11, 1997.
In their position paper, the respondents appended the joint affidavit of the Union president and those
members who alleged that they had cast their votes during the strike vote held on November 10, 1997. 16
In the meantime, on September 30, 1998, the Regional Director of the DOLE rendered a Decision denying
the petition for the cancellation of the respondent Unions certificate of registration. The decision was
affirmed by the Director of the Bureau of Labor Relations on December 29, 1998.

In a parallel development, Labor Arbiter Facundo L. Leda rendered a Decision on December 23, 1998 in
NLRC NCR Case No. 00-12-08644-97 in favor of the petitioner, and declared the strike staged by the
respondents illegal. The fallo of the decision reads:
1. Declaring as illegal the strike staged by the respondents from November 28, 1997 to December 5, 1997;
2. Declaring respondent Jaime Ibabao, in his capacity as union president, the other union officers, and
respondents Ronald Q. Centeno, Michael Eustaquio and Henry Vera Cruz to have lost their employment
status with petitioner; and
3. Ordering the above respondents to pay, jointly and severally, petitioner the amount of Two Hundred
Thousand Pesos (P200,000.00) by way of damages.17
The Labor Arbiter ruled that no voting had taken place on November 10, 1997; moreover, no notice of such
voting was furnished to the NCMB at least twenty-four (24) hours prior to the intended holding of the strike
vote. According to the Labor Arbiter, the affidavits of the petitioners 17 employees who alleged that no strike
vote was taken, and supported by the affidavit of the overseer of the parking lot and the security guards,
must prevail as against the minutes of the strike vote presented by the respondents. The Labor Arbiter also
held that in light of Article 263(9) of the Labor Code, the respondent Union should have filed a motion for a
writ of execution of the resolution of Undersecretary Laguesma which was affirmed by this Court instead of
staging a strike.
The respondents appealed the decision to the NLRC which rendered a Decision 18 on June 14, 1999,
granting their appeal and reversing the decision of the Labor Arbiter. The NLRC also denied the petitioners
petition to declare the strike illegal. In resolving the issue of whether the union members held a strike vote
on November 10, 1997, the NLRC ruled as follows:
We find untenable the Labor Arbiters finding that no actual strike voting took place on November 10, 1997,
claiming that this is supported by the affidavit of Erwin Barbacena, the overseer of the parking lot across the
hospital, and the sworn statements of nineteen (19) (sic) union members. While it is true that no strike voting
took place in the parking lot which he is overseeing, it does not mean that no strike voting ever took place at
all because the same was conducted in the parking lot immediately/directly fronting, not across, the hospital
building (Annexes "1-J," "1-K" to "1-K-6"). Further, it is apparent that the nineteen (19) (sic) hospital
employees, who recanted their participation in the strike voting, did so involuntarily for fear of loss of
employment, considering that their Affidavits are uniform and pro forma (Annexes "H-2" to "H-19").19
The NLRC ruled that under Section 7, Rule XXII of DOLE Order No. 9, Series of 1997, absent a showing
that the NCMB decided to supervise the conduct of a secret balloting and informed the union of the said
decision, or that any such request was made by any of the parties who would be affected by the secret
balloting and to which the NCMB agreed, the respondents were not mandated to furnish the NCMB with
such notice before the strike vote was conducted. 20
The petitioner filed a motion for the reconsideration of the decision, but the NLRC denied the said motion on
September 30, 1999.21
The petitioner filed a petition for certiorari with the CA assailing the decision and resolution of the NLRC on
the following allegation:
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC) COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, ACTED
CAPRICIOUSLY, AND CONTRAVENED THE LAW AND ESTABLISHED JURISPRUDENCE IN
REVERSING THE LABOR ARBITERS DECISION DATED DECEMBER 23, 1998 (ANNEX "E") AND IN
UPHOLDING THE LEGALITY OF THE STRIKE STAGED BY PRIVATE RESPONDENTS FROM
NOVEMBER 28, 1997 TO DECEMBER 5, 1997. 22
On September 29, 2000, the CA rendered judgment dismissing the petition and affirming the assailed
decision and resolution of the NLRC.
The petitioner filed the instant petition for review on certiorari under Rule 45 of the Rules of Court on the
following ground:
THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE NLRCS FINDING THAT
RESPONDENTS COMPLIED WITH THE LEGAL REQUIREMENTS FOR STAGING THE SUBJECT
STRIKE.23

The petitioner asserts that the NLRC and the CA erred in holding that the submission of a notice of a strike
vote to the Regional Branch of the NCMB as required by Section 7, Rule XXII of the Omnibus Rules
Implementing the Labor Code, is merely directory and not mandatory. The use of the word "shall" in the
rules, the petitioner avers, indubitably indicates the mandatory nature of the respondent Unions duty to
submit the said notice of strike vote.
The petitioner contends that the CA erred in affirming the decision of the NLRC which declared that the
respondents complied with all the requirements for a lawful strike. The petitioner insists that, as gleaned
from the affidavits of the 17 union members and that of the overseer, and contrary to the joint affidavit of the
officers and some union members, no meeting was held and no secret balloting was conducted on
November 10, 1997.
The petitioner faults the CA and the NLRC for holding that a meeting for a strike vote was held on the said
date by the respondents, despite the fact that the NLRC did not conduct an ocular inspection of the area
where the respondents members allegedly held the voting. The petitioner also points out that it adduced
documentary evidence in the form of affidavits executed by 17 members of the respondent union which
remained unrebutted. The petitioner also posits that the CA and the NLRC erred in reversing the finding of
the Labor Arbiter; furthermore, there was no need for the respondent union to stage a strike on November
28, 1997 because it had filed an urgent motion with the DOLE for the enforcement and execution of the
decision of this Court in G.R. No. 118915.
The petition is meritorious.
We agree with the petitioner that the respondent Union failed to comply with the second paragraph of
Section 10, Rule XXII of the Omnibus Rules of the NLRC which reads:
Section 10. Strike or lockout vote. A decision to declare a strike must be approved by a majority of the total
union membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda called
for the purpose. A decision to declare a lockout must be approved by a majority of the Board of Directors of
the employer, corporation or association or the partners obtained by a secret ballot in a meeting called for
the purpose.
The regional branch of the Board may, at its own initiative or upon the request of any affected party,
supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the
regional branch of the Board and notice of meetings referred to in the preceding paragraph at least twentyfour (24) hours before such meetings as well as the results of the voting at least seven (7) days before the
intended strike or lockout, subject to the cooling-off period provided in this Rule.
Although the second paragraph of Section 10 of the said Rule is not provided in the Labor Code of the
Philippines, nevertheless, the same was incorporated in the Omnibus Rules Implementing the Labor Code
and has the force and effect of law.24
Aside from the mandatory notices embedded in Article 263, paragraphs (c) and (f) of the Labor Code, a
union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike
vote, at least twenty-four (24) hours prior to such meeting. Unless the NCMB is notified of the date, place
and time of the meeting of the union members for the conduct of a strike vote, the NCMB would be unable to
supervise the holding of the same, if and when it decides to exercise its power of supervision. In National
Federation of Labor v. NLRC,25 the Court enumerated the notices required by Article 263 of the Labor Code
and the Implementing Rules, which include the 24-hour prior notice to the NCMB:
1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the Regional
Branch of the NCMB, copy furnished the employer of the union;
2) A cooling-off period must be observed between the filing of notice and the actual execution of the strike
thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair labor practice.
However, in the case of union busting where the unions existence is threatened, the cooling-off period need
not be observed.

4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with a 24-hour
prior notice to NCMB. The decision to declare a strike requires the secret-ballot approval of majority of the
total union membership in the bargaining unit concerned.

5) The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended
strike or lockout, subject to the cooling-off period.
A union is mandated to notify the NCMB of an impending dispute in a particular bargaining unit via a notice
of strike. Thereafter, the NCMB, through its conciliator-mediators, shall call the parties to a conference at the
soonest possible time in order to actively assist them in exploring all possibilities for amicable settlement. In
the event of the failure in the conciliation/mediation proceedings, the parties shall be encouraged to submit
their dispute for voluntary arbitration. However, if the parties refuse, the union may hold a strike vote, and if
the requisite number of votes is obtained, a strike may ensue. The purpose of the strike vote is to ensure
that the decision to strike broadly rests with the majority of the union members in general and not with a
mere minority, and at the same time, discourage wildcat strikes, union bossism and even corruption. 26 A
strike vote report submitted to the NCMB at least seven days prior to the intended date of strike ensures that
a strike vote was, indeed, taken. In the event that the report is false, the seven-day period affords the
members an opportunity to take the appropriate remedy before it is too late. 27 The 15 to 30 day cooling-off
period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of
the NCMB conciliator/mediator,28 while the seven-day strike ban is intended to give the DOLE an opportunity
to verify whether the projected strike really carries the imprimatur of the majority of the union members. 29
The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the
meeting for the said purpose is designed to (a) inform the NCMB of the intent of the union to conduct a strike
vote; (b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of
the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c) should the
NCMB decide on its own initiative or upon the request of an interested party including the employer, to
supervise the strike vote, to give it ample time to prepare for the deployment of the requisite personnel,
including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the unions
decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine for
itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The
failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior
to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal.
In this case, the respondent Union failed to comply with the 24-hour prior notice requirement to the NCMB
before it conducted the alleged strike vote meeting on November 10, 1997. As a result, the petitioner
complained that no strike vote meeting ever took place and averred that the strike staged by the respondent
union was illegal.
Conformably to Article 264 of the Labor Code of the Philippines 30 and Section 7, Rule XXII of the Omnibus
Rules Implementing the Labor Code,31 no labor organization shall declare a strike unless supported by a
majority vote of the members of the union obtained by secret ballot in a meeting called for that purpose. The
requirement is mandatory and the failure of a union to comply therewith renders the strike illegal. 32 The
union is thus mandated to allege and prove compliance with the requirements of the law.
In the present case, there is a divergence between the factual findings of the Labor Arbiter, on the one hand,
and the NLRC and the CA, on the other, in that the Labor Arbiter found and declared in his decision that no
secret voting ever took place in the parking lot fronting the hospital on November 10, 1997 by and among
the 300 members of the respondent Union. Erwin Barbacena, the overseer of the only parking lot fronting
the hospital, and security guards Simon Tingzon and Reggie Barawid, declared in their respective affidavits
that no secret voting ever took place on November 10, 1997; 17 employees of the petitioner also denied in
their respective statements that they were not members of the respondent Union, and were asked to merely
sign attendance papers and unnumbered votes. The NLRC and the CA declared in their respective
decisions that the affidavits of the petitioners 17 employees had no probative weight because the said
employees merely executed their affidavits out of fear of losing their jobs. The NLRC and the CA anchored
their conclusion on their finding that the affidavits of the employees were uniform and pro forma.
We agree with the finding of the Labor Arbiter that no secret balloting to strike was conducted by the
respondent Union on November 10, 1997 at the parking lot in front of the hospital, at the corner of Scout
Magbanua Street and Panay Avenue, Quezon City. This can be gleaned from the affidavit of Barbacena and
the joint affidavit of Tingzon and Barawid, respectively:
1. That I am working as an overseer of a parking lot owned by Mrs. Madelaine Dionisio and located right in
front of the Capitol Medical Center, specifically at the corner of Scout Magbanua Street and Panay Avenue,
Quezon City;
2. That on November 10, 1997, during my entire tour of duty from 6:00 a.m. to 6:00 p.m., no voting or
election was conducted in the aforementioned parking space for employees of the Capitol Medical Center
and/or their guests, or by any other group for that matter.33


1. That I, Simon J. Tingzon, am a security officer of Veterans Philippine Scout Security Agency (hereinafter
referred to as VPSSA), assigned, since July 1997 up to the present, as Security Detachment Commander at
Capitol Medical Center (hereinafter referred to as CMC) located at Scout Magbanua corner Panay Avenue,
Quezon City;
2. That my (Tingzon) functions as such include over-all in charge of security of all buildings and properties of
CMC, and roving in the entire premises including the parking lots of all the buildings of CMC;
3. That I, Reggie B. Barawid, am a security guard of VPSSA, assigned, since June 1997 up to the present,
as security guard at CMC;
4. That my (Barawid) functions as such include access control of all persons coming in and out of CMCs
buildings and properties. I also sometimes guard the parking areas of CMC;
5. That on November 10, 1997, both of us were on duty at CMC from 7:00 a.m. to 7:00 p.m., with me
(Barawid) assigned at the main door of the CMCs Main Building along Scout Magbanua St.;
6. That on said date, during our entire tour of duty, there was no voting or election conducted in any of the
four parking spaces for CMC personnel and guests. 34
The allegations in the foregoing affidavits belie the claim of the respondents and the finding of the NLRC that
a secret balloting took place on November 10, 1997 in front of the hospital at the corner of Scout Magbanua
Street and Panay Avenue, Quezon City. The respondents failed to prove the existence of a parking lot in
front of the hospital other than the parking lot across from it. Indeed, 17 of those who purportedly voted in a
secret voting executed their separate affidavits that no secret balloting took place on November 10, 1997,
and that even if they were not members of the respondent Union, were asked to vote and to sign attendance
papers. The respondents failed to adduce substantial evidence that the said affiants were coerced into
executing the said affidavits. The bare fact that some portions of the said affidavits are similarly worded does
not constitute substantial evidence that the petitioner forced, intimidated or coerced the affiants to execute
the same.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of the Court of Appeals and
NLRC are SET ASIDE AND REVERSED. The Decision of the Labor Arbiter is REINSTATED. No costs.
SO ORDERED.
2. G.R. No. 75271-73 June 27, 1988
CATALINO N. SARMIENTO and 71 other striking workers of ASIAN TRANSMISSION
CORPORATION,petitioners,
vs.
THE HON. JUDGE ORLANDO R. TUICO of the Municipal Trial Court of Calamba, Laguna, ROBERTO
PIMENTEL, NELSON C. TEJADA, and the COMMANDING OFFICER, 224th PC Company at Los Baos
Laguna, respondents.
No. L-77567 June 27, 1988
ASIAN TRANSMISSION, CORPORATION (ATC), petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), respondent.
CRUZ, J.:
Two basic questions are presented in these cases, to wit:
1. Whether or not a return-to-work order may be validly issued by the National Labor Relations Commission
pending determination of the legality of the strike; and
2. Whether or not, pending such determination, the criminal prosecution of certain persons involved in the
said strike may be validly restrained.

The first issue was submitted to the Court in G.R. No. 77567, to which we gave due course on July 1,
1987. 1 The case arose when on May 7, 1986, petitioner Asian Transmission Corporation terminated the
services of Catalino Sarmiento, vice-president of the Bisig ng Asian Transmission Labor Union (BATU), for
allegedly carrying a deadly weapon in the company premises. 2 As a result, the BATU filed a notice of strike
on May 26, 1986, claiming that the ATC had committed an unfair labor practice. 3 The conciliatory
conference held on June 5, 1986, failed to settle the dispute. The ATC then filed a petition asking the
Ministry of Labor and Employment to assume jurisdiction over the matter or certify the same to the NLRC for
compulsory arbitration. 4 Noting that the impending strike would prejudice the national interest as well as the
welfare of some 350 workers and their families, the MOLE issued an order on June 3, 1986, certifying the
labor dispute to the NLRC. 5At the same time, it enjoined the management from locking out its employees
and the union from declaring a strike or similar concerted action. This order was reiterated on June 13,
1986, upon the representation of the ATC that some 40 workers had declared a strike and were picketing the
company premises. 6 Proceedings could not continue in the NLRC, however, because of the acceptance by
President Aquino of the resignations of eight of its members, leaving only the vice-chairman in office. 7 For
this reason, the MOLE, on September 9, 1986, set aside the orders of June 9 and 13, 1986, and directly
assumed jurisdiction of the dispute, at the same time enjoining the company to accept all returning
workers. 8 This order was itself set aside on November 24,1986, upon motion of both the BATU and the ATC
in view of the appointment of new commissioners in the NLRC. The MOLE then returned the case to the
respondent NLRC and directed it to expeditiously resolve all issues relating to the dispute, "adding that the
union and the striking workers are ordered to return to work immediately." 9 Conformably, the NLRC issued
on January 13, 1987 the following resolution, which it affirmed in its resolution of February 12, 1987, denying
the motion for reconsideration:
CERTIFIED CASE No. NCR-NS-5-214-86, entitled Asian Transmission Corporation,
Petitioner versus Bisig ng Asian Transmission Labor Union (BATU), et al., Respondents.Considering that the petitioner, despite the order dated 24 November 1986 of the Acting
Minister, "to accept all the returning workers" continues to defy the directive insofar as 44 of
the workers are concerned, the Commission, sitting en banc, resolved to order the petitioner
to accept the said workers, or, to reinstate them on payroll immediately upon receipt of the
resolution.
It is these orders of January 13 and February 12, 1987, that are challenged by the ATC in this petition for
certiorari and are the subject of the temporary restraining order issued by this Court on March 23, 1987. 10
The second issue was raised in G.R. Nos. 75271-73, which we have consolidated with the first- mentioned
petition because of the Identity of their factual antecedents. This issue was provoked by three criminal
complaints filed against the petitioning workers in the municipal trial court of Calamba, Laguna, two by the
personnel administrative officer of the ATC and the third by the Philippine Constabulary. The first two
complaints, filed on July 11 and July 15, 1986, were for "Violation of Article 265, par. 1, in relation to Article
273 of the Labor Code of the Philippines."11 The third, filed on July 17, 1986, was for coercion. 12 In all three
complaints, the defendants were charged with staging an illegal strike, barricading the gates of the ATC
plant and preventing the workers through intimidation, harassment and force from reporting for work. Acting
on Criminal Case No. 15984, Judge Orlando Tuico issued a warrant of arrest against the petitioners and
committed 72 of them to jail although he later ordered the release of 61 of them to the custody of the
municipal mayor of Calamba, Laguna. 13 The petitioners had earlier moved for the lifting of the warrant of
arrest and the referral of the coercion charge to the NLRC and, later, for the dismissal of Criminal Cases
Nos. 15973 and 15981 on the ground that they came under the primary jurisdiction of the NLRC. 14 As the
judge had not ruled on these motions, the petitioners came to this Court in this petition for certiorari and
prohibition. On August 12, 1986, we issued a temporary restraining order to prevent Judge Tuico from
enforcing the warrant of arrest and further proceeding with the case. 15 This order was reiterated on
September 21, 1987, "to relieve tensions that might prevent an amicable settlement of the dispute between
the parties in the compulsory arbitration proceedings now going on in the Department of Labor," and made
to apply to Judge Paterno Lustre, who had succeeded Judge Tuico. 16
That is the background. Now to the merits.
It is contended by the ATC that the NLRC had no jurisdiction in issuing the return-to-work order and that in
any case the same should be annulled for being oppressive and violative of due process.
The question of competence is easily resolved. The authority for the order is found in Article 264(g) of the
Labor Code, as amended by B.P. Blg. 227, which provides as follows:
When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts
adversely affecting the national interest, such as may occur in but not limited to public
utilities, companies engaged in the generation or distribution of energy, banks, hospitals, and
export- oriented industries, including those within export processing zones, the Minister of

Labor and Employment shall assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such assumption or certification shall
have the effect of automatically enjoining the intended or impending strike or lockout as
specified in the assumption order. If one has already taken place at the time of assumption
or certification, all striking or locked out employees shall immediately return to work and the
employer shall immediately resume operations and readmit all workers under the same
terms and conditions prevailing before the strike or lockout. The Minister may seek the
assistance of law-enforcement agencies to ensure compliance with this provision as well as
such orders as he may issue to enforce the same.
The justification of the MOLE for such order was embodied therein, thus:
Asian Transmission Corporation is an export-oriented enterprise and its annual export
amounts to 90% of its sales generating more than twelve (12) million dollars per year. The
corporation employs three hundred fifty (350) workers with a total monthly take home pay or
approximately P1,300,000.00 a month.
Any disruption of company operations will cause the delay of shipments of export finished
products which have been previously committed to customers abroad, thereby seriously
hampering the economic recovery program which is being pursued by the government. It wig
also affect gravely the livelihood of three hundred fifty (350) families who will be deprived of
their incomes.
This Office is therefore of the opinion that a strike or any disruption in the normal operation of
the company will adversely affect the national interest. It is in the interest of both labor and
management that the dispute be certified for compulsory arbitration to National Labor
Relations Commission.
WHEREFORE, this Office hereby certifies the labor dispute to the National Labor Relations
Commission in accordance with Article 264(g) of the Labor Code, as amended. In line with
this Certification, the management is enjoined from locking out its employees and the union
from declaring a strike, or any concerted action which will disrupt the harmonious labormanagement relations at the company. 17
There can be no question that the MOLE acted correctly in certifying the labor dispute to the NLRC, given
the predictable prejudice the strike might cause not only to the parties but more especially to the national
interest. Affirming this fact, we conclude that the return-to-work order was equally valid as a statutory part
and parcel of the certification order issued by the MOLE on November 24, 1986. The law itself provides that
"such assumption or certification shall have the effect of automatically enjoining the intended or impending
strike. If one has already taken place at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall immediately resume operations and
readmit all workers under the same terms and conditions prevailing before the strike or lockout." The
challenged order of the NLRC was actually only an implementation of the above provision of the Labor Code
and a reiteration of the directive earlier issued by the MOLE in its own assumption order of September 9,
1986.
It must be stressed that while one purpose of the return-to-work order is to protect the workers who might
otherwise be locked out by the employer for threatening or waging the strike, the more important reason is to
prevent impairment of the national interest in case the operations of the company are disrupted by a refusal
of the strikers to return to work as directed. In the instant case, stoppage of work in the firm will be hurtful not
only to both the employer and the employees. More particularly, it is the national economy that will suffer
because of the resultant reduction in our export earnings and our dollar reserves, not to mention possible
cancellation of the contracts of the company with foreign importers. It was particularly for the purpose of
avoiding such a development that the labor dispute was certified to the NLRC, with the return-to-work order
following as a matter of course under the law.
It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a
duty; and while as a right it may be waived, it must be discharged as a duty even against the worker's will.
Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker
must return to his job together with his co-workers so the operations of the company can be resumed and it
can continue serving the public and promoting its interest. That is the real reason such return can be
compelled. So imperative is the order in fact that it is not even considered violative of the right against
involuntary servitude, as this Court held in Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco
Sawmills. 18 The worker can of course give up his work, thus severing his ties with the company, if he does

not want to obey the order; but the order must be obeyed if he wants to retain his work even if his inclination
is to strike.
If the worker refuses to obey the return-to-work order, can it be said that he is just suspending the enjoyment
of a right and he is entitled to assert it later as and when he sees fit? In the meantime is the management
required to keep his position open, unable to employ replacement to perform the work the reluctant striker is
unwilling to resume because he is still manning the picket lines?
While the ATC has manifested its willingness to accept most of the workers, and has in fact already done so,
it has balked at the demand of the remaining workers to be also allowed to return to work. 19 Its reason is
that these persons, instead of complying with the return-to-work order, as most of the workers have done,
insisted on staging the restrained strike and defiantly picketed the company premises to prevent the
resumption of operations. By so doing, the ATC submits, these strikers have forfeited their right to be
readmitted, having abandoned their positions, and so could be validly replaced.
The Court agrees.
The records show that the return-to-work order was first issued on June 3, 1986, and was reiterated on June
13, 1986. The strike was declared thereafter, if we go by the criminal complaints in G.R. Nos. 75271-73,
where the alleged acts are claimed to have been done on June 9,1986, and July 15,1986.
These dates are not denied. In fact, the petitioners argue in their pleadings that they were engaged only in
peaceful picketing, 20 which would signify that they had not on those dates returned to work as required and
had decided instead to ignore the said order. By their own acts, they are deemed to have abandoned their
employment and cannot now demand the right to return thereto by virtue of the very order they have defied.
One other point that must be underscored is that the return-to-work order is issued pending the
determination of the legality or illegality of the strike. It is not correct to say that it may be enforced only if the
strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to maintain
the status quo while the determination is being made. Otherwise, the workers who contend that their strike is
legal can refuse to return to their work and cause a standstill in the company operations while retaining the
positions they refuse to discharge or allow the management to fill. Worse, they win also claim payment for
work not done, on the ground that they are still legally employed although actually engaged in activities
inimical to their employer's interest.
This is like eating one's cake and having it too, and at the expense of the management. Such an unfair
situation surely was not contemplated by our labor laws and cannot be justified under the social justice
policy, which is a policy of fairness to both labor and management. Neither can this unseemly arrangement
be sustained under the due process clause as the order, if thus interpreted, would be plainly oppressive and
arbitrary.
Accordingly, the Court holds that the return-to-work order should benefit only those workers who complied
therewith and, regardless of the outcome of the compulsory arbitration proceedings, are entitled to be paid
for work they have actually performed. Conversely, those workers who refused to obey the said order and
instead waged the restrained strike are not entitled to be paid for work not done or to reinstatement to the
positions they have abandoned by their refusal to return thereto as ordered.
Turning now to the second issue, we hold that while as a general rule the prosecution of criminal offenses is
not subject to injunction, the exception must apply in the case at bar. The suspension of proceedings in the
criminal complaints filed before the municipal court of Calamba, Laguna, is justified on the ground of
prematurity as there is no question that the acts complained of are connected with the compulsory
arbitration proceedings still pending in the NLRC. The first two complaints, as expressly captioned, are for
"violation of Art. 265, par. 2, in relation to Art. 273, of the Labor Code of the Philippines," and the third
complaint relates to the alleged acts of coercion committed by the defendants in blocking access to the
premises of the ATC. Two of the criminal complaints were filed by the personnel administrative officer of the
ATC although he vigorously if not convincingly insists that he was acting in his personal capacity.
In view of this, the three criminal cases should be suspended until the completion of the compulsory
arbitration proceedings in the NLRC, conformably to the policy embodied in Circular No. 15, series of 1982,
and Circular No. 9, series of 1986, issued by the Ministry of Justice in connection with the implementation of
B.P. Blg. 227. 21 These circulars, briefly stated, require fiscals and other government prosecutors to first
secure the clearance of the Ministry of Labor and/or the Office of the President "before taking cognizance of
complaints for preliminary investigation and the filing in court of the corresponding informations of cases
arising out of or related to a labor dispute," including "allegations of violence, coercion, physical injuries,
assault upon a person in authority and other similar acts of intimidation obstructing the free ingress to and

egress from a factory or place of operation of the machines of such factory, or the employer's premises." It
does not appear from the record that such clearance was obtained, conformably to the procedure laid down
"to attain the industrial peace which is the primordial objectives of this law," before the three criminal cases
were filed.
The Court makes no findings on the merits of the labor dispute and the criminal cases against the workers
as these are not in issue in the petitions before it. What it can only express at this point is the prayerful hope
that these disagreements will be eventually resolved with justice to all parties and in that spirit of mutual
accommodation that should always characterize the relations between the workers and their employer.
Labor and management are indispensable partners in the common endeavor for individual dignity and
national prosperity. There is no reason why they cannot pursue these goals with open hands rather than
clenched fists, striving with rather than against each other, that they may together speed the dawning of a
richer day for all in this amiable land of ours.
WHEREFORE, judgment is hereby rendered as follows:
1. In G.R. No. 77567, the petition is DENIED and the challenged Orders of the NLRC dated January 13,
1986, and February 12, 1986, are AFFIRMED as above interpreted. The temporary restraining order dated
March 23, 1987, is LIFTED.
2. In G.R. Nos. 75271-73, the temporary restraining order of August 12,1986, and September 21, 1986, are
CONTINUED IN FORCE until completion of the compulsory arbitration proceedings in the NLRC.
No costs. It is so ordered.
3. G.R. Nos. 95494-97 September 7, 1995
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, JOSE ERAD, FERNANDO HERNANDO, EDDIE
ESTRELLA, CIRILO DAYAG, EDUARDO POQUITA, CARLITO PEPITO, RENE ARAO, JUANITO GAHUM,
EMILIANO MAGNO, PERLITO LISONDRA, GREGORIO ALBARAN, ABRAHAM BAYLON, DIONESIO
TRUCIO, TOMAS BASCO AND ROSARIO SINDAY, pertitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION & DEVELOPMENT CORPORATION, respondents.
G.R. Nos. 95494-97 September 7, 1995
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND CADECO ARGO DEVELOPMENT PHILS.,
INC.respondents.
G.R. Nos. 95494-97 September 7, 1995
LAPANDAY WORKERS UNION, ARQUILAO BACOLOD, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND LAPANDAY AGRICULTURAL & DEVELOPMENT
CORPORATION, respondents.
G.R. Nos. 95494-97 September 7, 1995
LAPANDAY WORKERS UNION, TOMAS N. BASCO, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND LAPANDAY AGRICULTURAL & DEVELOPMENT
CORPORATION, respondents.

PUNO, J.:
Petitioner Lapanday Agricultural Workers' Union (Union for brevity) and petitioners-workers of Lapanday
Agricultural and Development Corporation and CADECO Agro Development Philippines, Inc., seek to
reverse the consolidated Decision dated August 29, 1990, 1rendered by public respondent National Labor
Relations Commision, declaring their strike illegal and ordering the dismissal of their leaders.

10

The background of the case:

Private respondents are sister companies engaged in the production of bananas. Their agricultural
establishments are located in Davao City.
On the other hand, petitioner Lapanday Workers' Union (Union) is the duly certified bargaining agent of the
rank and file employees of private respondents. The Union is affiliated with the KMU-ANGLO. The other
petitioners are all members of the Union.
The records show that petitioner Union has a collective bargaining agreement with private respondents,
covering the period from December 5, 1985 to November 30, 1988. A few months before the expiration of
their CBA, private respondents initiated certain management policies which disrupted the relationship of the
parties.
First, on August 1, 1988, private respondents contracted Philippine Eagle Protectors and Security Agency,
Inc., to provide security services for their business premises located in Lapanday, Bandug, Callawa, Davao
City, and Guising, Davao Del Sur. Their contract also called for the protection of the lives and limbs of private
respondents' officers, employees and guests within company premises. The Union branded the security
guards posted within the company premises as private respondents' "goons" and "special forces." It also
accused the guards of intimidating and harassing their members.
Second, private respondents conducted seminars on Human Development and Industrial Relations (HDIR)
for their managerial and supervisory employees and, later, the rank-and-filers, to promote their social
education and economic growth. Among the topics discussed in the seminar were the mission statement of
the company, corporate values, and the Philippine political spectrum. The Union claimed that the module on
the Philippine political spectrum lumped the ANGLO (Alliance of Nationalist and Genuine Labor
Organization), with other outlawed labor organizations such as the National Democratic Front or other leftist
groups.
These issues were discussed during a labor-management meeting held on August 2, 1988. The labor group
was represented by the Union, through its President, petitioner Arquilao Bacolod, and its legal counsel. After
private respondents explained the issues, the Union agreed to allow its members to attend the HDIR
seminar for the rank-and-filers. Nevertheless, on August 19 and 20, the Union directed its members not to
attend the seminars scheduled on said dates. Earlier on, or on August 6, 1988, the Union, led by petitioners
Arquilao Bacolod and Rene Arao, picketed the premises of the Philippine Eagle Protectors to show their
displeasure on the hiring of the guards.
Worse still, the Union filed on August 25, 1988, a Notice of Strike with the National Conciliation and
Mediation Board (NCMB). It accused the company of unfair labor practices consisting of coercion of
employees, intimidation of union members and union-busting. 2 These were the same issues raised by the
Union during the August 2, 1988 labor-management meeting.
On August 29, 1988, the NCMB called a conciliation conference. The conference yielded the following
agreement:
(1) Union officers, including the officials of KMU-ANGLO, and the Executive Director of the NCMB would
attend the HDIR seminar on September 5, 1988; and
(2) A committee shall convene on September 10, 1989, to establish guidelines governing the guards.
The Union officials did attend the September 5, 1988 seminar. While they no longer objected to the
continuation of the seminar, they reiterated their demand for the deletion of the discussion pertaining to the
KMU-ANGLO.
With the apparent settlement of their differences, private respondents notified the NCMB that there were no
more bases for the notice of strike.
An unfortunate event brake the peace of the parties. On September 8, 1988, Danilo Martinez, a member of
the Board of Directors of the Union, was gunned down in his house in the presence of his wife and children.
The gunman was later identified as Eledio Samson, an alleged member of the new security forces of private
respondents.
On September 9, 1988, the day after the killing, most of the members of the Union refused to report for
work. They returned to work the following day but they did not comply with the "quota system" adopted by
the management to bolster production output. Allegedly, the Union instructed the workers to reduce their

11

production to thirty per cent (30%). Private respondents charged the Union with economic sabotage through
slowdown.
On September 14, 1988, Private respondents filed separate charges against the Union and its members for
illegal strike, unfair labor practice and damages, with prayer for injunction. These cases were docketed as
Case Nos. RAB-11-09-00612-888 and RAB No. 11-09-00613-88 before Labor Arbiter Antonio Villanueva.
On September 17, 1988, petitioners skipped work to pay their last respect to the slain Danilo Martinez who
was laid to rest. Again, on September 23, 1988, petitioners did not report for work. Instead, they proceeded
to private respondents' office at Lanang, carrying placards and posters which called for the removal of the
security guards, the ouster of certain management officials, and the approval of their mass leave application.
Their mass action did not succeed.
In a last ditch effort to settle the deteriorating dispute between the parties, City Mayor Rodrigo Duterte
intervened. Dialogues were held on September 27 and 29, 1988 at the City Mayor's Office. Again, the
dialogues proved fruitless as private respondents refused to withdraw the cases they earlier filed with public
respondent.
On October 3, 1988, a strike vote was canducted among the members of the Union and those in favor of the
strike won overwhelming support from the workers. The result of the strike vote was then submitted to the
NCMB on October 10, 1988. Two days later, or on Ootober 12, 1988, the Union struck.
On the bases of the foregoing facts, Labor Arbiter Antonio Villanueva ruled that the Onion staged an illegal
strike. The dispositlve portion of the Decision, dated December 12, 1988, states:
COMFORMABLY WITH ALL THE FOREGOING, judgment is hereby rendered:
a) Declaring the strike staged by respondents (petitioners) to be illegal;
b) Declaring the employees listed as respondents in the complaint and those mentioned in
page 21 to have lost their employment status with complainants Lapanday Agricultural and
Development Corporation and Cadeco Agro Development Philippines, Inc.; and
c) Ordering respondents (petitioners in this case) to desist from further committing an illegal
strike.
Petitioners appealed the Villanueva decision to public respondent NLRC.
It also appears that on December 6, 1988, or before the promulgation of the decision of Arbiter Villanueva,
the Union, together with Tomas Basco and 25 other workers, filed a complaint for unfair labor practice and
illegal suspension against LADECO. The case was docketed as Case No. RAB-11-12-00780-88. On even
date, another complaint for unfair labor practice and illegal dismissal was filed by the Union, together with
Arquilao Bacolod and 58 other complainants. This was docketed as Case No. RAB-11-12-00779-88. These
two (2) cases were heard by Labor Arbiter Newton Sancho.
Before the NLRC could resolve the appeal taken on the Villanueva decision in Case Nos. RAB-11-09-0061288 and RAB-11-09-00613-88, Labor Arbiter Sancho rendered a decision in the two (2) cases filed by the
Union against private respondents LADECO and CADECO (Case Nos. RAB-11-12-00779-88 and RAB-1112-00780-88). The Sancho decision, dated October 18, 1989, declared LADECO and CADECO guilty of
unfair labor practices and illegal dismissal and ordered the reinstatement of the dismissed employees of
private reapondents, with backwages and other benefits. Significantly, the Sancho decision considered the
refusal of the workers to report for work on September 9, 1988, justified by the circumstance then prevailing,
the killing of Danilo Martinez on September 8,1988.
Private respondents appealed the Sancho decision, claiming, among others, that labor arbiter Sancho erred
in passing upon the legality of the strike staged by petitioners since said issue had already been passed
upon by the Regional Arbitration Branch and was still on appeal before the NLRC.
Considering that the four (4) cases before it arose from the same set of facts and involved substantially the
same issues, the NLRC rendered a consolidated decision, promulgated August 29, 1990, upholding the
Villanueva decision in Case Nos. RAB-11-09-00612-88 and RAB-11-09-00613-88. The dispositive portion of
the assailed NLRC decision states:

12

WHEREFORE, premises considered, a new judgment is entered in the four consolidated and
above-captioned cases as follows:
1. The strike staged by the Lapanday Agricultural Workers Union is hereby declared to be
(sic) illegal;
2. As a consequence thereof, the following employees-union officers are declared to have
lost their employment status with Lapanday Agricultural Development Corporation and
CADECO Agro Development Philippines, to wit: Arguilao Bacolod, Jose Erad, Fernando
Hernando, Eldie Estrella, Cerelo Dayag, Lucino Magadan, Rene Arao, Eduardo Poquita,
Juanito Gahum, Emilio Magno, Perlito Lisondra, Gregorio Albaron, Abraham Baylon,
Dionosio Trocio, Tomas Basco and Rosario Sinday;
3. However, the individual respondents (union members), being merely rank-and-file
employees and who merely joined the strike declared as illegal, are ordered reinstated but
without backwages, the period they were out of work is deemed the penalty for the illegal
strike they staged;
4. Ordering Lapanday Workers' Union, its leaders and members, to desist from further
committing an illegal strike; and
5. Dismissing the complaint for unfair labor practice, illegal suspension and illegal dismissal
filed by the Lapanday Workers Union (LWU)-ANGLO and its members, for lack of merit.
SO ORDERED.
Petitioners fileds motion for reconsideration. It did not prosper. Hence, the petition.
Petitioners now claim that public respondent NLRC gravely abused its discretion in: a) declaring that their
activities, from September 9, 1988 to October 12, 1988, were strike activities; and b) declaring that the strike
staged on October 12, 1988 was illegal.
The critical issue is the legality of the strike held on October 12, 1988. The applicable laws are Articles 263
and 264 of the Labor Code, as amended by E.O. No. 111, dated December 24, 1986. 3
Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111, provides:
(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may
file anotice of strike or the employer may file, notice of lockout with the Ministry at least 30
days before the intended date thereof. In cases of unfair labor practice, the notice shall be
15 days and in the absence of a duly certified or recognized bargaining agent, the notice of
strike may be filed by any legitimate labor organization in behalf of its members. However, in
case of dismissal from employment of union officers duly elected in accordance with the
union constitution and by-laws, which may constitute union busting where the existence of
the union is threatened, the 15-daycooling-off period shall not apply and the union may take
action immediately.
xxx xxx xxx
(f) A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings
or referenda called for that purpose. A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or association or of the partners in a
partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall
be valid for the duration of the dispute based on substantially the same grounds considered
when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the
request of any affected party, supervise the conduct of secret balloting. In every case, the
union or the employer shall furnish the Ministry the results of the voting at least seven (7)
days before the intended strike or lockout subject to the cooling-off period herein provided.
Article 264 of the same Code reads:
Art. 264. Prohibited activities. (a) No labor organization or employer shall declare a strike
or lockout without first having bargained collectively in accordance with Title VII of this Book

13

or without first having filed the notice required in the preceding Article or without the
necessary strike or lockout vote first having been obtained and reported to the Ministry.
xxx xxx xxx
. . . . Any union officer who knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status: Provided that mere participation of a worker in
a lawful strike shall not constitute sufficient ground for termination of his employment, even if
a replacement had been hired by the employer during such lawful strike. (emphasis ours).
A strike is "any temporary stoppage of work by the concerted action of employees as a result of an industrial
or labor dispute." 4 It is the most preeminent of the economic weapons of workers which they unsheathe to
force management to agree to an equitable sharing of the joint product of labor and capital. Undeniably,
strikes exert some disquieting effects not only on the relationship between labor and management but also
on the general peace and progress of society. Our laws thus regulate their exercise within reasons by
balancing the interests of labor and management together with the overarching public interest.
Some of the limitations on the exercise of the right of strike are provided for in paragraphs (c) and (f) of
Article 263 of the Labor Code, as amended, supra. They Provide for the procedural steps to be followed
before staging a strike filing of notice of strike, taking of strike vote, and reporting of the strike vote result
to the Department of Labor and Employment. In National Federation of Sugar Workers (NFSW) vs.
Overseas, et al., 5 we ruled that these steps are mandatory in character, thus:
If only the filing of the strike notice and the strike-vote report would be deemed mandatory,
but not the waiting periods so specifically and emphatically prescribed by law,
the purposes (hereafter discussed) far which the filing of the strike notice and strike-vote
report is required cannot be achieved. . . .
xxx xxx xxx
So too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor
General
. . . The submission of the report gives assurance that a strike vote has been taken and that,
if the report concerning it is false, the majority of the members can take appropriate remedy
before it is too late.
The seven (7) day waiting period is intended to give the Department of Labor and Employment an
opportunity to verify whether the projected strike really carries the imprimatur of the majority of the
union members. The need for assurance that majority of the union members support the strike
cannot be gainsaid. Strike is usually the last weapon of labor to compel capital to concede to its
bargaining demands or to defend itself against unfair labor practices of management. It is a weapon
that can either breathe life to or destroy the union and its members in their struggle with
management for a more equitable due of their labors. The decision to wield the weapon of strike
must, therefore, rest on a rational basis, free from emotionalism, unswayed by the tempers and
tantrums of a few hotheads, and firmly focused on the legitimate interest of the union which should
not, however, be antithetical to the public welfare. Thus, our laws require the decision to strike to be
the consensus of the majority for while the majority is not infallible, still, it is the best hedge against
haste and error. In addition, a majority vote assures the union it will go to war against management
with the strength derived from unity and hence, with better chance to succeed. InBatangas Laguna
Tayabas Bus Company vs. NLRC, 6 we held:
xxx xxx xxx
The right to strike is one of the rights recognized and guaranteed by the Constitution as an
instrument of labor for its protection against exploitation by management. By virtue of this
right, the workers are able to press their demands for better terms of employment with more
energy and persuasiveness, poising the threat to strike as their reaction to employer's
intransigence. The strike is indeed a powerful weapon of the working class. But precisely
because of this, it must be handled carefully, like a sensitive explosive, lest it blow up in the
workers' own hands. Thus, it must be declared only after the most thoughtful consultation
among them, conducted in the only way allowed, that is, peacefully, and in every case
conformably to reasonable regulation. Any violation of the legal requirements and strictures, .
. . will render the strike illegal, to the detriment of the very workers it is supposed to protect.

14

Every war must be lawfully waged. A labor dispute demands no less observance of the rules,
for the benefit of all concerned.
Applying the law to the case at bar, we rule that strike conducted by the union on October 12, 1988 is plainly
illegal as it was held within th seven (7) day waiting period provided for by paragraph (f), Article 263 of the
Labor Code, as amended. The haste in holding the strike prevented the Department of Labor and
Employment from verifying whether it carried the approval of the majority of the union members. It set to
naught an important policy consideration of our law on strike. Considering this finding, we need not
exhaustively rule on the legality of the work stoppage conducted by the union and some of their members on
September 9 and 23, 1988. Suffice to state, that the ruling of the public respondent on the matter is
supported by substantial evidence.
We affirm the decision of the public respondent limiting the penalty of dismissal only to the leaders of the
illegal strike. especially the officers of the union who served as its major players. They cannot claim good
faith to exculpate themselves. They admitted knowledge of the law on strike, including its procedure. They
cannot violate the law which ironically was cast to promote their interest.
We, likewise, agree with the public respondent that the union members who were merely instigated to
participate in the illegal strike should be treated differently from their leaders. Part of our benign
consideration for labor is the policy of reinstating rank-and-file workers who were merely misled in
supporting illegal strikes. Nonetheless, these reinstated workers shall not be entitled to backwages as they
should not be compensated for services skipped during the illegal strike.
IN VIEW WHEREOF, the petition is dismissed for failure to show grave abuse of discretion on the part of the
public respondent. Costs against the petitioners.
SO ORDERED.
4. G.R. No. 145496

February 24, 2004

STAMFORD MARKETING CORP., GSP MANUFACTURING CORP., GIORGIO ANTONIO MARKETING

CORP., CLEMENTINE MARKETING CORP., ULTIMATE CONCEPTS PHILIPPINES, INC., and ROSARIO
G. APACIBLE,petitioners,
vs.
JOSEPHINE JULIAN, LEONOR AMBROSIO, MARILYN AQUINO, PURITA BARRO, ROSARIO BASADA,
HERMINIA BERGUELLES, ERLINDA CANARIA, SALVACION CIRUELOS, MARITESS BALISARIO,
JULIETA DOLONTAP, JOSEFINA DOMINGO, GLORIA FLORENDO, AMELITA GRANDE, SIMONA
MALUNES, CORAZON MARASIGAN, SUSANA OBNAMIA, LUCY PEREZ, GINALYN PIDOY, CAROLINA
REYNOSO, LETICIA SARMIENTO, ARCELY VILLEZA, MARIA SANCHO LABIT, IMELDA RIVERA,
ROWENA ALVARADO, VIOLETA ARRIOLA, VIRGINIA DE VERA, GIRLIE DISCAYA, ADELAIDA LOMOD,
MARILOU RABANAL, JOCELYN RUFILA, ELENA SUEDE, JACINTA TEJADA, MELBA TOLOSA,
LEZILDA CARANTO, JECINA BURABOD, LUCITA CASERO, MONICA CRUZ, GLENDA MIRANDA,
YOLANDA PANCHO, MYRNA RAGASA, FILOMENA MORALES, FELIPA VALENCIA, CORAZON
VIRTUZ, MARICEL BOLANGA, SONIA ANTILLA, LEONITA BINAL, GLORIA LARIOSA, LIZABETH
LUANGCO and JULIETA LEANO, respondents.

DECISION

QUISUMBING, J.:
For review on certiorari is the Court of Appeals Decision, 1 dated April 26, 2000, in CA-G.R. SP No. 53169,
as well as its Resolution,2 dated October 11, 2000, denying the petitioners Motion for Reconsideration. The
Court of Appeals modified the Resolution, 3 dated August 27, 1998, of the National Labor Relations
Commission (NLRC)-First Division which, in turn, dismissed the petitioners appeal from the decision of
Labor Arbiter Ramon Valentin C. Reyes in three (3) consolidated cases, namely:
(1) Josephine Julian, et al. vs. Stamford Marketing Corp. (NLRC NCR Case No. 00-11-08124-94);

15

(2) Philippine Agricultural, Commercial and Industrial Workers Union, et al. vs. GSP Manufacturing
Corp., et al. (NLRC NCR Case No. 00-03-02114-95); and
(3) Lucita Casero, et al. vs. GSP Manufacturing Corp., et al. (NLRC NCR Case No. 00-01-1043795).
The instant controversy stemmed from a letter sent by Zoilo V. De La Cruz, Jr., president of the Philippine
Agricultural, Commercial and Industrial Workers Union (PACIWU-TUCP), on November 2, 1994, to Rosario
A. Apacible, the treasurer and general manager of herein petitioners Stamford Marketing Corporation, GSP
Manufacturing Corporation, Giorgio Antonio Marketing Corporation, Clementine Marketing Corporation, and
Ultimate Concept Phils., Inc. Said letter advised Apacible that the rank-and-file employees of the
aforementioned companies had formed the Apacible Enterprise Employees Union-PACIWU-TUCP. The
union demanded that management recognize its existence. Shortly thereafter, discord reared its ugly head,
and rancor came hard on its wake.
Josephine Julian, et al. vs. Stamford Marketing Corp.
NLRC NCR Case No. 00-11-08124-94
On November 9, 1994, or just a day after Apacible received the letter of PACIWU-TUCP, herein private
respondents Josephine Julian, president of the newly organized labor union; Jacinta Tejada, and Jecina
Burabod, board member and member of the said union, respectively, were effectively dismissed from
employment.
Without further ado, the three dismissed employees filed suit with the Labor Arbiter. In their Complaint, the
three dismissed employees alleged that petitioners had not paid them their overtime pay, holiday
pay/premiums, rest day premium, 13th month pay for the year 1994, salaries for services actually rendered,
and that illegal deduction had been made without their consent from their salaries for a cash bond.
For its part, herein petitioner Stamford alleged that private respondent Julian was a supervising employee at
the Patricks Boutique at Shoemart (SM) Northmall. In October 1994, when she was four (4) to five (5)
months pregnant, the management of SM Northmall asked her to go on maternity leave, pursuant to
company policy. Julian was then directed to report at Stamfords Head Office for reassignment. She was
also asked to submit a medical certificate to enable the company to approximate her delivery date. Julian,
however, allegedly failed to comply with these directives and instead, ceased to report for work without
having given notice. Stamford then allegedly asked Tejada to take over Julians position, but the former
inexplicably refused to comply with the management directive. Instead, like Julian, she abandoned her work
with nary a notice or an explanation.
As to Burabod, petitioner Giorgio Antonio Boutique (Giorgio) averred that she was employed as one of its
sales clerks at its SM Northmall branch. When directed to report to the Giorgio branch at Robinsons
Galleria, she defiantly questioned the validity of the directive and refused to comply. Like Julian and Tejada,
she then ceased to report for work without giving notice.
Philippine Agricultural, Commercial and Industrial Workers Union, et al. vs. GSP Manufacturing Corp.
NLRC NCR Case No. 00-03-02114-95
On March 17, 1995, PACIWU-TUCP, filed on behalf of fifty (50) employees allegedly illegally dismissed for
union membership by the petitioners, a Complaint before the Arbitration Branch of NLRC, Metro Manila.
PACIWU-TUCP charged petitioners herein with unfair labor practice. The Complaint alleged that when
Apacible received the letter of PACIWU-TUCP, management began to harass the members of the local
chapter, a move which culminated in their outright dismissal from employment, without any just or lawful
cause. It was a clear case of union-busting, averred PACIWU-TUCP.
GSP Manufacturing Corporation (GSP) denied the unions averments. It claimed that it had verified with the
Bureau of Labor Relations (BLR) whether a labor organization with the name Apacible Enterprises
Employees Union was duly registered. It was informed that no such labor organization was registered either
as a local chapter of PACIWU or of the Trade Union Congress of the Philippines (TUCP). GSP claimed that
after unsuccessfully misrepresenting themselves, herein private respondents then started making unjustified
demands, abandoned their work, and staged an illegal strike from November 1994 up to the filing of the
Complaints. Petitioners then asked the private respondents to lift their picket and return to work, but were
only met with a cold refusal.
Lucita Casero, et al. vs. GSP Manufacturing Corp., et al.
NLRC NCR Case No. 00-01-10437-95

16

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

17

All other claims are dismissed for lack of merit.

The Research and Information Division, this Commission, is hereby directed to effect the necessary
computation which shall form part of this Decision.
SO ORDERED.5
Labor Arbiter Reyes ruled the reassignment and transfer of complainants in NLRC NCR Case No. 00-1108124-94 as unfair labor practice, it being management interference in the complainants formation and
membership of union. He held that the protested reassignments and transfers were highly suspicious,
having been made right after management was informed about the formation of the union. Such timing could
not have been pure coincidence. The Labor Arbiter also found that petitioners herein failed to substantiate
their claim that private respondents had abandoned their employment. He pointed out that the complainants
filing of a case immediately after their alleged dismissal militated against any claim of abandonment.
Moreover, petitioners did not furnish complainants with written notices of dismissal. As to the unpaid wages
and other monetary benefits claimed by private respondents herein, the Labor Arbiter ruled that as
petitioners herein did not present proof of their payment, there is presumption of non-payment. Finally, Labor
Arbiter Reyes found the cash deposit of P2,000.00 unauthorized and illegal, without any showing that the
same was necessary and recognized in the business.
In NLRC NCR Case No. 00-03-02114-95, it was duly established that the employees union was not
registered with the Bureau of Labor Relations. Hence, private respondents had engaged in an illegal strike
since the right to strike maybe availed of only by a legitimate labor organization. Labor Arbiter Reyes upheld
the dismissal of the union officers for leading and participating in an illegal strike, but ruled the dismissal of
the union members to be improper since they acted in good faith in the belief that their actions were within
the bounds of law.
In NLRC NCR Case No. 00-01-10437-95, the Labor Arbiter found petitioners liable for salary differentials
and other monetary claims for petitioners failure to sufficiently prove that it had paid the same to
complainants as required by law. He likewise ordered the return of the cash deposits to complainants, citing
the same reasons as in NLRC NCR Case No. 00-11-08124-94.
Petitioners herein seasonably appealed the decision of Labor Arbiter Reyes. Subsequently, the NLRC
affirmed the decision in NLRC NCR Case Nos. 00-11-08124-94 and 00-01-10437-95. However, the NLRC
set aside the judgment with respect to NLRC NCR Case No. 00-03-02114-95 and ordered the remand of the
case for further proceedings, in view of the various factual issues involved. The NLRC ruling reads:
WHEREFORE, finding the appeal unmeritorious, the same is hereby DISMISSED.
ACCORDINGLY, we hereby set aside the ruling in NLRC NCR CASE NO. 00-03-02114-95 as we
order the same remanded for further proceedings in view of the nature of the issues involved being
purely factual in character. The awards in NLRC NCR CASE NO. 00-11-08-08124-94 and NLRC
NCR CASE NO. 00-01-10437-95 are hereby AFFIRMED.
SO ORDERED.6
Meanwhile, on May 14, 1996, petitioners herein filed a Petition to Declare the Strike Illegal against their
striking employees, docketed as NLRC NCR Case No. 05-03064-96 and raffled off to Labor Arbiter Arthur L.
Amansec.
On September 2, 1998, Labor Arbiter Amansec decided NLRC NCR Case No. 05-03064-96, as follows:
WHEREFORE, judgment is hereby made finding the strike conducted by the respondents from
December 1, 1994 up to May 14, 1996 illegal and concomitantly, ordering respondents who are
established to have knowingly participated to have committed an illegal act to have lost their
employment status.
Other claims for lack of merit are ordered DISMISSED.
SO ORDERED.7
In declaring the strike illegal, Labor Arbiter Amansec noted that: (1) no prior notice to strike had been filed;
(2) no strike vote had been taken among the union members; and (3) the issue involved was non-strikeable,
i.e., a demand for salary increases.

18

Petitioners then moved for reconsideration of the NLRC ruling, citing the ruling in NLRC NCR Case No. 0503064-96 to support their position that respondents herein had conducted an illegal strike and were liable for
unlawful acts.
On March 12, 1999, the NLRC resolved to partly grant the Motion for Reconsideration, thus:
WHEREFORE, prescinding from the foregoing premises, the Motion for Reconsideration is partly
given due course, in that the issues raised in NLRC NCR CASE No. 00-03-02114-95 is hereby
declared to have been rendered academic.
The rest of the dispositions in the questioned resolution remains.
SO ORDERED.8
Unwilling to let the matter rest there, petitioners then filed a special civil action for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 53169. The Court of Appeals considered the following issues in
resolving the petition, to wit: (a) the validity of the respondents dismissal and entitlement to backwages, (b)
the validity of the Release, waiver and quitclaim executed by some of the respondents, and (c) the validity of
the claims for non-payment of salaries, overtime pay, holiday pay, premium pay, etc.
On April 26, 2000, the appellate court disposed of CA-G.R. SP No. 53169 as follows:
WHEREFORE, premises studiedly considered, the Petition is partly given due course as the 12
March 1999 Resolution of the NLRC is hereby modified as follows:
1. In lieu of reinstatement, private respondents Josephine Julian, Jacinta Tejada, and the rest of the
officers of the Union shall be given separation pay at the rate of one month pay for every year of
service, with a fraction of at least six months of service considered as one year, computed from the
time they were first employed until December 10, 1994;
2. Ordering petitioner corporations to reinstate, without loss of seniority, Jacina Burabod and the rest
of the Union members; plus payment of backwages;
The rest of the dispositions in the two (2) challenged resolutions remains.
SO ORDERED.9
The appellate court brushed aside petitioners theory that the illegality of strike makes the respondents
dismissal legal. It stressed that while the strike was illegal, marked as it was with violence and for noncompliance with the requirements of the Labor Code, nonetheless, Julian, Tejada, and Burabod
(complainants in NLRC NCR Case No. 00-11-08124-94) were dismissed prior to the staging of the strike.
Said dismissal constitutes unfair labor practice. Moreover, said dismissal was done without valid cause and
due process. Thus, the complainants in NLRC NCR Case No. 00-11-08124-94 are entitled to reinstatement
and backwages, although separation pay may be given in lieu of reinstatement due to strained relations with
petitioners. The appellate court also ruled that the quitclaims relied upon by petitioners herein are void,
having been executed under duress. Finally, the Court of Appeals affirmed the finding of the NLRC that
petitioners had failed to support their claim of having paid herein respondents their money claims, because
belated evidence presented by petitioners is bereft of any probative value.
Petitioners timely moved for reconsideration, but the appellate court denied said motion.
Hence, this petition alleging that the Court of Appeals committed palpable and reversible errorS of law when:
I IT ORDERED THE RESPONDENTS, WHO ARE UNION MEMBERS, BE REINSTATED AND BE
PAID BACKWAGES, DESPITE THE FACT THAT IT CATEGORICALLY HELD THAT UNLAWFUL
ACTS ATTENDED THE STAGING OF THE ILLEGAL STRIKE IN CONTRAVENTION OF THE
CLEAR MANDATE OF ARTICLE 264(a) OF THE LABOR CODE.
II IT AWARDED BACKWAGES TO THE RESPONDENTS, WHO ARE UNION MEMBERS,
DESPITE THE FACT THAT THE ISSUE OF WHETHER OR NOT THE SAID UNION MEMBERS
ARE ENTITTLED TO BACKWAGES HAVE BEEN ANSWERED IN THE NEGATIVE BY THE
DECISION DATED 15 APRIL 1996, PROMULGATED BY THE HONORABLE LABOR ARBITER A
QUO VALENTIN C. REYES AND SUCH RULING HAD ATTAINED FINALITY.

19

III IT AWARDED SEPARATION PAY AND BACKWAGES TO THE RESPONDENTS WHO ARE
OFFICERS OF THE UNION, NAMELY: ADELAIDA LUMOD, LUCITA CASERO, MYRNA RAGASA,
FELY MORALES, ELEN SUEDE, FELY VALENCIA AND VIOLETA ARRIOLA, DESPITE THE FACT
THAT IT WAS HELD IN THE DECISION DATED 15 APRIL 1996 PROMULGATED BY THE
HONORABLE LABOR ARBITER A QUO VALENTIN C. REYES THAT THE AFORENAMED UNION
OFFICERS HAVE LOST THEIR EMPLOYMENT STATUS BY STAGING AN ILLEGAL STRIKE AND
SUCH RULING HAD ATTAINED FINALITY.
IV IT HELD THAT RESPONDENTS JULIAN, TEJADA AND BURABOD WERE ILLEGALLY
DISMISSED.
V IT FAILED TO UPHOLD THE VALIDITY OF THE RELEASE, WAIVER AND QUITCLAIM
EXECUTED BY THE RESPONDENTS CONCERNED.
VI IT REFUSED TO GIVE PROBATIVE VALUE ON THE VOLUMINOUS DOCUMENTARY
EVIDENCE SUBMITTED BY HEREIN PETITIONERS.10
In our view, considering the assigned errors, the following are the relevant issues for our resolution:
1. Whether the respondents union officers and members were validly and legally dismissed from
employment considering the illegality of the strike;
2. Whether the respondents union officers and members are entitled to backwages, separation pay and
reinstatement, respectively.
On the first issue, petitioners argue that respondents were legally dismissed, pursuant to Article 264 11 of the
Labor Code in view of the determination by the Labor Arbiter that the strike conducted by respondents are
illegal and that illegal acts attended the mass action. The respondents counter that the determination of the
illegality of strike is inconsequential as the conclusion by the appellate court on the illegality of dismissal was
based on the petitioners non-compliance with the due process requirements on terminating employees,
which had nothing to do with the legality of the strike.
Some elaboration on the legality of the strike is needed, though briefly. In ruling the strike illegal, the NLRC
observed that:
While the right to strike is specifically granted by law, it is a remedy which can only be availed of by a
legitimate labor organization. Absent a showing as to the legitimate status of the labor organization,
said strike would have to be considered as illegal.

A review of the records of this case does not show that the local union to which complainants belong
to has complied with these basic requirements necessary to clothe the union with a legitimate status.
In fact, and as respondents claim, there is no record with the BLR that the union complainants
belong to have complied with the aforementioned requirements. This Office then has no recourse but
to consider the union of complainants as not being a legitimate labor organization. It then follows that
the strike conducted by complainants on respondent companies is illegal, as the right to strike is
afforded only to a legitimate labor organization.12
Indeed, the right to strike, while constitutionally recognized, is not without legal restrictions. 13 The Labor
Code regulates the exercise of said right by balancing the interests of labor and management in the light of
the overarching public interest. Thus, paragraphs (c) and (f) of Article 263 14 mandate the following
procedural steps to be followed before a strike may be staged: filing of notice of strike, taking of strike vote,
and reporting of the strike vote result to the Department of Labor and Employment. 15 It bears stressing that
these requirements are mandatory, meaning, non-compliance therewith makes the strike illegal. The evident
intention of the law in requiring the strike notice and strike-vote report is to reasonably regulate the right to
strike, which is essential to the attainment of legitimate policy objectives embodied in the law.16
In the instant case, we find no reason to disagree with the findings of the NLRC that the strike conducted by
the respondent union is illegal. First, it has not been shown to the satisfaction of this Court that said union is
a legitimate labor organization, entitled under Article 263 (c) to file a notice of strike on behalf of its
members. Second, the other requirements under Article 263 (c) and (f) were not complied with by the
striking union. On this matter, the record is bare of any showing to the contrary. Hence, what is left for this
Court to do is to determine the effects of the illegality of the strike on respondents union officers and

20

members, specifically (a) whether such would justify their dismissal from employment, and (b) whether they
ceased to be entitled to the monetary awards and other appropriate reliefs and remedies.
Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes a distinction
between union officers and members who participated thereon. Thus, knowingly participating in an illegal
strike is a valid ground for termination from employment of a union officer. The law, however, treats
differently mere union members. Mere participation in an illegal strike is not a sufficient ground for
termination of the services of the union members. The Labor Code protects an ordinary, rank-and-file union
member who participated in such a strike from losing his job, provided that he did not commit an illegal act
during the strike.17 Thus, absent any clear, substantial and convincing proof of illegal acts committed during
an illegal strike, an ordinary striking worker or employee may not be terminated from work. 18
Recourse to the records show that the following respondents were the officers of the union, namely:
Josephine C. Julian (President), Adelaida Lomod (Vice President), Lucita Casero (Secretary), Myrna
Ragasa (Treasurer), Filomena Morales (Auditor), Elena Suede (Board Member), Jacinta Tejada (Board
Member), Felipa Valencia (Board Member) and Violeta Arriola (P.R.O.).19 Before us, petitioners insist that
these employees were legally terminated for their participation in an illegal strike and moreover, Julian and
Tejada were validly dismissed for abandoning their jobs after refusing to comply with transfer and
reassignment orders.
While holding the strike illegal, the Court of Appeals nonetheless still ruled that the union officers and
members were illegally dismissed for non-observance of due process requirements and union busting by
management. It likewise gave no credence to the charge of abandonment against Julian and Tejada. Thus, it
awarded separation pay in lieu of reinstatement to all union officers including respondents Julian and Tejada
and affirmed all other monetary awards by the Labor Arbiter including backwages.
On this point, we affirm the findings of the appellate court that Julian and Tejada did not abandon their
employment. Petitioners utterly failed to show proof that Julian and Tejada had the intent to abandon their
work and sever their employment relationship with petitioners. It is established that an employee who
forthwith takes steps to protest his layoff cannot be said to have abandoned his work. 20 However, we cannot
sustain the appellate courts ruling that the dismissal of Julian and Tejada was tantamount to unfair labor
practice. There is simply nothing on record to show that Julian and Tejada were discouraged or prohibited
from joining any union. Hence, the petitioners cannot be held liable for unfair labor practice.
With respect to union officers, however, there is no dispute they could be dismissed for participating in an
illegal strike. Union officers are duty- bound to guide their members to respect the law.21 Nonetheless, as in
other termination cases, union officers must be given the required notices for terminating an
employment, i.e., notice of hearing to enable them to present their side, and notice of termination, should
their explanation prove unsatisfactory. Nothing in Article 264 of the Labor Code authorizes an immediate
dismissal of a union officer for participating in an illegal strike. The act of dismissal is not intended to
happen ipso facto but rather as an option that can be exercised by the employer and after compliance with
the notice requirements for terminating an employee. In this case, petitioners did not give the required
notices to the union officers.
We must stress, however, the dismissals per se are not invalid but only ineffectual in accordance
with Serrano v. National Labor Relations Commission.22 In said case, we held that (1) the employers failure
to comply with the notice requirement does not constitute denial of due process, but mere failure to observe
a procedure for termination of employment which makes the termination merely ineffectual, 23 and (2) the
dismissal shall be upheld but the employer must be sanctioned for non-compliance with the prescribed
procedure.24 As to the reliefs to be afforded, Serrano decreed that:
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the
termination of employment was due to an authorized cause, then the employee concerned should
not be ordered reinstated even though there is failure to comply with the 30-day notice requirement.
Instead, he must be granted separation pay in accordance with Art. 283

If the employees separation is without cause, instead of being given separation pay, he should be
reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid
full backwages if he has been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the
employee was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance
with that article, he should not be reinstated. However, he must be paid backwages from the time his

21

employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination of his
employment without legal effect.25
Admittedly, Serrano does not touch on the termination of an employee who is a mere union member, due to
participation in an illegal strike. But it is settled that an employee who is a mere union member does not lose
his employment status by mere participation allegedly in an illegal strike. If he is terminated, he is entitled to
reinstatement. Moreover, where the employee, whether a union member or officer, is not given any notice for
termination such as in this case, he is entitled to be paid backwages from the date of his invalid termination
until the final judgment of the case.
In the present case, we affirm the appellate courts ruling that the union members who are parties herein
were illegally dismissed and thus, entitled to reinstatement and payment of backwages for lack of sufficient
evidence that they engaged in illegal acts during the strike. They were in good faith in believing that their
actions were within the bounds of the law, since such were meant only to secure economic benefits for
themselves so as to improve their standard of living. Besides, it is not the business of this Court to determine
whether the acts committed by them are illegal, for review of factual issues is not proper in this petition.
Review of labor cases elevated to this Court on a petition for review on certiorari is confined merely to
questions of law, and not of fact, as factual findings generally are conclusive on this Court. 26
For the same reasons, we likewise affirm the Court of Appeals in upholding the findings of both the NLRC
and the Labor Arbiter regarding the validity or invalidity of quitclaims and the award of other monetary
claims. Questions on whether the quitclaims were voluntarily executed or not are factual in nature. Thus,
petitioners appeal for us to re-examine certain pieces of documentary evidence concerning monetary claims
cannot now be entertained. Factual findings of labor officials, who are deemed to have acquired expertise in
matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind
us when supported by substantial evidence. It is not our function to assess and evaluate the evidence all
over again, particularly where the findings of both the Arbiter and the Court of Appeals coincide. 27
WHEREFORE, the assailed Decision of the Court of Appeals, dated April 26, 2000 and its Resolution of
October 11, 2000, in CA-G.R. SP No. 53169 are AFFIRMED with MODIFICATION. Dismissal of the union
officers is declared NOT INVALID, and the award of separation pay to said union officers is hereby
DELETED. However, as a sanction for non-compliance with notice requirements for lawful termination by the
petitioners, backwages are AWARDED to the union officers computed from the time they were dismissed
until the final entry of judgment of this case. The rest of the dispositions of the Court of Appeals in its
Decision of April 26, 2000, in CA-G.R. SP No. 53169, are hereby AFFIRMED. No pronouncement as to
costs.
SO ORDERED.
5. ST. SCHOLASTICAS COLLEGE VS. TORRES
FACTS:
The Union and College initiated negotiations for a first ever CBA which resulted in a deadlock and prompted
the union to file a notice of strikewith the DOLE.
Union declared a strike which paralyzed the operations of the College and public respondent Sec. of Labor
immediately assumed jurisdiction over the labor dispute.
Instead of returning to work, the union filed a motion for reconsideration of the return towork order.
The college sent individual letters to the striking employees requiring them to return to work. In response
union presented demands, the most important of which is the unconditional acceptance back to work of the
striking employees. But these were rejected.
Sec. of Labor denied the motion for reconsideration for his return to work order andsternly warned striking
employees to comply with its terms.

Conciliation meetings were held but this proved futile as the college remained steadfast in its position that
any return to work order should be unconditional.

The College manifested to respondent Sec. That the union continued to defy his return to work order.

The College sent termination letters to individual strikers and filed a complaint forillegal strike against the
union.

22


The union moved for the enforcement of thereturn to work order before the Sec.

The Sec. issued an order directing reinstatement of striking union members and holding union officers
responsible for the violation of the return to work order and were correspondingly terminated.

Both parties moved for the partial consideration of the return to work order.

Hence this petition.

ISSUE:
WON striking union members, terminated for abandonment of work after failing to comply with the return to
work order of Sec. of labor, reinstated.
HELD:
The Labor Code provides that if a strike has already taken place at the time of assumption, all striking
employees should immediately return to work. This means that a return to work order is immediately
effective and executory, notwithstanding the filing of amotion for reconsideration. It must be strictly complied
with even during the pendency of any petition questioning its validity. After all, the assumption and/or
certification order issue
d in the exercise of the Sec.s
compulsive power of arbitration and until set aside, must therefore be complied with immediately. The
college correspondingly had every right to terminate the services of those who chose to disregard the return
to work order issued by the Sec. of Labor in order to protect the interest of the students who form part of the
youth of the land

6. G.R. No. 119293

June 10, 2003

SAN MIGUEL CORPORATION, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD NG
MANGGAGAWA (IBM), Respondents.
DECISION
AZCUNA, J.:
Before us is a petition for certiorari and prohibition seeking to set aside the decision of the Second Division
of the National Labor Relations Commission (NLRC) in Injunction Case No. 00468-94 dated November 29,
1994,1 and its resolution dated February 1, 1995 2 denying petitioners motion for reconsideration.
Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng Manggagawa (IBM), exclusive
bargaining agent of petitioners daily-paid rank and file employees, executed a Collective Bargaining
Agreement (CBA) under which they agreed to submit all disputes to grievance and arbitration proceedings.
The CBA also included a mutually enforceable no-strike no-lockout agreement. The pertinent provisions of
the said CBA are quoted hereunder:
ARTICLE IV
GRIEVANCE MACHINERY
Section 1. - The parties hereto agree on the principle that all disputes between labor and management may
be solved through friendly negotiation;. . . that an open conflict in any form involves losses to the parties,
and that, therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of the
foregoing principle, the parties hereto have agreed to establish a procedure for the adjustment of grievances
so as to (1) provide an opportunity for discussion of any request or complaint and (2) establish procedure for
the processing and settlement of grievances.
xxx

xxx
ARTICLE V
ARBITRATION

23

xxx

Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY and
the UNION and/or the workers involving or relating to wages, hours of work, conditions of employment
and/or employer-employee relations arising during the effectivity of this Agreement or any renewal thereof,
shall be settled by arbitration through a Committee in accordance with the procedure established in this
Article. No dispute, disagreement or controversy which may be submitted to the grievance procedure in
Article IV shall be presented for arbitration until all the steps of the grievance procedure are exhausted.
xxx

xxx

xxx

ARTICLE VI
STRIKES AND WORK STOPPAGES
Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work,
boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind,
sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during
the term of this Agreement.
Section 2. The COMPANY agrees that there shall be no lockout during the term of this Agreement so long as
the procedure outlined in Article IV hereof is followed by the UNION.3
On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the National Conciliation and
Mediation Board (NCMB) a notice of strike, docketed as NCMB-NCR-NS-04-180-94, against petitioner for
allegedly committing: (1) illegal dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4)
contracting out of jobs being performed by union members, (5) labor-only contracting, (6) harassment of
union officers and members, (7) non-recognition of duly-elected union officers, and (8) other acts of unfair
labor practice.4
The next day, IBM filed another notice of strike, this time through its president Edilberto Galvez, raising
similar grounds: (1) illegal transfer, (2) labor-only contracting, (3) violation of CBA, (4) dismissal of union
officers and members, and (5) other acts of unfair labor practice. This was docketed as NCMB-NCR-NS-04182-94.5
The Galvez group subsequently requested the NCMB to consolidate its notice of strike with that of the
Colomeda group,6 to which the latter opposed, alleging Galvezs lack of authority in filing the same. 7
Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to Dismiss, on the grounds
that the notices raised non-strikeable issues and that they affected four corporations which are separate and
distinct from each other.8
After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that the real issues involved are
non-strikeable. Hence on May 2, 1994, he issued separate letter-orders to both union groups, converting
their notices of strike into preventive mediation. The said letter-orders, in part, read:
During the conciliation meetings, it was clearly established that the real issues involved are illegal dismissal,
labor only contracting and internal union disputes, which affect not only the interest of the San Miguel
Corporation but also the interests of the MAGNOLIA-NESTLE CORPORATION, the SAN MIGUEL FOODS,
INC., and the SAN MIGUEL JUICES, INC.
Considering that San Miguel Corporation is the only impleaded employer-respondent, and considering
further that the aforesaid companies are separate and distinct corporate entities, we deemed it wise to
reduce and treat your Notice of Strike as Preventive Mediation case for the four (4) different companies in
order to evolve voluntary settlement of the disputes. . . .9 (Emphasis supplied)
On May 16, 1994, while separate preventive mediation conferences were ongoing, the Colomeda group filed
with the NCMB a notice of holding a strike vote. Petitioner opposed by filing a Manifestation and Motion to
Declare Notice of Strike Vote Illegal,10 invoking the case of PAL v. Drilon,11 which held that no strike could be
legally declared during the pendency of preventive mediation. NCMB Director Ubaldo in response issued
another letter to the Colomeda Group reiterating the conversion of the notice of strike into a case of
preventive mediation and emphasizing the findings that the grounds raised center only on an intra-union
conflict, which is not strikeable, thus:
xxx

xxx

xxx

A perusal of the records of the case clearly shows that the basic point to be resolved entails the question of
as to who between the two (2) groups shall represent the workers for collective bargaining purposes, which

24

has been the subject of a Petition for Interpleader case pending resolution before the Office of the Secretary
of Labor and Employment. Similarly, the other issues raised which have been discussed by the parties at the
plant level, are ancillary issues to the main question, that is, the union leadership... 12 (Emphasis supplied)
Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike against petitioner, docketed
as NCMB-NCR-NS-05-263-94. Additional grounds were set forth therein, including discrimination, coercion
of employees, illegal lockout and illegal closure.13 The NCMB however found these grounds to be mere
amplifications of those alleged in the first notice that the group filed. It therefore ordered the consolidation of
the second notice with the preceding one that was earlier reduced to preventive mediation. 14 On the same
date, the group likewise notified the NCMB of its intention to hold a strike vote on May 27, 1994.
On May 27, 1994, the Colomeda group notified the NCMB of the results of their strike vote, which favored
the holding of a strike.15 In reply, NCMB issued a letter again advising them that by virtue of the PAL v. Drilon
ruling, their notice of strike is deemed not to have been filed, consequently invalidating any subsequent
strike for lack of compliance with the notice requirement. 16 Despite this and the pendency of the preventive
mediation proceedings, on June 4, 1994, IBM went on strike. The strike paralyzed the operations of
petitioner, causing it losses allegedly worth P29.98 million in daily lost production. 17
Two days after the declaration of strike, or on June 6, 1994, petitioner filed with public respondent NLRC an
amended Petition for Injunction with Prayer for the Issuance of Temporary Restraining Order, Free Ingress
and Egress Order and Deputization Order.18 After due hearing and ocular inspection, the NLRC on June 13,
1994 resolved to issue a temporary restraining order (TRO) directing free ingress to and egress from
petitioners plants, without prejudice to the unions right to peaceful picketing and continuous hearings on the
injunction case.19
To minimize further damage to itself, petitioner on June 16, 1994, entered into a Memorandum of Agreement
(MOA) with the respondent-union, calling for a lifting of the picket lines and resumption of work in exchange
of "good faith talks" between the management and the labor management committees. The MOA, signed in
the presence of Department of Labor and Employment (DOLE) officials, expressly stated that cases filed in
relation to their dispute will continue and will not be affected in any manner whatsoever by the
agreement.20 The picket lines ended and work was then resumed.
Respondent thereafter moved to reconsider the issuance of the TRO, and sought to dismiss the injunction
case in view of the cessation of its picketing activities as a result of the signed MOA. It argued that the case
had become moot and academic there being no more prohibited activities to restrain, be they actual or
threatened.21Petitioner, however, opposed and submitted copies of flyers being circulated by IBM, as proof
of the unions alleged threat to revive the strike.22 The NLRC did not rule on the opposition to the TRO and
allowed it to lapse.
On November 29, 1994, the NLRC issued the challenged decision, denying the petition for injunction for lack
of factual basis. It found that the circumstances at the time did not constitute or no longer constituted an
actual or threatened commission of unlawful acts.23 It likewise denied petitioners motion for reconsideration
in its resolution dated February 1, 1995.24
Hence, this petition.
Aggrieved by public respondents denial of a permanent injunction, petitioner contends that:
A.
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY
INJUNCTION, THE PARTIES RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION
AND NOT TO STRIKE.
B.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH
IS THE ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS
ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID.
C.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE
WITHOUT RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION

25

WITHOUT EXPRESSING THE FACTS AND THE LAW ON WHICH IT IS BASED AND
ISSUING ITS DENIAL FIVE MONTHS AFTER THE LAPSE OF THE TRO.25
We find for the petitioner.
Article 254 of the Labor Code provides that no temporary or permanent injunction or restraining order in any
case involving or growing out of labor disputes shall be issued by any court or other entity except as
otherwise provided in Articles 218 and 264 of the Labor Code. Under the first exception, Article 218 (e) of the
Labor Code expressly confers upon the NLRC the power to "enjoin or restrain actual and threatened
commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any
labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any
party or render ineffectual any decision in favor of such party x x x." The second exception, on the other
hand, is when the labor organization or the employer engages in any of the "prohibited activities"
enumerated in Article 264.
Pursuant to Article 218 (e), the coercive measure of injunction may also be used to restrain an actual or
threatened unlawful strike. In the case of San Miguel Corporation v. NLRC, 26 where the same issue of
NLRCs duty to enjoin an unlawful strike was raised, we ruled that the NLRC committed grave abuse of
discretion when it denied the petition for injunction to restrain the union from declaring a strike based on
non-strikeable grounds. Further, in IBM v. NLRC,27 we held that it is the "legal duty and obligation" of the
NLRC to enjoin a partial strike staged in violation of the law. Failure promptly to issue an injunction by the
public respondent was likewise held therein to be an abuse of discretion.
In the case at bar, petitioner sought a permanent injunction to enjoin the respondents strike. A strike is
considered as the most effective weapon in protecting the rights of the employees to improve the terms and
conditions of their employment. However, to be valid, a strike must be pursued within legal bounds. 28 One of
the procedural requisites that Article 263 of the Labor Code and its Implementing Rules prescribe is the filing
of a valid notice of strike with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of
disputes,29 this requirement has been held to be mandatory, the lack of which shall render a strike illegal. 30
In the present case, NCMB converted IBMs notices into preventive mediation as it found that the real issues
raised are non-strikeable. Such order is in pursuance of the NCMBs duty to exert "all efforts at mediation
and conciliation to enable the parties to settle the dispute amicably," 31 and in line with the state policy of
favoring voluntary modes of settling labor disputes. 32 In accordance with the Implementing Rules of the
Labor Code, the said conversion has the effect of dismissing the notices of strike filed by respondent. 33 A
case in point is PAL v. Drilon,34 where we declared a strike illegal for lack of a valid notice of strike, in view of
the NCMBs conversion of the notice therein into a preventive mediation case. We ruled, thus:
The NCMB had declared the notice of strike as "appropriate for preventive mediation." The effect of that
declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket
of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During the
pendency of preventive mediation proceedings no strike could be legally declared... The strike which the
union mounted, while preventive mediation proceedings were ongoing, was aptly described by the petitioner
as "an ambush." (Emphasis supplied)
Clearly, therefore, applying the aforecited ruling to the case at bar, when the NCMB ordered the preventive
mediation on May 2, 1994, respondent had thereupon lost the notices of strike it had filed. Subsequently,
however, it still defiantly proceeded with the strike while mediation was ongoing, and notwithstanding the
letter-advisories of NCMB warning it of its lack of notice of strike. In the case of NUWHRAIN v.
NLRC,35 where the petitioner-union therein similarly defied a prohibition by the NCMB, we said:
Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter
dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not ULP,
hence not "strikeable." The refusal of the petitioners to heed said proscription of the NCMB is reflective of
bad faith.
Such disregard of the mediation proceedings was a blatant violation of the Implementing Rules, which
explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting
the proceedings.36
The NCMB having no coercive powers of injunction, petitioner sought recourse from the public respondent.
The NLRC issued a TRO only for free ingress to and egress from petitioners plants, but did not enjoin the
unlawful strike itself. It ignored the fatal lack of notice of strike, and five months after came out with a
decision summarily rejecting petitioners cited jurisprudence in this wise:
Complainants scholarly and impressive arguments, formidably supported by a long line of jurisprudence
cannot however be appropriately considered in the favorable resolution of the instant case for the
complainant. The cited jurisprudence do not squarely cover and apply in this case, as they are not similarly
situated and the remedy sought for were different.37
Unfortunately, the NLRC decision stated no reason to substantiate the above conclusion.1wphi1
Public respondent, in its decision, moreover ruled that there was a lack of factual basis in issuing the
injunction. Contrary to the NLRCs finding, we find that at the time the injunction was being sought, there
existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBMNCR Council which led the union. These flyers categorically declared: "Ipaalala nyo sa management na
hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket
line."38 These flyers were not denied by respondent, and were dated June 19, 1994, just a day after the
unions manifestation with the NLRC that there existed no threat of commission of prohibited activities.

26

Moreover, it bears stressing that Article 264(a) of the Labor Code 39 explicitly states that a declaration of
strike without first having filed the required notice is a prohibited activity, which may be prevented through an
injunction in accordance with Article 254. Clearly, public respondent should have granted the injunctive relief
to prevent the grave damage brought about by the unlawful strike.
Also noteworthy is public respondents disregard of petitioners argument pointing out the unions failure to
observe the CBA provisions on grievance and arbitration. In the case of San Miguel Corp. v. NLRC, 40 we
ruled that the union therein violated the mandatory provisions of the CBA when it filed a notice of strike
without availing of the remedies prescribed therein. Thus we held:
x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings provided in the
Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private
respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of Liberal
Labor Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for not complying
with the grievance procedure provided in the collective bargaining agreement. . . (Citations omitted)
As in the abovecited case, petitioner herein evinced its willingness to negotiate with the union by seeking for
an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent
however resorted to force without exhausting all available means within its reach. Such infringement of the
aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike.
As we said long ago: "Strikes held in violation of the terms contained in a collective bargaining agreement
are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly
adhered to and respected if their ends have to be achieved." 41
As to petitioners allegation of violation of the no-strike provision in the CBA, jurisprudence has enunciated
that such clauses only bar strikes which are economic in nature, but not strikes grounded on unfair labor
practices.42The notices filed in the case at bar alleged unfair labor practices, the initial determination of
which would entail fact-finding that is best left for the labor arbiters. Nevertheless, our finding herein of the
invalidity of the notices of strike dispenses with the need to discuss this issue.
We cannot sanction the respondent-unions brazen disregard of legal requirements imposed purposely to
carry out the state policy of promoting voluntary modes of settling disputes. The states commitment to
enforce mutual compliance therewith to foster industrial peace is affirmed by no less than our
Constitution.43 Trade unionism and strikes are legitimate weapons of labor granted by our statutes. But
misuse of these instruments can be the subject of judicial intervention to forestall grave injury to a business
enterprise.44
WHEREFORE, the instant petition is hereby GRANTED. The decision and resolution of the NLRC in
Injunction Case No. 00468-94 are REVERSED and SET ASIDE. Petitioner and private respondent are
hereby directed to submit the issues raised in the dismissed notices of strike to grievance procedure and
proceed with arbitration proceedings as prescribed in their CBA, if necessary. No pronouncement as to
costs.
SO ORDERED.

7. G.R. No. 128632

August 5, 1999

MSF TIRE AND RUBBER, INC., petitioner,

vs.
COURT OF APPEALS and PHILTREAD TIRE WORKERS' UNION, respondents.
MENDOZA, J.:
Petitioner seeks a review of the decision1 of the Court of Appeals, dated March 20, 1997, which set aside the
order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No. 95-770, granting petitioner's
application for a writ of preliminary injunction.
The facts are as follows:
A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private respondent,
Philtread Tire Workers' Union (Union), as a result of which the Union filed on May 27, 1994 a notice of strike
in the National Conciliation and Mediation Board National Capital Region charging Philtread with unfair
labor practices for allegedly engaging in union-busting for violation of the provisions of the collective
bargaining agreement. This was followed by picketing and the holding of assemblies by the Union outside
the gate of Philtread's plant at Km. 21, East Service Road, South Superhighway, Muntinlupa, Metro Manila.
Philtread, on the other hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15,
1994.
In an order, dated September 4, 1994,2 then Secretary of Labor Nieves Confesor assumed jurisdiction over
the labor dispute and certified it for compulsory arbitration. She enjoined the Union from striking and
Philtread from locking out members of the Union.

27

On December 9, 1994, during the pendency of the labor dispute, entered into a Memorandum of Agreement
with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under the Memorandum
of Agreement, Philtread's plant and equipment would be sold to a new company (petitioner MSF Tire and
Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which
the plant was located would be sold to another company (Sucat Land Corporation), 60% of which would be
owned by Philtread and 40% by Siam Tyre.
This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then asked
the Union to desist from picketing outside its plant and to remove the banners, streamers, and tent which it
had placed outside the plant's fence.
As the Union refused petitioner's request, petitioner filed on May 25, 1995 a complaint for injunction with
damages against the Union and the latter's officers and directors before the Regional Trial Court of Makati,
Branch 59 where the case was docketed as Civil Case No. 95-770.
On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the
trial court. It insisted that the parties were involved in a labor dispute and that petitioner, being a mere "alter
ego" of Philtread, was not an "innocent bystander."
After petitioner made its offer of evidence as well as the submission of the parties' respective memoranda,
the trial court, in an order, dated March 25, 1996, denied petitioner's application for injunction and dismissed
the complaint. However, on petitioner's motion, the trial court, on July 2, 1996, reconsidered its order, and
granted an injunction. Its order read: 3
Considering all that has been stated, the motion for reconsideration is granted. The Order dated
March 25, 1996 is reconsideration and set aside. Plaintiff's complaint is reinstated and defendant's
motion to dismiss is DENIED.
As regards plaintiff's application for the issuance of a writ of preliminary injunction, the Court finds
that the plaintiff has established a clear and sustaining right to the injunctive relief, hence, the same
is GRANTED. Upon posting by the plaintiff and approval by the Court of a bond in the amount of
One Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may
suffer by reason of the injunction in the event that the Court may finally adjudge that the plaintiff is
not entitled thereto, let a writ of preliminary injunction issue ordering the defendants and any other
persons acting with them and/or on their behalf to desist immediately from conducting their assembly
in the area immediately outside the plaintiff's plant at Km. 21 East Service Road, South
Superhighway, Muntinlupa, Metro Manila, and from placing and/or constructing banners, streamers,
posters and placards, and/or tents/shanties or any other structure, on the fence of, and/or along the
sidewalk outside, the said plant premises until further from this Court.
SO ORDERED.4
Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and
prohibition before the Court of Appeals.
On March 20, 1997, the appellate court rendered a decision granting the Union's petition and ordering the
trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for review. Petitioner makes the
following arguments in support of its petition:
a. The Court of Appeals erred in not summarily dismissing the Union's petition for its false
certification of non-forum shopping and the Union's failure to file a motion for reconsideration before
going up to the Court of Appeals on a petition for certiorari.
b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and
merit on the alleged grounds that MSF did not have a clear and unmistakable right to entitle it to a
writ of preliminary injunction.
c. The Court of Appeals' pronouncement that it has not touched upon the issue of whether or not
private respondent is a mere innocent bystander to the labor dispute between Philtread and the
Union or upon the issue of whether or not private respondent is a mere dummy or continuity of
Philtread is contrary to its own conclusions in the body of the decision, which conclusions are
erroneous.
d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on
Philtread's remaining operations in the country and allowed the Union to exercise its right to

28

communicate the facts of its labor dispute within MSF's premises, given the percentage of interest
Philtread has in both MSF and the corporation which owns the land bearing said plant.
The issues are (1) whether the Union's failure to disclose the pendency of NCMB-NCR-NS-05-167-96 in its
certification of non-forum shopping and its failure to file a motion for reconsideration of the order, dated July
2, 1996, of the trial court were fatal to its petition for review before the Court of Appeals; and (2) whether
petitioner has shown a clear legal right to the issuance of a writ of injunction under the "innocent bystander"
rule.
First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on the same
cause on the supposition that one or the other court would make a favorable disposition. 5 It is an act of
malpractice and is prohibited and condemned as trifling with courts and abusing their processes. 6 As held
in Executive Secretary v.Gordon:7
Forum-shopping consists of filing multiple suits involving the same parties for the same cause of
action, either simultaneously or successively, for the purpose of obtaining a favorable judgment.
Thus, it has been held that there is forum-shopping
(1) whenever as a result of an adverse decision one forum, a party seeks a favorable decision (other
than by appeal or certiorari) in another, or
(2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of
Appeals since in such case he deliberately splits appeals "in the hope that even as one case in
which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still
be open, or
(3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the
same from the original court.
In determining whether or not there is forum-shopping, what is important is the vexation caused the courts
and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same
or related causes and/or grant the same or substantially the same reliefs and in the process creating the
possibility of conflicting decisions being rendered by the different fora upon the same issues. 8
Petitioner asserts that the Court of Appeals should have dismissed the Union's petition for review on the
ground that the certification of non-forum shopping was false and perjurious as a result of the Union's failure
to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving the same parties and
pending before the National Conciliation and Mediation Board.
The argument is without merit. Petitioner was a party to the proceedings before the National Conciliation and
Mediation Board in which an order, dated September 8, 1994, was issued by then Secretary of Labor Nieves
Confesor, enjoining any strike or lock-out by the parties. 9 It was petitioner which initiated the action for
injunction before the trial court. Aggrieved by the injunctive order issued by the lower court, the Union was
forced to file a petition for review before the Court of Appeals. We cannot understand why petitioner should
complain that no mention of the pendency of the arbitration case before the labor department was made in
the certificate of non-forum shopping attached to the Union's petition in the Court of Appeals. The petition of
the Union in the Court of Appeals was provoked by petitioner's action in seeking injunction from the trial
court when it could have obtained the same relief from the Secretary of Labor.
Indeed, by focusing on the Union's certification before the appellate court, petitioner failed to notice that its
own certification before the lower court suffered from the same omission for which it faults the Union.
Although the body of petitioner's complaint mentions NCMB-NCR-NS-05-167-96, its own certification is
silent concerning this matter.10 It is not in keeping with the requirements of fairness for petitioner to demand
strict application of the prohibition against forum-shopping, when it, too, is guilty of the same omission.
Second. Petitioner asserts that its status as an "innocent bystander" with respect to the labor dispute
between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the appellate
court erred in not upholding its corporate personality as independent of Philtread's.
In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel, 11 this Court, through Justice J.B.L.
Reyes, stated the "innocent bystander" rule as follows:
The right to picket as a means of communicating the facts of a labor dispute is a phase of the
freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed
even in the absence of employer-employee relationship.

29

The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an
exercise of free speech, we believe the courts are not without power to confine or localize the sphere
of communication or the demonstration to the parties to the labor dispute, including those with
related interest, and to insulate establishments or persons with no industrial connection or having
interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance
of third parties or "innocent bystanders" if it appears that the inevitable result of its is to create an
impression that a labor dispute with which they have no connection or interest exists between them
and the picketing union or constitute an invasion of their rights. In one case decided by this Court,
we upheld a trial court's injunction prohibiting the union from blocking the entrance to a feed mill
located within the compound of a flour mill with which the union had a dispute. Although sustained
on a different ground, no connection was found between the two mills owned by two different
corporations other than their being situated in the same premises. It is to be noted that in the
instances cited, peaceful picketing has not been totally banned but merely regulated. And in one
American case, a picket by a labor union in front of a motion picture theater with which the union had
a labor dispute was enjoined by the court from being extended in front of the main entrance of the
building housing the theater wherein other stores operated by third persons were
located.12 (Emphasis added)
Thus, an "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court that aside from the
grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection
whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context
thereof. For instance, inPAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely
separate entities, different from, and without any connection whatsoever to, the Metropolitan Bank and Trust
Company, against whom the strike was directed, other than the incidental fact that they are the bank's
landlord and co-lessee housed in the same building, respectively. Similarly, in Liwayway
Publications, Inc. v. Permanent Concrete Workers Union,13 this Court ruled that Liwayway was an "innocent
bystander" and thus entitled to enjoin the union's strike because Liwayway's only connection with the
employer company was the fact that both were situated in the same premises.
In the case at bar, petitioner cannot be said not to have such on to the dispute. As correctly observed by the
appellate court:
Coming now to the case before us, we find that the "negotiation, contract of sale, and the post
transaction" between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation
between them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction
between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any
proprietary rights over its sold assets. On the contrary, Philtread remains as 20% owner of private
respondent and 60% owner of Sucat Land Corporation which was likewise incorporated in
accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns
the land were subject plant is located. This, together with the fact that private respondent uses the
same plant or factory; similar or substantially the same working conditions; same machinery, tools,
and equipment; and manufacture the same products as Philtread, lead us to safely conclude that
private respondent's personality is so closely linked to Philtread as to bar its entitlement to an
injunctive writ. Stated differently, given its close links with Philtread as to bar its entitlement to an
injunctive writ. Stated differently, given its close links with Philtread, we find no clear and
unmistakable right on the part of private respondent to entitle it to the writ of preliminary injunction it
prayed for below.
xxx

xxx

xxx

We stress that in so ruling, we have not touched on the issue of . . . whether or not private is a mere
dummy or continuation of Philtread . . . .14
Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat public
convenience, justify wrong, protect fraud, defend crime, or where the corporation is used as a mere alterego or business conduit,15 it is not these standards but those of the "innocent bystander" rule which govern
whether or not petitioner is to an injunctive writ. Since petitioner is not an "innocent bystander", the trial
court's order, dated July 2, 1996, is a patent nullity, the trial court having no jurisdiction to issue the writ of
injunction. No motion for reconsideration need be filed where the order is null and void. 16
WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is
AFFIRMED.1wphi1.nt
SO ORDERED.

30

8. G.R. No. 85611 April 6, 1990

VICTORIANO ZAMORAS, petitioner,
vs.
ROQUE SU, JR., ANITA SU HORTELLANO and NATIONAL LABOR RELATIONS
COMMISSION, respondents.
Paulo V. Briones for petitioner.
Pacifico C. Cimafranca for private respondents.

GRIO-AQUINO, J.:
The issue in this petition is whether, upon the established facts, the petitioner was an employee or tenant of
the private respondents.
The petitioner, Victoriano Zamoras, was hired by the respondent, Roque Su, Jr., in 1957 as overseer of his
coconut land in Asenario, Dapitan City. Zamoras was charged with the task of having the land titled in Su's
name, and of assigning portions to be worked by tenants, supervising the cleaning, planting, care and
cultivation of the land, the harvesting of coconuts and selling of the copra. As compensation, Su paid
Zamoras a salary of P2,400 per month plus one-third (1/3) of the proceeds of the sales of copra which
normally occurred every two months. Another one-third of the proceeds went to the tenants and the other
third to Su. This system of sharing was regularly observed up to September, 1981. As the coconut plantation
yielded an average harvest of 21,000 nuts worth P18,900, based on the current market price of P3 per kilo,
Zamoras' share amounted to P6,300 every two months.
In May, 1981, Su informed Zamoras in writing that he obtained a loan from the other respondent, Anita Su
Hortellano, and that he authorized her to harvest the coconuts from his property "while the loan was
outstanding" (p. 8, Rollo). Su sent Zamoras a letter dated May 29, 1981 informing him that he was being
laid-off temporarily until Su could obtain a loan from the Development Bank of the Philippines with which to
pay Anita. However, Zamoras was not allowed anymore to work as overseer of the plantation. Without his
knowledge and consent, Hortellano harvested the coconuts without giving him his one-third share of the
copra sales.
On August 8, 1983, Zamoras filed in the Regional Arbitration Branch of the Ministry of Labor and
Employment in Zamboanga City a complaint against Roque Su, Jr. and Anita Su Hortellano for illegal
termination and breach of contract with damages of not less than P75,600 as his uncollected share of the
copra sales from September 15, 1981 to August 1983.
The officer-in-charge of the NLRC Sub-Regional Office in Dipolog City who investigated the case submitted
the following findings which were adopted by the Labor Arbiter
The record would show that the respondent, Atty. Roque Su, Jr., is a resident of 976-A
Gerardo Avenue Extension, Lahug, Cebu City and at the same time an employee in the
government up to the present, while the land wherein the complainant herein was employed
by the respondent as overseer of the land since 1957 up to and until his termination from the
service sometime in September 1981 without just cause or causes duly authorized by law
and after due process. That to prove that complainant was the overseer of the land owned by
the respondent are the sworn declaration of the three witnesses, namely: Vicente Amor,
Narcisa Arocha, and Wilfredo Bernaldes who are presently working as tenants of the
respondent. That the three witnesses testified that they knew the complainant personally
who has been working as overseer of the land because it was through him, the complainant,
that they were allowed to work and/or occupy the land as tenants ever since up to the
present. In fact, they further declared that they do not know personally the owner of the land
and besides, they have not seen personally the said owner as their dealing were directly
done thru the complainant. That they always received their share of the produce from the
complainant for every two months up to 1981.
xxx xxx xxx
It is very clear in the evidence of record that complainant was an employee of the
respondent. This fact is even admitted by the respondent in his answer by way of
controverting the claim of the complainant. (pp. 44-45, Rollo.)

31

On July 30, 1986, the Labor Arbiter rendered a decision holding that Zamoras, as overseer of the
respondent's plantation, was a regular employee whose services were necessary and desirable to the usual
trade or business of his employer. The Labor Arbiter held that the dismissal of Zamoras was without just
cause, hence, illegal. The private respondents were ordered to reinstate him to his former position as
overseer of the plantation and to pay him backwages equivalent to P31,975.83 in the event that he opted not
to be reinstated or that his reinstatement was not feasible.
The private respondents appealed to the National Labor Relations Commission, alleging that the Labor
Arbiter erred:
1. in disregarding respondents' evidence (a financial report showing the yearly copra sales from 1973 to
1977), proving that complainant's one-third share of the copra sales amounted to P5,985.16 only and not
P6,300 per harvest;
2. in not holding that the complainant can no longer be reinstated for he is already dead; and
3. in not finding that no employer-employee relationship existed between the parties.
On September 16, 1988, the NLRC rendered a decision reversing the Labor Arbiter. It held that "the right to
control test used in determining the existence of an employer-employee relationship is unavailing in the
instant case and that what exists between the parties is a landlord-tenant relationship" (p. 32, Rollo),
because such functions as introducing permanent improvements on the land, assigning portions to tenants,
supervising the cleaning, planting, care and cultivation of the plants, and deciding where and to whom to sell
the copra are attributes of a landlord-tenant relationship, hence, jurisdiction over the case rests with the
Court of Agrarian Relations.
Zamoras filed this petition, assailing the NLRC's decision.
There is merit in the petition.
The NLRC's conclusion that a landlord-tenant relationship existed between Su and Zamoras is not
supported by the evidence which shows that Zamoras was hired by Su not as a tenant but as overseer of his
coconut plantation. As overseer, Zamoras hired the tenants and assigned their respective portions which
they cultivated under Zamoras' supervision. The tenants dealt directly with Zamoras and received their onethird share of the copra produce from him. The evidence also shows that Zamoras, aside from doing
administrative work for Su, regularly managed the sale of copra processed by the tenants. There is no
evidence that Zamoras cultivated any portion of Su's land personally or with the aid of his immediate farm
household. In fact the respondents never raised the issue of tenancy in their answer.
Under Section 5 (a) of R.A. No. 1199, a tenant is "a person who by himself, or with the aid available from
within his immediate household, cultivates the land belonging to or possessed by another, with the latter's
consent for purposes of production, sharing the produce with the landholder or for a price certain or
ascertainable in produce or in money or both, under the leasehold tenancy system" (Matienzo vs. Servidad,
107 SCRA 276). Agricultural tenancy is defined as "the physical possession by a person of land devoted to
agriculture, belonging to or legally possessed by another for the purpose of production through the labor of
the former and of the members of his immediate farm household in consideration of which the former agrees
to share the harvest with the latter or to pay a price certain or ascertainable, whether in produce or in money,
or both" (Sec. 3, R.A. No. 1199; 50 O.G. 4655-56; Miguel Carag vs. CA, et al., 151 SCRA 44).
The essential requisites of a tenancy relationship are: (1) the parties are the landholder and the tenant; (2)
the subject is the agricultural holding; (3) there is consent between the parties; (4) the purpose is agricultural
production; (5) there is personal cultivation by the tenant; and (6) there is a sharing of harvests between
landlord and tenant (Antonio Castro vs. CA and De la Cruz, G.R. L-34613, January 26, 1989; Tiongson vs.
CA, 130 SCRA 482; Guerrero vs. CA, 142 SCRA 138).
The element of personal cultivation of the land, or with the aid of his farm household, essential in
establishing a landlord-tenant or a lessor-lessee relationship, is absent in the relationship between Su and
Zamoras (Co vs. IAC, 162 SCRA 390; Graza vs. CA, 163 SCRA 39), for Zamoras did not cultivate any part
of Su's plantation either by himself or with the help of his household.
On the other hand, the following circumstances are indicative of an employer-employee relationship
between them:
1. Zamoras was selected and hired by Su as overseer of the coconut plantation.

32

2. His duties were specified by Su.

3. Su controlled and supervised the performance of his duties. He determined to whom Zamoras should sell
the copra produced from the plantation.
4. Su paid Zamoras a salary of P2,400 per month plus one-third of the copra sales every two months as
compensation for managing the plantation.
Since Zamoras was an employee, not a tenant of Su, it is the NLRC, not the Court of Agrarian Relations,
that has jurisdiction to try and decide Zamora's complaint for illegal dismissal (Art. 217, Labor Code; Manila
Mandarin Employees Union vs. NLRC, 154 SCRA 368; Jacqueline Industries Dunhill Bags Industries, et al.
vs. NLRC, et al., 69 SCRA 242).
WHEREFORE, the assailed decision is reversed and a new one is entered, declaring Zamoras to be an
employee of respondent Roque Su, Jr. and that his dismissal was illegal and without lawful cause. He is
entitled to reinstatement with backwages, but because he is dead and may no longer be reinstated, the
private respondents are ordered to pay to his heirs the backwages due him, as well as his share of the copra
sales from the plantation for a period of three (3) years from his illegal dismissal in September, 1981, plus
separation pay in lieu of reinstatement. Costs against the private respondents.
SO ORDERED.
9. G.R. No. 82511 March 3, 1992
GLOBE-MACKAY CABLE AND RADIO CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and IMELDA SALAZAR, respondents.
Castillo, Laman, Tan & Pantaleon for petitioner.
Gerardo S. Alansalon for private respondent.

ROMERO, J.:
For private respondent Imelda L. Salazar, it would seem that her close association with Delfin Saldivar would
mean the loss of her job. In May 1982, private respondent was employed by Globe-Mackay Cable and
Radio Corporation (GMCR) as general systems analyst. Also employed by petitioner as manager for
technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close.
Sometime in 1984, petitioner GMCR, prompted by reports that company equipment and spare parts worth
thousands of dollars under the custody of Saldivar were missing, caused the investigation of the latter's
activities. The report dated September 25, 1984 prepared by the company's internal auditor, Mr. Agustin
Maramara, indicated that Saldivar had entered into a partnership styled Concave Commercial and Industrial
Company with Richard A. Yambao, owner and manager of Elecon Engineering Services (Elecon), a supplier
of petitioner often recommended by Saldivar. The report also disclosed that Saldivar had taken petitioner's
missing Fedders airconditioning unit for his own personal use without authorization and also connived with
Yambao to defraud petitioner of its property. The airconditioner was recovered only after petitioner GMCR
filed an action for replevin against Saldivar. 1
It likewise appeared in the course of Maramara's investigation that Imelda Salazar violated company
reglations by involving herself in transactions conflicting with the company's interests. Evidence showed that
she signed as a witness to the articles of partnership between Yambao and Saldivar. It also appeared that
she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed to inform her
employer.
Consequently, in a letter dated October 8, 1984, petitioner company placed private respondent Salazar
under preventive suspension for one (1) month, effective October 9, 1984, thus giving her thirty (30) days
within which to, explain her side. But instead of submitting an explanations three (3) days later or on October
12, 1984 private respondent filed a complaint against petitioner for illegal suspension, which she
subsequently amended to include illegal dismissal, vacation and sick leave benefits, 13th month pay and
damages, after petitioner notified her in writing that effective November 8, 1984, she was considered
dismissed "in view of (her) inability to refute and disprove these findings. 2

33

After due hearing, the Labor Arbiter in a decision dated July 16, 1985, ordered petitioner company to
reinstate private respondent to her former or equivalent position and to pay her full backwages and other
benefits she would have received were it not for the illegal dismissal. Petitioner was also ordered to pay
private respondent moral damages of P50,000.00. 3
On appeal, public respondent National Labor Relations, Commission in the questioned resolution dated
December 29, 1987 affirmed the aforesaid decision with respect to the reinstatement of private respondent
but limited the backwages to a period of two (2) years and deleted the award for moral damages. 4
Hence, this petition assailing the Labor Tribunal for having committed grave abuse of discretion in holding
that the suspension and subsequent dismissal of private respondent were illegal and in ordering her
reinstatement with two (2) years' backwages.
On the matter of preventive suspension, we find for petitioner GMCR.
The inestigative findings of Mr. Maramara, which pointed to Delfin Saldivar's acts in conflict with his position
as technical operations manager, necessitated immediate and decisive action on any employee closely,
associated with Saldivar. The suspension of Salazar was further impelled by th.e discovery of the missing
Fedders airconditioning unit inside the apartment private respondent shared with Saldivar. Under such
circumstances, preventive suspension was the proper remedial recourse available to the company pending
Salazar's investigation. By itself, preventive suspension does, not signify that the company has adjudged the
employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted
to for the protection of the company's property pending investigation any alleged malfeasance or
misfeasance committed by the employee. 5
Thus, it is not correct to conclude that petitioner GMCR had violated Salazar's right to due process when
she was promptly suspended. If at all, the fault, lay with private respondent when she ignored petitioner's
memorandum of October 8, 1984 "giving her ample opportunity to present (her) side to the Management."
Instead, she went directly to the Labor Department and filed her complaint for illegal suspension without
giving her employer a chance to evaluate her side of the controversy.
But while we agree with the propriety of Salazar's preventive suspension, we hold that her eventual
separation from employment was not for cause.
What is the remedy in law to rectify an unlawful dismissal so as to "make whole" the victim who has not
merely lost her job which, under settled Jurisprudence, is a property right of which a person is not to be
deprived without due process, but also the compensation that should have accrued to her during the period
when she was unemployed?
Art. 279 of the Labor Code, as amended, provides:
Security of Tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement. 6 (Emphasis supplied)
Corollary thereto are the following provisions of the Implementing Rules and Regulations of the Labor Code:
Sec. 2. Security of Tenure. In cases of regular employments, the employer shall not
terminate the services of an employee except for a just cause as provided in the Labor Code
or when authorized by existing laws.
Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall by entitled
to reinstatement without loss of seniority rights and to backwages." 7 (Emphasis supplied)
Before proceeding any furthers, it needs must be recalled that the present Constitution has gone further than
the 1973 Charter in guaranteeing vital social and economic rights to marginalized groups of society,
including labor. Given the pro-poor orientation of several articulate Commissioners of the Constitutional
Commission of 1986, it was not surprising that a whole new Article emerged on Social Justice and Human
Rights designed, among other things, to "protect and enhance the right of all the people to human dignity,
reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing
wealth and political power for the common good."8 Proof of the priority accorded to labor is that it leads the
other areas of concern in the Article on Social Justice, viz., Labor ranks ahead of such topics as Agrarian

34

and Natural Resources Reform, Urban Land Roform and Housing, Health, Women, Role and Rights of
Poople's Organizations and Human Rights. 9
The opening paragraphs on Labor states
The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance
with law. They shall be entitled to security of tenure, humane conditions of work, and a living
wage. They shall also participate in policy and decision-making processes affecting their
rights and benefits is may be provided by law. 10 (Emphasis supplied)
Compare this with the sole.provision on Labor in the 1973 Constitution under the Article an Declaration of
Principles and State Policies that provides:
Sec. 9. The state shall afford protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate
the relations between workers and employers. The State shall ensure the rights of workers to
self-organization, collective baegaining, security of tenure, and just and humane conditions
of work. The State may provide for compulsory arbitration. 11
To be sure, both Charters recognize "security of tenure" as one of the rights of labor which the State is
mandated to protect. But there is no gainsaying the fact that the intent of the framers of the present
Constitution was to give primacy to the rights of labor and afford the sector "full protection," at least greater
protection than heretofore accorded them, regardless of the geographical location of the workers and
whether they are organized or not.
It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who substantially contributed to the
present formulation of the protection to labor provision and proposed that the same be incorporated in the
Article on Social Justice and not just in the Article on Declaration of Principles and State Policies "in the light
of the special importance that we are giving now to social justice and the necessity of emphasizing the
scope and role of social justice in national development." 12
If we have taken pains to delve into the background of the labor provisions in our Constitution and the Labor
Code, it is but to stress that the right of an employee not to be dismissed from his job except for a just or
authorized cause provided by law has assumed greater importance under the 1987 Constitution with the
singular prominence labor enjoys under the article on Social Justice. And this transcendent policy has been
translated into law in the Labor Code. Under its terms, where a case of unlawful or unauthorized dismissal
has been proved by the aggrieved employee, or on the other hand, the employer whose duty it is to prove
the lawfulness or justness of his act of dismissal has failed to do so, then the remedies provided in Article
279 should find, application. Consonant with this liberalized stance vis-a-vis labor, the legislature even went
further by enacting Republic Act No. 6715 which took effect on March 2, 1989 that amended said Article to
remove any possible ambiguity that jurisprudence may have generated which watered down the
constitutional intent to grant to labor "full protection." 13
To go back to the instant case, there being no evidence to show an authorized, much less a legal, cause for
the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but ay well,
to full backwages." 14
The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is,
in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary
meaning of the word "reinstate" is "to restore to a state, conditione positions etc. from which one had been
removed" 15 and in the latter, to give her back the income lost during the period of unemployment. Both
remedies, looking to the past, would perforce make her "whole."
Sadly, the avowed intent of the law has at times been thwarted when reinstatement has not been
forthcoming and the hapless dismissed employee finds himself on the outside looking in.
Over time, the following reasons have been advanced by the Court for denying reinstatement under the
facts of the case and the law applicable thereto; that reinstatement can no longer be effected in view of the
long passage of time (22 years of litigation) or because of the realities of the situation; 16 or that it would be
"inimical to the employer's interest; " 17 or that reinstatement may no longer be feasible; 18 or, that it will not
serve the best interests of the parties involved; 19 or that the company would be prejudiced by the workers'

35

continued employment; 20 or that it will not serve any prudent purpose as when supervening facts have
transpired which make execution on that score unjust or inequitable 21 or, to an increasing extent, due to the
resultant atmosphere of "antipathy and antagonism" or "strained relations" or "irretrievable estrangement"
between the employer and the employee. 22
In lieu of reinstatement, the Court has variously ordered the payment of backwages and separation pay
solely separation pay. 24

23

or

In the case at bar, the law is on the side of private respondent. In the first place the wording of the Labor
Code is clear and unambiguous: "An employee who is unjustly dismissed from work shall be entitled to
reinstatement. . . . and to his full backwages. . . ." 25 Under the principlesof statutory construction, if a statute
is clears plain and free from ambiguity, it must be given its literal meaning and applied without attempted
interpretation. This plain-meaning rule or verba legis derived from the maxim index animi sermo est (speech
is the index of intention) rests on the valid presumption that the words employed by, the legislature in a
statute correctly express its intent or will and preclude the court from construing it differently. 26 The
legislature is presumed to know the meaning of the words, to:have used words advisedly, and to have
expressed its intent by the use of such words as are found in the statute. 27 Verba legis non est recedendum,
or from the words of a statute there should be no departure. Neither does the provision admit of any
qualification. If in the wisdom of the Court, there may be a ground or grounds for non-application of the
above-cited provision, this should be by way of exception, such as when the reinstatement may be
inadmissible due to ensuing strained relations between the employer and the employee.
In such cases, it should be proved that the employee concerned occupies a position where he enjoys the
trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and productivity of the employee
concerned.
A few examples, will suffice to illustrate the Court's application of the above principles: where the employee
is a Vice-President for Marketing and as such, enjoys the full trust and confidence of top management; 28 or
is the Officer-In-Charge of the extension office of the bank where he works; 29 or is an organizer of a union
who was in a position to sabotage the union's efforts to organize the workers in commercial and industrial
establishments; 30 or is a warehouseman of a non-profit organization whose primary purpose is to facilitate
and maximize voluntary gifts. by foreign individuals and organizations to the Philippines; 31 or is a manager
of its Energy Equipment Sales. 32
Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwisey reinstatement
can never be possible simply because some hostility is invariably engendered between the parties as a
result of litigation. That is human nature. 33
Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an
employee who shall assert his right could be easily separated from the service, by merely paying his
separation pay on the pretext that his relationship with his employer had already become strained. 34
Here, it has not been proved that the position of private respondent as systems analyst is one that may be
characterized as a position of trust and confidence such that if reinstated, it may well lead to strained
relations between employer and employee. Hence, this does not constitute an exception to the general rule
mandating reinstatement for an employee who has been unlawfully dismissed.
On the other hand, has she betrayed any confidence reposed in her by engaging in transactions that may
have created conflict of interest situations? Petitioner GMCR points out that as a matter of company policy, it
prohibits its employees from involving themselves with any company that has business dealings with GMCR.
Consequently, when private respondent Salazar signed as a witness to the partnership papers of Concave
(a supplier of Ultra which in turn is also a supplier of GMCR), she was deemed to have placed. herself in an
untenable position as far as petitioner was concerned.
However, on close scrutiny, we agree with public respondent that such a circumstance did not create a
conflict of interests situation. As a systems analyst, Salazar was very far removed from operations involving
the procurement of supplies. Salazar's duties revolved around the development of systems and analysis of
designs on a continuing basis. In other words, Salazar did not occupy a position of trust relative to the
approval and purchase of supplies and company assets.
In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As we have held
countless times, while loss of confidence or breach of trust is a valid ground for terminations it must rest an
some basis which must be convincingly established. 35 An employee who not be dismissed on mere
presumptions and suppositions. Petitioner's allegation that since Salazar and Saldivar lived together in the

36

same apartment, it "presumed reasonably that complainant's sympathy would be with Saldivar" and its
averment that Saldivar's investigation although unverified, was probably true, do not pass this Court's
test. 36 While we should not condone the acts of disloyalty of an employee, neither should we dismiss him on
the basis of suspicion derived from speculative inferences.
To rely on the Maramara report as a basis for Salazar's dismissal would be most inequitous because the
bulk of the findings centered principally oh her friend's alleged thievery and anomalous transactions as
technical operations' support manager. Said report merely insinuated that in view of Salazar's special
relationship with Saldivar, Salazar might have had direct knowledge of Saldivar's questionable activities.
Direct evidence implicating private respondent is wanting from the records.
It is also worth emphasizing that the Maramara report came out after Saldivar had already resigned from
GMCR on May 31, 1984. Since Saldivar did not have the opportunity to refute management's findings, the
report remained obviously one-sided. Since the main evidence obtained by petitioner dealt principally on the
alleged culpability of Saldivar, without his having had a chance to voice his side in view of his prior
resignation, stringent examination should have been carried out to ascertain whether or not there existed
independent legal grounds to hold Salatar answerable as well and, thereby, justify her dismissal. Finding
none, from the records, we find her to have been unlawfully dismissed.
WHEREFORE, the assailed resolution of public respondent National Labor Relations Commission dated
December 29, 1987 is hereby AFFIRMED. Petitioner GMCR is ordered to REINSTATE private respondent
Imelda Salazar and to pay her backwages equivalent to her salary for a period of two (2) years only.
This decision is immediately executory.
SO ORDERED.
10. G.R. No. 111651 November 28, 1996
OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE, MARIO D.
SUMONOD, and SABU J. LAMARAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and EVERGREEN FARMS,
INC. respondents.
RESOLUTION

PADILLA, J.:
On 15 March 1996, the Court (First Division) promulgated a decision in this case, the dispositive part of
which states:
WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May
1993 is modified in that its deletion of the award for backwages in favor of petitioners, is SET
ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the
modification that backwages shall be paid to petitioners from the time of their illegal
dismissal on 25 June 1990 up to the date of their reinstatement. If reinstatement is no longer
feasible, a one-month salary shall be paid the petitioners as ordered in the labor arbiter's
decision, in addition to the adjudged backwages.
Private respondent now moves to reconsider the decision on grounds that (a) petitioners are not entitled to
recover backwages because they not actually dismissed but their probationary employment was not
converted to permanent employment; and (b) assuming that petitioners are entitled to backwages,
computation thereof should not start from cessation of work up to actual reinstatement, and that salary
earned elsewhere (during the period of illegal dismissal) should be deducted from the award such
backwages.
There is no compelling reason to reconsider the decision of the Court (First Division) dated 15 March 1996.
However, we here clarify the computation of backwages due an employee on account of his illegal dismissal
from employment.

37

This Court has, over the years, applied different methods in the computation of backwages. The first labor
relations law governing the award of backwages was Republic Act No. 875, the Industrial Peace Act,
approved on 17 June 1953. Sections 5 and 15 thereof provided thus:
Sec. 5. Unfair Labor Practice Cases.
(c) . . . If, after investigation, the Court shall be of the opinion that any person named in the
complaint has engaged in or is engaging in any unfair labor practice, then the Court shall
state its findings of fact and shall issue and cause to be served on such person an order
requiring such person to cease and desist from such unfair labor practice and take such
affirmative action as will effectuate the policies of this Act, including (but not limited to)
reinstatement of employees with or without back-pay and including rights of the employees
prior to dismissal including seniority.
. . . (emphasis supplied)
Sec. 15. Violation of Duty to Bargain Collectively. . . . Any employee whose work has
stopped as a consequence of such lockout shall be entitled to back-pay. (emphasis supplied)
In accordance with these provisions, backpay (the same as backwages) could be awarded where, in the
opinion of the Court of Industrial Relations (CIR), such was necessary to effectuate the policies of the
Industrial Peace
Act. 1 Only in one case was backpay a matter of right, that was, when an employer had declared a lockout
without having first bargained collectively with his employees in accordance with the provisions of the Act.
As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee,
it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. 2 Thus, in the
exercise of its jurisdiction, the CIR increased or diminished the award of backpay, depending on several
circumstances, among them, the good faith of the employer, 3 the employee's employment in other
establishments during, the period of illegal dismissal, or the probability that the employee could have
realized net earnings from outside employment if he had exercised due diligence to search for outside
employment. 4 In labor cases decided during the effectivity of R.A. No. 875, this Court acknowledged and
upheld the CIR's authority to deduct any amount from the employee's backwages, 5 including the discretion
to reduce such award of backwages whatever earnings were obtained by the employee elsewhere during
the period of his illegal dismissal. 6 In the case of Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers'
Union, 7 this Court restated the guidelines for determination of total backwages, thus:
First. To be deducted from the backwages accruing to each of the laborers to be reinstated is
the total amount of earnings obtained by him from other employment(s) from the date of
dismissal to the date of reinstatement. Should the laborer decide that it is preferable not to
return to work, the deduction should be made up to the time judgment becomes final. And
these, for the reason that employees should not be permitted to enrich themselves at the
expense of their employer. Besides, there is the "law's abhorrence for double compensation".
Second. Likewise, in mitigation of the damages that the dismissed respondents are entitled
to, account should be taken of whether in the exercise of due diligence respondents might
have obtained income from suitable remunerative employment. We are prompted to give out
this last reminder because it is really unjust that a discharged employee should, with folded
arms, remain inactive in the expectation that a windfall would come to him. A contrary view
would breed idleness; it is conducive to lack of initiative on the part of a laborer. Both bear
the stamp of undesirability.
From this ruling came the burden of disposing of an illegal dismissal case on its merits and of determining
whether or not the computation of the award of backwages is correct. In order not to unduly delay the
disposition of illegal dismissal cases, this Court found occasion in the case of Mercury Drug Co., Inc., et
al. v. CIR, et al. 8 to rule that a fixed amount of backwages without further qualifications should be awarded
to an illegally dismissed employee (hereinafter the Mercury Drug rule). This ruling was grounded upon
considerations of expediency in the execution of the decision. Former Justice Claudio Teehankee approved
of this formula expressing that such method of computation is a "realistic, reasonable and mutually
beneficial solution" and "thus obviates the twin evils of idleness on the part of the employees and attrition
and undue delay in satisfying the award on the part of the employer" 9 However, Justice Teehankee
dissented from the majority view that the employee in said case should be awarded backwages only for a
period of 1 year, 11 months and 15 day which represented the remainder of the prescriptive period after
deducting the period corresponding to the delay incurred by the employee in filing the complaint for unfair
labor practice and reinstatement. Justice Teehankee opined that:

38

. . . an award of back wages equivalent to three years (where the case is not terminated
sooner) should serve as the base figure for such awards without deduction, subject to
deduction where there are mitigating circumstances in favor of the employer but subject to
increase by way of exemplary damages where there are aggravating circumstances (e.g.
oppression or dilatory appeals) on the employer's part. 10
The proposal on the three-year backwages was subsequently adopted in later cases, among them, Feati
University Faculty Club (PAFLU) v. Feati University (No. L-31503, 15 August 1974, 58 SCRA 395), Luzon
Stevedoring Corporation v. CIR (No. L-34300, 22 November 1974, 61 SCRA 154), Danao Development
Corporation v. NLRC (Nos. L-40706 and L-40707, 16 February 1978, 81 SCRA 487), Associated AngloAmerican Tobacco Corporation v. Lazaro (No. 63779, 27 October 1983, 125 SCRA 463), Philippine National
Oil Company -Energy Development Corporation v. Leogardo (G.R. No. 58494, 5 July 1989, 175 SCRA 26).
Then came Presidential Decree No. 442 (the Labor Code of Philippines) which was signed into law on 1
May 1974 and which took effect on 1 November 1974. Its posture on the award of backwages, as amended,
was expressed as follows.
Art. 279. Security of tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and to his back wages computed from the time his
compensation was withheld from him up to the time of his reinstatement. (emphasis
supplied).
Under the abovequoted provision, it became mandatory to award backwages to illegally dismissed regular
employees. The law specifically declared that the award of backwages was to be computed from the time
compensation was withheld from the employee up to the time of his instatement. This notwithstanding, the
rule generally applied by the Court under the promulgation of the Mercury Drug case, 11 and during the
effectivity of P.D.No. 442 was still the Mercury Drug rule. A survey of causes from 1974 until 1989, when the
amendatory law to P.D. No. 442, namely, R.A. No. 6715 took effect, supports this conclusion.
In the case of New Manila Candy Workers Union (Naconwa-Paflu) v. CIR (1978), 12 or after the Labor Code
(P.D. No. 442) had taken effect, the court still followed the Mercury Drug rule to avoid the necessity of a
hearing on earnings obtained elsewhere by the employee during the period of illegal dismissal. In an even
later case (1987) 13 the Court declared that the general principle is that an employee is entitled to receive as
backwages the amounts he may have received from the date of his dismissal up to the time of his
reinstatement. However, in compliance with the jurisprudential policy of fixing the amount of backwages to a
just and reasonable level, the award of backwages equivalent to three (3) years, without qualification or
deduction, was nonetheless followed in said case.
In a more direct approach to the rule on the award of backwages, this Court declared in the 1990 case
of Medado v. Court of Appeals 14 that "any decision or order granting backwages in excess of three (3) years
is null nad void as to the excess."
In sum, during the effectivity of P.D. 442, the Court enforced the Mercury Drug rule and, in effect, qualified
the provision under P.D. No. 442 by limiting the award of backwages to three (3) years.
On March 1989, Republic Act No. 6715 took effect, amending the Labor Code. Article 279 thereof states in
part :
Art. 279 Security of Tenure. . . . An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation is witheld from him up to the time of his actual
reinstatement. (emphasis supplied)
In accordance with the above provision, an illegally dismissed employee is entitled to his full backwages
from the time his compensation was witheld from him (which, as a rule, is from the time of his illegal
dismissal) up to the time of his actual reinstatement. It is true that this Court had ruled in the case of Pines
City Educational Center vs. NLRC (G.R. No. 96779, 10 November 1993, 227 SCRA 655) that "in
ascertaining the total amount of backwages payable to them (employees), we go back to the rule prior to the
Mercury Drug rule that the total amount derived from employment elsewhere by the employee from the date
of dismissal up to the date of reinstatement, if any, should be deducted therefrom." 15 The rationale for such
ruling was that, the earnings derived elsewhere by the dismissed employee while litigating the legality of his

39

dismissal, should be deducted from the full amount of backwages which the law grants him upon
reinstatement, so as not to unduly or unjustly enrich the employee at the sense of the employer.
The Court deems it appropriate, however, to reconsider such earlier on the computation of backwages as
enunciated in said Pines City Educational Center case, by now holding that comformably with the evident
legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally
dismissed employee, should not, as general rule, be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal. The underlying reason of this ruling is that the employee,
while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family,
while his backwages have to be paid by the employer as part of the price or penalty he has to pay for
illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to
give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction
of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715
points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the period of his illegal dismissal. 16 In other words,
the provision handling for "full backwages" to illegally dismissed employees is clear, plain and free from
ambiguity and, therefore, must be applied without attempted or strained interpretation. Index animi sermo
est. 17
Therefore, in accordance with R.A. No. 6715, petitioners are entitled on their full backwages, inclusive of
allowances and other benefits or their monetary equivalent, from the time their actual compensation was
withheld on them up to the time of their actual reinstatement.
As to reinstatement of petitioners, this Court has already ruled that reinstatement is no longer feasible,
because the company would be adjustly prejudiced by the continued employment of petitioners who at
present are overage, a separation pay equal to one-month salary granted to them in the Labor Arbiter's
decision was in order and, therefore, affirmed on the Court's decision of 15 March 1996. Furthermore, since
reinstatement on this case is no longer feasible, the amount of backwages shall be computed from the time
of their illegal termination on 25 June 1990 up to the time of finality of this decision. 18
ACCORDINGLY, private respondent's Motion for Reconsideration, dated 10 April 1996, is DENIED.
SO ORDERED.
11. G.R. No. 108405

April 4, 2003

JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO, DANILO C. BALANAG, FERDINAND

DELLA, EDWARD A. ABELLERA, ALEXANDER ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA,
ARTHUR M. ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT A. ORDOO, BERNARD V.
JULARBAL, IGNACIO C. ALINGBAS and LEODEL N. SORIANO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), and BENGUET ELECTRIC
COOPERATIVE, INC. (BENECO) respondents.
AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari seeking to annul the decision promulgated by the National Labor
Relations Commission (NLRC) on July 2, 1992 in NLRC CA No. L-000384-92, 1 and its resolution dated
September 24, 1992 denying petitioners motion for reconsideration.
The factual background of this case, as summarized by the Labor Arbiter, is as follows:
Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment of wages and
claim for indemnity pay against a common respondent, the Benguet Electric Cooperative, Inc.,
(BENECO for short) represented by its Acting General Manager, Gerardo P. Versoza.
Complainants services as meter readers were contracted for hardly a months duration, or from
October 8 to 31, 1990. Their employment contracts, couched in identical terms, read:
You are hereby appointed as METER READER (APPRENTICE) under BENECO-NEA
Management with compensation at the rate of SIXTY-SIX PESOS AND SEVENTY-FIVE
CENTAVOS (P66.75) per day from October 08 to 31, 1990.
x x x. (Annex B, Complainants Joint Position Paper)

40

The said term notwithstanding, the complainants were allowed to work beyond October 31, 1990, or
until January 2, 1991. On January 3, 1991, they were each served their identical notices of
termination dated December 29, 1990. The same read:
Please be informed that effective at the close of office hours of December 31, 1990, your
services with the BENECO will be terminated. Your termination has nothing to do with your
performance. Rather, it is because we have to retrench on personnel as we are already
overstaffed.
x x x. (Annex C, CJPP)
On the same date, the complainants filed separate complaints for illegal dismissal. And following the
amendment of said complaints, they submitted their joint position paper on April 4, 1991.
Respondent filed its position paper on April 2, 1991.
It is the contention of the complainants that they were not apprentices but regular employees whose
services were illegally and unjustly terminated in a manner that was whimsical and capricious. On
the other hand, the respondent invokes Article 283 of the Labor Code in defense of the questioned
dismissal.2
On October 18, 1991, the Labor Arbiter rendered a decision, the dispositive portion of which reads as
follows:
WHEREFORE, judgment is hereby rendered:
1. Dismissing the complaints for illegal dismissal filed by the complainants for lack of merit. However
in view of the offer of the respondent to enter into another temporary employment contract with the
complainants, the respondent is directed to so extend such contract to each complainant, with the
exception of Jaime Viernes, and to pay each the amount of P2,590.50, which represents a months
salary, as indemnity for its failure to give complainants the 30-day notice mandated under Article 283
of the Labor Code; or, at the option of the complainants, to pay each financial assistance in the
amount of P5,000.00 and the P2,590.50 above-mentioned.
2. Respondent is also ordered:
A. To pay complainants the amount representing underpayment of their wages:
a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, Francisco Bayuga, Arthur
Oribello, Buenaventura de Guzman, Jr., Robert Ordoo, Bernard Jularbal and Leodel
Soriano, P1,994.25 each;
b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and
c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each.
B. To extend to complainant Jaime Viernes an appointment as regular employee for the position of
meter reader, the job he held prior to his termination, and to pay him P2,590.50 as indemnity, plus
the underpayment of his wages as above stated.
C. To pay P7,000.00 as and for attorneys fees.
No damages.
SO ORDERED.3
Aggrieved by the Labor Arbiters decision, the complainants and the respondent filed their respective
appeals to the NLRC.
On July 2, 1992, the NLRC modified its judgment, to wit:
WHEREFORE, premises considered, judgment is hereby rendered modifying the appealed decision
by declaring complainants dismissal illegal, thus ordering their reinstatement to their former position
as meter readers or to any equivalent position with payment of backwages limited to one year and

41

deleting the award of indemnity and attorneys fees. The award of underpayment of wages is hereby
AFFIRMED.
SO ORDERED.4
On August 27, 1992, complainants filed a Motion for Clarification and Partial Reconsideration. 5 On
September 24, 1992, the NLRC issued a resolution denying the complainants motion for reconsideration. 6
Hence, complainants filed herein petition.
Private respondent BENECO filed its Comment; the Office of the Solicitor General (OSG) filed a
Manifestation and Motion in Lieu of Comment; public respondent NLRC filed its own Comment; and
petitioners filed their Manifestation and Motion In Lieu of Consolidated Reply. Public respondent NLRC,
herein petitioners, and private respondent filed their respective memoranda, and the OSG, its Manifestation
in 1994.
Pursuant to our ruling in Rural Bank of Alaminos Employees Union vs. NLRC,7 to wit:
in the decision in the case of St. Martin Funeral Homes vs. National Labor Relations Commission,
G.R. No. 130866, promulgated on September 16, 1998, this Court pronounced that petitions for
certiorari relating to NLRC decisions must be filed directly with the Court of Appeals, and labor cases
pending before this Court should be referred to the appellate court for proper disposition. However,
in cases where the Memoranda of both parties have been filed with this Court prior to the
promulgation of the St. Martin decision, the Court generally opts to take the case itself for its final
disposition.8
and considering that the parties have filed their respective memoranda as of 1994, we opt to resolve the
issues raised in the present petition.
The parties raised the following issues:
1. Whether the respondent NLRC committed grave abuse of discretion in ordering the reinstatement
of petitioners to their former position as meter readers on probationary status in spite of its finding
that they are regular employees under Article 280 of the Labor Code.
2. Whether the respondent NLRC committed grave abuse of discretion in limiting the backwages of
petitioners to one year only in spite of its finding that they were illegally dismissed, which is contrary
to the mandate of full backwages until actual reinstatement but not to exceed three years.
3. Whether the respondent NLRC committed grave abuse of discretion in deleting the award of
indemnity pay which had become final because it was not appealed and in deleting the award of
attorneys fees because of the absence of a trial-type hearing.
4. Whether the mandate of immediately executory on the reinstatement aspect even pending appeal
as provided in the decision of Labor Arbiters equally applies in the decision of the National Labor
Relations Commission even pending appeal, by means of a motion for reconsideration of the order
reinstating a dismissed employee or pending appeal because the case is elevated on certiorari
before the Supreme Court.9
We find the petition partly meritorious.
As to the first issue: We sustain petitioners claim that they should be reinstated to their former position as
meter readers, not on a probationary status, but as regular employees.
Reinstatement means restoration to a state or condition from which one had been removed or
separated.10 In case of probationary employment, Article 281 of the Labor Code requires the employer to
make known to his employee at the time of the latters engagement of the reasonable standards under
which he may qualify as a regular employee.
A review of the records shows that petitioners have never been probationary employees. There is nothing in
the letter of appointment, to indicate that their employment as meter readers was on a probationary basis. It
was not shown that petitioners were informed by the private respondent, at the time of the latters
employment, of the reasonable standards under which they could qualify as regular employees. Instead,

42

petitioners were initially engaged to perform their job for a limited duration, their employment being fixed for
a definite period, from October 8 to 31, 1990.
Private respondents reliance on the case of Brent School, Inc. vs. Zamora,11 wherein we held as follows:
Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employees right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept
of regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former over the latter.12
is misplaced.
The principle we have enunciated in Brent applies only with respect to fixed term employments. While it is
true that petitioners were initially employed on a fixed term basis as their employment contracts were only
for October 8 to 31, 1990, after October 31, 1990, they were allowed to continue working in the same
capacity as meter readers without the benefit of a new contract or agreement or without the term of their
employment being fixed anew. After October 31, 1990, the employment of petitioners is no longer on a fixed
term basis. The complexion of the employment relationship of petitioners and private respondent is thereby
totally changed. Petitioners have attained the status of regular employees.
Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform activities which
are necessary or desirable in the usual business or trade of the employer, or a casual employee who has
rendered at least one year of service, whether continuous or broken, with respect to the activity in which he
is employed.
In De Leon vs. NLRC,13 and Abasolo vs. NLRC,14 we laid down the test in determining regular employment,
to wit:
The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business
of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of
the work performed and its relation to the scheme of the particular business or trade in its entirety.
Also if the employee has been performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such activity and while such activity
exists.15
Clearly therefrom, there are two separate instances whereby it can be determined that an employment is
regular: (1) The particular activity performed by the employee is necessary or desirable in the usual
business or trade of the employer; or (2) if the employee has been performing the job for at least a year.
Herein petitioners fall under the first category. They were engaged to perform activities that are necessary to
the usual business of private respondent. We agree with the labor arbiters pronouncement that the job of a
meter reader is necessary to the business of private respondent because unless a meter reader records the
electric consumption of the subscribing public, there could not be a valid basis for billing the customers of
private respondent. The fact that the petitioners were allowed to continue working after the expiration of their
employment contract is evidence of the necessity and desirability of their service to private respondents
business. In addition, during the preliminary hearing of the case on February 4, 1991, private respondent
even offered to enter into another temporary employment contract with petitioners. This only proves private
respondents need for the services of herein petitioners. With the continuation of their employment beyond
the original term, petitioners have become full-fledged regular employees. The fact alone that petitioners
have rendered service for a period of less than six months does not make their employment status as
probationary.
Since petitioners are already regular employees at the time of their illegal dismissal from employment, they
are entitled to be reinstated to their former position as regular employees, not merely probationary.

43

As to the second issue, Article 279 of the Labor Code, as amended by R.A. No. 6715, which took effect on
March 21, 1989, provides that an illegally dismissed employee is entitled to full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement. Since petitioners were employed on
October 8, 1990, the amended provisions of Article 279 of the Labor Code shall apply to the present case.
Hence, it was patently erroneous, tantamount to grave abuse of discretion on the part of the public
respondent in limiting to one year the backwages awarded to petitioners.
With respect to the third issue, an employer becomes liable to pay indemnity to an employee who has been
dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due
process.16 The indemnity is in the form of nominal damages intended not to penalize the employer but to
vindicate or recognize the employees right to procedural due process which was violated by the
employer.17 Under Article 2221 of the Civil Code, nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by him.
We do not agree with the ruling of the NLRC that indemnity is incompatible with the award of backwages.
These two awards are based on different considerations. Backwages are granted on grounds of equity to
workers for earnings lost due to their illegal dismissal from work. 18 On the other hand, the award of
indemnity, as we have earlier held, is meant to vindicate or recognize the right of an employee to due
process which has been violated by the employer.
In the present case, the private respondent, in effecting the dismissal of petitioners from their employment,
failed to comply with the provisions of Article 283 of the Labor Code which requires an employer to serve a
notice of dismissal upon the employees sought to be terminated and to the Department of Labor, at least
one month before the intended date of termination. Petitioners were served notice on January 3, 1991
terminating their services, effective December 29, 1990, or retroactively, in contravention of Article 283. This
renders the private respondent liable to pay indemnity to petitioners.
Thus, we find that the NLRC committed grave abuse of discretion in deleting the award of indemnity. In Del
Val vs. NLRC,19 we held that the award of indemnity ranges from P1,000.00 to P10,000.00 depending on the
particular circumstances of each case. In the present case, the amount of indemnity awarded by the labor
arbiter is P2,590.50, which is equivalent to petitioners one-month salary. We find no cogent reason to
modify said award, for being just and reasonable.
As to the award of attorneys fees, the same is justified by the provisions of Article 111 of the Labor Code, to
wit:
Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the culpable party may be
assessed attorneys fees equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative
proceedings for the recovery of the wages, attorneys fees which exceed ten percent of the amount
of wages recovered.
As to the last issue, Article 223 of the Labor Code is plain and clear that the decision of the NLRC shall be
final and executory after ten (10) calendar days from receipt thereof by the parties. In addition, Section 2(b),
Rule VIII of the New Rules of Procedure of the NLRC provides that "should there be a motion for
reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be executory
after ten calendar days from receipt of the resolution on such motion."
We find nothing inconsistent or contradictory between Article 223 of the Labor Code and Section 2(b), Rule
VIII, of the NLRC Rules of Procedure. The aforecited provision of the NLRC Rules of Procedure merely
provides for situations where a motion for reconsideration is filed. Since the Rules allow the filing of a motion
for reconsideration of a decision of the NLRC, it simply follows that the ten-day period provided under Article
223 of the Labor Code should be reckoned from the date of receipt by the parties of the resolution on such
motion. In the case at bar, petitioners received the resolution of the NLRC denying their motion for
reconsideration on October 22, 1992. Hence, it is on November 2, 1992 that the questioned decision
became executory.
WHEREFORE, the petition is partially GRANTED. The decision of the National Labor Relations Commission
dated July 2, 1992 is MODIFIED. Private respondent Benguet Electric Cooperative, Inc. (BENECO) is
hereby ordered to reinstate petitioners to their former or substantially equivalent position as regular
employees, without loss of seniority rights and other privileges appurtenant thereto, with full backwages from
the time of their dismissal until they are actually reinstated. The amount of P2,590.50 awarded by the labor

44

arbiter as indemnity to petitioners is REINSTATED. Private respondent is also ordered to pay attorneys fees
in the amount of ten percent (10%) of the total monetary award due to the petitioners. In all other respects
the assailed decision and resolution are AFFIRMED.
Costs against private respondent BENECO.
12. G.R. No. 167714

March 7, 2007

ROWELL INDUSTRIAL CORPORATION, Petitioner,

vs.
HON. COURT OF APPEALS and JOEL TARIPE, Respondents.
DECISION
CHICO-NAZARIO, J.:
This case is a Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to set
aside the Decision1and Resolution2of the Court of Appeals in CA-G.R. SP No. 74104, entitled, Rowell
Industrial Corp., and/or Edwin Tang vs. National Labor Relations Commission and Joel Taripe, dated 30
September 2004 and 1 April 2005, respectively, which affirmed the Resolutions 3of the National Labor
Relations Commission (NLRC) dated 7 June 2002 and 20 August 2002, finding herein respondent Joel
Taripe (Taripe) as a regular employee who had been illegally dismissed from employment by herein
petitioner Rowell Industrial Corp. (RIC), thereby ordering petitioner RIC to reinstate respondent Taripe with
full backwages, subject to the modification of exonerating Edwin Tang, the RIC General Manager and Vice
President, from liability and computing the backwages of herein respondent Taripe based on the prevailing
salary rate at the time of his dismissal. The NLRC Resolutions reversed the Decision 4of the Labor Arbiter
dated 29 September 2000, which dismissed respondent Taripe's complaint.
Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of consumer
products, e.g., foods, paints, among other things. Respondent Taripe was employed by petitioner RIC on 8
November 1999 as a "rectangular power press machine operator" with a salary of P223.50 per day, until he
was allegedly dismissed from his employment by the petitioner on 6 April 2000.
The controversy of the present case arose from the following facts, as summarized by the NLRC and the
Court of Appeals:
On [17 February 2000], [herein respondent Taripe] filed a [C]omplaint against [herein petitioner RIC] for
regularization and payment of holiday pay, as well as indemnity for severed finger, which was amended on
[7 April 2000] to include illegal dismissal. [Respondent Taripe] alleges that [petitioner RIC] employed him
starting [8 November 1999] as power press machine operator, such position of which was occupied by
[petitioner RIC's] regular employees and the functions of which were necessary to the latter's business.
[Respondent Taripe] adds that upon employment, he was made to sign a document, which was not
explained to him but which was made a condition for him to be taken in and for which he was not furnished a
copy. [Respondent Taripe] states that he was not extended full benefits granted under the law and the
[Collective Bargaining Agreement] and that on [6 April 2000], while the case for regularization was pending,
he was summarily dismissed from his job although he never violated any of the [petitioner RIC's] company
rules and regulations.
[Petitioner RIC], for [its] part, claim[s] that [respondent Taripe] was a contractual employee, whose services
were required due to the increase in the demand in packaging requirement of [its] clients for Christmas
season and to build up stock levels during the early part of the following year; that on [6 March 2000],
[respondent Taripe's] employment contract expired. [Petitioner RIC] avers that the information update for
union members, which was allegedly filled up by [respondent Taripe] and submitted by the Union to
[petitioner] company, it is stated therein that in the six (6) companies where [respondent Taripe] purportedly
worked, the latter's reason for leaving was "finished contract," hence, [respondent Taripe] has knowledge
about being employed by contract contrary to his allegation that the document he was signing was not
explained to him. [Petitioner RIC] manifest[s] that all benefits, including those under the [Social Security
System], were given to him on [12 May 2000].5
On 29 September 2000, the Labor Arbiter rendered a Decision dismissing respondent Taripe's Complaint
based on a finding that he was a contractual employee whose contract merely expired. The dispositive
portion of the said Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered declaring this complaint of [herein
respondent Taripe] against [herein petitioner RIC] and Mr. Edwin Tang for illegal dismissal DISMISSED for

45

lack of merit. However, on ground of compassionate justice, [petitioner RIC and Mr. Edwin Tang] are hereby
ordered to pay [respondent Taripe] the sum of PHP5,811.00 or one month's salary as financial assistance
and holiday pay in the sum of PHP894.00, as well as attorney's fees of 10% based on holiday pay (Article
110, Labor Code).6
Aggrieved, respondent Taripe appealed before the NLRC. In a Resolution dated 7 June 2002, the NLRC
granted the appeal filed by respondent Taripe and declared that his employment with the petitioner was
regular in status; hence, his dismissal was illegal. The decretal portion of the said Resolution reads as
follows:
WHEREFORE, premises considered, [herein respondent Taripe's] appeal is GRANTED. The Labor Arbiter's
[D]ecision in the above-entitled case is hereby REVERSED. It is hereby declared that [respondent Taripe's]
employment with [herein petitioner RIC and Mr. Edwin Tang] is regular in status and that he was illegally
dismissed therefrom.
[Petitioner RIC and Mr. Edwin Tang] are hereby ordered to reinstate [respondent Taripe] and to jointly and
severally pay him full backwages from the time he was illegally dismissed up to the date of his actual
reinstatement, less the amount of P1,427.67. The award of P894.00 for holiday pay is AFFIRMED but the
award of P5,811.00 for financial assistance is deleted. The award for attorney's fees is hereby adjusted to
ten percent (10%) of [respondent Taripe's] total monetary award. 7
Dissatisfied, petitioner RIC moved for the reconsideration of the aforesaid Resolution but it was denied in the
Resolution of the NLRC dated 20 August 2002.
Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil
Procedure before the Court of Appeals with the following assignment of errors:
I. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS
JURISDICTION WHEN IT MISINTERPRETED ARTICLE 280 OF THE LABOR CODE AND
IGNORED JURISPRUDENCE WHEN IT DECIDED THAT [RESPONDENT TARIPE] IS A
REGULAR EMPLOYEE AND THUS, ILLEGALLY DISMISSED.
II. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS
JURISDICTION WHEN IT ORDERED [EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY
LIABLE FOR MONETARY CLAIMS OF [RESPONDEN TARIPE].
III. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS
JURISDICTION WHEN IT ORDERED PAYMENT OF MONETARY CLAIMS COMPUTED ON
AN ERRONEOUS WAGE RATE.8
The Court of Appeals rendered the assailed Decision on 30 September 2004, affirming the Resolution of the
NLRC dated 7 June 2002, with modifications. Thus, it disposed WHEREFORE, the Resolutions dated [7 June 2002] and [20 August 2002] of [the NLRC] are affirmed,
subject to the modification that [Edwin Tang] is exonerated from liability and the computation of backwages
of [respondent Taripe] shall be based on P223.50, the last salary he received. 9
A Motion for Reconsideration of the aforesaid Decision was filed by petitioner RIC, but the same was denied
for lack of merit in a Resolution10of the Court of Appeals dated 1 April 2005.
Hence, this Petition.
Petitioner RIC comes before this Court with the lone issue of whether the Court of Appeals
misinterpreted Article 280 of the Labor Code, as amended, and ignored jurisprudence when it affirmed that
respondent Taripe was a regular employee and was illegally dismissed.
Petitioner RIC, in its Memorandum, 11argues that the Court of Appeals had narrowly interpreted Article 280 of
the Labor Code, as amended, and disregarded a contract voluntarily entered into by the parties.
Petitioner RIC emphasizes that while an employee's status of employment is vested by law pursuant to
Article 280 of the Labor Code, as amended, said provision of law admits of two exceptions, to wit: (1) those
employments which have been fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employment; and (2) when the work or
services to be performed are seasonal; hence, the employment is for the duration of the season. Thus, there
are certain forms of employment which entail the performance of usual and desirable functions and which
exceed one year but do not necessarily qualify as regular employment under Article 280 of the Labor Code,
as amended.
The Petition is unmeritorious.
A closer examination of Article 280 of the Labor Code, as amended, is imperative to resolve the issue raised
in the present case.

46

In declaring that respondent Taripe was a regular employee of the petitioner and, thus, his dismissal was
illegal, the Court of Appeals ratiocinated in this manner:
In determining the employment status of [herein respondent Taripe], reference must be made to Article 280
of the Labor Code, which provides:
xxxx
Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who
have rendered at least one year of service, whether continuous or broken, with respect to the activity in
which they are employed. [Respondent Taripe] belonged to the first category of regular employees.
The purported contract of employment providing that [respondent Taripe] was hired as contractual employee
for five (5) months only, cannot prevail over the undisputed fact that [respondent Taripe] was hired to
perform the function of power press operator, a function necessary or desirable in [petitioner's] business of
manufacturing tin cans. [Herein petitioner RIC's] contention that the four (4) months length of service of
[respondent Taripe] did not grant him a regular status is inconsequential, considering that length of service
assumes importance only when the activity in which the employee has been engaged to perform is not
necessary or desirable to the usual business or trade of the employer.
As aptly ruled by [the NLRC]:
"In the instant case, there is no doubt that [respondent Taripe], as power press operator, has been engaged
to perform activities which are usually necessary or desirable in [petitioner RIC's] usual business or trade of
manufacturing of tin cans for use in packaging of food, paint and others. We also find that [respondent
Taripe] does not fall under any of the abovementioned exceptions. Other that (sic) [petitioner RIC's] bare
allegation thereof, [it] failed to present any evidence to prove that he was employed for a fixed or specific
project or undertaking the completion of which has been determined at the time of his engagement or that
[respondent Taripe's] services are seasonal in nature and that his employment was for the duration of the
season."12
Article 280 of the Labor Code, as amended, provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists. [Emphasis supplied]
The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories,
namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the
employer; (2) project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season; and (3) casual employees or those who are neither regular nor project
employees.13
Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular
employees by years of service.14The former refers to those employees who perform a particular activity
which is necessary or desirable in the usual business or trade of the employer, regardless of their length of
service; while the latter refers to those employees who have been performing the job, regardless of the
nature thereof, for at least a year.15
The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an
employment contract with a fixed period. It does not necessarily follow that where the duties of the employee
consist of activities usually necessary or desirable in the usual business of the employer, the parties are
forbidden from agreeing on a period of time for the performance of such activities. There is nothing
essentially contradictory between a definite period of employment and the nature of the employee's
duties.16What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some
unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from
capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in
such a way as to deprive employers of the right and prerogative to choose their own workers if they have
sufficient basis to refuse an employee a regular status. Management has rights which should also be
protected.17
In the case at bar, respondent Taripe signed a contract of employment prior to his admission into the
petitioner's company. Said contract of employment provides, among other things:
4. That my employment shall be contractual for the period of five (5) months which means that the end of the
said period, I can (sic) discharged unless this contract is renewed by mutual consent or terminated for
cause.18
Based on the said contract, respondent Taripe's employment with the petitioner is good only for a period of
five months unless the said contract is renewed by mutual consent. And as claimed by petitioner RIC,

47

respondent Taripe, along with its other contractual employees, was hired only to meet the increase in
demand for packaging materials during the Christmas season and also to build up stock levels during the
early part of the year.
Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must,
nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security of
tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the parties,
without any force, duress or improper pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the
former on the latter.19
In the present case, it cannot be denied that the employment contract signed by respondent Taripe did not
mention that he was hired only for a specific undertaking, the completion of which had been determined at
the time of his engagement. The said employment contract neither mentioned that respondent Taripe's
services were seasonal in nature and that his employment was only for the duration of the Christmas season
as purposely claimed by petitioner RIC. What was stipulated in the said contract was that respondent
Taripe's employment was contractual for the period of five months.
Likewise, as the NLRC mentioned in its Resolution, to which the Court of Appeals agreed, other than the
bare allegations of petitioner RIC that respondent Taripe was hired only because of the increase in the
demand for packaging materials during the Christmas season, petitioner RIC failed to substantiate such
claim with any other evidence. Petitioner RIC did not present any evidence which might prove that
respondent Taripe was employed for a fixed or specific project or that his services were seasonal in nature.
Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the contract
of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which the terms
are prepared by only one party and the other party merely affixes his signature signifying his adhesion
thereto is called contract of adhesion.20It is an agreement in which the parties bargaining are not on equal
footing, the weaker party's participation being reduced to the alternative "to take it or leave it." 21In the
present case, respondent Taripe, in need of a job, was compelled to agree to the contract, including the fivemonth period of employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe
signed the employment contract with a fixed term of five months willingly and with full knowledge of the
impact thereof.
With regard to the second guideline, this Court agrees with the Court of Appeals that petitioner RIC and
respondent Taripe cannot be said to have dealt with each other on more or less equal terms with no moral
dominance exercised by the former over the latter. As a power press operator, a rank and file employee, he
can hardly be on equal terms with petitioner RIC. As the Court of Appeals said, "almost always, employees
agree to any terms of an employment contract just to get employed considering that it is difficult to find work
given their ordinary qualifications."22
Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed term
employment contract, it can be safely stated that the aforesaid contract signed by respondent Taripe for a
period of five months was a mere subterfuge to deny to the latter a regular status of employment.
Settled is the rule that the primary standard of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the casual business or trade of the
employer. The connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety.23
Given the foregoing, this Court agrees in the findings of the Court of Appeals and the NLRC that, indeed,
respondent Taripe, as a rectangular power press machine operator, in charge of manufacturing covers for
"four liters rectangular tin cans," was holding a position which is necessary and desirable in the usual
business or trade of petitioner RIC, which was the manufacture of tin cans. Therefore, respondent Taripe
was a regular employee of petitioner RIC by the nature of work he performed in the company.
Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor Code, as
amended, because it was not proven by petitioner RIC that he was employed only for a specific project or
undertaking or his employment was merely seasonal. Similarly, the position and function of power press
operator cannot be said to be merely seasonal. Such position cannot be considered as only needed for a
specific project or undertaking because of the very nature of the business of petitioner RIC. Indeed,
respondent Taripe is a regular employee of petitioner RIC and as such, he cannot be dismissed from his
employment unless there is just or authorized cause for his dismissal.
Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed
for just cause and with due process, notice and hearing. 24And in case of employees' dismissal, the burden is
on the employer to prove that the dismissal was legal. Thus, respondent Taripe's summary dismissal, not
being based on any of the just or authorized causes enumerated under Articles 282, 25283,26and 28427of the
Labor Code, as amended, is illegal.
Before concluding, we once more underscore the settled precept that factual findings of the NLRC, having
deemed to acquire expertise in matters within its jurisdiction, are generally accorded not only respect but
finality especially when such factual findings are affirmed by the Court of Appeals; 28hence, such factual
findings are binding on this Court.
WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of
the Court of Appeals dated 30 September 2004 and 1 April 2005, respectively, which affirmed with
modification the Resolutions of the NLRC dated 7 June 2002 and 20 August 2002, respectively, finding

48

herein respondent Taripe as a regular employee who had been illegally dismissed from employment by
petitioner RIC, are hereby AFFIRMED. Costs against petitioner RIC.
SO ORDERED.

13. G.R. No. 111042 October 26, 1999

AVELINO LAMBO and VICENTE BELOCURA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY
CO, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the decision 1 of the National Labor Relations Commission (NLRC)
which reversed the awards made by the Labor Arbiter in favor of petitioners, except one for P4,992.00 to
each, representing 13th month pay.
The facts are as follows.
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor
Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00
a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private
respondents, petitioners were paid on a piece-work basis, according to the style of suits they made.
Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least
P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave
pay, separation pay, 13th month pay, and attorneys fees.1wphi1.nt
After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners claims. The dispositive portion of the Labor Arbiters decision
reads:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring
the complainants to have been illegally dismissed and ordering the respondents to
pay the complainants the following monetary awards:
AVELINO LAMBO VICENTE BELOCURA
I. BACKWAGES P64,896.00 P64,896.00
II. OVERTIME PAY 13,447.90 13,447.90
III. HOLIDAY PAY 1,399.30 1,399.30
IV. 13TH MONTH PAY 4,992.00 4,992.00
V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20 = P191,102.40
Add: 10% Attorney's Fees 19,110.24

GRAND TOTAL P210,212.64

=========

49

or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED

TWELVE AND 64/100 (P210,212.64).
All other claims are dismissed for lack of merit.
SO ORDERED. 2
On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found that
petitioners had not been dismissed from employment but merely threatened with a closure of the business if
they insisted on their demand for a "straight payment of their minimum wage," after petitioners, on January
17, 1989, walked out of a meeting with private respondents and other employees. According to the NLRC,
during that meeting, the employees voted to maintain the company policy of paying them according to the
volume of work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners
allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held petitioners guilty
of abandonment of work and accordingly dismissed their claims except that for 13th month pay. The
dispositive portion of its decision reads:
WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new
one entered ordering respondents to pay each of the complainants their 13th month pay in
the amount of P4,992.00. All other monetary awards are hereby deleted.
SO ORDERED. 3
Petitioners allege that they were dismissed by private respondents as they were about to file a petition with
the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security
System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.
The petition is meritorious.
First. There is no dispute that petitioners were employees of private respondents although they were paid
not on the basis of time spent on the job but according to the quantity and the quality of work produced by
them. There are two categories of employees paid by results: (1) those whose time and performance are
supervised by the employer. (Here, there is an element of control and supervision over the manner as to
how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his
work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the
employers control is over the result of the work. Workers on pakyao and takay basis belong to this group.)
Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in
garment factories where work is done in the company premises, while payment on pakyao and takay basis
is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed
in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e., supervised employees.
In determining the existence of an employer-employee relationship, the following elements must be
considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct. 5 Of these elements, the most important
criterion is whether the employer controls or has reserved the right to control the employee not only as to the
result of the work but also as to the means and methods by which the result is to be accomplished. 6
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked
in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact
that they were paid on a piece-rate basis does not negate their status as regular employees of private
respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings,
capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of compensation and does not define the essence
of the relations. 7 Nor does the fact that petitioners are not covered by the SSS affect the employeremployee relationship.
Indeed, the following factors show that petitioners, although piece-rate workers, were regular employees of
private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was
necessary or desirable in the usual business of private respondents, which is engaged in the tailoring
business; (2) petitioners worked for private respondents throughout the year, their employment not being
dependent on a specific project or season; and, (3) petitioners worked for private respondents for more than
one year. 8
Second. Private respondents contend, however, that petitioners refused to report for work after learning that
the J.C. Tailoring and Dress Shop Employees Union had demanded their (petitioners) dismissal for conduct

50

unbecoming of employees. In support of their claim, private respondents presented the affidavits 9 of
Emmanuel Y. Caballero, president of the union, and Amado Cabaero, member, that petitioners had not
been dismissed by private respondents but that practically all employees of the company, including the
members of the union had asked management to terminate the services of petitioners. The employees
allegedly said they were against petitioners request for change of the mode of payment of their wages, and
that when a meeting was called to discuss this issue, a petition for the dismissal of petitioners was
presented, prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal
against private respondents on January 17, 1989, even before all employees could sign the petition and
management could act upon the same.1wphi1.nt
To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the
part of an employee to resume his employment. The burden of proof is on the employer to show an
unequivocal intent on the part of the employee to discontinue employment. 10 Mere absence is not sufficient.
It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not
want to work anymore. 11
Private respondents failed to discharge this burden. Other than the self-serving declarations in the affidavits
of their two employees, private respondents did not adduce proof of overt acts of petitioners showing their
intention to abandon their work. On the contrary, the evidence shows that petitioners lost no time in filing the
case for illegal dismissal against private respondent. This fact negates any intention on their part to sever
their employment relationship. 12 Abandonment is a matter of intention; it cannot be inferred or presumed
from equivocal acts. 13
Third. Private respondents invoke the compromise agreement, 14 dated March 2, 1993, between them and
petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00, petitioner absolved private
respondents from liability for money claims or any other obligations.
To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear
proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of
settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the
questionable transaction.15 However, considering that the Labor Arbiter had given petitioner Lambo a total
award of P94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly
unconscionable. As we have held in another case, 16 the subordinate position of the individual employee visa-vis management renders him especially vulnerable to its blandishments, importunings, and even
intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus,
quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are
ineffective to bar claims for the full measure of the workers legal rights. 17 An employee who is merely
constrained to accept the wages paid to him is not precluded from recovering the difference between the
amount he actually received and that amount which he should have received.
Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay, separation pay
and attorneys fees, corresponding to 10% of the total monetary awards, in favor of petitioners.
As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering that
petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989, 18 the Labor
Arbiter correctly applied the rule in the Mercury Drug case, 19 according to which the recovery of backwages
should be limited to three years without qualifications or deductions. Any award in excess of three years is
null and void as to the excess. 20
The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has
lapsed since petitioners dismissal, so that reinstatement would now be impractical and hardly in the best
interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of
one month salary for every year of service, with a fraction of at least six (6) months of service being
considered as one (1) year. 21
The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that
petitioners are regular employees, although paid on a piece-rate basis. 22 These awards are based on the
following computation of the Labor Arbiter:
AVELINO LAMBO
I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.
P 64.00/day x 26 days =

51

1,664.00/mo. x 36 mos. = P59,904.00

13th Mo. Pay:
P1,664.00/yr. x 3 yrs. = 4,992.00 P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 15 mos. & 12 day =
(15 mos. x 26 days + 12 days) = 402 days
*2 hours = 25%
402 days x 2 hrs./days = 804 hrs.
P 32.00/day 8 hrs. =
4.00/hr. x 25% =
1.00/hr. + P4.00/hr. =
5.00/hr. x 804 hrs. = 4,020.00
May 1/87 - Sept. 30/87 = 4 mos. & 26 days =
(4 mos. x 26 days + 26 days) = 130 days
130 days x 2 hrs./day = 260 hrs.
P 41.00/day 8 hrs. =
5.12/hr. x 25% =
1.28/hr. + P5.12/hr. =
6.40/hr. x 260 hrs. = P1,664.00
Oct. 1/87 - Dec. 13/87 = 2 mos. & 11 days =
(2 mos. x 26 days + 11 days) = 63 days
63 days x 2 hrs./day = 126 hrs.
P 49.00/day 8 hrs. =
6.12/hr. x 25% =
1.53/hr. + P6.12/hr. =
7.65/hr. x 126 hrs. = P963.90
Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days =
(13 mos. x 26 days + 2 days) = 340 days
340 days x 2 hrs./day = 680 hrs.
P 64.00/day 8 hrs. =

52

8.00/hr. x 25% =
2.00/hr. + P8.00/hr =
10.00/hr. x 680 hrs. = P6,800.00 P13,447.90
III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89
Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs
P 32.00/day x 200% =
64.00/day x 12 days = 768.00
32.00/day x 12 days = (384.00) P384.00
32.00/day x 30% =
9.60/day x 8 days = 76.80 460.80

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs

P 41.00/day x 200% =
82.00/day 3 days = 246.00
41.00/day x 3 days = (123.00) P123.00
41.00/day x 30% =
12.30/day x 3 days = 36.90 159.90

Oct. 1/87 - Dec. 13/87 = 1 RH

P 49.00/day x 200% =
98.00/day x 1 day = P98.00
49.00/day x 1 day = (49.00) 49.00

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs

P 64.00/day x 200% =
128.00/day x 9 days = P1,152.00
64.00/day x 9 days = (576.00) P576.00
64.00/day x 30% =
19.20/day x 8 days = 153.60 729.60 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.

53

P 64.00/day x 26 days =
1,664.00/yr. x 3 yrs. = 4,992.00
V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.
P1,664.00/mo. x 6 yrs. = 9,984.00

TOTAL AWARD OF AVELINO LAMBO P94,719.20

========
VICENTE BELOCURA
I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.
Same computation as A. Lambo P64,896.00
II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89
Same computation as A. Lambo 13,447.90
III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89
Same computation as A. Lambo 1,399.30
IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89
Same computation as A. Lambo 4,992.00
V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs.
P1,664.00/mo. x 7 yrs. = 11,648.00

TOTAL AWARD OF VICENTE BELOCURA P96,383.20

=========
SUMMARY
AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00
II. OVERTIME PAY 13,447.90 13,447.90
III. HOLIDAY PAY 1,399.30 1,399.30
IV. 13TH MO. PAY 4,992.00 4,992.00
V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20

54

= P191,102.40
ADD: 10% Attorney's Fees 19,110.24

GRAND TOTAL P210,212.64

=========
Except for the award of attorneys fees in the amount of P19,110.24, the above computation is affirmed. The
award of attorneys fees should be disallowed, it appearing that petitioners were represented by the Public
Attorneys Office. With regard to petitioner Avelino Lambo, the amount of P10,000.00 paid to him under the
compromise agreement should be deducted from the total award of P94,719.20. Consequently, the award to
each petitioner should be as follows:
AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00
II. OVERTIME PAY 13,447.90 13,447.90
III. HOLIDAY PAY 1,399.30 1,399.30
IV. 13TH MONTH PAY 4,992.00 4,992.00
V. SEPARATION PAY 9,984.00 11,648.00

P 94,719.20
Less 10,000.00

TOTAL P84,719.20 P96,383.20

GRAND TOTAL P181,102.40
=========
WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and another one is
RENDERED ordering private respondents to pay petitioners the total amount of One Hundred Eighty-One
Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed above.1wphi1.nt
SO ORDERED.
14. G.R. No. 125606 October 7, 1998
SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, THIRD DIVISION, and FRANCISCO DE GUZMAN,
JR.,respondents.

QUISUMBING, J.:
Before us is the petition for certiorari under Rule 65 of the Revised Rules of Court seeking on set aside the
April 18, 1996 Decision 1 and the May 30, 1996 Resolution 2 of public respondent National Labor Relations

55

Commission 3 in NLRC CA No. 009490-95. Said decision reversed the JUne 30, 1995 judgment 4 of the
labor Artiber 5 in NLRC-NCR Case No. 00-08-05954-94, and oredered the reinstatement of private
respondent as follows:
WHEREFORE, premises considered, the assiled decision is hereby VACATED and SET
ASIDE. A new one is hereby entered ordering herein respondent San Miguel Corporation to
reinstate complainant to his former position with full backwages from the time he was
dismissed from work until he is actually reinstated without loss of seniority rights and ther
benefits, less earning elsewhere, if any. 6
The facts on record show that in November 1990, private respondent was hired by petitioner as
helper/bricklayer for a specific project, the repair and upgrading of furnace C at its Manila Glass Plant. His
contract of employmentprovided that said temporary employment was for a specific period of approximately
four (4) months.
On April 30, 1991, private respondent was able to complete the repair and upgrading fo furnace C. Thus, his
services were terminated on that same day as there was no more work to be done. His employment contract
also ended that day.
On May 10, 1991, private respondent was again hired for a specific job or undertaking, which involved the
draining/cooling down of fuenace F and the emergency repair of furnace E. This project was for a specific
period of approximately three (3) months.
After the complesion of this task, namely the draining/cooling down of furnace F and the emergency repair of
furnace E, at the end of July 1991, private respondent's services were terminated.
On August 1, 1991, complainant saw his name in a Memorandum posted at the Company's Bulletin Board
as among those who were considered dismissed.
On August 12, 1994, or after the lapse of more than three (3) years from the completion of the last
undertaking for which private respondent wa hired, private respondent filed a complaint for illegal dismissal
against petitioner, docketed as NLRC NCR Case No. 08-05954-94. 7
Both parties submitted their respective position papers, reply and rejoinder to labor Arbiter Felipe Garduque
II. On JUne 30, 1995, he rendered the decision dismissing said complaint for lack of merit. In his ruling
Labor Arbiter Garduque sustained petitioner's argument that private respondent was a project employee.
The position of a helper does not fall within the classification of regular employees. Hence, complainant
never attained regular employment status. Moreover, his silence for more than three (3) years without any
reasonable explanation tended to weken his claim. 8
Not satisfied with the decision, private respondent interposed his appeal with public respondent NLRC on
August 8, 1995 Petitioner filed its opposition thereto on August 29, 1995.
On April 18, 1996, public respondent NLRC, promulgated its assailed decision, reversing Labor Arbiter
Garduque's decision. In its ruling, public respondent made the following findings:
Respondent scheme of subsequently re-hiring complainant after only ten (10) days from the
last day of the expiration of his contract of employment for a specific period, and giving him
again another contract of employment for another specific period cannot be countenanced.
This is one way of doing violence to the employee's constitutional right to security of tenure
under which even employees under probationary status are amply protected.
Under the circumstances obtaining in the instant case we find that herein complainant was
indeed illegally dismissed. Respondent failed to adduce substantial evidence to prove that
Francisco de Guzman, Jr. was dismissed for a just or authorized cause and after due
process. The only reason they advance is that his contract of employment which is for a
specific period had already expired. We, however, find this scheme, as discussed earlier, no
in accordance with law. 9
Petitioner then moved for the reconsideration of said decision. This was however denied by public
respondent on May 30, 1996 as it found no cogent reason, or patent or palpable error, that would warrant
the disturbance of the decision sought to be reconsidered.
Hence, this petition, based on the following grounds:

56

1. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN FAILING TO RULE

THAT PRIVATE RESPONDENT IS A PROJECT OR A FIXED PERIOD EMPLOYEE.
2. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT
PETITIONER VIOLATED PRIVATE RESPONDENT'S RIGHT TO SECURITY OF TENURE
AND THAT PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.
3. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT LACHES
OR SILENCE OR INACTION FOR AN UNREASONABLE LENGTH OF TIME DID NOT BAR
PRIVATE RESPONDENT'S CLAIM.
Given these ground, this petition may be resolved once the following issues are clarified: (a) What is tile
nature of the employment of private respondent, that of a project employee or a regular employee? and (b)
Was he terminated legally or dismissed illegally?
As a general rule the factual findings and conclusions drawn by the National Labor Relations Commission
are accorded not only great weight and respect, but even clothed with finality and deemed binding on the
Court, as long as they are supported by substantial evidence. However, when such findings and those of the
Labor Arbiter are in conflict, it behooves this Court to scrutinize the records of the case, particularly the
evidence presented, to arrive at a correct decision. 10
Art. 280 of the Labor Code defines regular, project and casual employment as follows:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of one parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually
exists.
The above mentioned provision reinforces the Constitutional mandate to protect the interest of labor as it
sets the legal framework for ascertaining one's nature of employment, and distinguishing different kinds of
employees. Its language manifests the intent to safeguard the tenurial interes of worker who may be denied
the enjoyment of the rights and benefits due to an employee, regardless of the nature of his employment, by
virtue of lopsided agreements which the economically powerful employer who can maneuver to keep an
employee on a casual or contractual status for as long as it is convenient to the employer.
Thus, under Article 280 of the Labor Code, an employment is deemed regular when the activities performed
by the employee are usually necessary or desirable in the usual business or trade of the employer even if
the parties enter into an agreement tating otherwise. But considered not regular under said Article (1) the socalled "project employment" the termination of which is more or less determinable at the time of
employment, such as those connected, which by its nature is only for one season of the year and the
employment is limited for the duration of that season, such as the Christmas holiday season. Nevertheless,
an exception to this exception is made: any employee who has rendered at least one (1) year of service,
whether continuous or intermitent, with respect to the activity he performed and while such activity actually
exists, must be deemed regular.
Following Article 280, whether one is employed as a project employee or not would depend on whether he
was hired to carry out a "specific project or undertaking", the duration and scope of which were specified at
the time his services were engaged for that particular project. 11 Another factor that may be undertaken by
the employee in relation to the usual trade or business of the employer, if without specifying the duration and
scope, the work to be undertaken is usually necessary or desirable in the usual business or trade of the
employer, then it is regular employment and not just "project" must less "casual" employment.
Thus, the nature of one's employment does not depend on the will or word of the employer. Nor on the
procedure of hiring and the manner of designating the employee, but on the nature of the activities to be

57

performed by the employee, considering the employer's nature of business 12 and the duration and scope of
the work to be done.
In ALU-TUCP vs NLRC, 13 this Court discussed two types of projects:
In the realm of business and industry, we note that project could refer to one or the other of
at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular
job or undertaking that is within the regular or usual business of the employer company, but
which is distinct at separate, and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times. . . .
The term project could also refer to, secondly, a particular job or undertaking that is not
within the regular business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations of the
employer. The job or undertaking also begins and ends at determined or determinable
times . . . (Underscoring supplied)
Public respondent NLRC's findings that herein private respondent is a regular employee is erraneous as the
latter's employment clearly falls within the definition of "project employees" under paragraph 1 of Article 280
of the Labor Code and such is a typical example of the second kind of project employment in the ALU TUCP
case discussed above
Note that the plant where private respondent was employed for only even months is engaged in the
manufacturer of glass, an integral component of the packaging and manufacturing business of petitioner.
The process of manufacturing glass requires a furnace, which has a limited operating life. Petitioner resorted
to hiring project or fixed term employees in having said furnaces repaired since said activity is not regularly
performed. Said furnaces are to be repaired or overhauled only in case of need and after being used
continuously for a varying period of five (5) to ten (10) years.
In 1990, one of the furnaces of petitioner required repair and upgrading. This was a undertaking distinct and
separate from petitioner's business of manufacturing glass. For this purpose, petitioner must hire workers to
undertake the said repair and upgrading. Private respondent was, thus, hired by petitioner on November 28,
1990 on a "temporary status for a specific job" for a determined period of approximately four months
Upon completion of the undertaking, or on April 30, 1991, private respondent's services were terminated. A
few days, thereafter, two of petitioner's furnaces required "draining/coolong down" and "emergency repair".
Private respondent was again hired on May 10, 1991 to help in the new undertaking, which would take
approximately three (3) months to accomplish. Upon completion of the second undertaking, private
respondent's services were likewise terminated. 14 He was not hired a third time, and his two engagements
taken together did not total one full year in order to qualify him as an exception to the exception falling under
the cited proviso in the second paragraph of Art. 280 of the Labor Code.
Clearly, private respondent was hired for a specific project that was not within the regular business of the
corporation. For petitioner is not engaged in the business of repairing furnaces. Although the activity was
necessary to enable petitioner to continue manufacturing glass, the necessity therefor arose only when a
particular furnace reached the end of its life or operating cycle. Or, as on the second undertaking, when a
particular furnace required an emergency repair. In other words, the undertakings where private respondent
was hired primarily as helper/bricklayer have specified goals and purpose which are fulfilled once the
designated work was completed. Moreover, such undertakings were also identifiably separate and distinct
from the usual, ordinary or regular business operations of petitioner, which is glass manufacturing. Thses
undertakings, the duration and scope of which had been determined and made known to private respondent
at the time of his employment clearly indicated the nature of his employment as a project employee. Thus,
his services were terminated legally after the completion of the project. 15
Public respondent NLRC's decision, if upheld, would amount to negating the distinction made in Article 280
of the Labor Code. It would shunt aside the rule that since a project employee's work defends on the
availability of a project, necessarily, the duration of his employment is coterminous with the project to which
he is assigned. 16 It would become a burden for an employer to retain an employee and pay him his
corresponding wages it there was no project for him to work on. Well to remember is the language of the
Court in the case of Mamansag vs. NLRC: 17
While the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every dispute will be automatically decided in
favor of labor. Management has also rights, which, as such, are entitled to respect and
enforcement in the interest of fair play. Although the Supreme Court has inclined more often

58

than not toward the worker and has upheld has cause in his conflicts with the employer, such
favoritism has no blinded the Court to the rule that justice is in avery case for the deserving,
to be dispensed in the light of the established facts and the applicable law and doctrine.
Considering that private respondent was a project employee whose employment, the nature of which he was
fully informed, related to a specific project, work or undertaking, we find that the Labor Arbiter correctly ruled
that said employment legally ended upon completion of said project. Hence the tremination of his
employment was not tantamount to an illegal dismissal; and it was a grave abuse of discretion on public
respondent's part to order his reinstatement by petitioner.
WHEREFORE the instant petition is hereby GRANTED. The decision of respondent NLRC is hereby
REVERSED, and the judgment of the Labor Arbiter REINSTATED.
NO COSTS.
SO ORDERED.
15. G.R. No. 79869 September 5, 1991
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO MERCADO,
JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA MERCADO,
JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO
GUEVARA, ROMEO MERCADO and LEON SANTILLAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER LUCIANO
AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA;
and STO. NIO REALTY, INCORPORATED, respondents.
Servillano S. Santillan for petitioners.
Luis R. Mauricio for private respondents.

PADILLA, J.:p
Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations Commission
(NLRC) dated 8 August 1984 which affirmed the decision of respondent Labor Arbiter Luciano P. Aquino with
the slight modification of deleting the award of financial assistance to petitioners, and the resolution of the
respondent NLRC dated 17 August 1987, denying petitioners' motion for reconsideration.
This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of
overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and 13th
month pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco Borja,
Leticia C. Borja and Sto. Nio Realty Incorporated, with Regional Arbitration Branch No. III, National Labor
Relations Commission in San Fernando, Pampanga. 1
Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all
the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned by
the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since
1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up
to April 1979, when they were all allegedly dismissed from their employment; and that, during the period of
their employment, petitioners received the following daily wages:
From 1962-1963 P1.50
1963-1965 P2.00
1965-1967 P3.00
1967-1970 P4.00
1970-1973 P5.00
1973-1975 P5.00
1975-1978 P6.00
1978-1979 P7.00

59

Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her
regular employees and instead averred that she engaged their services, through Spouses Fortunato
Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the
number of workers needed by owners of various farms, but only to do a particular phase of agricultural work
necessary in rice production and/or sugar cane production, after which they would be free to render services
to other farm owners who need their services. 2
The other private respondents denied having any relationship whatsoever with the petitioners and state that
they were merely registered owners of the land in question included as corespondents in this case. 3
The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent
farm workers and therefore entitled to the benefits which they pray for. And corollary to this, whether or not
said petitioners were illegally dismissed by private respondents.
Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners
were not regular and permanent workers of the private respondents, for the nature of the terms and
conditions of their hiring reveal that they were required to perform phases of agricultural work for a definite
period of time after which their services would be available to any other farm owner. 4 Respondent Labor
Arbiter deemed petitioners' contention of working twelve (12) hours a day the whole year round in the farm,
an exaggeration, for the reason that the planting of lice and sugar cane does not entail a whole year as
reported in the findings of the Chief of the NLRC Special Task Force. 5 Even the sworn statement of one of
the petitioners, Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado,
indubitably show that said petitioners were hired only as casuals, on an "on and off" basis, thus, it was within
the prerogative of private respondent Aurora Cruz either to take in the petitioners to do further work or not
after any single phase of agricultural work had been completed by them. 6
Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the
complaint by the petitioners who are related to one another, either by consanguinity or affinity, was the filing
of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr. and
Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to private
respondent, Aurora Cruz regarding said criminal case. 7 In his affidavit, Jesus David stated under oath that
petitioners were never regularly employed by private respondent Aurora Cruz but were, on-and-off hired to
work and render services when needed, thus adding further support to the conclusion that petitioners were
not regular and permanent employees of private respondent Aurora Cruz. 8
Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and 19781979 may be properly considered since all the other money claims have prescribed for having accrued
beyond the three (3) year period prescribed by law. 9 On grounds of equity, however, respondent Labor
Arbiter awarded petitioners financial assistance by private respondent Aurora Cruz, in the amount of Ten
Thousand Pesos (P10,000.00) to be equitably divided among an the petitioners except petitioner Fortunato
Mercado, Jr. who had manifested his disinterest in the further prosecution of his complaint against private
respondent. 10
Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners
questioned respondent Labor Arbiter's finding that they were not regular and permanent employees of
private respondent Aurora Cruz while private respondents questioned the award of financial assistance
granted by respondent Labor Arbiter.
The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with
the modification of the deletion of the award for financial assistance to petitioners. The dispositive portion of
the decision of the NLRC reads:
WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is
hereby modified in that the award of P10,000.00 financial assistance should be deleted. The
said Decision is affirmed in all other aspects.
SO ORDERED. 11
Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8
August 1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987. 12
In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners
contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that petitioners are not
regular and permanent employees of private respondents based on the terms and conditions of their hiring,
for said findings are contrary to the provisions of Article 280 of the Labor Code. 13 They submit that

60

petitioners' employment, even assuming said employment were seasonal, continued for so many years such
that, by express provision of Article 280 of the Labor Code as amended, petitioners have become regular
and permanent employees. 14
Moreover, they argue that Policy Instruction No. 12
lends support to this contention, when it states:

15

of the Department of Labor and Employment clearly

PD 830 has defined the concept of regular and casual employment. What determines
regularity or casualness is not the employment contract, written or otherwise, but the nature
of the job. If the job is usually necessary or desirable to the main business of the employer,
then employment is regular. If not, then the employment is casual. Employment for a definite
period which exceeds one (1) year shall be considered re for the duration of the definite
period.
This concept of re and casual employment is designed to put an end to casual employment
in regular jobs which has been abused by many employers to prevent so-called casuals from
enjoying the benefits of regular employees or to prevent casuals from joining unions.
This new concept should be strictly enforced to give meaning to the constitutional guarantee
of employment tenure. 16
Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider them as
casual workers since they have been doing all phases of agricultural work for so many years, activities
which are undeniably necessary, desirable and indispensable in the rice and sugar cane production
business of the private respondents. 17
In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as aimed by
respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence presented by the
parties and also by the Chief of the Special Task Force of the NLRC Regional Office and, therefore, in
accordance with the rule on findings of fact of administrative agencies, the decision should be given great
weight. 18 Furthermore, they contend that the arguments used by petitioners in questioning the decision of
the Labor Arbiter were based on matters which were not offered as evidence in the case heard before the
regional office of the then Ministry of Labor but rather in the case before the Social Security Commission,
also between the same parties. 19
Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it has
long been settled that findings of fact of administrative agencies if supported by substantial evidence are
entitled to great weight. 20 Moreover, it argues that petitioners cannot be deemed to be permanent and
regular employees since they fall under the exception stated in Article 280 of the Labor Code, which reads:
The provisions of written agreements to the contrary notwithstanding and regardless of the
oral agreements of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to
be performed is seasonal in nature and the employment is for the duration of the
season. 21 (emphasis supplied)
The Court resolved to give due course to the petition and required the parties to submit their respective
memoranda after which the case was deemed submitted for decision.
The petition is not impressed with merit.
The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the
Government is that the findings of fact made therein are respected, so long as they are supported by
substantial evidence, even if not overwhelming or preponderant; 22 that it is not for the reviewing court to
weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own
judgment for that of the administrative agency on the sufficiency of the evidence; 23 that the administrative
decision in matters within the executive's jurisdiction can only be set aside upon proof of gross abuse of
discretion, fraud, or error of law. 24
The questioned decision of the Labor Arbiter reads:

61

Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of
both parties, it is our well-discerned opinion that the petitioners are not regular and
permanent workers of the respondents. The very nature of the terms and conditions of their
hiring reveal that the petitioners were required to perform p of cultural work for a definite
period, after which their services are available to any farm owner. We cannot share the
arguments of the petitioners that they worked continuously the whole year round for twelve
hours a day. This, we feel, is an exaggeration which does not deserve any serious
consideration inasmuch as the plan of rice and sugar cane does not entail a whole year
operation, the area in question being comparatively small. It is noteworthy that the findings of
the Chief of the Special Task Force of the Regional Office are similar to this.
In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of
spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners
were only hired as casuals, on-and-off basis. With this kind of relationship between the
petitioners and the respondent Aurora Cruz, we feel that there is no basis in law upon which
the claims of the petitioners should be sustained, more specially their complaint for illegal
dismissal. It is within the prerogative of respondent Aurora Cruz either to take in the
petitioners to do further work or not after any single phase of agricultural work has been
completed by them. We are of the opinion that the real cause which triggered the filing of this
complaint by the petitioners who are related to one another, either by consanguinity or affinity
was due to the filing of a criminal complaint by the respondent Aurora Cruz against Reynaldo
Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979,
according to Jesus David, Zone Chairman of the locality where the petitioners and
respondent reside, petitioner Fortunato Mercado, Sr. asked for help regarding the case of his
son, Reynaldo, to talk with respondent Aurora Cruz and the said Zone Chairman also stated
under oath that the petitioners were never regularly employed by respondent Aurora Cruz
but were on-and-off hired to work to render services when needed. 25
A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case
are ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal of the
questioned decision of the Labor Arbiter as affirmed by the National Labor Relations Commission.
The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been
applied in their case presents an opportunity to clarify the afore-mentioned provision of law.
Article 280 of the Labor Code reads in full:
Article 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually
exists.
The first paragraph answers the question of who are employees. It states that, regardless of any written or
oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or
desirable activities in the usual business or trade of the employer, except for project employees.
A project employee has been defined to be one whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee, or where the work or service to be performed is seasonal in nature and the employment is for
the duration of the season 26 as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan
under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular
employees those "casual" employees who have rendered at least one year of service regardless of the fact
that such service may be continuous or broken.

62

Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case
and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is
without merit.
The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it
or restrain or limit the generality of the clause that it immediately follows. 27 Thus, it has been held that a
proviso is to be construed with reference to the immediately preceding part of the provision to which it is
attached, and not to the statute itself or to other sections thereof. 28 The only exception to this rule is where
the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso)
but also earlier provisions of the statute or even the statute itself as a whole. 29
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular
and casual employees was designed to put an end to casual employment in regular jobs, which has been
abused by many employers to prevent called casuals from enjoying the benefits of regular employees or to
prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of
Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further
the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of
employers against their employees and not, as petitioners would have us believe, to prevent small-scale
businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the
employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated
in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal
employees, their employment legally ends upon completion of the project or the season. The termination of
their employment cannot and should not constitute an illegal dismissal. 30
WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission
affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs.
SO ORDERED.

16. [G.R. No. 118475. November 29, 2000]

ELVIRA ABASOLO, ANTONIO ABAY, PURIFICACION ABAY, CATALINA ABELLERA, DANIEL

ABELLERA, ELSIE ABELLERA, LOURDES ADUSE, PACITA ALAMAN, REYNALDO ALBAY,
ROGELIO ALBAY, EMERITA ALCOY, ERLINDA ALEGRE, CORAZON ALOOT, IMELDA ALOOT,
ROWENA ALOOT, SHIRLEY JULIANA ALOOT, ADORACION ANTALAN, ESTRELLA ANTOLIN,
EPIFANIA ANTONIO, CARMELITA AQUINO, CECENIA ASPIRAS, EMILIANA ASPIRAS, ANA
BELEN ASPREC, MELENCIO ASPURIA, ILUMINADA ASTRO, CARMELITA ASUNCION,
FLORENTINA AVENA, EMILIA BACQUIL, GLORIA BAGALAN, BENJAMIN BALANAG, CLARITA
BALANAG, CONSUELO BALANAG, DOLORES BALANAG, CANDIDA BALANGA, CLARITA
BALANGA, FRANCISCA BALANGA, CORAZON BALANGUE, MILDRED BALANGUE, ERLINDA
BALDERAS, MANUEL BALLESIL, ERLINDA BAMBAO, ROSEMARIE BASIO, AMALIA
BATARIO, CONCHITA BATARIO, CORAZON BATARIO, ERLINDA BATARIO, GLORIA BATARIO,
PEDRO BATARIO, JR., REBECCA BATARIO, PERLA BAUTISTA, SHIRLEY BAUTISTA,
ANGELISA BAYANI, MORGAN BEGALAN, FRANCISCA BERBON, BERNARD VISITACION,
EVELYN BIASON, VERONICA BLANDO, UFENIA BLANZA, AMBROSIA BOADO, CARLOS
BOADO, LOLITA BORJE, MARILOU BUNGAY, RODRIGO BURGOS, AMELITA CABALBAG,
ERNESTO CABALBAG, ELVIRA CABUGON, JOSEFINA CACANINDIN, CORAZON CACAYARA,
JAIME CACHERO, JULIET CALLANO, ANDRES CALUZA, TERESITA CALUZA, ISABEL
COMADRO, EDITA CARBONEL, LOLITA CARILLA, BIENVENIDA CARINO, DELIA CARINO,
LOLITA CARINO, AMARIO CARREON, ARMELINDA CARREON, ERLINDA CARREON,
FECIDAD CARREON, JOSE CARREON, MA. VICTORIA CARREON, BENJAMIN CASALLO,
DEMETRIA CASEM, ALBERTO CASIM, GLORIA CASIM, FLORIDA CATUNGAL, ESTER
CAVINTA, REMEDIOS CAVINTA, ROSALINDA CAVINTA, JULITA CAYABYAB, IRENE CELESTE
CARMELITA CHAN, ESMENIA CORDERO, LYDIA CORPUZ, JOVA CORTEZ, NORA CORTEZ,
MAGDALENA CUDAL, GENOVA DACANAY, SABINA BACLAN, CORAZON DANAO, ELISA
DASALLA, AGNES BIBIANA DE CASTRO, ANITA DE CASTRO, EDITHA DE CASTRO, NIDA DE
CASTRO, CORAZON DE JESUS, JOSE DE JESUS, MERLA DE JESUS, MILAGROS DE VERA,
APOLINARIO DOLATRE, CAMILO DOLOR, JR., LOLITA DOLOR, WILMA DOMINGO, OLYMPIA
DOMONOON, BASILIO DULATRE, BASILIO DULATRE, IMELDA DULATRE, LETICIA DULATRE,
MARTINA DULATRE, RODRIGO DULATRE, JR., ROGELIO DULATRE, TRIFONA DULATRE,

63

CONSOLACION DULAY, CRESILDA DULAY, DANILO DULAY, EDITHA DULAY, ELENA G.

DULAY, ERLINDA DULAY, ESTRELLA DULAY, ESTELITA DULAY, ESTRELITA P. DULAY,
EVANGELINE DULAY, FELICIDAD DULAY, FELISA DULAY, GINA DULAY, GINA DULAY, GLORIA
DULAY, GUILLERMO DULAY, JAIME DULAY, LETICIA DULAY, LOLITA DULAY, LUIS DULAY,
MARIA G. DULAY, MILAGROS DULAY, REMEDIOS DULAY, ROBERTO DULAY, SOTERO
DULAY, TERESITA DULAY, TERESITA G. DULAY, TERESITA M. DULAY, THERESITA DULAY,
VALENTIN DULAY, EDITHA DUMO, REMEDIOS DY, RIA MAPILI, VICTORIO MAPILI, ROBERTO
MARAMBA, SUSANA MARAMBA, ANDRES MARCOS, LANIA MARCOS, AURORA MARGASA,
ARSENIA MARIGZA, LOLITA MARQUEZ, ANA MARIA MARZAN, ANGELITA MEDINA, ADELINA
MEDRIANO, ELIZABETH MEDRIANO, HERMINIA M. MEDRIANO, ROSALINDA MEDRIANO,
CLEOFE MELANA, LOLITA MELENDEZ, LOURDES MIGUEL, EMILIA G. MILANES, JOSE
MILANES, LILIA MILO, LILIAN MILO, FELICIDA MORION, EVELYN MOSTER, ADORACION
MUNAR, ELEONORA MUNAR, IMELDRA NAVARRO, TERESITA NAVERIDA, ANITA NINOBLA,
AURELIA NINOBLA, CARMELITA NINOBLA, MARCELA NINOBLA, MYRNA NISPERO,
JOSEFINA NUTO, LANY OBSRA, ELENA OCAMPO, SYLVIA OLINARES, ROSITA OPENIANO,
TRINIDAD ORDUNA, ROSALINDA ORDONEZ, JESSIE ORIBELLO, REMEDIOS ORIBELLO,
TERESITA ORIBELLO, HILARIO ORACION, AVELINA ORTILLA, MAGDALENA ORTILLA,
MARIETTA ORTILLA, LEONORA PADER, AMALIA PADILLA, ARCELITA PADILLA, EVELYN
PADILLA, FELICIDA ORTILLA, JOSELYN PADILLA, JOSEPHINE PADILLA, VIRGINIA PADILLA,
CLARITA PAIS, EDUARDO PANIS, JESUS PANIS, JOSE PANIS, TEOFILA PANIS, VIOLETA
PARADO, ROSITA PAROCHA, CARMELITA PASCUA, LUCIA PAYUMO, MARIA PICAR,
REYNALDA PILARCA, LUZVIMINDA QUERO, ALEJANDRA QUEZADA, TEODORO QUEZADA,
ARLENE QUIBAN, AIDA QUINDARA, JUANITA QUINONES, GLORIA RABOT, EFREN RACELIS,
ERLINDA RACELIS, IMELDA RACELIS, REMEDIOS RACELIS, SUSANA RACELIS, TERESITA
RACELIS, FLORITA RAQUEL, ALMA RAMIREZ, CARMEN RAMIREZ, ROSEMARIE RAMIREZ,
GEMMA RAMOS, JUANITA RAMOS, IMELITA REYES, VICTORIA A. RIVERA, VIRGINIA RIVERA,
LYDIA ROBLES, EMILIA RONQUILLO, ROSALLA ROSETE, FORTUNATO RUIZ, GLORIA RUIZ,
RICARDO RUIZ, ROSALINDA RUIZ, ROLIE RUIZ, DANILO RULLA, EDITHA RULLA, MARITES
RULLA, ANTONIO RULLAMOS, BERNADETEE RULLAMAS, JULITA R. RULLAMAS, SOLEDAD
RULLAMAS, CELILIA RULLAN, NAPOLEON RULLAN, NORA RULLAN, WARLITO RULLAN,
AURORA RULLODA, GLORIA RULLODA, REMEDIOS RULLODA, LETICIA RUMATAY, FELY
RUNAS, RIZALITO RUNAS, DOMINGA SABADO, JOSE SACDAL, CLARITA SALAZAR, GLORIA
SALTING, PURITA SAMSON, ESTRELLITA SERRANO, GEMMA SIABABA, SUSANA SIABANA,
PERLITA SOBREMONTE, CARMEN SOBREVILLA, RUBIE SOLOMON, MONICA SORIANO,
ERLINDA SUGUITAN, JULITA SUCNET, FEDEL TACIO, LETICIA TAGARA, JOSEFINA TALENG,
MARILY TAMONDON, NIEVEZ TAMONDON, GLORI TANGALIN, LEONARDO TANGALIN,
MYRNA TANGALIN, NOEMA TANGALIN, NORMA TANGALIN, CRISTETA TEANAN, RUFINA
TRANCIA, ALMA TRINIDAD, GLORIA TUGADE, TERESITA TUMBAGA, ALICIA UBONGEN,
ZENAIDA UCOL, ADELA UGAY, AMAILIA UGAY, ESTELLA UGAY, HONORATO UGAY, JULIETA
UGAY, LOURDES UGAY, PURIFICACION UGAY, ROSEMARIE UGAY, RUFINA UGAY, ANGELITO
UMEL, JOSEFINA VALDEZ, ALFREDO VERCELES, JOSIE VERCELES, HELEN VILLANUEVA,
SALVACION VILLAROSA, DOMINGO YARANON, FELIMON YARANON, FELIX YARANON,
MONICA YARES, CONSOLACION YARIZ, DEMETRIA YARIZ, IMELDA YARIZ, MARGARITA
ZARATE, ESMERALDA ABAD, LOURDES ABELLERA, MILAGROS ADUBE, JOSEPHINE
ARIAS, ERLINDA ASPERIN, EMELDA ASUNCION, LILIA ASUNCION, VIOLETA ASUNCION,
ROSA BALAGOT, ADORACION BALANAG, ALICA J. BALANAG, GLECERIA BALANGA,
CORAZON BAMBICO, RICARDO BAIARIO, ADELA BAUTISTA, CORAZON BRAVO, DINAH
BULATAO, MARILOU BUNGAY, LORETO BURGOS, EVELYN CABUNIAS, CARLITO
CACAYURAN, ISABEL CAMACHO, LUCRECIA CARREON, ALFREDO CASEM, HERA CASEM,
MELY CASEM, NATIVIDAD CASIPIT, MARILYN CASTILLO, NENITA CASTANEDA, CARMELITA
CAVINTA, LEONIDA CAVINTA, LEONILA CAVINTA, MELANIE CHAVEZ, LORETO CORTEZ,
HERMANA DACANAY, MARIETTA DACANAY, MARITES G. DACANAY, MARIO DALAZA, AIDA
DANAO, EVA DANAO, MARGIE DE GUZMAN, NATIVIDAD DE CASTRO, NATIVIDAD DELA
CRUZ, LORETA DIFUNTORUM, LOLITA DISTOR, ADELINA DOMONDON, HELEN DULATRE,
IMELDA M. DULATRE, JOSE N. DULATRE, LYDIA A. DULATRE, MERLY DULATRE,
CONCEPCION DULAY, DOMINGA DULAY, ELENA C. DULAY, ERLINDA DULAY, ORPILINA R.
DULAY, PABLO A. DULAY, RENATO DULAY, NORMA EISMA, EDNA ESTOQUE, TEOFILO
FAJARDO, ADELINA FONTANILLA, TERESITA FORONDA, MARGARITA FREDELUCES,
RUFINA GALESTE, MARISSA GALI, LUZVIMINDA GAMBOA, CLEOFE GARCIA, ERLINDA
GAPASIN, JULITA GATCHALIAN, MARISSA GATCHALIAN, ALFONSO HALOG, TERESITA
IBASAN, RICARDO JUGO, ELMA JULOYA, ELENITA LACUATA, EPIFANIA LACUATA,
SEBASTIAN LACUATA, JOSEFINA LARON, PEDRO LEGASPI, DOLORES LUCENA,
FLORDELIZA MABANTA, PERLITA MACAGBA, CESAR MAGLAYA, ERNA MAGNO, GLORIA
MAGNO, BONA P. MAMARIL, CONCEPCION MAMARIL, MARCELINA MAMARIL, TERESITA
MAMARIL, ESTINILIE MANGADANG, HERMOGENES MANGADANG, LETICIA MANGADANG,
LYDIA
MANGADANG,
SHIRLEY
MANGADANG,
SONIA MANGADANG,
TRINIDAD
MANGADANG, VICTORIANO MANGADANG, CRESTITA D. MANZANO, ERLINDA MAPALO,

64

FABIAN F. MAPANAO, LYDIA MAPILE, RUMO MASON, SUSANA MEDRIANO, DOLORES

MILAN, ANTONIO G. MUNAR, MARINA NINIALBA, CORAZON B. NINOBLE, SUSAN
ORIBELLO, JOVENCIO ORLINO, CHARITO ORPILLA, FERDINAND PADILLA, LETECIA
PAGADUAN, BERLINA PALMONES, ARISTON PANIS, PATRICIO PANIS, PRIMO PANIS,
REMEDIOS B. PANIS, EMELITO PERALTA, GLORIA RAMIREZ, DOMINGA RAMOS,
GERTRUDES RAMOS, DOROTEO REFUERZO, JR., JUANITA REFUERZO, FLORENCIO
REGACHO, MAGDALENA REBACHO, ADELINA REYES, DELIA REYES, EUFENIA RIVERA,
LEONORA RIVERA, ROSEMARIE ROSIMO, VICTORIA RUALO, DANILO RULLAN, AURORA
RULLODA,
SERAFICA
RULLODA,
ZENAIDO
P.
RULLODA,
IMELDA
RUNAS,
REMEDIOS SANTOS, DOMINADOR TABABA, ROSENDA TABAO, JOSEFINA TALENS,
REVELINA TORCEDO, RUFINA TUMBANGA, JULITA F. UGAY, BRENDA VILLANUEVA, GLORIA
VILORIA, FLORIDA YARIS, MARGARITA ZARATE, FERNANDO SACDAL, ANICETA
MANONGDO and BEATRIZ UGAY, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER RICARDO N. OLAIREZ, LA UNION TOBACCO REDRYING
CORPORATION and SEE LIN CHAN, respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for certiorari seeking to annul two Resolutions of the National Labor Relations
Commission (NLRC), Third Division, dated July 6, 1994 [1] and September 23, 1994[2], in its affirmance of the
Decision[3] of Labor Arbiter Ricardo N. Olairez dated December 29, 1993 dismissing petitioners consolidated
complaint for separation pay for lack of merit.
The facts are as follows:
Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private
respondent See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco
leaves and its by-products. Tobacco season starts sometime in October of every year when tobacco farmers
germinate their seeds in plots until they are ready for replanting in November. The harvest season starts in
mid-February. Then, the farmers sell the harvested tobacco leaves to redrying plants or do the redrying
themselves. The redrying plant of LUTORCO receives tobacco for redrying at the end of February and
starts redrying in March until August or September.
Petitioners have been under the employ of LUTORCO for several years until their employment with
LUTORCO was abruptly interrupted sometime in March 1993 when Compania General de Tabaccos de
Filipinas (also known as TABACALERA) took over LUTORCOs tobacco operations. New signboards were
posted indicating a change of ownership and petitioners were then asked by LUTORCO to file their
respective applications for employment with TABACALERA. Petitioners were caught unaware of the sudden
change of ownership and its effect on the status of their employment, though it was alleged that
TABACALERA would assume and respect the seniority rights of the petitioners.
On March 17, 1993, the disgruntled employees instituted before the NLRC Regional Arbitration Branch
No. 1, San Fernando, La Union a complaint [4] for separation pay against private respondent LUTORCO on
the ground that there was a termination of their employment due to the closure of LUTORCO as a result of
the sale and turnover to TABACALERA. Other equally affected employees filed two additional complaints [5],
also for separation pay, which were consolidated with the first complaint.
Private respondent corporation raised as its defense that it is exempt from paying separation pay and
denied that it terminated the services of the petitioners; and that it stopped its operations due to the absence
of capital and operating funds caused by losses incurred from 1990 to 1992 and absence of operating funds
for 1993, coupled with adverse financial conditions and downfall of prices. [6] It alleged further that LUTORCO
entered into an agreement with TABACALERA to take over LUTORCOs tobacco operations for the year
1993 in the hope of recovering from its serious business losses in the succeeding tobacco seasons and to
create a continuing source of income for the petitioners. [7] Lastly, it manifested that LUTORCO, in good faith
and with sincerity, is willing to grant reasonable and adjusted amounts to the petitioners, as financial
assistance, if and when LUTORCO could recover from its financial crisis. [8]
On December 29, 1993, Labor Arbiter Ricardo N. Olairez rendered his decision dismissing the
complaint for lack of merit. In upholding private respondent LUTORCOs position, the Labor Arbiter declared
that the petitioners are not entitled to the benefits under Article 283 [9] of the Labor Code since LUTORCO
ceased to operate due to serious business losses and, furthermore, TABACALERA, the new employer of the
petitioner has assumed the seniority rights of the petitioners and other employment liabilities of the
LUTORCO.[10]
Petitioners appealed[11] then the decision of the Labor Arbiter to the public respondent NLRC where it
was assigned to the Third Division.

65

In its Opposition to Appeal [12] dated February 5, 1994 private respondent LUTORCO presented new
allegations and a different stand for denying separation pay. It alleged that LUTORCO never ceased to
operate but continues to operate even after TABACALERA took over the operations of its redrying plaint in
Aringay, La Union. Petitioners were not terminated from employment but petitioners instead refused to work
with TABACALERA, despite the notice to petitioners to return to work in view of LUTORCOs need for
workers at its Agoo plant which had approximately 300,000 kilos of Virginia tobacco for processing and
redrying. Furthermore, petitioners are not entitled to separation pay because petitioners are seasonal
workers.
Adopting these arguments of private respondent, the NLRC, in a Resolution [13] dated July 6, 1994,
affirmed the dismissal of the consolidated complaints for separation pay. Public respondent held that
petitioners are not entitled to the protection of Article 283 of the Labor Code providing for separation pay
since there was no closure of establishment or termination of services to speak of. It declared that there
was no dismissal but a non-hiring due mainly to [petitioners] own volition. [14] Moreover, the benefits of
Article 283 of the Labor Code apply only to regular employees, not seasonal workers like petitioners.
[15]
Inasmuch as public respondent in its Resolution [16] dated September 23, 1994 denied petitioners motion
for reconsideration, petitioners now assail the correctness of the NLRCs resolution via the instant petition.
Petitioners anchor their petition on the following grounds, to wit:
I. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO EXCESS OR LACK OF JURISDICTION IN RULING THAT THERE WAS NO DISMISSAL
OR TERMINATION OF SERVICES.
II. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO EXCESS OR LACK OF JURISDICTION IN RULING THAT PETITIONERS WERE NOT
REGULAR EMPLOYEES.
III. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO EXCESS OR LACK OF JURISDICTION IN NOT AWARDING SEPARATION PAY TO THE
PETITIONERS.
Petitioners vigorously maintain that they are regular workers of respondent LUTORCO since they
worked continuously for many years with LUTORCO, some of them even for over 20 years, and that they
performed functions necessary and desirable in the usual business of LUTORCO. [17] According to them, the
fact that some of them work only during the tobacco season does not affect their status as regular workers
since they have been repeatedly called back to work for every season, year after year. [18] Thus, petitioners
take exception to the factual findings and conclusions of the NLRC, stressing that the conclusions of the
NLRC were based solely on the new theory advanced by private respondent LUTORCO only on appeal, that
is, that it was only LUTORCOs tobacco re-drying operation that was sold, and hence, diametrically opposed
to its theory before the Labor Arbiter, i.e., that it is the entire company (LUTORCO) itself that was sold.
Private respondent LUTORCO, on the other hand, insists that petitioners employment was not
terminated; that it never ceased to operate, and that it was petitioners themselves who severed their
employer-employee relationship when they chose employment with TABACALERA because petitioners
found more stability working with TABACALERA than with LUTORCO. [19] It likewise insists that petitioners
are seasonal workers since almost all of petitioners never continuously worked in LUTORCO for any given
year[20] and they were required to reapply every year to determine who among them shall be given work for
the season. To support its argument that petitioners are seasonal workers, private respondent LUTORCO
cites the case of Mercado, Sr. v. NLRC[21]wherein this Court held that the employment of [seasonal workers]
legally ends upon the completion of the xxx season.
Clearly, the crux of the dispute boils down to two issues, namely, (a) whether petitioners employment
with LUTORCO was terminated, and (b) whether petitioners are regular or seasonal workers, as defined by
law. Both issues are clearly factual in nature as they involved appreciation of evidence presented before the
NLRC whose finding of facts and conclusions thereon are entitled to respect and finality in the absence of
proof that they were arrived at arbitrarily or capriciously.[22] In the instant case, however, cogent reasons exist
to apply the exception, to wit:
First, upon a thorough review, the records speak of a sale to TABACALERA in 1993 under conditions
evidently so concealed that petitioners were not formally notified of the impending sale of LUTORCOs
tobacco re-drying operations to TABACALERA and its attendant consequences with respect to their
continued employment status under TABACALERA. They came to know of the fact of that sale only when
TABACALERA took over the said tobacco re-drying operations. Thus, under those circumstances, the
employment of petitioners with respondent LUTORCO was technically terminated when TABACALERA took
over LUTORCOs tobacco re-drying operations in 1993. [23]
Moreover, private respondent LUTORCOs allegation that TABACALERA assured the seniority rights of
petitioners deserves scant consideration inasmuch as the same is not supported by documentary evidence
nor was it confirmed by TABACALERA. Besides, there is no law requiring that the purchaser of an entire
company should absorb the employees of the selling company. The most that the purchasing company can

66

do, for reasons of public policy and social justice, is to give preference to the qualified separated employees
of the selling company, who in its judgment are necessary in the continued operation of the business
establishment. In the instant case, the petitioner employees were clearly required to file new applications for
employment. In reality then, they were hired as new employees of TABACALERA.
Second, private respondent LUTORCOs contention that petitioners themselves severed the employeremployee relationship by choosing to work with TABACALERA is bereft of merit considering that its offer to
return to work was made more as an afterthought when private respondent LUTORCO later realized it still
had tobacco leaves for processing and redrying. The fact that petitioners ultimately chose to work with
TABACALERA is not adverse to petitioners cause. To equate the more stable work with TABACALERA and
the temporary work with LUTORCO is illogical. Petitioners untimely separation in LUTORCO was not of
their own making and therefore, not construable as resignation therefrom inasmuch as resignation must be
voluntary and made with the intention of relinquishing the office, accompanied with an act of relinquishment.
[24]

Third, the test of whether or not an employee is a regular employee has been laid down in De Leon v.
NLRC,[25] in which this Court held:
The primary standard, therefore, of determining regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual trade or business of the
employer. The test is whether the former is usually necessary or desirable in the usual business or trade of
the employer. The connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also if the employee has been
performing the job for at least a year, even if the performance is not continuous and merely intermittent, the
law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is considered regular, but only with
respect to such activity, and while such activity exists.
Thus, the nature of ones employment does not depend solely on the will or word of the employer. Nor
on the procedure for hiring and the manner of designating the employee, but on the nature of the activities to
be performed by the employee, considering the employers nature of business and the duration and scope
of work to be done.[26]
In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners
have served the company for many years, some for over 20 years, performing services necessary and
indispensable to LUTORCOs business, serve as badges of regular employment. [27] Moreover, the fact that
petitioners do not work continuously for one whole year but only for the duration of the tobacco season does
not detract from considering them in regular employment since in a litany of cases [28] this Court has already
settled that seasonal workers who are called to work from time to time and are temporarily laid off during offseason are not separated from service in said period, but are merely considered on leave until re-employed.
Private respondents reliance on the case of Mercardo v. NLRC is misplaced considering that since in
said case of Mercado, although the respondent company therein consistently availed of the services of the
petitioners therein from year to year, it was clear that petitioners therein were not in respondent companys
regular employ. Petitioners therein performed different phases of agricultural work in a given
year. However, during that period, they were free to contract their services to work for other farm owners, as
in fact they did. Thus, the Court ruled in that case that their employment would naturally end upon the
completion of each project or phase of farm work for which they have been contracted.
All the foregoing considered, the public respondent NLRC in the case at bar erred in its total affirmance
of the dismissal of the consolidated complaint, for separation pay, against private respondents LUTORCO
and See Lin Chan considering that petitioners are regular seasonal employees entitled to the benefits of
Article 283 of the Labor Code which applies to closures or cessation of an establishment or undertaking,
whether it be a complete or partial cessation or closure of business operation. [29]
In the case of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC [30] this Court, when
faced with the question of whether the separation pay of a seasonal worker, who works for only a fraction of
a year, should be equated with the separation pay of a regular worker, resolved that question in this wise:
The amount of separation pay is based on two factors: the amount of monthly salary and the number of
years of service. Although the Labor Code provides different definitions as to what constitutes one year of
service, Book Six[31] does not specifically define one year of service for purposes of computing separation
pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least
six months shall be considered one whole year. Applying this case at bar, we hold that the amount of
separation pay which respondent members xxx should receive is one-half (1/2) their respective average
monthly pay during the last season they worked multiplied by the number of years they actually rendered
service, provided that they worked for at least six months during a given year.
Thus, in the said case, the employees were awarded separation pay equivalent to one (1) month, or to onehalf (1/2) month pay for every year they rendered service, whichever is higher, provided they rendered
service for at least six (6) months in a given year. As explained in the text of the decision in the said case,

67

month pay shall be understood as average monthly pay during the last season they worked. [32] An award
of ten percent (10%) of the total amount due petitioners as attorneys fees is legally and morally justifiable
under Art. 111 of the Labor Code, [33] Sec. 8, Rule VIII, Book III of its Implementing Rules, [34] and par. 7, Art.
2208[35] of the Civil Code.[36]
WHEREFORE, the petition is hereby GRANTED, and the assailed Resolutions dated July 6, 1994 and
September 23, 1994 of public respondent NLRC are REVERSED and SET ASIDE. Private respondent La
Union Tobacco Redrying Corporation is ORDERED: (a) to pay petitioners separation pay equivalent to one
(1) month, or one-half (1/2) month pay for each year that they rendered service, whichever is higher,
provided that they rendered service for at least six (6) months in a given year, and; (b) to pay ten percent
(10%) of the total amount due to petitioners, as and for attorneys fees. Consequently, public respondent
NLRC is ORDERED to COMPUTE the total amount of separation pay which each petitioner who has
rendered service to private respondent LUTORCO for at least six (6) months in a given year is entitled to
receive in accordance with this decision, and to submit its compliance thereon within forty-five (45) days
from notice of this decision.
SO ORDERED.
17. G.R. No. 149440

January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE

SEGURA, petitioners,
vs.
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents.
PANGANIBAN, J.:
Although the employers have shown that respondents performed work that was seasonal in nature, they
failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not
deny that these workers have served them for several years already. Hence, they are regular not
seasonal employees.
The Case
Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the
February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of
the Decision reads:
"WHEREFORE, premises considered, the instant special civil action for certiorari is hereby
DENIED." 2
On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA,
disposed in this wise:
"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and
VACATED and a new one entered declaring complainants to have been illegally dismissed.
Respondents are hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona
Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from
September 1991 until reinstated. Respondents being guilty of unfair labor practice are further
ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as
exemplary damages." 4
The Facts
The facts are summarized in the NLRC Decision as follows:
"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work
and/or were choosy in the kind of jobs they wanted to perform, the records is replete with
complainants' persistence and dogged determination in going back to work.
"Indeed, it would appear that respondents did not look with favor workers' having organized
themselves into a union. Thus, when complainant union was certified as the collective bargaining
representative in the certification elections, respondents under the pretext that the result was on
appeal, refused to sit down with the union for the purpose of entering into a collective bargaining
agreement. Moreover, the workers including complainants herein were not given work for more than

68

one month. In protest, complainants staged a strike which was however settled upon the signing of a
Memorandum of Agreement which stipulated among others that:
'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and
will endeavor to conclude the same within thirty (30) days.
'b) The management will give priority to the women workers who are members of the union
in case work relative . . . or amount[ing] to gahit and [dipol] arises.
'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.
'd) The management will provide fifteen (15) wagons for the workers and that existing
workforce prior to the actual strike will be given priority. However, in case the said workforce
would not be enough, the management can hire additional workers to supplement them.
'e) The management will not anymore allow the scabs, numbering about eighteen (18)
workers[,] to work in the hacienda; and
'f) The union will immediately lift the picket upon signing of this agreement.'
"However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its
commitment to sit down and bargain collectively. Instead, respondent employed all means including
the use of private armed guards to prevent the organizers from entering the premises.
"Moreover, starting September 1991, respondents did not any more give work assignments to the
complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation
efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and
respondents which provides:
'Whereas the union staged a strike against management on January 2, 1992 grounded on the
dismissal of the union officials and members;
'Whereas parties to the present dispute agree to settle the case amicably once and for all;
'Now therefore, in the interest of both labor and management, parties herein agree as
follows:
'1. That the list of the names of affected union members hereto attached and made part of
this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or
not this concerned Union members are hacienda workers;
'2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the
subjects of a Memorandum of Agreement entered into by and between the parties last
January 4, 1990;
'3. That herein parties can use other employment references in support of their respective
claims whether or not any or all of the listed 36 union members are employees or hacienda
workers or not as the case may be;
'4. That in case conflict or disagreement arises in the determination of the status of the
particular hacienda workers subject of this agreement herein parties further agree to submit
the same to voluntary arbitration;
'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to
be composed of three representatives each and is given five working days starting Jan. 23,
1992 to resolve the status of the subject 36 hacienda workers. (Union representatives:
Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)"
"Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed
as follows:
'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based
on who received their 13th month pay. The following are deemed not considered employees:

69

1. Luisa Rombo
2. Ramona Rombo
3. Bobong Abrega
4. Boboy Silva
'The name Orencio Rombo shall be verified in the 1990 payroll.
'The following employees shall be reinstated immediately upon availability of work:

1. Jose Dagle

7. Alejandro Tejares

2. Rico Dagle

8. Gaudioso Rombo

3. Ricardo Dagle

9. Martin Alas-as Jr.

4. Jesus Silva

10. Cresensio Abrega

5. Fernando Silva

11. Ariston Eruela Sr.

6. Ernesto Tejares

12. Ariston Eruela Jr.'

"When respondents again reneged on its commitment; complainants filed the present complaint.
"But for all their persistence, the risk they had to undergo in conducting a strike in the face of
overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of
'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted)
Ruling of the Court of Appeals
The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be
merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the
workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be
tantamount to illegal dismissal.
The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers
themselves who refused to or were choosy in their work." As found by the NLRC, the record of this case is
"replete with complainants' persistence and dogged determination in going back to work." 6
The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice.
Hence this Petition. 7
Issues
Petitioners raise the following issues for the Court's consideration:
"A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal
workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code,
which categorically state that seasonal employees are not covered by the definition of regular
employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual
employees who have served for at least one year.

70

"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying
instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco,
Bacolod-Murcia, and Gaco, . . .
"C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the
NLRC's conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of
unfair labor practice, and that the union be awarded moral and exemplary damages." 8
Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first issue
and Item C as the second.
The Court's Ruling
The Petition has no merit.
First Issue:
Regular Employment
At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for
review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier of facts
and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for labor tribunals to
resolve. 12 In the present case, these have already been threshed out by the NLRC. Its findings were
affirmed by the appellate court.
Contrary to petitioners' contention, the CA did not err when it held that respondents were regular employees.
Article 280 of the Labor Code, as amended, states:
"Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
"An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exist." (Italics supplied)
For respondents to be excluded from those classified as regular employees, it is not enough that they
perform work or services that are seasonal in nature. They must have also been employed only for the
duration of one season. The evidence proves the existence of the first, but not of the second, condition. The
fact that respondents with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy
Silva repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter.
Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of
regular employment is applicable.
In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:
"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v.
NLRC, in which this Court held:
"The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business
of the employer. The test is whether the former is usually necessary or desirable in the usual trade or
business of the employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least a year, even if the performance is not continuous
and merely intermittent, the law deems repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the

71

employment is considered regular, but only with respect to such activity and while such activity
exists.
xxx

xxx

xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the
duration of the . . . season does not detract from considering them in regular employment since in a
litany of cases this Court has already settled that seasonal workers who are called to work from time
to time and are temporarily laid off during off-season are not separated from service in said period,
but merely considered on leave until re-employed." 14
The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the earlier
case, the workers were required to perform phases of agricultural work for a definite period of time, after
which their services would be available to any other farm owner. They were not hired regularly and
repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof. On the
other hand, herein respondents, having performed the same tasks for petitioners every season for several
years, are considered the latter's regular employees for their respective tasks. Petitioners' eventual refusal
to use their services even if they were ready, able and willing to perform their usual duties whenever
these were available and hiring of other workers to perform the tasks originally assigned to respondents
amounted to illegal dismissal of the latter.
The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise of a
management prerogative. The sudden changes in work assignments reeked of bad faith. These changes
were implemented immediately after respondents had organized themselves into a union and started
demanding collective bargaining. Those who were union members were effectively deprived of their jobs.
Petitioners' move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code.
"Where there is no showing of clear, valid and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is on the employer to prove that the
termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove any such
cause for the dismissal of respondents who, as discussed above, are regular employees.
Second Issue:
Unfair Labor Practice
The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:
"Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the
promotion of those who withdrew from the union, the use of armed guards to prevent the organizers
to come in, and the dismissal of union officials and members, one cannot but conclude that
respondents did not want a union in their haciendaa clear interference in the right of the workers to
self-organization." 17
We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are
deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded
not only respect but even finality. Their findings are binding on the Supreme Court. 18 Verily, their conclusions
are accorded great weight upon appeal, especially when supported by substantial
evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in
the absence of a clear showing that these were arbitrary and bereft of any rational basis." 20
The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary
damages."21
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.
SO ORDERED.
18. G.R. No. 85519 February 15, 1990
UNIVERSITY OF STO. TOMAS, FR. MAXIMO MARINA O.P. AND GILBERTO L. GAMEZ, petitioners,
vs.

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NATIONAL LABOR RELATIONS COMMISSION, HONORABLE LABOR ARBITER BIENVENIDO S.

HERNANDEZ AND BASILIO E. BORJA, respondents.
Abad, Leao & Associates for petitioners.
Antonio B. Fidelino for private respondent.

GANCAYCO, J.:
The herein private respondent Dr. Basilio E. Borja was first appointed as "affiliate faculty" in the Faculty of
Medicine and Surgery at the University of Sto. Tomas (UST for short) on September 29, 1976. In the second
semester of the school year 1976-77 he was appointed instructor with a load of twelve (12) hours a week.
He was reappointed instructor for the school year 1977-78 with a load of nine (9) hours a week in the first
semester and two (2) hours a week in the second. On June 10, 1978 he was appointed as Instructor III for
the school year 1978-79. His load for the first semester was eight (8) hours a week, and for the second
semester, seven (7) hours a week.
On March 19, 1979 Dean Gilberto Gamez observed that Dr. Borja should not be reappointed based on the
evaluation sheet that shows his sub-standard and inefficient performance. 1 Nevertheless in view of the
critical shortage of staff members in the Department of Neurology and Psychiatry Dr. Gamez recommended
the reappointment of Dr. Borja, after informing the latter of the negative feedbacks regarding his teaching
and his promise to improve his performance. Thus on July 27, 1979 he was extended a reappointment as
Instructor III in the school year 1979-80. He was given a load of six (6) hours a week. In all these
appointments he was a part time instructor.
At the end of the academic year, it appearing that Dr. Borja had not improved his performance in spite of his
assurances of improvement, his reappointment was not recommended.
In July, 1982 he filed a complaint in the National Labor Relations Commission (NLRC for short) for illegal
dismissal against the UST. After the submission of the pleadings and due proceedings the labor arbiter
rendered a decision on July 19, 1984, the dispositive part of which reads as follows:
WHEREFORE this Office finds in favor of the complainant. The respondents (sic) university
are hereby ordered to effect the immediate reinstatement of complainant to his former
position with full backwages, rights and benefits appertaining thereto. Respondent university
is likewise ordered to pay the complainant the sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) as and by way of moral damages and another 1 0% of the gross amount due
him, and as and by way of attorney's fees.
Respondents are hereby ordered to effect this decision immediately. 2
The UST appealed therefrom to the NLRC which in due course rendered a decision on September 30, 1988,
modifying the appealed decision as follows:
WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED with a
modification limiting the backwages to three (3) years without qualification or deduction,
computed at P660.00 per month, ordering respondents to pay complainant P100,000.00 as
and for actual or compensatory damages, ordering respondents to pay complainant
P300,000.00 as and for moral damages, and further ordering them to pay complainant
P100,000.00 as and for exemplary damages.
Finally, respondents are ordered to pay to complainant the sum of ten (10%) percent of the
total sum due as and for attorney's fees. 3
Hence the instant petition for certiorari and prohibition with a prayer for the issuance of a writ of preliminary
injunction and restraining order that was filed by the UST and its officers wherein it is alleged that the public
respondent NLRC committed the following errors:
I
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED
SERIOUS REVERSIBLE ERRORS OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF

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DISCRETION AND/OR LACK OR EXCESS OF JURISDICTION IN FINDING THAT BASILIO

E. BORJA ACQUIRED TENURE, THE SAID FINDING BEING CLEARLY CONTRARY TO
THE EVIDENCE AT HAND AND DEVOID OF BASIS IN LAW.
II
THE HONORABLE NLRC COMMITTED A SERIOUS AND REVERSIBLE ERROR AND
GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT THE SERVICES OF BASILIO E.
BORJA HAD BEEN CONSTRUCTIVELY TERMINATED, HIS APPOINTMENT HAVING
MERELY LAPSED IN ACCORDANCE WITH ITS TERMS AS ACCEPTED BY THE
COMPLAINANT-APPELLEE BORJA.
III
THE HONORABLE NLRC COMMITTED A SERIOUS AND GRAVE ERROR IN AFFIRMING,
ALBEIT REDUCING THE AWARD OF THE HONORABLE LABOR ARBITER A QUO OF
CLEARLY EXCESSIVE, UNJUST, UNCONSCIONABLE AND SHOCKING MORAL
DAMAGES OF P300,000.00 AND IN AWARDING MOTU PROPIO EXEMPLARY DAMAGES
IN THE AMOUNT OF P100,000.00 IN GRAVE ABUSE OF ITS DISCRETION AMOUNTING
TO EXCESS OF JURISDICTION. 4
The petition is impressed with merit.
In the questioned decision of the public respondent NLRC it found that private respondent had earned to his
credit eight (8) semesters or four (4) academic years of professional duties with the UST and that he has
met the requirements to become a regular employee under the three (3) years requirement in the Manual of
Regulations for Private Schools.
The appealed decision is correct insofar as it declares that it is the Manual of Regulations for Private
Schools, not the Labor Code, that determines the acquisition of regular or permanent status of faculty
members in an educational institution, but the Court disagrees with the observation that it is only the
completion of three (3) years of service that is required to acquire such status.
According to Policy Instructions No. 11 issued by the Department of Labor and Employment, "the
probationary employment of professors, instructors and teachers shall be subject to standards established
by the Department of Education and Culture." Said standards are embodied in paragraph 75 of the Manual
of Regulations for Private Schools, to wit:
75. Full time teachers who have rendered three consecutive years of satisfactory service
shall be considered permanent." (Emphasis supplied)
The legal requisites, therefore, for acquisition by a teacher of permanent employment, or security of tenure,
are as follows:
1) the teacher is a full time teacher;
2) the teacher must have rendered three (3) consecutive years of service; and
3) such service must have been satisfactory.
Now, the Manual of Regulations also states that "a full-time teacher" is "one whose total working day is
devoted to the school, has no other regular remunerative employment and is paid on a regular monthly basis
regardless of the number of teaching hours" (Par. 77); and that in college, "the nominal teaching load of a
full-time instructor shall be eighteen hours a week" (par. 78).
It follows that a part-time member of the faculty cannot acquire permanence in employment under the
Manual of Regulations in relation to the Labor Code.
Hence, the crucial question is whether or not the private respondent was a full-time or part-time member of
the faculty during the three (3) years that he served in the petitioner-university's College of Medicine. Stated
otherwise, the question is (1) whether or not the said respondent's "total working day ..... (was) devoted to
the school" and he had "no other regular remunerative employment" and was "paid on a regular monthly
basis regardless of the number of teaching hours;" and/or (2) whether or not his normal teaching load was
eighteen (18) hours a week.

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It cannot be said that respondent's total working day was devoted to the school alone. It is clear from the
record that he was practising his profession as a doctor and maintaining a clinic in the hospital for this
purpose during the time that he was given a teaching load. In other words, he had another regular
remunerative work aside from teaching. His total working day was not, therefore, devoted to the school.
Indeed, his salaries from teaching were computed by the respondent Commission itself at only an average
of P660.00 per month; he, therefore, had to have other sources of income, and this of course was his selfemployment as a practising psychiatrist. That the compensation for teaching had to be averaged also shows
that he was not paid on a regular monthly basis. Moreover, there is absolutely no evidence that he
performed other functions for the school when not teaching. All things considered, it would appear that
teaching was only a secondary occupation or "sideline," his professional practice as a psychiatrist being his
main vocation.
The record also discloses that he never had a normal teaching load of eighteen (18) hours a week during
the time that he was connected with the university. The only evidence on this equally vital issue was
presented by the petitioner through the affidavit of Dr. Gilberts Gamez who was the dean of the medical
school during the time material to the proceedings at bar. His sworn declaration is to the effect that as
"affiliate faculty" member of the Department of Neurology and Psychiatry from September 29,1976, private
respondent had no teaching functions: that in fact, when he was appointed in September, 1976, classes for
the first semester were already nearing their end; that as "affiliate faculty" he was merely an observer
acquainting himself with the functions of an instructor while awaiting issuance of a formal appointment as
such; that in the school year 1977-78 he had a teaching load of nine (9) hours a week in the first semester
and two (2) hours a week in the second semester; that in the school year 1978-1979 he had a load of eight
(8) hours a week in the first semester and seven (7) hours a week in the second semester; that in the school
year 1979-1980 he had a load of six (6) hours a week in each semester. This evidence does not appear to
have been refuted at all by the private respondent, and has inexplicably been ignored by public respondent.
No discussion of this particular point is found in the decisions of the Labor Arbiter or the NLRC.
The private respondent, therefore, could not be regarded as a full- time teacher in any aspect. He could not
be regarded as such because his total working day was not devoted to the school and he had other regular
remunerative employment. Moreover, his average teaching load was only 6.33 hours a week.
In view of the explicit provisions of the Manual of Regulations above-quoted, and the fact that private
respondent was not a full- time teacher, he could not have and did not become a permanent employee even
after the completion of three (3) years of service.
Having found that private respondent did not become a permanent employee of petitioner UST, it
correspondingly follows that there was no duty on the part of petitioner UST to reappoint private respondent
as Instructor, the temporary appointment having lapsed. Such appointment is a matter addressed to the
discretion of said petitioner.
The findings, therefore, of the public respondent NLRC that private respondent was constructively
terminated is without lawful basis. By the same token, the order for reinstatement of private respondent with
backwages plus an award of actual or compensatory, moral and exemplary damages must be struck down.
WHEREFORE, the petition is hereby GRANTED. The questioned orders of public respondent NLRC dated
September 13, 1988 and public respondent labor arbiter Bienvenido S. Hernandez dated July 19,1988 are
hereby SET ASIDE and another judgment is hereby rendered DISMISSING the complaint of private
respondent, without pronouncement as to costs.
SO ORDERED.
19. G.R. No. 147816

May 9, 2003

EFREN P. PAGUIO, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION, ROBINA Y.
GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA
IGLESIA,respondents.
VITUG, J.:
On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement
with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm. 1 Again, petitioner
was to solicit advertisements for "The Manila Times," a newspaper of general circulation, published by
respondent company. Petitioner, for his efforts, was to receive compensation consisting of a 15%

75

commission on direct advertisements less withholding tax and a 10% commission on agency advertisements
based on gross revenues less agency commission and the corresponding withholding tax. The
commissions, released every fifteen days of each month, were to be given to petitioner only after the clients
would have paid for the advertisements. Apart from commissions, petitioner was also entitled to a monthly
allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious points
raised by the parties had something to do with the following stipulations of the agreement; viz:
"12. You are not an employee of the Metromedia Times Corporation nor does the company have any
obligations towards anyone you may employ, nor any responsibility for your operating expenses or
for any liability you may incur. The only rights and obligations between us are those set forth in this
agreement. This agreement cannot be amended or modified in any way except with the duly
authorized consent in writing of both parties.
"13. Either party may terminate this agreement at any time by giving written notice to the other, thirty
(30) days prior to effectivity of termination."2
On 15 August 1992, barely two months after the renewal of his contract, petitioner received the
following notice from respondent firm "Dear Mr. Paguio,
"Please be advised of our decision to terminate your services as Account Executive of Manila Times
effective September 30, 1992.
"This is in accordance with our contract signed last July 1, 1992." 3
Apart from vague allegations of misconduct on which he was not given the opportunity to defend
himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for
petitioner's termination was given. Aggrieved, petitioner filed a case before the labor arbiter, asking that his
dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without loss of
seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for
acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages.
In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement
with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the
Philippines.4Asserting their right to terminate the contract with petitioner, respondents pointed to the last
provision thereof stating that both parties could opt to end the contract provided that either party would
serve, thirty days prior to the intended date of termination, the corresponding notice to the other.
The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent
Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without loss of
seniority rights, and to pay him his commissions and other remuneration accruing from the date of dismissal
on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general
manager of respondent corporation, be held liable to petitioner for moral damages in the amount of
P20,000.00.
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and
declared the contractual relationship between the parties as being for a fixed-term employment. The NLRC
declared a fixed-term employment to be lawful as long as "it was agreed upon knowingly and voluntarily by
the parties, without any force, duress or improper pressure being brought to bear upon the worker and
absent any other circumstances vitiating his consent." 5 The finding of the NLRC was primarily hinged on the
assumption that petitioner, on account of his educated stature, having indeed personally prepared his
pleadings without the aid of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of
petitioner that he was a regular employee, the NLRC held: "The decisive determinant would not be the
activities that the employee (was) called upon to perform but rather, the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day certain being
understood to be that which (would) necessarily come, although it (might) not be known when." 6
Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of
the commission. In his petition for review on certiorari, petitioner raised the following issues for resolution:
"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'S COMPANY IS
FOR A FIXED PERIOD.
"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.

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"WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES." 7

The crux of the matter would entail the determination of the nature of contractual relationship between
petitioner and respondent company - was it or was it not one of regular employment?
A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the nonconcurrence, of the following factors - a) the manner of selection and engagement of the putative employee,
b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and d) the
presence or absence of the power to control the conduct of the putative employee or the power to control
the employee with respect to the means or methods by which his work is to be accomplished. 8 The "control
test" assumes primacy in the overall consideration. Under this test, an employment relation obtains where
work is performed or services are rendered under the control and supervision of the party contracting for the
service, not only as to the result of the work but also as to the manner and details of the performance
desired.9
An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by
respondent Metromedia Times Corporation not only of the right to control the results to be achieved but
likewise the manner and the means used in reaching that end. 10 Metromedia Times Corporation exercised
such control by requiring petitioner, among other things, to submit a daily sales activity report and also a
monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei,
company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director,
directed and monitored the sales activities of petitioner.
The Labor Code, in Article 280 thereof, provides:
"ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
"An employment shall be deemed to be casual if it is not covered by the proceeding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists."
Thus defined, a regular employee is one who is engaged to perform activities which are necessary and
desirable in the usual business or trade of the employer as against those which are undertaken for a specific
project or are seasonal. Even in these latter cases, where such person has rendered at least one year of
service, regardless of the nature of the activity performed or of whether it is continuous or intermittent, the
employment is considered regular as long as the activity exists, it not being indispensable that he be first
issued a regular appointment or be formally declared as such before acquiring a regular status. 11
That petitioner performed activities which were necessary and desirable to the business of the employer,
and that the same went on for more than a year, could hardly be denied. Petitioner was an account
executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued
operation of the business of respondent corporation. Robina Gokongwei, its President, herself admitted that
the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly,
respondent corporation recognized petitioner's invaluable contribution to the business when it renewed, not
just once but five times, its contract with petitioner.
Respondent company cannot seek refuge under the terms of the agreement it has entered into with
petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the
terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been
called upon to perform.12 The law affords protection to an employee, and it will not countenance any attempt
to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to
deprive the employee of his security of tenure. 13 The sheer inequality that characterizes employer-employee
relations, where the scales generally tip against the employee, often scarcely provides him real and better
options.
The real question that should thus be posed is whether or not petitioner has been justly dismissed from
service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal
must be for a just or authorized cause and must comply with the rudimentary due process of notice and

77

hearing. It is not shown that respondent company has fully bothered itself with either of these requirements
in terminating the services of petitioner. The notice of termination recites no valid or just cause for the
dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense.
The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the
part of respondents, particularly by respondent Liberato I. Gomez, and the award of moral damages must
thus be deleted.
WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No.
527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor
Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent
Liberato I. Gomez which award is deleted.
SO ORDERED.
20. G.R. No. L-48494 February 5, 1990
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,
vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and
DOROTEO R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.

NARVASA, J.:
The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor Code, 2 as
amended,3 have anathematized "fixed period employment" or employment for a term.
The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was
engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract
fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973,
and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971. 5
Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre
was given a copy of the report filed by Brent School with the Department of Labor advising of the termination
of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract,
expiration of the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted
the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for
the period May 16, to July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor Conciliator of said report of termination of his services,
Alegre protested the announced termination of his employment. He argued that although his contract did
stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable
in the usual business of his employer, and his employment had lasted for five years, he had acquired the
status of a regular employee and could not be removed except for valid cause. 6 The Regional Director
considered Brent School's report as anapplication for clearance to terminate employment (not a report of
termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance
and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without
loss of seniority rights and with full back wages. The Director pronounced "the ground relied upon by the
respondent (Brent) in terminating the services of the complainant (Alegre) . . . (as) not sanctioned by P.D.
442," and, quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. 7
Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the
case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent appealed to
the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit and
affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be
dismissed except for just cause, and expiration of the employment contract was not one of the just causes
provided in the Labor Code for termination of services. 10

78

The School is now before this Court in a last attempt at vindication. That it will get here.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when
the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did not come
into effect until November 1, 1974, some three years after the perfection of the employment contract, and
rights and obligations thereunder had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of
term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A.
1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that
In cases of employment, without a definite period, in a commercial, industrial, or agricultural
establishment or enterprise, the employer or the employee may terminate at any time the
employment with just cause; or without just cause in the case of an employee by serving
written notice on the employer at least one month in advance, or in the case of an employer,
by serving such notice to the employee at least one month in advance or one-half month for
every year of service of the employee, whichever is longer, a fraction of at least six months
being considered as one whole year.
The employer, upon whom no such notice was served in case of termination of employment
without just cause, may hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of employment
without just cause, shall be entitled to compensation from the date of termination of his
employment in an amount equivalent to his salaries or wages corresponding to the required
period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also
enumerated what it considered to be just causes for terminating an employment without a definite period,
either by the employer or by the employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also
implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided that
In cases in which the contract of employment does not have a fixed period, any of the parties
may terminate it, notifying the other thereof one month in advance.
The factor or shop clerk shall have a right, in this case, to the salary corresponding to said
month.
The salary for the month directed to be given by the said Article 302 of the Code of Commerce to the
factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When Article 302
(together with many other provisions of the Code of Commerce) was repealed by the Civil Code of
the Philippines, Republic Act No. 1052 was enacted avowedly for the precise purpose of reinstating
the mesada.
Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on
August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and with
contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV.
No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise
deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre on July 18,
1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations
for a term were explicitly recognized as valid by this Court, for instance, in Biboso v. Victorias Milling
Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on
December 29, 1983. 14 TheThompson case involved an executive who had been engaged for a fixed period
of three (3) years. Biboso involved teachers in a private school as regards whom, the following
pronouncement was made:
What is decisive is that petitioners (teachers) were well aware an the time that their tenure
was for a limited duration. Upon its termination, both parties to the employment relationship
were free to renew it or to let it lapse. (p. 254)

79

Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it
terminates on the expiration of such period." 16 "A contract of employment for a definite period terminates by
its own terms at the end of such period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor
Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless,
obscuration of the principle of licitness of term employment began to take place at about this time
Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of
employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to
such regulations as the Secretary of Labor may prescribe." The asserted objective to was "prevent the
circumvention of the right of the employee to be secured in their employment as provided . . . (in the Code)."
Article 321 prescribed the just causes for which an employer could terminate "an employment without a
definite period."
And Article 319 undertook to define "employment without a fixed period" in the following manner:

18

An employment shall be deemed to be without a definite period for purposes of this Chapter
where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the
season.
The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a
fixed term or period would be valid where the employee "has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer." The definition seems a non
sequitur. From the premise that the duties of an employee entail "activities which are usually necessary
or desirable in the usual business or trade of the employer the" conclusion does not necessarily follow
that the employer and employee should be forbidden to stipulate any period of time for the performance of
those activities. There is nothing essentially contradictory between a definite period of an employment
contract and the nature of the employee's duties set down in that contract as being "usually necessary or
desirable in the usual business or trade of the employer." The concept of the employee's duties as being
"usually necessary or desirable in the usual business or trade of the employer" is not synonymous with or
identical to employment with a fixed term. Logically, the decisive determinant in term employment should not
be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties
for the commencement and termination of their employment relationship, a day certain being understood to
be "that which must necessarily come, although it may not be known when." 19 Seasonal employment, and
employment for a particular project are merely instances employment in which a period, where not expressly
set down, necessarily implied.
Of course, the term period has a definite and settled signification. It means, "Length of existence;
duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound;
conclusion; termination. A series of years, months or days in which something is completed. A time of
definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of time
which has an influence on an obligation as a result of a juridical act, and either suspends its
demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar
notion of a period, in the context of a contract of employment, takes no account at all of the nature of the
duties of the employee; it has absolutely no relevance to the character of his duties as being "usually
necessary or desirable to the usual business of the employer," or not.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the
reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The
article 22 now reads:
. . . Probationary employment.Probationary employment shall not exceed six months from
the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged in a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular

80

employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause
declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat
exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now reads:
. . . Regular and Casual Employment.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer except where
the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or service to be employed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to he casual if it is not covered by the preceding
paragraph:provided, that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such
actually exists.
The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been
added, to wit: "The provisions of written agreement to the contrary notwithstanding and regardless of
the oral agreements of the parties . . ." The clause would appear to be addressed inter alia to
agreements fixing a definite period for employment. There is withal no clear indication of the intent to
deny validity to employment for a definite period. Indeed, not only is the concept of regular
employment not essentially inconsistent with employment for a fixed term, as above pointed
out, Article 272 of the Labor Code, as amended by said PD 850, still impliedly acknowledged the
propriety of term employment: it listed the "just causes" for which "an employer may
terminate employment without a definite period," thus giving rise to the inference that if the
employment be with a definite period, there need be no just cause for termination thereof if the
ground be precisely the expiration of the term agreed upon by the parties for the duration of such
employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa
Bilang 130, 24to eliminate altogether reference to employment without a definite period. As lastly amended,
the opening lines of the article (renumbered 283), now pertinently read: "An employer may terminate an
employment for any of the following just causes: . . . " BP 130 thus completed the elimination of every
reference in the Labor Code, express or implied, to employment with a fixed or definite period or term.
It is in the light of the foregoing description of the development of the provisions of the Labor Code bearing
on term or fixed-period employment that the question posed in the opening paragraph of this opinion should
now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying
down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on
this account be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term or fixed-period
employment in the Labor Code, and the specific statement of the rule 25 that
. . . Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer except where
the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or service to be employed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph:provided, that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with

81

respect to the activity in which he is employed and his employment shall continue while such
actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints
on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or
services, except the general admonition against stipulations contrary to law, morals, good customs, public
order or public policy. 26Under the Civil Code, therefore, and as a general proposition, fixed-term
employment contracts are not limited, as they are under the present Labor Code, to those by nature
seasonal or for specific projects with pre-determined dates of completion; they also include those to which
the parties by free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor
for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas
employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular
employment will all that it implies does not appear ever to have been applied, Article 280 of the Labor Code
not withstanding; also appointments to the positions of dean, assistant dean, college secretary, principal,
and other administrative offices in educational institutions, which are by practice or tradition rotated among
the faculty members, and where fixed terms are a necessity, without which no reasonable rotation would be
possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of
Labor 27 implicitly recognize that certain company officials may be elected for what would amount to fixed
periods, at the expiration of which they would have to stand down, in providing that these officials," . . . may
lose their jobs as president, executive vice-president or vice-president, etc. because the stockholders or the
board of directors for one reason or another did not re-elect them."
There can of course be no quarrel with the proposition that where from the circumstances it is apparent that
periods have been imposed to preclude acquisition of tenurial security by the employee, they should be
struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent
the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed
the employee himself who insists upon a period or where the nature of the engagement is such that, without
being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement
fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the
scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee
to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a
narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the
lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable
distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it
logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a
reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's
using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to
spite the face or, more relevantly, curing a headache by lopping off the head.
It is a salutary principle in statutory construction that there exists a valid presumption that
undesirable consequences were never intended by a legislative measure, and that a
construction of which the statute is fairly susceptible is favored, which will avoid all
objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28
Nothing is better settled than that courts are not to give words a meaning which would lead
to absurd or unreasonable consequences. That s a principle that does back to In re Allen
decided oil October 27, 1903, where it was held that a literal interpretation is to be rejected if
it would be unjust or lead to absurd results. That is a strong argument against its adoption.
The words of Justice Laurel are particularly apt. Thus: "The fact that the construction placed
upon the statute by the appellants would lead to an absurdity is another argument for
rejecting it. . . ." 29
. . . We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must prevail
over the letter thereof, for whatever is within the spirit of a statute is within the statute, since
adherence to the letter would result in absurdity, injustice and contradictions and would
defeat the plain and vital purpose of the statute. 30

82

Accordingly, and since the entire purpose behind the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention
of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely
ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered
into precisely to circumvent security of tenure. It should have no application to instances where a fixed
period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress
or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating
his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more
or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless
thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by
its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of
employment as still good rulea rule reaffirmed in the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by
her school a notice of termination following the expiration of the last of three successive fixed-term
employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive period. At the
expiration of the period stipulated in the contract, her appointment was deemed terminated
and the letter informing her of the non-renewal of her contract is not a condition sine qua
non before Reyes may be deemed to have ceased in the employ of petitioner UST. The
notice is a mere reminder that Reyes' contract of employment was due to expire and that the
contract would no longer be renewed. It is not a letter of termination. The interpretation that
the notice is only a reminder is consistent with the court's finding in Labajo supra. ... 32
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last
contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice
given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration
of his contract, not a letter of termination, nor an application for clearance to terminate which needed the
approval of the Department of Labor to make the termination of his services effective. In any case, such
clearance should properly have been given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE.
Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by
reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and
the other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs.
SO ORDERED.
21. G.R. No. L-77629 May 9, 1990
KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISMORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE (KILUSAN-OLALIA),
ROQUE JIMENEZ, MARIO C. RONGALEROS and OTHERS, petitioners,
vs.
HON. FRANKLIN M. DRILON, KIMBERLY-CLARK PHILIPPINES, INC., RODOLFO POLOTAN, doing
business under the firm name "Rank Manpower Co." and UNITED KIMBERLY-CLARK EMPLOYEES
UNION-PHILLIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (UKCEUPTGWO), respondents.
KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVITISM AND NATIONALISMOLALIA (KILUSAN-OLALIA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MANUEL AGUILAR, MA. ESTRELLA ALDA, CAPT.
REY L. LANADA, COL. VIVENCIO MANAIG and KIMBERLY-CLARK PHILIPPINES, INC., respondents.

REGALADO, J.:

83

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

84

3. Those contractual employees who are allegedly in the employ of an independent

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

TOTAL 581 votes

On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count
Challenged Votes" 12 on the ground that the 64 workers are employees of KIMBERLY within the meaning of
Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion,
asserting that there is no employer-employee relationship between the casual workers and the company,
and that the med-arbiter has no jurisdiction to rule on the issue of the status of the challenged workers which
is one of the issues covered by the assumption order. The med-arbiter opted not to rule on the protest until
the issue of regularization has been resolved by
MOLE. 13
On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-164-86,
disposition wherein is summarized as follows:

14

the

1. The service contract for janitorial and yard maintenance service between KIMBERLY and
RANK was declared legal;
2. The other casual employees not performing janitorial and yard maintenance services were
deemed labor-only contractual and since labor-only contracting is prohibited, such
employees were held to have attained the status of regular employees, the regularization
being effective as of the date of the decision;
3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as the
exclusive bargaining representative of KIMBERLY's employees;
4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered;
5. Roque Jimenez was ordered reinstated without backwages, the period when he was out
of work being considered as penalty for his misdemeanor;
6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes with
backwages was declared as already final and unappealable; and
7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983.
On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization of
contractual workers, the appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letter dated
November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation of the
November 13, 1986 decision but only with respect to the regularization of the casual workers. 16
On December 11, 1986, KILUSAN-OLALIA filed a motion for reconsideration questioning the authority of the
Minister of Labor to assume jurisdiction over the representation issue. In the meantime, KIMBERLY and

85

UKCEU-PTGWO continued with the negotiations on the new collective bargaining agreement (CBA), no
restraining order or junctive writ having been issued, and on December 18, 1986, a new CBA was concluded
and ratified by 440 out of 517 members of the bargaining unit. 17
In an order dated January 9, 1987, former Labor Minister Franklin Drilon denied both motions for
reconsideration filed by KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the new CBA executed
between KIMBERLY and UKCEU-PTGWO was signed.
On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in this Court docketed as G.R. No.
77629, seeking to set aside the aforesaid decision, dated November 13, 1986, and the order, dated January
9, 1987, rendered by the aforesaid labor ministers.
On March 25, 1987, this Court issued in G.R. No. 77629 a temporary restraining order, enjoining
respondents from enforcing and/or carrying out the decision and order above stated, particularly that portion
(1) recognizing respondent UKCEU-PTGWO as the exclusive bargaining representative of all regular rankand-file employees in the establishment of respondent company, (2) enforcing and/or implementing the
alleged CBA which is detrimental to the interests of the members of the petitioner union, and (3) stopping
respondent company from deducting monthly dues and other union assessments from the wages of all
regular rank-and-file employees of respondent company and from remitting the said collection to respondent
UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled, "In Re: Labor Dispute at Kimberly-Clark
Philippines, Inc.," of the Department of Labor and Employment, Manila, 19
In its comment, 20 respondent company pointed out certain events which took place prior to the filing of the
petition in G.R. No. 77629, to wit:
1. The company and UKCEU-PTGWO have concluded a new collective bargaining
agreement which had been ratified by 440 out of 517 members of the bargaining unit;
2. The company has already granted the new benefits under the new CBA to all its regular
employees, including members of petitioner union who, while refusing to ratify the CBA
nevertheless readily accepted the benefits arising therefrom;
3. The company has been complying with the check-off provision of the CBA and has been
remitting the union dues to UKCEU-PTGWO
4. The company has already implement the decision of November 13, 1986 insofar as the
regularization of contractual employees who have rendered more than one (1) year of
service as of the filing of the Notice of Strike on May 7, 1986 and are not engaged in
janitorial and yard maintenance work, are concerned
5. Rank Manpower Company had already pulled out, reassigned or replaced the contractual
employees engaged in janitorial and yard maintenance work, as well as those with less than
one year service; and
6. The company has reinstated Roque Jimenez as of January 11, 1987.
In G.R. No. 78791, the records 21 disclose that on May 4, 1987, KILUSAN-OLALIA filed another notice of
strike with the Bureau of Labor Relations charging respondent company with unfair labor practices. On May
8, 1987, the bureau dismissed and considered the said notice as not filed by reason of the pendency of the
representation issue before this Court in G.R. No. 77629. KILUSAN-OLALIA moved to reconsider said order,
but before the bureau could act on said motion, KILUSAN-OLALIA declared a strike and established a picket
on respondent company's premises in San Pedro, Laguna on May 17, 1987.
On May 18, 1987, KIMBERLY filed a petition for injunction with the National Labor Relations Commission
(NLRC), docketed as Injunction Case No. 1442. A supplement to said petition was filed on May 19, 1987. On
May 26, 1987, the commission en banc issued a temporary restraining order (TRO) on the basis of the
ocular inspection report submitted by the commission's agent, the testimonies of KIMBERLY's witnesses,
and pictures of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the ground of lack of
jurisdiction.
Immediately after the expiration of the first TRO on June 9, 1987, the striking employees returned to their
picket lines and reestablished their barricades at the gate. On June 19, 1987, the commission en
banc issued a second TRO.

86

On June 25, 1987, KILUSAN-OLALIA filed another petition for certiorari and prohibition with this Court,
docketed as G.R. No. 78791, questioning the validity of the temporary restraining orders issued by the
NLRC on May 26, 1987 and June 19, 1987. On June 29, 1987, KILUSAN-OLALIA filed in said case an
urgent motion for a TRO to restrain NLRC from implementing the questioned orders. An opposition, as well
as a reply thereto, were filed by the parties.
Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion for the issuance of a writ of
preliminary injunction when the strikers returned to the strike area after the second TRO expired. After due
hearing, the commission issued a writ of preliminary injunction on July 14, 1987, after requiring KIMBERLY
to post a bond in the amount of P20,000.00.
Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No. 78791 a second urgent motion for the
issuance of a TRO by reason of the issuance of said writ of preliminary injunction, which motion was
opposed by KIMBERLY.
Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early resolution 23 filed on
February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had terminated its strike and
picketing activities and that the striking employees had unconditionally offered to return to work, although
they were refused admission by KIMBERLY. By reason of this supervening development, the petition in G.R.
No. 78791, questioning the propriety of the issuance of the two temporary restraining orders and the writ of
injunction therein, has been rendered moot and academic.
In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the respondent Secretary of Labor and/or the
former Minister of Labor have acted with grave abuse of discretion and/or without jurisdiction in (1) ruling on
the issue of bargaining representation and declaring respondent UKCEU-PTGWO as the collective
bargaining representative of all regular rank-and-file employees of the respondent company; (2) holding that
petitioners are not entitled to vote in the certification election; (3) considering the regularization of petitioners
(who are not janitors and maintenance employees) to be effective only on the date of the disputed decision;
(4) declaring petitioners who are assigned janitorial and yard maintenance work to be employees of
respondent RANK and not entitled to be regularized; (5) not awarding to petitioners differential pay arising
out of such illegal work scheme; and (6) ordering the mere reinstatement of petitioner Jimenez.
The issue of jurisdiction actually involves a question of whether or not former Minister Sanchez committed a
grave abuse of discretion amounting to lack of jurisdiction in declaring respondent UKCEU-PTGWO as the
certified bargaining representative of the regular employees of KIMBERLY, after ruling that the 64 casual
workers, whose votes are being challenged, were not entitled to vote in the certification election.
KILUSAN-OLALIA contends that after finding that the 64 workers are regular employees of KIMBERLY,
Minister Sanchez should have remanded the representation case to the med-arbiter instead of declaring
UKCEU-PTGWO as the winner in the certification election and setting aside the med-arbiter's order which
allowed the 64 casual workers to cast their votes.
Respondents argue that since the issues of regularization and representation are closely interrelated and
that a resolution of the former inevitably affects the latter, it was necessary for the former labor minister to
take cognizance of the representation issue; that no timely motion for reconsideration or appeal was made
from his decision of November 13, 1986 which has become final and executory; and that the aforesaid
decision was impliedly accepted by KILUSAN-OLALIA when it demanded from KIMBERLY the issuance of
regular appointments to its affected members in compliance with said decision, hence petitioner employees
are now stopped from questioning the legality thereof.
We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the
regularization of the 64 casual workers, which fact is not even disputed by KILUSAN-OLALIA as may be
gleaned from its request for an interim order in the notice of strike case (BLR-NS-5-164-86), asking that the
regularization issue be immediately resolved. Furthermore, even the med-arbiter who ordered the holding of
the certification election refused to resolve the protest on the ground that the issue raised therein correctly
pertains to the jurisdiction of the then labor minister. No opposition was offered by KILUSAN-OLALIA. We
hold that the issue of regularization was properly addressed to the discretion of said former minister.
However, the matter of the controverted pronouncement by former Minister Sanchez, as reaffirmed by
respondent secretary, regarding the winner in the certification election presents a different situation.
It will be recalled that in the certification election, UKCEU-PTGWO came out as the winner, by garnering a
majority of the votes cast therein with the exception of 64 ballots which were subject to challenge. In the
protest filed for the opening and counting of the challenged ballots, KILUSAN-OLALIA raised the main and
sole question of regularization of the 64 casual workers. The med-arbiter refused to act on the protest on the

87

ground that the issue involved is within the jurisdiction of the then Minister of Labor. KILUSAN-OLALIA then
sought an interim order for an early resolution on the employment status of the casual workers, which was
one of the issues included in the notice of strike filed by KILUSAN-OLALIA in BLR Case No. NS-5-164-86.
Consequently, Minister Sanchez rendered the questioned decision finding that the workers not engaged in
janitorial and yard maintenance service are regular employees but that they became regular only on the date
of his decision, that is, on November 13, 1986, and, therefore, they were not entitled to vote in the
certification election. On the basis of the results obtained in the certification election, Minister Sanchez
declared UKCEU-PTGWO as the winner.
The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance service,
became regular employees of KIMBERLY.
We find and so hold that the former labor minister gravely abused his discretion in holding that those
workers not engaged in janitorial or yard maintenance service attained the status of regular employees only
on November 13, 1986, which thus deprived them of their constitutionally protected right to vote in the
certification election and choose their rightful bargaining representative.
The Labor Code defines who are regular employees, as follows:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary not withstanding and regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a specific project or under
the completion or termination of which has been determined at the time of the engagement
of the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph:Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such
activity exists.
The law thus provides for two. kinds of regular employees, namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer; and (2)
those who have rendered at least one year of service, whether continuous or broken, with respect to the
activity in which they are employed. The individual petitioners herein who have been adjudged to be regular
employees fall under the second category. These are the mechanics, electricians, machinists machine shop
helpers, warehouse helpers, painters, carpenters, pipefitters and masons It is not disputed that these
workers have been in the employ of KIMBERLY for more than one year at the time of the filing of the Petition
for certification election by KILUSAN-OLALIA.
Owing to their length of service with the company, these workers became regular employees, by operation
of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of
these employees entails the mechanical act of issuing regular appointment papers and compliance with
such other operating procedures as may be adopted by the employer, it is more in keeping with the intent
and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day
immediately after the end of his first year of service. To rule otherwise, and to instead make their
regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is
to impose a burden on the employee which is not sanctioned by law.
That the first stated position is the situation contemplated and sanctioned by law is further enhanced by the
absence of a statutory limitation before regular status can be acquired by a casual employee. The law is
explicit. As long as the employee has rendered at least one year of service, he becomes a regular employee
with respect to the activity in which he is employed. The law does not provide the qualification that the
employee must first be issued a regular appointment or must first be formally declared as such before he
can acquire a regular status. Obviously, where the law does not distinguish, no distinction should be drawn.
The submission that the decision of November 13, 1986 has become final and executory, on the grounds
that no timely appeal has been made therefrom and that KILUSAN-OLALIA has impliedly acceded thereto, is
untenable.
Rule 65 of the Rules of Court allows original petitions for certiorari from decisions or orders of public
respondents provided they are filed within a reasonable time. We believe that the period from January 9,

88

1987, when the motions for reconsideration separately filed by KILUSAN-OLALIA and KIMBERLY were
denied, to March 16, 1987, when the petition in G.R. No. 77629 was filed, constitutes a reasonable time for
availing of such recourse.
We likewise do not subscribe to the claim of respondents that KILUSAN-OLALIA has impliedly accepted the
questioned decision by demanding compliance therewith. In the letter of KILUSAN-OLALIA dated November
24, 1986 24 addressed to the legal counsel of KIMBERLY, it is there expressly and specifically pointed out
that KILUSAN-OLALIA intends to file a motion for reconsideration of the questioned decision but that, in the
meantime, it was demanding the issuance of regular appointments to the casual workers who had been
declared to be regular employees. The filing of said motion for reconsideration of the questioned decision by
KILUSAN-OLALIA, which was later denied, sustains our position on this issue and denies the theory of
estoppel postulated by respondents.
On the basis of the foregoing circumstances, and as a consequence of their status as regular employees,
those workers not perforce janitorial and yard maintenance service were performance entitled to the
payment of salary differential, cost of living allowance, 13th month pay, and such other benefits extended to
regular employees under the CBA, from the day immediately following their first year of service in the
company. These regular employees are likewise entitled to vote in the certification election held in July 1,
1986. Consequently, the votes cast by those employees not performing janitorial and yard maintenance
service, which form part of the 64 challenged votes, should be opened, counted and considered for the
purpose of determining the certified bargaining representative.
We do not find it necessary to disturb the finding of then Minister Sanchez holding as legal the service
contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and yard
maintenance service, which is supported by substantial and convincing evidence. Besides, we take judicial
notice of the general practice adopted in several government and private institutions and industries of hiring
a janitorial service on an independent contractor basis. Furthermore, the occasional directives and
suggestions of KIMBERLY are insufficient to erode primary and continuous control over the employees of
the independent contractor. 25 Lastly, the duties performed by these workers are not independent and
integral steps in or aspects of the essential operations of KIMBERLY which is engaged in the manufacture of
consumer paper products and cigarette paper, hence said workers cannot be considered regular employees.
The reinstatement of Roque Jimenez without backwages involves a question of fact best addressed to the
discretion of respondent secretary whose finding thereon is binding and conclusive upon this Court, absent a
showing that he committed a grave abuse in the exercise thereof.
WHEREFORE, judgment is hereby rendered in G.R. No. 77629:
1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open and count the 64 challenged votes, and
that the union with the highest number of votes be thereafter declared as the duly elected certified
bargaining representative of the regular employees of KIMBERLY;
2. Ordering KIMBERLY to pay the workers who have been regularized their differential pay with respect to
minimum wage, cost of living allowance, 13th month pay, and benefits provided for under the applicable
collective bargaining agreement from the time they became regular employees.
All other aspects of the decision appealed from, which are not so modified or affected thereby, are hereby
AFFIRMED. The temporary restraining order issued in G.R. No. 77629 is hereby made permanent.
The petition filed in G.R. No. 78791 is hereby DISMISSED.
SO ORDERED.
22. G.R. No. 143252

October 23, 2003

CEBU MARINE BEACH RESORT, OFELIA PELAEZ AND TSUYOSHI SASAKI, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), RIC RODRIGO RODRIGUEZ,
MANULITO VILLEGAS and LORNA G. IGOT, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:

89

Probationary employees need strong protection from the exploitation of employers since they are usually the
lowliest of the lowly and the most vulnerable to abuses of management, who would rather suffer in silence
than risk losing their jobs.1
At bar is a petition for review on certiorari seeking to reverse and set aside the Decision 2 dated November 5,
1999 and Resolution3 dated April 18, 2000 of the Court of Appeals in CA-G.R. SP No. 54548, entitled "Cebu
Marine Beach Resort, Ofelia Pelaez, and Tsuyoshi Sasaki vs. The Honorable National Labor Relations
Commission (Fourth Division), Ric Rodrigo Rodriguez, Manulita Villegas, and Lorna G. Igot".
The facts as borne by the records are:
Cebu Marine Beach Resort (herein petitioner company), a single proprietorship owned by Victor Dualan,
commenced its operations sometime in January, 1990 with the recruitment of its employees, including Ric
Rodrigo Rodriguez, Manulita Villegas and Lorna G. Igot, respondents.
On the last week of March, 1990 when Japanese tourists began arriving at the resort, petitioner company
became fully operational.
Inasmuch as the beach resort was intended to cater principally to Japanese tourists, respondents had to
undergo a special training in Japanese customs, traditions, discipline as well as hotel and resort services.
This special training was supervised by Tsuyoshi Sasaki, also a petitioner.
During a seminar conducted on May 24, 1990, petitioner Sasaki suddenly scolded respondents and hurled
brooms, floor maps, iron trays, fire hoses and other things at them. In protest, respondents staged a walkout and gathered in front of the resort.
Immediately, petitioner Sasaki reacted by shouting at them to go home and never to report back to work.
Heeding his directive, respondents left the premises. Eventually, they filed with the Regional Arbitration
Branch at Cebu City a complaint for illegal dismissal and other monetary claims against petitioners.
On May 28, 1990, petitioner company, through its acting general manager, Ofelia Pelaez, also a petitioner,
sent letters to respondents requiring them to explain why they should not be terminated from employment on
the grounds of abandonment of work and failure to qualify with the standards for probationary employees.
In due course, the Labor Arbiter rendered a Decision dated March 23, 1993 dismissing respondents
complaint but directing them to immediately report back to work.
On appeal, the National Labor Relations Commission (NLRC), in its Decision dated June 28, 1994, reversed
the Labor Arbiters Decision, declaring that the respondents were dismissed illegally and ordering their
reinstatement with payment of full backwages from May 24, 1990 up to their actual reinstatement or in lieu
thereof, the payment of their respective separation pay (equivalent to one month salary) from May 24, 1990
up to the date they were supposed to be reinstated, as well as attorneys fees (equivalent to 10% of the total
monetary award).
On February 28, 1995, the NLRC issued a Resolution declaring that the backwages shall correspond only to
the period from May 24, 1990 (the date of their dismissal) until March 23, 1993 (when they were ordered
reinstated by the Labor Arbiter), subject to the deduction of their earnings from other sources during the
pendency of the appeal.1awphi1.nt
On March 22, 1995, petitioners filed with this Court a petition for certiorari, prohibition and injunction with
prayer for the issuance of a temporary restraining order.
Pursuant to our ruling in St. Martins Funeral Home vs. NLRC,4 we referred the petition to the Court of
Appeals for its appropriate action and disposition.
On November 5, 1999, the Court of Appeals rendered its Decision affirming with modification the Decision
and Resolution of the NLRC. The dispositive portion reads:
"WHEREFORE, the Decision, dated June 28, 1994, and the Resolution dated February 28, 1995, both
issued by the public respondent, are hereby AFFIRMED with the following modifications: the backwages
should be computed from the date of the dismissal of private respondents until the finality of this Decision
without deduction from earnings during the pendency of the appeal and the award of separation pay must be
equivalent to one-half months salary for every year of service commencing likewise on the date of the

90

dismissal of private respondents until the finality of this Decision. The petition is dismissed. Costs against
petitioners.
"SO ORDERED."
From the said Decision, petitioners filed a motion for reconsideration, but was denied.
Hence, this petition for review on certiorari.
Petitioners contend that the Appellate Court committed a serious error when it unilaterally extended the 6month probationary employment contracts of the respondents by awarding them full backwages, or in lieu of
their reinstatement, when it ordered payment of their separation pay computed from the time of their
dismissal up to the finality of its Decision.
The sole legal issue for our Resolution is whether respondents were illegally dismissed from employment by
petitioner company.
We hold that the Court of Appeals did not err when it ruled that respondents were illegally dismissed from
the service.
It is settled that while probationary employees do not enjoy permanent status, they are entitled to the
constitutional protection of security of tenure. Their employment may only be terminated for just cause
or when they fail to qualify as regular employees in accordance with reasonable standards made
known to them by their employer at the time of engagement, and after due process.5
Here, petitioners terminated respondents probationary employment on the grounds of abandonment and
failure to qualify for the positions for which they were employed.
On this point, we quote with approval the findings of the Court of Appeals, thus:
"x x x. It is undisputed that Mr. Sasaki made an utterance to the effect that private respondents should go
home and never come back to work for the company again. Such utterance is tantamount to a dismissal. Its
meaning is also clear and unmistakable no matter which accent was used by Mr. Sasaki. Considering further
that Mr. Sasaki was in charge of the training of the private respondents, his words carry authority and
conviction. Even assuming for the sake of argument that Mr. Sasaki was never vested with the power of
dismissal, the petitioner company ratified Mr. Sasakis acts. When petitioner company sent a strongly
worded memorandum to private respondents asking them to explain why their services should not be
terminated for failure to live up to the companys expectations, it showed intention to terminate. x x x:
"x x x
"The subsequent issuances of the memos were, as rightly interpreted by the public respondent, merely an
afterthought to escape the legal liability arising from the illegal termination of the private respondents
services. x x x:
"x x x
"The next three reasons adduced by the petitioners sought to prove the existence of a just cause for the
dismissal of private respondents, which is, abandonment. We are not convinced. The fact that private
respondents never came back to work despite the issuance of the memoranda by the petitioner does not
support the allegation of abandonment. x x x."
Indeed, we find no indication that respondents have shown by some overt acts their intention to sever their
employment in petitioner company. To constitute abandonment, there must be clear proof of deliberate and
unjustified intent to sever the employer-employee relationship. Clearly, the operative factor is still the
employers ultimate act of putting an end to his employment.
Here, respondents did not report back for work because they were warned by petitioner Sasaki not to return.
But immediately, they filed with the Labor Arbiters Office a complaint for illegal dismissal. It is a settled
doctrine that the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for
an employee who takes steps to protest his dismissal cannot by logic be said to have abandoned his work. 6
That respondents failed to qualify for their positions, suffice it to state that at the time they were dismissed,
they were still in a "trial period" or probationary period. Being in the nature of a "trial period," the essence of

91

a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by
both the employer and the employee during said period. While the employer observes the fitness, propriety
and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the
probationer, on the other hand, seeks to prove to the employer that he has the qualifications to meet the
reasonable standards for permanent employment which obviously were made known to him. 7 To reiterate, in
the case at bar, far from allowing the respondents to prove that they possessed the qualifications to meet the
reasonable standards for their permanent employment, petitioners peremptorily dismissed them from the
service.
On another tack, petitioners argument that the Appellate Courts award of full backwages and separation
pay in effect unilaterally extended respondents 6-month probationary employment is bereft of merit.
In Philippine Manpower Services, Inc. vs. NLRC,8 we held that "absent the grounds for termination of a
probationary employee, he is entitled to continued employment even beyond the probationary period."
On a similar note, our ruling in Lopez vs. Javier9 is quite explicit, thus:
"x x x, probationary employees who are unjustly dismissed from work during the probationary period shall be
entitled to reinstatement and payment of full backwages and other benefits and privileges from the time
they were dismissed up to their actual reinstatement, conformably with Article 279 of the Labor Code, as
amended by Section 34 of Republic Act No. 6715, which took effect on March 21, 1989:
x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement."
Verily, respondents who were unjustly dismissed from work are actually entitled to reinstatement without loss
of seniority rights and other privileges as well as to their full backwages, inclusive of allowances, and to
other benefits or their monetary equivalent computed from the time their compensation was withheld
from them up to the time of their actual reinstatement.10
However, the circumstances obtaining in this case do not warrant the reinstatement of respondents.
Antagonism caused a severe strain in the relationship between them and petitioner company. A more
equitable disposition, as correctly held by the NLRC, would be an award of separation pay 11 equivalent to at
least one month pay, or one month pay for every year of service, whichever is higher,12 in addition to their full
backwages, allowances and other benefits.1a\^/phi1.net
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals dated November 5, 1999 and
April 18, 2000 are hereby AFFIRMED WITH MODIFICATION in the sense that, in lieu of reinstatement,
respondents are awarded separation pay equivalent to at least one month pay, or one month pay for every
year of service, whichever is higher; and their full backwages, other privileges and benefits, or their
monetary equivalent during the period of their dismissal up to their supposed actual reinstatement.
Costs against petitioners.
SO ORDERED.
23. G.R. No. 80609 August 23, 1988
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents.
Nicanor G. Nuevas for petitioner.

CRUZ, J.:
The only issue presented in the case at bar is the legality of the award of financial assistance to an
employee who had been dismissed for cause as found by the public respondent.

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Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two
complainants of having demanded and received from them the total amount of P3,800.00 in consideration of
her promise to facilitate approval of their applications for telephone installation. 1 Investigated and heard, she
was found guilty as charged and accordingly separated from the service. 2 She went to the Ministry of Labor
and Employment claiming she had been illegally removed. After consideration of the evidence and
arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit.
Nevertheless, the dispositive portion of labor arbiter's decision declared:
WHEREFORE, the instant complaint is dismissed for lack of merit.
Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally
blameless in the light of the fact that the deal happened outhide the premises of respondent
company and that their act of giving P3,800.00 without any receipt is tantamount to
corruption of public officers, complainant must be given one month pay for every year of
service as financial assistance. 3
Both the petitioner and the private respondent appealed to the National Labor Relations Board, which
upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further action,
thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to
question the affirmance of the above- quoted award as having been made with grave abuse of discretion.
In its challenged resolution of September 22, 1987, the NLRC said:
... Anent the award of separation pay as financial assistance in complainant's favor, We find
the same to be equitable, taking into consideration her long years of service to the company
whereby she had undoubtedly contributed to the success of respondent. While we do not in
any way approve of complainants (private respondent) mal feasance, for which she is to
suffer the penalty of dismissal, it is for reasons of equity and compassion that we resolve to
uphold the award of financial assistance in her favor. 5
The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled
to reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause
is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal
is in accordance with law. In the case of the private respondent, she has been awarded financial assistance
equivalent to ten months pay corresponding to her 10 year service in the company despite her removal for
cause. She is, therefore, in effect rewarded rather than punished for her dishonesty, and without any legal
authorization or justification. The award is made on the ground of equity and compassion, which cannot be a
substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead of deterring
corruption.
For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The
grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of
her employment after working faithfully with the company for ten years. In support of this position, the
Solicitor General cites the cases of Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and
Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for cause but were
nevertheless allowed separation pay on grounds of social and compassionate justice. As the Court put it in
the Firestone case:
In view of the foregoing, We rule that Firestone had valid grounds to dispense with the
services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his
reinstatement. However, considering that Lariosa had worked with the company for eleven
years with no known previous bad record, the ends of social and compassionate justice
would be served if he is paid full separation pay but not reinstatement without backwages by
the NLRC.
In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him full
separation pay for his 11 years of service with the company. In Soco, the employee was also legally
separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings but he
was just the same granted one-half month separation pay for every year of his 18-year service.
Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for preferring
certain dealers in violation of company policy but was allowed separation pay for his 2 years of service. In
Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss of confidence because of her
failure to account for certain funds but she was awarded separation pay equivalent to one-half month's
salary for every year of her service of 15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of

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the employee was justified because he had instigated labor unrest among the workers and had serious
differences with them, among other grounds, but he was still granted three months separation pay
corresponding to his 3-year service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service
was held validly terminated for lack of confidence and abandonment of work but he was nonetheless
granted three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and
Employment, et al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed
three employees who had been dismissed after they were found guilty of misappropriating company funds.
The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled
to separation pay. 13 The cases above cited constitute the exception, based upon considerations of equity.
Equity has been defined as justice outside law, 14 being ethical rather than jural and belonging to the sphere
of morals than of law. 15 It is grounded on the precepts of conscience and not on any sanction of positive
law. 16 Hence, it cannot prevail against the expressed provision of the labor laws allowing dismissal of
employees for cause and without any provision for separation pay.
Strictly speaking, however, it is not correct to say that there is no express justification for the grant of
separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason
is that our Constitution is replete with positive commands for the promotion of social justice, and particularly
the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns
of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in
Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article
devoted to the promotion of social justice and human rights with a separate sub- topic for labor. Article XIII
expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the
national economy and the welfare of the people in general. The categorical mandates in the Constitution for
the improvement of the lot of the workers are more than sufficient basis to justify the award of separation
pay in proper cases even if the dismissal be for cause.
The Court notes, however, that where the exception has been applied, the decisions have not been
consistent as to the justification for the grant of separation pay and the amount or rate of such award. Thus,
the employees dismissed for theft in the Firestone case and for animosities with fellow workers in the
Engineering Equipment case were both awarded separation pay notnvithstanding that the first cause was
certainly more serious than the second. No less curiously, the employee in the Soco case was allowed only
one-half month pay for every year of his 18 years of service, but in Filipro the award was two months
separation pay for 2 years service. In Firestone, the emplovee was allowed full separation pay
corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month
separation pay for every year of her 15year service. It would seem then that length of service is not
necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal.
The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was
considered warranted, was required regardless of the nature or degree of the ground proved, be it mere
inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made to
cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee
whatever the reason for his dismissal. This policy should be re-examined. It is time we rationalized the
exception, to make it fair to both labor and management, especially to labor.
There should be no question that where it comes to such valid but not iniquitous causes as failure to comply
with work standards, the grant of separation pay to the dismissed employee may be both just and
compassionate, particularly if he has worked for some time with the company. For example, a subordinate
who has irreconcilable policy or personal differences with his employer may be validly dismissed for
demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently
absent because she has also to take care of her child may also be removed because of her poor
attendance, this being another authorized ground. It is not the employee's fault if he does not have the
necessary aptitude for his work but on the other hand the company cannot be required to maintain him just
the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and
similar circumstances, however, the award to the employee of separation pay would be sustainable under
the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must
be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is
dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is
misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A
security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay
since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a
prostitute during his tour of duty and in the company premises, the situation is changed completely. This is
not only inefficiency but immorality and the grant of separation pay would be entirely unjustified.

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We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing
the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that
the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted separation pay even as he is validly dismissed, it is not
unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like
leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any
good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern
of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion
for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can
equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if
their hands are clean and their motives blameless and not simply because they happen to be poor. 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 cause of labor with the blemishes of their own character.
Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified.
The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the
NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than
a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty
that she should have strengthened instead of betraying during all of her 10 years of service with the
company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize
for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its
ranks of all undesirables.
The Court also rules that the separation pay, if found due under the circumstances of each case, should be
computed at the rate of one month salary for every year of service, assuming the length of such service is
deemed material. This is without prejudice to the application of special agreements between the employer
and the employee stipulating a higher rate of computation and providing for more benefits to the discharged
employee. 17
WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is
AFFIRMED in totoexcept for the grant of separation pay in the form of financial assistance, which is hereby
DISALLOWED. The temporary restraining order dated March 23, 1988, is LIFTED. It is so ordered.
24. G.R. No. 158693

November 17, 2004

JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and
VICENTE ANGELES, respondents.

DECISION

YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision1 of the Court of Appeals dated January 23, 2003, in
CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRCNCR Case No. 023442-00.

95

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing
ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as
gypsum board and cornice installers on January 2, 1992 2 until February 23, 1999 when they were dismissed
for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims 3 and on December 28,
1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent
to pay the monetary claims. The dispositive portion of the decision states:
WHEREFORE, premises considered, We find the termination of the complainants illegal.
Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 in
the sum of:
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of
service from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service incentive leave
pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and
Virgilio Agabon's 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED
FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND
SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE
HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC,
Research and Computation Unit, NCR.
SO ORDERED.4
On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their
work, and were not entitled to backwages and separation pay. The other money claims awarded by the
Labor Arbiter were also denied for lack of evidence. 5
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of
Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had
abandoned their employment but ordered the payment of money claims. The dispositive portion of the
decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar
as it dismissed petitioner's money claims. Private respondents are ordered to pay petitioners holiday
pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay
for said years, and to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in the
amount of P2,150.00.
SO ORDERED.6
Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed. 7
Petitioners assert that they were dismissed because the private respondent refused to give them
assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on February 23,
1999. They did not agree on this arrangement because it would mean losing benefits as Social Security
System (SSS) members. Petitioners also claim that private respondent did not comply with the twin
requirements of notice and hearing. 8
Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned
their work.9 In fact, private respondent sent two letters to the last known addresses of the petitioners
advising them to report for work. Private respondent's manager even talked to petitioner Virgilio Agabon by
telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving
40,000 square meters of cornice installation work. However, petitioners did not report for work because they
had subcontracted to perform installation work for another company. Petitioners also demanded for an

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increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work
and filed the illegal dismissal case.10
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect
but even finality if the findings are supported by substantial evidence. This is especially so when such
findings were affirmed by the Court of Appeals.11 However, if the factual findings of the NLRC and the Labor
Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself
the questioned findings.12
Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners' dismissal was for
a just cause. They had abandoned their employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins
the employer to give the employee the opportunity to be heard and to defend himself. 13 Article 282 of the
Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the latter's representative in
connection with the employee's work; (b) gross and habitual neglect by the employee of his duties; (c) fraud
or willful breach by the employee of the trust reposed in him by his employer or his duly authorized
representative; (d) commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and (e) other causes analogous
to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. 14 It is a
form of neglect of duty, hence, a just cause for termination of employment by the employer.15 For a valid
finding of abandonment, these two factors should be present: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the
second as the more determinative factor which is manifested by overt acts from which it may be deduced
that the employees has no more intention to work. The intent to discontinue the employment must be shown
by clear proof that it was deliberate and unjustified. 16
In February 1999, petitioners were frequently absent having subcontracted for an installation work for
another company. Subcontracting for another company clearly showed the intention to sever the employeremployee relationship with private respondent. This was not the first time they did this. In January 1996,
they did not report for work because they were working for another company. Private respondent at that time
warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning
and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is
a relevant consideration in determining the penalty that should be meted out to him. 17
In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from work without
leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have
abandoned his job. We should apply that rule with more reason here where petitioners were absent because
they were already working in another company.
The law imposes many obligations on the employer such as providing just compensation to workers,
observance of the procedural requirements of notice and hearing in the termination of employment. On the
other hand, the law also recognizes the right of the employer to expect from its workers not only good
performance, adequate work and diligence, but also good conduct 19 and loyalty. The employer may not be
compelled to continue to employ such persons whose continuance in the service will patently be inimical to
his interests.20
After establishing that the terminations were for a just and valid cause, we now determine if the procedures
for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules
Implementing the Labor Code:
Standards of due process: requirements of notice. In all cases of termination of employment, the
following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side;

97

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if
the employee so desires, is given opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of
all the circumstances, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee's last known address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while
dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to
terminate employees. A termination for an authorized cause requires payment of separation pay. When the
termination of employment is declared illegal, reinstatement and full backwages are mandated under Article
279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his
separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article
284, and due process was observed; (2) the dismissal is without just or authorized cause but due process
was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4)
the dismissal is for just or authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the time the compensation was
not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the
procedural requirements of due process.
The present case squarely falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company. Private respondent,
however, did not follow the notice requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore. Unfortunately for the
private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the
employee's last known address.21 Thus, it should be held liable for non-compliance with the procedural
requirements of due process.
A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various
rulings on employment termination in the light of Serrano v. National Labor Relations Commission.22
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice.
In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,23 we reversed this long-standing
rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to
reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just
ground for termination under Article 282. The employee had a violent temper and caused trouble during
office hours, defying superiors who tried to pacify him. We concluded that reinstating the employee and
awarding backwages "may encourage him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe." 24 We further held that:
Under the circumstances, the dismissal of the private respondent for just cause should be
maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as above

98

discussed. The dismissal of an employee must be for just or authorized cause and after due
process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a
sanction for its failure to give a formal notice and conduct an investigation as required by law before
dismissing petitioner from employment. Considering the circumstances of this case petitioner must
indemnify the private respondent the amount of P1,000.00. The measure of this award depends on
the facts of each case and the gravity of the omission committed by the employer.25
The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the
due process requirement, the dismissal may be upheld but the employer will be penalized to pay an
indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the
violation by the employer of the notice requirement in termination for just or authorized causes was not a
denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer
must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a
just or authorized cause.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases
involving dismissals without requisite notices. We concluded that the imposition of penalty by way of
damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required
payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a
just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing full
backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor
Code which states:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.
This means that the termination is illegal only if it is not for any of the justified or authorized causes provided
by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee
was unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has
prompted us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights
based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed
fundamental to a civilized society as conceived by our entire history. Due process is that which comports
with the deepest notions of what is fair and right and just. 26 It is a constitutional restraint on the legislative as
well as on the executive and judicial powers of the government provided by the Bill of Rights.
Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the
valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing
Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I,
Sec. 2, as amended by Department Order Nos. 9 and 10. 27 Breaches of these due process requirements
violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply
with constitutional due process.
Constitutional due process protects the individual from the government and assures him of his rights in
criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and
Implementing Rules protects employees from being unjustly terminated without just cause after notice and
hearing.
In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just and valid cause but the
employee was not accorded due process. The dismissal was upheld by the Court but the employer was

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sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of
each case and the gravity of the omission committed by the employer.
In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee was not given due
process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just
cause,albeit without due process, did not entitle the employee to reinstatement, backwages, damages and
attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations
Commission,30 which opinion he reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been properly observed by an
employer, it would not be right to order either the reinstatement of the dismissed employee or the
payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in
terminating the services of the employee, the employer must be deemed to have opted or, in any
case, should be made liable, for the payment of separation pay. It might be pointed out that the
notice to be given and the hearing to be conducted generally constitute the two-part due process
requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar
circumstances might obtain in certain situations where to undertake the above steps would be no
more than a useless formality and where, accordingly, it would not be imprudent to apply the res
ipsa loquitur rule and award, in lieu of separation pay, nominal damages to the employee. x x x. 31
After carefully analyzing the consequences of the divergent doctrines in the law on employment termination,
we believe that in cases involving dismissals for cause but without observance of the twin requirements of
notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that
the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be
stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by
dispensing justice not just to employees, but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying
with statutory due process may have far-reaching consequences.
This would encourage frivolous suits, where even the most notorious violators of company policy are
rewarded by invoking due process. This also creates absurd situations where there is a just or authorized
cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case
where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal,
who has fled and cannot be found, or where serious business losses demand that operations be ceased in
less than a month. Invalidating the dismissal would not serve public interest. It could also discourage
investments that can generate employment in the local economy.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers.
The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when
it is in the right, as in this case.32 Certainly, an employer should not be compelled to pay employees for work
not actually performed and in fact abandoned.
The employer should not be compelled to continue employing a person who is admittedly guilty of
misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law
protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. 33
It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment,
which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social
Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an
injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition
of the necessity of interdependence among diverse units of a society and of the protection that should be
equally and evenly extended to all groups as a combined force in our social and economic life, consistent
with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all
persons, and of bringing about "the greatest good to the greatest number." 34
This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related
cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and
circumstances.

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Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations
and dispense justice with an even hand in every case:
We have repeatedly stressed that social justice or any justice for that matter is for the deserving,
whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of
reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly
extends its sympathy and compassion. But never is it justified to give preference to the poor simply
because they are poor, or reject the rich simply because they are rich, for justice must always be
served for the poor and the rich alike, according to the mandate of the law.35
Justice in every case should only be for the deserving party. It should not be presumed that every case of
illegal dismissal would automatically be decided in favor of labor, as management has rights that should be
fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building,
labor and management need each other to foster productivity and economic growth; hence, the need to
weigh and balance the rights and welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee
for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.36 The
indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now, pay later,"
which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into special consideration the gravity of the due
process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. 37
As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an employer is liable to
pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such
dismissal, the employer fails to comply with the requirements of due process. The Court, after considering
the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employee's one
month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the
employee's right to statutory due process which was violated by the employer.39
The violation of the petitioners' right to statutory due process by the private respondent warrants the
payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant circumstances. 40 Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages
would serve to deter employers from future violations of the statutory due process rights of employees. At
the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the
Labor Code and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners' holiday
pay, service incentive leave pay and 13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners' money claims. Private respondent is liable for
petitioners' holiday pay, service incentive leave pay and 13th month pay without deductions.
As a general rule, one who pleads payment has the burden of proving it. Even where the employee must
allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than
on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls,
records, remittances and other similar documents which will show that overtime, differentials, service
incentive leave and other claims of workers have been paid are not in the possession of the worker but in
the custody and absolute control of the employer.41
In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave pay,
it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the
petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers
showing payments of the benefit in the years disputed. 42 Allegations by private respondent that it does not
operate during holidays and that it allows its employees 10 days leave with pay, other than being selfserving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby
making it liable for such claims to the petitioners.

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Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month
pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant
an additional income in the form of the 13th month pay to employees not already receiving the same 43 so as
"to further protect the level of real wages from the ravages of world-wide inflation."44 Clearly, as additional
income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit:
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece ,
or commission basis, or other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to
the employee"
from which an employer is prohibited under Article 11345 of the same Code from making any deductions
without the employee's knowledge and consent. In the instant case, private respondent failed to show that
the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay
was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner
Virgilio Agabon included the same as one of his money claims against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the
private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in
the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and
the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated
January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and Virgilio Agabon abandoned
their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular
holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in
the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of
P2,150.00 isAFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements, Inc.
is furtherORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for noncompliance with statutory due process.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona,
Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ., concur.

SEPARATE OPINION
TINGA, J:
I concur in the result, the final disposition of the petition being correct. There is no denying the importance of
the Court's ruling today, which should be considered as definitive as to the effect of the failure to render the
notice and hearing required under the Labor Code when an employee is being dismissed for just causes, as
defined under the same law. The Court emphatically reaffirms the rule that dismissals for just cause are not
invalidated due to the failure of the employer to observe the proper notice and hearing requirements under
the Labor Code. At the same time, The Decision likewise establishes that the Civil Code provisions on
damages serve as the proper framework for the appropriate relief to the employee dismissed for just cause if
the notice-hearing requirement is not met. Serrano v. NLRC,1 insofar as it is controlling in dismissals for
unauthorized causes, is no longer the controlling precedent. Any and all previous rulings and statements of
the Court inconsistent with these determinations are now deemed inoperative.
My views on the questions raised in this petition are comprehensive, if I may so in all modesty. I offer this
opinion to discuss the reasoning behind my conclusions, pertaining as they do to questions of fundamental
importance.
Prologue

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The factual backdrop of the present Petition for Review is not novel. Petitioners claim that they were illegally
dismissed by the respondents, who allege in turn that petitioners had actually abandoned their employment.
There is little difficulty in upholding the findings of the NRLC and the Court of Appeals that petitioners are
guilty of abandonment, one of the just causes for termination under the Labor Code. Yet, the records also
show that the employer was remiss in not giving the notice required by the Labor Code; hence, the resultant
controversy as to the legal effect of such failure vis--vis the warranted dismissal.
Ostensibly, the matter has been settled by our decision in Serrano2, wherein the Court ruled that the failure
to properly observe the notice requirement did not render the dismissal, whether for just or authorized
causes, null and void, for such violation was not a denial of the constitutional right to due process, and that
the measure of appropriate damages in such cases ought to be the amount of wages the employee should
have received were it not for the termination of his employment without prior notice. 3 Still, the Court has, for
good reason, opted to reexamine the so-called Serrano doctrine through the present petition
Antecedent Facts
Respondent Riviera Home Improvements, Inc (Riviera Home) is engaged in the manufacture and installation
of gypsum board and cornice. In January of 1992, the Agabons were hired in January of 1992 as cornice
installers by Riviera Home. According to their personnel file with Riviera Home, the Agabon given address
was 3RDS Tailoring, E. Rodriguez Ave., Moonwalk Subdivision, P-II Paraaque City, Metro Manila. 4
It is not disputed that sometime around February 1999, the Agabons stopped rendering services for Riviera
Home. The Agabons allege that beginning on 23 February 1999, they stopped receiving assignments from
Riviera Home.5 When they demanded an explanation, the manager of Riviera Homes, Marivic Ventura,
informed them that they would be hired again, but on a "pakyaw" (piece-work) basis. When the Agabons
spurned this proposal, Riviera Homes refused to continue their employment under the original terms and
agreement.6 Taking affront, the Agabons filed a complaint for illegal dismissal with the National Labor
Relations Commission ("NLRC").
Riviera Homes adverts to a different version of events leading to the filing of the complaint for illegal
dismissal. It alleged that in the early quarter of 1999, the Agabons stopped reporting for work with Riviera.
Two separate letters dated 10 March 1999, were sent to the Agabons at the address indicated in their
personnel file. In these notices, the Agabons were directed to report for work immediately.7 However, these
notices were returned unserved with the notation "RTS Moved." Then, in June of 1999, Virgilio Agabon
informed Riviera Homes by telephone that he and Jenny Agabon were ready to return to work for Riviera
Homes, on the condition that their wages be first adjusted. On 18 June 1999, the Agabons went to Riviera
Homes, and in a meeting with management, requested a wage increase of up to Two Hundred Eighty Pesos
(P280.00) a day. When no affirmative response was offered by Riviera Homes, the Agabons initiated the
complaint before the NLRC.8
In their Position Paper, the Agabons likewise alleged that they were required to work even on holidays and
rest days, but were never paid the legal holiday pay or the premium pay for holiday or rest day. They also
asserted that they were denied Service Incentive Leave pay, and that Virgilio Agabon was not given his
thirteenth (13th) month pay for the year 1998.9
After due deliberation, Labor Arbiter Daisy G. Cauton-Barcelona rendered a Decision dated 28 December
1999, finding the termination of the Agabons illegal, and ordering Riviera Homes to pay backwages in the
sum of Fifty Six Thousand Two Hundred Thirty One Pesos and Ninety Three Centavos (P56,231.93) each.
The Labor Arbiter likewise ordered, in lieu of reinstatement, the payment of separation pay of one (1) month
pay for every year of service from date of hiring up to 29 November 1999, as well as the payment of holiday
pay, service incentive leave pay, and premium pay for holiday and restday, plus thirteenth (13 th) month
differential to Virgilio Agabon.10
In so ruling, the Labor Arbiter declared that Riviera Homes was unable to satisfactorily refute the Agabons'
claim that they were no longer given work to do after 23 February 1999 and that their rehiring was only on
"pakyaw" basis. The Labor Arbiter also held that Riviera Homes failed to comply with the notice requirement,
noting that Riviera Homes well knew of the change of address of the Agabons, considering that the
identification cards it issued stated a different address from that on the personnel file. 11 The Labor Arbiter
asserted the principle that in all termination cases, strict compliance by the employer with the demands of
procedural and substantive due process is a condition sine qua non for the same to be declared valid.12
On appeal, the NLRC Second Division set aside the Labor Arbiter's Decision and ordered the dismissal of
the complaint for lack of merit.13 The NLRC held that the Agabons were not able to refute the assertion that
for the payroll period ending on 15 February 1999, Virgilio and Jenny Agabon worked for only two and one-

103

half (2) and three (3) days, respectively. It disputed the earlier finding that Riviera Homes had known of the
change in address, noting that the address indicated in the
identification cards was not the Agabons, but that of the persons who should be notified in case of
emergency concerning the employee. 14 Thus, proper service of the notice was deemed to have been
accomplished. Further, the notices evinced good reason to believe that the Agabons had not been
dismissed, but had instead abandoned their jobs by refusing to report for work.
In support of its conclusion that the Agabons had abandoned their work, the NLRC also observed that the
Agabons did not seek reinstatement, but only separation pay. While the choice of relief was premised by the
Agabons on their purported strained relations with Riviera Homes, the NLRC pointed out that such claim
was amply belied by the fact that the Agabons had actually sought a conference with Riviera Homes in June
of 1999. The NLRC likewise found that the failure of the Labor Arbiter to justify the award of extraneous
money claims, such as holiday and service incentive leave pay, confirmed that there was no proof to justify
such claims.
A Petition for Certiorari was promptly filed with the Court of Appeals by the Agabons, imputing grave abuse
of discretion on the part of the NLRC in dismissing their complaint for illegal dismissal. In a Decision15 dated
23 January 2003, the Court of Appeals affirmed the finding that the Agabons had abandoned their
employment. It noted that the two elements constituting abandonment had been established, to wit: the
failure to report for work or absence without valid justifiable reason, and; a clear intention to sever the
employer-employee relationship. The intent to sever the employer-employee relationship was buttressed by
the Agabon's choice to seek not reinstatement, but separation pay. The Court of Appeals likewise found that
the service of the notices were valid, as the Agabons did not notify Riviera Homes of their change of
address, and thus the failure to return to work despite notice amounted to abandonment of work.
However, the Court of Appeals reversed the NLRC as regards the denial of the claims for holiday pay,
service incentive leave pay, and the balance of Virgilio Agabon's thirteenth (13th) month pay. It ruled that the
failure to adduce proof in support thereof was not fatal and that the burden of proving that such benefits had
already been paid rested on Riviera Homes.16 Given that Riviera Homes failed to present proof of payment
to the Agabons of their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998, the
Court of Appeals chose to believe that such benefits had not actually been received by the employees. It
also ruled that the apparent deductions made by Riviera Homes on the thirteenth (13th) month pay of Virgilio
Agabon violated Section 10 of the Rules and Regulations Implementing Presidential Decree No.
851.17 Accordingly, Riviera Homes was ordered to pay the Agabons holiday for four (4) regular holidays in
1996, 1997 and 1998, as well as their service incentive leave pay for said years, and the balance of Virgilio
Agabon's thirteenth (13th) month pay for 1998 in the amount of Two Thousand One Hundred Fifty Pesos
(P2,150.00).18
In their Petition for Review, the Agabons claim that they had been illegally dismissed, reasserting their
version of events, thus: (1) that they had not been given new assignments since 23 February 1999; (2) that
they were told that they would only be re-hired on a "pakyaw" basis, and; (3) that Riviera Homes had
knowingly sent the notices to their old address despite its knowledge of their change of address as indicated
in the identification cards.19Further, the Agabons note that only one notice was sent to each of them, in
violation of the rule that the employer must furnish two written notices before termination the first to
apprise the employee of the cause for which dismissal is sought, and the second to notify the employee of
the decision of dismissal.20 The Agabons likewise maintain that they did not seek reinstatement owing to the
strained relations between them and Riviera Homes.
The Agabons present to this Court only one issue, i.e.: whether or not they were illegally dismissed from
their employment.21 There are several dimensions though to this issue which warrant full consideration.
The Abandonment Dimension
Review of Factual Finding of Abandonment
As the Decision points out, abandonment is characterized by the failure to report for work or absence
without valid or justifiable reason, and a clear intention to sever the employer-employee relationship. The
question of whether or not an employee has abandoned employment is essentially a factual issue. 22 The
NLRC and the Court of Appeals, both appropriate triers of fact, concluded that the Agabons had actually
abandoned their employment, thus there is little need for deep inquiry into the correctness of this factual
finding. There is no doubt that the Agabons stopped reporting for work sometime in February of 1999. And
there is no evidence to support their assertion that such absence was due to the deliberate failure of Riviera
Homes to give them work. There is also the fact, as noted by the NLRC and the Court of Appeals, that the
Agabons did not pray for reinstatement, but only for separation

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pay and money claims.23 This failure indicates their disinterest in maintaining the employer-employee
relationship and their unabated avowed intent to sever it. Their excuse that strained relations between them
and Riviera Homes rendered reinstatement no longer feasible was hardly given credence by the NLRC and
the Court of Appeals.24
The contrary conclusion arrived at by the Labor Arbiter as regards abandonment is of little bearing to the
case. All that the Labor Arbiter said on that point was that Riviera Homes was not able to refute the Agabons'
claim that they were terminated on 23 February 1999. 25 The Labor Arbiter did not explain why or how such
finding was reachhy or how such finding was reachhe Agabons was more credible than that of Riviera
Homes'. Being bereft of reasoning, the conclusion deserves scant consideration.
Compliance with Notice Requirement
At the same time, both the NLRC and the Court of Appeals failed to consider the apparent fact that the rules
governing notice of termination were not complied with by Riviera Homes. Section 2, Book V, Rule XXIII of
the Omnibus Rules Implementing the Labor Code (Implementing Rules) specifically provides that for
termination of employment based on just causes as defined in Article 282, there must be: (1) written notice
served on the employee specifying the grounds for termination and giving employee reasonable opportunity
to explain his/her side; (2) a hearing or conference wherein the employee, with the assistance of counsel if
so desired, is given opportunity to respond to the charge, present his evidence or rebut evidence presented
against him/her; and (3) written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify termination.
At the same time, Section 2, Book V, Rule XXIII of the Implementing Rules does not require strict
compliance with the above procedure, but only that the same be "substantially observed."
Riviera Homes maintains that the letters it sent on 10 March 1999 to the Agabons sufficiently complied with
the notice rule. These identically worded letters noted that the Agabons had stopped working without
permission that they failed to return for work despite having been repeatedly told to report to the office and
resume their employment.26 The letters ended with an invitation to the Agabons to report back to the office
and return to work.27
The apparent purpose of these letters was to advise the Agabons that they were welcome to return back to
work, and not to notify them of the grounds of termination. Still, considering that only substantial compliance
with the notice requirement is required, I am prepared to say that the letters sufficiently conform to the first
notice required under the Implementing Rules. The purpose of the first notice is to duly inform the employee
that a particular transgression is being considered against him or her, and that an opportunity is being
offered for him or her to respond to the charges. The letters served the purpose of informing the Agabons of
the pending matters beclouding their employment, and extending them the opportunity to clear the air.
Contrary to the Agabons' claim, the letter-notice was correctly sent to the employee's last known address, in
compliance with the Implementing Rules. There is no dispute that these letters were not actually received by
the Agabons, as they had apparently moved out of the address indicated therein. Still, the letters were sent
to what Riviera Homes knew to be the Agabons' last known address, as indicated in their personnel file. The
Agabons insist that Riviera Homes had known of the change of address, offering as proof their company IDs
which purportedly print out their correct new address. Yet, as pointed out by the NLRC and the Court of
Appeals, the addresses indicated in the IDs are not the Agabons, but that of the person who is to be notified
in case on emergency involve either or both of the Agabons.
The actual violation of the notice requirement by Riviera Homes lies in its failure to serve on the Agabons the
second notice which should inform them of termination. As the Decision notes, Riviera Homes' argument
that sending the second notice was useless due to the change of address is inutile, since the Implementing
Rules plainly require that the notice of termination should be served at the employee's last known address.
The importance of sending the notice of termination should not be trivialized. The termination letter serves
as indubitable proof of loss of employment, and its receipt compels the employee to evaluate his or her next
options. Without such notice, the employee may be left uncertain of his fate; thus, its service is mandated by
the Implementing Rules. Non-compliance with the notice rule, as evident in this case, contravenes the
Implementing Rules. But does the violation serve to invalidate the Agabons' dismissal for just cause?
The So-Called Constitutional Law Dimension
Justices Puno and Panganiban opine that the Agabons should be reinstated as a consequence of the
violation of the notice requirement. I respectfully disagree, for the reasons expounded below.

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Constitutional Considerations
Of Due Process and the Notice-Hearing
Requirement in Labor Termination Cases
Justice Puno proposes that the failure to render due notice and hearing prior to dismissal for just cause
constitutes a violation of the constitutional right to due process. This view, as acknowledged by Justice Puno
himself, runs contrary to the Court's pronouncement in Serrano v. NLRC28 that the absence of due notice
and hearing prior to dismissal, if for just cause, violates statutory due process.
The ponencia of Justice Vicente V. Mendoza in Serrano provides this cogent overview of the history of the
doctrine:
Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to
overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882
which gave either party to the employer-employee relationship the right to terminate their
relationship by giving notice to the other one month in advance. In lieu of notice, an employee could
be laid off by paying him a mesadaequivalent to his salary for one month. This provision was
repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954,
R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the mesada. On
June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of advance notice for
every year of service.29
Under Section 1 of the Termination Pay Law, an employer could dismiss an employee without just cause by
serving written notice on the employee at least one month in advance or one-half month for every year of
service of the employee, whichever was longer.30 Failure to serve such written notice entitled the employee
to compensation equivalent to his salaries or wages corresponding to the required period of notice from the
date of termination of his employment.
However, there was no similar written notice requirement under the Termination Pay Law if the dismissal of
the employee was for just cause. The Court, speaking through Justice JBL Reyes, ruled in Phil. Refining Co.
v. Garcia:31
[Republic] Act 1052, as amended by Republic Act 1787, impliedly recognizes the right of the
employer to dismiss his employees (hired without definite period) whether for just case, as therein
defined or enumerated, or without it. If there be just cause, the employer is not required to serve
any notice of discharge nor to disburse termination pay to the employee. xxx32
Clearly, the Court, prior to the enactment of the Labor Code, was ill-receptive to the notion that termination
for just cause without notice or hearing violated the constitutional right to due process. Nonetheless, the
Court recognized an award of damages as the appropriate remedy. In Galsim v. PNB,33 the Court held:
Of course, the employer's prerogative to dismiss employees hired without a definite period may be
with or without cause. But if the manner in which such right is exercised is abusive, the employer
stands to answer to the dismissed employee for damages. 34
The Termination Pay Law was among the repealed laws with the enactment of the Labor Code in 1974.
Significantly, the Labor Code, in its inception, did not require notice or hearing before an employer could
terminate an employee for just cause. As Justice Mendoza explained:
Where the termination of employment was for a just cause, no notice was required to be given to the
employee. It was only on September 4, 1981 that notice was required to be given even where the
dismissal or termination of an employee was for cause. This was made in the rules issued by the
then Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code.
And it was still much later when the notice requirement was embodied in the law with the
amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989. 35
It cannot be denied though that the thinking that absence of notice or hearing prior to termination constituted
a constitutional violation has gained a jurisprudential foothold with the Court. Justice Puno, in his Dissenting
Opinion, cites several cases in support of this theory, beginning with Batangas Laguna Tayabas Bus Co. v.
Court of Appeals36 wherein we held that "the failure of petitioner to give the private respondent the benefit of
a hearing before he was dismissed constitutes an infringement on his constitutional right to due process of
law.37
Still, this theory has been refuted, pellucidly and effectively to my mind, by Justice Mendoza's disquisition
inSerrano, thus:

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xxx There are three reasons why, on the other hand, violation by the employer of the notice
requirement cannot be considered a denial of due process resulting in the nullity of the employee's
dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It
does not apply to the exercise of private power, such as the termination of employment under the
Labor Code. This is plain from the text of Art. III, 1 of the Constitution, viz.: "No person shall be
deprived of life, liberty, or property without due process of law. . . ." The reason is simple: Only the
State has authority to take the life, liberty, or property of the individual. The purpose of the Due
Process Clause is to ensure that the exercise of this power is consistent with what are considered
civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before the
power of organized society are brought to bear upon the individual. This is obviously not the case of
termination of employment under Art. 283. Here the employee is not faced with an aspect of the
adversary system. The purpose for requiring a 30-day written notice before an employee is laid off is
not to afford him an opportunity to be heard on any charge against him, for there is none. The
purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an
opportunity to determine whether economic causes do exist justifying the termination of his
employment.
xxx
The third reason why the notice requirement under Art. 283 can not be considered a requirement of
the Due Process Clause is that the employer cannot really be expected to be entirely an impartial
judge of his own cause. This is also the case in termination of employment for a just cause under Art.
282 (i.e., serious misconduct or willful disobedience by the employee of the lawful orders of the
employer, gross and habitual neglect of duties, fraud or willful breach of trust of the employer,
commission of crime against the employer or the latter's immediate family or duly authorized
representatives, or other analogous cases).38
The Court in the landmark case of People v. Marti39 clarified the proper dimensions of the Bill of Rights.
That the Bill of Rights embodied in the Constitution is not meant to be invoked against acts of private
individuals finds support in the deliberations of the Constitutional Commission. True, the liberties
guaranteed by the fundamental law of the land must always be subject to protection. But protection
against whom? Commissioner Bernas in his sponsorship speech in the Bill of Rights answers the
query which he himself posed, as follows:
"First, the general reflections. The protection of fundamental liberties in the essence of
constitutional democracy. Protection against whom? Protection against the state. The Bill of
Rights governs the relationship between the individual and the state. Its concern is not the
relation between individuals, between a private individual and other individuals. What the Bill
of Rights does is to declare some forbidden zones in the private sphere inaccessible to any
power holder." (Sponsorship Speech of Commissioner Bernas; Record of the Constitutional
Commission, Vol. 1, p. 674; July 17,1986; Italics supplied) 40
I do not doubt that requiring notice and hearing prior to termination for just cause is an admirable sentiment
borne out of basic equity and fairness. Still, it is not a constitutional requirement that can impose itself on the
relations of private persons and entities. Simply put, the Bill of Rights affords protection against possible
State oppression against its citizens, but not against an unjust or repressive conduct by a private party
towards another.
Justice Puno characterizes the notion that constitutional due process limits government action alone
as "pass,"and adverts to nouvelle vague theories which assert that private conduct may be restrained by
constitutional due process. His dissent alludes to the American experience making references to the postCivil War/pre-World War II era when the US Supreme Court seemed overly solicitous to the rights of big
business over those of the workers.
Theories, no matter how entrancing, remain theoretical unless adopted by legislation, or more
controversially, by judicial opinion. There were a few decisions of the US Supreme Court that, ostensibly,
imposed on private persons the values of the constitutional guarantees. However, in deciding the cases, the
American High Court found it necessary to link the actors to adequate elements of the "State" since the
Fourteenth Amendment plainly begins with the words "No State shall" 41

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More crucially to the American experience, it had become necessary to pass legislation in order to compel
private persons to observe constitutional values. While the equal protection clause was deemed sufficient by
the Warren Court to bar racial segregation in public facilities, it necessitated enactment of the Civil Rights
Acts of 1964 to prohibit segregation as enforced by private persons within their property. In this jurisdiction, I
have trust in the statutory regime that governs the correction of private wrongs. There are thousands of
statutes, some penal or regulatory in nature, that are the source of actionable claims against private
persons. There is even no stopping the State, through the legislative cauldron, from compelling private
individuals, under pain of legal sanction, into observing the norms ordained in the Bill of Rights.
Justice Panganiban's Separate Opinion asserts that corporate behemoths and even individuals may now be
sources of abuses and threats to human rights and liberties. 42 The concern is not unfounded, but appropriate
remedies exist within our statutes, and so resort to the constitutional trump card is not necessary. Even if we
were to engage the premise, the proper juristic exercise should be to examine whether an employer has
taken the attributes of the State so that it could be compelled by the Constitution to observe the proscriptions
of the Bill of Rights. But the strained analogy simply does not square since the attributes of an employer are
starkly incongruous with those of the State. Employers plainly do not possess the awesome powers and the
tremendous resources which the State has at its command.
The differences between the State and employers are not merely literal, but extend to their very essences.
Unlike the State, the raison d'etre of employers in business is to accumulate profits. Perhaps the State and
the employer are similarly capacitated to inflict injury or discomfort on persons under their control, but the
same power is also possessed by a school principal, hospital administrator, or a religious leader, among
many others. Indeed, the scope and reach of authority of an employer pales in comparison with that of the
State. There is no basis to conclude that an employer, or even the employer class, may be deemed a de
facto state and on that premise, compelled to observe the Bill of Rights. There is simply no nexus in their
functions, distaff as they are, that renders it necessary to accord the same jurisprudential treatment.
It may be so, as alluded in the dissent of Justice Puno, that a conservative court system overly solicitous to
the concerns of business may consciously gut away at rights or privileges owing to the labor sector. This
certainly happened before in the United States in the early part of the twentieth century, when the
progressive labor legislation such as that enacted during President Roosevelt's New Deal regime most of
them addressing problems of labor were struck down by an arch-conservative Court. 43 The preferred
rationale then was to enshrine within the constitutional order business prerogatives, rendering them superior
to the express legislative intent. Curiously, following its judicial philosophy at the time the U. S. Supreme
Court made due process guarantee towards employers prevail over the police power to defeat the cause of
labor.44
Of course, this Court should not be insensate to the means and methods by which the entrenched powerful
class may maneuver the socio-political system to ensure self-preservation. However, the remedy to
rightward judicial bias is not leftward judicial bias. The more proper judicial attitude is to give due respect to
legislative prerogatives, regardless of the ideological sauce they are dipped in.
While the Bill of Rights maintains a position of primacy in the constitutional hierarchy,45 it has scope and
limitations that must be respected and asserted by the Court, even though they may at times serve
somewhat bitter ends. The dissenting opinions are palpably distressed at the effect of the Decision, which
will undoubtedly provoke those reflexively sympathetic to the labor class. But haphazard legal theory cannot
be used to justify the obverse result. The adoption of the dissenting views would give rise to all sorts of
absurd constitutional claims. An excommunicated Catholic might demand his/her reinstatement into the
good graces of the Church and into communion on the ground that excommunication was violative of the
constitutional right to due process. A celebrity contracted to endorse Pepsi Cola might sue in court to void a
stipulation that prevents him/her from singing the praises of Coca Cola once in a while, on the ground that
such stipulation violates the constitutional right to free speech. An employee might sue to prevent the
employer from reading outgoing e-mail sent through the company server using the company e-mail address,
on the ground that the constitutional right to privacy of communication would be breached.
The above concerns do not in anyway serve to trivialize the interests of labor. But we must avoid
overarching declarations in order to justify an end result beneficial to labor. I dread the doctrinal acceptance
of the notion that the Bill of Rights, on its own, affords protection and sanctuary not just from the acts of
State but also from the conduct of private persons. Natural and juridical persons would hesitate to interact
for fear that a misstep could lead to their being charged in court as a constitutional violator. Private
institutions that thrive on their exclusivity, such as churches or cliquish groups, could be forced to renege on
their traditional tenets, including vows of secrecy and the like, if deemed by the Court as inconsistent with
the Bill of Rights. Indeed, that fundamental right of all private persons to be let alone would be forever
diminished because of a questionable notion that contravenes with centuries of political thought.

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It is not difficult to be enraptured by novel legal ideas. Their characterization is susceptible to the same
marketing traps that hook consumers to new products. With the help of unique wrapping, a catchy label, and
testimonials from professed experts from exotic lands, a malodorous idea may gain wide acceptance, even
among those self-possessed with their own heightened senses of perception. Yet before we join the mad
rush in order to proclaim a theory as "brilliant," a rigorous test must first be employed to determine whether it
complements or contradicts our own system of laws and juristic thought. Without such analysis, we run the
risk of abnegating the doctrines we have fostered for decades and the protections they may have implanted
into our way of life.
Should the Court adopt the view that the Bill of Rights may be invoked to invalidate actions by private
entities against private individuals, the Court would open the floodgates to, and the docket would be
swamped with, litigations of the scurrilous sort. Just as patriotism is the last refuge of scoundrels, the broad
constitutional claim is the final resort of the desperate litigant.
Constitutional Protection of Labor
The provisions of the 1987 Constitution affirm the primacy of labor and advocate a multi-faceted state policy
that affords, among others, full protection to labor. Section 18, Article II thereof provides:
The State affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare.
Further, Section 3, Article XIII states:
The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equal employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security to tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.
The constitutional enshrinement of the guarantee of full protection of labor is not novel to the 1987
Constitution. Section 6, Article XIV of the 1935 Constitution reads:
The State shall afford protection to labor, especially to working women, and minors, and shall
regulate the relations between the landowner and tenant, and between labor and capital in industry
and in agriculture. The State may provide for compulsory arbitration.
Similarly, among the principles and state policies declared in the 1973 Constitution, is that provided in
Section 9, Article II thereof:
The State shall afford full protection to labor, promote full employment and equality in employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between
workers and employers. The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work. The State may provide for
compulsory arbitration.
On the other hand, prior to the 1973 Constitution, the right to security of tenure could only be found in
legislative enactments and their respective implementing rules and regulations. It was only in the 1973
Constitution that security of tenure was elevated as a constitutional right. The development of the concept of
security of tenure as a constitutionally recognized right was discussed by this Court in BPI Credit
Corporation v. NLRC,46 to wit:

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The enthronement of the worker's right to security or tenure in our fundamental law was not
achieved overnight. For all its liberality towards labor, our 1935 Constitution did not elevate the right
as a constitutional right. For a long time, the worker's security of tenure had only the protective
mantle of statutes and their interpretative rules and regulations. It was as uncertain protection that
sometimes yielded to the political permutations of the times. It took labor nearly four decades of
sweat and tears to persuade our people thru their leaders, to exalt the worker's right to security of
tenure as a sacrosanct constitutional right. It was Article II, section 2 [9] of our 1973 Constitution that
declared as a policy that the State shall assure the right of worker's to security tenure. The 1987
Constitution is even more solicitous of the welfare of labor. Section 3 of its Article XIII mandates that
the State shall afford full protection to labor and declares that all workers shall be entitled to security
of tenure. Among the enunciated State policies are the
promotion of social justice and a just and dynamic social order. In contrast, the prerogative of
management to dismiss a worker, as an aspect of property right, has never been endowed with a
constitutional status.
The unequivocal constitutional declaration that all workers shall be entitled to security of tenure
spurred our lawmakers to strengthen the protective walls around this hard earned right. The right
was protected from undue infringement both by our substantive and procedural laws. Thus, the
causes for dismissing employees were more defined and restricted; on the other hand, the
procedure of termination was also more clearly delineated. These substantive and procedural laws
must be strictly complied with before a worker can be dismissed from his employment. 47
It is quite apparent that the constitutional protection of labor was entrenched more than eight decades ago,
yet such did not prevent this Court in the past from affirming dismissals for just cause without valid notice.
Nor was there any pretense made that this constitutional maxim afforded a laborer a positive right against
dismissal for just cause on the ground of lack of valid prior notice. As demonstrated earlier, it was only after
the enactment of the Labor Code that the doctrine relied upon by the dissenting opinions became en vogue.
This point highlights my position that the violation of the notice requirement has statutory moorings, not
constitutional.
It should be also noted that the 1987 Constitution also recognizes the principle of shared responsibility
between workers and employers, and the right of enterprise to reasonable returns, expansion, and growth.
Whatever perceived imbalance there might have been under previous incarnations of the provision have
been obviated by Section 3, Article XIII.
In the case of Manila Prince Hotel v. GSIS,48 we affirmed the presumption that all constitutional provisions
are self-executing. We reasoned that to declare otherwise would result in the pernicious situation wherein by
mere inaction and disregard by the legislature, constitutional mandates would be rendered ineffectual. Thus,
we held:
As against constitutions of the past, modern constitutions have been generally ed upon a different
principle and have often become in effect extensive codes of laws intended to operate directly upon
the people in a manner similar to that of statutory enactments, and the function of constitutional
conventions has evolved into one more like that of a legislative body. Hence, unless it is expressly
provided that a legislative act is necessary to enforce a constitutional mandate, the presumption now
is that all provisions of the constitution are self-executing. If the constitutional provisions are treated
as requiring legislation instead of self-executing, the legislature would have the power to ignore and
practically nullify the mandate of the fundamental law. This can be cataclysmic. That is why the
prevailing view is, as it has always been, that
. . . in case of doubt, the Constitution should be considered self-executing rather than nonself-executing. . . . Unless the contrary is clearly intended, the provisions of the Constitution
should be considered self-executing, as a contrary rule would give the legislature discretion
to determine when, or whether, they shall be effective. These provisions would be
subordinated to the will of the lawmaking body, which could make them entirely meaningless
by simply refusing to pass the needed implementing statute. 49
In further discussing self-executing provisions, this Court stated that:
In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the
exercise of powers directly granted by the constitution, further the operation of such a provision,
prescribe a practice to be used for its enforcement, provide a convenient remedy for the protection of
the rights secured or the determination thereof, or place reasonable safeguards around the exercise
of the right. The mere fact that legislation may supplement and add to or prescribe a penalty for the

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violation of a self-executing constitutional provision does not render such a provision ineffective in
the absence of such legislation. The omission from a constitution of any express provision for a
remedy for enforcing a right or liability is not necessarily an indication that it was not intended to be
self-executing. The rule is that a self-executing provision of the constitution does not necessarily
exhaust legislative power on the subject, but any legislation must be in harmony with the
constitution, further the exercise of constitutional right and make it more available. Subsequent
legislation however does not necessarily mean that the subject constitutional provision is not, by
itself, fully enforceable.50
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as selfexecuting in the sense that these are automatically acknowledged and observed without need for any
enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full
exercise of the rights embodied therein, and the realization of ideals therein expressed, would be
impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when
examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a blanket
shield in favor of labor against any form of removal regardless of circumstance. This interpretation implies an
unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to define the parameters of these
guaranteed rights to ensure the protection and promotion, not only the rights of the labor sector, but of the
employers' as well. Without specific and pertinent legislation, judicial bodies will be at a loss, formulating
their own conclusion to approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right
to stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing.
As manifested by several framers of the 1987 Constitution, the provisions on social justice require legislative
enactments for their enforceability. This is reflected in the record of debates on the social justice provisions
of the Constitution:
MS. [FELICITAS S.] AQUINO: We appreciate the concern of the Commissioner. But this Committee
[on Social Justice] has actually become the forum already of a lot of specific grievances and
specific demands, such that understandably, we may have been, at one time or another,
dangerously treading into the functions of legislation. Our only plea to the Commission is to
focus our perspective on the matter of social justice and its rightful place in the Constitution. What
we envision here is a mandate specific enough that would give impetus for statutory
implementation. We would caution ourselves in terms of the judicious exercise of selfcensorship against treading into the functions of legislation. (emphasis supplied)51
xxx
[FLORENZ D.] REGALADO: I notice that the 1935 Constitution had only one section on social
justice; the same is true with the 1973 Constitution. But they seem to have stood us in good stead;
and I am a little surprised why, despite that attempt at self-censorship, there are certain
provisions here which are properly for legislation.52
xxx
BISHOP [TEODORO S.] BACANI: [I] think the distinction that was given during the presentation of
the provisions on the Bill of Rights by Commissioner Bernas is very apropos here. He spoke of selfexecuting rights which belong properly to the Bill of Rights, and then he spoke of a new body
of rights which are more of claims and that these have come about largely through the works
of social philosophers and then the teaching of the Popes. They focus on the common good
and hence, it is not as easy to pinpoint precisely these rights nor the situs of the rights. And
yet, they exist in relation to the common good. 53
xxx
MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of this kind of collaboration will be left
to legislation but the important thing now is the conservation, utilization or maximization of the very
limited resources. xxx
[RICARDO J.] ROMULO: The other problem is that, by and large, government services are
inefficient. So, this is a problem all by itself. On Section 19, where the report says that people's
organizations as a principal means of empowering the people to pursue and protect through
peaceful means, I do not suppose that the Committee would like to either preempt or

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exclude the legislature, because the concept of a representative and democratic system
really is that the legislature is normally the principal means.
[EDMUNDO G.] GARCIA: That is correct. In fact, people cannot even dream of influencing the
composition or the membership of the legislature, if they do not get organized. It is, in fact, a
recognition of the principle that unless a citizenry is organized and mobilized to pursue its ends
peacefully, then it cannot really participate effectively.54
There is no pretense on the part of the framers that the provisions on Social Justice, particularly Section 3 of
Article XIII, are self-executory. Still, considering the rule that provisions should be deemed self-executing if
enforceable without further legislative action, an examination of Section 3 of Article XIII is warranted to
determine whether it is complete in itself as a definitive law, or if it needs future legislation for completion and
enforcement.55Particularly, we should inquire whether or not the provision voids the dismissal of a laborer for
just cause if no valid notice or hearing is attendant.
Constitutional Commissioner Fr. Joaquin G. Bernas makes a significant comment on Section 3, Article XIII of
the 1987 Constitution:
The [cluster] of rights guaranteed in the second paragraph are the right "to security of tenure,
humane conditions of work, and a living wage." Again, although these have been set apart by a
period (.) from the next sentence and are therefore not modified by the final phrase "as may be
provided by law," it is not the intention to place these beyond the reach of valid laws. xxx
(emphasis supplied)56
At present, the Labor Code is the primary mechanism to carry out the Constitution's directives. This is clear
from Article 357 under Chapter 1 thereof which essentially restates the policy on the protection of labor as
worded in the 1973 Constitution, which was in force at the time of enactment of the Labor Code. It
crystallizes the fundamental law's policies on labor, defines the parameters of the rights granted to labor
such as the right to security of tenure, and prescribes the standards for the enforcement of such rights in
concrete terms. While not infallible, the measures provided therein tend to ensure the achievement of the
constitutional aims.
The necessity for laws concretizing the constitutional principles on the protection of labor is evident in the
reliance placed upon such laws by the Court in resolving the issue of the validity of a worker's dismissal. In
cases where that was the issue confronting the Court, it consistently recognized the constitutional right to
security of tenure and employed the standards laid down by prevailing laws in determining whether such
right was violated.58 The Court's reference to laws other than the Constitution in resolving the issue of
dismissal is an implicit acknowledgment that the right to security of tenure, while recognized in the
Constitution, cannot be implemented uniformly absent a law prescribing concrete standards for its
enforcement.
As discussed earlier, the validity of an employee's dismissal in previous cases was examined by the Court in
accordance with the standards laid down by Congress in the Termination Pay Law, and subsequently, the
Labor Code and the amendments thereto. At present, the validity of an employee's dismissal is weighed
against the standards laid down in Article 279, as well as Article 282 in relation to Article 277(b) of the Labor
Code, for a dismissal for just cause, and Article 283 for a dismissal for an authorized cause.
The Effect of Statutory Violation
Of Notice and Hearing
There is no doubt that the dismissal of an employee even for just cause, without prior notice or hearing,
violates the Labor Code. However, does such violation necessarily void the dismissal?
Before I proceed with my discussion on dismissals for just causes, a brief comment regarding dismissals for
authorized cause under Article 283 of the Labor Code. While the justiciable question in Serrano pertained to
a dismissal for unauthorized cause, the ruling therein was crafted as definitive to dismissals for just cause.
Happily, the Decision today does not adopt the same unwise tack. It should be recognized that dismissals
for just cause and dismissals for authorized cause are governed by different provisions, entail divergent
requisites, and animated by distinct rationales. The language of Article 283 expressly effects the termination
for authorized cause to the service of written notice on the workers and the Ministry of Labor at least one (1)
month before the intended date of termination. This constitutes an eminent difference than dismissals for
just cause, wherein the causal relation between the notice and the dismissal is not expressly stipulated. The
circumstances distinguishing just and authorized causes are too markedly different to be subjected to the
same rules and reasoning in interpretation.

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Since the present petition is limited to a question arising from a dismissal for just cause, there is no reason
for making any pronouncement regarding authorized causes. Such declaration would be merely obiter, since
they are neither the law of the case nor dispositive of the present petition. When the question becomes
justiciable before this Court, we will be confronted with an appropriate factual milieu on which we can render
a more judicious disposition of this admittedly important question.
B. Dismissal for Just Cause
There is no express provision in the Labor Code that voids a dismissal for just cause on the ground that
there was no notice or hearing. Under Section 279, the employer is precluded from dismissing an employee
except for a just cause as provided in Section 282, or an authorized cause under Sections 283 and 284.
Based on reading Section 279 alone, the existence of just cause by itself is sufficient to validate the
termination.
Just cause is defined by Article 282, which unlike Article 283, does not condition the termination on the
service of written notices. Still, the dissenting opinions propound that even if there is just cause, a
termination may be invalidated due to the absence of notice or hearing. This view is anchored mainly on
constitutional moorings, the basis of which I had argued against earlier. For determination now is whether
there is statutory basis under the Labor Code to void a dismissal for just cause due to the absence of notice
or hearing.
As pointed out by Justice Mendoza in Serrano, it was only in 1989 that the Labor Code was amended to
enshrine into statute the twin requirements of notice and hearing. 59 Such requirements are found in Article
277 of the Labor Code, under the heading "Miscellaneous Provisions." Prior to the amendment, the noticehearing requirement was found under the implementing rules issued by the then Minister of Labor in 1981.
The present-day implementing rules likewise mandate that the standards of due process, including the
requirement of written notice and hearing, "be substantially observed." 60
Indubitably, the failure to substantially comply with the standards of due process, including the notice and
hearing requirement, may give rise to an actionable claim against the employer. Under Article 288, penalties
may arise from violations of any provision of the Labor Code. The Secretary of Labor likewise enjoys broad
powers to inquire into existing relations between employers and employees. Systematic violations by
management of the statutory right to due process would fall under the broad grant of power to the Secretary
of Labor to investigate under Article 273.
However, the remedy of reinstatement despite termination for just cause is simply not authorized by the
Labor Code. Neither the Labor Code nor its implementing rules states that a termination for just cause is
voided because the requirement of notice and hearing was not observed. This is not simply an inadvertent
semantic failure, but a conscious effort to protect the prerogatives of the employer to dismiss an employee
for just cause. Notably, despite the several pronouncements by this Court in the past equating the noticehearing requirement in labor cases to a constitutional maxim, neither the legislature nor the executive has
adopted the same tack, even gutting the protection to provide that substantial compliance with due process
suffices.
The Labor Code significantly eroded management prerogatives in the hiring and firing of employees.
Whereas employees could be dismissed even without just cause under the Termination Pay Law 61, the
Labor Code affords workers broad security of tenure. Still, the law recognizes the right of the employer to
terminate for just cause. The just causes enumerated under the Labor Code serious misconduct or willful
disobedience, gross and habitual neglect, fraud or willful breach of trust, commission of a crime by the
employee against the employer, and other analogous causes are characterized by the harmful behavior of
an employee against the business or the person of the employer.
These just causes for termination are not negated by the absence of notice or hearing. An employee who
tries to kill the employer cannot be magically absolved of trespasses just because the employer forgot to
serve due notice. Or a less extreme example, the gross and habitual neglect of an employee will not be
improved upon just because the employer failed to conduct a hearing prior to termination.
In fact, the practical purpose of requiring notice and hearing is to afford the employee the opportunity to
dispute the contention that there was just cause in the dismissal. Yet it must be understood if a dismissed
employee is deprived of the right to notice and hearing, and thus denied the opportunity to present
countervailing evidence that disputes the finding of just cause, reinstatement will be valid not
because the notice and hearing requirement was not observed, but because there was no just cause
in the dismissal. The opportunity to dispute the finding of the just cause is readily available before the
Labor Arbiter, and the subsequent levels of appellate review. Again, as held in Serrano:

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Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to
comply with the Due Process Clause of the Constitution. The time for notice and hearing is at the trial stage.
Then that is the time we speak of notice and hearing as the essence of procedural due process. Thus,
compliance by the employer with the notice requirement before he dismisses an employee does not
foreclose the right of the latter to question the legality of his dismissal. As Art. 277(b) provides, "Any decision
taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of
his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. 62
The Labor Code presents no textually demonstrable commitment to invalidate a dismissal for just cause due
to the absence of notice or hearing. This is not surprising, as such remedy will not restore the employer or
employee into equity. Absent a showing of integral causation, the mutual infliction of wrongs does not negate
either injury, but instead enforces two independent rights of relief.
The Damages' Dimensions
Award for Damages Must Have Statutory Basis
The Court has grappled with the problem of what should be the proper remedial relief of an employee
dismissed with just cause, but not afforded either notice or hearing. In a long line of cases, beginning
with Wenphil Corp. v. NLRC63 and up until Serrano in 2000, the Court had deemed an indemnification award
as sufficient to answer for the violation by the employer against the employee. However, the doctrine was
modified in Serrano.
I disagree with Serrano insofar as it held that employees terminated for just cause are to be paid backwages
from the time employment was terminated "until it is determined that the termination is for just cause
because the failure to hear him before he is dismissed renders the termination of his employment without
legal effect."64 Article 279 of the Labor Code clearly authorizes the payment of backwages only if an
employee is unjustly dismissed. A dismissal for just cause is obviously antithetical to an unjust dismissal. An
award for backwages is not clearly warranted by the law.
The Impropriety of Award for Separation Pay
The formula of one month's pay for every year served does have statutory basis. It is found though in the
Labor Code though, not the Civil Code. Even then, such computation is made for separation pay under the
Labor Code. But separation pay is not an appropriate as a remedy in this case, or in any case wherein an
employee is terminated for just cause. As Justice Vitug noted in his separate opinion in Serrano, an
employee whose employment is terminated for a just cause is not entitled to the payment of separation
benefits.65 Separation pay is traditionally a monetary award paid as an alternative to reinstatement which
can no longer be effected in view of the long passage of time or because of the realities of the
situation.66 However, under Section 7, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code,
"[t]he separation from work of an employee for a just cause does not entitle him to the termination pay
provided in the Code."67 Neither does the Labor Code itself provide instances wherein separation pay is
warranted for dismissals with just cause. Separation pay is warranted only for dismissals for authorized
causes, as enumerated in Article 283 and 284 of the Labor Code.
The Impropriety of Equity Awards
Admittedly, the Court has in the past authorized the award of separation pay for duly terminated employees
as a measure of social justice, provided that the employee is not guilty of serious misconduct reflecting on
moral character.68 This doctrine is inapplicable in this case, as the Agabons are guilty of abandonment,
which is the deliberate and unjustified refusal of an employee to resume his employment. Abandonment is
tantamount to serious misconduct, as it constitutes a willful breach of the employer-employee relationship
without cause.
The award of separation pay as a measure of social justice has no statutory basis, but clearly emanates
from the Court's so-called "equity jurisdiction." The Court's equity jurisdiction as a basis for award, no matter
what form it may take, is likewise unwarranted in this case. Easy resort to equity should be avoided, as it
should yield to positive rules which pre-empt and prevail over such persuasions. 69 Abstract as the concept
is, it does not admit to definite and objective standards.
I consider the pronouncement regarding the proper monetary awards in such cases as Wenphil Corp. v.
NLRC,70Reta,71 and to a degree, even Serrano as premised in part on equity. This decision is premised in
part due to the absence of cited statutory basis for these awards. In these cases, the Court deemed an
indemnity award proper without exactly saying where in statute could such award be derived at. Perhaps,
equity or social justice can be invoked as basis for the award. However, this sort of arbitrariness,

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indeterminacy and judicial usurpation of legislative prerogatives is precisely the source of my discontent.
Social justice should be the aspiration of all that we do, yet I think it the more mature attitude to consider that
it ebbs and flows within our statutes, rather than view it as an independent source of funding.
Article 288 of the Labor Code as a Source of Liability
Another putative source of liability for failure to render the notice requirement is Article 288 of the Labor
Code, which states:
Article 288 states:
Penalties. Except as otherwise provided in this Code, or unless the acts complained of hinges on
a question of interpretation or implementation of ambiguous provisions of an existing collective
bargaining agreement, any violation of the provisions of this Code declared to be unlawful or penal in
nature shall be punished with a fine of not less than One Thousand Pesos (P1,000.00) nor more
than Ten Thousand Pesos (P10,000.00), or imprisonment of not less than three months nor more
than three years, or both such fine and imprisonment at the discretion of the court.
It is apparent from the provision that the penalty arises due to contraventions of the provisions of the Labor
Code. It is also clear that the provision comes into play regardless of who the violator may be. Either the
employer or the employee may be penalized, or perhaps even officials tasked with implementing the Labor
Code.
However, it is apparent that Article 288 is a penal provision; hence, the prescription for penalties such as fine
and imprisonment. The Article is also explicit that the imposition of fine or imprisonment is at the "discretion
of the court." Thus, the proceedings under the provision is penal in character. The criminal case has to be
instituted before the proper courts, and the Labor Code violation subject thereof duly proven in an
adversarial proceeding. Hence, Article 288 cannot apply in this case and serve as basis to impose a penalty
on Riviera Homes.
I also maintain that under Article 288 the penalty should be paid to the State, and not to the person or
persons who may have suffered injury as a result of the violation. A penalty is a sum of money which the law
requires to be paid by way of punishment for doing some act which is prohibited or for not doing some act
which is required to be done.72 A penalty should be distinguished from damages which is the pecuniary
compensation or indemnity to a person who has suffered loss, detriment, or injury, whether to his person,
property, or rights, on account of the unlawful act or omission or negligence of another. Article 288 clearly
serves as a punitive fine, rather than a compensatory measure, since the provision penalizes an act that
violates the Labor Code even if such act does not cause actual injury to any private person.
Independent of the employee's interests protected by the Labor Code is the interest of the State in seeing to
it that its regulatory laws are complied with. Article 288 is intended to satiate the latter interest. Nothing in the
language of Article 288 indicates an intention to compensate or remunerate a private person for injury he
may have sustained.
It should be noted though that in Serrano, the Court observed that since the promulgation of Wenphil Corp.
v. NLRC73 in 1989, "fines imposed for violations of the notice requirement have varied from P1,000.00
to P2,000.00 to P5,000.00 to P10,000.00."74 Interestingly, this range is the same range of the penalties
imposed by Article 288. These "fines" adverted to in Serrano were paid to the dismissed employee. The use
of the term "fines," as well as the terminology employed a few other cases, 75 may have left an erroneous
impression that the award implemented beginning with Wenphil was based on Article 288 of the Labor Code.
Yet, an examination of Wenphilreveals that what the Court actually awarded to the employee was an
"indemnity", dependent on the facts of each case and the gravity of the omission committed by the
employer. There is no mention in Wenphil of Article 288 of the Labor Code, or indeed, of any statutory basis
for the award.
The Proper Basis: Employer's Liability under the Civil Code
As earlier stated, Wenphil allowed the payment of indemnity to the employee dismissed for just cause is
dependent on the facts of each case and the gravity of the omission committed by the employer. However, I
considered Wenphil flawed insofar as it is silent as to the statutory basis for the indemnity award. This
failure, to my mind, renders it unwise for to reinstate the Wenphil rule, and foster the impression that it is the
judicial business to invent awards for damages without clear statutory basis.
The proper legal basis for holding the employer liable for monetary damages to the employee
dismissed for just cause is the Civil Code. The award of damages should be measured against the

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loss or injury suffered by the employee by reason of the employer's violation or, in case of nominal
damages, the right vindicated by the award. This is the proper paradigm authorized by our law, and
designed to obtain the fairest possible relief.
Under Section 217(4) of the Labor Code, the Labor Arbiter has jurisdiction over claims for actual, moral,
exemplary and other forms of damages arising from the employer-employee relations. It is thus the duty of
Labor Arbiters to adjudicate claims for damages, and they should disabuse themselves of any inhibitions if it
does appear that an award for damages is warranted. As triers of facts in a specialized field, they should
attune themselves to the particular conditions or problems attendant to employer-employee relationships,
and thus be in the best possible position as to the nature and amount of damages that may be warranted in
this case.
The damages referred under Section 217(4) of the Labor Code are those available under the Civil Code. It is
but proper that the Civil Code serve as the basis for the indemnity, it being the law that regulates the private
relations of the members of civil society, determining their respective rights and obligations with reference to
persons, things, and civil acts.76 No matter how impressed with the public interest the relationship between a
private employer and employee is, it still is ultimately a relationship between private individuals. Notably,
even though the Labor Code could very well have provided set rules for damages arising from the employeremployee relationship, referral was instead made to the concept of damages as enumerated and defined
under the Civil Code.
Given the long controversy that has dogged this present issue regarding dismissals for just cause, it is wise
to lay down standards that would guide the proper award of damages under the Civil Code in cases wherein
the employer failed to comply with statutory due process in dismissals for just cause.
First. I believe that it can be maintained as a general rule, that failure to comply with the statutory
requirement of notice automatically gives rise to nominal damages, at the very least, even if the dismissal
was sustained for just cause.
Nominal damages are adjudicated in order that a right of a plaintiff which has been violated or invaded by
another may be vindicated or recognized without having to indemnify the plaintiff for any loss suffered by
him.77 Nominal damages may likewise be awarded in every obligation arising from law, contracts, quasicontracts, acts or omissions punished by law, and quasi-delicts, or where any property right has been
invaded.
Clearly, the bare act of failing to observe the notice requirement gives rise to nominal damages assessable
against the employer and due the employee. The Labor Code indubitably entitles the employee to notice
even if dismissal is for just cause, even if there is no apparent intent to void such dismissals deficiently
implemented. It has also been held that one's employment, profession, trade, or calling is a "property right"
and the wrongful interference therewith gives rise to an actionable wrong. 78
In Better Buildings, Inc. v. NLRC,79 the Court ruled that the while the termination therein was for just and
valid cause, the manner of termination was done in complete disregard of the necessary procedural
safeguards.80 The Court found nominal damages as the proper form of award, as it was purposed to
vindicate the right to procedural due process violated by the employer.81 A similar holding was maintained
in Iran v. NLRC82 and Malaya Shipping v. NLRC.83 The doctrine has express statutory basis, duly recognizes
the existence of the right to notice, and vindicates the violation of such right. It is sound, logical, and should
be adopted as a general rule.
The assessment of nominal damages is left to the discretion of the court, 84 or in labor cases, of the Labor
Arbiter and the successive appellate levels. The authority to nominate standards governing the award of
nominal damages has clearly been delegated to the judicial branch, and it will serve good purpose for this
Court to provide such guidelines. Considering that the affected right is a property right, there is justification in
basing the amount of nominal damages on the particular characteristics attaching to the claimant's
employment. Factors such as length of service, positions held, and received salary may be considered to
obtain the proper measure of nominal damages. After all, the degree by which a property right should be
vindicated is affected by the estimable value of such right.
At the same time, it should be recognized that nominal damages are not meant to be compensatory, and
should not be computed through a formula based on actual losses. Consequently, nominal damages usually
limited in pecuniary value.85 This fact should be impressed upon the prospective claimant, especially one
who is contemplating seeking actual/compensatory damages.
Second. Actual or compensatory damages are not available as a matter of right to an employee dismissed
for just cause but denied statutory due process. They must be based on clear factual and legal bases, 86 and

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correspond to such pecuniary loss suffered by the employee as duly proven. 87 Evidently, there is less degree
of discretion to award actual or compensatory damages.
I recognize some inherent difficulties in establishing actual damages in cases for terminations validated for
just cause. The dismissed employee retains no right to continued employment from the moment just cause
for termination exists, and such time most likely would have arrived even before the employer is liable to
send the first notice. As a result, an award of backwages disguised as actual damages would almost never
be justified if the employee was dismissed for just cause. The possible exception would be if it can be
proven the ground for just cause came into being only after the dismissed employee had stopped receiving
wages from the employer.
Yet it is not impossible to establish a case for actual damages if dismissal was for just cause. Particularly
actionable, for example, is if the notices are not served on the employee, thus hampering his/her
opportunities to obtain new employment. For as long as it can be demonstrated that the failure of the
employer to observe procedural due process mandated by the Labor Code is the proximate cause of
pecuniary loss or injury to the dismissed employee, then actual or compensatory damages may be awarded.
Third. If there is a finding of pecuniary loss arising from the employer violation, but the amount cannot be
proved with certainty, then temperate or moderate damages are available under Article 2224 of the Civil
Code. Again, sufficient discretion is afforded to the adjudicator as regards the proper award, and the award
must be reasonable under the circumstances.88 Temperate or nominal damages may yet prove to be a
plausible remedy, especially when common sense dictates that pecuniary loss was suffered, but incapable
of precise definition.
Fourth. Moral and exemplary damages may also be awarded in the appropriate circumstances. As pointed
out by the Decision, moral damages are recoverable where the dismissal of the employee was attended by
bad faith, fraud, or was done in a manner contrary to morals, good customs or public policy, or the employer
committed an act oppressive to labor.89 Exemplary damages may avail if the dismissal was effected in a
wanton, oppressive or malevolent manner.
Appropriate Award of Damages to the Agabons
The records indicate no proof exists to justify the award of actual or compensatory damages, as it has not
been established that the failure to serve the second notice on the Agabons was the proximate cause to any
loss or injury. In fact, there is not even any showing that such violation caused any sort of injury or
discomfort to the Agabons. Nor do they assert such causal relation. Thus, the only appropriate award of
damages is nominal damages. Considering the circumstances, I agree that an award of Fifteen Thousand
Pesos (P15,000.00) each for the Agabons is sufficient.
All premises considered, I VOTE to:
(1) DENY the PETITION for lack of merit, and AFFIRM the Decision of the Court of Appeals dated 23
January 2003, with the MODIFICATION that in addition, Riviera Homes be
ORDERED to pay the petitioners the sum of Fifteen Thousand Pesos (P15,000.00) each, as nominal
damages.
(2) HOLD that henceforth, dismissals for just cause may not be invalidated due to the failure to
observe the due process requirements under the Labor Code, and that the only indemnity award
available to the employee dismissed for just cause are damages under the Civil Code as duly
proven. Any and all previous rulings and statements of the Court inconsistent with this holding are
now deemed INOPERATIVE.
DANTE O. TINGA
Associate Justice
25. G.R. No. 152048

April 7, 2009

FELIX B. PEREZ and AMANTE G. DORIA, Petitioners,

vs.
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, Respondents.
DECISION

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CORONA, J.:
Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine Telegraph and
Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in PT&Ts Shipping Section,
Materials Management Group.
Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping Section, respondents
formed a special audit team to investigate the matter. It was discovered that the Shipping Section jacked up
the value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly
showed traces of tampering, alteration and superimposition.
On September 3, 1993, petitioners were placed on preventive suspension for 30 days for their alleged
involvement in the anomaly.1 Their suspension was extended for 15 days twice: first on October 3,
19932 and second on October 18, 1993.3
On October 29, 1993, a memorandum with the following tenor was issued by respondents:
In line with the recommendation of the AVP-Audit as presented in his report of October 15, 1993 (copy
attached) and the subsequent filing of criminal charges against the parties mentioned therein, [Mr. Felix
Perez and Mr. Amante Doria are] hereby dismissed from the service for having falsified company
documents.4 (emphasis supplied)
On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal dismissal. 5 They alleged
that they were dismissed on November 8, 1993, the date they received the above-mentioned memorandum.
The labor arbiter found that the 30-day extension of petitioners suspension and their subsequent dismissal
were both illegal. He ordered respondents to pay petitioners their salaries during their 30-day illegal
suspension, as well as to reinstate them with backwages and 13th month pay.
The National Labor Relations Commission (NLRC) reversed the decision of the labor arbiter. It ruled that
petitioners were dismissed for just cause, that they were accorded due process and that they were illegally
suspended for only 15 days (without stating the reason for the reduction of the period of petitioners illegal
suspension).6
Petitioners appealed to the Court of Appeals (CA). In its January 29, 2002 decision, 7 the CA affirmed the
NLRC decision insofar as petitioners illegal suspension for 15 days and dismissal for just cause were
concerned. However, it found that petitioners were dismissed without due process.
Petitioners now seek a reversal of the CA decision. They contend that there was no just cause for their
dismissal, that they were not accorded due process and that they were illegally suspended for 30 days.
We rule in favor of petitioners.
Respondents Failed to Prove Just
Cause and to Observe Due Process
The CA, in upholding the NLRCs decision, reasoned that there was sufficient basis for respondents to lose
their confidence in petitioners8 for allegedly tampering with the shipping documents. Respondents
emphasized the importance of a shipping order or request, as it was the basis of their liability to a cargo
forwarder.9
We disagree.
Without undermining the importance of a shipping order or request, we find respondents evidence
insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted. 10 Other
than their bare allegations and the fact that such documents came into petitioners hands at some point,
respondents should have provided evidence of petitioners functions, the extent of their duties, the
procedure in the handling and approval of shipping requests and the fact that no personnel other than
petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the
alleged tampering of shipping documents.
The alterations on the shipping documents could not reasonably be attributed to petitioners because it was
never proven that petitioners alone had control of or access to these documents. Unless duly proved or

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sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer
that it has lost confidence in its employee. 11
Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative
is a just cause for termination.12 However, in General Bank and Trust Co. v. CA,13 we said:
[L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which are
improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier
action taken in bad faith.
The burden of proof rests on the employer to establish that the dismissal is for cause in view of the security
of tenure that employees enjoy under the Constitution and the Labor Code. The employers evidence must
clearly and convincingly show the facts on which the loss of confidence in the employee may be fairly made
to rest.14 It must be adequately proven by substantial evidence. 15 Respondents failed to discharge this
burden.
Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due process. To
meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker
with two written notices: (1) a written notice specifying the grounds for termination and giving to said
employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon
due consideration of all circumstances, grounds have been established to justify the employer's decision to
dismiss the employee. 16
Petitioners were neither apprised of the charges against them nor given a chance to defend themselves.
They were simply and arbitrarily separated from work and served notices of termination in total disregard of
their rights to due process and security of tenure. The labor arbiter and the CA correctly found that
respondents failed to comply with the two-notice requirement for terminating employees.
Petitioners likewise contended that due process was not observed in the absence of a hearing in which they
could have explained their side and refuted the evidence against them.
There is no need for a hearing or conference. We note a marked difference in the standards of due process
to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand,
provides that an employer must provide the employee ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires:
ART. 277. Miscellaneous provisions. x x x
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against
dismissal except for a just and authorized cause and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated
a written notice containing a statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative if he so
desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the
right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that the termination was for a
valid or authorized cause shall rest on the employer. (emphasis supplied)
The omnibus rules implementing the Labor Code, on the other hand, require a hearing and
conference during which the employee concerned is given the opportunity to respond to the charge, present
his evidence or rebut the evidence presented against him: 17
Section 2. Security of Tenure. x x x
(d) In all cases of termination of employment, the following standards of due process shall be substantially
observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which to explain his side.

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(ii) A hearing or conference during which the employee concerned, with the assistance of
counsel if he so desires, is given opportunity to respond to the charge, present his evidence
or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of
all the circumstances, grounds have been established to justify his termination. (emphasis supplied)
Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of
an employee? Can the apparent conflict between the law and its IRR be reconciled?
At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the
administrative regulations implementing it.18 The authority to promulgate implementing rules proceeds from
the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the
enabling statute.19 As such, it cannot amend the law either by abridging or expanding its scope. 20
Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be
given "ample opportunity to be heard and to defend himself." Thus, the opportunity to be heard afforded by
law to the employee is qualified by the word "ample" which ordinarily means "considerably more than
adequate or sufficient."21 In this regard, the phrase "ample opportunity to be heard" can be reasonably
interpreted as extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of
the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b).
Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be
taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance with
the due process requirement in termination of employment. The test for the fair procedure guaranteed under
Article 277(b) cannot be whether there has been a formal pretermination confrontation between the
employer and the employee. The "ample opportunity to be heard" standard is neither synonymous nor
similar to a formal hearing. To confine the employees right to be heard to a solitary form narrows down that
right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an
exclusivist and absolutist interpretation is overly restrictive. The "very nature of due process negates any
concept of inflexible procedures universally applicable to every imaginable situation." 22
The standard for the hearing requirement, ample opportunity, is couched in general language revealing the
legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation.
To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit.
Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that
the so-called standards of due process outlined therein shall be observed "substantially," not strictly. This is
a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive
avenue of due process.
An employees right to be heard in termination cases under Article 277(b) as implemented by Section 2(d),
Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is
satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the
charges against him and to submit evidence in support thereof.
A hearing means that a party should be given a chance to adduce his evidence to support his side of the
case and that the evidence should be taken into account in the adjudication of the controversy.23 "To be
heard" does not mean verbal argumentation alone inasmuch as one may be heard just as effectively
through written explanations, submissions or pleadings. 24 Therefore, while the phrase "ample opportunity to
be heard" may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the
existence of an actual, formal "trial-type" hearing, although preferred, is not absolutely necessary to satisfy
the employees right to be heard.
This Court has consistently ruled that the due process requirement in cases of termination of employment
does not require an actual or formal hearing. Thus, we categorically declared in Skippers United Pacific,
Inc. v. Maguad:25
The Labor Code does not, of course, require a formal or trial type proceeding before an erring
employee may be dismissed. (emphasis supplied)
In Autobus Workers Union v. NLRC,26 we ruled:
The twin requirements of notice and hearing constitute the essential elements of due process. Due process
of law simply means giving opportunity to be heard before judgment is rendered. In fact, there is no

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violation of due process even if no hearing was conducted, where the party was given a chance to
explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard.
xxxxxxxxx
A formal trial-type hearing is not even essential to due process. It is enough that the parties are
given a fair and reasonable opportunity to explain their respective sides of the controversy and to
present supporting evidence on which a fair decision can be based. This type of hearing is not even
mandatory in cases of complaints lodged before the Labor Arbiter. (emphasis supplied)
In Solid Development Corporation Workers Association v. Solid Development Corporation,27 we had the
occasion to state:
[W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements
of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must
furnish the employee with two written notices before the termination of employment can be effected: (1) the
first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the
second informs the employee of the employers decision to dismiss him. The requirement of a hearing, on
the other hand, is complied with as long as there was an opportunity to be heard, and not
necessarily that an actual hearing was conducted.
In separate infraction reports, petitioners were both apprised of the particular acts or omissions constituting
the charges against them. They were also required to submit their written explanation within 12 hours from
receipt of the reports. Yet, neither of them complied. Had they found the 12-hour period too short, they
should have requested for an extension of time. Further, notices of termination were also sent to them
informing them of the basis of their dismissal. In fine, petitioners were given due process before they were
dismissed. Even if no hearing was conducted, the requirement of due process had been met since
they were accorded a chance to explain their side of the controversy. (emphasis supplied)
Our holding in National Semiconductor HK Distribution, Ltd. v. NLRC28 is of similar import:
That the investigations conducted by petitioner may not be considered formal or recorded hearings
or investigations is immaterial. A formal or trial type hearing is not at all times and in all instances
essential to due process, the requirements of which are satisfied where the parties are afforded fair and
reasonable opportunity to explain their side of the controversy. It is deemed sufficient for the employer to
follow the natural sequence of notice, hearing and judgment.
The above rulings are a clear recognition that the employer may provide an employee with ample
opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other
than a formal hearing. The employee can be fully afforded a chance to respond to the charges against him,
adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written.
After receiving the first notice apprising him of the charges against him, the employee may submit a written
explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer
evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and
the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with
the assistance of a representative or counsel. He may also ask the employer to provide him copy of records
material to his defense. His written explanation may also include a request that a formal hearing or
conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just
as it is where there exist substantial evidentiary disputes 29 or where company rules or practice requires an
actual hearing as part of employment pretermination procedure. To this extent, we refine the decisions we
have rendered so far on this point of law.
This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code
reasonably implements the "ample opportunity to be heard" standard under Article 277(b) of the Labor Code
without unduly restricting the language of the law or excessively burdening the employer. This not only
respects the power vested in the Secretary of Labor and Employment to promulgate rules and regulations
that will lay down the guidelines for the implementation of Article 277(b). More importantly, this is faithful to
the mandate of Article 4 of the Labor Code that "[a]ll doubts in the implementation and interpretation of the
provisions of [the Labor Code], including its implementing rules and regulations shall be resolved in favor of
labor."
In sum, the following are the guiding principles in connection with the hearing requirement in dismissal
cases:

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(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and reasonable way.
(b) a formal hearing or conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when
similar circumstances justify it.
(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or
conference" requirement in the implementing rules and regulations.
Petitioners Were Illegally
Suspended for 30 Days
An employee may be validly suspended by the employer for just cause provided by law. Such suspension
shall only be for a period of 30 days, after which the employee shall either be reinstated or paid his wages
during the extended period.30
In this case, petitioners contended that they were not paid during the two 15-day extensions, or a total of 30
days, of their preventive suspension. Respondents failed to adduce evidence to the contrary. Thus, we
uphold the ruling of the labor arbiter on this point.
Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the
Labor Code, as amended, mandates that the employee is entitled to reinstatement without loss of seniority
rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary
equivalent computed from the time the compensation was not paid up to the time of actual
reinstatement.31 In this case, however, reinstatement is no longer possible because of the length of time that
has passed from the date of the incident to final resolution. 32 Fourteen years have transpired from the time
petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any
prudent or practical purpose.33
WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 29,
2002 in CA-G.R. SP No. 50536 finding that petitioners Felix B. Perez and Amante G. Doria were not illegally
dismissed but were not accorded due process and were illegally suspended for 15 days, is SET ASIDE. The
decision of the labor arbiter dated December 27, 1995 in NLRC NCR CN. 11-06930-93 is
hereby AFFIRMED with the MODIFICATIONthat petitioners should be paid their separation pay in lieu of
reinstatement.
SO ORDERED.
26. G.R. No. 119842 August 30, 1996
VENANCIO GUERRERO, NORBERTO H. ESCULLAR, JOAQUIN C. SAMSON, EMERITO C. DORADO,
IRENEO CONSIGNADO, RUPERTO REFRACCIO, ANTONIO FIESTA, JOSE M. CAGUICLA, AMADO
SALONGA, CONSTANCIO AMBRAD ROLANDO N. ABENIO, ROGELIO E. ABENIO, ROMELITO M.
ARIZOBAL, TEODORO M. CAAMOAN, JR., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, R.O.H. AUTO PRODUCTS PHILS., INC. and GOEFF
KEMP,respondents.

PUNO, J.:p
This an original action for certiorari under Rule 65 of the Revised Rules of Court to annual the Decision of
respondent National Labor Relations Commission (NLRC) 1 dismissing petitioners complaint for illegal
dismissal against R.O.H. Auto Products Phils., Inc. and its president, Goeff Kemp.
The petitioners are former employees of respondent R.O.H. Auto Products Phils., Inc. a corporation
engaged in the manufacture of automotive steel wheels.
On March 24, 1992, members of the union in respondent company went on strike. The petitioners, however,
did not participate in the strike.

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Respondent company allegedly sustained huge losses as the strike virtually paralyzed its operations. To
prevent further losses, respondent proposed on April 22, 1992 to the non-striking employees a "financial
assistance" in exchange for their resignation. Respondent company, nevertheless, assured them priority in
hiring when positions of equal stature and compensation become available.
On April 24, 1992, the petitioners availed of respondent company's offer. They signed individual Quitclaim
and Release deeds upon receipt of their separation pay.
On May 3, 1992, the strike ended. The operations in respondent company resumed and all the striking
employees returned to their posts. The petitioners offered to re-assume their former positions but
respondent company refused to admit them. They filed separate complaint for illegal dismissal.
In a consolidated Decision dated June 29, 1993, Labor Arbiter Geobel A. Bartolabac dismissed the
complaints for lack of merit, viz:
WHEREFORE, premises considered, the above-entitled cases are now hereby dismissed for
lack of merit.
Respondents (sic) R.O.H. Auto Products Phils. Inc., is, however, ordered to pay each
complainant an additional financial assistance equivalent to their one month salary. 2
This was affirmed by the NLRC in its Decision dated March 10, 1995.

Hence, this petition.

The issue is whether petitioners were illegally dismissed.
We rule in the affirmative.
The law gives an employer the right to terminate the services of its employees to obviate or to minimize
business losses. This right, however, may not be exercised arbitrarily or whimsically. Article 283 of the Labor
Code lays down the conditions for the exercise of right, thus:
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy,retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title by serving a written notice on the workers and the Ministry of Labor
and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to separation pay equivalent to at least his one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.
(emphasis supplied)
The requisites for valid retrenchment under the foregoing provision are:
(1) necessity of the retrenchment to prevent losses and proof of such losses;
(2) written notice to the employees and to the Department of Labor and Employment at least
one month prior to the intended date of retrenchment; and
(3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for
every year of service, whichever is higher. 4
Considering the circumstances in the case at bar, we find that respondent company did not satisfy the legal
requirements for valid retrenchment.
First, respondent company did not present sufficient evidence to prove the extent of its losses. To justify the
employees termination of service, the losses must be serious, actual and real, and they must be supported
by sufficient and convincing evidence. 5 The burden of proof rests of the

123

employer. 6 Respondent company alleged that the strike paralyzed its operations and resulted in the
withdrawal of its clients' orders. Respondent company, however, failed to prove its claim with competent
evidence which would show that it was indeed suffering from business losses so serious as would
necessitate retrenchment or reduction of personnel. 7 As we held in Lopez Sugar Corporation vs. Federation
of Free Workers: 8
Lastly but certainly not the least important, alleged losses if already realized, and the
expected imminent losses sought to be forestalled, must be proved by sufficient and
convincing evidence. The reason for requiring this quantum of proof is readily apparent: any
less exacting standard of proof would render too easy the abuse of this ground for
termination of services of employees. In Garcia v.National Labor Relations Commission, the
Court said:
. . . But it is essentially required that the alleged losses in business
operations must be prove[n]. Otherwise, said ground for termination would be
susceptible to abuse by scheming employers who might be merely feigning
business losses or reverses in their business ventures in order to ease out
employees.
We reject respondent company's contention that it was not necessary to present proof of severity of the
losses it sustained since petitioners were aware of the strike and its adverse effects on the company's
operations. The rule is that not every loss incurred or expected to be incurred by a company will justify
retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert
such losses. 9
Second, respondent company failed to prove that retrenchment was necessary to prevent further losses.
There is no showing in this case that respondent company has taken other measures to abate the losses it
sustained because of the strike. Retrenchment must be exercised only as a last resort, considering that it
will lead to the loss of the employees livelihood. Retrenchment is justified only when all other less drastic
means have been tried and found insufficient. 10
Respondent company did not also follow the proper procedure for retrenchment under Article 283. It did not
give written notices to both the petitioners and the Department of Labor and Employment at least one (1)
month prior to the retrenchment. Its purpose is to enable the proper authorities to ascertain whether
retrenchment is being done in good faith and is not just a pretext for evading compliance with the just
obligations of the employer to the affected employees. 11 This requirements is mandatory 12 as it is intended
to protect the workers right to security of tenure. The payment of "one (1) month salary in lieu of the notice"
which was included in petitioners separation pay cannot be considered as sufficient compliance with the
requirement of the law. 13
Finally, petitioners availment of the "financial assistance" given by respondent company did not estop them
from questioning the legality of their separation from the company. When respondent company made the
offer, petitioners were made to believe that the company would cease to operate for an indefinite period of
time. Hence, petitioners were constrained to accept whatever relief the respondent company offered at that
time. In De Leon vs.NLRC, 14 we held that "employees who receive their separation pay are not barred from
contesting the legality of their dismissal. The acceptance of those benefits (will) not amount to estoppel."
IN VIEW WHEREOF, the assailed Decision is REVERSED and SET ASIDE. Respondents R.O.H. Auto
Products Phils., Inc. and Goeff Kemp are hereby ordered to REINSTATE the petitioners without loss of
seniority rights and with full backwages minus the amount received by them as "financial assistance" upon
their separation. 15 No costs.
SO ORDERED.
27. G.R. No. 112546 March 13, 1996
NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ANTONIO M. VILLANUEVA and
WILFREDO GUILLEMA, respondents.

PANGANIBAN, J.:p

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Is a company which is forced by huge business losses to close its business, legally required to pay
separation benefits to its employees at the time of its closure in an amount equivalent to the separation pay
paid to those who were separated when the company was still a going concern? This is the main question
brought before this Court in this petition for certiorari under Rule 65 of the Revised Rules of Court, which
seeks to reverse and set aside the Resolutions dated July 29, 1993 1 and September 27, 1993 2 of the
National Labor Relations Commission 3 (NLRC) in NLRC CA No. M-00139593.
The Resolution dated July 29, 1993 affirmed in toto the decision of the Labor Arbiter in RAB-11-08-00672-92
and RAB-11-08-00713-92 ordering petitioners to pay the complainants therein certain monetary claims.
The Resolution dated September 27, 1993 denied the motion for reconsideration of the said July 29, 1993
Resolution.
The Facts
Petitioner North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privatelyowned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a
conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986,
PNB transferred all its loans to and equity in North Davao in favor of the national government which, by
virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset
Privatization Trust (APT). As of December 31, 1990 the national government hold 81.8% of the common
stock and 100% of the preferred stock of said company.4
Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by
reason of the company's closure on May 31, 1992, and who were the complainants in the cases before the
respondent labor arbiter.
On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses.
From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos
(P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31,
1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20,392 billion pesos,
as shown by its financial statements audited by the Commission on Audit. When it ceased operations, its
remaining employees were separated and given the equivalent of 12.5 days' pay for every year of service,
computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and
sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its
operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days'
pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued
by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in
Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 1/2 hours' travel time by
public transportation; this arrangement lasted from 1981 up to 1990.
Subsequently, a complaint was filed with respondent Labor Arbiter by respondent Wilfredo Guillema and 271
other separated employees for: (1) additional separation pay of 17.5 days for every year of service; (2) back
wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance;
(6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which
amounted to P58,022,878.31 as computed by private respondent. 5
On May 6, 1993, respondent Labor Arbiter rendered a decision ordering petitioner North Davao to pay the
complainants the following:
(a) Additional separation pay of 17.5 days for every year of service;
(b) Backwages equivalent to two (2) days a month times the number of years of service but
not to exceed three (3) years;
(c) Transportation allowance at P80 a month times the number of years of service but not to
exceed three (3) years.
The benefits awarded by respondent Labor Arbiter amounted to P10,240,517.75. Attorney's fees equivalent
to ten percent (10%) thereof were also granted. 6
On appeal, respondent NLRC affirmed the decision in toto. Petitioner North Davao's motion for
reconsideration was likewise denied. Hence, this petition.
The Parties' Submissions and the Issues

125

In affirming the Labor Arbiter's decision, respondent NLRC ruled that "since (North Davao) has been paying
its employees separation pay equivalent to thirty (30) days pay for every year of service," knowing fully well
that the law provides for a lesser separation pay, then such company policy "has ripened into an obligation,"
and therefore, depriving now the herein private respondent and others similarly situated of the same benefits
would be discriminatory. 7 Quoting from Businessday Information Systems and Services, Inc. (BISSI)
vs. NLRC, 8 it said that petitioners "may not pay separation benefits unequally for such discrimination breeds
resentment and ill-will among those who have been treated less generously than others." It also cited Abella
vs. NLRC, 9 as authority for saying that Art. 283 of the Labor Code protects workers in case of closure of the
establishment.
To justify the award of two days a month in backwages and P80 per month of transportation allowance,
respondent Commission ruled:
As to the appellants' claim that complainants-appellees' time spent in collecting their wages
at Tagum, Davao is not compensable allegedly because it was on official time can not be
given credence. No iota of evidence has been presented to back up said contention. The
same is true with appellants' assertion that the claim for transportation expenses is without
basis since they were incurred by the complainants. Appellants should have submitted the
payrolls to prove that complainants appellees were not the ones who personally collected
their wages and/or the bus/jeep trip tickets or vouchers to show that the complainantsappellees were provided with free transportation as claimed.
Petitioner, through the Government Corporate Counsel, raised the following grounds for the allowance of the
petition:
1. The NLRC acted with grave abuse of discretion in affirming without legal basis the award
of additional separation pay to private respondents who were separated due to serious
business losses on the part of petitioner.
2. The NLRC acted with grave abuse of discretion in affirming without sufficient factual basis
the award of backwages and transportation expenses to private respondents.
3. There is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of
the law.
and the following issues:
1. Whether or not an employer whose business operations ceased due to serious business
losses or financial reverses is obliged to pay separation pay to its employees separated by
reason of such closure.
2. Whether or not time spent in collecting wages in a place other than the place of
employment is compensable notwithstanding that the same is done during official time.
3. Whether or not private respondents are entitled to transportation expenses in the absence
of evidence that these expenses were incurred.
The First Issue: Separation Pay
To resolve this issue, it is necessary to revisit the provision of law adverted to by the parties in their
submissions, namely, Art. 283 of the Labor Code, which reads as follows:
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor
and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay

126

for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year. (emphasis supplied)
The underscored portion of Art. 283 governs the grant of separation benefits "in case of closures or
cessation of operation" of business establishments "NOT due to serious business losses or financial
reverses . . . ". Where, however, the closure was due to business losses as in the instant case, in which
the aggregate losses amounted to over P20 billion the Labor Code does not impose any obligation upon
the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. Even
the public respondents, in their Comment 10 filed by the Solicitor General, impliedly concede this point.
However, respondents tenaciously insist on the award of separation pay, anchoring their claim solely on
petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay,
which policy had been in force in the years prior to its closure. Respondents contend that, by denying the
same separation benefits to private respondent and the others similarly situated, petitioners discriminated
against them. They rely on this Court's ruling in Businessday Information Systems and Services, Inc. (BISSI)
vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial reverses, decided "as a
retrenchment measure" to lay-off some employees on May 16, 1988 and gave them separation pay
equivalent to one-half (1/2) month pay for every year of service. BISSI retained some employees in an
attempt to rehabilitate its business as a trading company. However, barely two and a half months later, these
remaining employees were likewise discharged because the company decided to cease business operations
altogether. Unlike the earlier terminated employees, the second batch received separation pay equivalent to
a full month's salary for every year of service, plus a mid-year bonus. This Court ruled that "there was
impermissible discrimination against the private respondents in the payment of their separation benefits. The
law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising
management prerogatives, grant greater benefits to some and less to others. . . ."
In resolving the present case, it bears keeping in mind at the outset that the factual circumstances
of BISSI are quite different from the current case. The Court noted that BISSI continued to suffer losses
even after the retrenchment of the first batch of employees: clearly, business did not improve despite such
drastic measure. That notwithstanding, when BISSI finally shut down, it could well afford to (and actually did)
pay off its remaining employees with MORE separation benefits as compared with those earlier laid off;
obviously, then, there was no reason for BISSI to skimp on separation pay for the first batch of discharged
employees. That it was able to pay one-month separation benefit for employees at the time of closure of its
business meant that it must have been also in a position to pay the same amount to those who were
separated prior to closure. That it did not do so was a wrongful exercise of management prerogatives. That
is why the Court correctly faulted it with "impermissible discrimination." Clearly, it exercised its management
prerogatives contrary to "general principles of fair play and justice."
In the instant case however, the company's practice of giving one month's pay for every year of service
could no longer be continued precisely because the company could not afford it anymore. It was forced to
close down on account of accumulated losses of over P20 billion. This could not be said of BISSI. In the
case of North Davao, it gave 30-days' separation pay to its employees when it was still a going concern
even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment
of such separation benefits. But when a business enterprise completely ceases operations, i.e., upon its
death as a going business concern, its vital lifeblood its cashflow literally dries up. Therefore, the fact
that less separation benefits ware granted when the company finally met its business death cannot be
characterized as discrimination. Such action was dictated not by a discriminatory management option but by
its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze
blood out of a dry stone. Nor water out of parched land.
As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits
when the closure is due to losses. In the case before us, the basis for the claim of the additional separation
benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as
an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of the present case,
the grant of a lesser amount of separation pay to private respondent was done, not by reason of
discrimination, but rather, out of sheer financial bankruptcy a fact that is not controlled by management
prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a
supervening fact that prevented the company from continuing to grant the more generous amount of
separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation
benefits at all although not required by law and 12.5-days worth at that, should have elicited admiration
instead of condemnation. But to require it to continue being generous when it is no longer in a position to do
so would certainly be unduly oppressive, unfair and most revolting to the conscience. As this Court held
in Manila Trading & Supply Co. vs. Zulueta, 11 and reiterated in San Miguel Corporation vs. NLRC 12 and
later, in Allied Banking Corporation vs. Castro, 13 "(t)he law, in protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the employer."

127

At this juncture, we note that the Solicitor General in his Comment challenges the petitioners' assertion that
North Davao, having closed down, no longer has the means to pay for the benefits. The Solicitor General
stresses that North Davao was among the assets transferred by PNB to the national government, and that
by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this
government asset. He then concludes that "(i)t would, therefore, be incongruous to declare that the National
Government, which should always be presumed to be solvent, could not pay now private respondents'
money claims." Such argumentation is completely misplaced. Even if the national government owned or
controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a
stockholder thereof, and under existing laws and prevailing jurisprudence, a stockholder as a rule is not
directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North
Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent
or not is not material to the instant case. The respondents have not shown that this case constitutes one of
the instances where the corporate veil may be pierced. 14 From another angle, the national government is
not the employer of private respondent and his co-complainants, so there is no reason to expect any kind of
bailout by the national government under existing law and jurisprudence.
The Second and Third Issues:
Back Wages and Transportation Allowance
Anent the award of back wages and transportation allowance, the issues raised in connection therewith are
factual, the determination of which is best left to the respondent NLRC. It is well settled that this Court is
bound by the findings of fact of the NLRC, so long as said findings are supported by substantial evidence 15.
As the Solicitor General pointed out in his comment:
It is undisputed that because of security reasons, from the time of its operations, petitioner
NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte,
which usually took the workers about two and a half (2 1/2) hours of travel from the place of
work and such travel time is not official.
Records also show that on February 12, 1992, when an inspection was conducted by the
Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco,
Davao del Norte, it was found out that petitioners had violated labor standards law, one of
which is the place of payment of wages (p. 109, Vol. 1, Record)
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides
that:
Sec. 4. Place of payment. (a) As a general rule, the place of payment shall be at or near
the place of undertaking. Payment in a place other than the workplace shall be permissible
only under the following circumstances:
(1) When payment cannot be effected at or near the place of work by reason of the
deterioration of peace and order conditions, or by reason of actual or impending
emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat
impossible;
(2) When the employer provides free transportation to the employees back and forth; and
(3) Under any analogous circumstances; provided that the time spent by the employees in
collecting their wages shall be considered as compensable hours worked.
(b) xxx xxx xxx
(Emphasis supplied)
Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1, Record), the Regional Director,
Regional Office No. XI, Department of Labor and Employment, Davao City, ordered
petitioner NDMC, among others, as follows:
WHEREFORE, . . . . Respondent is further ordered to pay its workers
salaries at the plantsite at Amacan, New Leyte, Maco, Davao del Norte or
whenever not possible, through the bank in Tagum, Davao del Norte as
already been practiced subject, however to the provisions of Section 4 of
Rule VIII, Book III of the rules implementing the Labor Code as amended.

128

Thus, public respondent Labor Arbiter Antonio M. Villanueva correctly held that:
From the evidence on record, we find that the hours spent by complainants in
collecting salaries at a bank in Tagum, Davao del Norte shall be considered
compensable hours worked. Considering further the distance between
Amacan, Maco to Tagum which is 2 1/2 hours by travel and the risks in
commuting all the time in collecting complainants' salaries, would justify the
granting of backwages equivalent to two (2) days in a month as prayed for.
Corollary to the above findings, and for equitable reasons, we likewise hold
respondents liable for the transportation expenses incurred by complainants
at P40.00 round trip fare during pay days.
(p. 10, Decision; p. 207, Vol. 1, Record)
On the contrary, it will be petitioners' burden or duty to present evidence of
compliance of the law on labor standards, rather than for private respondents
to prove that they were not paid/provided by petitioners of their backwages
and transportation expenses.
Other than the bare denials of petitioners, the above findings stand uncontradicted. Indeed we are not at
liberty to set aside findings of facts of the NLRC, absent any capriciousness, arbitrariness, or abuse or
complete lack of basis. In Maya Farms Employees Organizations vs. NLRC, 16 , we held:
This Court has consistently ruled that findings of fact of administrative agencies ad quasijudicial bodies which have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but even finality and are binding upon this
Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that
they were arrived at arbitrarily or in disregard of the evidence on record.
WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution by SETTING ASIDE and
deleting the award for "additional separation pay of 17.5 days for every year of service", and AFFIRMING it
in all other aspects. No costs.
SO ORDERED.
28. G.R. No. 127718

March 2, 2000

NATIONAL FEDERATION OF LABOR, ABELARDO SANGADAN, LUCIANO RAMOS, NESTOR

TILASAN, GREGORIO TILASAN, JOAQUIN GARCIA, ROGELIO SABAITAN, CASTRO LEONARDO,
PILARDO POTENCIANO, RONILLO POTENCIANO, SANTIAGO SABAITAN, JOVENCIO BARTOLOME,
JUANITO CONCERMAN, GEORGE TUMILAS, PATROCINIO DOMINGO, AVELINO FRANCISCO,
MELITON SANGADAN, ALEXANDER GERONIMO, JOAQUIN GERONIMO, RAMIL MACASO,
LAMBERTO JOVEN, CRISTINO GARINA, SAMMY GANTAAN, NACIAL USTALAN, EDWIN USTALAN,
ROLAND POTENCIANO, RODY CONCERMAN, ELMER DOMINGO, ARNAGUEZ SANGADAN, UNDING
BOLENG, EDUARDO BOLENG, ROBERTO PANEO and HENRY SANGADAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (5th Division), PATALON COCONUT ESTATE and/or
CHARLIE REITH as General Manager and SUSIE GALLE REITH, as owner, respondents.
DE LEON, JR., J.:
Before us is a special civil action for certiorari to set aside and annul two (2) resolutions of the National
Labor Relations Commission1 promulgated on April 24, 19962 and August 29, 19963 denying the award of
separation pay to petitioners.1wphi1.nt
The pertinent facts are as follows:
Petitioners are bona fide members of the National Federation of Labor (NFL), a legitimate labor organization
duly registered with the Department of Labor and Employment. They were employed by private respondents
Charlie Reith and Susie Galle Reith, general manager and owner, respectively, of the 354-hectare Patalon
Coconut Estate located at Patalon, Zamboanga City. Patalon Coconut Estate was engaged in growing
agricultural products and in raising livestock.

129

In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law (CARL), which mandated the compulsory acquisition of all covered agricultural lands
for distribution to qualified farmer beneficiaries under the so-called Comprehensive Agrarian Reform
Programme (CARP).
Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the Patalon Estate Agrarian Reform
Association (PEARA), a cooperative accredited by the Department of Agrarian Reform (DAR), of which
petitioners are members and co-owners.
As a result of this acquisition, private respondents shut down the operation of the Patalon Coconut Estate
and the employment of the petitioners was severed on July 31, 1994. Petitioners did not receive any
separation pay.
On August 1, 1994, the cooperative took over the estate. A certain Abelardo Sangadan informed
respondents of such takeover via a letter which was received by the respondents on July 26, 1994. Being
beneficiaries of the Patalon Coconut Estate pursuant to the CARP, the petitioners became part-owners of
the land.4
On April 25, 1995, petitioners filed individual complaints before the Regional Arbitration Branch (RAB) of the
National Labor Relations Commission (NLRC) in Zamboanga City, praying for their reinstatement with full
backwages on the ground that they were illegally dismissed. The petitioners were represented by their labor
organization, the NFL.
On December 12, 1995, the RAB rendered a decision, the dispositive portion of which provides:
WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing complainants'
charge for illegal dismissal for lack of merit, but ordering respondents thru [sic] its owner-manager or
its duly authorized representative to pay complainants' separation pay in view of the latter's
cessation of operations or forced sale, and for 13th month differential pay in the amount, as follows,
for:
Names

Separation

13th Mo. Pay Diff.

Abelardo Sangadan

P23,879.06

None

P23,879.06

Luciano Ramos

43,605.24

P711.25

44,316.49

Nestor Tilasan

19,726.18

401.46

20,127.64

Gregorio Tilasan

25,955.50

None

25,955.50

Joaquin Garcia

7,267.54

1,211.25

8,478.79

Rogelio Sabaitan

21,798.00

1,211.25

23,009.25

Castro Leonardo, Jr.

25,955.50

63.10

26,018.60

Pilardo Potenciano

5,191.10

911.25

6,102.35

Ronillo Potenciano

7,267.54

None

7,267.54

Jovencio Bartolome

8,305.76

477.35

8,783.01

Santiago Sabaitan

4,152.88

1,011.25

5,164.13

Juanito Concerman

7,267.54

611.25

7,928.79

George Tumilas

16,611.52

1,011.25

17,622.77

Patrocinio Domingo

2,076.44

1,011.25

3,087.69

Avelino Francisco

3,114.66

1,211.25

4,325.91

Meliton Sangadan

15,573.30

392.50

15,965.80

Alexander Geronimo

15,573.00

None

15,573.30

Joaquin Geronimo

24,917.28

1,211.25

26,128.53

Ramil Macaso

6,229.32

861.25

7,090.57

Lamberto Joven

16,611.62

1,011.25

17,622.77

130

Total Pay

Cristino Garina

35,299.48

849.65

36,149.13

Sammy Gantaan

14,535.08

961.25

15,496.33

Nacial Ustalan

38,414.14

79.95

38,494.09

Edwin Ustalan

7,267.54

1,011.25

8,278.79

Roland Potenciano

5,191.10

911.25

6,102.35

Rody Concerman

7,267.54

691.25

7,958.79

Elmer Domingo

3,114.66

1,211.25

4,325.91

Aranquez Sangada

45,681.68

711.25

46,392.93

Unding Boleng

31,146.60

None

31,146.60

Eduardo Boleng

35,299.48

759.30

36,058.78

Roberto Paneo

23,876.06

911.25

24,787.31

Henry Sangadan

16,611.52

1,011.25

17,622.77

Total Benefits

P586,774.22

FURTHER, complainants' claim for Muslim Holiday overtime pay and rest day pay should be
dismissed for lack of merit, too.5
Appeal was taken by private respondents to public respondent NLRC. 6
On April 24, 1996, the NLRC issued a resolution, the dispositive portion of which provides:
WHEREFORE, the decision appealed from is hereby modified in favor of the following findings:
1) Respondents are not guilty of illegally dismissing complainants. Respondents' cessation of
operation was not due to a unilateral action on their part resulting in the cutting off of the
employment relationship between the parties. The severance of employer-employee
relationship between the parties came about INVOLUNTARILY, as a result of an act of the
State. Consequently, complainants are not entitled to any separation pay.
2) The award of 13th month pay differential is, however, Set Aside. Any award of 13th month
pay differentials to complainants should be computed strictly based on their reduced pay,
equivalent to six (6) hours work, Monday to Friday, pursuant to what the parties agreed in the
November 18, 1991 Compromise Agreement.
SO ORDERED.7
Petitioners filed a motion for reconsideration which was denied by the NLRC in its resolution 8 dated August
29, 1996.
Hence, this petition.
The issue is whether or not an employer that was compelled to cease its operation because of the
compulsory acquisition by the government of its land for purposes of agrarian reform, is liable to pay
separation pay to its affected employees.
The petition is bereft of merit.
Petitioners contend that they are entitled to separation pay citing Article 283 of the Labor Code which reads:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate
the employment of any employee due to the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever

131

is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of

operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as
one (1) whole year.
It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of
personnel.1wphi1 The peculiar circumstances in the case at bar, however, involves neither the closure of
an establishment nor a reduction of personnel as contemplated under the aforesaid article. When the
Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant to
CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and ultimately to
the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is
not applicable to the case at bench.
Even assuming, arguendo, that the situation in this case were a closure of the business establishment called
Patalon Coconut Estate of private respondents, still the petitioners/employees are not entitled to separation
pay. The closure contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the
part of the employer to close the business establishment as may be gleaned from the wording of the said
legal provision that "The employer may also terminate the employment of any employee due to. . .".9 The
use of the word "may," in a statute, denotes that it is directory in nature and generally permissive only. 10 The
"plain meaning rule" or verba legis in statutory construction is thus applicable in this case. Where the words
of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and applied without
attempted interpretation. 11
In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of the
business establishment is forced upon the employer and ultimately for the benefit of the employees.
As earlier stated, the Patalon Coconut Estate was closed down because a large portion of the said estate
was acquired by the DAR pursuant to the CARP. Hence, the closure of the Patalon Coconut Estate was not
effected voluntarily by private respondents who even filed a petition to have said estate exempted from the
coverage of RA 6657. Unfortunately, their petition was denied by the Department of Agrarian Reform. Since
the closure was due to the act of the government to benefit the petitioners, as members of the Patalon
Estate Agrarian Reform Association, by making them agrarian lot beneficiaries of said estate, the petitioners
are not entitled to separation pay. The termination of their employment was not caused by the private
respondents. The blame, if any, for the termination of petitioners' employment can even be laid upon the
petitioner-employees themselves inasmuch as they formed themselves into a cooperative, PEARA,
ultimately to take over, as agrarian lot beneficiaries, of private respondents' landed estate pursuant to RA
6657. The resulting closure of the business establishment, Patalon Coconut Estate, when it was placed
under CARP, occurred through no fault of the private respondents.
While the Constitution provides that "the State . . . shall protect the rights of workers and promote their
welfare", that constitutional policy of providing full protection to labor is not intended to oppress or destroy
capital and management. Thus, the capital and management sectors must also be protected under a regime
of justice and the rule of law.
WHEREFORE, the petition is DISMISSED. The Resolutions of the National Labor Relations Commission
dated April 24, 1996 and August 29, 1996 are hereby AFFIRMED. No costs.1wphi1.nt
SO ORDERED.
29. G.R. No. 152988

August 24, 2004

CHIANG KAI SHEK COLLEGE, and CHIEN YIN SHAO, petitioners,

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

DECISION

132

DAVIDE, JR., C.J.:

Assailed in this petition is the decision1 of 12 October 2001, as well as the resolution2 of 11 April 2002, of the
Court Appeals in CA-G.R. SP No. 59996, which affirmed the decision 3 of 29 February 2000 of the National
Labor Relations Commission (NLRC) declaring that Diana P. Belo was illegally dismissed as a teacher of
petitioner Chiang Kai Shek College (CKSC).
The controversy began on 8 June 1992, when Ms. Belo, a teacher of CKSC since 1977, applied for a leave
of absence for the school year 1992-1993 because her children of tender age had no yaya to take care of
them. The then principal, Mrs. Joan Sy Cotio, approved her application. However, on 15 June 1992, Ms.
Belo received a letter dated 9 June 1992 of Mr. Chien Yin Shao, President of CKSC, informing her of the
schools existing policy; thus:
Regarding your letter of request for leave of absence dated June 8, 1992, we would like to inform
you of the existing policy of our school:
(1) We could not assure you of any teaching load should you decide to return in the future.
(2) Only teachers in service may enjoy the privilege and benefits provided by our school. Hence,
your children are no longer entitled to free tuition starting school year 1992-1993. 4
Ms. Belo, nonetheless, took her leave of absence. On 8 July 1992, she learned that Laurence, one of her
three children studying at the CKSC, was sent out of the examination room because his tuition fees were not
paid. This embarrassing incident impelled Ms. Belo to pay, allegedly under protest, all the school fees of her
children.5
In May 1993, after her one-year leave of absence, Ms. Belo presented herself to Ms. Cotio and signified her
readiness to teach for the incoming school year 1993-1994. She was, however, denied and not accepted by
Ms. Cotio. She then relayed the denial to Mr. Chien on 17 May 1993. On 21 July 1993, she received the
reply of Mr. Chien dated 1 July 1993 informing her that her confirmation to teach was filed late and that there
was no available teaching load for her because as early as April 21 of that year, the school had already hired
non-permanent teachers.6
Adversely affected by the development, Ms. Belo filed with the Labor Arbitration Office a complaint for illegal
dismissal; non-payment of salaries, 13th month pay, living allowance, teacher's day pay; loss of income; and
moral damages.
In his decision7 of 18 October 1995, Labor Arbiter Donato G. Quinto, Jr., dismissed the complaint, reasoning
that Ms. Belo was not dismissed but that there was simply no available teaching load for her. When in May
1993 she signified her intention to teach, the school had already acted on the applications or re-applications
to teach of probationary teachers. The schools policies, which were articulated in Mr. Chiens letter of 9
June 1992 to Ms. Belo, were management prerogatives which did not amount to her dismissal. Said policies
were also the consequences of her leave of absence and were not even questioned by her. The Labor
Arbiter thus offered a Solomonic solution by directing the petitioners to give her a teaching load in the
ensuing year 1996-1997 and the succeeding years without loss of seniority rights. 8
On appeal9 by the private respondent, the NLRC reversed the decision of the Labor Arbiter. It considered as
misplaced the Labor Arbiters utter reliance on Mr. Chiens letter to Ms. Belo enunciating the questioned
school policies. It reasoned that if the school policy was to extend free tuition fees to children of teachers in
school, then the petitioners must have considered her "already not in school or summarily dismissed or
separated the very moment [she] applied for leave," for, otherwise, her children would have been granted
that privilege. Thus, it directed the petitioners to immediately reinstate Ms. Belo to her former position with
full back wages from the time of her dismissal up to her actual reinstatement. It, however, dismissed Ms.
Belo's prayer for moral and exemplary damages and attorney's fees for lack of evidence that the petitioners
acted in bad faith and malice.
Their motion for reconsideration having been denied, 10 the petitioners filed a petition for certiorari with the
Court of Appeals contending that the NLRC gravely abused its discretion amounting to lack of jurisdiction in
(a) overturning the factual determination of the Labor Arbiter despite the fact that Ms. Belo stated in her
Notice of Appeal that she was appealing only on a pure question of law; (b) holding that Ms. Belo was
constructively dismissed by the petitioners despite the uncontroverted evidence that she was not illegally
dismissed; and (c) granting Ms. Belo monetary awards.
On 12 October 2001, the Court of Appeals found that far from abusing its discretion, the NLRC acted
correctly when it ascertained that Ms. Belo was constructively dismissed. It declared as illegal, for being

133

violative of Ms. Belos right to security of tenure, the school policy that a teacher who goes on leave cannot
be assured of a teaching load. The school should have set aside a teaching load for her after the expiration
of her leave of absence. It would have been a different story, one indeed ripe for termination of her
employment, had Ms. Belo failed to report for work. As for the schools contention that the NLRC was barred
from resolving factual issues because of Ms. Belo's statement that she was appealing the case on a pure
question of law, the Court of Appeals declared that such statement was a simple mistake in terminology,
which is insufficient to deny an employee of her rights under the law.
In its resolution dated 11 April 2002, the Court of Appeals denied the motion for reconsideration for lack of
merit.
Hence, on 11 June 2002,11 petitioner CKSC and its president Mr. Chien filed the present petition. They claim
that the Court of Appeals erred in affirming the NLRC decision which reversed the factual findings of the
Labor Arbiter even if the said findings were amply supported by clear and uncontroverted evidence and had
already attained finality, as Ms. Belo had appealed merely on a question of law. The Court of Appeals also
erred in upholding the NLRC decision which failed to point out specifically the alleged particular portions of
the records of the case, parties respective position papers, and pleadings, much less particular testimonial
and documentary evidence, that warrant the patently erroneous and baseless conclusion that there was a
"clear case of constructive dismissal." The NLRC decision is in complete violation of Section 14, Article VIII
of the Constitution, which provides: "No decision shall be rendered by any court without expressing therein
clearly and distinctly the facts and the laws on which it is based." Likewise, the Court of Appeals has not only
completely and arbitrarily ignored and disregarded the facts and issues raised as an issue before it, but also
decided on the illegality of the schools policy, which was never raised before it or in any of the forums
below. Anent the free tuition fee benefit extended to children of teachers in service in petitioner school, the
same is a privilege granted not by law, but voluntarily by the said school. Hence, the petitioner school could
determine the conditions under which said privilege may be enjoyed, such as, that only teachers in actual
service can enjoy the privilege.
Amidst the convolution of issues proffered by the petitioners, the only issue that needs to be determined and
on which hinges the resolution of the other issues is whether the Court of Appeals erred in affirming the
NLRC decision that Ms. Belo was constructively, nay, illegally dismissed and is, therefore, entitled to
reinstatement and back wages.
It must be noted at the outset that Ms. Belo had been a full-time teacher in petitioner CKSC continuously for
fifteen years or since 1977 until she took a leave of absence for the school year 1992-1993. Under the
Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of
employment and, therefore, be entitled to a security of tenure, the following requisites must concur: (a) the
teacher is a full-time teacher; (b) the teacher must have rendered three consecutive years of service; and (c)
such service must have been satisfactory.12
Since Ms. Belo has measured up to these standards, she therefore enjoys security of tenure. The
fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed
except for just and authorized cause provided by law and after due notice and hearing. 13
We agree with the Court of Appeals that the NLRC did not commit any grave abuse of discretion in finding
that Ms. Belo was constructively dismissed when the petitioners, in implementing their policies, effectively
barred her from teaching for the school year 1993-1994. The three policies are (1) the non-assurance of a
teaching load to a teacher who took a leave of absence; (2) the hiring of non-permanent teachers in April to
whom teaching loads were already assigned when Ms. Belo signified in May 1993 her intention to teach;
and (3) the non-applicability to children of teachers on leave of the free tuition fee benefits extended to
children of teachers in service.
Case law defines constructive dismissal as a cessation from work because continued employment is
rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay or
both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee.14
When in the school year 1992-1993, the petitioners already applied to Ms. Belos children the policy of
extending free tuition fee benefits only to children of teachers in service, Ms. Belo was clearly discriminated
by them. True, the policy was made known to Ms. Belo in a letter dated 9 June 1992, but, this only
additionally and succinctly reinforced the clear case of discrimination. Notably, petitioners statements of
policies dated 13 March 1992 for the school year 1992-1993 did not include that policy; thus:
To : All Teachers and Staff of Chiang Kai Shek College

134

From : The President

Pursuant to laws, rules and regulations promulgated by the proper government authorities of the
Philippines, the following procedure are hereby issued for proper compliance of all concerned:
1. All teachers and staff who have rendered satisfactory service for a period of more than three (3)
full consecutive years (e.g. those who started working in June, 1988 or before) are considered
permanent employees and therefore need not re-apply for the forthcoming school year 1992-1993.
2. However, should any teacher or staff of permanent status wish to resign or to retire after this
school year 1991-1992, he/she must file his/her written resignation or retirement application on or
before March 28, 1992, so that the school will have sufficient time to make the necessary
adjustments. Failure to file formal application on the part of the permanent employee shall be
construed as consent to work for another school year.
3. All probationary employees (e.g. those who started working after June, 1988) who wish to
continue their services in our school shall re-apply. Reapplications must be submitted on or before
March 28, 1992. Failure to submit reapplication shall be construed as not interested to work for
Chiang Kai Shek College in the coming school year 1992-1993.
4. All reapplications shall be acted upon and the decision of the administration will be conveyed to
the employees concerned on or before April 21, 1992. 15
It can be argued that the extension of free tuition fees to children of teachers in service was an informal
policy or custom. If it were so, there would have been no need to include this policy in the schools written
statement of policies dated 12 March 1993, which reads:
To : All Teachers and Staff of Chiang Kai Shek College
From : The Office of the President
Pursuant to laws, rules and regulations promulgated by the proper government authorities of the
Philippines, the following procedure are hereby issued for proper compliance of all concerned:
1. All teachers and staff who have rendered satisfactory service for a period of more than three (3)
full consecutive years (e.g. those who started working in June, 1989 or before) are considered
permanent employees and therefore need not re-apply for the forthcoming school year 1993-1994.
2. However, should any teacher or staff of permanent status wish to resign, to retire, or to take a
leave of absence after this school year 1992-1993, he/she must file his/her written application on or
before March 27, 1993, so that the school will have sufficient time to make the necessary
adjustments. Failure to file formal application on the part of the permanent employee shall be
construed as consent to work for another school year.
In accordance with our school policy, employees not in service are not entitled to any benefit
extended by our school.
3. All probationary employees (e.g. those who started working after June 1989) who wish to continue
their services in our school shall re-apply. Reapplications must be submitted on or before March 27,
1993. Failure to submit reapplication shall be construed as not interested to work for Chiang Kai
Shek College in the coming school year 1993-1994.
4. All reapplications shall be acted upon and the decision of the administration will be conveyed to
the employees concerned on or before April 21, 1993.16
A cursory analysis of the petitioners statements of policies dated 13 March 1992 and 12 March 1993 reveals
that the lists of policies are essentially the same. Both are addressed to all teachers and staff of petitioner
school. However, the policy "that employees not in service are not entitled to any benefit extended by the
school" was not listed in the written statement of policies dated 13 March 1992. The policy made its maiden
appearance in petitioners statement of policies one year after or on 12 March 1993. It was, therefore, the
policy of extending free tuition fees to children of teachers of the school, whether on service or on leave,
which existed as a matter of custom and practice. That is why the school modified the privilege in written
form.

135

Thus, when the petitioners retroactively applied the modified written policy to Ms. Belo, they considered her
already a teacher not in service. The NLRC was correct when it reasoned as follows: "[I]f the school policy is
to extend free tuition fees to children of teachers in school, then respondents [petitioners herein] have
considered [Ms. Belo] already not in school or summarily dismissed or separated the very moment the latter
applied for leave. Otherwise, [her] children should have been granted the on-going privileges and benefits
on free tuition fees, among others."
Ms. Belo was definitely singled out in the implementation of a future policy. This is grossly unfair and unjust.
The petitioners did not take heed of the principle enshrined in our labor laws that policies should be
adequately known to the employees and uniformly implemented to the body of employees as a whole and
not in isolation.
The continued employment of Ms. Belo was also rendered unlikely by the insistence of the petitioners in
implementing the alleged policy that a teacher who goes on leave for one year is not assured of a teaching
load. While this alleged policy was mentioned in Mr. Chiens letter of 9 June 1992, it was not included in the
schools written statement of policies dated 13 March 1992. Hence, it was then a non-existent policy. When
a non-existent policy is implemented and, in this case, only to Ms. Belo, it constitutes a clear case of
discrimination.
Even if the policy of non-assurance of a teaching load existed as a matter of practice and custom, it still
glaringly contradicts petitioners written statement of policies dated 12 March 1993. Crystal clear therefrom is
the fact that only permanent teachers who wished "to resign, to retire, or to take a leave of absence after the
school year 1992-1993 must file their written application in March 1993." Those who failed to file an
application were expressly considered by the school as consenting to teach for the succeeding school year.
Additionally, the petitioners did not require permanent teachers with satisfactory service to re-apply.
It, therefore, blows our mind why the petitioners would require Ms. Belo, a permanent teacher since 1977
with a satisfactory service record, to signify her intention to teach in March 1993. Plainly, the petitioners
violated their avowed policies. Since Ms. Belo was not retiring, resigning or filing another leave of absence
after the school year 1992-1993, the petitioners should have considered her as consenting to teach for the
incoming school year 1993-1994. In fact, they should not have required her to re-apply to teach. In
accordance with the written statement of policies dated 12 March 1993, only probationary teachers are
required by the petitioners to re-apply in March. Failure of probationary teachers to re-apply in March is an
indication of their lack of interest to teach again at the school.
Petitioners invocation of the third policy that of giving teaching assignments to probationary teachers in
April to justify their refusal to provide Ms. Belo a teaching load is, therefore, a lame excuse that rings of
untruth and dishonesty. Patently clear is the illegal manner by which the petitioners eased out Ms. Belo from
the teaching corps.
Thus, the Court of Appeals justification in upholding the NLRC ruling attains an added judicial and logical
sting:
When respondent Belo reported for work after the termination of her one-year leave of absence, it
was obligatory for petitioner school to give her a teaching load. It was improper for petitioner school
to farm out subjects of respondent Belo to provisionary [sic] teacher [sic]. The petitioner school
should have assumed that respondent Belo was returning for work after the expiration of her leave. It
would have been a different story, if after the start of classes, respondent Belo failed to report for
work, then the school had a right to institute the necessary proceeding for the termination of her
employment.17
Likewise, we do not find merit in petitioners assertion that the Court of Appeals should not have passed
upon the illegality of the school policy of non-assurance of a teaching load, since the alleged illegality was
never raised as an issue before the respondent court or in the forums below. As pointed out by the private
respondent, that policy was part of the defense invoked by the petitioners in the Arbiter level, in the NLRC,
and in the respondent court to the charge of illegal dismissal; and, hence, it must necessarily be passed
upon and scrutinized. Besides, that policy is intimately intertwined with the main issue of whether Ms. Belo
was illegally dismissed.
We reject petitioners contention that "the NLRC decision failed to point out specifically the alleged particular
portions of the records of the case, parties respective position papers, and pleadings, much less particular
testimonial and documentary evidence, that warrant the patently erroneous and baseless conclusion that
there is a clear case of constructive dismissal." In fact, the NLRC considered the same policies that the
petitioners insist as their bases for maintaining that Ms. Belo was not dismissed. It seems that the petitioners
could only be persuaded if the reviewing bodies unearthed a document that explicitly states that Ms. Belo

136

was being constructively dismissed. This phantom paper chase unveils the unsubstantiated and contrived
claim of the petitioners. They need only to look, for example, at the letter dated 9 June 1992 to Ms. Belo.
The "policies" therein stated are discernibly non-existent, or if existing as a matter of custom they grossly
transgressed petitioners formal written policies dated 13 March 1992 and 12 March 1993. Clear, therefore,
is the fact that the written formal policies apply to all teachers and staff except Ms. Belo.
Hence, there is no need to belabor the point that the NLRC decision clearly complied with the requirement
expressed under Section 14, Article VIII of the Constitution. The decision speaks for itself.
Suffice it is to say, this case is an exception to the general rule that the factual findings and conclusions of
the Labor Arbiter are accorded weight and respect on appeal, and even finality. For one thing, the findings of
the NLRC and the Labor Arbiter are contrary to each other; hence, the reviewing court may delve into the
records and examine for itself the questioned findings. 18
Further, we do not find merit in petitioners claim that Ms. Belos judicial admission that she was appealing
on a "pure question of law" precludes the review and reversal of the Labor Arbiters factual finding that she
was not illegally dismissed. Such claim is belied by the Notice of Appeal itself, 19 wherein Ms. Belo declared
that she was appealing the decision of the Labor Arbiter to the NLRC "on a pure question of law and for
being contrary to law and jurisprudence applicable [to] the case and the evidence on record, and rendered
with grave abuse of discretion."20
Oddly, even the petitioners themselves maintain that to prove grave abuse of discretion, "it is necessary to
bring out questions of fact." Thus, in their own justification in resorting to both Rules 45 and 65 of the Rules
of Court for the review and the nullification of the decision of the Court of Appeals, they contend:
Clearly, petitioners remedy is two-fold under Rule 45 and 65. Under Rule 45, only questions of law
may be raised. Perhaps, respondents can now understand why petitioners have used both Rules 45
and 65. And this is simply because by invoking said two rules, they are not limited to raising
questions of law, but they can raise both questions of fact and law. To show that grave abuse of
discretion has been committed under Rule 65, it is necessary to bring out questions of fact,
which was precisely done in the issues raised in page 2 of the petition. 21
Indeed, Ms. Belo questioned the legality of her dismissal and the denial of her monetary claims, as well as
her claim for damages. Both are essentially factual issues, since their determination necessitates an
evaluation of proof and not only a consideration of the applicable statutory and case laws.
Basic is the distinction between legal and factual issues. A question of law exists when the doubt or
controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the
issue does not call for an examination of probative value of the evidence presented, the truth or falsehood of
facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or
falsehood of facts or when the query invites calibration of the whole evidence considering mainly the
credibility of witnesses, the existence and relevancy of specific surrounding circumstances, as well as their
relation to each other and to the whole, and the probability of the situation. 22
More importantly, the Labor Arbiters conclusions are baseless, bereft of any rational basis, unsupported by
evidence on record, and glaringly erroneous. The decisions of the NLRC and the Court of Appeals are the
ones in harmony with the evidence on record.
In sum, we are convinced that Ms. Belo was unceremoniously and constructively dismissed by the
petitioners without just cause and without observing the twin requirements of due process, i.e., due notice
and hearing, in violation of the tenets of equity and fair play. Ms. Belo is, therefore, entitled to reinstatement
and back wages in accordance with the questioned Court of Appeals and NLRC decisions.
the petition is DENIED. The decision of 12 October 2001 and resolution of 11 April 2002 of the Court of
Appeals in CA-GR. SP No. 59996 are hereby AFFIRMED.
Costs against the petitioners.
SO ORDERED.
30. G.R. No. 149974

June 15, 2005

PHILIPPINE INDUSTRIAL SECURITY AGENCY CORPORATION, petitioner,

vs.
PERCIVAL AGUINALDO, respondent.

137

DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision1 of the Court of Appeals dated May 31, 2001 and its Resolution dated
September 11, 2001 in CA-G.R. No. 62704, "PERCIVAL AGUINALDO, Petitioner, versus NATIONAL
LABOR RELATIONS COMMISSION, PHILIPPINE INDUSTRIAL SECURITY AGENCY CORP., and FAR
EAST BANK AND TRUST COMPANY, Respondents."
On April 11, 1988, Philippine Industrial Security Agency Corporation (PISAC), petitioner, hired Percival
Aguinaldo, respondent, as a security guard. He was assigned to secure the premises of Far East Bank &
Trust Company (FEBTC) Branch in Santiago City. In 1993, he was promoted as Branch Head Guard. 2
On November 13, 1998, Ms. Remy Tumamao, petitioners roving personnel, caught respondent without
headgear and smoking while on duty. Respondent explained his side in a Memorandum 3 dated November
14, 1998, thus:
"This is in response with the inspection done last Friday November 13, 1998 at 10:30AM by Ms. Remy
Tumamao of the Chief security office.
I was not able to use my perching cap at that time because my hair is still wet. I was in complete attire
before the incident but when I received an emergency call from our armor crew who, on that time has a cash
transfer to Central Bank Tuguegarao Cagayan, I was informed that our armor car had a mechanical trouble.
So even if it was raining, I called our Mechanic immediately residing beside our branch.
Thank you for your kind consideration on this matter.
SG. PERCIVAL AGUINALDO
HEAD GUARD"
On November 23, 1998, petitioner security agency issued a memorandum to respondent directing him to
report to the FEBTC main office in Malabon City for investigation. 4 The following day, or on November 24,
petitioner issued a Relief Order5 ordering him to report to its head office for further clarification of his status,
thus:
"(Y)ou are hereby relieved from your post at FEBTC Br., Santiago City effective 24 November 1998.
Report to PISACORP head Office for further clarification of your status.
By order: x x x"
Also on November 24, Antonio B. Banastas, Jr., Branch Head of FEBTC, Santiago City, wrote a
Memorandum6 to petitioner requesting the retention of respondent in the same office, thus:
"MEMORANDUM:
F O R : COL. MARCIAL CONACO, JR.
ASSISTANT VICE PRESIDENT
SECURITY OFFICE
S U B J E C T: WAIVER OF RELIEVE ORDER TO
SECURITY GUARD PERCIVAL AGUINALDO
-------------------------------------------------------------------------------------This is relative to the spot inspection report of Ms. Remy Tumamao on November 13, 1998.
On the morning of November 13, 1998 our armoured car was on its way to deliver cash to
Central Bank in Tuguegarao. At around 10:00 A.M., our armoured car personnel called up
Mr. Aguinaldo and informed him that they incurred a mechanical trouble. Upon receiving the
message, Mr. Aguinaldo went out to fetch or call a mechanic. Since it was raining on that

138

morning, he did not wear his perching cap because his hair was still wet. It was during that
moment when Ms. Tumamao saw him in the branch.
In view of the degree of offense committed by our Security Guard, he should be given
a written reprimand and not relieved from his post since this was his first offense.
Mr. Aguinaldo has been with the branch for ten years, he is a person of good moral
character and has performed his job above our expectations.
In view of this, I would like to seek your approval for the retention of Mr. Aguinaldo.
Thank you.
(Sgd.) ANTONIO B. BANASTAS, JR.
BRANCH HEAD"
However, petitioner, in its letter7 dated December 2, 1998, denied the above request, thus:
"Please be advised that your request of retention at your former post (FEBTC Santiago) was
denied. In view hereof, please report to Supervisor Lary Lopez for reassignment while you
are reserved to the new bank branch that will soon to operate at Santiago.
Please be guided accordingly.
PEPITO C. NOVERAS
Operations Officer"
Forthwith, petitioner assigned respondent temporarily to FEBTC Malabon City Branch pending the opening
of another Branch in Santiago City where according to said petitioner, he will be re-assigned.
This prompted respondent to file with the Office of the Labor Arbiter, Tuguegarao, Cagayan a complaint for
illegal dismissal and non-payment of separation pay with damages against petitioner.
On November 3, 1999, Executive Labor Arbiter Ricardo N. Olairez rendered a Decision 8 dismissing
respondents complaint for lack of merit.
On appeal, the National Labor Relations Commission (NLRC) rendered its Decision 9 dated March 29, 2000
reversing the appealed Decision, thus:
"Did the Executive Labor Arbiter err in not ruling that the complainant was illegally dismissed from
employment?
Based on the memorandum dated December 2, 1998, respondent PISAC did not put the complainant on a
floating status. Rather, it gave him a new assignment as a reserved (security guard) for the new bank
branch that was supposedly going to operate soon in Santiago. Clearly, what was given to him was a
mockery of an assignment. There was no date given for his assumption of his new post. There was no
assurance that it would ever be realized. In fact, there is not even a single reference to the above-mentioned
new agreement in any of the pleadings of respondent PISAC. Respondent PISAC simply ignored every
reference to the memorandum dated December 2, 1998 that the complainant made in his own pleadings.
Respondent PISACs act of giving the complainant an assignment in the future amounts to an indefinite
suspension. It is settled that an indefinite suspension is tantamount to a constructive dismissal (Oriental
Mindoro Electric Cooperative, Inc. vs. NLRC (246 SCRA 294). Under these circumstances, the complainant
would ordinarily be entitled to reinstatement with full backwages (Article 279, Labor Code). However, since
he prayed for separation pay in the complaint, he should be awarded separation pay in lieu of reinstatement
and of course, full backwages.
WHEREFORE, the decision is hereby reversed. Respondent Philippine Industrial Security Agency Corp. is
hereby ordered to pay the complainant his full backwages from November 24, 1998 to the date of the finality
of this decision and separation pay amounting to P59,400.00 (P5,400 x 11 years = P59,400.00).
SO ORDERED."
On May 19, 2000, petitioner filed a motion for reconsideration. Surprisingly, it was granted by the NLRC in its
Decision10 dated August 29, 2000 thus:
"WHEREFORE, the instant Motion for Reconsideration is GRANTED. Our Decision of 29 March 2000 is
hereby RECONSIDERED and SET ASIDE. The 3 November 1999 Decision of Executive Labor Arbiter
Ricardo N. Olairez dismissing the case is hereby REINSTATED.
SO ORDERED."
Respondent then filed a motion for reconsideration but was denied by the NLRC in its Resolution 11 dated
December 7, 2000.
Hence, respondent filed with the Court of Appeals a petition for certiorari12 under Rule 65 of the 1997 Rules
of Civil Procedure, as amended.

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On May 31, 2001, the Appellate Court rendered its Decision 13 granting the petition and setting aside the
Decision of the NLRC. In finding for respondent, the Appellate Court held:
"The petition is impressed with merit.
Petitioner claims that his reassignment to another post that was not yet open amounted to constructive
dismissal. We agree.
A constructive dismissal is a quitting because continued employment is rendered impossible, unreasonable
or unlikely, as an offer involving a demotion in rank and a diminution in pay (Philippine Japan Active Carbon
Corp. vs. NLRC, G.R. No. 83239, March 8, 1989). As further explained in Jarcia vs. NLRC (266 SCRA 97
[1997]):
In case of constructive dismissal, the employer has the burden of proving that the transfer and demotion of
an employee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a
transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer
is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. Failure of the employer to overcome this burden of
proof, the employees demotion shall no doubt be tantamount to unlawful constructive dismissal.
In the case at bar, petitioner was validly relieved from his post for violating a company policy. The petitioner
did not contest this violation as he in fact admitted to committing it during the investigation, though with a
valid and plausible explanation. What tarnishes the whole scene is the fact that after petitioner was
relieved from his old post in Santiago City, Isabela, he was temporarily reassigned to the head office
of private respondent PISA in Malabon, Metro Manila pending the opening of another bank in
Isabela (Rollo, p. 60). This act is unfair and downright oppressive considering that petitioner, along
with his family, is a long-time resident of Santiago City, Isabela. The transfer would mean that
petitioner would be away from his family or that he would bring his entire family to Manila entailing
expenses. Further, it remains unclear if petitioner would be reassigned back to Isabela, as the said
plan remains ambiguous for it is not clearly shown when the said reassignment would take place. In
the Notice given to petitioner, it is stated that his reassignment to Manila is good for 179 days and maybe
renewed after its expiration. We cannot give evidentiary weight to private respondent PISAs claim that
petitioner will be reassigned back to another branch in Isabela as no evidence to that effect was
offered.
While it is true that an employer is free to regulate, according to his own discretion and judgment, all aspects
of employment, including hiring, work assignments, working methods, time, place and manner of work, tools
to be used, processes to be followed, supervision of workers, working regulations, transfer of employees,
work supervision, layoff of workers and the discipline, dismissal and recall of workers (San Miguel Brewery
Sales vs. Ople, G.R. No. 53515, February 8, 1989), and this right to transfer employees forms part of
management prerogatives, the employees transfer should not be unreasonable, nor inconvenient, nor
prejudicial to him. It should not involve a demotion in rank or diminution of his salaries, benefits and other
privileges, as to constitute constructive dismissal (PT&T vs. Laplana, G.R. No. 76645, July 23, 1991).
Hence, petitioner cannot be faulted for filing an illegal dismissal case. While the case does not directly fall
under the traditional concept of illegal dismissal case, We hold that it partakes of the nature of constructive
dismissal. InPhilippine Advertising Counselors, Inc. vs. NLRC, 263 SCRA 395 (1996) and Masagana
Concrete Products vs. NLRC, 313 SCRA 576 (1999), the Supreme Court keenly made this observation, to
wit:
Constructive dismissal, however, does not always involve such kinds of diminution, an act of clear
discrimination, insensibility, or disdain by an employer may become so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued employment.
As explained earlier, this Court is fully aware of the right of management to transfer its employees as part of
management prerogative. But like all rights, the same cannot be exercised with unbridled discretion. The
managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in
mind the basic element of justice and fair play.
However, private respondent Far East Bank cannot be held liable for petitioners backwages as it is not the
employer of the petitioner.
WHEREFORE, the petition is GRANTED. The NLRC Decision dated August 29, 2000 is hereby SET ASIDE.
Private respondent PISA is hereby ordered to REINSTATE petitioner to his former position without loss of
seniority rights and privileges and to PAY his backwages computed from the time the same were withheld
from him."14(Emphasis supplied)
Petitioner filed a motion for reconsideration but was denied in a Resolution dated September 11, 2001. 15
Hence, the present recourse, petitioner ascribing to the Court of Appeals the following assignments of error:
1. The questioned Decision and Resolution of the Court of Appeals "are manifestly not in accord with
law and established jurisprudence;" and
2. The petition is "dismissible outright for having been filed in violation of the Rule against forumshopping."16
Petitioner primarily contends that respondents re-assignment to Malabon City is only temporary, otherwise,
he would have been placed in a "floating status." Moreover, such re-assignment is a valid exercise of
management prerogative done in good faith and with valid reason.
Respondent counters that the Court of Appeals correctly ruled that his re-assignment is "unfair and
downright oppressive" and constitutes constructive dismissal. The "floating status" anticipated by petitioner
is just imaginary and without any basis, as the move to transfer him to a new or other post is completely

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unnecessary. Besides, Mr. Banastas, strongly recommended his retention in FEBTC-Santiago City
considering that he has been with the Santiago City Branch for ten years and has performed his job
efficiently.17 His transfer to Malabon City is tantamount to constructive dismissal.
On the issue of forum-shopping, respondent contends that he filed only one petition for certiorari and that is
with the Court of Appeals, docketed therein as CA-G.R. SP No. 62704.1avvphi1.zw+
For his part, the Solicitor General submits that the Court of Appeals did not err in giving due course to
respondents petition. First, the issue raised by petitioner is factual which necessarily calls for an
examination of the evidence and is, therefore, not reviewable in a petition for certiorari. Second, there is no
evidence on record showing that respondent indeed filed another petition for review.
The petition must fail.
Settled is the rule that findings of facts of the Court of Appeals are accorded respect, even finality, and will
not be disturbed especially where such findings are supported by substantial evidence. 18 One of the
exceptions, however, is when there is a variance between the findings of the NLRC and the Court of
Appeals, as in this case.
Jurisprudence recognizes the exercise of management prerogative. For this reason, courts often decline to
interfere in legitimate business decisions of employers. 19 In fact, labor laws discourage interference in
employers judgment concerning the conduct of their business. 20
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign
employees from one office or area of operation to another provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made
in bad faith, or effected as a form of punishment or demotion without sufficient cause.21
By transferring respondent to the Malabon City FEBTC Branch, petitioner resorted to constructive dismissal.
A transfer amounts to constructive dismissal when the transfer is unreasonable, unlikely, inconvenient,
impossible, or prejudicial to the employee,22 as in this case. It is defined as an involuntary resignation
resorted when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the
employee.23
In constructive dismissal, the employer has the burden of proving that the transfer and demotion of an
employee are for just and valid grounds, such as genuine business necessity.24 The employer must be able
to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of salary and other benefits. Should the employer fail to overcome
this burden of proof, the employees transfer shall be tantamount to unlawful constructive dismissal. 25
In the case at bar, petitioner failed to overcome this burden of proof. Foremost, respondent explained that he
was in complete attire that morning. However, the bank personnel informed him that the FEBTC armor car,
on its way to deliver cash to the Central Bank Office in Tuguegarao, incurred mechanical trouble. So he
immediately went outside to fetch a mechanic. It was then raining, hence, he got wet the reason why he
was not wearing his perching cap. Under the circumstances, his failure to wear his perching cap is justified.
Thus, he should not be held liable for any violation of office regulations which warrants his transfer to
another work place.
Second, the letter of Mr. Banastas recommending the retention of respondent in the FEBTC Santiago City
Branch negates petitioners reasons in re-assigning the latter to the FEBTC Malabon City Branch. Serviceoriented enterprises, such as petitioner's business of providing security services, generally adhere to the
business adage that "the customer or client is always right". 26 Here, petitioner disregarded such aphorism.
Petitioners act manifests insensibility to the welfare of respondent and his family. Obviously, his transfer to
Malabon City will be prejudicial to them economically and emotionally. Indeed, , petitioners action is in
defiance of basic due process and fair play in employment relations. 27
Third, petitioners excuse in re-assigning respondent to Malabon City, pending the opening of another
FEBTC Branch in Santiago City is unreasonable. The Appellate Court is correct in holding that there is no
assurance that a new FEBTC Branch will be opened in Santiago City.
In Blue Dairy Corporation vs. NLRC,28 we ruled that:
"x x x the managerial prerogative to transfer personnel must not be exercised with grave abuse of discretion,
bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the
manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid
himself of an undesirable worker. x x x"
WHEREFORE, the petition is hereby DENIED. The assailed Decision of the Court of Appeals is AFFIRMED.
Costs against petitioner.
SO ORDERED.

31. G.R. No. 81493 April 3, 1990

SUPERSTAR SECURITY AGENCY, INC. and/or Col. ARTURO ANDRADA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FILOMENA HERMOSA, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioners.

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Federico C. Leynes for private respondent.

MEDIALDEA, J.:
This petition for review on certiorari seeks to reverse the decision of the public respondent National Labor
Relations Commission setting aside the decision of the Labor Arbiter and ordering the reinstatement of
private respondent with limited backwages of one (1) year. This is an opportune time to stress once again
that the appropriate remedy to assail the decisions of the National Labor Relations Commission is through a
petition forcertiorari under Rule 65 not Rule 45 of the Rules of Court. However, in the interest of justice, We
shall treat this petition as a special civil action for certiorari (De Asis, et al. v. NLRC, G.R. No. 82478,
September 7, 1989).
The antecedent facts are as follows:
On June 24, 1981, Filomena Hermosa (Hermosa, for short) was hired by petitioner Superstar Security
Agency (Agency, for short) as a Security Guard with a daily salary of P37.00 and an emergency cost of living
allowance of P510.00 per month. She was assigned to different detachments in premises owned by the
Agency's clients such as the Supergarment Malugay Yakal (SMY) or Rustan Commercial Corporation
Warehouse, Rustan Group of Companies consisting of Rustan Commercial Corporation (Cubao and Makati
Detachments), Tourist Duty Free Shop (FTI Detachment, Hyatt, Hilton and Sheraton Detachments), and
Rustan Supermarket Warehouse (Rockefeller Detachment). On February 1, 1985, the Agency placed
Hermosa on a temporary "off-detail." On March 5, 1985, Hermosa filed a complaint for illegal dismissal. She
claimed that she was unceremoniously dismissed on suspicion that she was the author of an anonymous
report about the irregularities committed by her fellow lady security guards; that it was this precise reason
why she was called to the headquarters by the Agency's Personnel Supervisor, Rafael Fermo; that,
thereafter, Fermo threatened and directed her to keep any information regarding the matter to herself; that
she was instructed not to report for duty at SMY effective February 1, 1985 as she would be given a new
assignment; that she did as she was told but no new assignment came despite repeated follow-ups; and that
instead, the Agency informed her that the cause of her temporary "off-detail" was the cost-cutting program of
the Rustan Group of Companies and the refusal of Agency's clients to accept her allegedly due to poor
performance, and lack of elementary courtesy and tact. Finally, Hermosa averted that she was denied due
process in that she was neither informed of the alleged complaints against her nor afforded the opportunity
to explain her side.
Petitioners, on the other hand, claimed that Hermosa was relieved of her SMY post due to the cost-cutting
program of its clients; that while she was on temporary "off-detail" since February 1, 1985, the Agency
continued to look for an available assignment for her with the other detachments; that, however, the
respective Security Directors of the said detachments signified their unwillingness to accept her because of
her poor performance and undesirable conduct and behavior (Exhs. 6 to 13); that the Agency did not dismiss
her at all; that Mr. Fermo did not receive any anonymous report of any irregularity committed by some
security guards, hence, there was no basis for the supposed threat and instruction to complainant to be
silent; that the Agency usually welcomes any report, if it exists, regarding the behavior of its personnel by
conducting an inquiry thereon; that the Agency is committed to maintain the trust placed upon it by its clients
as well as heed the latter's demands for good service; and that the complainant has been previously warned
and reprimanded for breach or violation of the Agency's rules on discipline (Exh. 16 to 22).
On April 7, 1986, the Labor Arbiter rendered a decision, to wit:
WHEREFORE, pursuant to the above premises, the respondent Superstar Security Agency,
Inc. is hereby ordered to pay the complainant the amount of P3,848.00 by way of separation
pay.
SO ORDERED. (Rollo, p. 26)
On appeal to the respondent National Labor Relations Commission, the aforesaid decision was set aside
and a decision favorable to complainant was issued, as follows:
WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE, and
another one entered, ordering the respondents to reinstate the complainant to her former
position without loss of seniority rights and other related benefits but with a limited
backwages of one (1) year without deduction and qualification.
SO ORDERED. (Rollo, pp. 20-21)

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Hence, this recourse.

The sole issue presented for resolution is whether or not the petitioners are guilty of illegal dismissal
(Memorandum of Petitioners, p. 6; Rollo, p. 71).
We resolve the issue in the negative. The charge of illegal dismissal was prematurely filed. The records
show that a month after Hermosa was placed on a temporary "off-detail," she readily filed a complaint
against the petitioners on the presumption that her services were already terminated. Temporary "off-detail"
is not equivalent to dismissal. In security parlance, it means waiting to be posted. (TSN, January 14, 1980,
p. 35) It is a recognized fact that security guards employed in a security agency may be temporarily
sidelined as their assignments primarily depend on the contracts entered into by the agency with third
parties (Agro Commercial Security Agencies, Inc. v. NLRC, et al., G.R. Nos. 82823-24, July 31, 1989).
However, it must be emphasized that such temporary inactivity should continue only for six months.
Otherwise the security agency concerned could be liable for constructive dismissal under Article 287 (now
Article 286) of the Labor Code (see Agro case, supra). We note that Hermosa's "off-detail" from SMY was
due not to petitioners' machination but to a previous request of SMY which was reiterated by the
management on January 29, 1985 (Exhibit "22," Records, p. 69). Moreover, the defenses raised by the
petitioners, namely, their clients' cost reduction program and their refusal to accept the complainant's
services do not appear to Us as a "scheme to camouflage (Hermosa's) illegal dismissal . . ." (NLRC
decision, Records, p. 201). We simply cannot ignore the reality of the situation obtaining in this case. In the
business world, companies which offer contracts for services cater to the whims and wishes of clients
whether the same are reasonable or not. Clients are not expected to explain the reason for their demands
while these companies are not only expected but also are bound to comply with their clients' directives. In
the case at bar, We do not find it unusual for clients to resort to a cost-cutting program in view of the
prevailing economic condition and then to manifest their preferences of people they want to work with in
their establishments.
Hermosa maintains that her temporary "off-detail" is a mere cover-up since petitioners failed to present
evidence to support their clients' cost-cutting program. We do not think so. Petitioners are neither involved in
their clients' businesses nor do they exercise control over the latter's business operations. They only provide
security to their clients' establishments. Consequently, the Agency has no right at all to demand the reasons
for their clients' action. Faced with its clients' negative reaction to Hermosa's detail, petitioners are practically
powerless to disregard the position of its clients. To do otherwise would mean an end to petitioners' business
relationship with them. Considering that it was only Hermosa among petitioners' employees who was
affected by the clients' memoranda, it would be sheer foolishness for petitioners to press for Hermosa's
detail to the detriment of its business. Justice, fairness and due process demand that an employer should
not be penalized for situations where it had no participation or control (see M.F Violago Oiler Tank Trucks v.
The National Labor Relations Commission, et. al., G.R. Nos. 56950-51, September 30, 1982, 117 SCRA 544
and A. Marquez v. Leogardo, Jr., G.R. No. 63227, March 15, 1984, 128 SCRA 244).
Hermosa further argues that the clients' memoranda refusing her services are self-serving pieces of
evidence since they contained a general statement of "undesirable conduct and behavior" which were
secured after the complaint was filed. We are unconvinced. It must be borne in mind that at this point
Hermosa was still placed on temporary "off-detail." The fact that the clients' memoranda came after the
complaint bolsters the petitioners' stance that they were indeed looking for an available post for Hermosa
but their clients formally turned down its request. Such refusal was not without basis. The offer of exhibits of
petitioners before the Labor Arbiter reveals reports on Hermosa's past misconduct like: (1) inspecting a bag
containing purchased items of a Tourist Duty-Free Shop (TDFS) customer; flaring up and talking in a loud
voice upon being informed that a customer without plane ticket was allowed to, purchase (TDFS) goods,
both violative of (TDFS) rules and regulations; (2) reading magazines for sale and comics inside the store;
(3) shouting at an employee of a client; (4) uttering unnecessary remarks while on duty which triggered a
misunderstanding; and (5) wearing sexy shoes (sic) with an opening at the toes instead of the usual
authorized shoes for lady security guards (Exh. "16," "17," "18", and "l 9," pp. 63-66). In the above
infractions, the clients' respective Security Directors pursuant to an established practice took charge of the
investigation and copies of the memorandum of the action taken thereon were furnished Hermosa and the
Agency. Thus, the general statement of undesirable conduct and behavior need not be spelled out since
petitioners already had information of Hermosa's previous misdemeanor.
Hermosa denies that she committed the foregoing acts of misconduct. She claims that the "evidence were
planned and fabricated to lend a semblance of legality to the cause of (her) dismissal." (memorandum of
Petitioners, Rollo, p. 87). Hermosa's supposition is untenable. A study of the records reveals that other than
her statement of denial, Hermosa did not present any corroborative evidence. Upon the other hand, the
subject memoranda contained detailed reports on the incidents which would be difficult for petitioners to
concoct. In the absence of a contrary evidence, the said memoranda are credible.

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Considering, therefore, the circumstances of this case, We are more inclined to sustain the Labor Arbiter's
award of separation pay than reinstatement. As the Labor Arbiter aptly puts it:
. . . (I)f by reason of complainant's justified placement under temporary off-detail no dismissal
then could be spoken of, yet, by reason of subsequent events whereby she was rejected by
the other detachments of the respondent Agency, it could be said that her continuing
temporary off-detail has already become a permanent one. For this reason, there is a need
to extend to the complainant separation pay equivalent to one (1) month pay for every year
of service. (Decision of the Labor Arbiter, Rollo, p. 26)
ACCORDINGLY, the decision of the NLRC dated October 30, 1987 is SET ASIDE and the decision of the
Labor Arbiter dated April 7, 1986 is hereby REINSTATED. No costs.
SO ORDERED.
32. G.R. No. 143215

July 11, 2002

SOLIMAN SECURITY SERVICES, INC. and/or TERESITA L. SOLIMAN, petitioners,

vs.
THE COURT OF APPEALS and EDUARDO VALENZUELA, respondents.
VITUG, J.:
Respondent Eduardo Valenzuela, a security guard, was a regular employee of petitioner Soliman Security
Services assigned at the BPI-Family Bank, Pasay City. On 09 March 1995, he received a memorandum
from petitioners relieving him from his post at the bank, said to be upon the latters request, and requiring
him to report to the security agency for reassignment. The following month, or on 07 April 1995, respondent
filed a complaint for illegal dismissal on the ground that his services were terminated without a valid cause
and that, during his tenure at the bank, he was not paid his overtime pay, 13th month pay, and premium pay
for services rendered during holidays and rest days. He averred that, after receiving the memorandum of 09
March 1995, he kept on reporting to the office of petitioners for reassignment but, except for a brief stint in
another post lasting for no more than a week, he was put on a "floating" status.
Petitioners contended that the relief of respondent from his post, made upon request of the client, was
merely temporary and that respondent had been offered a new post but the latter refused to accept it.
Petitioners argued that respondents floating status for barely 29 days did not constitute constructive
dismissal.
On 31 July 1995, the Labor Arbiter, Ariel Cadiente Santos, arrived at a decision holding petitioners guilty of
constructive dismissal and ordering the reinstatement of the complainant to his former position with full
backwages from the date of his "dismissal" until his actual reinstatement; directing the Research and
Information Unit to compute the various monetary benefits awarded to the complainant; and adjudging the
payment, by way of attorneys fees, of ten percent (10%) of all sums owing to the complainant.
On 16 October 1998, petitioners filed an appeal to the National Labor Relations Commission (NLRC).
On 11 November 1998, the NLRC issued an order directing petitioners to submit an affidavit to the effect that
their appeal bond was genuine and that it would be in force and effect until the final disposition of the case.
In his reply memorandum, dated 28 November 1998, respondent, asseverating that petitioners failed to
deposit the required bond for the appeal, sought the appeal to be declared as not having been validly
perfected. On 19 January 1999, petitioners submitted a manifestation and affidavit in compliance with the
11th November 1998 order of the NLRC.1Apparently satisfied, the NLRC, on 30 April 1999, gave due course
to the appeal and rendered the presently assailed decision, reversing that of the Labor Arbiter, to wit:
WHEREFORE, the decision appealed from is hereby SET ASIDE. However, respondent [before the
NLRC] is hereby ordered to pay complainant separation pay computed at one-half (1/2) month for
every year of service, reckoned from date of employment on October 9, 1990 up to September 9,
1995, the date the complainant should have been redeployed." 2
A motion for reconsideration, filed by herein private respondent Valenzuela, was denied by the NLRC.
Valenzuela forthwith brought the matter up to the Court of Appeals. On the thesis that the only issue
interposed was whether or not the NLRC committed grave abuse of discretion when it took cognizance of
the appeal and reversed the decision of the Labor Arbiter despite the failure of herein petitioners to validly

144

post the appeal bond, the appellate court responded in the affirmative, set aside the assailed decision of the
NLRC and reinstated that of the Labor Arbiter. A motion to reconsider the decision was denied.
In the instant recourse before this Court, petitioners claim that the Court of Appeals (Eleventh Division) has
committed grave abuse of discretion amounting to lack or excess of jurisdiction in declaring petitioners to
have failed in perfecting their appeal with the NLRC.
This Court finds merit in the petition.
Private respondent would posit that the appeal of petitioners to the NLRC should be considered to have
been made on 19 January 1999 (when petitioner submitted, pursuant to the NLRC order, a statement under
oath to the effect that the surety bond it had posted was genuine and confirmed it to be in effect until the
final termination of the case) which was beyond the ten-day period for perfecting an appeal. The records
before the Court would show, however, that an appeal bond was posted with the NLRC at the same time
that the appeal memorandum of petitioners was filed on 16 October 1998. A certified true copy of the appeal
bond3 would indicate that it was received by the Commission on 16 October 1998, the date reflected by the
stamp-mark thereon. The surety bond issued by the Philippine Charter Insurance Corporation bore the date
of 14 October 1998 or two days before the appeal memorandum was seasonably filed on 16 October 1998.
The Order,4 dated 11 November 1998, of the NLRC categorically stated that "records [would] disclose that
the instant appeal [was] accompanied by a surety bond, as the Decision sought to be appealed involved a
monetary award." The NLRC, in fact, ordered petitioner to submit an affidavit to confirm that its appeal bond
was genuine and would be in force and effect until the final disposition of the case. The Commissions
declaration that the appeal was accompanied by a surety bond indicated that there had been compliance
with Article 2235 of the Labor Code.
An appeal to the NLRC is perfected once an appellant files the memorandum of appeal, pays the required
appeal fee and, where an employer appeals and a monetary award is involved, the latter posts an appeal
bond or submits a surety bond issued by a reputable bonding company.6 In line with the desired objective of
labor laws to have controversies promptly resolved on their merits, the requirements for perfecting appeals
are given liberal interpretation and construction. 7
The only issue on the merits of the case is whether or not private respondent should be deemed
constructively dismissed by petitioner for having been placed on "floating status," i.e., with no reassignment,
for a period of 29 days. The question posed is not new. In the case of Superstar Security Agency, Inc., vs.
NLRC,8 this Court, addressing a similar issue, has said:
"x x x The charge of illegal dismissal was prematurely filed. The records show that a month after
Hermosa was placed on a temporary off-detail, she readily filed a complaint against the petitioners
on the presumption that her services were already terminated. Temporary off-detail is not equivalent
to dismissal. In security parlance, it means waiting to be posted. It is a recognized fact that security
guards employed in a security agency may be temporarily sidelined as their assignments primarily
depend on the contracts entered into by the agency with third parties (Agro Commercial Security
Agencies, Inc. vs. NLRC, et al., G.R. Nos. 82823-24, 31 July 1989). However, it must be
emphasized that such temporary inactivity should continue only for six months. Otherwise, the
security agency concerned could be liable for constructive dismissal." 9
Constructive dismissal exists when an act of clear discrimination, insensibility or disdain, on the part of an
employer has become so unbearable as to leave an employee with no choice but to forego continued
employment.10 The temporary "off-detail" of respondent Valenzuela is not such a case.
WHEREFORE, the instant petition is GRANTED. The assailed decision and resolution of the Court of
Appeals areSET ASIDE and the decision of the National Labor Relations Commission in NCR CN. 0402620-95 isREINSTATED. No costs.
SO ORDERED.
33. G.R. No. 87051 February 7, 1991
ESCO HALE SHOE COMPANY, INC. and ELMER H. COBB, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, CASIMIRA B. PEDROSA, HON. NIEVES V. DE
CASTRO, DEPUTY SHERIFF RENE A. MASILUNGAN and ALLIED BANKING
CORPORATION, respondents.
Padilla, Reyes, Belarmino & De la Torre and Paul P. Lentejas for petitioners.

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Ballon & Triste Law Offices and Ocampo, Quiroz, Mina & Associates for private respondents.

PARAS, J.:p
This is a petition for review on certiorari of a decision of the respondent National Labor Relations
Commission which affirmed the respondent Labor Arbiter's decision ordering the petitioner Esco Hale Shoe
Company, Inc. to pay private respondent Casimira B. Pedrosa the total amount of P23,534.83 representing
retirement benefits, 13th month pay for 1986 and unpaid vacation/sick leave benefits.
It appears that private respondent had been employed by the petitioner for forty nine (49) years commencing
in 1937 as a shoe box maker until 1986 as a heel pad attacher.
In 1982, having reached the age of sixty five (65), private respondent applied for retirement with the Social
Security Commission and she received retirement benefits therefrom. Although she had already retired,
private respondent continued working for the petitioner until November 1, 1986 when she was excluded by
the petitioner from the regular work schedule. Private respondent, thereafter, demanded that she be retired
from employment and/or be paid separation pay, but the petitioner refused despite repeated demands.
Thus, on February 12, 1987, private respondent filed a complaint against the petitioner for violation of PD
851 and for payment of retirement benefits and/or separation pay and other claims.
As defense, the petitioner argued that the only reason for the filing of the complaint is private respondent's
baseless demand to be retired anew; that the petitioner has no separate retirement nor private benefit plan
and all its employees, including the private respondent, are reported to the SSS for coverage; that private
respondent had effectively retired from the petitioner in 1982 when she received retirement benefits from the
SSS; and that all the other claims of private respondent, except vacation leave pay for the years 1985 and
1986 in the amount of P1,008.00, had been paid by the petitioner to her.
Finding the employer's obligation to pay retirement benefits to its retiring employee separate and distinct
from that of the SSS, the respondent Labor Arbiter rendered a decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, respondent Esco Hale Shoe Company, Inc. and/or
Elmer H. Cobb, as Owner and President, are hereby ordered to pay complainant Casimira B.
Pedrosa the total amount of TWENTY THREE THOUSAND FIVE HUNDRED THIRTY FOUR
PESOS AND EIGHTY-THREE CENTAVOS (P23,534.83) which represents her 13th month
pay for 1986, unpaid vacation/sick leave benefits and retirement benefits, by depositing the
same with this Office within fifteen (15) days from receipt hereof. Failure to comply within the
period herein prescribed, a writ of execution shall automatically issue to satisfy this Decision.
SO ORDERED. (pp. 43-44, Rollo)
In so ruling, said respondent Labor Arbiter relied on Sections 13 and 14 of Rule 1, Book VI of the Omnibus
Rules Implementing the Labor Code, which provide:
Section 13. Retirement. In the absence of any collective agreement or other applicable
agreement concerning terms and conditions of employment which provides for retirement at
an older age, an employee may be retired upon reaching the age of sixty (60) years.
Section 14. Retirement benefits. (a) An employee who is retired pursuant to a bona-fide
retirement plan or in accordance with the applicable individual or collective agreement or
established employer policy shall be entitled to all the retirement benefits provided therein or
to termination pay equivalent to at least one month salary, or to one-half month salary for
every year of service, whichever is higher, a fraction of at least (6) months being considered
as one whole year. (emphasis supplied)
Said decision was affirmed by the respondent Commission on appeal.
In this petition, the petitioner contends that there is no basis for twice granting retirement benefits to the
private respondent, who is admittedly a retired employee and a pensioner of the SSS.

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Considering that it is admitted by both parties that the petitioner has no collective bargaining agreement nor
bona-fide retirement plan, the aforementioned provisions of the Implementing Rules are inapplicable to the
instant case. Said provisions merely recognize and qualify the retirement benefits a retiring employee is
entitled to receive, in case there is a separate retirement or private benefit plan. In fact, Article 287, the law
being implemented by the aforesaid sections states:
Art. 287. Retirement. any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as
he may have earned under existing laws and any collective bargaining or other agreement.
(Section 287, Labor Code, as amended)
However, since private respondent had worked with the petitioner for such a long time, We deem it just and
equitable to grant her separation pay as she is retiring from the service of the petitioner ten (10) years
beyond the statutory age of sixty 60).
We uphold the findings of the Labor Arbiter as affirmed by the respondent Commission with regard to the
grant of separation pay, to wit:
Anent the issue of 13th month pay, respondents, either in their position paper or in the
affidavit of respondent Cobb, have been mum, an indication that complainant was not paid.
As to the claim for vacation and sick leave benefits, since there is an admission by the
respondents that complainant is entitled to the amount of P1,008.00 for the years 1985 and
1986 and are ready and willing to pay any time, the same need not have to be passed upon.
In computing the separation or retirement benefits of complainants, we have to consider the
period when the country was at war with Japan and also the occupation years which started
in December, 1941 up to 1945. The separation benefits, therefore, have to be based on fortyfive (45) years instead of forty-nine years as claimed and computed on the basis of the
minimum wage rate in 1986 at P37.00 a day when complainant was separated from work.
And being a daily paid employee, the computation has to be computed at 13 days per year
of service, as follows:
P37.00 x 13/days = P481.00/mo.
P481.00 x 45 years = P21,645.00
or a total of Twenty One Thousand Six Hundred Forty-Five Pesos (P21,645.00). In fine, the
total benefits to be received by complainant is P23,534.83 representing her 13 month pay for
1986, the unpaid vacation/sick leave benefits and retirement pay (p. 72, Rollo)
PREMISES CONSIDERED, the petition is hereby DISMISSED.
SO ORDERED.
34.
G.R. No. 70615 October 28, 1986
VIRGILIO CALLANTA, petitioner,
vs.
CARNATION PHILIPPINES, INC., and NATIONAL LABOR RELATIONS COMMISSION
[NLRC], respondents.
Danilo L. Pilapil for petitioner.

FERNAN, J.:
The issue raised in this petition for certiorari is whether or not an action for illegal dismissal prescribes in
three [3] years pursuant to Articles 291 and 292 of the Labor Code which provide:

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Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations
issued pursuant thereto shall prescribe in three [3] years.
xxx xxx xxx
Art. 292. Money Claims. All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three [3] years from the time
the cause of action accrued; otherwise, they shall be forever barred.
xxx xxx xxx
Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc. [Carnation, for
brevity] in January 1974 as a salesman in the Agusan del Sur area. Five [51 years later or on June 1, 1979,
respondent Carnation filed with the Regional Office No. X of the Ministry of Labor and Employment [MOLE],
an application for clearance to terminate the employment of Virgilio Callanta on the alleged grounds of
serious misconduct and misappropriation of company funds amounting to P12,000.00, more or less.
Upon approval on June 26, 1979 by MOLE Regional Director Felizardo G. Baterbonia, of said clearance
application, petitioner Virgilio Callanta's employment with Carnation was terminated effective June 1, 1979.
On July 5, 1982, Virgilio Callanta filed with the MOLE, Regional Office No. X, a complaint for illegal dismissal
with claims for reinstatement, backwages, and damages against respondent Carnation.
In its position paper dated October 5, 1982, respondent Carnation put in issue the timeliness of petitioner's
complaint alleging that the same is barred by prescription for having been filed more than three [3] years
after the date of Callanta's dismissal.
On March 24, 1983, Labor Arbiter Pedro C. Ramos rendered a decision finding the termination of Callanta's
employment to be without valid cause. Respondent Carnation was therefore ordered to reinstate Virgilio
Callanta to his former position with backwages of one [1] year without qualification including all fringe
benefits provided for by law and company policy, within ten [10] days from receipt of the decision. It was
likewise provided that failure on the part of respondent to comply with the decision shall entitle complainant
to full backwages and all fringe benefits without loss of seniority rights.
On April 18, 1983, respondent Carnation appealed to respondent National Labor Relations Commission
[NLRC] which in a decision dated February 25, 1985, 1 set aside the decision of the Labor Arbiter. It declared
the complaint for illegal dismissal filed by Virgilio Callanta to have already prescribed. Thus:
Records show that Virgilio Callanta was dismissed from his employment with respondent
company effective June 1, 1979; and that on 5 July 1982, he filed the instant complaint
against respondent for: Unlawful Dismissal with Backwages, etc.
The provisions of the Labor Code applicable are:
Art. 291. Offenses. Offenses penalized under this Code and the rules and regulations
issued pursuant thereto shall prescribe in three [3] years.
Art. 292. Money claims. All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three [3] years from the time
the cause of action accrued; otherwise, they shall be forever barred.
Obviously, therefore, the causes of action, i.e., "Unlawful Dismissal" and "Backwages, etc."
have already prescribed, the complaint therefore having been filed beyond the three-year
period from accrual date.
With this finding, there is no need to discuss the other issues raised in the appeal.
WHEREFORE, in view of the foregoing, the Decision appealed from is hereby SET ASIDE
and another one entered, dismissing the complaint.
SO ORDERED.
Hence, this petition, which We gave due course in the resolution dated September 18, 1985. 2

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Petitioner contends that since the Labor Code is silent as to the prescriptive period of an action for illegal
dismissal with claims for reinstatement, backwages and damages, the applicable law, by way of supplement,
is Article 1146 of the New Civil Code which provides a four [4]-year prescriptive period for an action
predicated upon "an injury to the rights of the plaintiff" considering that an action for illegal dismissal is
neither a "penal offense" nor a mere "money claim," as contemplated under Articles 291 and 292,
respectively, of the Labor Code. Petitioner further claims that an action for illegal dismissal is a more serious
violation of the rights of an employee as it deprives him of his means of livelihood; thus, it should
correspondingly have a prescriptive period longer than the three 13] years provided for in "money claims."
Public respondent, on the other hand, counters with the arguments that a case for illegal dismissal falls
under the general category of "offenses penalized under this Code and the rules and regulations pursuant
thereto" provided under Article 291 or a money claim under Article 292, so that petitioner's complaint for
illegal dismissal filed on July 5, 1982, or three [3] years, one [1] month and five [5] days after his alleged
dismissal on June 1, 1979, was filed beyond the three-year prescriptive period as provided under Articles
291 and 292 of the Labor Code, hence, barred by prescription; that while it is admittedly a more serious
offense as it involves an employee's means of livelihood, there is no logic in assuming that it has a longer
prescriptive period, as naturally, one who is truly aggrieved would immediately seek the redress of his
grievance; that assuming arguendo that the law does not provide for a prescriptive period for the
enforcement of petitioner's right, it is nevertheless beyond dispute that the said right has already lapsed into
a stale demand; and that considering the seriousness of the act committed by petitioner, private respondent
was justified in terminating the employment.
We find for petitioner.
Verily, the dismissal without just cause of an employee from his employment constitutes a violation of the
Labor Code and its implementing rules and regulations. Such violation, however, does not amount to an
"offense" as understood under Article 291 of the Labor Code. In its broad sense, an offense is an illegal act
which does not amount to a crime as defined in the penal law, but which by statute carries with it a penalty
similar to those imposed by law for the punishment of a crime. 3 It is in this sense that a general penalty
clause is provided under Article 289 of the Labor Code which provides that "... any violation of the provisions
of this code declared to be unlawful or penal in nature shall be punished with a fine of not less than One
Thousand Pesos [P1,000.00] nor more than Ten Thousand Pesos [10,000.00], or imprisonment of not less
than three [3] months nor more than three [3] years, or both such fine and imprisonment at the discretion of
the court." [Emphasis supplied.]
The confusion arises over the use of the term "illegal dismissal" which creates the impression that
termination of an employment without just cause constitutes an offense. It must be noted, however that
unlike in cases of commission of any of the probihited activities during strikes or lockouts under Article 265,
unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities under Article 38,
among others, which the Code itself declares to be unlawful, termination of an employment without just or
valid cause is not categorized as an unlawful practice.
Besides, the reliefs principally sought by an employee who was illegally dismissed from his employment are
reinstatement to his former position without loss of seniority rights and privileges, if any, backwages and
damages, in case there is bad faith in his dismissal. As an affirmative relief, reinstatement may be ordered,
with or without backwages. While ordinarily, reinstatement is a concomitant of backwages, the two are not
necessarily complements, nor is the award of one a condition precedent to an award of the other. 4 And, in
proper cases, backwages may be awarded without ordering reinstatement . In either case, no penalty of fine
nor improsonment is imposed on the employer upon a finding of illegality in the dismissal. By the very nature
of the reliefs sought, therefore, an action for illegal dismissal cannot be generally categorized as an
"offense" as used under Article 291 of the Labor Code, which according to public respondent, must be
brought within the period of three[3] years from the time the cause of action accrued, otherwise, the same is
forever barred.
It is true that the "backwwages" sought by an illegally dismissed employee may be considered, by reason of
its practical effect, as a "money claim." However, it is not the principal cause of action in an illegal dismissal
case but the unlawful deprivation of the one's employment committed by the employer in violation of the
right of an employee. Backwages is merely one of the reliefs which an illegally dismissed employee prays
the labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act committed by the
employer. The award thereof is not private compensation or damages 5 but is in furtherance and effectuation
of the public objectives of the Labor Code. 6 even though the practical effect is the enrichment of the
individual, the award of backwages is not inredness of a private right, but, rather, is in the nature of a
command upon the employer to make public reparation for his violation of the Labor Code. 7
The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is
applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this

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Court had occasion to hold that an action for damages involving a plaintiff seperated from his employment
for alleged unjustifiable causes is one for " injury to the rights of the plaintiff, and must be brought within four
[4] years. 8
In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court, thru then Chief Justice Enrique M.
Fernando, sustained the sand of the Solicitor General that the period of prescription mentioned under Article
281, now Article 292, of the Labor Code, refers to and "is limited to money claims, an other cases of injury to
rights of a workingman being governed by the Civil Code." Accordingly, this Court ruled that petitioner
Marciana Santos, who sought reinstatement, had four [4] years within which to file her complaint for the
injury to her rights as provided under Article 1146 of the Civil Code.
Indeed there is, merit in the contention of petitioner that the four [4]-year prescriptive period under Article
1146 of the New Civil Code, applies by way of supplement, in the instant case, to wit:
Art. 1146. The following actions must be instituted within four years.
[1] Upon an injury to the lights of the plaintiff.
xxx xxx xxx
[Emphasis supplied]
As this Court stated in Bondoc us. People's Bank and Trust Co., 9 when a person has no property, his job
may possibly be his only possession or means of livelihood, hence, he should be protected against any
arbitrary and unjust deprivation of his job. Unemployment, said the Court in Almira vs. B.F. Goodrich
Philippines, 10 brings "untold hardships and sorrows on those dependent on the wage earners. The misery
and pain attendant on the loss of jobs thus could be avoided if there be acceptance of the view that under all
the circumstances of this case, petitioners should not be deprived of their means of livelihood."
It is a principle in American jurisprudence which, undoubtedly, is well-recognized in this jurisdiction that one's
employment, profession, trade or calling is a "property right," and the wrongful interference therewith is an
actionable wrong. 11 The right is considered to be property within the protection of a constitutional guaranty
of due process of law. 12 Clearly then, when one is arbitrarily and unjustly deprived of his job or means of
livelihood, the action instituted to contest the legality of one's dismissal from employment constitutes, in
essence, an action predicated "upon an injury to the rights of the plaintiff," as contemplated under Art. 1146
of the New Civil Code, which must be brought within four [4] years.
In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3] years,
one [1] month and five [5] days after the alleged effectivity date of his dismissal on June 1, 1979 which is
well within the four [4]-year prescriptive period under Article 1146 of the New Civil Code.
Even on the assumption that an action for illegal dismissal falls under the category of "offenses" or "money
claims" under Articles 291 and 292, Labor Code, which provide for a three-year prescriptive period, still, a
strict application of said provisions will not destroy the enforcement of fundamental rights of the employees.
As a statutory provision on limitations of actions, Articles 291 and 292 go to matters of remedy and not to the
destruction of fundamental rights. 13 As a general rule, a statute of limitation extinguishes the remedy only.
Although the remedy to enforce a right may be barred, that right may be enforced by some other available
remedy which is not barred. 14
More so, in the instant case, where the delay in filing the case was with justifiable cause. The threat to
petitioner that he would be charged with estafa if he filed a complaint for illegal dismissal, which private
respondent did after all on June 22, 1981, justifies, the delayed filing of the action for illegal dismissal with
the Regional Office No. X, MOLE on July 5, 1982. Laches will not in that sense strengthen the cause of
public respondent. Besides, it is deemed waived as it was never alleged before the Labor Arbiter nor the
NLRC.
Public respondent dismissed the action for illegal dismissal on the sole issue of prescription of actions. It did
not resolve the case of illegal dismissal on the merits. Nonetheless, to resolve once and for all the issue of
the legality of the dismissal, We find that petitioner, who has continuously served respondent Carnation for
five [5] years was, under the attendant circumstances, arbitrarily dismissed from his employment. The
alleged shortage in his accountabilities should have been impartially investigated with all due regard for due
process in view of the admitted enmity between petitioner and E.L. Corsino, respondent's auditor. 15 Absent
such an impartial investigation, the alleged shortage should not have been attended with such a drastic
consequence as termination of the employment relationship. Outright dismissal was too severe a penalty for

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a first offense, considering that the alleged shortage was explained to respondent's Auditor, E.L. Corsino, in
accordance with respondent's accounting and auditing policies.
The indecent haste of his dismissal from employment was, in fact, aggravated by the filing of the estafa
charge against petitioner with the City Fiscal of Butuan City on June 22, 1981, or two [2] years after his
questioned dismissal. After the case had remained pending for five [5] years, the Regional Trial Court of
Agusan del Norte and Butuan City, Branch V finally dismissed the same provisionally in an order dated
February 21, 1986 for failure of the prosecution's principal witness to appear in court. Admittedly, loss of trust
and confidence arising from the same alleged misconduct is sufficient ground for dismissing an employee
from his employment despite the dismissal of the criminal case. 16 However, it must not be indiscriminately
used as a shield to dismiss an employee arbitrarily. 17 For, who can stop the employer from filing all the
charges in the books for the simple exercise of it, and then hide behind the pretext of loss of confidence
which can be proved by mere preponderance of evidence.
We grant the petition and the decision of the NLRC is hereby reversed and set aside. Although We are
strongly inclined to affirm that part of the decision of the Labor Arbiter ordering the reinstatement of petitioner
to his former position without loss of seniority rights and privileges, a supervening event, which petitioner
mentioned in his motion for early decision dated January 6, 1986 18 that is, FILIPRO, Inc.'s taking over the
business of Carnation, has legally rendered the order of reinstatement difficult to enforce, unless there is an
express agreement on assumption of liabilities 19 by the purchasing corporation, FILIPRO, Inc. Besides,
there is no law requiring that the purchasing corporation should absorb the employees of the selling
corporation. 20 In any case, the very concept of social justice dictates that petitioner shall be entitled to
backwages of three [3] years. 21
WHEREFORE, respondent Carnation Philippines, Inc. is hereby ordered to pay petitioner Virgilio Callanta
backwages for three [3] years without qualification and deduction. This decision is immediately executory.
No costs.
SO ORDERED.

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