G.R. No.

80774 May 31, 1988

SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and RUSTICO VEGA, respondents.
Siguion Reyna, Montecillo & Ongsiako Law Offices for petitioner.
The Solicitor General for public respondent.

FELICIANO, J .:
In line with an Innovation Program sponsored by petitioner San Miguel Corporation ("Corporation;"
"SMC") and under which management undertook to grant cash awards to "all SMC employees ...
except [ED-HO staff, Division Managers and higher-ranked personnel" who submit to the
Corporation Ideas and suggestions found to be beneficial to the Corporation, private respondent
Rustico Vega submitted on 23 September 1980 an innovation proposal. Mr. Vega's proposal was
entitled "Modified Grande Pasteurization Process," and was supposed to eliminate certain alleged
defects in the quality and taste of the product "San Miguel Beer Grande:"
Title of Proposal
Modified Grande Pasteurization Process
Present Condition or Procedure
At the early stage of beer grande production, several cases of beer grande full goods
were received by MB as returned beer fulls (RBF). The RBF's were found to have
sediments and their contents were hazy. These effects are usually caused by
underpasteurization time and the pasteurzation units for beer grande were almost
similar to those of the steinie.
Proposed lnnovation (Attach necessary information)
In order to minimize if not elienate underpasteurization of beer grande, reduce the
speed of the beer grande pasteurizer thereby, increasing the pasteurization time and
the pasteurization acts for grande beer. In this way, the self-life (sic) of beer grande
will also be increased.
1

Mr. Vega at that time had been in the employ of petitioner Corporation for thirteen (1 3) years and
was then holding the position of "mechanic in the Bottling Department of the SMC Plant Brewery
situated in Tipolo, Mandaue City.
Petitioner Corporation, however, did not find the aforequoted proposal acceptable and consequently
refused Mr. Vega's subsequent demands for a cash award under the Innovation Program. On 22
February 1983., a Complaint
2
(docketed as Case No. RAB-VII-0170-83) was filed against petitioner
Corporation with Regional Arbitration Branch No. VII (Cebu City) of the then.", Ministry of Labor and
Employment. Frivate respondent Vega alleged there that his proposal "[had] been accepted by the
methods analyst and implemented by the Corporation [in] October 1980," and that the same "ultimately
and finally solved the problem of the Corporation in the production of Beer Grande." Private respondent
thus claimed entitlement to a cash prize of P60,000.00 (the maximum award per proposal offered under
the Innovation Program) and attorney's fees.
In an Answer With Counterclaim and Position Paper,
3
petitioner Corporation alleged that private
respondent had no cause of action. It denied ever having approved or adopted Mr. Vega's proposal as
part of the Corporation's brewing procedure in the production of San Miguel Beer Grande. Among other
things, petitioner stated that Mr. Vega's proposal was tumed down by the company "for lack of originality"
and that the same, "even if implemented [could not] achieve the desired result." Petitioner further alleged
that the Labor Arbiter had no jurisdiction, Mr. Vega having improperly bypassed the grievance machinery
procedure prescribed under a then existing collective bargaining agreement between management and
employees, and available administrative remedies provided under the rules of the Innovation Program. A
counterclaim for moral and exemplary damages, attorney's fees, and litigation expenses closed out
petitioner's pleading.
In an Order
4
dated 30 April 1986, the Labor Arbiter, noting that the money claim of complainant Vega in
this case is "not a necessary incident of his employment" and that said claim is not among those
mentioned in Article 217 of the Labor Code, dismissed the complaint for lack of jurisdiction. However, in a
gesture of "compassion and to show the government's concern for the workingman," the Labor Arbiter
also directed petitioner to pay Mr. Vega the sum of P2,000.00 as "financial assistance."
The Labor Arbiter's order was subsequently appealed by both parties, private respondent Vega
assailing the dismissal of his complaint for lack of jurisdiction and petitioner Corporation questioning
the propriety of the award of "financial assistance" to Mr. Vega. Acting on the appeals, the public
respondent National Labor Relations Commission, on 4 September 1987, rendered a Decision,
5
the
dispositive portion of which reads:
WHEREFORE, the appealed Order is hereby set aside and another udgment
entered, order the respondent to pay the complainant the amount of P60,000.00 as
explained above.
SO ORDERED.
In the present Petition for certiorari filed on 4 December 1987, petitioner Corporation, invoking Article
217 of the Labor Code, seeks to annul the Decision of public respondent Commission in Case No.
RAB-VII-01 70-83 upon the ground that the Labor Arbiter and the Commission have no jurisdiction
over the subject matter of the case.
The jurisdiction of Labor Arbiters and the National Labor Relations Commission is outlined in Article
217 of the Labor Code, as last amended by Batas Pambansa Blg. 227 which took effect on 1 June
1982:
ART. 217. Jurisdiction of Labor Arbiters and the commission. (a) The Labor Arbiters
shall have theoriginal and exclusive jurisdiction to hear and decide within thirty (30)
working days after submission of the case by the parties for decision, the following
cases involving are workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and
other terms and conditions of employment;
3. All money claims of workers, including those based on non-
payment or underpayment of wages, overtime compensation,
separation pay and other benefits provided by law or appropriate
agreement, except claims for employees' compensation, social
security, medicare and maternity benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this; Code,
including questions involving the legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided
by Labor Arbiters. (Emphasis supplied)
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that
the entire universe of money claims that might be asserted by workers against their employers has
been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the first place,
paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1
related to unfair labor practices), paragraph 2 (relating to claims concerning terms and conditions of
employment), paragraph 4 (claims relating to household services, a particular species of employer-
employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to
employers).<re|| an1w> It is evident that there is a unifying element which runs through paragraphs 1 to 5 and
that is, that they all refer to cases or disputes arising out of or in connection with an employer-
employee relationship. This is, in other words, a situation where the rule of noscitur a sociis may be
usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article 217 of the
Labor Code, as amended. We reach the above conclusion from an examination of the terms
themselves of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of
Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the
NLRC "cases arising from employer employee relations,"
6
which clause was not expressly carried
over, in printer's ink, in Article 217 as it exists today. For it cannot be presumed that money claims of
workers which do not arise out of or in connection with their employer-employee relationship, and which
would therefore fall within the general jurisdiction of the regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on
an exclusive basis. The Court, therefore, believes and so holds that the money claims of workers"
referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with
the employer-employee relationship, or some aspect or incident of such relationship. Put a little
differently, that money claims of workers which now fall within the original and exclusive jurisdiction of
Labor Arbiters are those money claims which have some reasonable causal connection with the
employer-employee relationship.
Applying the foregoing reading to the present case, we note that petitioner's Innovation Program is
an employee incentive scheme offered and open only to employees of petitioner Corporation, more
specifically to employees below the rank of manager. Without the existing employer-employee
relationship between the parties here, there would have been no occasion to consider the
petitioner's Innovation Program or the submission by Mr. Vega of his proposal concerning beer
grande; without that relationship, private respondent Vega's suit against petitioner Corporation would
never have arisen. The money claim of private respondent Vega in this case, therefore, arose out of
or in connection with his employment relationship with petitioner.
The next issue that must logically be confronted is whether the fact that the money claim of private
respondent Vega arose out of or in connection with his employment relation" with petitioner
Corporation, is enough to bring such money claim within the original and exclusive jurisdiction of
Labor Arbiters.
In Molave Motor Sales, Inc. v. Laron,
7
the petitioner was a corporation engaged in the sale and repair
of motor vehicles, while private respondent was the sales Manager of petitioner. Petitioner had sued
private respondent for non-payment of accounts which had arisen from private respondent's own
purchases of vehicles and parts, repair jobs on cars personally owned by him, and cash advances from
the corporation. At the pre-trial in the lower court, private respondent raised the question of lack of
jurisdiction of the court, stating that because petitioner's complaint arose out of the employer-employee
relationship, it fell outside the jurisdiction of the court and consequently should be dismissed. Respondent
Judge did dismiss the case, holding that the sum of money and damages sued for by the employer arose
from the employer-employee relationship and, hence, fell within the jurisdiction of the Labor Arbiter and
the NLRC. In reversing the order of dismissal and requiring respondent Judge to take cognizance of the
case below, this Court, speaking through Mme. Justice Melencio-Herrera, said:
Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under
paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other cases
arising from employer-employee relation, unless, expressly excluded by this
Code." Even then, the principle followed by this Court was that, although a
controversy is between an employer and an employee, the Labor Arbiters have no
jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 11
SCRA 597, 604, in negating jurisdiction of the Labor Arbiter, although the parties
were an employer and two employees, Mr. Justice Abad Santos stated:
The pivotal question to Our mind is whether or not the Labor Code
has any relevance to the reliefs sought by the plaintiffs. For if the
Labor Code has no relevance, any discussion concerning the statutes
amending it and whether or not they have retroactive effect is
unnecessary.
It is obvious from the complaint that the plaintiffs have not alleged any
unfair labor practice. Theirs is a simple action for damages for
tortious acts allegedly committed by the defendants. Such being the
case, the governing statute is the Civil Code and not the Labor Code.
It results that the orders under review are based on a wrong premise.
And in Singapore Airlines Limited v. Pao, 122 SCRA 671, 677, the following was
said:
Stated differently, petitioner seeks protection under the civil laws and
claims no benefits under the Labor Code. The primary relief sought is
for liquidated damages for breach of a contractual obligation. The
other items demanded are not labor benefits demanded by workers
generally taken cognizance of in labor disputes, such as payment of
wages, overtime compensation or separation pay. The items claimed
are the natural consequences flowing from breach of an obligation,
intrinsically a civil dispute.
In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost
of repair jobs made on his personal cars, and for the purchase price of vehicles and
parts sold to him. Those accounts have no relevance to the Labor Code. The cause
of action was one under the civil laws, and it does not breach any provision of the
Labor Code or the contract of employment of DEFENDANT. Hence the civil courts,
not the Labor Arbiters and the NLRC should have jurisdiction.
8

It seems worth noting that Medina v. Castro-Bartolome, referred to in the above excerpt, involved a
claim for damages by two (2) employees against the employer company and the General Manager
thereof, arising from the use of slanderous language on the occasion when the General Manager
fired the two (2) employees (the Plant General Manager and the Plant Comptroller). The Court
treated the claim for damages as "a simple action for damages for tortious acts" allegedly committed
by private respondents, clearly if impliedly suggesting that the claim for damages did not necessarily
arise out of or in connection with the employer-employee relationship.Singapore Airlines Limited v.
Pao, also cited in Molave, involved a claim for liquidated damages not by a worker but by the
employer company, unlike Medina. The important principle that runs through these three (3) cases is
that where the claim to the principal relief sought
9
is to be resolved not by reference to the Labor Code
or other labor relations statute or a collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the
NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations
nor in wage structures and other terms and conditions of employment, but rather in the application of the
general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed
to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these
agencies disappears.
Applying the foregoing to the instant case, the Court notes that the SMC Innovation Program was
essentially an invitation from petitioner Corporation to its employees to submit innovation proposals,
and that petitioner Corporation undertook to grant cash awards to employees who accept such
invitation and whose innovation suggestions, in the judgment of the Corporation's officials, satisfied
the standards and requirements of the Innovation Program
10
and which, therefore, could be translated
into some substantial benefit to the Corporation. Such undertaking, though unilateral in origin, could
nonetheless ripen into an enforceable contractual (facio ut des)
11
obligation on the part of petitioner
Corporation under certain circumstances. Thus, whether or not an enforceable contract, albeit implied
arid innominate, had arisen between petitioner Corporation and private respondent Vega in the
circumstances of this case, and if so, whether or not it had been breached, are preeminently legal
questions, questions not to be resolved by referring to labor legislation and having nothing to do with
wages or other terms and conditions of employment, but rather having recourse to our law on contracts.
WEREFORE, the Petition for certiorari is GRANTED. The decision dated 4 September 1987 of
public respondent National Labor Relations Commission is SET ASIDE and the complaint in Case
No. RAB-VII-0170-83 is hereby DISMISSED, without prejudice to the right of private respondent
Vega to file a suit before the proper court, if he so desires. No pronouncement as to costs.
SO ORDERED.
Fernan, Gutierrez, Jr., Bidin and Cortes, JJ., concur.
G.R. No. 78277 May 12, 1989
SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR ARBITER ILDEFONSO
AGBUYA and FERNANDO M. ALMONICAR, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
The Solicitor General for public respondent.
Edgardo A. Camello for private respondent.

CORTES, J .:
Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee by his
employer are two-fold: the substantive and the procedural. Not only must the dismissal be for a valid
or authorized cause as provided by law (Arts. 279, 281, 282-284), but the rudimentary requirements
of due process notice and hearing must also be observed before an employee may be
dismissed [Art. 277 (b).] One cannot go without the other, for otherwise the termination would, in the
eyes of the law, be illegal.
The resolution of the instant case hinges on the determination of whether or not petitioner had
complied with the procedural requirements before it dismissed private respondent.
The antecedents of this case, as summarized with particularity by the Solicitor General, are as
follows:
1. Private respondent, Fernando M. Almonicar, had been an employee of the
petitioner corporation for almost ten years preceding his termination on August 15,
1982. He started working for the petitioner on October 1, 1973 as Route Helper in the
Company's Beer Marketing Division, Cotabato Sales Office, Cotabato City; and since
then, he was promoted twice before his elevation to his last position of Route
Salesman.
2. During his period of employment, Almonicar had a clean record until at around
5:30 o'clock in the afternoon of February 22, 1982, after arriving from his day's work,
he was approached at the Sales Office inside the company's warehouse in Cotabato
City by another company Route Salesman named Abdulkadil Dumamba. Then and
there, in the presence of the company warehousemen, Dumamba requested
Almonicar if the latter could transfer to his account the 100 cases of empty regular
beer bottles and 100 cases of empty Beer Grande bottles worth P3,340.00, which
were returned allegedly for cash refund by Dumamba's customer, but that Dumamba
did not have sufficient sales/collections for the refund.
3. Finding nothing wrong with Dumamba's proposition, as in fact, it was then a
common practice among salesmen whenever one of them did not have sufficient
sales/collection to pay for the value of beer empties returned for cash refund.
Almonicar agreed to the proposition. Forthwith, Almonicar handed to Dumamba the
P3,340.00 out of his sales/collections, and issued in the name of Dumamba's
customer the corresponding cash refund invoice (Annex "B", Petition). Whereupon,
Almonicar advised the warehouseman to reflect in his Checker's Stock Report said
returned beer empties.
4. It turned out, however, that the beer empties were returned not for cash refund,
but to be credited to the customer's account with the petitioner company. For which,
Dumamba issued to the customer a charge refund invoice (Annex "A", Petition), but
which was not recorded in the latter's account ledger card because Dumamba did not
include it in his sales report to make his transaction records appear to be in order.
5. Consequently, when a verification was made on February 25, 1982, of the account
of Dumamba's customer, the latter refused to sign the confirmation slip (Annex "C",
Petition) of his account with the petitioner company, claiming that the same did not
tally with his record. As a result, an inquiry was conducted wherein it was found out
that the discrepancy lies in Dumamba's failure to include in his report the charge
refund invoice he issued for the return of said beer empties, and the misappropriation
for his personal use [of] the cash intended for the refund of the value thereof which
was extended to him by Almonicar out of the latter's sales/collections. This, resulted
in the recommendation for the grounding of Dumamba until further investigation
(Annex "D", Petition).
6. Thereafter, an investigation was conducted sometime in March 1982 in connection
with several acts of defalcation allegedly committed by Dumamba during the year
1982, one of which was the misappropriation of the P3,340.00 covered by a cash
refund invoice issued by Almonicar.
7. It was for the purpose of helping the Company in the investigation against
Dumamba, particularly with respect to the above-mentioned cash refund, as he was
made to understand by Regional Sales Manager Romeo A. Reyes who conducted
the investigation, that Almonicar gave his statement (Annex "F", Petition) in the early
morning of March 4, 1982.
8. As a result of said investigation, Dumamba was immediately grounded. Almonicar
on the other hand was even recommended by the company's sales supervisor,
Ranulfo Mabacho, for promotion to Salesman in-Charge of the Midsayap (North
Cotabato) Sales Office. He was likewise entrusted to act as Salesman-in-Charge of
the Cotabato Sales Office whenever the regular salesman was absent.
9. However, to Almonicar's shock and astonishment, he received on July 26, 1982, a
letter dated July 21, 1982 from their Regional Manager, advising him that, "after due
investigation of your recent case, we have decided to separate you from service at
the close of business on August 15, 1982."
10. Immediately, Almonicar sought an explanation from the Regional Manager but
the latter told him that the "decision" came from the company's head office in Manila.
However, when the Regional Manager was asked for copies of the alleged
"investigation" and "decision", the latter simply told him that the pertinent papers will
be forwarded to the Ministry of Labor.
11. This prompted Almonicar to file on October l6, 1982 a complaint for illegal
dismissal with the Labor Ministry's Regional Office No. 12 in Cotabato City against
the herein petitioner and Regional Sales Manager Romeo A. Reyes.
12. After efforts of conciliation with the Labor's Regional Office in Cotabato City
failed, the case was indorsed for compulsory arbitration to the Executive Labor
Arbiter in Cagayan de Oro City, wherein the parties, through their respective
counsels, agreed at the hearing called on October 26, 1983 to submit their case for
decision on the bases of their position papers and supporting evidence.
13. Pursuant thereto, complainant Almonicar (herein private respondent) duly filed
his position paper and supporting documents on January 23, 1984. Anent the
respondent (herein petitioner), its counsel filed a Manifestation and Motion asking for
an extension of twenty (20) days from Jan. 20, 1984 within which to file its position
paper. Subsequently, another motion was filed asking for a final extension of twenty
(20) days from February 10, 1984 within which to file its position paper, but the
petitioner failed to file even until Executive Labor Arbiter rendered his decision
(Annex "G", Petition) on May 30, 1984 finding private respondent's dismiss to be
without basis and, therefore, entitled to full back wages with all fringe benefits from
the time of his termination up to the promulgation of the decision. However, since
private respondent's reinstatement was no longer feasible, he was awarded a
separation pay corresponding to his ten (10) years of service at 1/2 month pay for
every year of service based on the last salary. In addition, petitioner was ordered to
pay private respondent's counsel 10% of the total award.
14. From the foregoing decision, both parties appealed to the respondent
Commission. In its appeal, petitioner alleged that the Executive Labor Arbiter abused
his discretion and erred in his findings of fact and conclusion of law by introducing for
the first time evidence in refutation of private respondent's position paper. For his
part, private respondent assailed the Executive Labor Arbiter's decision for not
ordering his reinstatement, despite the finding that his dismissal was without basis
and no evidence whatsoever was shown that this was no longer possible.
15. The respondent Commission, which apparently overlooked private respondent's
appeal and was misled into appreciating petitioners evidence presented for the first
time on appeal, promulgated on December 10, 1985 a decision (Annex "J", Petition),
finding private respondent guilty of the offense imputed to him. However, considering
his ten (10) years of unblemished record with the company, he was awarded a
separation of 1/2 month's pay for every year of service, instead of reinstatement,
without back wages.
16. So that, on a Motion for Reconsideration (Annex "K", Petition) filed by private
respondent, the respondent Commission rectified its errors by reversing and setting
aside its previous decision of December 10, 1985 and instead, promulgated on
March 30, 1987 another decision (Annex "L", Petition) the dispositive portion of which
reads:
WHEREFORE, premises considered the respondents are hereby
ordered to reinstate complainant to his former position with full
backwages with all of the benefits legal and by contract and without
loss of seniority rights and other privileges, computed from the date of
his dismissal up to his actual reinstatement. Consequently,
respondent is directed to show proof of immediate compliance to the
mandate of the decision after ten (10) days from receipt of this
Resolution. [Rollo, pp. 121-128.]
Without seeking reconsideration of the NLRC's decision of March 30, 1987, petitioner filed the
instant petition seeking the reversal of said decision on the ground that public respondents had
gravely abused their discretion.
The Court finds the petition unmeritorious.
The pleadings filed by petitioner and the annexes to its petition glaringly reveal a fatal lapse on its
part the failure, prior to private respondent's dismissal, to furnish him written notice and to afford
him the opportunity to be heard and to defend himself as mandated by the Labor Code, as
amended. Thus, the code provides that "the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires" [Art. 277(b); formerly, Art, 278 (b).] In implementation of this
requirement, the amended rules and regulations promulgated by the Secretary of Labor provides:
Sec. 1. Security of tenure and due process. No worker shall be dismissed except
for a just or authorized cause provided by law and after due process.
Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall
furnish him a written notice stating the particular acts or omission constituting the
grounds for his dismissal. In cases of abandonment of work, the notice shall be
served at the worker's last known address.
x x x
Sec. 5. Answer and hearing. The worker may answer the allegations stated
against him in the notice of dismissal within a reasonable period from receipt of such
notice. The employer shall afford the worker ample opportunity to be heard and to
defend himself with the assistance of his representative, if he so desires.
Sec. 6. Decision to dismiss. The employer shall immediately notify a worker in
writing of a decision to dismiss him stating clearly the reasons therefor.
x x x
[Rule XIV, Book V, Rules and Regulations Implementing the Labor Code; Emphasis
supplied.]
In the instant case, after giving his statement as a witness for the company in connection with the
investigation on the alleged acts of defalcation committed by Dumamba, private respondent was
unexpectedly dismissed, without even being investigated in connection with the violation attributed to
him, much less notified that the company intended to dismiss him for the alleged violation.
It is therefore apparent that private respondent's dismissal was an afterthought. He was asked to
make a statement in connection with the investigation against Dumamba and when it became
subsequently apparent to those in the head office in Manila that his act of issuing the invoice in the
name of Dumamba's customer constituted a possible violation of company rules and regulations he
was unceremoniously meted the penalty of dismissal. Even the tenor of his statement [Annex "F",
Petition; Rollo, pp. 30-32], which was in the form of question and answer, indicates that it was being
given in connection with the investigation of Dumamba's misappropriation of the money given by the
private respondent for the refund of the empty bottles. There is no indication in said statement that
private respondent was also under investigation. In contrast, Dumamba's statement [Annex "E",
Petition; Rollo, pp. 27-29] clearly stated that he was the subject of the investigation. Thus, it was
prefaced by a paragraph entitled "Preliminaries", which provides:
We are investigating you to shed light on reported beer empties that were retrieved
from United Grocery, situated at Supermarket, Cotabato City, and it (sic) were not
credited to the account of said outlet. . . [Rollo, p. 27; Emphasis supplied.]
Moreover, that the company did not contemplate conducting an administrative proceeding against
private respondent was bolstered by the undisputed fact that he was allowed to continue with his
regular duties after he gave his statement, and even recommended for promotion some time before
his sudden dismissal, contrasted with the immediate grounding of Dumamba. The failure of
petitioner to afford private respondent due process, as required by the Labor Code, in effecting his
termination, is thus patent.
No grave abuse of discretion could therefore be attributed to the NLRC for holding that private
respondent was illegally terminated and ordering his reinstatement with backwages, as such was
fully supported by the facts and the law. The reinstatement of private respondent, as ordered by the
NLRC, in lieu of the payment of separation pay, as directed by the Labor Arbiter, is even made more
imperative by the fact that he was arbitrarily deprived of his employment at the early age of thirty-two
(32) when he was just approaching the prime of his life, causing his family economic dislocation and
untold hardship as he pursued his case through the years.
Neither can grave abuse of discretion be ascribed to the Executive Labor Arbiter for basing his
findings of fact and, consequently, his decision exclusively on private respondent's position paper. It
will be recalled that the parties agreed to submit the case for decision on the basis of their position
papers and that in spite of the extension granted it, petitioner failed to file its position paper, forcing
the arbiter to decide the case without it. Moreover Art. 221 of the Labor Code, which provides that
the technical rules of evidence are not controlling in proceedings before Labor Arbiters, allows the
latter to decide the case on the basis of position papers and other documents submitted by the
parties [Manila Doctors Hospital v. NLRC, G.R. No. 64897, February 28, 1985, 135 SCRA 262;
Asiaworld Publishing House, Inc. v. Ople, G.R. No. 56398, July 23, 1987, 152 SCRA 219.]
No grave abuse of discretion warranting the issuance of the corrective writ of certiorari having been
established, the dismissal of the petition is in order.
A final word. While the Court finds no cogent reason to set aside the NLRC's decision, We are not,
however, disregarding or in any way diminishing the employer's prerogative to instill discipline in his
employees and to impose reasonable penalties, including dismissal, on erring employees pursuant
to company rules and regulations [Soco V. Mercantile Corporation of Davao, G.R. Nos. 53364-65,
March 16, 1987, 148 SCRA 526.] Neither is the Court deviating from the established rules that an
employer cannot be compelled to continue with the employment of workers guilty of acts of
misfeasance or malfeasance, and whose continuance in the service of the employer is clearly
inimical to his interests, and that the law, in protecting the rights of workers, authorizes neither the
oppression nor self-destruction of employers [Manila Trading & Supply Co. v. Zulueta, 69 Phil. 485
(1940); San Miguel Brewery, Inc. v. National Labor Union, 97 Phil. 378 (1955); Colgate Palmolive
Philippines v. Ople, G.R. No. 73681, June 30, 1988.] But it must be emphasized nevertheless that
due process must be observed in effecting an employee's dismissal. And rightfully so, because the
dismissal of an employee affects not only his position but also his means of livelihood and his
dependents' sustenance. The employee must be informed of the alleged violation and given an
opportunity to be heard before he is dismissed. Strict adherence to the requirements set forth in the
Labor Code, as amended, is essential. Thus, the Court in the recent case of Century Textile Mills,
Inc., et al, v. NLRC, et al. [G.R. No. 77857, May 25, 19881 stated:
The twin requirements of notice and hearing constitute essential elements of due
process in cases of employee dismissal: the requirement of notice is intended to
inform the employee concerned of the employer's intent to dismiss and the reason for
the proposed dismissal; upon the other hand, the requirement of hearing affords the
employee an opportunity to answer his employer's charges against him and
accordingly to defend himself therefrom before dismissal is effected. Neither of these
two requirements can be dispensed with without running afoul of the due process
requirement of the 1987 Constitution.
WHEREFORE, the instant petition is hereby DISMISSED and the decision of the NLRC dated March
30, 1987 is AFFIRMED with the modification that the award of backwages is fixed at three (3) years,
without qualification or deduction, in line with current jurisprudence. The temporary restraining order
issued by the Court on May 20, 1987 is LIFTED and SET ASIDE. This decision is IMMEDIATELY
EXECUTORY.
SO ORDERED.
G.R. No. 82467 June 29, 1989
SAN MIGUEL CORPORATION, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, PEDRO B. DELEN, FELIPE P. MERCADO,
ROGELIO Z. MISOLAS, HENRY S. LOGAN & EFREN M. QUERUBIN, respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Mildred A. Ramos for private respondents.

GRIO-AQUINO, J .:
This is a petition for review under Rule 65 of the Rules of Court of the resolution dated December
15, 1987 of the National Labor Relations Commission (NLRC) in NLRC-NRC Case No. 6-2896-83,
entitled "Pedro Delen, Felipe Mercado, Rogelio Z. Misolas, Henry S. Logan, Efren Querubin,
Complainants versus San Miguel Corporation, Respondent," dismissing the appeal of the
respondent corporation (now petitioner) and affirming in toto the decision dated March 17, 1986 of
the Labor Arbiter, Ceferina J. Diosana, who found that the complainants (herein private respondents)
were illegally dismissed by the petitioner, and directed the latter "to reinstate them to their former
positions without loss of seniority rights and with full backwages and other benefits appurtenant to
their respective positions" (Annex I).
We dismissed the petition on April 11, 1988 on the ground that it failed to show that the NLRC had
acted with grave abuse of discretion in rendering its questioned resolution (p. 311, Rollo). The
petitioner's motion for reconsideration was prematurely denied by Us on August 29, 1988 (p. 416,
Rollo). At that time, We inadvertently overlooked the fact that the petitioner had filed an omnibus
motion on August 24, 1988: (1) for leave to file a reply to private respondents' comment; and (2) to
require private respondents to furnish petitioner a copy of page 5 of their comment (p. 345, Rollo).
The petitioner's consolidated reply to the separate comments filed by the NLRC and the private
respondents (pp. 335-343 and 349-415, Rollo) was filed on September 21, 1988 (p. 417, Rollo). On
October 14, 1988, the petitioner filed an "Extremely Urgent Motion for Leave of Court En Banc to File
Appeal En Banc." (p. 479, Rollo.)
While it is necessary to disabuse the mind of the petitioner of the impression that the Court En
Banc is an appellate court within the Supreme Court to which parties may appeal decisions of the
Division, for it is the same Supreme Court, and the referral of a case by a Division to the En
Banc rests entirely in the discretion of the Division, We have decided to deny the plea for referral of
this case to the Court En Banc, but instead, to treat the "appeal to the Court En Banc" (p. 479, Rollo)
as a second motion for reconsideration of the resolutions of this Court dated April 11, 1988 and
August 29, 1988.
The complainants were former security guards of the petitioner which dismissed them for falsification
of their lame cards. They made false entries in their time cards showing that they reported for work
on February 19 and 20, 1983 when the truth was that they went on a hunting tap to San Juan,
Batangas, with their chief Major Martin Asaytuno, then head of the Administrative Services
Department of the Security Directorate of the petitioner.
Besides the falsification of the entries for February 19 and 20, 1983 in their time cards, complainant
Misolas was caught redhanded by Security Guard Romeo Martin at 7:45 A.M. on March 2, 1983
punching in not only his own time card but also the time cards of Delen and Querubin (p. 51, Rollo).
Seeing Misolas in a tight fix, Querubin rushed to the bundy clock and punched in a time card (which
turned out to be the card of one Rodrigo de Castro) to save Misolas and to make it appear to Martin
that he (Querubin), punched in his own time card.
On the basis of the evidence, the Labor Arbiter found that the complainants did go on a hunting trip
to San Juan, Batangas on February 19 and 20, 1983, upon the invitation of their department head,
Major Asaytuno. They went along to please him because they believed that his invitation was
equivalent to a command (p. 229, Rollo). Being an army man, Asaytuno expected "total obedience"
from his subordinates (p. 229, Rollo). The complainants and Asaytuno left the office at 2:00 P.M. on
February 19, 1983 and tarried in Batangas up to February 20. Asaytuno signed four (4) sets of
overtime authority for February 19-20 so that the private respondents could collect overtime pay (p.
230, Rollo). When they reported for work on February 21, 1983, Major Asaytuno asked for their time
cards and initialed the false entries showing that they reported for work on February 19-20 (p. 230,
Rollo). The Labor Arbiter held that under those circumstances 'the dismissal of the complainants
cannot be sustained" (p. 230, Rollo).
With regard to the charge that complainants Misolas and Querubin dishonestly punched the time
cards of Delen and others, the Labor Arbiter found "material discrepancies in the testimony of the
petitioner's principal witness, Security Guard Romeo Martin, and rejected his evidence as
'questionable'" (p. 231, Rollo). The Labor Arbiter directed the company "to reinstate the complainants
to their respective former positions without loss of seniority rights and with full backwages and other
benefits appurtenant to their respective positions" (p. 232, Rollo) but dismissed the complainants'
claim for damages for lack of merit (p. 233, Rollo).
The petitioner appealed to the NLRC, Third Division, which in a resolution dated December 15, 1987
(Annex K), dismissed the appeal for lack of merit and affirmed the appealed judgment (p. 269,
Rollo). The petitioner filed a motion for reconsideration which the NLRC denied on March 10, 1988
(Annex N).
The company filed a petition for review in this Court on March 25, 1988, alleging that the NLRC
committed grave abuse of discretion in upholding the Labor Arbiter's decision and "in not finding that
the private respondents were guilty of serious misconduct, fraud, and willful breach of trust" (p. 14,
Rollo) which warranted their dismissal from the service.
As the decisions of the Labor Arbiter and the NLRC adverted to the testimony of Major Asaytuno as
a witness for the company, but were silent regarding any disciplinary action that the company took
against him, and as the petitioner admittedly put him on the witness stand "to clear his name," and
considered him a "victim of his friendship with the complainants" (p. 19, Rollo), this Court was misled
to believe that the company let Asaytuno, the "big fish," go, but penalized the "little fish" (his
subordinates) for the misconduct that they all committed. Since We could not sanction that brand of
selective justice, We dismissed the petition for review.
However, after a more careful consideration of the pleadings and their annexes, We found these
statements in paragraph 19 of the petition for certiorari and in Annex J of the petition (petitioner's
Appeal Memorandum in the NLRC):
l 9. After a thorough and impartial investigation conducted both by the Security and
Legal Directorate of the petitioner, private respondents, together with Major
Asaytuno, were found to have committed serious irregularities in the performance of
their duties. Accordingly, they were dismissed from the service and termination
letters were respectively served on them. (p. 11, Rollo.)
16. ... all the five (5) complainants together with Major Asaytuno were found to have
committed serious irregularities in the performance of their duties. Accordingly, they
were dismissed from the service and termination letters were respectively served on
them. (p. 243, Rollo.)
We, therefore, now resolve to grant the petitioner's second motion for reconsideration, for, although
it may be conceded that the private respondents acted under some degree of moral compulsion
when they agreed to accompany Major Asaytuno on a hunting trip to San Juan, Batangas, they were
certainly under no compulsion from him to falsify their time cards and thereby defraud the company
by collecting wages for the dates when they did not report for work.
In order for obedience to be considered as an exempting circumstance ... it must be
in compliance with a lawful order not opposed to a higher positive duty of the
subaltern, and that the person commanding act within the scope of his authority. As a
general rule, an inferior should obey his superior. But between a general law which
enjoins obedience to a superior giving just orders, etc., and a prohibitive law which
plainly forbids what the superior commands, the choice is not doubtful. (Viada, I
Penal Code 528, 5th Ed.; People vs. Barroga, 54 Phil. 247).
In order to be exempted (on the ground of obedience) it must be shown that both the
person who gives the order and the person who executes it are acting within the
limitations prescribed by law. (People vs. Wilson, 52 Phil. 919.)
The falsification and fraud which the private respondents committed against their employer were
inexcusable. Major Asaytuno's initials on the false entries in their time cards did not purge the
documents of their falsity. Their acts constituted dishonesty and serious misconduct, lawful grounds
for their dismissal under Art. 282, sub-pars. (a) and (c), of the Labor Code, which provides:
ART. 282. Termination by employer. An employer may terminate an employment for
any of the following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work.
xxx xxx xxx
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative.
The NLRC gravely abused its discretion in ordering the reinstatement of the private respondents to
their positions with backwages. Its decision was an unjustified departure from the rule that:
An employer cannot legally be compelled to continue with the employment of a
person who admittedly was guilty of misfeasance or malfeasance towards his
employer, and whose continuance in the service of the latter is patently inimical to his
interests. The law, in protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer. (Manila Trading & Supply Co. vs.
The Hon. Francisco Zulueta, et al., 69 Phil. 485, cited in San Miguel Brewery, Inc. vs.
National Labor Union et al., 97 Phil. 387.)
WHEREFORE, our resolutions dated April 11, 1988 and August 29, 1988 are hereby recalled and
the petition for certiorari is granted. The decisions of the Labor Arbiter and the NLRC in NLRC-NCR
Case No. 6-2896-83 are hereby set aside. The private respondents' complaint for illegal dismissal
and reinstatement with backwages and damages is dismissed. Costs against the private
respondents.
SO ORDERED.
G.R. No. 81471 April 26, 1989
CHONG GUAN TRADING, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSE M. CHUA, respondents.
Neva B. Blancaver and Apolinario N. Lomabao, Jr. for petitioner.
Faustino F. Tugade for private respondent.
The Solicitor General for public respondent.

CORTES, J .:
Assailed in this petition is the decision of the National Labor Relations Commission (NLRC) in NLRC
Case No. 11-4406-83, entitled "Jose M. Chua v. Chong Guan Trading," whereby the NLRC held that
private respondent Jose M. Chua was illegally dismissed by petitioner Chong Guan Trading. The
Court after a careful examination of the pleadings filed in this case, i.e., the Petition and its Annexes,
the Comment of public respondent, the Reply and Supplemental Reply of petitioner, the
Manifestation/Opposition of private respondent, and the Rejoinder of public respondent, considered
the Comment as answer, the issues joined, and the case submitted for decision.
Jose M. Chua was employed as sales manager of Chong Guan Trading, a dealer of paper and
paper products owned by Mariano, Pepito and Efren Lim. Private respondent started working with
the petitioner way back in 1960 but it was only in 1972 that his name was registered by petitioner
with the Social Security System. [Decision of SSC in SSS Case No. 8728, p. 1; Rollo, p. 49.]
In November 1983, private respondent filed a complaint with the Office of the Labor Arbiter of the
National Capital Region charging petitioner with illegal dismissal and non-payment of overtime pay
and other benefits provided for by law. In his complaint, private respondent alleged that he was fired
by Mariano Lim because of the incident that occurred on October 28,1983.
It appears from the record that on the morning of October 28, 1983, a customer, who borrowed the
store's telephone directory, accidentally dropped it on the top-glass of the store's showcase causing
it to break. When Pepito Lim saw the already taped broken top-glass he asked for an explanation
from private respondent. In order to cover up for the customer, private respondent admitted that he
himself accidentally broke it. Pepito then got angry and hurled "unprintable words and invectives" at
private respondent. [Decision of NLRC, p. 2; Rollo, p. 14.] What transpired thereafter was disputed
by both parties. Private respondent claimed that he was dismissed by Mariano Lim when the later
ordered him to leave petitioner's premises. Petitioner, on the other hand, denied having dismissed
private respondent and claimed that it was private respondent who went home after the incident and
failed to report for work for many days thereafter. Petitioner alleged that, far from being dismissed, it
was private respondent himself who abandoned his job.
The parties filed their respective position papers and agreed to submit the case for resolution on the
basis of the pleadings.
On April 18,1984, the Labor Arbiter rendered a decision finding that there was no illegal dismissal
since private respondent was never dismissed by petitioner. The Labor Arbiter held that the
altercation that occurred between private respondent and the Lim brothers because of the broken
top-glass cannot be construed as the dismissal of the private respondent because it was only a
minor incident. No pronouncement on the issue of the alleged abandonment by private respondent
was made but the Labor Arbiter ordered the reinstatement of private respondent but without
backwages. The dispositive portion of the decision reads:
WHEREFORE, respondents are hereby ordered to reinstate complainant to his
former position without backwages, to pay him his proportionate 13th-month pay for
the year 1983 and the money equivalent of fifteen (15) days service incentive leave
pay. All his other claims including the claim for damages are hereby, DISMISSED.
SO ORDERED. [Decision of Labor Arbiter, p. 7; Rollo, p. 31 .]
Private respondent elevated the decision of the Labor Arbiter to the NLRC. In a resolution
promulgated on June 30, 1987, the NLRC dismissed the appeal for being filed out of time.
Upon motion of private respondent, the NLRC reconsidered its Resolution and gave due course to
the appeal. On December 29,1987 respondent Commission decided in favor of private respondent
and held that:
xxx xxx xxx
... we are by and large convinced that the appellant was indeed dismiss without the
attendant formalities required by law. On account of which he should therefore, be
reinstated to his former position with three (3) years backwages without qualification
or deduction.
Should reinstatement, however, be not feasible due to circumstances or
developments not attributable to the appellees, the appellant should, in addition to
the three years backwages, be paid a separation pay equivalent to one half month
pay for every year of service, a fraction of at least six (6) months being considered as
one whole year.
The rest of the award for other benefits stays.
WHEREFORE, modified as above-indicated, the decision appealed from is hereby,
AFFIRMED.
SO ORDERED. [NLRC Decision, p. 18; Rollo, p. 18.]
From the NLRC decision, petitioner interposed the present petition.
The Court will first address the procedural issue raised by the petitioner.
Petitioner maintains that respondent NLRC has no jurisdiction to entertain the appeal flied by private
respondent, much less modify the decision appealed from, the same having become final and
executory after the lapse of ten (10) days from respondent's receipt thereof.
Article 223 of the Labor Code [Pres. Decree 442, as amended] provides for a reglementary period of
ten (10) days within which to appeal a decision of the labor arbiter to the NLRC. The ten-day period
has been interpreted by this Court in the case of Vir-jen and Marine Services, Inc. v. National Labor
Relations Commission [G.R. Nos. 58011-12, July 20, 1987, 115 SCRA 347] as ten (10) "calendar"
days and not ten (10) "working" days.
In the instant case, while the appeal was filed within ten (10) working days from receipt of the
decision, it was filed beyond the (10) calendar days prescribed by law. Private respondent received
a copy of the decision of Labor Arbiter Martinez on May 3, 1984 while the appeal was filed only on
May 15, 1984 or twelve (12) days from notice of the decision. [Resolution of NLRC, p. 1; Rollo, p.
32.]
It is true that the perfection of an appeal in the manner and within the period prescribed by law is not
only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the
judgment final and executory. [Narag v. National Labor Relations Commission, G.R. No. 69628,
October 28,1987, 155 SCRA 199.] However, as correctly pointed out by the Solicitor General, the
NLRC may disregard the procedural lapse where there is an acceptable reason to excuse tardiness
in the taking of an appeal. [Comment of the Office of the Solicitor General, p. 6; Rollo, p. 46; See
also Firestone Tire and Rubber Company of the Philippines v. Lariosa, G.R. No. 70479, February
27, 1987, 148 SCRA 187; MAI Philippines, Inc. v. National Labor Relations Commission, G.R. No.
73662, June 18, 1987, 151 SCRA 196.]
In this case, the appeal was filed out of time because the counsel of private respondent relied on the
footnote of the notice of the decision of the Labor Arbiter which stated that "the aggrieved party may
appeal ... within ten (10)working days, as per NLRC Resolution No. 1, series of 1977." [Decision of
NLRC, p. 1; Rollo, p. 13; Emphasis supplied.] In the case of Firestone Tire and Rubber Co. of the
Phil. v. Lariosa, [supra], which has substantially the same set of facts as this case, the Court
accepted the party's reliance on the erroneous notice in the labor arbiter's decision as a reasonable
ground for excusing non-compliance with the ten (10) calendar day period for appeal. Explaining the
reason for this ruling, the Court said:
xxx xxx xxx
Mindful of the fact that Lariosa's counsel must have been misled by the implementing
rules of the labor commission and considering that the shortened period for an
appeal is principally intended more for the employee's benefit, rather than that of the
employer, We are inclined to overlook this particular procedural lapse and to proceed
with the resolution of the instant case, [at p. 191.]
xxx xxx xxx
Thus, private respondent's late filing of the appeal notwithstanding, the Court finds that public
respondent did not commit grave abuse of discretion in giving due course to the appeal.
Having disposed of the procedural issue, the Court will now deal with the main issue in this case,
which is whether or not NLRC committed grave abuse of discretion in ordering petitioner to pay
private respondent three years backwages and separation pay (if reinstatement is no longer
possible) for the alleged illegal dismissal of private respondent.
While petitioner concedes that private respondent must be reinstated since there was no intentional
abandonment on the part of private respondent, it challenges the order for the payment of
backwages and separation pay. Petitioner contends that there was no illegal dismissal to speak of
since private respondent was never dismissed in the first place, and that justice dictates that private
respondent must simply be reinstated. [Reply, pp. 1-2; Rollo, pp. 51-52.]
Both the labor arbiter and the NLRC agree that the accidental breaking of the showcase's top-glass
was so minor an incident as to provoke an employer to dismiss a managerial employee who has
worked with him for more than twenty (20) years. [Decision of NLRC, Rollo, p. 16.] However, in
holding that private respondent was illegally dismissed by petitioner, the NLRC held that:
We agree that the accidental breaking of the showcase's top-glass was a minor
incident. Ordinarily it could not provoke an employer (who knew what its
repercussions could be) to dismiss an employee for that matter. But the appellees
[petitioner Chong Guan trading and its owners] who, we perceive,were indeed bent
on ousting the appellant [private respondent Chua] magnified it to such a serious
proportion, as shown by the unprintable words and invectives that they hurled to the
appellant, to ostensibly justify their heretofore desire to terminate him.
In short, they seized the incident as the most opportune time to implement their
obvious decision to lay-off the appellant. [Decision of NLRC, p. 4; Rollo, p. 16;
Emphasis supplied.]
The import of the above findings of the NLRC is that the breaking of the top-glass was used by
petitioner as an excuse to terminate respondent Chua in accordance with its scheme or plan to oust
him.
The Court cannot sustain the findings of respondent NLRC.
As found by the labor arbiter, no evidence was presented to establish the existence of the so-called
scheme to oust private respondent [Decision of Labor Arbiter, p. 5; Rollo, p. 29.] It was based only
on private respondent's unsupported claim that there was an "orchestrated scheme or plan" to oust
him and that this plan had been carefully laid out for a long time. Private respondent's claim is not
borne out by the record which shows that petitioner has been granting substantial cash advances to
private respondent. In fact barely a month before his alleged illegal dismissal, petitioner allowed
private respondent to make a cash advance of P4,718.00. [Decision of Labor Arbiter, p. 5; Rollo, p.
29.] If indeed there was a scheme to oust private respondent, petitioner should have denied him
further cash advances knowing that his services will soon be terminated and as a result thereof,
there may be no way to recover the cash advances.
Furthermore, the NLRC admitted in its decision that its finding that the petitioner was "indeed bent
on ousting" private respondent was based only on its "perception" and not on any evidence on
record. [Decision of NLRC, p. 4; Rollo, p. 16.] This Court, however, cannot rely on NLRC's
perception or speculations in the absence of any credible evidence to support it. [San Miguel
Corporation v. National Labor Relations Commission, G.R. No. 50321, March 13, 1984, 128 SCRA
180.] For while it is well-established that the findings of facts of the NLRC are entitled to great
respect and are generally binding on this Court [Antipolo Highway Lines, Inc. v. Inciong, G.R. No. L-
38532, June 27, 1975, 64 SCRA 441; Philippine Labor Alliance Council (PLAC) v. Bureau of Labor
Relations, G.R. No. L-41288, January 31, 1977, 75 SCRA 162; Genconsu Free Workers Union v.
Inciong, G.R. No. L-48687, July 2, 1979, 91 SCRA 311; Pan-Philippine Life Insurance Corporation v.
NLRC, G.R. No. 53721, June 29, 1982, 114 SCRA 866; Pepsi-Cola Labor Union-BLFUTUPAS Local
Chapter No. 896 v. National Labor Relations Commission, G.R. No. 58341, June 29, 1982, 114
SCRA 930; Mamerto v. Inciong, G.R. No. 53068, November 15, 1982, 118 SCRA 265; San Miguel
Corporation v. National Labor Relations Commission, G.R. No. 50321, March 13, 1984, 128 SCRA
180] it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC when
the Court finds that the latter committed grave abuse of discretion in reversing the decision of the
labor arbiter or when the findings of facts from which the conclusions were based were not
supported by substantial evidence [Insular Life Assurance Co., Ltd. Employees Association-NATU v.
Insular Life Assurance Co., Ltd., G.R. No. L- 25291, March 10, 1977, 76 SCRA 50; Kapisanan ng
Manggagawa sa Camara Shoes v. Camara Shoes, G.R. No. 50985, January 30, 1982, 111 SCRA
477.]
The question that must now be addressed by the Court is whether, absent the alleged scheme or
plan to oust private respondent, it can be inferred from the events that transpired on the morning of
October 28, 1983 that private respondent was illegally dismissed by petitioner.
Private respondent claims that Mariano Lim dismissed him when the latter said: "Lumayas ka rito."
This is disputed by the petitioner who claims that it was private respondent who voluntarily left
petitioner's premises.
After a careful examination of the events that gave rise to the present controversy as shown by the
record, the Court is convinced that private respondent was never dismissed by the petitioner. Even if
it were true that Mariano Lim ordered private respondent to go and that at that time he intended to
dismiss private respondent, the record is bereft of evidence to show that he carried out this intention.
Private respondent was not even notified that he had been dismissed. Nor was he prevented from
returning to his work after the October 28 incident. The only thing that is established from the record,
and which is not disputed by the parties, is that private respondent Chua did not return to his work
after his heated argument with the Lim brothers.
Moreover, petitioner has consistently manifested its willingness to reinstate private respondent to his
former position. This negates any intention on petitioner's part to dismiss private respondent.
Petitioner first expressed its willingness to reinstate private respondent during the initial hearing of
the case before the Labor Arbiter. [Decision of Labor Arbiter, p. 6; Rollo, p. 30.] In its position paper
the petitioner also stated that:
x x x x x x x x x
IN PASSING, we gladly reiterate ... that the management is still waiting and more
than willing to accept him [private respondent] and return to his former position,
notwithstanding his long unauthorized absences and the intentional abandonment
from his job.
x x x x x x x x x
[Annex "B" to the Petition, p. 5; Rollo, p. 24.]
This was again reiterated by the petitioner in its Reply to the Comment of public respondent filed in
connection with the instant petition. [Reply, pp. 1- 2; Rollo, pp. 51-52.]
Therefore, considering the Court's finding that private respondent was never dismissed by the
petitioner, the award of three years backwages was not proper. Backwages, in general, are granted
on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal
from work. [New Manila Candy Workers Union (NACONWA-PAFLU) v. Court of Industrial Relations,
G.R. No. L-29728, October 30, 1978, 86 SCRA 37; Durabuilt Recapping Plant and Co. v. National
Labor Relations Commission, G.R. No. 76746, July 27, 1987, 152 SCRA 328.] Where the employee
was not dismissed and his failure to work was not due to the employer's fault, the burden of
economic loss suffered by the employee should not be shifted to the employer. [SSS v. SSS
Supervisors' Union-CUGCO, G.R. No. L-31832, October 23, 1982, 117 SCRA 746; Durabuilt
Recapping Plant and Co. v. National Labor Relations Commission, supra.] In this case, private
respondent's failure to work was due to the misunderstanding between the petitioner's management
and private respondent. As correctly observed by the Labor Arbiter, private respondent must have
construed the October 28 incident as his dismissal so that he opted not to work for many days
thereafter and instead filed a complaint for illegal dismissal.[Decision of Labor Arbiter, p. 6; Rollo, p.
30.] On the other hand, petitioner interpreted private respondent's failure to report for work as an
intentional abandonment. [Annex "B "to the Petition, p. 5; Rollo, p. 24.] However, there was no intent
to dismiss private respondent since the petitioner is willing to reinstate him. Nor was there an intent
to abandon on the part of private respondent since he immediately filed a complaint for illegal
dismissal soon after the October 28 incident. It would be illogical for private respondent to abandon
his work and then immediately file an action seeking his reinstatement. [Judric Canning Corporation
v. Inciong, G.R. No. 51494, August 19, 1982, 115 SCRA 887; Flexo Manufacturing Corporation v.
National Labor Relations Commission, G.R. No. 55971, February 28, 1985, 135 SCRA 145;
Remerco Garments Manufacturing v. Ministry of Labor and Employment, G.R. Nos. 56176-77,
February 28, 1985, 135 SCRA 167.] Under these circumstances, it is but fair that each party must
bear his own loss, thus placing the parties on equal footing. [Pan American World Airways, Inc. v.
Court of Industrial Relations, et al., G.R. No. L-20434, July 30, 1966, 17 SCRA 813; SSS v. SSS
Supervisors' Union-CUGCO, supra.]
As to the separation pay, considering that petitioner has expressed its willingness to reinstate private
respondent to his former position, the order for the payment of separation pay is no longer
necessary.
WHEREFORE, premises considered, the decision of respondent NLRC is REVERSED and SET
ASIDE. The decision of the Labor Arbiter is REINSTATED.
SO ORDERED.
G.R. No. 149011 June 28, 2005
SAN MIGUEL CORPORATION, petitioner
vs.
PROSPERO A. ABALLA, BONNY J. ABARING, EDWIN M. ADLA-ON, ALVIN C. ALCALDE,
CELANIO D. ARROLLADO, EDDIE A. ARROLLADO, REYNALDO T. ASONG, RENE A.
ASPERA, JOEL D. BALATERIA, JOSEPH D. BALATERIA, JOSE JOLLEN BALLADOS,
WILFREDO B. BASAS, EDWIN E. BEATINGO, SONNY V. BERONDO, CHRISTOPHER D.
BRIONES, MARLON D. BRIONES, JOEL C. BOOC, ENRIQUE CABALIDA, DIOSCORO R.
CAHINOD, ERNESTO P. CAHINOD, RENANTE S. CAHINOD, RUDERICK R. CALIXTON,
RONILO C. CALVEZ, PANCHO CAETE, JUNNY CASTEL, JUDY S. CELESTE, ROMEO CHUA,
DANILO COBRA, ARMANDO C. DEDOYCO, JOEY R. DELA CRUZ, JOHN D. DELFIN,
RENELITO P. DEON, ARNEL C. DE PEDRO, ORLANDO DERDER, CLIFFORD A. DESPI, RAMIE
A. DESPI, SR., VICTOR A. DESPI, ROLANDO L. DINGLE, ANTONIO D. DOLORFINO, LARRY
DUMA-OP, NOEL DUMOL, CHITO L. DUNGOG, RODERICK C. DUQUEZA, ROMMEL
ESTREBOR, RIC E. GALPO, MANSUETO GILLE, MAXIMO L. HILA-US, GERARDO J. JIMENEZ,
ROBERTLY Y. HOFILEA, ROBERTO HOFILEA, VICENTE INDENCIO, JONATHAN T.
INVENTOR, PETER PAUL T. INVENTOR, JOEBERT G. LAGARTO, RENATO LAMINA, ALVIN
LAS POBRES, ALBERT LAS POBRES, LEONARD LEMONCHITO, JERRY LIM, JOSE COLLY S.
LUCERO, ROBERTO E. MARTIL, HERNANDO MATILLANO, VICENTE M. MATILLANO, TANNY
C. MENDOZA, WILLIAM P. NAVARRO, WILSON P. NAVARRO, LEO A. OLVIDO, ROBERTO G.
OTERO, BIENVENIDO C. PAROCHILIN, REYNALDO C. PAROCHILIN, RICKY PALANOG,
BERNIE O. PILLO, ALBERTO O. PILLO, JOE-MARIE S. PUGNA, EDWIN G. RIBON, RAUL A.
RUBIO, HENRY S. SAMILLANO, EDGAR SANTIAGO, ROLAND B. SANTILLANA, ROLDAN V.
SAYAM, JOSEPH S. SAYSON, RENE SUARNABA, ELMAR TABLIGAN, JERRY D. TALITE,
OSCAR TALITE, WINIFREDO TALITE, CAMILO N. TEMPOROSA, JOSE TEMPOROSA, RANDY
TINGALA, TRISTAN A. TINGSON, ROGELIO TOMESA, DIONISE A. TORMIS, ADELINO C.
UNTAL, FELIX T. UNTAL, RONILO E. VISTA, JOAN C. VIYO and JOSE JOFER C. VIYO and the
COURT OF APPEALS, respondents.
D E C I S I O N
CARPIO-MORALES, J .:
Petitioner San Miguel Corporation (SMC), represented by its Assistant Vice President and Visayas
Area Manager for Aquaculture Operations Leopoldo S. Titular, and Sunflower Multi-Purpose
Cooperative (Sunflower), represented by the Chairman of its Board of Directors Roy G. Asong,
entered into a one-year Contract of Services
1
commencing on January 1, 1993, to be renewed on a
month to month basis until terminated by either party. The pertinent provisions of the contract read:
1. The cooperative agrees and undertakes to perform and/or provide for the company, on a
non-exclusive basis for a period of one year the following services for the Bacolod Shrimp
Processing Plant:
A. Messengerial/Janitorial
B. Shrimp Harvesting/Receiving
C. Sanitation/Washing/Cold Storage
2

2. To carry out the undertaking specified in the immediately preceding paragraph, the
cooperative shall employ the necessary personnel and provide adequate equipment,
materials, tools and apparatus, to efficiently, fully and speedily accomplish the work and
services undertaken by the cooperative. xxx
3. In consideration of the above undertaking the company expressly agrees to pay the
cooperative the following rates per activity:
A. Messengerial/Janitorial Monthly Fixed Service Charge of: Nineteen Thousand Five
Hundred Pesos Only (P19,500.00)
B. Harvesting/Shrimp Receiving. Piece rate of P0.34/kg. Or P100.00 minimum per
person/activity whichever is higher, with provisions as follows:
P25.00 Fixed Fee per person
Additional meal allowance P15.00 every meal time in case harvest duration exceeds
one meal.
This will be pre-set every harvest based on harvest plan approved by the Senior
Buyer.
C. Sanitation/Washing and Cold Storage P125.00/person for 3 shifts.
One-half of the payment for all services rendered shall be payable on the fifteenth
and the other half, on the end of each month. The cooperative shall pay taxes, fees,
dues and other impositions that shall become due as a result of this contract.
The cooperative shall have the entire charge, control and supervision of the work and
services herein agreed upon. xxx
4. There is no employer-employee relationship between the company and the cooperative, or
the cooperative and any of its members, or the company and any members of the
cooperative. The cooperative is an association of self-employed members, an independent
contractor, and an entrepreneur. It is subject to the control and direction of the company only
as to the result to be accomplished by the work or services herein specified, and not as to
the work herein contracted. The cooperative and its members recognize that it is taking a
business risk in accepting a fixed service fee to provide the services contracted for and its
realization of profit or loss from its undertaking, in relation to all its other undertakings, will
depend on how efficiently it deploys and fields its members and how they perform the work
and manage its operations.
5. The cooperative shall, whenever possible, maintain and keep under its control the
premises where the work under this contract shall be performed.
6. The cooperative shall have exclusive discretion in the selection, engagement and
discharge of its member-workers or otherwise in the direction and control thereof. The
determination of the wages, salaries and compensation of the member-workers of the
cooperative shall be within its full control. It is further understood that the cooperative is an
independent contractor, and as such, the cooperative agrees to comply with all the
requirements of all pertinent laws and ordinances, rules and regulations. Although it is
understood and agreed between the parties hereto that the cooperative, in the performance
of its obligations, is subject to the control or direction of the company merely as a (sic) result
to be accomplished by the work or services herein specified, and not as to the means and
methods of accomplishing such result, the cooperative hereby warrants that it will perform
such work or services in such manner as will be consistent with the achievement of the result
herein contracted for.
xxx
8. The cooperative undertakes to pay the wages or salaries of its member-workers, as well
as all benefits, premiums and protection in accordance with the provisions of the labor code,
cooperative code and other applicable laws and decrees and the rules and regulations
promulgated by competent authorities, assuming all responsibility therefor.
The cooperative further undertakes to submit to the company within the first ten (10) days of
every month, a statement made, signed and sworn to by its duly authorized representative
before a notary public or other officer authorized by law to administer oaths, to the effect that
the cooperative has paid all wages or salaries due to its employees or personnel for services
rendered by them during the month immediately preceding, including overtime, if any, and
that such payments were all in accordance with the requirements of law.
xxx
12. Unless sooner terminated for the reasons stated in paragraph 9 this contract shall be for
a period of one (1) year commencing on January 1, 1993. Thereafter, this Contract will be
deemed renewed on a month-to-month basis until terminated by either party by sending a
written notice to the other at least thirty (30) days prior to the intended date of termination.
xxx
3
(Underscoring supplied)
Pursuant to the contract, Sunflower engaged private respondents to, as they did, render services at
SMCs Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed
renewed by the parties every month after its expiration on January 1, 1994 and private respondents
continued to perform their tasks until September 11, 1995.
In July 1995, private respondents filed a complaint before the NLRC, Regional Arbitration Branch
No. VI, Bacolod City, praying to be declared as regular employees of SMC, with claims for recovery
of all benefits and privileges enjoyed by SMC rank and file employees.
Private respondents subsequently filed on September 25, 1995 an Amended Complaint
4
to include
illegal dismissal as additional cause of action following SMCs closure of its Bacolod Shrimp
Processing Plant on September 15, 1995
5
which resulted in the termination of their services.
SMC filed a Motion for Leave to File Attached Third Party Complaint
6
dated November 27, 1995 to
implead Sunflower as Third Party Defendant which was, by Order
7
of December 11, 1995, granted
by Labor Arbiter Ray Alan T. Drilon.
In the meantime, on September 30, 1996, SMC filed before the Regional Office at Iloilo City of the
Department of Labor and Employment (DOLE) a Notice of Closure
8
of its aquaculture operations
effective on even date, citing serious business losses.
By Decision of September 23, 1997, Labor Arbiter Drilon dismissed private respondents complaint
for lack of merit, ratiocinating as follows:
We sustain the stand of the respondent SMC that it could properly exercise its management
prerogative to contract out the preparation and processing aspects of its aquaculture operations.
Judicial notice has already been taken regarding the general practice adopted in government and
private institutions and industries of hiring independent contractors to perform special services. xxx
xxx
Indeed, the law allows job contracting. Job contracting is permissible under the Labor Code under
specific conditions and we do not see how this activity could not be legally undertaken by an
independent service cooperative like the third-party respondent herein.
There is no basis to the demand for regularization simply on the theory that complainants performed
activities which are necessary and desirable in the business of respondent. It has been held that the
definition of regular employees as those who perform activities which are necessary and desirable
for the business of the employer is not always determinative because any agreement may provide
for one (1) party to render services for and in behalf of another for a consideration even without
being hired as an employee.
The charge of the complainants that third-party respondent is a mere labor-only contractor is a
sweeping generalization and completely unsubstantiated. xxx In the absence of clear and convincing
evidence showing that third-party respondent acted merely as a labor only contractor, we are firmly
convinced of the legitimacy and the integrity of its service contract with respondent SMC.
In the same vein, the closure of the Bacolod Shrimp Processing Plant was a management decision
purely dictated by economic factors which was (sic) mainly serious business losses. The law
recognizes the right of the employer to close his business or cease his operations for bonafide
reasons, as much as it recognizes the right of the employer to terminate the employment of any
employee due to closure or cessation of business operations, unless the closing is for the purpose of
circumventing the provisions of the law on security of tenure. The decision of respondent SMC to
close its Bacolod Shrimp Processing Plant, due to serious business losses which has (sic) clearly
been established, is a management prerogative which could hardly be interfered with.
xxx The closure did affect the regular employees and workers of the Bacolod Processing Plant, who
were accordingly terminated following the legal requisites prescribed by law. The closure, however,
in so far as the complainants are concerned, resulted in the termination of SMCs service contract
with their cooperative xxx
9
(Underscoring supplied)
Private respondents appealed to the NLRC.
By Decision of December 29, 1998, the NLRC dismissed the appeal for lack of merit, it finding
that third party respondent Sunflower was an independent contractor in light of its observation that
"[i]n all the activities of private respondents, they were under the actual direction, control and
supervision of third party respondent Sunflower, as well as the payment of wages, and power of
dismissal."
10

Private respondents Motion for Reconsideration
11
having been denied by the NLRC for lack of merit
by Resolution of September 10, 1999, they filed a petition for certiorari
12
before the Court of Appeals
(CA).
Before the CA, SMC filed a Motion to Dismiss
13
private respondents petition for non-compliance with
the Rules on Civil Procedure and failure to show grave abuse of discretion on the part of the NLRC.
SMC subsequently filed its Comment
14
to the petition on March 30, 2000.
By Decision of February 7, 2001, the appellate court reversed the NLRC decision and accordingly
found for private respondents, disposing as follows:
WHEREFORE, the petition is GRANTED. Accordingly, judgment is hereby RENDERED: (1)
REVERSING and SETTING ASIDE both the 29 December 1998 decision and 10 September 1999
resolution of the National Labor Relations Commission (NLRC), Fourth Division, Cebu City in NLRC
Case No. V-0361-97 as well as the 23 September 1997 decision of the labor arbiter in RAB Case
No. 06-07-10316-95; (2) ORDERING the respondent, San Miguel Corporation, to GRANT
petitioners: (a) separation pay in accordance with the computation given to the regular SMC
employees working at its Bacolod Shrimp Processing Plant with full backwages, inclusive of
allowances and other benefits or their monetary equivalent, from 11 September 1995, the time their
actual compensation was withheld from them, up to the time of the finality of this decision;
(b) differentials pays (sic) effective as of and from the time petitioners acquired regular employment
status pursuant to the disquisition mentioned above, and all such other and further benefits as
provided by applicable collective bargaining agreement(s) or other relations, or by law, beginning
such time up to their termination from employment on 11 September 1995; and ORDERING private
respondent SMC to PAY unto the petitioners attorneys fees equivalent to ten (10%) percent of the
total award.
No pronouncement as to costs.
SO ORDERED.
15
(Underscoring supplied)
Justifying its reversal of the findings of the labor arbiter and the NLRC, the appellate court reasoned:
Although the terms of the non-exclusive contract of service between SMC and [Sunflower] showed a
clear intent to abstain from establishing an employer-employee relationship between SMC and
[Sunflower] or the latters members, the extent to which the parties successfully realized this intent in
the light of the applicable law is the controlling factor in determining the real and actual
relationship between or among the parties.
xxx
With respect to the power to control petitioners conduct, it appears that petitioners were under the
direct control and supervision of SMC supervisors both as to the manner they performed their
functions and as to the end results thereof. It was only after petitioners lodged a complaint to have
their status declared as regular employees of SMC that certain members of [Sunflower] began to
countersign petitioners daily time records to make it appear that they (petitioners) were under the
control and supervision of [Sunflower] team leaders (rollo, pp. 523-527). xxx
Even without these instances indicative of control by SMC over the petitioners, it is safe to assume
that SMC would never have allowed the petitioners to work within its premises, using its own
facilities, equipment and tools, alongside SMC employees discharging similar or identical activities
unless it exercised a substantial degree of control and supervision over the petitioners not only as to
the manner they performed their functions but also as to the end results of such functions.
xxx
xxx it becomes apparent that [Sunflower] and the petitioners do not qualify as independent
contractors. [Sunflower] and the petitioners did not have substantial capital or investment in the form
of tools, equipment, implements, work premises, et cetera necessary to actually perform the service
under their own account, responsibility, and method. The only "work premises" maintained by
[Sunflower] was a small office within the confines of a small "carinderia" or refreshment parlor owned
by the mother of its chair, Roy Asong; the only equipment it owned was a typewriter (rollo, pp. 525-
525) and, the only assets it provided SMC were the bare bodies of its members, the petitioners
herein (rollo, p. 523).
In addition, as shown earlier, petitioners, who worked inside the premises of SMC, were under the
control and supervision of SMC both as to the manner and method in discharging their functions
and as to the resultsthereof.
Besides, it should be taken into account that the activities undertaken by the petitioners as cleaners,
janitors, messengers and shrimp harvesters, packers and handlers were directly related to the
aquaculture business of SMC (See Guarin vs. NLRC, 198 SCRA 267, 273). This is confirmed by
the renewal of the service contract from January 1993 to September 1995, a period of close to three
(3) years.
Moreover, the petitioners here numbering ninety seven (97), by itself, is a considerable workforce
and raises the suspicion that the non-exclusive service contract between SMC and [Sunflower] was
"designed to evade the obligations inherent in an employer-employee relationship" (See Rhone-
Poulenc Agrochemicals Philippines, Inc. vs. NLRC, 217 SCRA 249, 259).
Equally suspicious is the fact that the notary public who signed the by-laws of [Sunflower]
and its [Sunflower] retained counsel are both partners of the local counsel of SMC (rollo, p. 9).
xxx
With these observations, no other logical conclusion can be reached except that [Sunflower] acted
as an agent of SMC, facilitating the manpower requirements of the latter, the real employer of the
petitioners. We simply cannot allow these two entities through the convenience of a non-exclusive
service contract to stipulate on the existence of employer-employee relation. Such existence is a
question of law which cannot be made the subject of agreement to the detriment of the petitioners
(Tabas vs. California Manufacturing, Inc., 169 SCRA 497, 500).
xxx
There being a finding of "labor-only" contracting, liability must be shouldered either by SMC or
[Sunflower] or shared by both (See Tabas vs. California Manufacturing, Inc., supra, p. 502). SMC
however should be held solelyliable for [Sunflower] became non-existent with the closure of the
aquaculture business of SMC.
Furthermore, since the closure of the aquaculture operations of SMC appears to be valid,
reinstatement is no longer feasible. Consistent with the pronouncement in Bustamante, et al., vs.
NLRC, G.R. No. 111651, 28 November 1996, petitioners are thus entitled to separation pay (in the
computation similar to those given to regular SMC employees at its Bacolod Shrimp Processing
Plant) "with full backwages, inclusive of allowances and other benefits or their monetary equivalent,
from the time their actual compensation was withheld from them" up to the time of the finality of this
decision. This is without prejudice to differentials pays (sic) effective as of and from the time
petitioners acquired regular employment status pursuant to the discussion mentioned above, and all
such other and further benefits as provided by applicable collective bargaining agreement(s) or other
relations, or by law, beginning such time up to their termination from employment on 11 September
1995.
16
(Emphasis and underscoring supplied)
SMCs Motion for Reconsideration
17
having been denied for lack of merit by Resolution of July 11,
2001, it comes before this Court via the present petition for review on certiorari assigning to the CA
the following errors:
I
THE COURT OF APPEALS GRAVELY ERRED IN GIVING DUE COURSE AND GRANTING
RESPONDENTS PATENTLY DEFECTIVE PETITION FOR CERTIORARI. IN DOING SO, THE
COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS.
II
THE COURT OF APPEALS GRAVELY ERRED IN RECOGNIZING ALL THE RESPONDENTS AS
COMPLAINANTS IN THE CASE BEFORE THE LABOR ARBITER. IN DOING SO, THE COURT OF
APPEALS DECIDED THIS CASE IN A MANNER NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT.
III
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENTS ARE
EMPLOYEES OF SMC.
IV
THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDNG (sic) THAT RESPONDENTS ARE
NOT ENTITLED TO ANY RELIEF. THE CLOSURE OF THE BACOLOD SHRIMP PROCESSING
PLANT WAS DUE TO SERIOUS BUSINESS LOSSES.
18
(Underscoring supplied)
SMC bewails the failure of the appellate court to outrightly dismiss the petition for certiorari as only
three out of the ninety seven named petitioners signed the verification and certification against
forum-shopping.
While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs
or petitioners in a case and the signature of only one of them is insufficient,
19
this Court has stressed
that the rules on forum shopping, which were designed to promote and facilitate the orderly
administration of justice, should not be interpreted with such absolute literalness as to subvert its
own ultimate and legitimate objective.
20
Strict compliance with the provisions regarding the certificate
of non-forum shopping merely underscores its mandatory nature in that the certification cannot be
altogether dispensed with or its requirements completely disregarded.
21
It does not, however,
thereby interdict substantial compliance with its provisions under justifiable circumstances.
22

Thus in the recent case of HLC Construction and Development Corporation v. Emily Homes
Subdivision Homeowners Association,
23
this Court held:
Respondents (who were plaintiffs in the trial court) filed the complaint against petitioners as a group,
represented by their homeowners association president who was likewise one of the plaintiffs, Mr.
Samaon M. Buat.Respondents raised one cause of action which was the breach of contractual
obligations and payment of damages. They shared a common interest in the subject matter of the
case, being the aggrieved residents of the poorly constructed and developed Emily Homes
Subdivision. Due to the collective nature of the case, there was no doubt that Mr. Samaon M. Buat
could validly sign the certificate of non-forum shopping in behalf of all his co-plaintiffs. In cases
therefore where it is highly impractical to require all the plaintiffs to sign the certificate of non-forum
shopping, it is sufficient, in order not to defeat the ends of justice, for one of the plaintiffs, acting as
representative, to sign the certificate provided that xxx the plaintiffs share a common interest in
the subject matter of the case or filed the case as a "collective," raising only one common
cause of action or defense.
24
(Emphasis and underscoring supplied)
Given the collective nature of the petition filed before the appellate court by herein private
respondents, raising one common cause of action against SMC, the execution by private
respondents Winifredo Talite, Renelito Deon and Jose Temporosa in behalf of all the other private
respondents of the certificate of non-forum shopping constitutes substantial compliance with the
Rules.
25
That the three indeed represented their co-petitioners before the appellate court is, as it
correctly found, "subsequently proven to be true as shown by the signatures of the majority of the
petitioners appearing in their memorandum filed before Us."
26

Additionally, the merits of the substantive aspects of the case may also be deemed as "special
circumstance" or "compelling reason" to take cognizance of a petition although the certification
against forum shopping was not executed and signed by all of the petitioners.
27

SMC goes on to argue that the petition filed before the CA is fatally defective as it was not
accompanied by "copies of all pleadings and documents relevant and pertinent thereto" in
contravention of Section 1, Rule 65 of the Rules of Court.
28

This Court is not persuaded. The records show that private respondents appended the following
documents to their petition before the appellate court: the September 23, 1997 Decision of the Labor
Arbiter,
29
their Notice of Appeal with Appeal Memorandum dated October 16, 1997 filed before the
NLRC,
30
the December 29, 1998 NLRCD E C I S I O N,
31
their Motion for Reconsideration dated
March 26, 1999 filed with the NLRC
32
and the September 10, 1999 NLRC Resolution.
33

It bears stressing at any rate that it is the appellate court which ultimately determines if the
supporting documents are sufficient to make out a prima facie case.
34
It discerns whether on the
basis of what have been submitted it could already judiciously determine the merits of the
petition.
35
In the case at bar, the CA found that the petition was adequately supported by relevant
and pertinent documents.
At all events, this Court has allowed a liberal construction of the rule on the accomplishment of a
certificate of non-forum shopping in the following cases: (1) where a rigid application will result in
manifest failure or miscarriage of justice; (2) where the interest of substantial justice will be served;
(3) where the resolution of the motion is addressed solely to the sound and judicious discretion of
the court; and (4) where the injustice to the adverse party is not commensurate with the degree of
his thoughtlessness in not complying with the procedure prescribed.
36

Rules of procedure should indeed be viewed as mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be eschewed.
37

SMC further argues that the appellate court exceeded its jurisdiction in reversing the decisions of the
labor arbiter and the NLRC as "findings of facts of quasi-judicial bodies like the NLRC are accorded
great respect and finality," and that this principle acquires greater weight and application in the case
at bar as the labor arbiter and the NLRC have the same factual findings.
The general rule, no doubt, is that findings of facts of an administrative agency which has acquired
expertise in the particular field of its endeavor are accorded great weight on appeal.
38
The rule is not
absolute and admits of certain well-recognized exceptions, however. Thus, when the findings of fact
of the labor arbiter and the NLRC are not supported by substantial evidence or their judgment was
based on a misapprehension of facts, the appellate court may make an independent evaluation of
the facts of the case.
39

SMC further faults the appellate court in giving due course to private respondents petition despite
the fact that the complaint filed before the labor arbiter was signed and verified only by private
respondent Winifredo Talite; that private respondents position paper
40
was verified by only six
41
out
of the ninety seven complainants; and that their Joint-Affidavit
42
was executed only by twelve
43
of the
complainants.
Specifically with respect to the Joint-Affidavit of private respondents, SMC asserts that it should not
have been considered by the appellate court in establishing the claims of those who did not sign the
same, citing this Courts ruling in Southern Cotabato Development and Construction, Inc. v. NLRC.
44

SMCs position does not lie.
A perusal of the complaint shows that the ninety seven complainants were being represented by
their counsel of choice. Thus the first sentence of their complaint alleges: "xxx complainants, by
counsel and unto this Honorable Office respectfully state xxx." And the complaint was signed by
Atty. Jose Max S. Ortiz as "counsel for the complainants." Following Section 6, Rule III of the 1990
Rules of Procedure of the NLRC, now Section 7, Rule III of the 1999 NLRC Rules, Atty. Ortiz is
presumed to be properly authorized by private respondents in filing the complaint.
That the verification wherein it is manifested that private respondent Talite was one of the
complainants and was causing the preparation of the complaint "with the authority of my co-
complainants" indubitably shows that Talite was representing the rest of his co-complainants in
signing the verification in accordance with Section 7, Rule III of the 1990 NLRC Rules, now Section
8, Rule 3 of the 1999 NLRC Rules, which states:
Section 7. Authority to bind party. Attorneys and other representatives of parties shall have
authority to bind their clients in all matters of procedure; but they cannot, without a special power of
attorney or express consent, enter into a compromise agreement with the opposing party in full or
partial discharge of a clients claim. (Underscoring supplied)
As regards private respondents position paper which bore the signatures of only six of them,
appended to it was an Authority/Confirmation of Authority
45
signed by the ninety one others
conferring authority to their counsel "to file RAB Case No. 06-07-10316-95, entitled Winifredo
Talite et al. v. San Miguel Corporation presently pending before the sala of Labor Arbiter Ray Alan
Drilon at the NLRC Regional Arbitration Branch No. VI in Bacolod City" and appointing him as their
retained counsel to represent them in the said case.
That there has been substantial compliance with the requirement on verification of position papers
under Section 3, Rule V of the 1990 NLRC Rules of Procedure
46
is not difficult to appreciate in light
of the provision of Section 7, Rule V of the 1990 NLRC Rules, now Section 9, Rule V of the 1999
NLRC Rules which reads:
Section 7. Nature of Proceedings. The proceedings before a Labor Arbiter shall be non-litigious in
nature. Subject to the requirements of due process, the technicalities of law and procedure and the
rules obtaining in the courts of law shall not strictly apply thereto. The Labor Arbiter may avail
himself of all reasonable means to ascertain the facts of the controversy speedily, including ocular
inspection and examination of well-informed persons. (underscoring supplied)
As regards private respondents Joint-Affidavit which is being assailed in view of the failure of some
complainants to affix their signatures thereon, this Court quotes with approval the appellate courts
ratiocinations:
A perusal of the Southern Cotabato Development Case would reveal that movant did not quote the
whole text of paragraph 5 on page 865 of 280 SCRA. The whole paragraph reads:
"Clearly then, as to those who opted to move for the dismissal of their complaints, or did not submit
their affidavits nor appear during trial and in whose favor no other independent evidence was
adduced, no award for back wages could have been validly and properly made for want of factual
basis. There is no showing at all that any of the affidavits of the thirty-four (34) complainants were
offered as evidence for those who did not submit their affidavits, or that such affidavits had any
bearing at all on the rights and interest of the latter. In the same vein, private respondents position
paper was not of any help to these delinquent complainants.
The implication is that as long as the affidavits of the complainants were offered as evidence
for those who did not submit theirs, or the affidavits were material and relevant to the rights
and interest of the latter, such affidavits may be sufficient to establish the claims of those
who did not give their affidavits.
Here, a reading of the joint affidavit signed by twelve (12) of the ninety-seven (97) complainants
(petitioners herein) would readily reveal that the affidavit was offered as evidence not only for the
signatories therein but for all of the complainants. (These ninety-seven (97) individuals were
previously identified during the mandatory conference as the only complainants in the proceedings
before the labor arbiter) Moreover, the affidavit touched on the common interest of all of the
complainants as it supported their claim of the existence of an employer-employee relationship
between them and respondent SMC. Thus, the said affidavit was enough to prove the claims of the
rest of the complainants.
47
(Emphasis supplied, underscoring in the original)
In any event, SMC is reminded that the rules of evidence prevailing in courts of law or equity do not
control proceedings before the Labor Arbiter. So Article 221 of the Labor Code enjoins:
ART. 221. Technical rules not binding and prior resort to amicable settlement. In any
proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in
courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the
Commission and its members and the Labor Arbiters shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and without regard to technicalities of law
or procedure, all in the interest of due process. xxx
As such, their application may be relaxed to serve the demands of substantial justice.
48

On the merits, the petition just the same fails.
SMC insists that private respondents are the employees of Sunflower, an independent contractor.
On the other hand, private respondents assert that Sunflower is a labor-only contractor.
Article 106 of the Labor Code provides:
ART. 106. Contractor or subcontracting. Whenever an employer enters into a contract with
another person for the performance of the formers work, the employees of the contractor and of the
latters subcontractor, if any shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work performed under the contract, in the same
manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established under the Code. In so prohibiting or restricting, he
may make appropriate distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the parties involved shall
be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him.
Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by
Department Order No. 18, distinguishes between legitimate and labor-only contracting:
Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there
exists a trilateral relationship under which there is a contract for a specific job, work or service
between the principal and the contractor or subcontractor, and a contract of employment between
the contractor or subcontractor and its workers. Hence, there are three parties involved in these
arrangements, the principal which decides to farm out a job or service to a contractor or
subcontractor, the contractor or subcontractor which has the capacity to independently undertake
the performance of the job, work or service, and the contractual workers engaged by the contractor
or subcontractor to accomplish the job, work or service.
Section 5. Prohibition against labor-only contracting. Labor-only contracting Sis hereby declared
prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal, and any of the following elements are present:
i) The contractor or subcontractor does not have substantial capital or investment which
relates to the job, work or service to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing activities which are directly related
to the main business of the principal, or
ii) The contractor does not exercise the right to control over the performance of the work of
the contractual employee.
The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor
Code, as amended.
"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case
of corporations, tools, equipment, implements, machineries and work premises, actually and directly
used by the contractor or subcontractor in the performance or completion of the job, work or service
contracted out.
The "right to control" shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the
manner and means to be used in reaching that end.
The test to determine the existence of independent contractorship is whether one claiming to be
an independent contractor has contracted to do the work according to his own methods and
without being subject to the control of the employer, except only as to the results of the
work.
49

In legitimate labor contracting, the law creates an employer-employee relationship for a limited
purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes
jointly and severally liable with the job contractor, only for the payment of the employees wages
whenever the contractor fails to pay the same. Other than that, the principal employer is not
responsible for any claim made by the employees.
50

In labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered
merely an agent of the principal employer and the latter is responsible to the employees of the labor-
only contractor as if such employees had been directly employed by the principal employer.
51

The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the
existence of an employer-employee relationship between SMC and private respondents. The
language of a contract is not, however, determinative of the parties relationship; rather it is the
totality of the facts and surrounding circumstances of the case.
52
A party cannot dictate, by the mere
expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as
labor-only contractor or job contractor, it being crucial that its character be measured in terms of and
determined by the criteria set by statute.
53

SMC argues that Sunflower could not have been issued a certificate of registration as a cooperative
if it had no substantial capital.
54

While indeed Sunflower was issued Certificate of Registration No. IL0-875
55
on February 10, 1992 by
the Cooperative Development Authority, this merely shows that it had at least P2,000.00 in paid-up
share capital as mandated by Section 5 of Article 14
56
of Republic Act No. 6938, otherwise known as
the Cooperative Code, which amount cannot be considered substantial capitalization.
What appears is that Sunflower does not have substantial capitalization or investment in the form of
tools, equipment, machineries, work premises and other materials to qualify it as an independent
contractor.
On the other hand, it is gathered that the lot, building, machineries and all other working tools utilized
by private respondents in carrying out their tasks were owned and provided by SMC. Consider the
following uncontroverted allegations of private respondents in the Joint Affidavit:
[Sunflower], during the existence of its service contract with respondent SMC, did not own a single
machinery, equipment, or working tool used in the processing plant. Everything was owned and
provided by respondent SMC. The lot, the building, and working facilities are owned by respondent
SMC. The machineries and equipments (sic) like washer machine, oven or cooking machine, sizer
machine, freezer, storage, and chilling tanks, push carts, hydrolic (sic) jack, tables, and chairs were
all owned by respondent SMC. All the boxes, trays, molding pan used in the processing are also
owned by respondent SMC. The gloves and boots used by the complainants were also owned by
respondent SMC. Even the mops, electric floor cleaners, brush, hoose (sic), soaps, floor waxes,
chlorine, liquid stain removers, lysol and the like used by the complainants assigned as cleaners
were all owned and provided by respondent SMC.
Simply stated, third-party respondent did not own even a small capital in the form of tools,
machineries, or facilities used in said prawn processing
xxx
The alleged office of [Sunflower] is found within the confines of a small "carinderia" or "refreshment"
(sic) owned by the mother of the Cooperative Chairman Roy Asong.
xxx In said . . . office, the only equipment used and owned by [Sunflower] was a typewriter.
57

And from the job description provided by SMC itself, the work assigned to private respondents
was directly relatedto the aquaculture operations of SMC. Undoubtedly, the nature of the work
performed by private respondents in shrimp harvesting, receiving and packing formed an integral
part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that
they are considered directly related to the principal business of the employer
58
has been
jurisprudentially recognized.
Furthermore, Sunflower did not carry on an independent business or undertake the performance of
its service contract according to its own manner and method, free from the control and supervision of
its principal, SMC, its apparent role having been merely to recruit persons to work for SMC.
Thus, it is gathered from the evidence adduced by private respondents before the labor arbiter that
their daily time records were signed by SMC supervisors Ike Puentebella, Joemel Haro, Joemari
Raca, Erwin Tumonong, Edison Arguello, and Stephen Palabrica, which fact shows that SMC
exercised the power of control and supervision over its employees.
59
And control of the premises in
which private respondents worked was by SMC. These tend to disprove the independence of the
contractor.
60

More. Private respondents had been working in the aqua processing plant inside the SMC
compound alongside regular SMC shrimp processing workers performing identical jobs under the
same SMC supervisors.
61
This circumstance is another indicium of the existence of a labor-only
contractorship.
62

And as private respondents alleged in their Joint Affidavit which did not escape the observation of
the CA, no showing to the contrary having been proffered by SMC, Sunflower did not cater to clients
other than SMC,
63
and with the closure of SMCs Bacolod Shrimp Processing Plant, Sunflower
likewise ceased to exist. This Courts ruling in San Miguel Corporation v. MAERC Integrated
Services, Inc.
64
is thus instructive.
xxx Nor do we believe MAERC to have an independent business. Not only was it set up to
specifically meet the pressing needs of SMC which was then having labor problems in its
segregation division, none of its workers was also ever assigned to any other establishment, thus
convincing us that it was created solely to service the needs of SMC. Naturally, with the severance
of relationship between MAERC and SMC followed MAERCs cessation of operations, the loss of
jobs for the whole MAERC workforce and the resulting actions instituted by the
workers.
65
(Underscoring supplied)
All the foregoing considerations affirm by more than substantial evidence the existence of an
employer-employee relationship between SMC and private respondents.
Since private respondents who were engaged in shrimp processing performed tasks usually
necessary or desirable in the aquaculture business of SMC, they should be deemed regular
employees of the latter
66
and as such are entitled to all the benefits and rights appurtenant to regular
employment.
67
They should thus be awarded differential pay corresponding to the difference
between the wages and benefits given them and those accorded SMCs other regular employees.1awphi 1.zw+
Respecting the private respondents who were tasked with janitorial and messengerial duties, this
Court quotes with approval the appellate courts ruling thereon:
Those performing janitorial and messengerial services however acquired regular status only after
rendering one-year service pursuant to Article 280 of the Labor Code. Although janitorial and
messengerial services are considered directly related to the aquaculture business of SMC, they are
deemed unnecessary in the conduct of its principal business; hence, the distinction (See Coca Cola
Bottlers Phils., Inc. v. NLRC, 307 SCRA 131, 136-137 and Philippine Bank of Communications v.
NLRC, supra, p. 359).
68

The law of course 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.
69

As for those of private respondents who were engaged in janitorial and messengerial tasks, they fall
under the second category and are thus entitled to differential pay and benefits extended to other
SMC regular employees from the day immediately following their first year of service.
70

Regarding the closure of SMCs aquaculture operations and the consequent termination of private
respondents, Article 283 of the Labor Code provides:
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 Department 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 to 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. (Underscoring supplied)
In the case at bar, a particular department under the SMC group of companies was closed allegedly
due to serious business reverses. This constitutes retrenchment by, and not closure of, the
enterprise or the company itself as SMC has not totally ceased operations but is still very much an
on-going and highly viable business concern.
71

Retrenchment is a management prerogative consistently recognized and affirmed by this Court. It is,
however, subject to faithful compliance with the substantive and procedural requirements laid down
by law and jurisprudence.
72

For retrenchment to be considered valid the following substantial requirements must be met: (a) the
losses expected should be substantial and not merely de minimis in extent; (b) the substantial losses
apprehended must be reasonably imminent such as can be perceived objectively and in good faith
by the employer; (c) the retrenchment must be reasonably necessary and likely to effectively prevent
the expected losses; and (d) the alleged losses, if already incurred, and the expected imminent
losses sought to be forestalled, must be proved by sufficient and convincing evidence.
73

In the discharge of these requirements, it is the employer who has the onus, being in the nature of
an affirmative defense.
74

Normally, the condition of business losses is shown by audited financial documents like yearly
balance sheets, profit and loss statements and annual income tax returns. The financial statements
must be prepared and signed by independent auditors failing which they can be assailed as self-
serving documents.
75

In the case at bar, company losses were duly established by financial documents audited by Joaquin
Cunanan & Co. showing that the aquaculture operations of SMCs Agribusiness Division
accumulated losses amounting toP145,848,172.00 in 1992 resulting in the closure of its Calatrava
Aquaculture Center in Negros Occidental,P11,393,071.00 in 1993 and P80,325,608.00 in 1994
which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod
Shrimp Processing Plant in 1995.
SMC has thus proven substantial business reverses justifying retrenchment of its employees.
For termination due to retrenchment to be valid, however, the law requires that written notices of the
intended retrenchment be served by the employer on the worker and on the DOLE at least one (1)
month before the actual date of the retrenchment,
76
in order to give employees some time to prepare
for the eventual loss of their jobs, as well as to give DOLE the opportunity to ascertain the verity of
the alleged cause of termination.
77

Private respondents, however, were merely verbally informed on September 10, 1995 by SMC
Prawn Manager Ponciano Capay that effective the following day or on September 11, 1995, they
were no longer to report for work as SMC would be closing its operations.
78

Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but the
employer failed to comply with the notice requirement, the sanction should be stiff as the dismissal
process was initiated by the employers exercise of his management prerogative, as opposed to a
dismissal based on a just cause under Article 282 with the same procedural infirmity where the
sanction to be imposed upon the employer should be tempered as the dismissal process was, in
effect, initiated by an act imputable to the employee.
79

In light of the factual circumstances of the case at bar, this Court awards P50,000.00 to each private
respondent as nominal damages.
The grant of separation pay as an incidence of termination of employment due to retrenchment to
prevent losses is a statutory obligation on the part of the employer and a demandable right on the
part of the employee. Private respondents should thus be awarded separation pay equivalent to at
least one (1) month pay or to at least one-half month pay for every year of service, whichever is
higher, as mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to
other regular SMC employees that were terminated as a result of the retrenchment, depending on
which is most beneficial to private respondents.
Considering that private respondents were not illegally dismissed, however, no backwages need be
awarded. It is well settled that backwages may be granted only when there is a finding of illegal
dismissal.
80
The appellate court thus erred in awarding backwages to private respondents upon the
authority of Bustamante v. NLRC,
81
what was involved in that case being one of illegal dismissal.
With respect to attorneys fees, in actions for recovery of wages or where an employee was forced to
litigate and thus incurred expenses to protect his rights and interests,
82
a maximum of ten percent
(10%) of the total monetary award
83
by way of attorneys fees is justifiable under Article 111 of the
Labor Code,
84
Section 8, Rule VIII, Book III of its Implementing Rules,
85
and paragraph 7, Article
2208 of the Civil Code.
86
Although an express finding of facts and law is still necessary to prove the
merit of the award, there need not be any showing that the employer acted maliciously or in bad faith
when it withheld the wages. There need only be a showing that the lawful wages were not paid
accordingly, as in this case.
87

Absent any evidence showing that Sunflower has been dissolved in accordance with law, pursuant
to Rule VIII-A, Section 19
88
of the Omnibus Rules Implementing the Labor Code, Sunflower is held
solidarily liable with SMC for all the rightful claims of private respondents.
WHEREFORE, the petition is DENIED. The assailed Decision dated February 7, 2001 and
Resolution dated July 11, 2001 of the Court of Appeals are AFFIRMED with MODIFICATION.
Petitioner San Miguel Corporation and Sunflower Multi-Purpose Cooperative are hereby ORDERED
to jointly and severally pay each private respondent differential pay from the time they became
regular employees up to the date of their termination; separation pay equivalent to at least one (1)
month pay or to at least one-half month pay for every year of service, whichever is higher, as
mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to other regular
SMC employees that were terminated as a result of the retrenchment, depending on which is most
beneficial to private respondents; and ten percent (10%) attorneys fees based on the herein
modified award.
Petitioner San Miguel Corporation is further ORDERED to pay each private respondent the amount
of P50,000.00, representing nominal damages for non-compliance with statutory due process.
The award of backwages is DELETED.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Garcia, JJ., concur.