Conviction/Commission of a Crime

EDUARDO BUGHAW, JR., Petitioner, vs. TREASURE ISLAND INDUSTRIAL CORPORATION, Respondent.

The charge of drug abuse inside the company's premises and during working hours against Eduardo constitutes serious
misconduct, which is one of the just causes for termination. Misconduct is improper or wrong conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not merely an error in judgment. The misconduct to be serious within the meaning of the Act
must be of such a grave and aggravated character and not merely trivial or unimportant. Such misconduct, however
serious, must nevertheless, in connection with the work of the employee, constitute just cause for his separation. This
Court took judicial notice of scientific findings that drug abuse can damage the mental faculties of the user. It is beyond
question therefore that any employee under the influence of drugs cannot possibly continue doing his duties without
posing a serious threat to the lives and property of his co-workers and even his employer.

Loberanes's statements given to police during investigation is evidence which can be considered by Treasure Island
against Eduardo. Eduardo failed to controvert Loberanes' claim that he too was using illegal drugs. Records reveal that
Treasure Island gave Eduardo a first notice dated 11 June 2001, giving him 120 hours within which to explain and defend
himself from the charge against him and to attend the administrative hearing scheduled on 16 June 2001. There is no
dispute that Eduardo received said notice as evidenced by his signature appearing on the lower left portion of a copy
thereof together with the date and time of his receipt. He also admitted receipt of the first notice in his Memorandum
before this Court. Despite his receipt of the notice, however, Eduardo did not submit any written explanation on the charge
against him, even after the lapse of the 120- day period given him. Neither did Eduardo appear in the scheduled
administrative hearing to personally present his side. Thus, Treasure Island cannot be faulted for considering only the
evidence at hand, which was Loberanes' statement, and conclude therefrom that there was just cause for Eduardo's
termination. xxx

While there is no dispute that Treasure Island fully complied with the first-notice requirement apprising Eduardo of the
cause of his impending termination and giving him the opportunity to explain his side, we find that it failed to satisfy the
need for a second notice informing Eduardo that he was being dismissed from employment.

We cannot give credence to Treasure Island's allegation that Eduardo refused to receive the third letter dated 21 August
2001 which served as the notice of termination. There is nothing on record that would indicate that Treasure Island even
attempted to serve or tender the notice of termination to Eduardo. No affidavit of service was appended to the said notice
attesting to the reason for failure of service upon its intended recipient. Neither was there any note to that effect by the
server written on the notice itself.

Constructive Dismissal

DIVINE WORD COLLEGE OF LAOAG, PETITIONER, VS. SHIRLEY B. MINA, AS HEIR-SUBSTITUTE OF THE LATE
DELFIN A. MINA, RESPONDENT.

Constructive dismissal is a dismissal in disguise. There is cessation of work in constructive dismissal because '"continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in
pay' and other benefits." To be considered as such, an act must be a display of utter discrimination or insensibility on the
part of the employer so intense that it becomes unbearable for the employee to continue with his employment. The law
recognizes and resolves this situation in favor of employees in order to protect their rights and interests from the coercive
acts of the employer.

In this case, Mina's transfer clearly amounted to a constructive dismissal. For almost 22 years, he was a high school
teacher enjoying a permanent status in DWCL's high school department. In 2002, he was appointed as an associate
professor at the college department but shortly thereafter, or on June 1, 2003, he was appointed as a college laboratory
custodian, which is a clear relegation from his previous position. Not only that. He was also divested of his teaching load.
His appointment even became contractual in nature and was subject to automatic termination after one year "without any
further notification." Aside from this, Mina was the only one among the high school teachers transferred to the college
department who was divested of teaching load. More importantly, DWCL failed to show any reason for Mina's transfer and
that it was not unreasonable, inconvenient, or prejudicial to him.

Also, the CA correctly ruled that Mina's appointment as laboratory custodian was a demotion. There is demotion when an
employee occupying a highly technical position requiring the use of one's mental faculty is transferred to another position,
where the employee performed mere mechanical work virtually a transfer from a position of dignity to a servile or
menial job. The assessment whether Mina's transfer amounted to a demotion must be done in relation to his previous
position, that is, from an associate college professor, he was made a keeper and inventory-taker of laboratory materials.
Clearly, Mina's new duties as laboratory custodian were merely perfunctory and a far cry from his previous teaching job,
which involved the use of his mental faculties. And while there was no proof adduced showing that his salaries and
benefits were diminished, there was clearly a demotion in rank. As was stated in Blue Dairy Corporation v. NLRC, "[i]t was
virtually a transfer from a position of dignity to a servile or menial job."

Given the finding of constructive dismissal, Mina, therefore, is entitled to reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement.

Temporary "Off-detail" or "floating status" - 301 (286)

VICENTE C. TATEL, PETITIONER, VS. JLFP INVESTIGATION SECURITY AGENCY, INC., JOSE LUIS F. PAMINTUAN,
AND/OR PAOLO C. TURNO, RESPONDENTS.

At the core of this petition is Tatel's insistence that he was illegally dismissed when, after he was put on "floating status" on
October 24, 2009, respondents no longer gave him assignments or postings, and the period therefor had lasted for more
than six (6) months. On the other hand, respondents maintained that Tatel abandoned his work, and that his inconsistent
statements before the labor tribunals regarding his work details rendered his claim of illegal dismissal suspect.

After a judicious perusal of the records, the Court is convinced that Tatel was constructively, not actually, dismissed after
having been placed on "floating status" for more than six (6) months, reckoned from October 24, 2009, the day following
his removal from his last assignment with IPVG on October 23, 2009, and not on August 24, 2009 as erroneously held by
the NLRC.

In Superstar Security Agency, Inc. and/or Col. Andrada v. NLRC, the Court ruled that placing an employee on temporary
"off-detail" is not equivalent to dismissal provided that such temporary inactivity should continue only for a period of six (6)
months. In security agency parlance, being placed "off-detail" or on "floating status" means "waiting to be
posted." In Salvaloza v. NLRC, the Court further explained the nature of the "floating status," to wit:

Temporary "off-detail" or "floating status" is the period of time when security guards are in between assignments
or when they are made to wait after being relieved from a previous post until they are transferred to a new one. It
takes place when the security agency's clients decide not to renew their contracts with the agency, resulting in a
situation where the available posts under its existing contracts are less than the number of guards in its roster. It
also happens in instances where contracts for security services stipulate that the client may request the agency
for the replacement of the guards assigned to it even for want of cause, such that the replaced security guard may
be placed on temporary "off-detail" if there are no available posts under the agency's existing contracts. During
such time, the security guard does not receive any salary or any financial assistance provided by law. It does not
constitute a dismissal, as the assignments primarily depend on the contracts entered into by the security agencies
with third parties, so long as such status does not continue beyond a reasonable time. When such a "floating
status" lasts for more than six (6) months, the employee may be considered to have been constructively
dismissed. (Emphasis supplied)

Relative thereto, constructive dismissal exists when an act of clear discrimination, insensibility, or disdain, on the part of
the employer has become so unbearable as to leave an employee with no choice but to forego continued employment, or
when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as an
offer involving a demotion in rank and a diminution in pay.

In this case, respondents themselves claimed that after having removed Tatel from his post at BaggerWerken on August
24, 2009 due to several infractions committed thereat, they subsequently reassigned him to SKI from September 16, 2009
to October 12, 2009 and then to IPVG from October 21 to 23, 2009. Thereafter, and until Tatel filed the instant complaint
for illegal dismissal six (6) months later, or on May 4, 2010, he was not given any other postings or assignments. While it
may be true that respondents summoned him back to work through the November 26, 2009 Memorandum, which Tatel
acknowledged to have received on December 11, 2009, records are bereft of evidence to show that he was given another
detail or assignment. As the "off-detail" period had already lasted for more than six (6) months, Tatel is therefore deemed
to have been constructively dismissed.

Floating status beyond 6 months - 301 (286)

EXOCET SECURITY AND ALLIED SERVICES CORPORATION AND/OR MA. TERESA MARCELO, PETITIONER, VS.
ARMANDO D. SERRANO, RESPONDENT.
While there is no specific provision in the Labor Code which governs the floating status or temporary off-detail of
security guards employed by private security agencies, this situation was considered by this Court in several cases as a
form of temporary retrenchment or lay-off.[18] The concept has been defined as that period of time when security guards
are in between assignments or when they are made to wait after being relieved from a previous post until they are
transferred to a new one.[19] As pointed out by the CA, it takes place when the security agencys clients decide not to
renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are
less than the number of guards in its roster. It also happens in instances where contracts for security services stipulate
that the client may request the agency for the replacement of the guards assigned to it, even for want of cause, such that
the replaced security guard may be placed on temporary off-detail if there are no available posts under the agencys
existing contracts.

As the circumstance is generally outside the control of the security agency or the employer, the Court has ruled that when
a security guard is placed on a floating status, he or she does not receive any salary or financial benefit
provided by law. Pido v. National Labor Relations Commission explains why:

Verily, a floating status requires the dire exigency of the employers bona fide suspension of operation of a
business or undertaking. In security services, this happens when the security agencys clients which do not
renew their contracts are more than those that do and the new ones that the agency gets. Also, in instances
when contracts for security services stipulate that the client may request the agency for the replacement
of the guards assigned to it even for want of cause, the replaced security guard may be placed on
temporary off-detail if there are no available posts under respondents existing contracts.

When a security guard is placed on a floating status, he does not receive any salary or financial benefit
provided by law. Due to the grim economic consequences to the employee, the employer should bear the
burden of proving that there are no posts available to which the employee temporarily out of work can be
assigned. (emphasis supplied)

It must be emphasized, however, that although placing a security guard on floating status or a temporary off-detail is
considered a temporary retrenchment measure, there is similarly no provision in the Labor Code which treats of a
temporary retrenchment or lay-off. Neither is there any provision which provides for its requisites or its duration.
Nevertheless, since an employee cannot be laid-off indefinitely, the Court has applied Article 292 (previously Article 286)
of the Labor Code by analogy to set the specific period of temporary lay-off to a maximum of six (6) months. The said
provision states:

ART. 292. When employment not deemed terminated. - The bona-fide suspension of the operation of a business
or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic
duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month
from the resumption of operations of his employer or from his relief from the military or civic duty.

Thus, this Court has held, citing Sebuguero v. NLRC, that the placement of the employee on a floating status should not
last for more than six months. After six months, the employee should be recalled for work, or for a new assignment;
otherwise, he is deemed terminated. xxx

In accordance with the aforementioned ruling, the Department of Labor and Employment (DOLE) issued Department
Order No. 14, Series of 2001 (DO 14- 01), entitled Guidelines Governing the Employment and Working Conditions of
Security Guards and Similar Personnel in the Private Security Industry, Section 6.5,in relation to Sec. 9.3, of which states
that the lack of service assignment for a continuous period of six (6) months is an authorized cause for the termination of
the employee, who is then entitled to a separation pay equivalent to half month pay for every year of service. xxx

To validly terminate a security guard for lack of service assignment for a continuous period of six months under Secs. 6.5
and 9.3 of DO 14-01, the security agency must comply with the provisions of Article 289 (previously Art. 283) of the Labor
Code, which mandates that a written notice should be served on the employee on temporary off-detail or floating
status and to the DOLE one (1) month before the intended date of termination. xxx

In every case, the Court has declared that the burden of proving that there are no posts available to which the security
guard may be assigned rests on the employer. xxx

In the controversy now before the Court, there is no question that the security guard, Serrano, was placed on floating
status after his relief from his post as a VIP security by his security agencys client. Yet, there is no showing that his
security agency, Exocet, acted in bad faith when it placed Serrano on such floating status. What is more, the present
case is not a situation where Exocet did not recall Serrano to work within the six-month period as required by law
and jurisprudence. Exocet did, in fact, make an offer to Serrano to go back to work. It is just that the assignment
although it does not involve a demotion in rank or diminution in salary, pay, benefits or privilegeswas not the security
detail desired by Serrano.

Clearly, Serranos lack of assignment for more than six months cannot be attributed to Exocet. On the contrary, records
show that, as early as September 2006, or one month after Serrano was relieved as a VIP security, Exocet had already
offered Serrano a position in the general security service because there were no available clients requiring positions
for VIP security. Notably, even though the new assignment does not involve a demotion in rank or diminution in salary,
pay, or benefits, Serrano declined the position because it was not the post that suited his preference, as he
insisted on being a VIP Security.

g. Transfer/Reassignment of work

JENNY F. PECKSON, PETITIONER, VS. ROBINSONS SUPERMARKET CORPORATION, JODY GADIA, ROENA
SARTE, AND RUBY ALEX, RESPONDENTS.

In Rural Bank of Cantilan, Inc. v. Julve, the Court had occasion to summarize the general jurisprudential guidelines
affecting the right of the employer to regulate employment, including the transfer of its employees:

Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his
own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods,
the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline,
dismissal, and recall of employees. The only limitations to the exercise of this prerogative are those imposed by
labor laws and the principles of equity and substantial justice. While the law imposes many obligations upon the
employer, nonetheless, it also protects the employers right to expect from its employees not only good
performance, adequate work, and diligence, but also good conduct and loyalty. In fact, the Labor Code does not
excuse employees from complying with valid company policies and reasonable regulations for their governance
and guidance.

Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a
movement from one position to another of equivalent rank, level or salary without break in the service or a lateral
movement from one position to another of equivalent rank or salary; (b) the employer has the inherent right to
transfer or reassign an employee for legitimate business purposes; (c) a transfer becomes unlawful where it is
motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient
cause; (d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to
the employee. xxx

In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, a machinist who had been employed with the petitioner company
for 16 years was reduced to the service job of transporting filling materials after he failed to report for work for one (1) day
on account of an urgent family matter. This is one instance where the employees demotion was rightly held to be an
unlawful constructive dismissal because the employer failed to show substantial proof that the employees demotion was
for a valid and just cause:

In case of a constructive dismissal, the employer has the burden of proving that the transfer and demotion of an
employee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not
to be considered a constructive dismissal, the employer must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution
of his salaries, privileges and other benefits. Failure of the employer to overcome this burden of proof, the
employees demotion shall no doubt be tantamount to unlawful constructive dismissal. x x x.

In the case at bar, we agree with the appellate court that there is substantial showing that the transfer of the petitioner
from Category Buyer to Provincial Coordinator was not unreasonable, inconvenient, or prejudicial to her. The petitioner
failed to dispute that the job classifications of Category Buyer and Provincial Coordinator are similar, or that they
command a similar salary structure and responsibilities. We agree with the NLRC that the Provincial Coordinators
position does not involve mere clerical functions but requires the exercise of discretion from time to time, as well as
independent judgment, since the Provincial Coordinator gives appropriate recommendations to management and ensures
the faithful implementation of policies and programs of the company. It even has influence over a Category Buyer because
of its recommendatory function that enables the Category Buyer to make right decisions on assortment, price and quantity
of the items to be sold by the store.

We also cannot sustain the petitioners claim that she was not accorded due process and that the respondents acted
toward her with discrimination, insensibility, or disdain as to force her to forego her continued employment. In addition to
verbal reminders from Sarte, the petitioner was asked in writing twice to explain within 48 hours her refusal to accept her
transfer. In the first, she completely remained silent, and in the second, she took four (4) days to file a mere one-
paragraph reply, wherein she simply said that she saw the Provincial Coordinator position as a demotion, hence she could
not accept it. Worse, she may even be said to have committed insubordination when she refused to turn over her
responsibilities to the new Category Buyer, Padilla, and to assume her new responsibilities as Provincial Coordinator and
report to the Metroeast Depot as directed. This was precisely the reason why the petitioner was kept on floating status. To
her discredit, her defiance constituted a neglect of duty, or an act of insubordination, per the LA.

Neither can we consider tenable the petitioners contention that the respondents deliberately held her up to mockery and
ridicule when they cut off her email access, sent memoranda to her clients that she was no longer a Category Buyer, and
to the various Robinsons branches that she was now a Provincial Coordinator on floating status and that Padilla was
taking over her position as the new Category Buyer. It suffices to state that these measures are the logical steps to take
for the petitioners unjustified resistance to her transfer, and were not intended to subject her to public embarrassment.

Promotion

PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION, PETITIONER, VS. COURT OF APPEALS, NATIONAL
LABOR RELATIONS COMMISSION, PT&T PROGRESSIVE WORKERS UNION-NAFLU-KMU, CRISTINA RODIEL,
JESUS PARACALE, ROMEO TEE, BENJAMIN LAKANDULA, AVELINO ACHA, IGNACIO DELA CERNA AND
GUILLLERMO DOMEGILLO, RESPONDENTS.

Indeed, the increase in the respondents responsibility can be ascertained from the scalar ascent of their job grades. With
or without a corresponding increase in salary, the respective transfer of the private respondents were in fact promotions,
following the ruling enunciated in Homeowners Savings and Loan Association, Inc. v. NLRC:

[P]romotion, as we defined in Millares v, Subido, is the advancement from one position to another with an
increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary.
Apparently, the indispensable element for there to be a promotion is that there must be an advancement from one
position to another or an upward vertical movement of the employees rank or position. Any increase in salary
should only be considered incidental but never determinative of whether or not a promotion is bestowed upon an
employee. This can be likened to the upgrading of salaries of government employees without conferring upon the,
the concomitant elevation to the higher positions.

The admissions of the petitioner are conclusive on it. An employee cannot be promoted, even if merely as a result of a
transfer, without his consent. A transfer that results in promotion or demotion, advancement or reduction or a transfer that
aims to lure the employee away from his permanent position cannot be done without the employees consent.

There is no law that compels an employee to accept a promotion for the reason that a promotion is in the nature of a gift
or reward, which a person has a right to refuse. Hence, the exercise by the private respondents of their right cannot be
considered in law as insubordination, or willful disobedience of a lawful order of the employer. As such, there was no valid
cause for the private respondents dismissal.

Preventive suspension

JOSE P. ARTIFICIO, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, RP GUARDIANS SECURITY
AGENCY, INC., JUAN VICTOR K. LAURILLA, ALBERTO AGUIRRE, AND ANTONIO A. ANDRES, RESPONDENTS.

Sections 8 and 9 of Rule XXIII, Implementing Book V of the Omnibus Rules Implementing the Labor Code provides:

SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive suspension
if his continued employment poses a serious and imminent threat to the life or property of the employer or of his
co-workers.

SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The employer
shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may
extend the period of suspension provided that during the period of extension, he pays the wages and other
benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him
during the extension if the employer decides, after completion of the hearing, to dismiss the worker.

(NOTE: These provisions have been removed. At present, no specific rule governs Preventive Suspension.)

In this case, Artificio's preventive suspension was justified since he was employed as a security guard tasked precisely to
safeguard respondents' client. His continued presence in respondents' or its client's premises poses a serious threat to
respondents, its employees and client in light of the serious allegation of conduct unbecoming a security guard such as
abandonment of post during night shift duty, light threats and irregularities in the observance of proper relieving time.

Besides, as the employer, respondent has the right to regulate, according to its discretion and best judgment, all aspects
of employment, including work assignment, working methods, processes to be followed, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers. Management has the
prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules
and regulations.

This Court has upheld a company's management prerogatives so long as they are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements. xxx

As already mentioned, after Artificio was placed under preventive suspension on 29 July 2002, he forthwith, or on 5
August 2002, filed a complaint for illegal dismissal and illegal suspension. From that date until the present, he has
insisted on his submission that he was illegally dismissed and that he is not seeking reinstatement as in fact right from the
start, his prayer was for separation pay. Having determined that the imposition on Artificio of preventive suspension was
proper and that such suspension did not amount to illegal dismissal, we see no basis for the grant of backwages.

Nonetheless, given the attendant circumstances in this case, namely, that Artificio had been working with the company for
a period of sixteen (16) years and without any previous derogatory record, the ends of social and compassionate justice
would be served if Artificio be given some equitable relief in the form of separation pay.

Artificio is entitled to separation pay considering that while reinstatement is an option, Artificio himself has never, at
anytime after the notice of preventive suspension intended to remain in the employ of private respondents.

* D. Termination due to employee's death

ONE SHIPPING CORP., AND/OR ONE SHIPPING KABUSHIKI KAISHA/JAPAN, PETITIONER, VS. IMELDA C.
PEAFIEL, RESPONDENT.

It is indisputable that Ildefonso was previously employed by the petitioners as Second Engineer on board the vessel
MV/ACX Magnolia to work for a duration of twelve (12) months pursuant to the terms and conditions of the Contract of
Employment entered into by the parties on August 23, 2004, which was duly approved by the Philippine Overseas
Employment Administration (POEA).

Based on the records, however, Ildefonso pre-terminated his contract of employment with the petitioners when on April 9,
2005, he requested for a vacation leave effective May 2005. The said request was granted by the petitioners. Hence,
Ildefonso was duly paid of all that was due him as a result of his employment and, subsequently, Ildefonso was repatriated
to the Philippines on May 21, 2005.

From the above findings and circumstance, it is clear that at the time of Ildefonso's repatriation, the employer-employee
relationship between Ildefonso and the petitioners had already been terminated. Thus, the Labor Arbiter was correct in
concluding that the terms and conditions contained in the contract of employment ceased to have force and effect,
including the payment of death compensation benefits to the heirs of a seafarer who dies during the term of his contract
as provided for in Section 20 (A) of the POEA Standard Employment Contract, which states:

A. COMPENSATION AND BENEFITS FOR DEATH

1. In case of work-related death of a seafarer during the term of his contract, the employer shall pay his
beneficiaries the Philippine Currency equivalent of the amount of Fifty Thousand US Dollars (US$50,000) and an
additional amount of Seven Thousand US Dollars (US$7,000) to each child under the age of twenty one (21), but
not exceeding four (4) children, at the exchange rate prevailing during the time of payment. xxx

Furthermore, there is no evidence to show that Ildefonso's illness was acquired during the term of his employment with
petitioners.

The CA, in reversing the rulings of the Labor Arbiter and the NLRC, stated that the fact that One Shipping hired Ildefonso
despite a waiver and prior knowledge of his heart ailment behooves petitioners to accept liability for said death in the
course of his employment is misguided. Granting that petitioners were made aware of Ildefonso's prior heart ailment, the
fact still remains that he died after the effectivity of his contract. There is even no reason given why Ildefonso asked for a
pre-termination of his contract which resulted in his repatriation. To surmise that he asked for the pre-termination of his
contract due to a medical condition is highly speculative and must not be considered as a fact.
2. Substantive Requirements - Business Related Causes - 298 (283); Book VI, Rule I, Sec. 9

a. Basis: Employer Right - Const., Art. XIII, Sec. 3, par. 4; Labor Code, 298 (283).

FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THEPHILIPPINES (FASAP), PETITIONER, VS.

PHILIPPINE AIRLINES, INC., PATRIA CHIONG AND COURT OF APPEALS, RESPONDENTS.

The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its
failure to prove these reverses or losses necessarily means that the employee's dismissal was not justified. Any claim of
actual or potential business losses must satisfy certain established standards, all of which must concur, before any
reduction of personnel becomes legal. These are:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred,
are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent
as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least
one-half () month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its
interest and not to defeat or circumvent the employees' right to security of tenure; and,

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship
for certain workers.

In view of the facts and the issues raised, the resolution of the instant petition hinges on a determination of the existence
of the first, fourth and the fifth elements set forth above, as well as compliance therewith by PAL, taking to mind that the
burden of proof in retrenchment cases lies with the employer in showing valid cause for dismissal; that legitimate business
reasons exist to justify retrenchment.

RE: first element - The employer's prerogative to layoff employees is subject to certain limitations. In Lopez Sugar
Corporation v. Federation of Free Workers, we held that:

Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly
sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character,
the bona fide nature of the retrenchment would appear to be seriously in question.

Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees
retired or otherwise laid-off.

Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to
effectively prevent the expected losses. The employer should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than labor costs. An employer who, for instance, lays off
substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called
"golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational
meaning to the constitutional policy of providing "full protection" to labor, the employer's prerogative to bring down
labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means
- e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving
manufacturing efficiencies, trimming of marketing and advertising costs, etc. - have been tried and found wanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses
sought to be forestalled, must be proved by sufficient and convincing evidence. xxx

PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more
than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis,
however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL
underwent corporate rehabilitation does not automatically justify the retrenchment of its cabin crew personnel.
Records show that PAL was not even aware of its actual financial position when it implemented its retrenchment program.
It initially decided to cut its fleet size to only 14 ("Plan 14") and based on said plan, it retrenched more than 1,400 of its
cabin crew personnel. Later on, however, it abandoned its "Plan 14" and decided to retain 22 units of aircraft ("Plan 22").
Unfortunately, it has retrenched more than what was necessary. xxx

This only proves that PAL was not aware of the true state of its finances at the time it implemented the assailed massive
retrenchment scheme. It embarked on the mass dismissal without first undertaking a well-considered study on the
proposed retrenchment scheme. This view is underscored by the fact that previously, PAL terminated the services of 140
probationary cabin attendants, but rehired them almost immediately and even converted their employment into permanent
and regular, even as a massive retrenchment was already looming in the horizon.

To prove that PAL was financially distressed, it could have submitted its audited financial statements but it failed to present
the same with the Labor Arbiter. xxx

PAL's assertion - that its finances were gravely compromised as a result of the 1997 Asian financial crisis and the pilots'
strike - lacks basis due to the non-presentation of its audited financial statements to prove actual or imminent losses. Also,
the fact that PAL was placed under receivership did not excuse it from submitting to the labor authorities copies of its
audited financial statements to prove the urgency, necessity and extent, of its retrenchment program. PAL should have
presented its audited financial statements for the years immediately preceding and during which the retrenchment was
carried out. Law and jurisprudence require that alleged losses or expected imminent losses must be proved by sufficient
and convincing evidence.

Likewise, PAL has not shown to the Court's satisfaction that the pilots' strike had gravely affected its operations. It offered
no proof to show the correlation between the pilots' strike and its alleged financial difficulties. xxx

Moreover, as the Court ruled in the case of EMCO Plywood Corporation,[74] it must be shown that the employer resorted
to other means but these proved to be insufficient or inadequate, such as cost reduction, lesser investment on raw
materials, adjustment of the work routine to avoid scheduled power failure, reduction of the bonuses and salaries of both
management and rank-and-file, improvement of manufacturing efficiency, and trimming of marketing and advertising
costs. In the instant case, there is no proof that PAL engaged in cost-cutting measures other than a mere reduction in its
fleet of aircraft and the retrenchment of 5,000 of its personnel.

The only manifestation of PAL's attempt at exhausting other possible measures besides retrenchment was when it
conducted negotiations and consultations with FASAP which, however, ended nowhere. None of the plans and
suggestions taken up during the meetings was implemented. On the other hand, PAL's September 4, 1998 offer of shares
of stock to its employees was adopted belatedly, or only after its more than 1,400 cabin crew personnel were retrenched.
Besides, this offer can hardly be considered to be borne of good faith, considering that it was premised on the condition
that, if accepted, all existing CBAs between PAL and its employees would have to be suspended for 10 years. When the
offer was rejected by the employees, PAL ceased its operations on September 23, 1998. It only resumed business when
the CBA suspension clause was ratified by the employees in a referendum subsequently conducted. Moreover, this stock
distribution scheme does not do away with PAL's expenditures or liabilities, since it has for its sole consideration the
commitment to suspend CBAs with its employees for 10 years. It did not improve the financial standing of PAL, nor did it
result in corporate savings, vis--vis the financial difficulties it was suffering at the time.

Also, the claim that PAL saved P24 million monthly due to the implementation of the retrenchment program does not
prove anything; it has not been shown to what extent or degree such savings benefited PAL, vis--vis its total
expenditures or its overall financial position. Likewise, its claim that its liabilities reached P90 billion, while its assets
amounted to P85 billion only - or a debt to asset ratio of more than 1:1 - may not readily be believed, considering that it
did not submit its audited financial statements. All these allegations are self-serving evidence.

Interestingly, PAL submitted its audited financial statements only when the case was the subject of certiorari proceedings
in the Court of Appeals by attaching in its Comment a copy of its consolidated audited financial statements for the years
2002, 2003 and 2004. However, these are not the financial statements that would have shown PAL's alleged precarious
position at the time it implemented the massive retrenchment scheme in 1998. PAL should have submitted its financial
statements for the years 1997 up to 1999; and not for the years 2002 up to 2004 because these financial statements
cover a period markedly distant to the years in question, which make them irrelevant and unacceptable.

Neither could PAL claim to suffer from imminent or resultant losses had it not implemented the retrenchment scheme in
1998. It could not have proved that retrenchment was necessary to prevent further losses, because immediately thereafter
- or in February 1999 - PAL was on the road to recovery; this is the airline's bare admission in its Comment to the instant
petition. During that period, it was recalling to duty cabin crew it had previously retrenched. In March 2000, PAL declared a
net income of P44.2 million. In March 2001, it reported a profit of P419 million. In March 2003, it again registered a net
income of P295 million. All these facts are anathema to a finding of financial difficulties.

Finally, what further belied PAL's allegation that it was suffering from substantial actual and imminent losses was the fact
that in December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC, and on June 4, 1999, or less than a
year after the retrenchment, the amount of US$200 million was invested directly into PAL by way of additional capital
infusion for its operations. These facts betray PAL's claim that it was in dire financial straits. By submitting a "stand-alone"
rehabilitation plan, PAL acknowledged that it could undertake recovery on its own and that it possessed enough resources
to weather the financial storm, if any.

RE: Fourth element - When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known
to its employees, it could not be said that it acted in a manner compatible with good faith. It offer ed no satisfactory
explanation why it abandoned Plan 14; instead, it justified its actions of subsequently recalling to duty retrenched
employees by making it appear that it was a show of good faith; that it was due to its good corporate nature that the
decision to consider recalling employees was made. The truth, however, is that it was unfair for PAL to have made such a
move; it was capricious and arbitrary, considering that several thousand employees who had long been working for PAL
had lost their jobs, only to be recalled but assigned to lower positions (i.e., demoted), and, worse, some as new hires,
without due regard for their long years of service with the airline.

The irregularity of PAL's implementation of Plan 14 becomes more apparent when it rehired 140 probationary cabin
attendants whose services it had previously terminated, and yet proceeded to terminate the services of its permanent
cabin crew personnel.

RE: Fifth element - PAL was not obligated to consult FASAP regarding the standards it would use in evaluating the
performance of the each cabin crew. However, we do not agree with the findings of the appellate court that the criteria
utilized by PAL in the actual retrenchment were reasonable and fair.

This Court has repeatedly enjoined employers to adopt and observe fair and reasonable standards to effect retrenchment.
This is of paramount importance because an employer's retrenchment program could be easily justified considering the
subjective nature of this requirement. The adoption and implementation of unfair and unreasonable criteria could not
easily be detected especially in the retrenchment of large numbers of employees, and in this aspect, abuse is a very
distinct and real possibility. This is where labor tribunals should exercise more diligence; this aspect is where they should
concentrate when placed in a position of having to judge an employer's retrenchment program.

Indeed, the NLRC made a detailed listing of the retrenchment scheme based on the ICCD Masterank and Seniority 1997
Ratings. It found the following:

1. Number of employees retrenched due to inverse seniority rule and other reasons -- 454

2. Number of employees retrenched due to excess sick leaves -- 299

3. Number of employees who were retrenched due to excess sick leave and other reasons -- 61

4. Number of employees who were retrenched due to other reasons -- 107

5. Number of employees who were demoted -- 552

Total -- 1,473.

Prominent from the above data is the retrenchment of cabin crew personnel due to "other reasons" which, however, are
not specifically stated and shown to be for a valid cause. This is not allowed because it has no basis in fact and in law.

Moreover, in assessing the overall performance of each cabin crew personnel, PAL only considered the year 1997. This
makes the evaluation of each cabin attendant's efficiency rating capricious and prejudicial to PAL employees covered by
it. By discarding the cabin crew personnel's previous years of service and taking into consideration only one year's worth
of job performance for evaluation, PAL virtually did away with the concept of seniority, loyalty and past efficiency, and
treated all cabin attendants as if they were on equal footing, with no one more senior than the other.

b. Business-related or Authorized Causes:

1) Installation of Labor-saving Devices - 298 (283)

2) Retrenchment to Prevent Losses or Down-sizing: Standards - 298 (283)

In G.R. No. 146408, the Court noted that the termination of the respondents in June 1998 was in disregard of a subsisting
temporary restraining order which the Court issued in 1996 to preserve the status quo, before the case was transferred to
the CA in January 1999. The Court also held that PAL failed to establish such economic losses which rendered impossible
its compliance with the order to accept the respondent as regular employees.

Thus: Other than its bare allegations, [PAL] presented nothing to substantiate its impossibility of compliance. In
fact, [PAL] waived this defense by failing to raise it in its Memorandum filed on June 14, 1999 before the [CA]. x x
x.

While retrenchment is a valid exercise of management prerogative, it is well settled that economic losses as a ground for
dismissing an employee is factual in nature, and in order for a retrenchment scheme to be valid, all of the following
elements under Article 283 of the Labor Code must concur or be present (see previous case for requirements)

The absence of one element renders the retrenchment scheme an irregular exercise of management prerogative. The
employer's obligation to exhaust all other means to avoid further losses without retrenching its employees is a component
of the first element enumerated above. To impart operational meaning to the constitutional policy of providing full
protection to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a
measure of last resort, after less drastic means have been tried and found wanting.

2.i) Two kinds of Losses to justify retrenchment: incurred/impending (future or expected) losses

Sanoh Fulton Phils. Inc. v. Emmanuel Bernardo and Samuel Taghoy, GR No. 187214; Aug. 14, 2013; Sep.
Concurring opinion, J. Carpio

Under the first requisite, there are two kinds of losses which can justify retrenchment, namely, incurred losses and
impending losses. Incurred losses refer to losses that have already occurred. Since they have already occurred, they
should be reflected in the financial statements. On the other hand, impending losses refer to losses that have not yet
occurred. They are also termed as future or expected losses. Since they have not yet occurred, they are not reflected in
the financial statements. Thus, in Waterfront Cebu City Hotel v. Jimenez, the Court held that retrenchment must be
reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good
faith by the employer. The Court recognizes two kinds of losses which can justify retrenchment incurred losses which
are substantial, serious, actual and real, and expected losses which are reasonably imminent.

Whether the losses are incurred or impending, employers always bear the burden of proving that retrenchment is
necessary to abate such losses.

In the present case, Sanoh conducted a retrenchment mainly to prevent impending losses, not to abate losses already
being incurred. In his ponencia, Justice Jose P. Perez (Justice Perez) stated:

In view of job order cancellations relating to the manufacture of wire condensers by Matsushita, Sanyo and
National Panasonic, Sanoh decided to phase out the Wire Condenser Department. On 22 December 2003, the
Human Resources Manager of Sanoh informed the 17 employees, 16 of whom belonged to the Wire Condenser
Department, of retrenchment effective 22 January 2004. All 17 employees are union members.

xxxx

Sanoh insists that it is the prerogative of management to effect retrenchment as long as it is done in good faith.
Sanoh relies on letters from its customers showing cancellation of job orders to prove that it is suffering from
serious losses. In addition, Sanoh claims that it had, in fact, closed down the Wire Condenser Department in view
of serious business losses.

xxxx

Sanoh asserts that cancelled orders of wire condensers led to the phasing out of the Wire Condenser Department
which triggered retrenchment. Sanoh presented the letters of cancellation given by Matsushita and Sanyo as
evidence of cancelled orders.

Justice Perez then stated that, even if the retrenchment was conducted for the pupose of preventing impending losses,
the retrenchment conducted by Sanoh was invalid because it failed to present financial statements. Justice Perez stated
that:
 We held in Lambert Pawnbrokers and Jewelry Corporation v. Binamira, that the losses must be supported by
sufficient and convincing evidence and the normal method of discharging this is by the submission of financial
statements duly audited by independent external auditors. It was aptly observed by the appellate court that no
financial statements x x x were presented to substantiate Sanohs claim of loss of P7 million per month.

I disagree. Again, impending, expected or future losses which employers seek to prevent through retrenchment could not
yet be reflected in the financial statements because they have not yet occurred. In fact, if the retrenchment does indeed
prevent the impending losses as it is supposed to do, then such losses would never be reflected in the financial
statements. It would be unreasonable and unfair to require employers conducting retrenchment to prevent impending,
expected or future losses to submit as proof of such losses financial statements.

The surrounding facts in Lambert Pawnbrokers and Jewelry Corporation v. Binamira are not on all fours with the present
case. In Lambert, the employer alleged as justification for retrenchment incurred losses, not impending losses. xxx

Sanoh is liable for illegal dismissal not because it failed to present its financial statements but because the surrounding
circumstances show that there were no impending losses which were reasonably imminent as perceived objectively and
in good faith by the employer. Sanoh failed to discharge its burden to prove with substantial and convincing evidence that
the impending losses it expected to incur were imminent and that the retrenchment it conducted was necessary to prevent
such losses.

Justice Perez correctly found that (1) Matsushita had four outstanding orders of refrigerator condensers; (2) Matsushitas
Model 602 orders were increased from 500 to 1,600 units; (3) Sanyo had sufficient stocks for three months so it
temporarily stopped ordering, then it resumed ordering in February 2004; (4) the additional orders from Concepcion
Industries and Uni-Magma more than compensated for the cancelled orders; (5) the Sanohs Wire Condenser Department
was profitable in 2005; (6) Sanohs Wire Condenser Department was never shut down; and (7) employees in the Wire
Condenser Department rendered overtime work.

3) Redundancy -298 (283)

OCEAN EAST AGENCY, CORPORATION, ENGR. ARTURO D. CARMEN, AND CAPT. NICOLAS SKINITIS,
PETITIONERS, VS. ALLAN I. LOPEZ, RESPONDENT.

International Hardware, Inc. neither involves an employee who consented to or voluntarily applied for his retrenchment
due to authorized causes for termination. Nor does it contain a discussion on the lack of termination notice to the DOLE
and the dispensability of such notice when an employee acknowledged the validity of the cause for his termination. The
Court, therefore, considers as a mere obiter dictum the statement in the said case to the effect that the notice to the DOLE
is unnecessary when the employee acknowledged the existence of a valid cause for termination of his employment.

Petitioners cannot also rely on Dole Philippines, Inc. because its factual milieu is different from this case. In Dole
Philippines, Inc., the private respondent employees filled up application forms for the redundancy program and thus
acknowledged that the existence of their services were redundant. They also executed two releases in favor of the
company, and there is neither a showing that they were unsuspecting or gullible persons nor that the terms of the
settlement were unconscionable. In contrast, in the case at bar, Lopez neither filled up an application form for redundancy
program, nor executed a valid release and quitclaim in favor of Ocean East.

Likewise, petitioners' reliance on Talam v. NLRC 4th Division, Cebu City, et al. is misplaced. Citing Lopez acceptance of a
considerable sum as separation pay and his certificate of service without protest as clearly indicative of consent to his
dismissal, which effectively released them from their obligations, petitioners argue that the notice to the DOLE may
already be dispensed with since there was no more useful purpose for it, and he was already compensated as required by
law. Petitioners' argument is untenable. Suffice it to say that unlike in Talam, there is no indication that Lopez executed a
waiver and quitclaim which estops him from questioning the validity of his dismissal. Besides, the CA is correct in pointing
out that Lopez had no choice but to accept the separation pay because he was a family man with five (5) children to
support and Ocean East's letter clearly stated that he was being terminated due to redundancy.

Above all, there is no merit in petitioners' contention that notice to the DOLE may already be dispensed with since there
was no more useful purpose for it, and he was already adequately compensated as required by law. Indeed, to dispense
with such notice would not only disregard a clear labor law provision that affords protection to an employee, but also
defeats its very purpose which is to give the DOLE the opportunity to ascertain the veracity of the alleged authorized
cause of termination. In fact, the Court has considered as a fatal error the employer's failure to give a written notice to the
DOLE as required under Article 283 of the Labor Code.
With regard to petitioners' failure to establish the third and fourth requisites for a valid implementation of a redundancy
program, the Court stresses the importance of having fair and reasonable criteria, such as but not limited to (a) less
preferred status, e.g., temporary employee; (b) efficiency; and (c) seniority. The presence of such criteria used by the
employer shows good faith on its part and is evidence that the implementation of redundancy was painstakingly done by
the employer in order to properly justify the termination from the service of its employees. Conversely, the absence of
criteria in the selection of an employee to be dismissed and the erroneous implementation of the criterion selected, both
render invalid the redundancy because both have the ultimate effect of illegally dismissing an employee.

While it is true that the characterization of an employee's services as superfluous or no longer necessary and, therefore,
properly terminable, is an exercise of business judgment on the part of the employer, the exercise of such judgment must
not violate the law, and must not be arbitrary or malicious. An employer cannot simply declare that it has become over-
manned and dismiss its employees without adequate proof to sustain its claim of redundancy. To dispel any suspicion of
bad faith on the part of the employer, it must present adequate proof of the redundancy, as well as the criteria in the
selection of the employees affected. The following evidence may be proffered to substantiate redundancy, to wit: the new
staffing pattern, feasibility studies/proposal on the viability of the newly-created positions, job description and the approval
by the management of the restructuring.

In this case, petitioners were able to establish through Ocean East's Quality Procedures Manual that Lopez' position as a
Documentation Officer was redundant because its duties and functions were similar to those of the Documentation Clerks
in its operations department. However, they failed to prove by substantial evidence their observance of the fair and
reasonable criteria of seniority and efficiency in ascertaining the redundancy of the position of Documentation Officer, as
well as good faith on their part in abolishing such position. Petitioners were unable to justify why it was more efficient to
terminate Lopez rather than its two other Documentation Clerks, Reynolds and Hing. Also, while Reynolds was
supposedly retained for being more senior than Lopez, petitioners were silent on why they chose to retain Hing who was
hired in 1996, instead of Lopez who was hired about eight (8) years earlier in 1988.

Even as the ground of redundancy does not require the exhibition of proof of losses or imminent losses, petitioners went
on to claim that Ocean East was constrained to downsize its personnel due to financial difficulties as shown in its Balance
Sheets as of 31st December 2000 and 1999 and the related Statement of Income and Retained Earnings (Deficit) and
Cash Flows for the years then ended. As they have the burden of proving the existence of an authorized cause,
petitioners should have presented the company's audited financial statements before the Labor Arbiter who is in the
position to evaluate evidence. That they failed to do so and only presented these documents to the CA on a motion for
reconsideration of its Decision dated January 26, 2010, is lamentable, considering that the admission of evidence is
outside the sphere of the appellate court's certiorari jurisdiction.

Anent petitioners' claims that Ocean East continued to suffer losses despite the implementation of its right-sizing plan, and
that it was unable to replace its two other employees who resigned after Lopez' termination, the Court agrees with the CA
in rejecting the documentary evidence submitted to support such claims, i.e., the resignation letters of Hing, a
Documentation Clerk, and one Emma Jaballos, a bookkeeper. Clearly, the said resignation letters cannot be considered
as relevant evidence that a reasonable mind might accept as adequate to support a conclusion as to Ocean East's
claimed losses and inability to replace its employees.

For petitioners' failure to prove that Ocean East served the DOLE a written notice of termination as required under Article
283 of the Labor Code, and to show that it was in good faith in implementing a redundancy program, and that it adopted a
fair and reasonable criteria in ascertaining what positions are to be declared redundant, the CA correctly found the
company liable for illegal dismissal.

Re-Distinction between Retrenchment & Closure

WATERFRONT CEBU CITY HOTEL, PETITIONER, VS. MA. MELANIE P. JIMENEZ, JACQUELINE C. BAGUIO,
LOVELLA V. CARILLO, AND MAILA G. ROBLE, RESPONDENTS.

Waterfront Promotion, Ltd. is a wholly-owned subsidiary of Waterfront Philippines. Petitioner Hotel, as shown in the official
records, is also another subsidiary of Waterfront Philippines. Strictly speaking, the Club is not related to petitioner except
to say that they are two different subsidiaries of one parent corporation, i.e., Waterfront Philippines. Petitioner, then, could
have right at the beginning avoided the conflict with respondents by setting itself apart from them. Petitioner could have
invoked the separateness from the Hotel of the Club which employed respondents. Petitioner did not do so. Instead, and
at the outset, it formally presented itself as the respondents employer when, through its Director of Human Resources, it
informed respondents about the temporary suspension of the business of the Club and forthwith served the notices of
suspension of business on DOLE.
We find the consolidated financial statements that were prepared in the name of Waterfront Promotion refer to the casino
operations of the Club. A consolidated financial statement is usually prepared for a parent company and its subsidiaries,
the purpose of which is to provide an overview of the financial condition of the group of companies as a single entity. The
Club, being a wholly-owned subsidiary of Waterfront Promotion, Ltd. operates under the management, supervision and
control of Waterfront Promotion, Ltd. The relationship between these two companies is so intertwined that the Club is
practically considered a department or division of Waterfront Promotion, Ltd.

A review of the consolidated financial statement shows that for the fiscal years 2002 and 2003, the parent company and
the consolidated companies reflect the same amounts of losses: United States (U.S.) $2,791,104.00 for 2002 and U.S.
$765,222.00 for 2003. This proves petitioners assertion that the losses there reflected refer to the losses of the Club.

The consolidated financial statement and the corporate relationships it indicates, cannot, however, be relied upon by
petitioner to avoid this particular labor dispute because, as already stated, petitioner itself has been claiming from the very
beginning that the Club is only a division/department of the hotel.

Verily, retrenchment and not closure was effected to warrant the valid dismissal of respondents. Petitioner has
not totally ceased its operations. It merely closed down a department.

Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the
employees. It is resorted to during periods of business recession, industrial depression, or seasonal fluctuations or during
lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery or of automation. It is an act of the employer of dismissing
employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of
his business.

In case of retrenchment, proof of financial losses becomes the determining factor in proving its legitimacy. In establishing
a unilateral claim of actual or potential losses, financial statements audited by independent external auditors constitute the
normal method of proof of profit and loss performance of a company. The condition of business losses justifying
retrenchment is normally shown by audited financial documents like yearly balance sheets and profit and loss statements
as well as annual income tax returns.

Retrenchment is subject to faithful compliance with the substantive and procedural requirements laid down by law and
jurisprudence. For a valid retrenchment, the following elements must be present:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred,
are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent
as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least
month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its
interest and not to defeat or circumvent the employees right to security of tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship
for certain workers.

All these elements were successfully proven by petitioner. First, the huge losses suffered by the Club for the past two
years had forced petitioner to close it down to avert further losses which would eventually affect the operations of
petitioner. Second, all 45 employees working under the Club were served with notice of termination. The corresponding
notice was likewise served to the DOLE one month prior to retrenchment. Third, the employees were offered separation
pay, most of whom have accepted and opted not to join in this complaint. Fourth, cessation of or withdrawal from business
operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of
employees. As a matter of fact, as of this writing, the Club has not resumed operations. Neither is there a showing that
petitioner carried out the closure of the business in bad faith. No labor dispute existed between management and the
employees when the latter were terminated.

Re-Guidelines in Closure
MANILA POLO CLUB EMPLOYEES UNION (MPCEU) FUR-TUCP, PETITIONER, VS. MANILA POLO CLUB, INC.,
RESPONDENT.

Based on the above and cases of similar import, We summarize:

1. Closure or cessation of operations of establishment or undertaking may either be partial or total.

2. Closure or cessation of operations of establishment or undertaking may or may not be due to serious business
losses or financial reverses. However, in both instances, proof must be shown that: (1) it was done in good faith to
advance the employer's interest and not for the purpose of defeating or circumventing the rights of employees
under the law or a valid agreement; and (2) a written notice on the affected employees and the DOLE is served at
least one month before the intended date of termination of employment.

3. The employer can lawfully close shop even if not due to serious business losses or financial reverses but
separation pay, which is equivalent to at least one month pay as provided for by Article 283 of the Labor Code, as
amended, must be given to all the affected employees.

4. If the closure or cessation of operations of establishment or undertaking is due to serious business losses or
financial reverses, the employer must prove such allegation in order to avoid the payment of separation pay.
Otherwise, the affected employees are entitled to separation pay.

5. The burden of proving compliance with all the above-stated falls upon the employer.

Guided by the foregoing, the Court shall refuse to dwell on the issue of whether respondent was in sound financial
condition when it resolved to stop the operations of its F & B Department. As stated, an employer can lawfully close shop
anytime even if not due to serious business losses or financial reverses. Furthermore, the issue would entail an inquiry
into the factual veracity of the evidence presented by the parties, the determination of which is not Our statutory function.
Indeed, petitioner is asking Us to sift through the evidence on record and pass upon whether respondent had, in truth and
in fact, suffered from serious business losses or financial reverses. That task, however, would be contrary to the well-
settled principle that this Court is not a trier of facts, and cannot re-examine and re-evaluate the probative value of the
evidence presented to the VA and the CA, which formed the basis of the questioned decision.

Respondent correctly asserted in its Memorandum that the instant case is similar to Alabang Country Club Inc. When it
decided to cease operating its F & B Department and open the same to a concessionaire, respondent did not reduce the
number of personnel assigned thereat; instead, it terminated the employment of all personnel assigned at the department
and those who are directly and indirectly involved in its operations. The closure of the F & B Department was due to
legitimate business considerations, a resolution which the Court has no business interfering with. We have already
resolved that the characterization of the employee's service as no longer necessary or sustainable, and therefore,
properly terminable, is an exercise of business judgment on the part of the employer; the determination of the continuing
necessity of a particular officer or position in a business corporation is a management prerogative, and the courts will not
interfere with the exercise of such so long as no abuse of discretion or arbitrary or malicious action on the part of the
employer is shown. As recognized by both the VA and the CA, evident proofs of respondents good faith to arrest the
losses which the F & B Department had been incurring since 1994 are: engagement of an independent consulting firm to
conduct manpower audit/organizational development; institution of cost-saving programs, termination of the services of
probationary employees, substantial reduction of a number of agency staff and personnel, and the retrenchment of eight
(8) managers. After the effective date of the termination of employment relation, respondent even went on to aid the
displaced employees in finding gainful employment by soliciting the assistance of respondents members, Makati Skyline,
Human Resource Managers of some companies, and the Association of Human Resource Managers. These were not
refuted by petitioner. Only that, it perceives them as inadequate and insists that the operational losses are very well
covered by the other income of respondent and that less drastic measures could have been resorted to, like increasing
the membership dues and the prices of food and beverage. Yet the wisdom or soundness of the Management decision is
not subject to discretionary review of the Court for, even the VA admitted, it enjoys a pre-eminent role and is presumed to
possess all relevant and necessary information to guide its business decisions and actions.

Further, unlike in the case of Eastridge Golf Club, Inc., there is nothing on record to indicate that the closure of
respondents F & B Department was made in bad faith. It was not motivated by any specific and clearly determinable
union activity of the employees; rather, it was truly dictated by economic necessity. Despite petitioners allegations, no
convincing and credible proofs were presented to establish the claim that such closure qualifies as an act of union-busting
and ULP. No evidence was shown that the closure is stirred not by a desire to avoid further losses but to discourage the
workers from organizing themselves into a union for more effective negotiations with the management. Allegations are not
proofs and it is incumbent upon petitioner to substantiate the same. On the contrary, respondent continued to negotiate
with petitioner even after April 30, 2002. In fact, a Memorandum of Agreement was executed before the NCMB between
petitioner and respondent on June 10, 2002 whereby the parties agreed, among others, to maintain the existing provisions
of the CBA, except those pertaining to wage increases and signing bonus.

Finally, even if the members of petitioner are not considered as illegally dismissed, they are entitled to separation pay
pursuant to Article 283 of the Labor Code, as amended. Per respondent's information, however, the separation packages
of all 117 union members were already paid during the pendency of the case. Petitioner did not oppose this
representation; hence, We shall treat the fact of receipt of separation pay as having been voluntarily entered into, with a
full understanding of its import, and the amount received as credible and reasonable settlement that should be respected
by the Court as the law between the parties are valid and binding between them.

5) Temporary Closure/Bona fide suspension of operations - 301 (286)

MANILA MINING CORPORATION, PETITIONER, VS. LOWITO AMOR, ET. AL., RESPONDENTS.

Without necessarily resulting to a termination of employment, an employer may at any rate, bona fide suspend the
operation of its business for a period of not exceeding six months under Article 286 of the Labor Code. While the employer
is, on the one hand, duty bound to reinstate his employees to their former positions without loss of seniority rights if the
operation of the business is resumed within six months, employment is deemed terminated where the suspension
exceeds said period. Not having resumed its operations within six months from the time it suspended its operations on 27
July 2001, it necessarily follows that petitioner is liable to pay respondents separation pay computed at one (1) month pay
or at least one-half (1/2) month pay for every year of service, whichever is higher, as well as the damages and attorneys
fees adjudicated by the Labor Arbiter. Without proof of the serious business losses it allegedly sustained and/or
compliance with the reportorial requirements under Article 283 of the Labor Code, petitioner cannot expediently plead
exemption from said liabilities due to the supposed financial reverses which led to the eventual closure of its business. It is
essentially required that the alleged losses in business operations must be proven for, otherwise, said ground for
termination would be susceptible to abuse by scheming employers who might be merely feigning business losses or
reverses in their business ventures in order to ease out employees. The condition of business losses justifying
retrenchment is normally shown by audited financial documents like yearly balance sheets and profit and loss statements
as well as annual income tax returns which were not presented in this case.

5.) i. Floating status requires dire exigency of the employer's bona fide suspension of operation

PEAK VENTURES CORPORATION AND/OR EL TIGRE SECURITY AND INVESTIGATION AGENCY, PETITIONERS,
VS. HEIRS OF NESTOR B. VILLAREAL, RESPONDENTS.

When Villareal was relieved from duty, he was placed on floating status. A floating status requires the dire exigency of the
employers bona fide suspension of operation, business or undertaking. It takes place when the security agencys clients
decide not to renew their contracts with the agency x x x and also in instances where contracts for security services
stipulate that the client may request the agency for the replacement of the guards assigned to it x x x.

In the latter case, the employer should prove that there are no posts available to which the employee temporarily out of
work can be assigned. As pointed out by the labor tribunals, petitioners failed to discharge the burden of proving that there
were no other posts available for Villareal after his recall from his last assignment. Worse, no sufficient reason was given
for his relief and continued denial of a new assignment. And because of the dire financial straits brought about by these
unjustified acts of petitioners, Villareal was forced to resign and execute documents in a manner as directed by petitioners
in order to claim his security bond deposits. From these circumstances, petitioners claim of voluntary resignation is
untenable. What is clear instead is that Villareal was constructively dismissed. There is constructive dismissal when an act
of clear discrimination, insensitivity or disdain on the part of the employer has become so unbearable as to leave an
employee with no choice but to forego continued employment. Constructive dismissal exists where there is cessation of
work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay. Moreover, Villareals immediate filing of a Complaint for illegal dismissal to ask for
reinstatement negates the fact of voluntary resignation.

3. Disease 299 (284)

CRAYONS PROCESSING, INC., PETITIONER, VS. FELIPE PULA AND COURT OF APPEALS (FIFTH DIVISION),
RESPONDENTS.

The termination as upheld by the NLRC was grounded on Article 284 of the Labor Code, which reads:
 An employer may terminate the services of an employee who has been found to be suffering from any disease
and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his
co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half
(1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.

The particular manner by which it is determined that the employee is suffering from the disease of such character as
expressed in Article 284 is in turn spelled out in Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor
Code, which provides:

Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer
shall not terminate his employment unless there is a certification by a competent public health authority that
the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months
even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall
not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his normal health. (Emphasis supplied)

For a dismissal on the ground of disease to be considered valid, two requisites must concur: (a) the employee must be
suffering from a disease which cannot be cured within six months and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees; and (b) a certification to that effect must be issued by a
competent public health authority. The burden falls upon the employer to establish these requisites, and in the absence of
such certification, the dismissal must necessarily be declared illegal. As succinctly stressed in Tan v. NLRC, "it is only
where there is a prior certification from a competent public authority that the disease afflicting the employee
sought to be dismissed is of such nature or at such stage that it cannot be cured within six (6) months even with
proper medical treatment that the latter could be validly terminated from his job."

Without the required certification, the characterization or even diagnosis of the disease would primarily be shaped
according to the interests of the parties rather than the studied analysis of the appropriate medical professionals. The
requirement of a medical certificate under Article 284 cannot be dispensed with; otherwise, it would sanction the unilateral
and arbitrary determination by the employer of the gravity or extent of the employee's illness and thus defeat the public
policy in the protection of labor.

The NLRC's conclusion that no such certification was required since Pula had effectively been absented due to illness for
more than six (6) months is unsupported by jurisprudence and plainly contrary to the language of the Implementing Rules.
The indefensibility of such conclusion is further heightened by the fact that Pula was able to obtain two different medical
certifications attesting to his fitness to resume work. Assuming that the burden did fall on Pula to establish that he was fit
to return to work, those two medical certifications stand as incontestable in the absence of contrary evidence of similar
nature from Crayons. Then again, the burden lies solely on Crayons to prove that Pula was unfit to return to work. Even
absent the certifications favorable to Pula, Crayons would still be unable to justify his dismissal on the ground of ill health
or disease, without the necessary certificate from a competent public health authority.

6. Termination in conformity with existing statute/Qualification reqs.

UNIVERSITY OF THE EAST, DEAN ELEANOR JAVIER, RONNIE GILLEGO AND DR. JOSE C. BENEDICTO,
PETITIONERS, VS. ANALIZA F. PEPANIO AND MARITI D. BUENO, RESPONDENTS.

But the policy requiring postgraduate degrees of college teachers was provided in the Manual of Regulations as early as
1992. Indeed, recognizing this, the 1994 CBA provided even then that UE was to extend only semester-to-semester
appointments to college faculty staffs, like respondents, who did not possess the minimum qualifications for their
positions.

Besides, as the Court held in Escorpizo v. University of Baguio, a school CBA must be read in conjunction with statutory
and administrative regulations governing faculty qualifications. Such regulations form part of a valid CBA without need for
the parties to make express reference to it. While the contracting parties may establish such stipulations, clauses, terms
and conditions, as they may see fit, the right to contract is still subject to the limitation that the agreement must not be
contrary to law or public policy.

The State through Batas Pambansa Bilang 232 (The Education Act of 1982) delegated the administration of the education
system and the supervision and regulation of educational institutions to the Ministry of Education, Culture and Sports (now
Department of Education). Accordingly, in promulgating the Manual of Regulations, DECS was exercising its power of
regulation over educational institutions, which includes prescribing the minimum academic qualifications for teaching
personnel.

In 1994 the legislature transferred the power to prescribe such qualifications to the Commission on Higher Education
(CHED). CHED's charter authorized it to set minimum standards for programs and institutions of higher learning. The
Manual of Regulations continued to apply to colleges and universities and suppletorily the Joint Order until 2010 when
CHED issued a Revised Manual of Regulations which specifically applies only to institutions involved in tertiary education.
xxx

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The operation of educational
institutions involves public interest. The government has a right to ensure that only qualified persons, in possession of
sufficient academic knowledge and teaching skills, are allowed to teach in such institutions. Government regulation in this
field of human activity is desirable for protecting, not only the students, but the public as well from ill-prepared teachers,
who are lacking in the required scientific or technical knowledge. They may be required to take an examination or to
possess postgraduate degrees as prerequisite to employment.

Respondents were each given only semester-to-semester appointments from the beginning of their employment with UE
precisely because they lacked the required master's degree. It was only when UE and the faculty union signed their 2001
CBA that the school extended petitioners a conditional probationary status subject to their obtaining a master's degree
within their probationary period. It is clear, therefore, that the parties intended to subject respondents' permanent status
appointments to the standards set by the law and the university.

D. Procedural Requirements - 292 (277) (b); Book VI, Rule I, Secs. 1-3, Omnibus Rules

1. In General: Essential Elements of Due Process

a. Compliance with the Twin requirements of notice and hearing

UNITED TOURIST PROMOTIONS (UTP) AND ARIEL D. JERSEY, PETITIONERS, VS. HARLAND B. KEMPLIN,
RESPONDENTS.

In Unilever Philippines, Inc. v. Maria Ruby M. Rivera, the Court laid down in detail the steps on how to comply with
procedural due process in terminating an employee, viz:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data
and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general description of
the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated
and/or which among the grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein
the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them;
(2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the employees
have been considered; and (2) grounds have been established to justify the severance of their employment.
(Underlining ours)

Prescinding from the above, UTPs letter sent to Kemplin on July 30, 2009 is a lame attempt to comply with the twin notice
requirement provided for in Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code.

The charges against Kemplin were not clearly specified. While the letter stated that Kemplins employment contract had
expired, it likewise made general references to alleged criminal suits filed against him. One who reads the letter is
inevitably bound to ask if Kemplin is being terminated due to the expiration of his contract, or by reason of the pendency
of suits filed against him. Anent the pendency of criminal suits, the statement is substantially bare. Besides, an employees
guilt or innocence in a criminal case is not determinative of the existence of a just or authorized cause for his
dismissal. The pendency of a criminal suit against an employee, does not, by itself, sufficiently establish a ground for an
employer to terminate the former.

It also bears stressing that the letter failed to categorically indicate which of the policies of UTP did Kemplin violate to
warrant his dismissal from service. Further, Kemplin was never given the chance to refute the charges against him as no
hearing and investigation were conducted. Corollarily, in the absence of a hearing and investigation, the existence of just
cause to terminate Kemplin could not have been sufficiently established.

b. Liability for non-compliance with procedural reqs. - Distinction between Just and Authorized causes

JENNY M. AGABON AND VIRGILIO C. AGABON, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION
(NLRC), RIVIERA HOME IMPROVEMENTS, INC. AND VICENTE ANGELES, RESPONDENTS.

After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe
that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the
better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but
imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing
so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory
due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by
invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a
procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or
threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious
business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve
public interest. It could also discourage investments that can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The
commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right, as
in this case. Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact
abandoned.

The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or
malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the
laborer authorizes neither oppression nor self-destruction of the employer.

It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the
requirements of due process were complied with, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause
of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent
Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the
greatest good to the greatest number.

This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases.
Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances.
xxx

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his
statutory rights, as ruled in Reta v. National Labor Relations Commission. The indemnity to be imposed should be stiffer to
discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The
sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into
special consideration the gravity of the due process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him. xxx

The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity
in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking
into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it
proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of
the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this
fundamental right granted to the latter under the Labor Code and its Implementing Rules.

Justice Tinga (concur in the result): Justices Puno and Panganiban opine that the Agabons should be reinstated as a
consequence of the violation of the notice requirement. I respectfully disagree, for the reasons expounded below. xxx
Justice Puno proposes that the failure to render due notice and hearing prior to dismissal for just cause constitutes a
violation of the constitutional right to due process. This view, as acknowledged by Justice Puno himself, runs contrary to
the Courts pronouncement in Serrano v. NLRC that the absence of due notice and hearing prior to dismissal, if for just
cause, violates statutory due process. xxx Justice Panganibans Separate Opinion asserts that corporate behemoths and
even individuals may now be sources of abuses and threats to human rights and liberties. The concern is not unfounded,
but appropriate remedies exist within our statutes, and so resort to the constitutional trump card is not necessary. Even if
we were to engage the premise, the proper juristic exercise should be to examine whether an employer has taken the
attributes of the State so that it could be compelled by the Constitution to observe the proscriptions of the Bill of Rights.
But the strained analogy simply does not square since the attributes of an employer are starkly incongruous with those of
the State. Employers plainly do not possess the awesome powers and the tremendous resources which the State has at
its command.

RUBEN SERRANO, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND ISETANN DEPARTMENT
STORE, RESPONDENTS.

We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employers failure to comply with the notice
requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination of
employment which makes the termination of employment merely ineffectual. It is similar to the failure to observe the
provisions of Art. 1592, in relation to Art. 1191, of the Civil Code in rescinding a contract for the sale of immovable
property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations,
nonetheless, in cases involving the sale of immovable property, the vendor cannot exercise this power even though the
vendee defaults in the payment of the price, except by bringing an action in court or giving notice of rescission by means
of a notarial demand. Consequently, a notice of rescission given in the letter of an attorney has no legal effect, and the
vendee can make payment even after the due date since no valid notice of rescission has been given.

Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make the
dismissal of an employee illegal. This is clear from Art. 279 xxx

Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and, therefore, the
employee should be reinstated and paid backwages. To contend, as Justices Puno and Panganiban do, that even if the
termination is for a just or authorized cause the employee concerned should be reinstated and paid backwages would be
to amend Art. 279 by adding another ground for considering a dismissal illegal. What is more, it would ignore the fact that
under Art. 285, if it is the employee who fails to give a written notice to the employer that he is leaving the service of the
latter, at least one month in advance, his failure to comply with the legal requirement does not result in making his
resignation void but only in making him liable for damages. This disparity in legal treatment, which would result from the
adoption of the theory of the minority cannot simply be explained by invoking President Ramon Magsaysays motto that
"he who has less in life should have more in law." That would be a misapplication of this noble phrase originally from
Professor Thomas Reed Powell of the Harvard Law School.

Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,[39] in support of his view that an illegal dismissal results not
only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola case actually involved a
dismissal for an alleged loss of trust and confidence which, as found by the Court, was not proven. The dismissal was,
therefore, illegal, not because there was a denial of due process, but because the dismissal was without cause. The
statement that the failure of management to comply with the notice requirement "taints the dismissal with illegality" was
merely a dictum thrown in as additional grounds for holding the dismissal to be illegal.
Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the payment of
backwages for the period when the employee is considered not to have been effectively dismissed or his employment
terminated. The sanction is not the payment alone of nominal damages as Justice Vitug contends.

2. Right to Counsel - Art. 292 (277) (b), 1st sentence

ESPERO SANTOS SALAW, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, ASSOCIATED BANK
AND/OR JOSE R. TENGCO, CHAIRMAN OF THE BOARD, ROLLIE TUAZON, MANAGER, RESPONDENTS.

We agree with the labor arbiter that the petitioner was terminated without the benefit of due process of law. His dismissal
was, therefore, illegal.

Respondents' initial act in convening their Personnel Discipline and Investigation Committee (PDIC) to investigate
complainant (after the CIS experience) would have complied with the demands of due process had complainant been
given the opportunity to present his own defense and confront the witnesses, if any. and examine the evidence against
him. But as the records clearly show, complainant was denied that constitutional right when his subsequent request to
refute the allegations against him was granted and a hearing was set "without counsel or representative." (See
respondent Tuazon's letter to respondent dated February 25, 1985).

The investigation of petitioner Salaw by the respondent Bank's investigating committee violated his constitutional right to
due process, in as much as he was not given a chance to defend himself, as provided in Rule XIV, Book V of the
Implementing Rules and Regulations of the Labor Code governing the dismissal of employees. Section 5 of the said Rule
requires that "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."

As aptly observed by the labor arbiter, the respondents premised their action in dismissing the complainant on his
supposed admission of the offense imputed to him by the Criminal Investigation Service (CIS) in its interrogation in
November, 1984. The said admission was carried in a three-page Sworn Statement signed by the complainant. Aside
from this Statement, no other evidence was presented by the respondents to establish the culpability of the complainant in
the fraudulent sale of the respondents' foreclosed properties. Even the minutes of the proceedings taken during the
investigation conducted by the respondents were not presented. x x x This is a glaring denial of due process.

We find it worth reiterating the cardinal primary rights which must be respected even in proceedings of an administrative
character as enunciated by this Court in the classic landmark decision of Justice Laurel in Ang Tibay, to wit:

(1) The first of these rights is the right to a hearing, which includes the right of the party interested or affected to
present his own case and submit evidence in support thereof. In the language of Chief Justice Hughes,
in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and property of the citizen shall be
protected by the rudimentary requirements of fair play."

(2) Not only must the party be given an opportunity to present his case and to adduce evidence tending to
establish the rights which he asserts but the tribunal must consider the evidence presented. (Chief Justice
Hughes in Morgan v. U.S.298 U.S. 468, 56 S. Ct. 906, 80 Law. ed. 1288). In the language of this Court
in Edwards vs. McCoy, 22 Phil. 598, "the right to adduce evidence, without the corresponding duty on the part of
the board to consider it, is vain. Such right is conspicuously futile if the person or persons to whom the evidence
is presented thrust it aside without notice or consideration."

(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which
cannot be disregarded, namely, that of having something to support its decision. A decision with absolutely
nothing to support it is a nullity, a place when directly attached." (Edward vs. McCoy, supra) x x x.

(4) Not only must there be some evidence to support a finding or conclusion (City of Manila vs, Agustin, G.R. No.
45844, promulgated November 29, 1937, XXXVI O.G. 1335), but the evidence must be ''substantial."
(Washington, Virginia & Maryland Coach Co. v. National Labor Relations Board, 301 U.S. 142, 147, 57 S. Ct.
648, 650, 81 Law. ed. 965.) "Substantial evidence is more than a mere scintilla, it means such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion." (Appalachian Electric Power v. National
Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson Products, 6 Cir., 97
F. 2d 13,15; Ballston-Stillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) x x x.

(5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record
and disclosed to the parties affected. (Interstate Commence Commission vs. L. & N.R.Co. , 227 U.S. 88, 33 S. Ct.
I 85, 57 Law. ed. 43 I) x x x.
 (6) The Court of Industrial Relations (now the National Labor Relations Commission) or any of its judges,
therefore, must act on its or his own independent consideration of the law and facts of the controversy, and not
simply accept the views of a subordinate in arriving at a decision x x x.

(7) The Court of Industrial Relations (now NLRC) should, in all controversial questions, render its decision in such
a manner that the parties to the proceeding can know the various issues involved, and the reasons for the
decisions rendered. The performance of this duty is inseparable from the authority conferred upon it.

Considering further that the admission by the petitioner, which was extracted from him by the Criminal Investigation
Service of the Philippine Constabulary (National Capital Region) without the assistance of counsel and which was made
as the sole basis for his dismissal, can not be admitted in evidence against him, then, the finding of guilt of the PDIC,
which was affirmed by the public respondent NLRC, has no more leg to stand on. A decision with absolutely nothing to
support it is a nullity.

Significantly, the dismissal of the petitioner from his employment was characterized by undue haste. The law is clear that
even in the disposition of labor cases, due process must not be subordinated to expediency or dispatch. Otherwise, the
dismissal of the employee will be tainted with illegality. On this point, we have ruled consistently.

We reiterate the rule laid down in Santos v. NLRC that "the normal consequences of a finding that an employee has been
illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of
seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to
actual reinstatement.'' The petitioner is entitled to no less.

3. Two Notice Requirement - Art. 292 (277) (b), 1st sentence

STANLEY FINE FURNITURE, ELENA AND CARLOS WANG, PETITIONERS, VS. VICTOR T. GALLANO AND
ENRIQUITO SIAREZ, RESPONDENTS.

Elena admitted that no notices of dismissal were issued.

Elena pointed out that there is no evidence showing that at the time she sent the memoranda, she already knew of the
complaint for money claims filed by respondents. The allegation that she told respondents Nag complain pa kayo sa
Labor ha, sige tanggal na kayo is hearsay and inadmissible.

King of Kings Transport, Inc. v. Mamac extensively discussed the two-notice requirement and the procedure that must be
observed in cases of termination, thus:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data
and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general description of
the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated
and/or which among the grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein
the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them;
(2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the employees
have been considered; and (2) grounds have been established to justify the severance of their
employment. (Emphasis in the original, citation omitted)
Elena presented photocopies of the memoranda to prove that notices to explain were sent to respondents. These
photocopies were not considered by the Labor Arbiter, on the ground that they had no probative value. Elena argued that
even if the annexes were mere photocopies, they formed part of the position paper, which is a verified pleading under
oath. Elena also cited Lee v. Regional Trial Court of Quezon City, Branch 85 where this court allegedly ruled that
photocopies of documents attached to a verified motion, which have not been controverted, are admissible.

A review of the decision in Lee v. Regional Trial Court of Quezon City, Branch 85 shows that the case involved an
omnibus motion to cite Jose C. Lee and the other parties in indirect contempt, and to impose disciplinary sanctions or
disbar Jose C. Lees counsel. The statement cited by Elena is not the controlling doctrine in that case. In addition, it
appears that this court brushed aside the defect in form in the exercise of its discretion and, thus, it should not be taken
as the controlling doctrine. Hence, no error can be attributed to the Court of Appeals when it agreed with the Labor
Arbiters ruling that the photocopies of the memoranda have no probative value since they are mere photocopies.

Even if this court considers Annexes 1 to 5, these pieces of evidence would not save Elenas cause. Annexes 1 to 3 are
the memoranda issued to Enriquito with a notation that he refused to sign. Annex 2 is dated May 25, 2005, but the date
when Enriquito allegedly refused to sign is not indicated. Annex 3 is dated May 23, 2005, but again, the memorandum
does not show when it was served upon Enriquito and the date he refused to sign. It is quite possible that these
memoranda were antedated.

Annex 4 is dated June 1, 2005 and was sent to Enriquito Siarez via registered mail. Annex 5 is the memorandum issued
to Victor Gallano and is likewise dated June 1, 2005. Respondents were allegedly dismissed on May 26, 2005; hence,
Annex 1 dated May 27, 2005, Annex 4 dated June 1, 2005, and Annex 5 also dated June 1, 2005, were issued as a mere
afterthought.

a. Pre-dismissal notice

ERECTOR ADVERTISING SIGN GROUP, INC. AND ARCH. JIMMY C. AMOROTO, PETITIONERS, VS. NATIONAL
LABOR RELATIONS COMMISSION, RESPONDENT.

We recall that the notice of termination served by petitioner on Cloma cites three reasons why the management has
arrived at the decision to dismiss him from service: first, his absence from work for two (2) days without prior notice and
approval; second, his act of barging into the premises of the Outright Division and threatening the members of the said
division with bodily harm if they did not stop doing their work; and third, his frequent tardiness in reporting for work.

Certainly, nowhere in the records does it appear that Cloma attempted to deny these allegations, yet it is equally certain
that the records do not contain any suggestion that petitioner, with respect to these three grounds with which Cloma is
charged, has tried to notify the latter of the said charges. Indeed, we find that petitioner has not complied with the basic
requirement of serving a pre-dismissal notice on Cloma. What is clear from the records is that the only notice that was
given to Cloma prior to his termination is the May 20, 2000 notice of termination informing him that his employment in the
company has been severed for the causes mentioned.

Be that as it may, petitioner insists that Cloma has been sufficiently informed of the acts constituting the grounds for his
termination and that with respect thereto, ample opportunity was thereafter given to him to be heard thereon, only that he
did not choose to avail of that opportunity. Petitioner seems to be referring to the May 15 and May 17, 2000 Suspension
Orders which it previously served on Cloma. These orders, however, hardly constitute the first notice required by law prior
to termination. Here is why: a fleeting glance at these two orders readily reveals that the alleged offenses mentioned
therein were not to be used as grounds for termination, but rather merely for suspension. The wording of the orders
conveys the idea that as a result of his shortcomings, Cloma was going to be meted the penalty of suspension in
accordance with the provisions of the company's rules and regulations, but not that he might be dismissed from service
upon the same grounds. There is not an allusion in the said orders that petitioner was giving Cloma sufficient opportunity
to submit his defenses or explanation. Instead, what it implies is that the management has already decided, for causes
stated therein, to suspend Cloma from work in the company, and nothing more.

Moreover, the May 15, 2000 Order, in particular, could not have constituted the first notice relative to the charge that
Cloma has incurred unauthorized absences for two days as stated in the notice of termination. This, inasmuch as the
order refers to a four (4)-day absence supposedly incurred between May 12, 2000 and May 15, 2000 for which Cloma has
actually been sanctioned with suspension. In this regard, it suffices to say that even assuming that the May 15, 2000 order
could validly take the place of the first notice, still, Cloma's dismissal cannot be validly effected, because an employee
may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of
employment.[29] The same is true with the third ground of termination, i.e., that Cloma has frequently been late in reporting
for work. Observably, aside from the fact that Cloma, with respect to this ground, has not been furnished a pre-dismissal
notice, the notice of termination does not state the inclusive dates on which Cloma actually reported late for his work.

Moreover, we agree with the Court of Appeals that not only did petitioner fail to comply with the procedural due process
requirements in terminating Cloma's employment, but also that petitioner has not overcome the quantum of substantial
evidence needed to establish the existence of just causes for dismissal in this case.

With respect to the charges of frequent tardiness and incurring an unauthorized two-day leave of absence, it is plain in the
records that the same have not been sufficiently proved by petitioner. For one, petitioner could not identify the dates when
Cloma incurred the alleged tardiness in reporting for work. Add to that the fact that Cloma's daily time records, which
would have been the best evidence on the matter, have not been made of record when they are actually within petitioner's
power to produce and submit at the trial. The same applies to the charge of unauthorized absences.

Finally, anent the charge that Cloma had terrorized the staff of the Outright Division and incited a work stoppage, it is
clear, from the May 17, 2000 suspension order, that he has already been penalized with suspension for this offense and,
hence, this act may no longer be added to support the imposition of the ultimate penalty of dismissal from service nor may
it be used as an independent ground to that end.

4. Hearing

a. Hearing -Art. 292 (277) (b), 151 sentence

FELIX B. PEREZ AND AMANTE G. DORIA, PETITIONERS, VS. PHILIPPINE TELEGRAPH AND TELEPHONE
COMPANY AND JOSE LUIS SANTIAGO, RESPONDENTS.

Petitioners likewise contended that due process was not observed in the absence of a hearing in which they could have
explained their side and refuted the evidence against them.

There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed
as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer
must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative
if he so desires:

ART. 277. Miscellaneous provisions. x x x (b) Subject to the constitutional right of workers to security of tenure
and their right to be protected against dismissal except for a just and authorized cause and without prejudice to
the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment
is sought to be terminated a written notice containing a statement of the causes for termination and shall afford
the latter ample opportunity to be heard and to defend himself with the assistance of his representative if
he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right
of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized
cause shall rest on the employer. (emphasis supplied)

The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the
employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence
presented against him:

Section 2. Security of Tenure. x x x (d) In all cases of termination of employment, the following standards of
due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if
he so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. (emphasis supplied)
Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of an employee?
Can the apparent conflict between the law and its IRR be reconciled?

At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the administrative
regulations implementing it. The authority to promulgate implementing rules proceeds from the law itself. To be valid, a
rule or regulation must conform to and be consistent with the provisions of the enabling statute. As such, it cannot amend
the law either by abridging or expanding its scope.

Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given "ample
opportunity to be heard and to defend himself." Thus, the opportunity to be heard afforded by law to the employee is
qualified by the word "ample" which ordinarily means "considerably more than adequate or sufficient." In this regard, the
phrase "ample opportunity to be heard" can be reasonably interpreted as extensive enough to cover actual hearing or
conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity
with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean
that holding an actual hearing or conference is a condition sine qua non for compliance with the due process requirement
in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has
been a formal pretermination confrontation between the employer and the employee. The "ample opportunity to be heard"
standard is neither synonymous nor similar to a formal hearing. To confine the employee's right to be heard to a solitary
form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense.
Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The "very nature of due process negates
any concept of inflexible procedures universally applicable to every imaginable situation."

The standard for the hearing requirement, ample opportunity, is couched in general language revealing the legislative
intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation. To confine it to a single
rigid proceeding such as a formal hearing will defeat its spirit.

Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called
standards of due process outlined therein shall be observed "substantially," not strictly. This is a recognition that while a
formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process.

An employee's right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the
Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a
formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit
evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that
the evidence should be taken into account in the adjudication of the controversy. [23] "To be heard" does not mean verbal
argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or
pleadings. Therefore, while the phrase "ample opportunity to be heard" may in fact include an actual hearing, it is not
limited to a formal hearing only. In other words, the existence of an actual, formal "trial-type" hearing, although preferred,
is not absolutely necessary to satisfy the employee's right to be heard.

This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably implements
the "ample opportunity to be heard" standard under Article 277(b) of the Labor Code without unduly restricting the
language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of
Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of
Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations
shall be resolved in favor of labor."

In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases:

(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to
answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference
or some other fair, just and reasonable way.

(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or
substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances
justify it.
 (c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference"
requirement in the implementing rules and regulations.

BRION, J.: The petitioners' position that a formal hearing should be an absolute requirement whose absence signifies the
non-observance of procedural due process is an unduly strict view and is not at all what procedural due process requires.

To recapitulate, the "ample opportunity to be heard" the Labor Code expressly requires does not mean an actual hearing
in every dismissal action by the employer; whether an actual hearing would be required depends on the circumstances of
each case as each particular situation demands. Thus, the identical rulings in King of Kings of Transport, Inc. vs. Mamac
and R.B. Michael Press vs. Galit that an actual hearing is a mandatory requirement in employee dismissal should now be
read with our present ruling in mind. The Department of Labor and Employment should as well be on notice that this ruling
is the legally correct interpretation of Rule I, Section (2)(d)(ii) of Book VI of the Rules to Implement the Labor Code.

VELASCO, JR., J. (dissenting):

The aforequoted provision states that employees are to be given "ample" opportunity to be heard and defend themselves.
However, the word "ample" is vague and not defined in the said provision. Since the meaning of this word is unclear, then
it should be given a liberal construction to favor labor. "Ample" means "considerably more than adequate or sufficient."
Ample opportunity can be construed to be broad enough to encompass an actual hearing or conference. To be sure,
opportunity to be heard does not exclude an actual or formal hearing since such requirement would grant more than
sufficient chance for an employee to be heard and adduce evidence. In this sense, I believe there is no discrepancy
between Art. 277 and the Implementing Rule in question.

The Implementing Rules thus makes available for employees a considerably or generously sufficient opportunity to defend
themselves through a hearing or conference. In Tanala v. NLRC, we said that:

With respect to the issue of whether petitioner was denied due process in the administrative procedure entailed in
his dismissal, we agree with the labor arbiter that petitioner was indeed denied procedural due process therein.
His dismissal was not preceded by any notice of the charges against him and a hearing thereon. The twin
requirements of notice and hearing constitute the essential elements of due process in cases of dismissal
of employees. The purpose of the first requirement is obviously to enable the employee to defend himself against
the charge preferred against him by presenting and substantiating his version of the facts.

Contrary to the findings of the NLRC, the notice of preventive suspension cannot be considered as an adequate
notice. Even the fact that petitioner submitted a written explanation after the receipt of the order of
suspension is not the "ample opportunity to be heard" contemplated by law. Ample opportunity to be
heard is especially accorded to the employee sought to be dismissed after he is informed of the charges
in order to give him an opportunity to refute such accusations levelled against him.

(2) The ponencia seems to underscore the absence of any mention of an "actual hearing" in Art. 277(b). It is conceded
that there is no explicit mention of an actual hearing or conference in said legal provision. As earlier discussed, the
requisite hearing is captured in the phrase "ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires." Even if the phrase "actual hearing" is not specified in Art. 277(b), the same thing is true
with respect to the second written notice informing the employee of the employer's decision which is likewise unclear in
said provision. Thus, the fact that Art. 277(b) does not expressly mention actual hearing in Art. 277(b) does not bar the
Secretary of Labor from issuing a rule (Sec. 2[d][ii], Rule I, Implementing Rules of Book VI of the Labor Code)
implementing the provision that what really is meant is an actual hearing or conference. It should be noted that the
Secretary of Labor also issued a rule on the need for a second written notice on the decision rendered in the illegal
dismissal proceedings despite the silence of Art. 277(b) on the need for a written notice of the employer's decision.

(3) The majority opinion cites the rule in statutory construction that in case of discrepancy between the basic law and its
implementing rules, the basic law prevails. In the case at bar, said principle does not apply because precisely there is no
clear-cut discrepancy between Art. 277(b) of the Labor Code and Sec. 2(b), Rule XXIII, Implementing Rules of Book V of
the Labor Code. To the extent of being repetitive the phrase "ample opportunity to be heard" can be construed to cover an
actual hearing. This way, Sec. 2(b), Rule XXIII does not conflict with nor contravene Art. 277(b).

(4) Art. 4 of the Labor Code states that "all doubts in the implementation and interpretation of the provisions of [the Labor
Code], including its implementing rules and regulations, shall be resolved in favor of labor." Since the law itself invests the
Department of Labor and Employment (DOLE) the power to promulgate rules and regulations to set the standard
guidelines for the realization of the provision, then the Implementing Rules should be liberally construed to favor labor.
The Implementing Rules, being a product of such rule-making power, has the force and effect of law. Art. 277 of the Labor
Code granted the DOLE the authority to develop the guidelines to enforce the process. In accordance with the mandate of
the law, the DOLE developed Rule I, Sec. 2(d) of the Implementing Rules of Book VI of the Labor Code. xxx

In any case, the standards of due process contained in Sec. 2(b), Rule XXIII, Implementing Rules of Book V of the Labor
Code, and now in Sec. 2(d)(ii), Rule I, Implementing Rules of Books VI of the Labor Code, do not go beyond the terms
and provisions of the Labor Code. The Implementing Rules merely encapsulates a vague concept into a concrete idea. In
what forum can an employer provide employees with an ample opportunity to be heard and defend themselves with the
assistance of a representative? This situation can only take place in a formal hearing or conference which the
Implementing Rules provides. The employees may only be fully afforded a chance to respond to the charges made
against them, present their evidence, or rebut the evidence presented against them in a formal hearing or conference.
Therefore, in my humble opinion, there is no discrepancy between the law and the rules implementing the Labor Code.

b. Use of Position Paper

SEASTAR MARINE SERVICES, INC. AND CICERO L. MALUNDA, PETITIONERS, VS. LUCIO A. BUL-AN, JR.,
RESPONDENT.

Thus, a formal trial-type hearing is not at all times and in all instances essential to due process. It is enough that the
parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present
supporting evidence on which a fair decision can be based. In fact, Rule V of the Rules of Procedure of the NLRC, as
amended, outlines the procedure to be followed in cases before the labor arbiter, as follows:

Section 3. Submission of Position Papers/Memorandum.

Should the parties fail to agree upon an amicable settlement, either in whole or in part, during the conferences,
the Labor Arbiter shall issue an order stating therein the matters taken up and agreed upon during the
conferences and directing the parties to simultaneously file their respective verified position papers.

Those verified position papers shall cover only those claims and causes of action raised in the complaint
excluding those that may have been amicably settled, and shall be accompanied by all the supporting documents
including the affidavits of their respective witnesses which shall take the place of the latters direct testimony. The
parties shall, thereafter, not be allowed to allege facts, or present evidence to prove facts, not referred to and any
cause or causes of action not included in the complaint or position papers, affidavits, and other documents.
Unless otherwise requested in writing by both parties, the Labor Arbiter shall direct both parties to submit
simultaneously their position papers/memorandum with the supporting documents and affidavits within fifteen (15)
calendar days from the date of the last conference, with proof of having furnished each other with copies thereof.

Section 4. Determination of Necessity of Hearing. Immediately after the submission by the parties of their
position papers/memorandum, the Labor Arbiter shall motu proprio determine whether there is a need for a formal
trial or hearing. At this stage, he may, at his discretion and for the purpose of making such determination, ask
clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant
documentary evidence, if any from any party or witness.

Section 5. Period to Decide Case. (a) Should the Labor Arbiter find it necessary to conduct a hearing, he shall
issue an order to that effect setting the date or dates for the same which shall be determined within ninety (90)
days from initial hearing.

He shall render his decision within thirty (30) calendar days, without extension, after the submission of the case by
the parties for decision, even in the absence of stenographic notes: Provided, however, that OFW cases shall be
decided within ninety (90) calendar days after the filing of the complaint and the acquisition by the labor arbiter of
jurisdiction over the parties.

(b) If the Labor Arbiter finds no necessity of further hearing after the parties have submitted their position papers
and supporting documents, he shall issue an Order to that effect and shall inform the parties, stating the reasons
therefore. In any event, he shall render his decision in the case within the same period provided in paragraph (a)
hereof.

5. Decision/Award - Const., Art VIII, Sec. 14

ABD OVERSEAS MANPOWER CORPORATION, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION,
MARS INTERNATIONAL MANPOWER, INC. AND MOHMINA MACARAYA, RESPONDENTS.
Thus, after stating the facts that are clearly culled from the POEA decision, the questioned resolution of March 21, 1994,
quotes the discussion of the POEA on the liabilities for monetary awards of petitioner and its foreign principal.
Consequently, in the nine-page resolution, the NLRC merely contributed two pages, including its conclusions, viz.:

After a careful perusal of the records of the case, We agree with the POEA Administrator findings and conclusion
th(a)t the transferee agency, ABD must assume full and complete responsibility to the contractual obligation of the
principal, M.S. Al Babtain Recruitment Office to the complainant who was recruited by MARS.

Section 6, Rule I, Book III of the POEA Rules and Regulation provides: x x x

It is clear from the aforementioned provision of the POEA Rules and Regulation that the transferee agency shall
assume full and complete responsibility to all contractual obligations of the principals to its workers originally
recruited and processed by its former agency.

In the case at bar, respondent ABD Overseas Manpower Corporation(,) being the transferee agency(,) must
assume (the) full liability of the principal, M.S. Al Babtain(,) to the complainant originally recruited and process(ed)
by its former agency(,) Mars International Manpower Inc.

We find no grave abuse of discretion on the part of the POEA Administrator.

WHEREFORE, in view of the foregoing considerations, the Motion for Reconsideration is dismissed for lack of
merit.

SO ORDERED.

Section 13, Rule VII of the New Rules of Procedure of the NLRC provides as follows:

SEC. 13. Form of Decision/Resolution/Order. The Decision/ Resolution shall state clearly and distinctly the
findings of facts, issues and conclusions of law on which it is based and the relief granted, if any. If the decision or
resolution involves monetary awards, the same shall contain the specific amount awarded as of the date the
decision is rendered.

This provision of the Rules is obviously in consonance with Section 14, Article VIII of the Constitution providing that (n)o
decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is
based. xxx

In this case, the NLRC left petitioner in the dark by its failure to discuss why the facts it pointed out in its memorandum
on appeal would not affect the unqualified application of Section 6, Rule I, Book III of the POEA Rules. It is possible that
the NLRC fully believed that said rule should be applied literally. This should not, however, have given premium to brevity
in its resolution[10] to the point that the very underpinnings for a partys appeal to it would be completely disregarded and
left unresolved. As this Court declared, (b)revity is doubtless an admirable trait, but it should not and cannot be
substituted for substance. xxx

MARS impleaded petitioner in the case after it had been submitted for decision and one-and-a-half years after it had filed
its answer. During this hiatus, the case lay dormant in the POEA. It should be noted that petitioner became the accredited
recruitment agency on September 3, 1990, two months after MARS had filed its answer to the complaint. The POEAs
inaction ad interim provided MARS with an opportunity to escape liability.

Basic principles of justice and equity, however, dictate that MARS should not be totally cleared of its liability to Macaraya
under the peculiar circumstances of this case. Section 6, Rule II, Book III of the POEA Rules may not be used as a shield
against liability by a recruitment agency that has been substituted by a foreign principal as its local recruitment agency
after it has clearly incurred liability in favor of an overseas worker. After all, the POEA is presumed by law to have intended
right and justice to prevail in promulgating its rules. Consequently, considering that it was MARS with whom Macaraya
entered into a contract and that it had been accorded due process at the proceedings before the POEA, it is but meet and
just that MARS be the one to be held accountable for her claims.

6. Burden of Proof -Art. 292 (277) (b), 3rd sentence

PHILIPPINE RURAL RECONSTRUCTION MOVEMENT (PRRM), PETITIONER, VS. VIRGILIO E. PULGAR,

RESPONDENT.

Primarily, we underscore the fact that when Pulgar filed an illegal dismissal complaint on April 3, 1997, he was still on
leave from the organization. In other words, from PRRM's standpoint, Pulgar was still its employee when he filed the
illegal dismissal case against the organization.
Pulgar claims that he was forced to file an illegal dismissal complaint against PRRM while he was on leave because he
was not allowed to enter the office premises on March 31, 1997. But aside from making this allegation, Pulgar failed to
provide any other details on how he was prevented from entering the premises. Was he physically prevented from
entering the premises by a security guard? Did the senior officers of PRRM refuse to let him into the office when he
reported to work? We are left to guess the particulars of how PRRM prevented Pulgar from entering the premises, leaving
us to doubt the veracity of this allegation.

To bolster his contention that he was constructively dismissed, Pulgar asserts that his personal things were taken from his
office, placed in boxes and put in storage. To support this allegation, he attached three photographs. But the only thing
seen in these photographs is a storage room with sealed boxes on the floor. Taken at face value, there is nothing in the
photographs that proves that the boxes in the storage room even contain Pulgar's personal things. Absent such proof, we
cannot use these pictures to prove that Pulgar was constructively dismissed from employment.

We further note that at the time PRRM was conducting an investigation into the alleged anomalies committed in the
liquidation and use of PRRM funds at the TBFO during Pulgar's management, Pulgar went on a number of leaves,
specifically on March 3-10, 1997, then on March 20-25, 1997, and finally on April 1-15, 1997. The timing and frequency of
these leaves, while not indicative of Pulgar's intention to sever his employment, at the very least, imply Pulgar's active
efforts to evade the organization's ongoing investigation.

Significantly, while Pulgar claims he was constructively dismissed when he was barred from the premises on March 31,
1997, he still filed his application for leave for April 1-15, 1997. The fact alone that Pulgar was able to return to the
office to file his application for leave for April 1-15, 1997 raises doubt as to his purported ban from the premises. More
importantly, if Pulgar truly believed that he had already been constructively dismissed on March 31, 1997, reason dictates
that he would no longer bother to apply for a leave of absence from PRRM for April 1-15, 1997. The fact that he did belies
his contention that he believed he had already been constructively dismissed on March 31, 1997.

Also worth mentioning is the fact that Pulgar continued to receive his salary from PRRM even after March 31, 1997, or the
date of his alleged constructive dismissal. In fact, Pulgar received his salary up until April 15, 1997, when his vacation and
sick leaves had been consumed.

These circumstances, taken together, lead us to conclude that PRRM did not terminate Pulgar's employment. On the
contrary, what appears from the evidence is that it was Pulgar himself who terminated his employment with PRRM when
he filed an illegal dismissal complaint against the organization while he was on leave. xxx

From Pulgar's own admissions, we consider the following facts to be established:

First, Pulgar took funds intended for one activity or project and applied them to other activities/projects.

Second, Pulgar took the savings from the TBFO and placed them in a bank account under his own name. To date,
Pulgar has not turned over these funds to the PRRM.

Third, Pulgar submitted manufactured and fake receipts to PRRM to liquidate TBFO's expenses.

Noticeably, from Pulgar's disclosures alone, a prima facie case for estafa can already be made out against Pulgar. With
the danger of criminal prosecution hanging over his head, Pulgar's abrupt decision to terminate his employment with
PRRM becomes easily understandable.

While we recognize the rule that in illegal dismissal cases, the employer bears the burden of proving that the termination
was for a valid or authorized cause, in the present case, however, the facts and the evidence do not establish a prima
facie case that the employee was dismissed from employment. Before the employer must bear the burden of proving
that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal
from service. Logically, if there is no dismissal, then there can be no question as to its legality or illegality. Bare
allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence.

7. Degree of Proof /Substantial evidence

EMMA H. QUIROQUIRO, PETITIONER, VS. BALAGTAS CREDIT COOPERATIVE & COMMUNITY DEVELOPMENT,
INC., RESPONDENT.

Petitioner insists that she was illegally dismissed since there is no valid ground to terminate her. Petitioner further claims
that her dismissal failed to satisfy the due process requirements.
We are not convinced. As correctly found by the Court of Appeals, respondent was able to prove by substantial evidence
that petitioner's dismissal is lawful. Substantial evidence is defined as that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion.

Respondent presented documents and affidavits establishing petitioner's gross negligence and her breach of respondent's
trust and confidence in her. Based on the records, it was shown that petitioner committed the following infractions: (1) the
over withdrawal of P250,000 on the time deposit placement of a member; (2) concealment and non-posting of the over
withdrawal; (3) the series of monthly withdrawals after the P250,000 over withdrawal on the same time deposit placement;
(4) the loss of a certificate of title; (5) the over-computation of interest rate on a time deposit placement; (6) the "unfair
filing of delinquent accounts"; (7) duplication of journal voucher numbers, and (8) backlog in the schedule of postings.

We agree with the finding of the Court of Appeals that petitioner's "inability to stop during her watch an over withdrawal by
one member, amounting to P250,000.00," and followed by a series of monthly withdrawals, "constitutes gross and habitual
neglect of duty that is a just cause for her dismissal." The Court of Appeals further found that "her other infractions such as
the loss of a certificate of title, the granting of a high interest to pre-terminated deposits, duplication of JV numbers, and a
backlog in her reportings or postings only add to such major infraction and establish a pattern of negligence and inability
to fulfill her duty."

Moreover, there is no dispute that petitioner held the sensitive positions of general manager and accountant, which
demand respondent's utmost trust and confidence. Her responsibilities as accountant included, among others, the
handling and processing of the deposits and withdrawals of the members of the cooperative; installing an effective
accounting system within the cooperative; and safekeeping of certificates of title. As general manager, petitioner was in
charge of supervising and overseeing the daily operations of the cooperative and was tasked to prepare periodic reports
on the financial condition of the cooperative. xxx

Clearly, petitioner's act of allowing the over withdrawal of P250,000 on the time deposit placement of a member and her
subsequent inaction and non-rectification of such misconduct breached respondent's trust and confidence in her,
warranting the penalty of dismissal.

In addition, while respondent painstakingly presented evidence to prove the legality of petitioner's dismissal, petitioner
miserably failed to rebut the charges against her. As found by the Court of Appeals, petitioner "did not even attach her own
evidence [to her pleadings] or at least refute if not totally contradict the allegations of [respondent]." Petitioner merely
denied the allegations against her. In her apology letter, petitioner pleaded for forgiveness and another chance from
respondent, which in effect constituted an admission of her wrongdoings.

While petitioner's dismissal is lawful, we sustain the award of P30,000 nominal damages in favor of petitioner for
respondent's non-observance of the due process requirements in dismissing her. We agree with the Court of Appeals,
which in turn upheld the NLRC, that the 48 hours given to petitioner to explain her side was insufficient time to "consult the
union official or lawyer, gather data and evidence and decide on [her defenses]." Petitioner should have been given at
least five calendar days from receipt of the notice to prepare for her defense. Notwithstanding, the lack of statutory due
process does not nullify the dismissal or render it illegal or ineffectual when the dismissal was for just cause, but it will
merit the grant of nominal damages as indemnification.

8. Employee is disputably presumed innocent: while employer has burden of proof to prove wrongdoing,
employee must rebut the charge(s) against him

ROSALIE L. GARGOLES, PETITIONER, VS. REYLITA S. DEL ROSARIO, DOING BUSINESS UNDER THE NAME
AND STYLE JAY ANNE'S ONE HOUR PHOTO SHOP, RESPONDENT.

The petitioner argues that she did not need to dispute the charge of dishonesty or theft of her employers funds because
she had the presumption of innocence in her favor

The argument is untenable. It is true that every person is entitled to be presumed innocent of wrongdoing. The objective of
the presumption has been to lay the burden of proof on the shoulders of the alleger of wrongdoing. The presumption
extends to the petitioner and to every other employee charged with any wrongdoing that may cause them to be
sanctioned, including being dismissed from employment. But the presumption, which is disputable, by no means excuses
the employee charged with wrongdoing from answering and defending herself once the presumption has been overcome
by a showing to the contrary. The failure of the employee to rebut or disprove the proof of wrongdoing then establishes the
charge against her. This is especially true in a case for dismissal grounded on loss of confidence or breach of trust, in
which the employer may proceed to dismiss the erring employee once the employer becomes morally convinced that she
was guilty of a breach of trust and confidence. Based on the record, the petitioner did not sufficiently contradict or rebut
the charge of dishonesty.
9. Criminal Cases/Quantum of Proof

LOLITA S. CONCEPCION, PETITIONER, VS. MINEX IMPORT CORPORATION/MINERAMA CORPORATION,

KENNETH MEYERS, SYLVIA P. MARIANO, AND VINA MARIANO, RESPONDENTS.

Indeed, the employer is not expected to be as strict and rigorous as a judge in a criminal trial in weighing all the
probabilities of guilt before terminating the employee. Unlike a criminal case, which necessitates a moral certainty of guilt
due to the loss of the personal liberty of the accused being the issue, a case concerning an employee suspected of
wrongdoing leads only to his termination as a consequence. The quantum of proof required for convicting an accused is
thus higher proof of guilt beyond reasonable doubt than the quantum prescribed for dismissing an employee
substantial evidence. In so stating, we are not diminishing the value of employment, but only noting that the loss of
employment occasions a consequence lesser than the loss of personal liberty, and may thus call for a lower degree of
proof.

It is also unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a conviction
before terminating him when there is already sufficient showing of the wrongdoing. Requiring that certainty may prove too
late for the employer, whose loss may potentially be beyond repair. Here, no less than the DOJ Secretary found probable
cause for qualified theft against the petitioner. That finding was enough to justify her termination for loss of confidence. To
repeat, her responsibility as the supervisor tasked to oversee the affairs of the kiosk, including seeing to the secure
handling of the sales proceeds, could not be ignored or downplayed. The employers loss of trust and confidence in her
was directly rooted in the manner of how she, as the supervisor, had negligently handled the large amount of sales by
simply leaving the amount inside the cabinet drawer of the kiosk despite being aware of the great risk of theft. At the very
least, she could have resorted to the SOP of first seeking guidance from the main office on how to secure the amount if
she could not deposit in the bank due to that day being a Sunday. xxx

The petitioner plainly demonstrated how quickly and summarily her dismissal was carried out without first requiring her to
explain anything in her defense as demanded under Section 2 (d) of Rule I of the Implementing Rules of Book VI of the
Labor Code. Instead, the respondents forthwith had her arrested and investigated by the police authorities for qualified
theft. This, we think, was a denial of her right to due process of law, consisting in the opportunity to be heard and to
defend herself.[14]In fact, their decision to dismiss her was already final even before the police authority commenced an
investigation of the theft, the finality being confirmed by no less than Sylvia Mariano herself telling the petitioner during
their phone conversation following the latters release from police custody on November 11, 1997 that she (Sylvia) no
longer wanted to see her.

The fact that the petitioner was the only person suspected of being responsible for the theft aggravated the denial of due
process. When the respondents confronted her in the morning of November 10, 1997 for the first time after the theft, they
brought along a police officer to arrest and hale her to the police precinct to make her answer for the theft. They evidently
already concluded that she was the culprit despite a thorough investigation of the theft still to be made. This, despite their
obligation under Section 2 (d) of Rule I of the Implementing Rules of Book VI of the Labor Code, firstly, to give her a
reasonable opportunity within which to explain (her) side; secondly, to set a hearing or conference during which the
employee concerned, with the assistance of counsel if (she) so desires is given opportunity to respond to the charge,
present (her) evidence, or rebut the evidence presented against (her); and lastly, to serve her a written notice of
termination xxx indicating that upon due consideration of all the circumstances, grounds have been established to justify
(her) termination. They wittingly shunted aside the tenets that mere accusation did not take the place of proof of
wrongdoing, and that a suspicion or belief, no matter how sincere, did not substitute for factual findings carefully
established through an orderly procedure.

10. Laches/Prescription - Civil Code, Art. 1145, Art. 1155; Art. 306 (291)

ONOFRE V. MONTERO, EDGARDO N. ESTRAERO, RENING P. PADRE, GABRIEL A. MADERA, HERMINIO T.

TACLA, NELSON C. VILORIA, DEMETRIO Q. PAJARILLO, ALFREDO R. AGANON, REYNALDO AVILA, ALBERT T.
RUIZ, NESTOR Y. YAGO, HARTY M. TUPASI, AGUSTIN R. AVILA, JR. OR MARCOS R. AVILA, BONIFACIO B.
GAANO, JOSELITO D. CUENTA, JONAS P. ESTILONG, DOMINADOR C. CANARIA, GENARO C. RONDARIS,
HERARDO M. DULAY, FRANKLIN A. RAVINA, JR., AND RUBEN C. CABELLO, PETITIONERS, VS. TIMES
TRANSPORTATION CO., INC., AND SANTIAGO RONDARIS, MENCORP TRANSPORT SYSTEMS, INC., VIRGINIA R.
MENDOZA AND REYNALDO MENDOZA, RESPONDENTS.

In the case at bar, October 26, 1997 and November 24, 1997 appear on record to be the dates when the petitioners
employment were terminated by TTCI. The antecedent facts that gave rise to the petitioners dismissal from employment
are not disputed in this case. There is no question about the fact that the petitioners complaints for unfair labor practice
and money claims have already prescribed. The petitioners however argue that their complaints for illegal dismissal were
duly filed within the four-year prescriptive period since the period during which their cases were pending should be
deducted from the period of prescription. On the other hand, the respondents insist that said complaints have already
prescribed. Hence, the pivotal question in resolving the issues hinges on the resolution of whether the period during which
the petitioners cases were pending should be excluded from the period of prescription.

Settled is the rule that when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to
contest the legality of ones dismissal from employment constitutes, in essence, an action predicated upon an injury to the
rights of the plaintiff, as contemplated under Article 1146 of the New Civil Code, which must be brought within four years.

The petitioners contend that the period when they filed a labor case on May 14, 1998 but withdrawn on March 22, 1999
should be excluded from the computation of the four-year prescriptive period for illegal dismissal cases. However, the
Court had already ruled that the prescriptive period continues even after the withdrawal of the case as though no action
has been filed at all. The applicability of Article 1155 of the Civil Code in labor cases was upheld in the case
of Intercontinental Broadcasting Corporation v. Panganiban where the Court held that although the commencement of a
civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff
leaves the parties in exactly the same position as though no action had been commenced at all.

In like manner, while the filing of the complaint for illegal dismissal before the LA interrupted the running of the prescriptive
period, its voluntary withdrawal left the petitioners in exactly the same position as though no complaint had been filed at
all. The withdrawal of their complaint effectively erased the tolling of the reglementary period.

11. Quitclaim: Requisites for validity/Acceptance of benefits does not bar contesting of legality of dismissal
[QUESTION IN 2016 BAR EXAM !!!]

CONVOY MARKETING CORPORATION AND/OR ARNOLD LAAB, PETITIONERS, VS. OLIVER B. ALBIA,*
RESPONDENT.

On the third issue, the Court finds that the quitclaims and releases Albia executed are invalid.

Cases abound where the Court gave effect to quitclaims executed by the employees when the employer is able to prove
the following requisites, to wit:

(1) the employee executes a deed of quitclaim voluntarily;

(2) there is no fraud or deceit on the part of any of the parties;

(3) the consideration of the quitclaim is credible and reasonable; and

(4) the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third
person with a right recognized by law.

In this case, however, petitioners failed to prove that the P1,805.72 consideration for the Quitclaim and Release dated
August 4, 2004 is credible and reasonable vis-a-vis what Albia should receive in full as a regular employee who was
illegally dismissed. The same holds true with respect to the Quitclaim and Release dated November 21, 2003 and April
19, 2004 with considerations of P5,712.28 and P 2,716.42, respectively. That all the said waivers and quitclaims are
agreements between two (2) intelligent parties who are, more or less, in the same footing cannot also be sustained
because of Albia's low educational attainment, having finished only grade 4 in the elementary level, as well as his status
as a plain wage earner.

Moreover, all the quitclaims and releases executed by Albia upon the termination of the five-month Delivery Agency
Agreements (For Driver) are contrary to law and public policy, as they preclude him from becoming a regular employee
and acquiring tenurial security. xxx

It may not be amiss to state that a deed of release or quitclaim, like those executed between Convoy and Albia, does not
bar an employee from demanding benefits to which he is legally entitled. Employees who received their separation pay
are, in fact, not barred from contesting the legality of their dismissal, and the acceptance of such benefits would not
amount to estoppel.

12. Dismissal of case, purely on technical ground - frowned upon

JOBEL ENTERPRISES AND/OR MR. BENEDICT LIM, PETITIONERS, VS. NATIONAL LABOR RELATIONS
COMMISSION (SEVENTH DIVISION, QUEZON CITY) AND ERIC MARTINEZ, SR., RESPONDENTS.
We note that this case was dismissed on purely technical grounds at both the NLRC and the CA levels, in total disregard
of the merits of the case. The NLRC dismissed the company's appeal for non-perfection for its failure "to substantially
address the issue of failure to post the required appeal bond pursuant to Section 6, Rule VI of the 2005 Revised Rules of
Procedure of the NLRC."[17] In summarily throwing out the appeal, the NLRC apparently forgot that earlier, or on
September 15, 2008, it gave the company "ten (10) unextendible days xxx within which to file an additional cash or surety
bond in the amount of xxx P432,892.93"when it denied the company's motion to reduce bond. The NLRC even warned
that "[t]heir failure to post the required bond shall result in the dismissal of the appeal for non-perfection."

As earlier mentioned, the company complied with the NLRC directive by posting a surety bond in the required
amount within the 10-day period; it received a copy of the NLRC resolution directing it to post an additional cash or surety
bond on October 13, 2008 and posted the bond on October 23, 2008. The company likewise submitted a joint declaration
between the company representative and the surety company on the period of effectivity of the bond, and the documents
on the legal status of the surety company. The NLRC grossly erred, therefore, in declaring that the company failed to
address the issue of its failure to post the required bond. The CA grossly failed to consider this lapse.

We note, too, that the CA's refusal to consider the petition was the absence of a duplicate original or certified true copy of
the assailed NLRC decision, in violation of Section 3, Rule 46 of the Rules of Court (in relation to Section 1, Rule 65). The
company though corrected the procedural lapse by attaching a certified copy of the NLRC decision to its motion for
reconsideration. At this point, the CA should have at least considered the merits of the petitioners' case as we did
in Gutierrez v. Secretary of the Department of Labor and Employment. We held in that case that while "what [were]
submitted were mere photocopies[,] there was substantial compliance with the Rules since petitioner attached to her
Supplemental Motion for Reconsideration certified true copies of the questioned DOLE Orders."

Our own examination of the records shows that the company's case is not, on its face, unmeritorious and should have
been considered further to determine what really transpired between the parties. For instance, the company argued that it
did not dismiss Martinez. It claimed that Martinez refused to return to work and, during conciliation, demanded outright
that he be paid P300,000.00, manifesting at the same time that he no longer wanted to work for the company. Before the
labor arbiter, the company even manifested its willingness to accept Martinez back to work as no dismissal actually took
place. Thus, the concrete issue posed was whether Martinez had been dismissed or had simply walked out of his job.

Under these circumstances, we find that the CA precipitately denied the petition for certiorari based on an overly rigid
application of the rules of procedure. In effect, it sacrificed substance to form in a situation where the petitioners' recourse
was not patently frivolous or meritless. This is a matter of substantial justice - in fact, a lack of it - that we should not allow
to remain uncorrected.

WHEREFORE, premises considered, the petition is granted. The assailed resolutions of the Court of Appeals are SET
ASIDE. The case is REMANDED to the National Labor Relations Commission for its resolution of the petitioners' appeal
with utmost dispatch. Costs against respondent Eric Martinez, Sr.

13. When to allow relaxation of procedural rules: exceptional circumstances

WATERFRONT CEBU CITY CASINO HOTEL, INC. AND MARCO PROTACIO, PETITIONERS, VS. ILDEBRANDO
LEDESMA, RESPONDENT.

Atty. Abellana, Ledesmas counsel, admittedly received a copy of the NLRC Resolution denying the Motion for
Reconsideration on March 15, 2010 while Ledesma received his copy on March 24, 2010.

Ledesma erroneously asserted in his petition for certiorari filed before the CA, that the 60 th day is May 15, 2010, counted
from March 15, 2010. In computing a period, the first day shall be excluded, and the last included; hence, the last day to
file his petition for certiorari is on May 14, 2010, a Friday. Ledesma therefore belatedly filed his petition on May 17, 2010.

Realizing his procedural faux pas, Ledesma filed an amended petition where he contended that he timely filed his petition
for certiorari on May 17, 2010 counted from his receipt of the NLRC Resolution denying his motion for reconsideration
on March 24, 2010. This stance is bereft of any legal basis. When a party to a suit appears by counsel, service of every
judgment and all orders of the court must be sent to the counsel. This is so because notice to counsel is an effective
notice to the client, while notice to the client and not his counsel is not notice in law. Receipt of notice by the counsel of
record is the reckoning point of the reglementary period. xxx

The relaxation of procedural rules may be allowed only when there are exceptional circumstances to justify the same.
There should be an effort on the part of the party invoking liberality to advance a reasonable or meritorious explanation for
his/her failure to comply with the rules. Moreover, those who seek exemption from the application of a procedural rule
have the burden of proving the existence of exceptionally meritorious reason warranting such departure. xxx
Both in his petition and amended petition, Ledesma never invoked the liberality of the CA nor endeavored to justify the
belated filing of his petition. On the contrary, Ledesma remained firm that his petition was filed with the CA within the
reglementary period. Absent valid and compelling reasons for the procedural lapse, the desired leniency cannot be
accorded to Ledesma. xxx

Notably, Ledesma never refuted, at the administrative investigation level at Waterfront, and even at the proceedings
before the LA, NLRC, and the CA, the allegations leveled against him by Rosanna Lofranco that, after deluding her to
perform a massage on him, Ledesma exhibited to her his penis and requested that he be masturbated while inside the
conference room of the hotel. If not for the position of Ledesma as a House Detective, he will not have access to the
conference room nor will he know that the premises is not monitored through a closed-circuit television, thus giving him
the untrammeled opportunity to accomplish his lewd design on the unsuspecting victim. Such acts of Ledesma
constituted misconduct or improper behavior which is a just cause for his dismissal.

14. Good faith of employee

CORNELIO C. CRUZ, PETITIONER, VS. COCA-COLA BOTTLERS PHILS., INC., MANUEL A. REMULLA, JR.,
ROMEO A. LARA AND/OR RENE P. HORRILLENO, RESPONDENTS.

Several factors militate against petitioners claim of good faith. Petitioners length of service, which spans almost fifteen
(15) years, works against his favor in this case. We have held that the longer an employee stays in the service of the
company, the greater is his responsibility for knowledge and compliance with the norms of conduct and the code of
discipline in the company. Considering that petitioner has worked at respondent company for a long period of time, one
expects that securing the LOGP or TGP would be automatic for him.

Moreover, in his sworn statement, Aguilar attested that he reminded petitioner of whether he had secured the gate pass
for the products, and petitioner merely replied, Ayos na. The Labor Arbiter and the NLRC found no reason to disregard
Aguilars statement which was candid, straightforward and in harmony with the statements of the other witnesses. More
importantly, the statement is consistent with how petitioner acted on that fateful day. Petitioner was described to have left
the plant premises without stopping at the gates for the mandatory inspection. His suspicious actions, thus, prompted the
dispatch of security to pursue his truck.

As the Labor Arbiter observed, faced with the overwhelming evidence presented by respondents on one hand and the
mere general denial of petitioner on the other, the invocation of the protective mantle of the law in favor of labor cannot be
upheld in this case. This principle cannot be adopted where there is clear and convincing evidence of the truth. While this
court endeavors to live up to its mandate that the workingmans welfare should be the primordial and paramount
consideration, it cannot do so if it will be at the expense of justice and will result in the oppression or self-destruction of the
employer. The interests of both the employers and employees are intended to be protected and not one of them is given
undue preference. xxx

Admittedly, the company rules violated by petitioner are punishable, for the first offense, with the penalty of suspension.
However, respondent company has presented evidence showing that petitioner has a record of other violations from as far
back as 1986. In 1991, petitioner was found to have deliberately misrepresented on two occasions the total number of
empties and was consequently suspended for six (6) days. In 1990 and 1991, petitioner was also suspended for his
involvement in vehicular accidents, which caused damage to another car and an outlet store. On several occasions,
petitioner has been investigated for shortages in remittances of collections from customers. These misdemeanors are
aggravated by several AWOLS which petitioner had taken in the course of his employment.

To be sure, the nature of petitioners offenses is downright inimical to the interests of respondent company. By virtue of his
job, petitioner is entrusted with the property and funds, which belong to respondent company. His actions on that fateful
day of July 25, 1998 highlight, not only petitioners consistent and deliberate defiance of company rules and regulation,
but also his duplicity in handling respondent companys properties. It would appear that respondent company had
tolerated petitioners work ethic far too long. We therefore find that it was justified in terminating petitioner after the flagrant
dishonesty he committed.

Anent the issue of compliance with the procedural requirements for termination, we agree with the Court of Appeals that
the notices given to petitioner were legally deficient. As observed by the appellate court, the first notice dated July 27,
1998, did not contain the particulars of the charges nor the circumstances in which the violation happened. The notice was
also couched in general terms that it only mentions the specific sections and rule numbers of the Red Book that was
violated without defining what such violation was. A cursory reading of this notice likewise shows that it does not state that
petitioner was in fact facing a possible dismissal from the company. Consequently, petitioner was not sufficiently apprised
of the gravity of the situation he was in. xxx
WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals dated June 3, 2004 in CA-G.R. SP
No. 66970 and its resolution dated October 5, 2004, are hereby AFFIRMED with MODIFICATION. As modified, the
dismissal of petitioner is declared valid but respondent company is ORDERED to pay petitioner the amount of P20,000.00
as nominal damages for non-compliance with statutory due process.

15. Appeal in Labor cases - 229 (223); NLRC Rules of Procedure, Rule VI, Secs. 4, 6

MIGUEL DELA BARAIRO, PENA PETITIONER, VS. OFFICE OF THE PRESIDENT AND MST MARINE SERVICES
(PHILS,), INC. RESPONDENT.

Following settled jurisprudence, the proper remedy to question the decisions or orders o the Secretary of Labor is via
Petition for Certiorari under Rule 65, not via an appeal to the OP. For appeals to the OP in labor cases have indeed been
eliminated, except those involving national interest over which the President may assume jurisdiction. xxx

It cannot be gainsaid that petitioner's case does not involve national interest.

Petitioner's appeal of the Secretary of Labor's Decision to the Office of the President did not toll the running of the period,
hence, the assailed Decisions of the Secretary of Labor are deemed to have attained finality. xxx

At all events, on the merits, the petition just the same fails.

As found by the POEA Administrator and the Secretary of Labor, through Undersecretary Danilo P. Cruz, petitioner's
refusal to board the M/T Haruna on November 30, 2004 constituted unjustified breach of his contract of employment
under Section 1 (A-2) Rule II. Part VI [sic] of the POEA Seabased Rules and Regulations. [12] That petitioner believed that
respondent company violated his rights when the period of his earlier Maritina contract was not followed and his "stand-by
fees" were not fully paid did not justify his refusal to abide by the valid and existing Haruna contract requiring him to serve
aboard M/T Haruna. For, as noted in the assailed DOLE Order, "if petitioner's rights has been violated as he claims, he
has various remedies under the contract winch he did not avail of.

Parenthetically, the Undersecretary of Labor declared that "the real reason [petitioner] refused to re-join Haruna on
November 30. 2004, is that he left the Philippines on November 29, 2004 to join MT Adriatiki, a vessel of another maiming
agency," which declaration petitioner has not refuted.

16. Appeal bond: Jurisdictional - 229 (223)

LEPANTO CONSOLIDATED MINING CORPORATION, PETITIONER, VS. BELIO ICAO, RESPONDENT.

In appeals from any decision or order of the labor arbiter, the posting of an appeal bond is required under Article 223 of
the Labor Code, which reads:

Article 223. APPEAL. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed
to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or
orders. Such appeal may be entertained only on any of the following grounds:

xxxx

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis and
underlining supplied)

The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates this requirement in Rule VI, Section 6, which provides:

SECTION 6. Bond. In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected onlyupon the posting of a bond, which shall
either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of
damages and attorneys fees.
(Emphases and underlining supplied)

In Viron Garments Manufacturing Co., Inc. v. NLRC, the Court explained the mandatory nature of this requirement as
follows:

The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by
the employer, is clearly limned in the provision that an appeal by the employer may be perfected only upon the
 posting of a cash or surety bond. The word only makes it perfectly clear, that the lawmakers intended the
posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may
be perfected. (Emphases supplied)

We now turn to the main question of whether petitioners Consolidated Motion to release the cash bond it posted in a
previous case, for application to the present case, constitutes compliance with the appeal bond requirement. While it is
true that the procedure undertaken by petitioner is not provided under the Labor Code or in the NLRC Rules, we answer
the question in the affirmative.

We reiterate our pronouncement in Araneta v. Rodas,[22] where the Court said that when the law does not clearly provide a
rule or norm for the tribunal to follow in deciding a question submitted, but leaves to the tribunal the discretion to
determine the case in one way or another, the judge must decide the question in conformity with justice, reason and
equity, in view of the circumstances of the case. Applying this doctrine, we rule that petitioner substantially complied with
the mandatory requirement of posting an appeal bond for the reasons explained below.

First, there is no question that the appeal was filed within the 10-day reglementary period. Except for the alleged failure to
post an appeal bond, the appeal to the NLRC was therefore in order.

Second, it is also undisputed that petitioner has an unencumbered amount of money in the form of cash in the custody of
the NLRC. To reiterate, petitioner had posted a cash bond of P401,610.84 in the separate case Dangiw Siggaao, which
was earlier decided in its favor. As claimed by petitioner and confirmed by the Judgment Division of the Judicial Records
Office of this Court, the Decision of the Court in Dangiw Siggaao had become final and executory as of 28 April 2008, or
more than seven months before petitioner had to file its appeal in the present case. This fact is shown by the Entry of
Judgment on file with the aforementioned office. Hence, the cash bond in that case ought to have been released to
petitioner then.

Under the Rule VI, Section 6 of the 2005 NLRC Rules, [a] cash or surety bond shall be valid and effective from the date
of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied. Hence, it is clear that
a bond is encumbered and bound to a case only for as long as 1) the case has not been finally decided, resolved or
terminated; or 2) the award has not been satisfied. Therefore, once the appeal is finally decided and no award needs to be
satisfied, the bond is automatically released. Since the money is now unencumbered, the employer who posted it should
now have unrestricted access to the cash which he may now use as he pleases as appeal bond in another case, for
instance. This is what petitioner simply did.

Third, the cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more than enough to cover the appeal
bond in the amount of P345,879.45 required in the present case.

Fourth, this ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure that workers will
receive the money awarded in their favor when the employers appeal eventually fails. There was no showing at all of any
attempt on the part of petitioner to evade the posting of the appeal bond. On the contrary, petitioners move showed a
willingness to comply with the requirement. Hence, the welfare of Icao is adequately protected.

Moreover, this Court has liberally applied the NLRC Rules and the Labor Code provisions on the posting of an appeal
bond in exceptional cases. xxx

Having complied with the appeal bond requirement, petitioners appeal before the NLRC must therefore be reinstated.

17. Principle of Res judicata

LEO R. ROSALES, EDGAR SOLIS JONATHAN G. RANIOLA, LITO FELICIANO, RAYMUNDO DIDAL, JR., NESTOR
SALIN, ARNULFO S. ABRIL, RUBEN FLORES, DANTE FERMA AND MELCHOR SELGA, PETITIONERS, VS. NEW
A.N.J.H. ENTERPRISES & N.H. OIL MILL CORPORATION, NOEL AWAYAN, MA. FE AWAYAN, BYRON ILAGAN,
HEIDI A. ILAGAN AND AVELINO AWAYAN, RESPONDENTS.

For res judicata to apply, the concurrence of the following requisites must be verified:

(1) the former judgment is final;

(2) it is rendered by a court having jurisdiction over the subject matter and the parties;

(3) it is a judgment or an order on the merits;

(4) there is-between the first and the second actions-identity of parties, of subject matter, and of causes of action.
The petitioners dispute the existence of all of the foregoing requisites. First, petitioners contend that LA Guan does not
have jurisdiction to issue the Orders in SRAB-IV-03-5066-10-L since, in the first place, Noel's letter request for guidance in
the payment of separation pay is allegedly not a "labor dispute."

Article 219 (previously Article 212) of the Labor Code defines a "labor dispute" as "any controversy or matter concerning
terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the
proximate relation of employer and employee." As separation pay concerns a term and condition of employment, Noel's
request to be guided in the payment thereof is clearly a labor dispute under the Labor Code.

The proper payment of separation pay further falls under the jurisdiction of the labor arbiter pursuant to Art. 224
(previously Art. 217) of the Labor Code, as it is mandated as a necessary condition for the termination of employees, viz,:

Art. 224. Jurisdiction of the Labor Arbiters and the Commission.

(a) Except as otherwise provided under this Code,the Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

xxxx

6. Except claims for employees compensation, social security, medicare and maternity benefits, all other claims
arising from employer-employee relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim
for reinstatement. (emphasis supplied)

The invocation of the labor arbiter's jurisdiction by way of a letter request instead of a complaint is of no moment, as it is
well-settled that the application of technical rules of procedure is relaxed in labor cases.

The third requisite, however, is not present. The Orders rendered by LA Guan cannot be considered as constituting a
judgment on the merits. The Orders simply manifest that petitioners "are amenable to the computations made by the
company respecting their separation pay." Nothing more. They do not clearly state the petitioners' right or New ANJH's
corresponding duty as a result of the termination.

Similarly, the fourth requisite is- also absent. While there may be substantial identity of the parties, there is no identity of
subject matter or cause of action. In SME Bank, Inc. v. De Guzman, this Court held that the acceptance of separation pay
is an issue distinct from the legality of the dismissal of the employees. xxx

In the absence of the third and fourth requisites, the appellate court should have proceeded to rule on the validity of
petitioners' termination.

E. Reliefs/Remedies in Illegal Dismis/ sal: Cumulative, not alternative - 294 (279); 229 (223)

1. In General

MELODY PAULINO LOPEZ, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, LETRAN COLLEGE-
MANILA, FR. ROGELIO ALARCON, O.P., FR. EDWIN LAO, O.P. AND MS. PERLY NAVARRO, RESPONDENTS.

Pursuant to [Article 294 (279)], illegally dismissed employees are entitled to reinstatement and full backwages. The
phraseology of the law means that both reliefs are available to the illegally dismissed employee as a matter of course.
However, if reinstatement is not possible, the employees are entitled to the grant of separation pay and full backwages. At
this instance, it must be stressed that the reliefs of separation pay and backwages are cumulative, not alternative
remedies. Not infrequently had this Court ruled that separation pay shall be granted as an option to reinstatement if
reinstatement can no longer be enforced due to the strained relations between the parties brought about by the litigation
in this case. Personal animosities have been generated due to the attendant circumstances of the case. Petitioner held
much rancor in her heart against private respondents. Since reinstatement would not be to the best interest of the parties,
in lieu thereof, the NLRC correctly awarded separation pay equivalent to one (1) month's salary for every year of service,
a fraction of at least six (6) months being considered as one (1) whole year.
Anent petitioner's claim for backwages, it is interesting to note that while the Office of the Solicitor General (OSG),
representing the NLRC, made the observation that the NLRC was correct in finding that petitioner should be granted
separation pay instead of being reinstated, it submits that the NLRC erred in failing to award her backwages.

We agree with the recommendation of the OSG that in addition to separation pay (which is in lieu of reinstatement), the
petitioner should also be entitled to backwages. However, we want to rectify the erroneous stance of the OSG that in
computing backwages, the total amount derived from employment elsewhere by the employee from the date of dismissal
up to the date of reinstatement, if any, should be deducted therefrom. It further stated that the computation of full
backwages and presentation of proof as to income earned elsewhere by the illegally dismissed employee after his
termination and before actual reinstatement should be ventilated in the execution proceeding before the Labor Arbiter
concordant with Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor Relations Commission.

For clarity and emphasis at the expense of redundancy, we reiterate the jurisprudence laid down in our en
banc Resolution in Bustamante vs. NLRC with regard to illegal dismissals effected after March 21, 1989. We ruled in
recent cases that an illegally dismissed employee is entitled to his full backwages from the time his compensation was
withheld from him (which, as a rule, is from the time of his illegal dismissal) up to the time of his actual reinstatement. The
legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e. without deducting
from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.

Considering that petitioner was terminated from service on May 8, 1991, which is after March 21, 1989, the ruling
in Bustamante vs. NLRC should be applied.

a. Reinstatement - Art. 294 (279)

1) Definition

ASIAN TERMINALS, INC., FORMERLY MARINA PORT SERVICES, INC., PETITIONER, VS. RENATO P.
VILLANUEVA, ROLANDO T. RODOLFO, ALFREDO L. LANZA, AND BRENDO S. POQUIZ, RESPONDENTS.

Reinstatement means restoration to a state or condition from which one had been removed or separated. The person
reinstated assumes the position he had occupied prior to his dismissal. Reinstatement presupposes that the previous
position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent
or of similar nature as the one previously occupied by the employee.

MPSI asserts that it reinstated respondents to their former positions. According to MPSI, respondents were regular
employees and that their designation as casual rotation employees merely meant that they work on rotation.

The NLRC found that MPSI indeed reinstated respondents to their former positions or to substantially equivalent
positions. The records of the case support this finding. Factual findings of labor officials, who possess the expertise in
matters within their jurisdiction, are generally accorded great weight if substantial evidence support the findings.

MPSI reinstated respondents on 26 February 1996 to the following positions:

1. Alfredo L. Lanza - CRE-120

2. Rolando T. Rodolfo - CRE-370
3. Renato P. Villanueva - CRE-412
4. Brendo S. Poquiz - DWV-112

These were the positions occupied by respondents before MPSI dismissed them, as evinced in the letter dated 9 June
1993 of the AWU president to MPSI. xxx Likewise, these were the very same positions stated in the memorandum dated
11 June 1993, terminating the services of respondents. xxx

Reinstatement means restoration to the former position occupied prior to dismissal or to substantially equivalent position.
Reinstatement does not mean promotion. Promotion is based primarily on an employee's performance during a certain
period. Just because their contemporaries are already occupying higher positions does not automatically entitle
respondents to similar positions.

2) Exceptions

EMERITUS SECURITY AND MAINTENANCE SYSTEMS, INC., PETITIONER, VS. JANRIE C. DAILIG, RESPONDENT.
Article 279 of the Labor Code of the Philippines mandates the reinstatement of an illegally dismissed employee, to wit:

Security of Tenure. - x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full back wages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.

Thus, reinstatement is the general rule, while the award of separation pay is the exception. The circumstances warranting
the grant of separation pay, in lieu of reinstatement, are laid down by the Court in Globe-Mackay Cable and Radio
Corporation v. National Labor Relations Commission, thus:

Over time, the following reasons have been advanced by the Court for denying reinstatement under the facts of
the case and the law applicable thereto; that reinstatement can no longer be effected

1) in view of the long passage of time (22 years of litigation) or because of the realities of the situation;

2) or that it would be inimical to the employers interest;

3) or that reinstatement may no longer be feasible;

4) or, that it will not serve the best interests of the parties involved;

5) or that the company would be prejudiced by the workers continued employment;

6) or that it will not serve any prudent purpose as when supervening facts have transpired which make execution
on that score unjust or inequitable

7) or, to an increasing extent, due to the resultant atmosphere of antipathy and antagonism

8) or strained relations or irretrievable estrangement between the employer and the employee.

In this case, petitioner claims that it complied with the reinstatement order of the Labor Arbiter. On 23 January 2008,
petitioner sent respondent a notice informing him of the Labor Arbiters decision to reinstate him. Accordingly, in February
2008, respondent was assigned by petitioner to Canlubang Sugar Estate, Inc. in Canlubang, Laguna, and to various posts
thereafter. At the time of the filing of the petition, respondent was assigned by petitioner to MD Distripark Manila, Inc. in
Bian, Laguna.

Respondent admits receiving a reinstatement notice from petitioner. Thereafter, respondent was assigned to one of
petitioners clients. However, respondent points out that he was not reinstated by petitioner Emeritus Security and
Maintenance Systems, Inc. but was employed by another company, Emme Security and Maintenance Systems, Inc.
(Emme). Thus, according to respondent, he was not reinstated at all.

Petitioner counters that Emeritus and Emme are sister companies with the same Board of Directors and officers, arguing
that Emeritus and Emme are in effect one and the same corporation.

Considering petitioners undisputed claim that Emeritus and Emme are one and the same, there is no basis in
respondents allegation that he was not reinstated to his previous employment. Besides, respondent assails the corporate
personalities of Emeritus and Emme only in his Comment filed before this Court. Further, respondent did not appeal the
Labor Arbiters reinstatement order.

Contrary to the Court of Appeals ruling, there is nothing in the records showing any strained relations between the parties
to warrant the award of separation pay. There is neither allegation nor proof that such animosity existed between
petitioner and respondent. In fact, petitioner complied with the Labor Arbiters reinstatement order.

Considering that (1) petitioner reinstated respondent in compliance with the Labor Arbiters decision, and (2) there is no
ground, particularly strained relations between the parties, to justify the grant of separation pay, the Court of Appeals erred
in ordering the payment thereof, in lieu of reinstatement.

a). Closure of Business

JACINTO RETUYA, PRISCILA B. VALE, BALTAZAR QUILAT, ABDON DAYSON AND ELEUTERIO ENSALADA,
PETITIONERS, VS. HON. SALIC B. DUMARPA, (PRESIDING COMMISSIONER); HON. OSCAR N. ABELLA AND
HON. LEON G. GONZAGA JR. (COMMISSIONERS); NATIONAL LABOR RELATIONS COMMISSION (FIFTH
DIVISION), CAGAYAN DE ORO CITY; INSULAR BUILDERS, INC./ANTONIO MURILLO, PRESIDENT AND GENERAL
MANAGER; AND RODOLFO MURILLO, RESPONDENTS.
The records indicate that reinstatement is no longer feasible. Insular Builders, Inc. has ceased operations. Absent any
showing that its business was deliberately stopped to avoid reinstating the complaining employees, the amount of back
wages shall be computed from the time of their illegal termination on July 26, 1993, up to the time of the cessation of the
business operations. "Computing backwages beyond x x x the date of [cessation of business], would not only be unjust
but confiscatory as well as violative of the Constitution depriving the [respondent] of his property rights."

Moreover, petitioners are entitled to separation pay. As provided by Article 279 of the Labor Code, an illegally dismissed
employee is entitled to the twin reliefs of 1) either reinstatement or separation pay, if reinstatement is no longer feasible;
and 2) back wages. These are distinct and separate reliefs given to alleviate the economic setback brought about by the
employee's dismissal.[20] The award of one does not bar the other. Back wages may be awarded without reinstatement,
and reinstatement may be ordered without awarding back wages.

b). Economic Business Conditions

UNION OF SUPERVISORS (RB) NATU, PETITIONER, VS. THE SECRETARY OF LABOR AND REPUBLIC BANK,
RESPONDENTS.

The respondent Republic Planters Bank contends that inasmuch as the herein case involves managerial level, the ruling
in the case of Diwa ng Pagkakaisa - PAFLU v. Filtex International Corporation, supra, which involves rank and file
employees is not in point. The Bank argues that such a distinction is significant in that "the position of a Branch Manager
relates to one of trust and confidence and therefore the incumbent manager of San Juan Branch who has won the trust
and confidence of the management by reason of his capability and probity should not be dismissed in favor of one whose
competence and integrity the management has not tested."

WE find merit in said contention. Although there is no denying the fact that the complainant Norberto Luna has served the
respondent Republic Bank for 22 years, as pointed out in the decision: "Forgotten were his almost 22 years of service to
the respondent Bank without any showing of any irregularity in the performance of his duties", the fact that he served
"without any showing of any irregularity in the performance of his duties" does not prove that he has the trust and
confidence of the Republic Planters Bank which are requisites for the position of a manager. And lack of irregularities in
the service does not necessarily prove superior competence, efficiency and integrity.

It must be remembered that the respondent Bank reached the point of almost complete financial ruin were it not for the
rehabilitation progress initiated by the government necessitating widespread restructuring and reorganization of the Bank.
At that time of economic crisis of the respondent Bank, the herein petitioner was the manager of the San Juan Branch. It
cannot be said that he did not contribute, directly or indirectly, to the downhill economy of the respondent Bank.

Clearly, the respondent Bank, after surviving said crisis, and emerging therefrom as Republic Planters Bank, should be
given the best managers. Managers who can contribute to its struggle to survive. Managers who have not only the
capacity and efficiency but likewise they must also have the "proven" skill that is essential for the respondent Republic
Planters Bank to go on and weather these times of economic difficulties.

The Labor Code provision on reinstatement, to wit:

"Art. 280. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and to his backwages computed from the time his compensation was withheld from him up to the
time of his reinstatement."

is aimed to restore the situation as nearly as possible to status quo ante the unfair labor practice. This requires that those
deprived of a recognized and protected interest by violations of the law should be made whole so as to prevent the
violator from profiting from his misdeeds (N.L.R.B. v. Coats and Clark, Inc. 241 F2d 556; N.L.R.B. v. J. H. Rutter-Rex
Manufacturing Co., 245 F2d 594). Yet the reinstatement remedy must always be adapted to economic-business
conditions (N.L.R.B. v. R.C. Can Co.,, 328 F2d 974, 980; N.L.R.B. v. American Aggregate Co., 305 F2d 599, 563-565).

There is no question that the Republic Planters Bank is the successor of the Republic Bank. This is not disputed by the
respondent Republic Planters Bank as can be shown in its reply to petitioner's comment, as follows:

"While respondent does not dispute the fact that the corporate personality of the old Republic Bank is continued
by the present Republic Planters Bank, yet, as a matter of equity, it feels that it should not be made to bear the
consequences of an unfair labor practice committed by the old management against complainant Luna."

But, in order to keep the respondent Republic Planters Bank on its feet once again, it had to undergo innovations to
ensure recovery. The respondent Republic Planters Bank actually changed its methods of operation and this change was
motivated by economic factors.
Considering these "economic-business conditions" together with the economic crisis WE are in now, it is inevitable that
these be reflected in the desire for efficient and productive management. This honest intention can only be effectuated if
the complainant Norberto Luna is reinstated to a substantially equivalent position without loss of seniority rights and the
incumbent manager who is now holding the position formerly held by herein complainant be allowed to continue with his
"tested" competence and integrity in the management of the San Juan Branch of the Republic Planters Bank.

c). Employee's Unsuitability

DIVINE WORD HIGH SCHOOL AND REV. VIC TIAM, SVD. DIRECTOR, PETITIONERS, VS. THE NATIONAL LABOR
RELATIONS COMMISSION AND LUZ MALLBO CATENZA, RESPONDENTS.

Nonetheless We hesitate ordering the reinstatement of private respondent Luz Ballano Catenza as a high school teacher
in the petitioner high school, which is a Catholic institution, serving the educational and moral needs of its Catholic
studentry. While herself innocent, the continued presense of Mrs. Catenza as a teacher in the school may well be met
with antipathy and antagonism by some sectors in the school community.

WHEREFORE, the petitioners are hereby ORDERED to pay complainant-appellee separation pay equivalent to one
month pay for every year of service, plus her backwages (not to exceed three years) from the time of the dismissal up to
the time of actual payment.

d.) Employee'sRetirement/Coverage

THE NEW PHILIPPINE SKYLANDERS, INC. AND/OR JENNIFER M. EANO-BOTE, PETITIONERS, VS. FRANCISCO
N. DAKILA, RESPONDENT.

Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages computed from the time he was illegally
dismissed. However, considering that respondent Dakila was terminated on May 1, 2007, or one (1) day prior to his
compulsory retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the NLRC correctly held him
entitled to the payment of his retirement benefits pursuant to the CBA. On the other hand, his backwages should be
computed only for days prior to his compulsory retirement which in this case is only a day. Consequently, the award of
reinstatement wages pending appeal must be deleted for lack of basis.

e.) Antipathy and Antagonism - Doctrine of Strained Relations

Felix Martos, and 98 others v. New San Jose Builders, Inc. 684 S 561 (Oct. 2012)

As to Martos, the Court agrees that the reinstatement being sought by him was no longer practicable because of strained
relation between the parties. Indeed, he can no longer question this fact. This issue was never raised or taken up on
appeal before the NLRC. It was only after he lost the appeal in the CA that he raised it.

Thus, the Court deems it fair to award separation pay in lieu of reinstatement. In addition to his separation pay, Martos is
also entitled to payment of full backwages, 13th month pay, service incentive leave pay, and attorneys fees.

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in
the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides
not to be reinstated.

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee
from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust.

WHEREFORE, the petition is DENIED.

f) Job with a totally different nature

DUP SOUND PHILS. AND/OR MANUEL TAN, PETITIONERS, VS. COURT OF APPEALS AND CIRILO A. PIAL,
RESPONDENTS.

Under the existing law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights. Article 279 of the Labor Code clearly provides that an employee who is dismissed without just cause and
without due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof. Article 223 of
the same Code also provides that an employee entitled to reinstatement shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation, or, at the option of the employer, merely
reinstated in the payroll. It is established in jurisprudence that reinstatement means restoration to a state or condition from
which one had been removed or separated. The person reinstated assumes the position he had occupied prior to his
dismissal. Reinstatement presupposes that the previous position from which one had been removed still exists, or that
there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the
employee. Based on the foregoing principles, it cannot be said that petitioners intended to reinstate private respondent
neither to his former position under the same terms and conditions nor to a substantially equivalent position. To begin with,
the notice that petitioners sent to private respondent requiring the latter to report back for work is silent with regard to the
position or exact nature they wanted the private respondent to assume. Indeed, as it turned out, petitioners had other
plans for private respondent. Thus, private respondent's assignment to a different job, as well as transfer of work
assignment without any justification therefor, cannot be deemed as faithful compliance with the reinstatement order.

As earlier discussed, private respondent may not be faulted for rejecting what petitioners claim as compliance with the
order to reinstate the former given the totally different nature of the job he was afterwards given and the conditions and
working environment under which he was to perform such job. Thus, private respondent found it unacceptable to work for
petitioners. That he was placed in an untenable situation which practically left him with no choice but to leave his assigned
task also shows the strained relations that has developed between the parties.

3). Offer to reinstate

CARLOS RANARA, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, ORO UNION
CONSTRUCTION SUPPLY AND/OR JIMMY TING CHANG, GENERAL MANAGER/OWNER, RESPONDENTS.

In the petitioner's case, he was only one among ten employees in a small store, and that made a great deal of difference
to him. He had reason to fear that if he accepted the private respondents' offer, their watchful eyes would thereafter be
focused on him, to detect every small shortcoming of his as a ground for vindictive disciplinary action. In our own view,
this was a case of strained relations between the employer and the employee that justified Ranara's refusal of the private
respondents' offer to return him to his former employment.

It is clear that the petitioner was illegally dismissed without even the politeness of a proper notice. Without cause and
without any investigation, formal or otherwise, Ranara was simply told that he should not report back for work the
following day. When he did so just the same, thinking she had only spoken in jest, he found that somebody else had been
employed in his place. When he protested his replacement, he was even scolded for being "hard-headed" and not
accepting his dismissal.

The fact that his employer later made an offer to re-employ him did not cure the vice of his earlier arbitrary dismissal. The
wrong had been committed and the harm done. Notably, it was only after the complaint had been filed that it occurred to
Chang, in a belated gesture of good will, to invite Ranara back to work in his store. Chang's sincerity is suspect. We doubt
if his offer would have been made if Ranara had not complained against him. At any rate, sincere or not, the offer of
reinstatement could not correct the earlier illegal dismissal of the petitioner. The private respondents incurred liability
under the Labor Code from the moment Ranara was illegally dismissed, and the liability did not abate as a result of
Chang's repentance.

4). Payroll Reinstatement/Wages pending Appeal -Art. 223, par. 3

Aking

The issue at bar explores an aspect of Article 223's implementation: if the arbiter's order of reinstatement remains
unexecuted, should its subsequent reversal on appeal preclude execution? Respondent expectedly holds the negative
view, arguing that "there can be no reinstatement by virtue of the fact that there is no illegal dismissal to speak of." A
cursory search of this Court's jurisprudence belies the cogency of this claim.

More than five years ago, the Court in Roquero v. Philippine Airlines, Inc. was confronted with the same question now
posed and, as respondent prays, was there asked to refuse payment of reinstatement wages of the dismissed employee
because of the reversal on appeal of the reinstatement order. Speaking through Justice, later Chief Justice, Reynato S.
Puno, we rejected this contention, holding that

[t]echnicalities have no room in labor cases where the Rules of Court are applied only in a suppletory manner and
only to effectuate the objectives of the Labor Code and not to defeat them. Hence, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the
higher court. On the other hand, if the employee has been reinstated during the appeal period and such
 reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually rendered services during the period. (Emphasis supplied)

We reiterated Roquero in our succeeding ruling in Air Philippines Corporation v. Zamora.

True, a Division of the Court in Genuino v. National Labor Relations Commission diverged from Roquero by requiring
refund or set-off of salaries received post-reversal of the reinstatement order. However, the Court en banc in Garcia v.
Philippine Airlines, Inc., nipped Genuino in the bud and reaffirmed the Roquero line of jurisprudence:

[T]he Genuino ruling not only disregards the social justice principles behind the rule [in Article 223], but also
institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente
lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor
Arbiter's decision ordering reinstatement, the employer gets back the same amount without having to spend
ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a
bond [even a cash bond] by the employer shall not stay the execution for reinstatement."

In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund
the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of
the prevailing doctrine on reinstatement pending appeal vis-a-vis the effect of a reversal on appeal.

xxxx

The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal by the higher court. It settles the view that
the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either readmit them to
work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll,
and that failing to exercise the options in the alternative, employer must pay the employee's salaries.
[18]
(Underlining in the original; italicization and boldfacing supplied)

Thus, respondent is not only bound to pay petitioner her reinstatement wages, had it done so, it is precluded from
recovering the amount paid post-reversal of the arbiter's reinstatement order by the Court of Appeals.

5) No Refund doctrine

COLLEGE OF THE IMMACULATE CONCEPTION, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION
AND ATTY. MARIUS F. CARLOS, PH.D., RESPONDENTS.

Does the subsequent reversal of the LA's findings mean that respondent should reimburse petitioner all the salaries and
benefits he received pursuant to the immediate execution of the LA's erroneous decision ordering his reinstatement as
Department Dean?

We rule in the negative. In Air Philippines Corporation v. Zamora, citing Roquero v. Philippine Airlines, Inc., we held that:

x x x Hence, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until
reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually rendered services during the
period.

Petitioner, however, insists that Roquero finds no application to the case at bar, because here, respondent was ordered
reinstated to a position different from that which he previously held, i.e., the LA wrongfully ordered his reinstatement as
Dean, when he should have been reinstated only as a full-time faculty member, because this was the position he held
when he filed the complaint for illegal dismissal. Further, petitioner takes a firm stand that the case of International
Container Terminal Services, Inc v. NLRC refers only to a case of a dismissed employee and is inapplicable here, where it
was correctly found on appeal that the employee was not dismissed at all, but was only sanctioned for teaching in another
university without petitioner's permission.

It is not disputed at this point that the LA erred in ordering respondent's reinstatement as Dean. The NLRC ruled that
respondent should have been merely reinstated as a full-time law professor, because the term of his appointment as Dean
had long expired. However, such mistake on the part of the LA cannot, in any way, alter the fact that during the pendency
of the appeal of his decision, his order for respondent's reinstatement as Dean was immediately executory. Article 223 of
the Labor Code explicitly provides that:

Art. 223. - Appeal. - x x x

xxxx

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as
the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for reinstatement provided therein. (Emphasis supplied)

Therefore, petitioner could not validly insist that it is entitled to reimbursement for the payment of the salaries of
respondent pursuant to the execution of the LA's decision by simply arguing that the LA's order for reinstatement is
incorrect. The pertinent law on the matter is not concerned with the wisdom or propriety of the LA's order of reinstatement,
for if it was, then it should have provided that the pendency of an appeal should stay its execution. After all, a decision
cannot be deemed irrefragable unless it attains finality.

6) Reinstatement as Interim relief, when applicable

LUNESA O. LANSANGAN AND ROCITA CENDAA, PETITIONERS, VS. AMKOR TECHNOLOGY PHILIPPINES, INC.,
RESPONDENT.

Roquero, as well as Article 223 of the Labor Code on which the appellate court also relied, finds no application in the
present case. Article 223 concerns itself with an interim relief, granted to a dismissed or separated employee while the
case for illegal dismissal is pending appeal, as what happened in Roquero. It does not apply where there is no finding of
illegal dismissal, as in the present case.

The Arbiter found petitioners dismissal to be valid. Such finding had, as stated earlier, become final, petitioners not
having appealed it. Following Article 279 which provides:

xxxx

In cases of regular employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement (Emphasis, underscoring and italics supplied),

petitioners are not entitled to full backwages as their dismissal was not found to be illegal. Agabon v. NLRC so states
payment of backwages and other benefits is justified only if the employee was unjustly dismissed.

- Starting here, retain footnote tags -

7) Reinstatement and Separation Pay, Exclusive Remedies

BANI RURAL BANK, INC., ENOC THEATER I AND II AND/OR RAFAEL DE GUZMAN, PETITIONERS, VS. TERESA
DE GUZMAN, EDGAR C. TAN AND TERESA G. TAN, RESPONDENTS.

Article 279 of the Labor Code, as amended, [34] provides backwages and reinstatement as basic awards and
consequences of illegal dismissal:

Article 279. Security of Tenure. x x x An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.

By jurisprudence derived from this provision, separation pay may [also] be awarded to an illegally dismissed employee in
lieu of reinstatement.[35] Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides the following
instances when the award of separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper:

(a) when reinstatement is no longer possible, in cases where the dismissed employees position is no longer available;
(b) the continued relationship between the employer and the employee is no longer viable due to the strained
relations between them; and

(c) when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for
the best interest of the parties involved.[36]

In these instances, separation pay is the alternative remedy to reinstatement in addition to the award of backwages.
[37]
The payment of separation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the
legal consequences of reinstatement to an employee who was illegally dismissed. [38]

For clarity, the bases for computing separation pay and backwages are different. xxx The computation of separation pay is
based on the length of the employees service; and the computation of backwages is based on the actual period when the
employee was unlawfully prevented from working.[41]

8) Reinstatement without backwages: Employer's good faith warranted an exception

INTEGRATED MICROELECTRONICS, INC., PETITIONER, VS. ADONIS A. PIONILLA, RESPONDENT.

As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if reinstatement is not
viable) and payment of full backwages. In certain cases, however, the Court has carved out an exception to the foregoing
rule and thereby ordered the reinstatement of the employee without backwages on account of the following: (a) the fact
that dismissal of the employee would be too harsh of a penalty; and (b) that the employer was in good faith in terminating
the employee. xxx

In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a penalty to be imposed against Pionilla
for his infractions; and (b) IMI was in good faith when it dismissed Pionilla as his dereliction of its policy on ID usage was
honestly perceived to be a threat to the companys security. In this respect, since these concurring circumstances trigger
the application of the exception to the rule on backwages as enunciated in the above-cited cases, the Court finds it proper
to accord the same disposition and consequently directs the deletion of the award of backwages in favor of Pionilla,
notwithstanding the illegality of his dismissal.

9) No Reinstatement salaries in case of corporate rehabilitation

PHILIPPINE AIRLINES, INC., PETITIONER, VS. REYNALDO V. PAZ, RESPONDENT.

A scrutiny of the circumstances, however, will show that the delay in reinstating the respondent was not due to the
unjustified refusal of PAL to abide by the order but because of the constraints of corporate rehabilitation. It bears noting
that a year before the respondent filed his complaint for illegal dismissal on June 25, 1999, PAL filed a petition for
approval of rehabilitation plan and for appointment of a rehabilitation receiver with the SEC. On June 23, 1998, the SEC
appointed an Interim Rehabilitation Receiver. Thereafter, the SEC issued an Order [31] dated July 1, 1998, suspending all
claims for payment against PAL.

The inopportune event of PALs entering rehabilitation receivership justifies the delay or failure to comply with the
reinstatement order of the LA. Thus, in Garcia, the Court held:

It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court,
tribunal or board against the corporation shall ipso jure be suspended. As stated early on, during the pendency of
petitioners complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation
Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with
a Permanent Rehabilitation Receiver.

Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is
ministerial and mandatory. This injunction or suspension of claims by legislative fiat partakes of the nature of a
restraining order that constitutes a legal justification for respondents non-compliance with the reinstatement order.
Respondents failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus
justified. Such being the case, respondents obligation to pay the salaries pending appeal, as the normal effect of
the non-exercise of the options, did not attach.[32] (Citations omitted)

In light of the fact that PALs failure to comply with the reinstatement order was justified by the exigencies of corporation
rehabilitation, the respondent may no longer claim salaries which he should have received during the period that the LA
decision ordering his reinstatement is still pending appeal until it was overturned by the NLRC. Thus, the CA committed a
reversible error in recognizing the respondents right to collect reinstatement salaries albeit suspending its execution while
PAL is still under corporate rehabilitation.
b. Backwages - Art. 294 (279)

1) Effect of Failure to Order

ST. MICHAEL'S INSTITUTE, FR. NICANOR VICTORINO AND EUGENIA BLANCO, PETITIONERS, VS. CARMELITA A.
SANTOS, FLORENCIO M. MAGCAMIT AND ALBERT M. ROSARDA, RESPONDENTS.

On the matter of the award of backwages, petitioners advance the view that by awarding backwages, the appellate court
"unwittingly reversed a time-honored doctrine that a party who has not appealed cannot obtain from the appellate court
any affirmative relief other than the ones granted in the appealed decision." [26]We do not agree.

The fact that the NLRC did not award backwages to the respondents or that the respondents themselves did not appeal
the NLRC decision does not bar the Court of Appeals from awarding backwages. While as a general rule, a party who has
not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, the Court of
Appeals is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if
it finds that their consideration is necessary in arriving at a complete and just resolution of the case [27] or to serve the
interests of justice or to avoid dispensing piecemeal justice. [28]

Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to the twin reliefs of
(a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages. [29] Both are distinct
reliefs given to alleviate the economic damage suffered by an illegally dismissed employee [30] and, thus, the award of one
does not bar the other. Both reliefs are rights granted by substantive law which cannot be defeated by mere procedural
lapses.[31] Substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid
and technical application of the rules. [32] The order of the Court of Appeals to award backwages being a mere legal
consequence of the finding that respondents were illegally dismissed by petitioners, there was no error in awarding the
same.

2) Computation

U-BIX CORPORATION AND EDILBERTO B. BRAVO, PETITIONERS, VS. VALERIE ANNE H. HOLLERO,
RESPONDENT.

Petitioners argue that the recomputation of the monetary award in the sum of P3,270,512.82 is erroneous. In particular,
they assail the computation of backwages from the time of respondent's dismissal up to the finality of the Court's October
31, 2008 Decision in the illegal dismissal case on March 12, 2009. They point out that full backwages is computed from
the time an illegally dismissed employee's compensation is withheld up to the time of his actual reinstatement. And since
the July 12, 1999 Decision of the NLRC awarded separation pay in lieu of reinstatement, petitioners argue that
backwages should no longer accrue beyond the date of the said NLRC Decision. This is because when the NLRC
awarded separation pay in lieu of reinstatement in its Decision, the employment tie between petitioners and respondent
was already effectively severed.

This Court has already meticulously explained in Bani Rural Bank Inc. v. De Guzman[50] that:

The computation of separation pay is based on the length of the employee's service; and the computation of
backwages is based on the actual period when the employee was unlawfully prevented from working.

The basis of computation of backwages

The computation of backwages depends on the final awards adjudged as a consequence of illegal
dismissal, in that:

First, when reinstatement is ordered, the general concept under Article 279 of the Labor Code, as amended,
computes the backwages from the time of dismissal until the employee's reinstatement. The computation of
backwages (and similar benefits considered part of the backwages) can even continue beyond the decision of the
labor arbiter or NLRC and ends only when the employee is actually reinstated.

Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case
is disputed) or reinstatement is waived by the employee (in the event that the payment of separation pay,
in lieu, is not disputed), backwages is computed from the time of dismissal until the finality of the
decision ordering separation pay.
 Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a
supervening event that makes the award of reinstatement no longer possible x x x backwages is computed from
the time of dismissal until the finality of the decision ordering separation pay.

The above computation of backwages, when separation pay is ordered, has been the Court's consistent
ruling. In Session Delights Ice Cream and Fast Foods v. Court Appeals Sixth Division, we explained that
the finality of the decision becomes the reckoning point because in allowing separation pay, the final
decision effectively declares that the employment relationship ended so that separation pay and
backwages are to be computed up to that point.

We may also view the proper computation of backwages (whether based on reinstatement or an order of
separation pay) in terms of the life of the employment relationship itself.

When reinstatement is ordered, the employment relationship continues. Once the illegally dismissed employee is
reinstated, any compensation and benefits thereafter received stem from the employee's continued employment.
In this instance, backwages are computed only up until the reinstatement of the employee since after the
reinstatement, the employee begins to receive compensation from his resumed employment.

When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or
subsequently ordered in light of a supervening event making the award of reinstatement no longer possible), the
employment relationship is terminated only upon the finality of the decision ordering the separation pay.
The finality of the decision cuts-off the employment relationship and represents the final settlement of the
rights and obligations of the parties against each other. Hence, backwages no longer accumulate upon
the finality of the decision ordering the payment of separation pay since the employee is no longer
entitled to any compensation from the employer by reason of the severance of his employment .
[51]
(Citations omitted; emphases and underscoring supplied)

Clearly, therefore, respondent is entitled to backwages computed from the time she was illegally dismissed up to the date
of the finality of the Court's October 31, 2008 Decision in the illegal dismissal case on March 12, 2009. The Court, thus,
finds the subject recomputation of money award to be in order.

3) Salary increases and commissions, when not included

GEORGE D. JONES, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, 4TH DIVISION, CEBU CITY;
ABBOTT LABORATORIES (PHILS.), INC., AUBREY BOUT, AND ELENITO P. TUAZON, RESPONDENTS.

(2014 case not available, only 1995 one)

4) Recomputation of consequence of ID upon execution of the decision, not a violation of the principle of
Immutability of final judgments

METROGUARDS SECURITY AGENCY CORPORATION (FORMERLY KNOWN AS BEEGUARDS CORPORATION)

AND MS. MILAGROS T. CHAN, PETITIONERS, VS. ALBERTO N. HILONGO, RESPONDENT.

The issue for our consideration is whether the CA erred in ordering the re-computation of Hilongos monetary awards.

We rule in the negative.

The issue is not novel. In Nacar v. Gallery Frames,[24] we have held that:

x x x no essential change is made by a recomputation as this step is a necessary consequence that flows from
the nature of the illegality of dismissal declared by the Labor Arbiter in that decision. A recomputation (or an
original computation, if no previous computation has been made) is a part of the law specifically, Article 279 of
the Labor Code and the established jurisprudence on this provision that is read into the decision. By the nature
of an illegal dismissal case, the reliefs continue to add up until full satisfaction, as expressed under Article 279 of
the Labor Code. The recomputation of the consequences of illegal dismissal upon execution of the decision does
not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling
stands; only the computation of monetary consequences of this dismissal is affected, and this is not a violation of
the principle of immutability of final judgments.

Nacar reiterated the Courts ruling in the earlier cases of Session Delights and Gonzales.

We thus cannot agree with petitioners contention that a decision that has acquired finality becomes immutable and
unalterable.[25] The re-computation of the consequences of illegal dismissal upon execution of the decision does not
constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the
computation of monetary consequences of this dismissal is affected, and this is not a violation of the principle of
immutability of final judgments.

5) Deletion of backwages

See again: Integrated Microelectronics, Inc. v. Adonis A. Pionilla, GR No. 200222; Aug. 28, 2013 employer in good faith

6) Fringe Benefits

ACESITE CORPORATION, HOLIDAY INN, JOHANN ANGERBAUER AND PHIL KENNEDY, PETITIONER, VS.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) AND LEO A. GONZALES, RESPONDENTS.

As to the deletion of the fringe benefits or their monetary equivalent, this Court agrees with Gonzales that it is not in
accord with law and jurisprudence. Article 279 of the Labor Code provides:

ART. 279 SECURITY OF TENURE. In cases of regular employment, the employer shall not terminate the
services of an employee except for just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his actual reinstatement. (Emphasis and
underscoring supplied)

2. Damages and Attorney's fees -Att. 111; CC, Art. 2208, par. 7

NANCY S. MONTINOLA, PETITIONER, VS. PHILIPPINE AIRLINES, RESPONDENT.

PALs actions in implicating Montinola and penalizing her for no clear reason show bad faith. PALs denial of her request to
clarify the charges against her shows its intent to do a wrongful act for moral obliquity. If it were acting in good faith, it
would have gathered more evidence from its contact in Honolulu or from other employees before it started pointing
fingers. PAL should not have haphazardly implicated Montinola and denied her livelihood even for a moment.

PAL apparently granted Montinola procedural due process by giving her a notice of administrative charge and conducting
a hearing. However, this was more apparent than real. The notice of administrative charge did not specify the acts
committed by Montinola and how these acts violated PALs Code of Discipline. The notice did not state which among the
items confiscated by the US customs officials were originally found in Montinolas possession. Worse, the panel of PAL
officers led by Atty. Pascual did not entertain any query to clarify the charges against her.

There is denial of an opportunity to be heard if the employee is not clearly apprised of the acts she committed that
constituted the cause for disciplinary action. The Omnibus Rules Implementing the Labor Code requires that a written
notice [be] served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side. [77] Reasonable opportunity has been described as
every kind of assistance that management must accord to the employees to enable them to prepare adequately for their
defense.[78]

When the alleged participation of the employee in the illicit act which serves as a basis for the disciplinary action is not
clear from the notice, the opportunity to be heard will not be reasonable. The notice fails to meet reasonable standards. It
does not have enough information to enable the employee to adequately prepare a defense. xxx

If the case involves a contract, Article 2332 of the Civil Code provides that the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Thus, in Garcia v. NLRC,[84] this
court ruled that in labor cases, the court may award exemplary damages if the dismissal was effected in a wanton,
oppressive or malevolent manner.[85]

It is socially deleterious for PAL to suspend Montinola without just cause in the manner suffered by her. Hence, exemplary
damages are necessary to deter future employers from committing the same acts. xxx

This case qualifies for the first, second, and seventh reasons why attorneys fees are awarded under the Civil Code.

First, considering that we have awarded exemplary damages in this case, attorneys fees can likewise be awarded.

Second, PALs acts and omissions compelled Montinola to incur expenses to protect her rights with the National Labor
Relations Commission and the judicial system. She went through four tribunals, and she was assisted by counsel. These
expenses would have been unnecessary if PAL had sufficient basis for its decision to discipline Montinola.
Finally, the action included recovery for wages. To bring justice to the illegal suspension of Montinola, she asked for
backwages for her year of suspension.

3. Separation Pay

a. Instances when separation pay may be awarded

7K CORPORATION, PETITIONER, VS. EDDIE ALBARICO, RESPONDENT.

We rule that although petitioner correctly contends that separation pay may in fact be awarded for reasons other than
illegal dismissal, the circumstances of the instant case lead to no other conclusion than that the claim of respondent
Albarico for separation pay was premised on his allegation of illegal dismissal. Thus, the voluntary arbitrator properly
assumed jurisdiction over the issue of the legality of his dismissal.

True, under the Labor Code, separation pay may be given not only when there is illegal dismissal. In fact, it is also given
to employees who are terminated for authorized causes, such as redundancy, retrenchment or installation of labor-saving
devices under Article 283[29] of the Labor Code. Additionally, jurisprudence holds that separation pay may also be awarded
for considerations of social justice, even if an employee has been terminated for a just cause other than serious
misconduct or an act reflecting on moral character. [30] The Court has also ruled that separation pay may be awarded if it
has become an established practice of the company to pay the said benefit to voluntarily resigning employees [31] or to
those validly dismissed for non-membership in a union as required in a closed-shop agreement. [32]

The above circumstances, however, do not obtain in the present case. There is no claim that the issue of entitlement to
separation pay is being resolved in the context of any authorized cause of termination undertaken by petitioner
corporation. Neither is there any allegation that a consideration of social justice is being resolved here. In fact, even in
instances in which separation pay is awarded in consideration of social justice, the issue of the validity of the dismissal still
needs to be resolved first. Only when there is already a finding of a valid dismissal for a just cause does the court then
award separation pay for reason of social justice. The other circumstances when separation pay may be awarded are not
present in this case.

The foregoing findings indisputably prove that the issue of separation pay emanates solely from respondents allegation of
illegal dismissal. In fact, petitioner itself acknowledged the issue of illegal dismissal in its position paper submitted to the
NCMB.

Moreover, we note that even the NLRC was of the understanding that the NCMB arbitration case sought to resolve the
issue of the legality of the dismissal of the respondent. In fact, the identity of the issue of the legality of his dismissal,
which was previously submitted to the NCMB, and later submitted to the NLRC, was the basis of the latters finding of
forum shopping and the consequent dismissal of the case before it. In fact, petitioner also implicitly acknowledged this
when it filed before the NLRC its Motion to Dismiss respondents Complaint on the ground of forum shopping. Thus, it is
now estopped from claiming that the issue before the NCMB does not include the issue of the legality of the dismissal of
respondent. Besides, there has to be a reason for deciding the issue of respondents entitlement to separation pay. To
think otherwise would lead to absurdity, because the voluntary arbitrator would then be deciding that issue in a vacuum.
The arbitrator would have no basis whatsoever for saying that Albarico was entitled to separation pay or not if the issue of
the legality of respondents dismissal was not resolve first.

b. When to Pay Separation Pay/When dismissal is for a just cause: serious misconduct, other just causes

Security Bank Savings Corp. v. Charles M. Singson

As an exception, case law instructs that in certain circumstances, the grant of separation pay or financial assistance to a
legally dismissed employee has been allowed as a measure of social justice or on grounds of equity. In Philippine Long
Distance Telephone Co. v. NLRC (PLDT),31 the Court laid down the parameters in awarding separation pay to dismissed
employees based on social justice:

xxx We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving
moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give
the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground
of social justice. xxx
However, in the later case of Toyota Motor Philippines Corporation Workers Association v. NLRC (Toyota),33 the Court
further excluded from the grant of separation pay based on social justice the other instances listed under Article 282 (now
296) of the Labor Code, namely, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust,
and commission of a crime against the employer or his family. But with respect to analogous cases for termination like
inefficiency, drug use, and others, the social justice exception could be made to apply depending on certain
considerations, such as the length of service of the employee, the amount involved, whether the act is the first offense, the
performance of the employee, and the like. 34

To reiterate, the grant of separation pay to a dismissed employee is primarily determined by the cause of the dismissal. In
the case at bar, respondent's established act of repeatedly allowing Branch Manager Pinero to bring the checkbooks and
bank forms outside of the bank's premises in violation of the company's rules and regulations had already been declared
by the LA to be gross and habitual neglect of duty under Article 282 of the Labor Code, which finding was not contested
on appeal by respondent. It was petitioners who interposed an appeal solely with respect to the award of separation pay
as financial assistance. As they aptly pointed out, the infractions, while not clearly indicative of any wrongful intent, is,
nonetheless, serious in nature when one considers the employee's functions, rendering it inequitable to award separation
pay based on social justice. As the records show, respondent was the custodian of accountable bank forms in his
assigned branch and as such, was mandated to strictly comply with the monitoring procedure and disposition thereof as a
security measure to avoid the attendant high risk to the bank. Indeed, it is true that the failure to observe the processes
and risk preventive measures and worse, to take action and address its violation, may subject the bank to regulatory
sanction. It bears stressing that the banking industry is imbued with public interest. Banks are required to possess not only
ordinary diligence in the conduct of its business but extraordinary diligence in the care of its accounts and the interests of
its stakeholders. The banking business is highly sensitive with a fiduciary duty towards its client and the public in general,
such that central measures must be strictly observed. 37 It is undisputed that respondent failed to perform his duties
diligently, and therefore, not only violated established company policy but also put the bank's credibility and business at
risk. The excuse that his Branch Manager, Pinero, merely prompted him towards such ineptitude is of no moment. He
readily admitted that he violated established company policy against bringing out checkbooks and bank forms, 38 which
means that he was well aware of the fact that the same was prohibited. Nevertheless, he still chose to, regardless of his
superior's influence, disobey the same not only once, but on numerous occasions. All throughout, there is no showing that
he questioned the acts of Branch Manager Pinero; neither did he take it upon himself to report said irregularities to a
higher authority. Hence, under these circumstances, the award of separation pay based on social justice would be
improper.

c. Backwages and Separation Pay, Distinct Reliefs

ELIZABETH D. PALTENG, PETITIONER, VS. UNITED COCONUT PLANTERS BANK, RESPONDENT.

Notably, reinstatement and payment of backwages are distinct and separate reliefs given to alleviate the economic
setback brought about by the employee's dismissal. The award of one does not bar the other. Backwages may be
awarded without reinstatement, and reinstatement may be ordered without awarding backwages. [15]

In a number of cases,[16] the Court, despite ordering reinstatement or payment of separation pay in lieu of reinstatement,
has not awarded backwages as penalty for the misconduct or infraction committed by the employee.

In the case at bar, petitioner admitted that she granted the BP accommodation against Mercado's personal checks beyond
and outside her authority. The Labor Arbiter, the NLRC and the Court of Appeals all found her to have committed an "error
of judgment,"[17] "honest mistake,"[18] "honest mistake" vis--vis a "major offense."[19]

Since petitioner was not faultless in regard to the offenses imputed against her, we hold that the award of separation pay
only, without backwages, is proper.

d. Computation/ Rationale

BUSINESSDAY INFORMATION SYSTEMS AND SERVICES, INC., AND RAUL LOCSIN, PETITIONERS, VS.
NATIONAL LABOR RELATIONS COMMISSION, NEMESIO MOYA, ALFREDO AMANTE, EDWIN BERSAMINA,
SAMUEL CUELA, ROMEO DELA CRUZ, MANUEL DE JESUS, SEVERINO DELA CRUZ, DANILO ESPIRITU, ANGEL
FLORES, DANILO FRANCISCO, FLORENCIO GLORIOSO, GERARDO MANUEL, ARMANDO MENDOZA, PEDRO
MORELOS, ALEXON ORBETA, ROMEO PEREZ, ALFREDO SABANDO, NESTOR SANTOS, ALFREDO SEPTRIMO,
OSCAR SEVILLA, EDUARDO SIOSON, REYMUNDO TIONGCO, TERESITA REYES, CARMENCITA CARPIO,
GENARO NABUTAS, DANILO MAMPLATA, AND ROLANDO GAMIT, RESPONDENTS.
Undoubtedly, petitioners' right to terminate employees on account of retrenchment to prevent losses or closure of
business operations, is recognized by law, but it may not pay separation benefits unequally for such discrimination breeds
resentment and ill-will among those who have been treated less generously than others.

The following observations of the Commission are relevant:

"The respondents cited financial business difficulties to justify their termination of the complainants' employment on 16
May 1988. They were given one-half (1/2) month of their salary for every year of service. Due to continuing losses, which
is a sign that business, after the termination did not improve, they closed operations on 31 July 1989, where they
dismissed the second batch of employees who were given one (1) month pay for every year they served. The third
batch ofemployees were terminated on 28 February 1989, who were likewise given one (1) month pay for every year of
service. The business climate obtaining on 16 May 1988 when the complainants were terminated did not at all defer (sic)
improvement-wise, with that of 31 July 1988 nor to 28 February 1989. The interval between the dates of termination was
so closed to each other, so that, no improvement in business maybe likely expected. In fact, the respondents suffered
continuous losses, hence, there is no difference in the circumstances of the business to distinguish.

"Granting that the 16 May 1988 termination was a retrenchment scheme, and the 31 July 1988 and the 28 February 1989
were due to closure, the law requires the granting of the same amount of separationbenefits to the affected employees in
any of the cases. The respondent argued that the giving of more separation benefit to the second and third batches of
employees separated was their expression of gratitude and benevolence to the remaining employees who have tried to
save and make the company viable in the remaining days of
operations. Thisjustification is not plausible. There are workers in the first batch whohave rendered more years of service
and could even be said to be moreefficient than those separated subsequently, yet, they did not receive thesame recogniti
on. Understandably, their being retained longer in their job and be not included in the batch that was first terminated, was
a concession enough and may already be considered as favor granted by the respondents to the prejudice of the
complainants. As it happened, there are workers in the first batch who have rendered more years in service but received
lesser separation pay, because of that arrangement made by the respondents in paying their termination benefits. x x
x" (pp. 36-37, Rollo)

Clearly, there was impermissible discrimination against the private respondents in the payment of their separation
benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising
management prerogatives, grant greater benefits to some and less to others. Management prerogatives are not absolute
prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair play and justice
(UST vs.NLRC, 190 SCRA 758). Article 283 of the Labor Code, as
amended, protects workers whose employment is terminated because of closure ofthe establishment or reduction of pers
onnel (Abella vs. NLRC, 152 SCRA 141, 145).

e. Effect of Receipt

SAN MIGUEL CORPORATION, PETITIONER, VS. ERNESTO JAVATE, JR., AND THE DEPARTMENT OF LABOR,
RESPONDENTS.

There is likewise no merit to petitioner's contention that private respondent is estopped from assailing his retirement as he
has accepted the benefits under the retirement plan. [22] Private respondent vehemently denied this contention, and the
filing of the compliant for illegal dismissal indisputably strengthens such denial.

Furthermore, even assuming arguendo that private respondent indeed received his retirement benefits, it does not estop
him from questioning the legality of his dismissal. As this Court stated in De Leon vs. NLRC: [23]

"The contention of respondents that petitioner is barred from contesting the illegality of his dismissal since he has already
received his separation pay cannot be sustained. Since he was forced to retire, he suddenly found himself jobless with a
family of eight (8) children to support. He had no alternative but to accept what was offered to him. x x x Employees who
received their separation pay are not barred from contesting the legality of their dismissal. The acceptance of those
benefits would not amount to estoppel as held in the leading case of Mercury Drug Co. vs. CIR (56 SCRA 694) as aptly
cited in the decision of the Labor Arbiter." (emphasis supplied).

4. Financial Assistance/Separation pay as a Measure of Social Justice

When Allowed/ Not Allowed

SANGWOO PHILIPPINES, INC. AND/OR SANG IK JANG, JISSO JANG, WISSO JANG, AND NORBERTO TADEO,
PETITIONERS, VS. SANGWOO PHILIPPINES,INC. EMPLOYEES UNION OLALIA, REPRESENTED BY PORFERIA
SALIBONGCOGON,[1] RESPONDENTS.

Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of business
operations and/or an actual locking-up of the doors of establishment, usually due to financial losses. Closure of business,
as an authorized cause for termination of employment, [27] aims to prevent further financial drain upon an employer who
cannot pay anymore his employees since business has already stopped. [28] In such a case, the employer is generally
required to give separation benefits to its employees, unless the closure is due to serious business losses. [29] xxx

In this case, the LA, NLRC, and the CA all consistently found that SPI indeed suffered from serious business losses which
resulted in its permanent shutdown and accordingly, held the companys closure to be valid. It is a rule that absent any
showing that the findings of fact of the labor tribunals and the appellate court are not supported by evidence on record or
the judgment is based on a misapprehension of facts, the Court shall not examine anew the evidence submitted by the
parties.[31]Perforce, without any cogent reason to deviate from the findings on the validity of SPIs closure, the Court thus
holds that SPI is not obliged to give separation benefits to the minority employees pursuant to Article 297 of the Labor
Code as interpreted in the case of Galaxie. As such, SPI should not be directed to give financial assistance amounting to
P15,000.00 to each of the minority employees based on the Formal Offer of Settlement. If at all, such formal offer should
be deemed only as a calculated move on SPIs part to further minimize the expenses that it will be bound to incur should
litigation drag on, and not as an indication that it was still financially sustainable. However, since SPEU chose not to
accept, said offer did not ripen into an enforceable obligation on the part of SPI from which financial assistance could have
been realized by the minority employees.

7. Solidary Liability of Corporate Officers

ESSENCIA Q. MANARPIIS, PETITIONER, VS. TEXAN PHILIPPINES, INC., RICHARD TAN AND CATHERINE P.
RIALUBIN-TAN, RESPONDENTS.

Finally, on the solidary liability of respondents Richard Tan and Catherine Rialubin-Tan for the monetary awards. It is basic
that a corporation being a juridical entity, may act only through its directors, officers and employees. Obligations incurred
by them, acting as such corporate agents are not theirs but the direct accountabilities of the corporation they represent.
However, in certain exceptional situations, solidary liability may be incurred by corporate officers. In labor cases for
instance, this Court has held corporate directors and officers solidarily liable with the corporation for the termination of
employment of employees done with malice or bad faith.

We sustain the NLRCs conclusion that the schemes implemented by the respondents to justify petitioners baseless
dismissal, and the manner by which such schemes were effected showed malice and bad faith on their part.
Consequently, its affirmance of the order of the LA that the amounts awarded to petitioner are payable in solidum by
respondents is proper. The NLRC likewise correctly upheld the award of attorneys fees considering that petitioner was
assisted by a private counsel to prosecute her illegal dismissal complaint and enforce her rights under our labor laws.

V. RETIREMENT

2. Definition

BANCO DE ORO UNIBANK, INC., PETITIONER, VS. GUILLERMO C. SAGAYSAY, RESPONDENT.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee
whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. [24] Article 287 of
the Labor Code is the primary provision which governs the age of retirement and states:

Art. 287. Retirement. xxx

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months being considered as one whole year.

[Emphasis Supplied]
Doubtless, under this provision, the retirement age is primarily determined by the existing agreement or employment
contract. Only in the absence of such an agreement shall the retirement age be fixed by law, which provides for a
compulsory retirement age at 65 years, while the minimum age for optional retirement is set at 60 years. [25]

Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement age of 65
years are not per se repugnant to the constitutional guaranty of security of tenure. By its express language, the Labor
Code permits employers and employees to fix the applicable retirement age at 60 years or below, provided that the
employees' retirement benefits under any CBA and other agreements shall not be less than those provided therein. [26]

Jurisprudence is replete with cases discussing the employer's prerogative to lower the compulsory retirement age subject
to the consent of its employees. xxx

A scrutiny of the above-discussed cases reveals that the retirement plan was adopted after the employees were hired by
their employer. This is in stark contrast with the case at bench wherein the adoption of the retirement plan
came before the hiring of Sagaysay. Thus, the present petition portrays a unique predicament on whether a retirement
plan adopted before the employment of an employee is deemed binding on the latter.

Sagaysay was sufficiently informed of the retirement plan

After a judicious study of records, the Court is convinced that Sagaysay was undeniably informed and had consented to
the retirement plan of BDO before his compulsory retirement on September 1, 2010 based on the following:

First, the retirement plan was established as early as July 1, 1994. The purpose of the plan was to create a BDO
employee's retirement trust fund which would provide for retirement and other benefits for all employees of the bank. It
was also intended to support the funding of the benefits indicated in the CBA. [33] The retirement plan provided several
retirement options such as normal retirement, early retirement, late retirement, and disability retirement. Normal or
compulsory retirement was mandated at the first day of the month following the employee's sixtieth (60 th) birthday, while
early or optional retirement age was pegged at the age of fifty (50) with at least 10 years of credited service. It also
discussed the different benefits that an employee could be entitled to upon retirement, resignation or separation.

It was renamed on June 1, 2004, but its provision on the normal retirement age was retained. Twelve (12) years after the
adoption of the retirement plan, Sagaysay was employed by the bank. From its inception until his hiring, no employee had
earnestly questioned the retirement plan. By then, it was unquestionably an established policy within the BDO, applied to
each and every worker of the bank.

Second, by accepting the employment offer of BDO, Sagaysay was deemed to have assented to all existing rules,
regulations and policy of the bank, including the retirement plan. Likewise, he consented to the CBA [34] between BDO and
the National Union of Bank Employees Banco De Oro Chapter. Section 2 of Article XVII of the CBA provides that "[t]he
Bank shall continue to grant retirement/gratuity pay xxx." Notably, both the retirement plan and the CBA recognize that the
bank has a continued and existing practice of granting the retirement pay to its employees.

Third, on June 1, 2009, BDO issued a memorandum [35] regarding the implementation of its retirement program, reiterating
that the normal retirement date was the first day of the month following the employee's sixtieth (60 th) birthday. Similar to
the case of Obusan, the memorandum was addressed to all employees and officers. By that time, Sagaysay was
already an employee and he did not deny being informed of such memorandum.

For four years, from the time he was employed until his retirement, and having actual knowledge of the BDO retirement
plan, Sagaysay had every opportunity to question the same, if indeed he knew it would not be beneficial to him. Yet, he
did not express his dissent. As observed in Obusan, "[t]his deafening silence eloquently speaks of [his] lack of
disagreement with its provisions."[36]

Lastly, perhaps the most telling detail indicative of Sagaysay's assent to the retirement plan was his e-mails to the bank,
dated July 27, 2010 and August 19, 2010. In these communications, albeit having been informed of his upcoming
retirement, Sagaysay never opposed the company's compulsory age of retirement. In fact, he recognized that "the time
has come that BDO Retirement Program will be implemented to those reaching the age of sixty (60)." [37]

Glaringly, he even requested that his services be extended, at least until May 16, 2011, so that he could render five (5)
years of service.[38]Sagaysay's request reflects the late retirement option where an employee may be allowed by the bank
to continue to work on a yearly extension basis beyond his normal retirement date. [39] The late retirement option is
embodied in the same retirement plan, of which, ironically, he claimed to be unaware. With such inconsistent stance, the
Court can only conclude that Sagaysay was indeed notified and had accepted the provisions of the retirement plan. It was
only when his request for late retirement was denied that he suddenly became oblivious to the said plan.
3. Retroactive Application of RA 7641

UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO) AND/OR RENATO CABATI, AS MANAGER,
PETITIONERS, VS. AGRIPINO CABALLEDA AND ALEJANDRO CADALIN, RESPONDENTS.

First. The issue of the retroactive effect of R.A. 7641 on prior existing employment contracts has long been settled.
In Enriquez Security Services, Inc. v. Cabotaje,[24] we held:

RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a
curative statute that -- absent a retirement plan devised by, an agreement with, or a voluntary grant from, an
employer -- can respond, in part at least, to the financial well-being of workers during their twilight years soon
following their life of labor. There should be little doubt about the fact that the law can apply to labor
contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not
only from the date of the law's enactment but retroactively to the time said employment contracts have
started.

This doctrine has been repeatedly upheld and clarified in several cases. [25] Pursuant thereto, this Court imposed two (2)
essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still
in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements
for eligibility for such retirement benefits under the statute.

It is evident from the records that when respondents were compulsorily retired from the service, R.A. 7641 was already in
full force and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility
under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus,
warranting the retroactive application of R.A. 7641 in this case.

4. Components of one-half month pay/salary - Rules Implementing the New Retirement Law, Rule II, Sec. 5.2,
Guidelines 5.2

ROGELIO REYES, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, AND
UNIVERSAL ROBINA CORPORATION GROCERY DIVISION, RESPONDENTS.

Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law,
[22]
provides:

Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

xxxx

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one half (1/2) month salary
for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean fifteen (15) days
plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.

And, Section 5 of Rule II of the Rules Implementing the New Retirement Law, provides:

RULE II

Retirement Benefits

xxxx

Section 5. Retirement Benefits.

5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the Act
shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
 5.2 Components of One-half (1/2) Month Salary. - For the purpose of determining the minimum retirement pay
due an employee under this Rule, the term "one-half-month salary" shall include all the following:

(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term "salary"
includes all remunerations paid by an employer to his employees for services rendered during normal
working days and hours, whether such payments are fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the same, and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of food, lodging, or other facilities customarily
furnished by the employer to his employees. The term does not include cost of living allowance, profit-
sharing payments and other monetary benefits which are not considered as part of or integrated into the
regular salary of the employees.

(b) The cash equivalent of not more than five (5) days of service incentive leave.

(c) One-twelfth of the 13 month pay due the employee.

(d) All other benefits that the employer and employee may agree upon that should be included in the
computation of the employee's retirement pay. (Emphasis supplied)

The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the
second is primarily determined by the collective bargaining agreement or other employment contract or employer's
retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other
employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years
or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned.

For the purpose of computing retirement pay, "one-half month salary" shall include all of the following:

1) 15 days salary based on the latest salary rate;

2) cash equivalent of 5 days of service incentive leave (or vacation leave);

3) 1/12 of the 13th month pay;

4) other benefits as may be agreed upon by employer and employee for inclusion.

But, it shall not include the following:

1) cost of living allowance;

2) profit-sharing payments; and

3) other monetary benefits which are not considered as part of or integrated into the regular salary of the
employees

Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his retirement
benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of profit-sharing payments
specifically excluded by the foregoing rules.

As aptly observed by the Court of Appeals:

In fine, Boie-Takeda and Philippine Duplicator particularize the types of earnings and remuneration that should or
should not properly be included or integrated in the basic salary and which questions are to be resolved or
determined on a case-to-case basis, in the light of the specific and detailed facts of each case. In other words,
when these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing
statements, they are properly excluded in computing retirement pay. However, sales commissions which are
effectively an integral portion of the basic salary structure of an employee, shall be included in determining the
retirement pay.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his
position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding commissions" paid
to him by Universal Robina Corp. could not have been "sales commissions" in the same sense that Philippine
Duplicators paid its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale of
article at all. Therefore, any commission which they receive is certainly not the basic salary which measures the
standard or amount of work of complainant as Unit Manager. Accordingly, the additional payments made to
 petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. Certainly,
from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation, which
pronounced that commissions are additional pay that does not form part of the basic salary, applies to the present
case.[23]

5. When RA 7641 is applicable -Took effect 7 Jan. 1993

GRACE CHRISTIAN HIGH SCHOOL, REPRESENTED BY ITS PRINCIPAL, DR. JAMES TAN, PETITIONER, VS.
FILIPINAS A. LAVANDERA, RESPONDENT.

RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing for the rules on
retirement pay to qualified private sector employees in the absence of any retirement plan in the establishment. The said
law[32] states that an employees retirement benefits under any collective bargaining [agreement (CBA)] and other
agreements shall not be less than those provided under the same that is, at least one-half () month salary for every
year of service, a fraction of at least six (6) months being considered as one whole year and that [u]nless the parties
provide for broader inclusions, the term one-half () month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

The foregoing provision is applicable where (a) there is no CBA or other applicable agreement providing for retirement
benefits to employees, or (b) there is a CBA or other applicable agreement providing for retirement benefits but it is below
the requirement set by law.[33] Verily, the determining factor in choosing which retirement scheme to apply is still superiority
in terms of benefits provided.[34]

In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it the option to retire
a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half () month
for every year of service. Considering, however, that GCHS computed Filipinas retirement pay without including one-
twelfth (1/12) of her 13th month pay and the cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly
ruled that Filipinas retirement benefits should be computed in accordance with Article 287 of the Labor Code, as amended
by RA 7641, being the more beneficent retirement scheme. They differ, however, in the resulting benefit differentials due
to divergent interpretations of the term one-half () month salary as used under the law.

The Court, in the case of Elegir v. Philippine Airlines, Inc.,[35] has recently affirmed that one-half () month salary
means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining
5 days for [SIL].[36] The Court sees no reason to depart from this interpretation. GCHS argument [37] therefore that the 5
days SIL should be likewise pro-rated to their 1/12 equivalent must fail.

Section 5.2, Rule II[38] ([38] Rule II took effect on January 7, 1993 when RA 7641 went into force) of the Implementing
Rules of Book VI of the Labor Code, as amended, promulgated to implement RA 7641, further clarifies what comprises
the month salary due a retiring employee, to wit:

RULE II

Retirement Benefits

xxxx

SEC. 5. Retirement Benefits.

xxxx

5.2 Components of One-half () Month Salary. For the purpose of determining the minimum retirement pay
due an employee under this Rule, the term one-half month salary shall include all the following:

(a) Fifteen (15) days salary of the employee based on his latest salary rate . As used herein, the term
salary includes all remunerations paid by an employer to his employees for services rendered during
normal working days and hours, whether such payments are fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the same, and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of food, lodging or other facilities customarily
furnished by the employer to his employees. The term does not include cost of living allowance, profit-
sharing payments and other monetary benefits which are not considered as part of or integrated into the
regular salary of the employees.

(b) The cash equivalent of not more than five (5) days of service incentive leave;
 (c) One-twelfth of the 13th month pay due the employee.

(d) All other benefits that the employer and employee may agree upon that should be included in the
computation of the employees retirement pay.

x x x x (Emphases supplied)

The foregoing rules are, thus, clear that the whole 5 days of SIL are included in the computation of a retiring employees
pay,[39] as correctly ruled by the CA.

6. Three Kinds of Retirement Plans

MARILYN ODCHIMAR GERLACH, PETITIONER, VS. REUTERS LIMITED, PHILS., RESPONDENT.

There are three kinds of retirement schemes. The first type is compulsory and contributory in character. The second
type is one set up by agreement between the employer and the employees in collective bargaining agreements or other
agreements between them.[27] The third type is one that is voluntarily given by the employer, expressly as in an announced
company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. [28] It is this third type of
retirement scheme which covers respondents Plan.

Article 287 of the Labor Code reads:

"Article 287. Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements." (Emphasis
supplied)

The first paragraph of the above provisions deals with the retirement age of an employee established in (a) a collective
bargaining agreement or (b) other applicable employment contract.

The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have earned
under (a) an existing law, (b) a collective bargaining or (c) other agreements.

In Llora Motors, Inc. vs. Drilon,[29] we held that Article 287, does not in itself purport to impose any obligation upon
employers to set up a retirement scheme for their employees over and above that already established under existing laws,
like the Social Security Act.

Nonetheless, Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code, provides

"Sec. 14. Retirement benefits. (a) An employee who is retired pursuant to a bona fide retirement plan or in
accordance with the applicable individual or collective agreement or established employer policy shall be entitled
to all the retirement benefits provided therein . . ."

Thus, in the instant case, respondent based petitioners retirement benefits on its Plan and established policy, which is in
accord with the above provision. Consequently, petitioners theory that the computation of her retirement benefits should
be based on her basic annual salary while stationed abroad is untenable.

We agree with the Court of Appeals that petitioners retirement benefits must be based on her notional Philippine salary. It
is very clear that from the very start of her first assignment overseas, respondent apprised her that the companys
contribution to the Plan is based on her notional Philippine salary.[30] In fact, under the Plan, the companys contribution to
the fund is 10% of the basic monthly salary of each participant. Respondent also informed petitioner of the amount of her
notional Philippine salary whenever she was transferred to her next overseas assignment or when there were increases in
her salary, both actual and notional.[31] Significantly, respondent was able to prove that it has been its practice worldwide
that the notional salary of an employee is its basis in computing its contribution to the retirement plan for a local
employee detailed abroad. It follows that the amount of retirement benefits of a retiring employee assigned abroad is
based on his notional salary.

7. Voluntary Retirement

ROBERTO O. ARIOLA, FRANCO MALLARE, BENJAMIN BIETE & HERMOGENES MAMAYSON, ALL MEMBERS OF
PHILEX MINES SUPERVISORY EMPLOYEES UNION, PETITIONERS, VS. PHILEX MINING CORPORATION AND
VOLUNTARY ARBITRATOR NORMA B. ADVINCULA, RESPONDENTS.
As basis for their findings that petitioners retired from service, the Court of Appeals and Arbitrator Advincula cited the
vouchers[16] petitioners signed showing their receipt of "retirement gratuity." Although there is no dispute that petitioners
received varied amounts[17] denominated in the vouchers in question as "retirement gratuity," the records show that Philex
paid these amounts because of petitioners' retrenchment.

Thus, in the letter dated 1 June 1993, [18] addressed to petitioner Benjamin Biete ("Biete"), Tomas Z. Roxas, Jr. ("Roxas") of
Philex Retirement Trust informed petitioner Biete that he was entitled to receive "retirement gratuity" equivalent to one
month salary for every year of service because "[Biete's] separation at the instance of Philex Mining Corporation as a
result of its retrenchment program xxx is for cause beyond [Biete's] control. xxx

Clearly, under Philex's Retirement Gratuity Plan, "retirement gratuity" is paid not only to retiring employees but also to
those who, like petitioners, are dismissed for cause "beyond their control" such as retrenchment. Indeed, Philex treated
the "retirement gratuity" as petitioners' basic separation pay, which, with transportation allowance, comprised their "net
separation [pay]" as indicated in Deeds of Release and Quitclaims petitioners signed. [20] Significantly, Philex paid
petitioners such separation pay after notifying them of their retrenchment. [21] xxx

Furthermore, Philex's failure to submit other documents proving petitioners' claimed retirement, such as their applications
for retirement under Philex's early voluntary retirement program [24] and their clearance slips, undermines its claim. The
submission of these documents, which should indicate the reason for petitioners' separation from service, would have put
to rest any doubt on the cause of such separation.

In sum, we hold that by themselves, the vouchers in question do not suffice to prove petitioners' retirement from Philex.
Retirement results from a voluntary agreement between the employer and the employee where the latter, after reaching a
certain age, agrees to sever his employment with the former. [25] Thus if, as in the present case, the intent to retire is not
clearly established or if the retirement is involuntary, it is to be treated as a discharge. [26]

8. Forfeiture of Benefits

INTEL TECHNOLOGY PHILIPPINES, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND
JEREMIAS CABILES, RESPONDENTS.

In contemplating whether to accept the offer, Cabiles wrote Intel Phil. providing details and asking as follows:

Are there any clearance requirements I need to fulfil as I move as a local hire to Hong Kong starting February 1?? I am
still on my expat assignment in Chengdu till it ends January 31. Then immediately I become a HK local employee so I
dont technically repatriate and work back to my home site Philippines at all. Nevertheless, I still need to close I
think my employment there and so that all my ES benefits and clearance will be closed like conversion of my vacation
leaves to cash, carry over of my service tenure in CV to HK etc. Please do let me know what process I need to go through
or would an email notification be enough?

Another issue I would like to clarify is with regard to my retirement benefits. Will celebrate my 10 th year of service with Intel
on April 16, 2007. However, because I will be moving to Hong Kong as a local hire starting February 1, would I still be
entitled to retirement benefits?? Do we roundup the years of service if its close enough to 10 years?? If not, what other
alternatives I have or do I just lose my years of service at Intel Philippines? Any possibility that I keep my 9.5 years and
start it from there when I work in the Philippines again in the future?? [26] [Emphases supplied]

This communication manifested two of his main concerns: a) clearance procedures; and b) the probability of getting his
retirement pay despite the non-completion of the required 10 years of employment service. Beyond these concerns,
however, was his acceptance of the fact that he would be ending his relationship with Intel Phil. as his employer. The
words he used - local hire, close, clearance denote nothing but his firm resolve to voluntarily disassociate himself from
Intel Phil. and take on new responsibilities with Intel HK.

Despite a non-favorable reply as to his retirement concerns, Cabiles still accepted the offer of Intel HK.

His acceptance of the offer meant letting go of the retirement benefits he now claims as he was informed through email
correspondence that his 9.5 years of service with Intel Phil. would not be rounded off in his favor. He, thus, placed himself
in this position, as he chose to be employed in a company that would pay him more than what he could earn in Chengdu
or in the Philippines.

The choice of staying with Intel Phil. vis--vis a very attractive opportunity with Intel HK put him in a dilemma. If he would
wait to complete ten (10) years of service with Intel Phil. (in about 4 months) he would enjoy the fruits of his retirement but
at the same time it would mean forfeiture of Intel HKs compensation offer in the amount of HK $ 942,500.00, an amount a
lot bigger than what he would receive under the plan. He decided to forfeit and became Intel HKs newest hire.
All these are indicative of the clearest intent of Cabiles to sever ties with Intel Phil. He chose to forego his tenure with Intel
Phil., with all its associated benefits, in favor of a more lucrative job for him and his family with Intel HK.

9. Equitable Reduction of Retirement Benefits

XAVIER C. RAMOS, PETITIONER, VS. BPI FAMILY SAVINGS BANK AND/OR ALFONSO L. SALCEDO, JR.,
RESPONDENTS.

Applying the foregoing considerations, the Court finds the CA to have erred in attributing grave abuse of discretion on the
part of the NLRC in finding that the deduction made from Ramoss retirement benefits was improper. Two (2) reasons
impel the foregoing conclusion:

First, as correctly observed by the NLRC, BPI Family was not able to substantially prove its imputation of negligence
against Ramos. Well-settled is the rule that the burden of proof rests upon the party who asserts the affirmative of an
issue.[45] In this case, BPI Family failed to establish that the duty to confirm and validate information in credit applications
and determine credit worthiness of prospective loan applicants rests with the Dealer Network Marketing Department,
which is the department under the supervision of Ramos. Quite the contrary, records show that these responsibilities lie
with the banks Credit Services Department, namely its Credit Evaluation Section and Loans Review and Documentation
Section,[46] of which Ramos was not part of.

Second, as similarly observed by the NLRC, Ramos merely followed standing company practice when he issued the PO
and ATD without prior approval from the banks Credit Services Department. In fact, as the CA itself notes, BPI Family
adopted the practice of processing loans with extraordinary haste in order to overcome arduous competition with other
banks and lending institutions, despite compromising procedural safeguards, viz.:[47]

In a separate audit report (herein appended as Annex E), it was noted that marketing officers regularly issue or
release purchase orders and authorities to deliver to car dealers (in case of dealer generated auto loan wherein a
loan originates from the automobile dealer who submits the financing transactions, down payment and mortgage
fee by the debtor-car purchaser to the bank) before the approval of the documents. The report further noted
that the practice has been adopted due in part to the stiff competition with other banks and lending
institutions. Resultantly, in 2005 alone, approximately 111 car loan applications were released ahead of
the approval of the credit evaluation section.

Such findings of the auditing division have not been rebutted or countered as erroneous. In fact, in all 111
instances, the bank did not attempt to rectify the flaw by calling the respondents attention to the manner
by which he disregarded important bank procedure or protocol in accommodating car loan applications. It
would seem unthinkable that respondent bank has had no knowledge thereof when its credit evaluation
committee could have easily relayed the variations to the management for expedient solution. Any conscientious,
well-meaning banking institution (such as respondent bank, We imagine) would have raised the red flag the
moment the violation is first discovered. However, in the case before Us, respondent bank did not sound alarm
until the discovery of the first defraudation. Without doubt, its uncharacteristically relaxed supervision over
its divisions contributed to a large extent to the unfortunate attainment of fraud. x x x (Emphases supplied)

Based on the foregoing, it is readily apparent that Ramoss action of issuing the PO and ATD ahead of the approval of the
credit committee was actually conformant to regular company practice which BPI Family itself sanctioned. As such,
Ramos cannot be said to have been negligent in his duties. To this end, it is well to note that in loan transactions, banks
are mandated to ensure that their clients wholly comply with all the documentary requirements in relation to the approval
and release of loan applications. [48] As BPI Family uncharacteristically relaxed supervision over its divisions, yielding as it
did to the demands of industry competition, it is but reasonable that it solely bears the loss of its own shortcomings.

10. Equitable Solution

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., PETITIONER, VS, ANTONIO T. REUS, RESPONDENT.

A critical point in appreciating the 1993 NLRC decision is the fact that it MODIFIED the Linsangan decision directing the
petitioner to pay complainant Php 2,000.00 as indemnity and any retirement benefit he may be entitled to under the
company's retirement plan.

An undisputed modification that the 1993 NLRC decision decreed is the deletion of the order for the payment of indemnity
and attorney's fees. The deletion is based apparently on the lack of finding relating to any due process violation or to any
ground for entitlement to attorney's fees.
A second obvious change, and the one most material to the present dispute, is the removal of the order for payment of
retirement benefits that the complainant "may be entitled" to under the company's retirement plan. The NLRC simply
ordered "the respondent to pay complainant benefits under its company retirement plan, less the amount of the lost
collection and other outstanding obligations of the complainant with the company as of date" ; thus, removing the condition
of "entitlement" found in the Labor Arbiter's decision. Why the NLRC so worded the dispositive portion of its decision is
clarified by its own penultimate paragraph where the NLRC explained the basis for the modification, thus:

Mindful however of the length of service of herein complainant with respondent company and considering further
that the proximate cause of the loss of the collection is not solely attributable to him, the equitable solution would
be for Mr. Reus to be entitled to the retirement benefits under the retirement plan. [33]

With this explanation, it immediately becomes clear that the NLRC was not ordering the payment of benefits under the
plan because the respondent was entitled thereto under the terms of the plan, or that it entertained doubts about
entitlement and was ordering payment if entitlement could be established. The NLRC apparently had other thoughts in
mind; it wanted to order payment - not strictly based on the law for there was a cited cause for dismissal, nor on the
eligibility terms of the company's retirement plan for he was not being retired - but on the basis of equity; it was simply
applying the benefits of the plan as a measure of what should be paid as "equitable solution," to quote directly from the
words of the 1993 NLRC decision. Thus, its order for payment was clear, direct, and unfettered by any condition of
entitlement or eligibility.

Significantly, whether such equitable grant is justified or not, legally correct or in error, or whether it is wise or unwise, are
issues that are beyond the parties' reach at this time. We hasten to add that the NLRC decision and our affirmation of this
decision cannot and should not be used as authority for issues relating to the terms of the company retirement plan; what
we hereby affirm is the finality of the NLRC's equitable award and its terms, not any issue on the interpretation or
application of, or the entitlement under, the terms of the plan. With the NLRC decision now fully implemented through the
garnishment of the supersedeasbond posted by the petitioner and the release of the proceeds to the respondent, this
case is ready to be declared fully closed and terminated upon the finality of this Decision.

12. Collection of both retirement benefits and separation pay (Two are mutually exclusive)

GOODYEAR PHILIPPINES, INC. AND REMEGIO M. RAMOS, PETITIONERS, VS. MARINA L. ANGUS,
RESPONDENT.

In Aquino v. National Labor Relations Commission,[33] citing Batangas Laguna Tayabas Bus Company v. Court of
Appeals[34] and University of the East v. Hon. Minister of Labor[35] the Court held that an employee is entitled to recover
both separation pay and retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA.
Concomitantly, the Court ruled that an employee's right to receive separation pay in addition to retirement benefits
depends upon the provisions of the company's Retirement Plan and/or CBA. [36]

Here, petitioners allege that there is a provision in the last CBA against the recovery of both retirement benefits and
separation pay. To support their claim, petitioners submitted a copy of what appears to be a portion of the company CBA
entitled "Retirement Plan, Life Insurance, Physical Disability Pay and Resignation Pay." Section 1, Article XI thereof
provides that the availment of retirement benefits precludes entitlement to any separation pay. The same, however, can
hardly be considered as substantial evidence because it does not appear to be an integral part of Goodyear's CBA. Even
assuming that it is, it would still not suffice as there is no showing if the CBA under which the said provision is found was
the one in force at the time material to this case. On the other hand, Angus presented the parties' 2001-2004 CBA and
upon examination of the same, the Court agrees with her that it does not contain any restriction on the availment of
benefits under the company's Retirement Plan and of separation pay. Indeed, the Labor Arbiter and the NLRC erred in
ignoring this material piece of evidence which is decisive of the issue presented before them. The CA, thus, committed no
error in reversing the Decisions of the labor tribunals when it ruled in favor of Angus' entitlement to both retirement
benefits and separation pay.

Moreover, the Court agrees with the CA that the amount Angus received from petitioners represented only her retirement
pay and not separation pay. A cursory reading of petitioners' September 18, 2001 letter notifying Angus of her termination
from employment shows that they granted her early retirement benefits pegged at 47 days' pay per year of service. This
rate was arrived at after petitioners considered respondent's length of service with the company, as well as her age which
qualified her for early retirement. In fact, petitioners were even explicit in stating in the said letter that the amount she was
to receive would come from the company's Pension Fund, which, as correctly asserted by Angus, was created to cover
retirement benefit payment of employees. In addition, the document [37] showing a detailed account of Angus' termination
benefits speaks for itself as the same is entitled "Summary of Retirement Pay and other Company Benefits." In view
therefore of the clear showing that what petitioners decided to grant Angus was her early retirement benefits, they cannot
now be permitted to deny having paid such benefit.

Petitioners further argue that Angus is not entitled to retirement pay because she does not meet the requirements
enumerated in the Retirement Plan provision of the CBA. The Court disagrees. While it is obvious that Angus is not
entitled to compulsory retirement as she has not yet reached the age of 60, there is no denying, however, that she is
qualified for early retirement. Under the provision of the Retirement Plan of the CBA as earlier quoted, a worker who is at
least 50 years old and with at least 15 years of service, and who has been recommended by the President of the Union
for early retirement and duly approved by the Human Resources Director, shall be entitled to lump sum retirement
benefits. At the time of her termination, Angus was already 57 years of age and had been in the service for more than 34
years. The exchange of correspondence between Angus and Ramos also shows that the latter, as Goodyear's Human
Resources Director, offered, recommended and approved the grant of early retirement in favor of the former. Clearly, all
the requirements for Angus' availment of early retirement under the Retirement Plan of CBA were substantially complied
with.

It is worthy to mention at this point that retirement benefits and separation pay are not mutually exclusive. [38] Retirement
benefits are a form of reward for an employee's loyalty and service to an employer [39] and are earned under existing laws,
CBAs, employment contracts and company policies. [40] On the other hand, separation pay is that amount which an
employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal
during the period that he is looking for another employment and is recoverable only in instances enumerated under
Articles 283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. [41] In the case at
bar, Article 283[42] clearly entitles Angus to separation pay apart from the retirement benefits she received from petitioners.

13.) Management Prerogative

PHILIPPINE AIRLINES, INC., PETITIONER, VS. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES,
RESPONDENT.

Finally, on the issue of whether petitioner should consult the pilot concerned before exercising its option to retire pilots, we
rule that this added requirement, in effect, amended the terms of Article VII, Section 2 of the 1976 PAL-ALPAP Retirement
Plan. The option of an employer to retire its employees is recognized as valid. [12] In the earlier case of Bulletin Publishing
Corp. v. Sanchez,[13] this Court held:

The aforestated sections explicitly declare, in no uncertain terms, that retirement of an employee may be done
upon initiative and option of the management. And where there are cases of voluntary retirement, the same is
effective only upon the approval of management. The fact that there are some supervisory employees who have
not yet been retired after 25 years with the company or have reached the age of sixty merely confirms that it is the
singular prerogative of management, at its option, to retire supervisors or rank-and-file members when it deems
fit. There should be no unfair labor practice committed by management if the retirement of private respondents
were made in accord with the agreed option. That there were numerous instances wherein management
exercised its option to retire employees pursuant to the aforementioned provisions, appears to be a fact which
private respondents have not controverted. It seems only now when the question of the legality of a supervisors
union has arisen that private respondents attempt to inject the dubious theory that the private respondents are
entitled to form a union or go on strike because there is allegedly no retirement policy provided for their benefit.
As above noted, this assertion does not appear to have any factual basis. [14]

Surely, the requirement to consult the pilots prior to their retirement defeats the exercise by management of its option to
retire the said employees. It gives the pilot concerned an undue prerogative to assail the decision of management. Due
process only requires that notice be given to the pilot of petitioners decision to retire him. Hence, the Secretary of Labor
overstepped the boundaries of reason and fairness when he imposed on petitioner the additional requirement of
consulting each pilot prior to retiring him.

Furthermore, when the Secretary of Labor and Employment imposed the added requirement that petitioner should consult
its pilots prior to retirement, he resolved a question which was outside of the issues raised, thereby depriving petitioner an
opportunity to be heard on this point.[15]

14. Exemption from Tax - Rules lmpl. the New Retirement Law, Rule II, Sec. 6

INTERCONTINENTAL BROADCASTING CORPORATION (IBC), REPRESENTED BY ATTY. RENATO Q. BELLO, IN

HIS CAPACITY AS CEO AND PRESIDENT, PETITIONER, VS. NOEMI B. AMARILLA, CORSINI R. LAGAHIT,
ANATOLIO G. OTADOY, AND CANDIDO C. QUIONES, JR., RESPONDENTS.
An agreement to pay the taxes on the retirement benefits as an incentive to prospective retirees and for them to avail of
the optional retirement scheme is not contrary to law or to public morals. Petitioner had agreed to shoulder such taxes to
entice them to voluntarily retire early, on its belief that this would prove advantageous to it. Respondents agreed and
relied on the commitment of petitioner. For petitioner to renege on its contract with respondents simply because its new
management had found the same disadvantageous would amount to a breach of contract. There is even no evidence that
any "new management" was ever installed by petitioner after respondents' retirement; nor is there evidence that the Board
of Directors of petitioner resolved to renege on its contract with respondents and demand the reimbursement for the
amounts remitted by it to the BIR.

The well-entrenched rule is that estoppel may arise from a making of a promise if it was intended that the promise should
be relied upon and, in fact, was relied upon, and if a refusal to sanction the perpetration of fraud would result to injustice.
The mere omission by the promisor to do whatever he promises to do is sufficient forbearance to give rise to a promissory
estoppel.[26]

Petitioner cannot hide behind the fact that, under the compromise agreement between the PCGG and Benedicto, the
latter had assigned and conveyed to the Republic of the Philippines his shares, interests and rights in petitioner.
Respondents retired only after the Court affirmed the validity of the Compromise Agreement [27] and the execution by
petitioner and the union of their 1993 CBA while Civil Case No. 0034 was still pending in the Sandiganbayan. There is no
showing that before respondents demanded the payment of their salary differentials, petitioner had rejected its
commitment to shoulder the taxes on respondents' retirement benefits and sought its nullification before the court; nor is
there any showing that petitioner's "new management" filed any criminal or administrative charges against the former
officers/board of directors comprising the "old management" relative to the payment of the taxes on respondents'
retirement benefits.

15. Gratuity pay vis-a-vis Retirement pay

STA. CATALINA COLLEGE AND SR. LORETA ORANZA, PETITIONERS, VS. NATIONAL LABOR RELATIONS
COMMISSION AND HILARIA G. TERCERO, RESPONDENTS.

As for the ruling of the CA affirming that of the NLRC that the P12,000.00 gratuity pay earlier awarded to Hilaria should not
be deducted from the retirement benefits due her, the same is in order. Gratuity pay is separate and distinct from
retirement benefits. It is paid purely out of generosity. So Republic Planters Bank v. NLRC[27] holds:

Gratuity pay x x x is paid to the beneficiary for the past services or favor rendered purely out of the generosity of
the giver or grantor. Gratuity, therefore, is not intended to pay a worker for actual services rendered or for actual
performance. It is a money benefit or bounty given to the worker, the purpose of which is to reward employees
who have rendered satisfactory service to the company. (Underscoring supplied)

Retirement benefits, on the other hand, are intended to help the employee enjoy the remaining years of his life, releasing
him from the burden of worrying for his financial support, and are a form of reward for his loyalty to the employer. [28]

16. Effect of Accepting Redundancy Pay

ZUELLIG PHARMA CORPORATION, PETITIONER, VS. ALICE M. SIBAL, MA. TERESA J. BARISO, PRESCILLANO
L. GONZALES, LAURA B. BERNARDO, MAMERTA R. ZITA, JOSEPHINE JUDY C. GARCIA, MENDOZA,* AND MA.
ASUNCION B. HERCE, EDITHA D. CARPITANOS, MA. LUZ B. BUENO, DANTE C. VERASTIGUE,** AGNES R.
ALCOBER, ARWIN Y. CRUZ, ADONIS F. OCAMPO, SOPHIA P. ANGELES, JOEL B. BUSTAMANTE, EDITHA B.
COLE, LUDIVINA C. PACIA, ROSELLE M. DIZON, RODOLFO A. ABCEDE, WILFREDO RICAFRENTE, RODOLFO R.
ROBERTO, ROSALIE R. LUNAR, BENJAMIN R. CALAYCAY, GUILLERO YAP CADORNA, THROVADORE TOBOSO,
CAROLINA S. UY, MARIA LORETTO M. REGIS, ALMAR C. CALUAG,** VILMA R. SAPIWOSO, ANATALIA L.
CALPITO, FELIPE S. CALINAWAN, VIVIELIZA DELMAR MANULAT, MA. LIZA L. RAFINAN,** AMMIE V. GATILAO,
ALEX B. SADAYA AND REGINO EDDIE PANGA, RESPONDENTS.

Section 2 of Article XIV explicitly states that any payment of retirement gratuity shall be chargeable against separation
pay. Clearly, respondents cannot have both retirement gratuity and separation pay, as selecting one will preclude recovery
of the other. To illustrate the mechanics of how Section 2 of Article XIV bars double recovery, if the employees choose to
retire, whatever amount they will receive as retirement gratuity will be charged against the separation pay they would have
received had their separation from employment been for a cause which would entitle them to severance pay. These
causes are enumerated in Section 3, Article XIV of the CBA (i.e., retrenchment, closure of business, merger, redundancy,
or installation of labor-saving device). However, if the cause of the termination of their employment was any of the causes
enumerated in said Section 3, they could no longer claim retirement gratuity as the fund from which the same would be
taken had already been used in paying their separation pay. Put differently, employees who were separated from the
company cannot have both retirement gratuity and separation pay as there is only one fund from which said benefits
would be taken. Inarguably, Section 2 of Article XIV effectively disallows recovery of both separation pay and retirement
gratuity. Consequently, respondents are entitled only to one. Since they have already chosen and accepted redundancy
pay and have executed the corresponding Release and Quitclaim, they are now barred from claiming retirement gratuity.
xxx

The employees are entitled only either to separation pay or retirement gratuity, depending on their own choice. But they
cannot have both. Section 2, Article VII of the Retirement Gratuity Plan on Effect of Social Legislation is clear on the
matter. Thus:

Section 2 Other Laws and/or Government Awards, Rules and Regulations

Except only as provided in the next preceding Section hereof, in the event that the Company is required under the
laws or by lawful order of competent authority to give to its employees any separation pay, or other benefits or
emoluments similar or analogous to those herein already provided, the employees concerned shall not be entitled
to both what the law or the lawful order of competent authority requires the company to give and the benefits
herein provided, but shall be entitled only to [the] benefit of his choice. [25] (Italics supplied)

Having chosen and accepted redundancy pay, respondents are thus precluded from seeking payment of retirement pay.
Moreover, as correctly pointed out by Zuellig, Section 5, Article V of the 1968 Retirement Gratuity Plan was already
superseded by Section 2, Article XIV of the 1995 CBA, a much later contract which reiterates the express prohibition
against double recovery. In addition, unlike in Aquino where the employees have served the company for at least ten
years making them eligible for retirement,[26] none of the respondents herein appear to be qualified for optional retirement.
Under Section 1[a] and [b], Article XIV of the CBA earlier quoted, to be entitled to retirement gratuity, the employee must
have reached 60 years of age, resigned, suffered illness, or opted to retire even before reaching the age of 60 but has
been in the employ of Zuellig for at least 25 years. None of the respondents who initiated the complaints appear to have
met the above requirements. They never even bothered to controvert Zuelligs contention that they are not qualified for
retirement.

End 27 November 2016