Labor Relations (Termination of Employment) 062817
JUST CAUSES
SAMPAGUITA AUTO TRANSPORT V. NLRC
FACTS:
Respondent Efren I Sagad alleges that he was hired by the petitioner compa-
ny as a regular bus driver on May 17, 2006 and was dismissed due to the alleged con-
nivance with conductor Vitola in issuing tickets outside their assigned route on Novem-
ber 5, 2006.
On the other hand, the company countered that it employed Sagad as proba-
tionary bus driver and it had informed the defendant that during the probationary period,
he will be evaluated to determine whether he would qualify for regular employment;
that on September 21, 2006, an evaluator boarded Sagads bus and described Sagads
manner of driving as reckless driver, nakikipaggitgitan, nakikipaghabulan, nagsasakay
sa gitna ng kalsada, sumusubsob ang pasahero. Sagads fellow workers also revealed
that Sagad proposed that they cheat on the company by way of unreported bus trip. The
dispatcher likewise submitted a negative report and recommended the termination of
Sagad. The company also cited Sagads involvement on a hit-and-run accident.
Labor Arbiter: dismissed the complaint of Sagad. The LA noted that the company suc-
cessfully proved that Sagad failed to qualify as a regular employee; that Sagads proba-
tionary employment expired and he did not work beyond October 14, 2006.
NLRC: Sagad had been illegally dismissed. Sagad was not a probationary employee as
the company failed to prove by substantial evidence the due execution of Sagads sup-
posed probationary employment contract. The supposed memorandum issued by the
company on October 15, 2006 was not proven to be served on Sagad.
CA: affirmed the NLRC rulings in toto. Sagad had been illegally dismissed considering,
that the grounds the company relied upon for the termination of Sagads employment
were not among the causes for a valid dismissal enumerated under Article 282 of the
Labor Code. The company failed to comply with the twin-notice requirement in em-
ployee dismissals.
COMPANY SEEKS THE REVERSAL OF THE CAS DECISION
ISSUE:
Whether Sagad was a regular employee
Whether Sagad dismissal illegal
HELD:
Sagad was dismissed, not as a probationary employee, but as one who had attained
regular status.
The records indicate that he was retained even beyond the expiration of his
supposed probationary employment on October 14, 2006. The company never refuted
the contention of Sagad that he was dismissed on November 5, 2006, thereby its silence
can only mean that Sagad remained in employment until November 4, 2006 attaining
regular status as of that date. Further, the payslip for the whole month of November
submitted by Sagad as evidence revealed that he really was working until the first week
of November 2006.
Sagad was dimissed for just cause as mentioned in Article 282 of the Labor Code.
The irregularities or infractions committed by Sagad in connection with his
work as a bus driver constitute a serious misconduct or, at the very least, conduct analo-
gous to serious misconduct, under the above-cited Article 282 of the Labor Code.
It is not disputed that the company called Sagads attention to his negative actuations as
a bus driver, which were reported by a company evaluator who boarded his bus on
September 21, 2006. The evaluator reported that he was driving recklessly, racing and
jostling for position on the road, thereby jarring the passengers on their seats, and pick-
ing up passengers on the middle of the road. He denied such allegation stating that his
wife and one of his children were on the bus. He admitted, however, that on one occa-
sion, he chased an "Everlasting" bus to warn its driver not to block him. He also admit-
ted that once in a while, he sped up to compensate for lost time in his trips. During his
brief employment with the company, he exhibited the tendency to speed up when he
finds the need for it, very obviously in violation of traffic rules, regulations and compa-
ny policy. Instead of negating the evaluators observations, his admissions make them
credible.
Also, the evaluation showed that Sagad has poor performance on account of (1) the low
revenue of Sagads bus; (2) his inability to make all his scheduled trips; and (3) his
habit of bringing his wife with him on his trips. Castillo also heard of talks of Sagads
orders to the conductors to earn money in a questionable way.
Sagad disputed the comments of Hemoroz and Lucero maintaining that they were not
made under oath. The Court ruled that it found no evidence that the two had an ax to
grind against Sagad so that they would lie about their impression of him as a bus driver.
The employees involvement in a hit-and-run was clearly established by the Traffic
Accident Investigation Report, Sworn Statement of the owners of the other vehicles
involved, and the demand letter of the insurance company demanding reimbursement
from what it paid to Purefoods Hormel Co.
Therefore, there is substantial evidence supporting Sagads removal as a bus driver.
Sagad committed serious misconduct and breach of trust and confidence of his employ-
er, which are just causes for his separation from the service. However, the companys
failure to comply with the twin-notice rule grants Sagad an indemnity in the form of
nominal damages.
COCA-COLA BOTTLERS, PHILS., INC. v. KAPISANAN NG MALAYANG
MANGGAGAWA SA COCA- COLA-FFW
G.R. No. 148205. February 28, 2005
FACTS: Petitioner Coca-Cola Bottlers Phil., Inc. hired the private respondent, Floren-
tino Ramirez as driver-helper. Sometime in October 1996, it happened that the route
salesman was unavailable to make his usual routes. Since Ramirez had been driving for
the route salesman for so long, the petitioner company decided to assign him as tempo-
rary replacement of the regular route salesman. Thereafter, the Officer-in-Charge of the
Batangas Sales Office, informed the Officer-in-Charge of DSS-District 44, that a review
of the copies of the invoices relating to the transactions of Ramirez revealed discrepan-
cies: (a) the number of cases delivered to customers; (b) empty bottles retrieved from
them, and (c) the amounts in Sales Invoices Nos. 3212215, 3288587, 3288763, 3288765
and 3288764. On February 11, 1997, Ramirez received a notice from the company
informing him that his services were being terminated; that based on the investigation, it
was clearly established that he violated Sections 10 and 12 of the CCBPI Employees
Code of Disciplinary Rules and Regulations (Red Book); and that coupled with his prior
infractions, his employment was terminated effective February 12, 1997.
ISSUE: Whether or not respondent Ramirez was dismissed by the petitioner without
just or valid cause.
HELD: Yes.
We find, as the CA did in its assailed Resolution, that the respondent, by his acts and
omissions, committed irregularities in the performance of his duties. He made it appear
in the customers copy of Sales Invoice No. 3212215 that the latter returned 33 cases of
family-size empty bottles valued at P4,092.00; however, such transaction was not re-
flected in the invoice submitted by him to the petitioner company.
1
A perusal of the customers copy of the sales invoice would show that the customer
owed the petitioner company P9,045.00. However, in the petitioner companys copy of
the sales invoice, the respondent declared that the customer returned 33 cases of empty
bottles valued at P4,092.00; hence, the customer owed the petitioner only P4,953.40
which the customer paid. The respondent failed to indicate the return of the empty bot-
tles in the petitioner companys copy of the sales invoice. The explanation of the re-
spondent, that while he intended to correct the customers copy of the sales invoice he
was unable to do so because such customers copy had been misplaced by the customer,
is unacceptable. The respondent should have presented the affidavit of the customer to
corroborate such claim. The fact that it turned out that the customer still had his copy of
the sales invoice does not sit well with the respondents cause. In fine then, the explana-
tion given by the respondent during the panel investigation is untrue.
There is no dispute that the respondent overcharged the customer in Sales Invoice No.
3288587 in the amount of P504.00, and that the respondent returned the overpayment to
the customer. However, the respondent was burdened to give a valid explanation for
such overcharging on the customer, which he failed to do.
The respondent also admitted that he failed to indicate in the customers copy of Sales
Invoice No. 3288764 the customers retrieval of 210 cases of empty Coca-Cola bottles of
varied sizes, amounting to P2,250.00. The respondent failed to give a valid explanation
for his omission, although there appears to be no doubt that, indeed, the customer re-
turned the 210 empty bottles to the petitioner through him.
In order to effect a valid dismissal of an employee, the law requires that there be just
and valid cause as provided in Article 282 and that the employee was afforded an op-
portunity to be heard and to defend himself.[20] Pursuant to Article 282 of the Labor
Code, an employees services can be terminated for the following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly-authorized representative.
(d) Commission of a crime or offense by the employee against the person of his em-
ployer or any immediate member of his family or his duty-authorized representative;
and
(e) Other causes analogous to the foregoing.
In the present case, the respondent was dismissed for dishonesty, more specifically for
violation of the company policy, and, more particularly, Sections 10 and 12 of Compa-
ny Rules and Regulation No. 005-85, Fictitious sales transactions; Falsification of com-
pany records/data/documents/reports; Conspiring or conniving with, or directing others
to commit fictitious transactions; and inefficiency in the performance of duties, negli-
gence and blatant disregard of or deviation from established control and other policies
and procedures.
However, the petitioner failed to adduce clear and convincing evidence that the re-
spondent had fictitious sales transactions, or that he falsified company rec-
ords/documents/reports, or that he connived with customers of the petitioner to persuade
them to commit fictitious transactions. It is undisputed that the respondent entered into
the sales transactions subject of the complaint of the petitioner for and in behalf of the
petitioner. While it is true that the respondent failed to indicate the return of the empty
bottles made by a customer either in the petitioner companys copy of the sales invoice
or in his reports on his sales transactions; and overcharged a customer in one transac-
tion, there is no clear and convincing evidence that the respondent did so intentionally,
for a wrong or criminal purpose. There is also no showing that the respondent intention-
ally defied the lawful orders or regulations of the petitioner. Indeed, as declared by the
CA in its assailed resolution, the petitioner did not suffer any material loss by the re-
spondents actuations:
A quick review of the salient facts shows that individual petitioner Florentino A.
Ramirez was hired by private respondent company on July 1, 1982, as driver-helper.
Obviously, this job did not involve the same amount of trust and confidence as that of a
salesman.
From the parties various pleadings both in this petition, as well as in the case below,
what becomes clear is that the private respondent suffered no damage whatsoever from
the actuations of the individual petitioner. His alleged dishonesty was not proven. What
he committed was merely non-compliance with, or oversight of, certain internal proce-
dures in the proper recording of his sales and other transactions, resulting in a shortage
in one transaction, which was nevertheless offset by an overage in another. It could be
allowed that, indeed, he was inefficient and incompetent for the function of a salesman
which he had to temporarily perform.[26]
In pointing out that the private respondent suffered no material loss, We note that it was
very possible that the discrepancies found in the documents reflecting the individual
petitioners transactions as an acting salesman could very well have been due to simple
inadvertence and the fact that the customers, who for some reason failed to pay their
accounts with exact cash but instead partly with empty bottles, later misplaced their
copy of the invoice. Thus, their copy could not be corrected seasonably. The recording
was very likely bungled further by individual petitioners lack of training and familiarity
with the strict recording procedures. We are inclined to give him this benefit of the
doubt.
That the individual petitioner has not been specifically trained as salesman is undisput-
ed. Yet Ramirez was penalized as a full-fledge salesman, not as a driver-helper who
was forced to perform the functions of acting salesman or perhaps risk being charged
with insubordination. Then it was not just any penalty meted out to him, as if there is
only one punishment possible for him: the supreme sanction of dismissal.
We cannot but agree that the extreme penalty of dismissal was too harsh and manifestly
disproportionate to the infraction committed. There was no dishonesty, no demonstra-
tion of such moral perverseness as would have justified the claimed loss of confidence
attendant to the job. The company must bear a share of the blame for entrusting a mere
driver-helper with a highly fiduciary task knowing that he did not possess the required
skills. At most, Ramirez failed to comply with, or even violated, certain company rules
of internal control procedures, but to say that it was deliberate is gratuitous.
Perhaps, individual petitioner should first have been given a mere warning, then a rep-
rimand or even a suspension, but certainly not outright dismissal from employment.
NATHANIEL N. DONGON, PETITIONER,
vs.
RAPID MOVERS AND FORWARDERS CO., INC., AND/OR NICANOR E. JAO,
JR., RESPONDENTS.
FACTS:
From the records, it appears that petitioner Rapid is engaged in the hauling and trucking
business while private respondent Nathaniel T. Dongon is a former truck helper lead-
man
. Private respondents area of assignment is the Tanduay Otis Warehouse where he has a
job of facilitating the loading and unloading [of the] petitioners trucks. On 23 April
2001, private respondent and his driver, Vicente Villaruz, were in the vicinity of Tan-
duay as they tried to get some goods to be distributed to their clients.
Labor Relations (Termination of Employment) 062817
Tanduays security guard called the attention of private respondent as to the fact that
Mr. Villaruz[s] was not wearing an Identification Card (I.D. Card). Private respondent,
then, assured the guard that he will secure a special permission from the management to
warrant the orderly release of goods.
Instead of complying with his compromise, private respondent lent his I.D. Card to
Villaruz; and by reason of such misrepresentation , private respondent and Mr. Villaruz
got a clearance from Tanduay for the release of the goods. However, the security guard,
who saw the misrepresentation committed by private respondent and Mr. Villaruz,
accosted them and reported the matter to the management of Tanduay.
On 23 May 2001, after conducting an administrative investigation, private respondent
was dismissed from the petitioning Company.
Private respondent filed a Complaint for Illegal Dismissal.
LABOR ARBITER: dismissed the complaint, and ruled that respondent Rapid Movers
and Forwarders Co., Inc. (Rapid Movers) rightly exercised its prerogative to dismiss
petitioner.
NLRC: reversed the Labor Arbiter, and held that Rapid Movers had not discharged its
burden to prove the validity of petitioners dismissal from his employment. It opined
that Rapid Movers did not suffer any pecuniary damage from his act; and that his dis-
missal was a penalty disproportionate to the act of petitioner complained of. It awarded
him backwages and separation pay in lieu of reinstatement.
COURT OF APPEALS: promulgated its assailed decision reinstating the decision of the
Labor Arbiter.
ISSUE:
Whether or not the dismissal of petitioner on the ground of willful disobedience to the
company regulation is lawful.
RULING:
No. Petitioner was not guilty of willful disobedience; hence, his dismissal
was illegal.
Willful disobedience to the lawful orders of an employer is one of the valid grounds to
terminate an employee under Article 296 (formerly Article 282) of the Labor Code.19
For willful disobedience to be a ground, it is required that: (a) the conduct of the em-
ployee must be willful or intentional; and (b) the order the employee violated must have
been reasonable, lawful, made known to the employee, and must pertain to the duties
that he had been engaged to discharge.20 Willfulness must be attended by a wrongful
and perverse mental attitude rendering the employees act inconsistent with proper
subordination.21 In any case, the conduct of the employee that is a valid ground for
dismissal under the Labor Code constitutes harmful behavior against the business inter-
est or person of his employer.22 It is implied that in every act of willful disobedience,
the erring employee obtains undue advantage detrimental to the business interest of the
employer.
Under the foregoing standards, the disobedience attributed to petitioner could not be
justly characterized as willful within the contemplation of Article 296 of the Labor
Code. He neither benefitted from it, nor thereby prejudiced the business interest of
Rapid Movers. His explanation that his deed had been intended to benefit Rapid Movers
was credible. There could be no wrong or perversity on his part that warranted the ter-
mination of his employment based on willful disobedience.
CAVITE APPAREL, INCORPORATED and ADRIANO TIMOTEO, Petitioners,
vs. MICHELLE MARQUEZ, Respondent.
Facts: Cavite Apparel is a domestic corporation engaged in the manufacture of garments
for export. On August 22, 1994, it hired Michelle as a regular employee in its Finishing
Department. Michelle enjoyed, among other benefits, vacation and sick leaves of seven
(7) days each per annum. Prior to her dismissal on June 8, 2000, Michelle committed
the following infractions (with their corresponding penalties):
a. First Offense: Absence without leave (AWOL) on December 6, 1999 written warn-
ing
b. Second Offense: AWOL on January 12, 2000 stern warning with three (3) days
suspension
c. Third Offense: AWOL on April 27, 2000 suspension for six (6) days.6
On May 8, 2000, Michelle got sick and did not report for work. When she returned, she
submitted a medical certificate. Cavite Apparel, however, denied receipt of the certifi-
cate.7 Michelle did not report for work on May 15-27, 2000 due to illness. When she
reported back to work, she submitted the necessary medical certificates. Nonetheless,
Cavite Apparel suspended Michelle for six (6) days (June 1-7, 2000). When Michelle
returned on June 8, 2000, Cavite Apparel terminated her employment for habitual ab-
senteeism.
On July 4, 2000, Michelle filed a complaint for illegal dismissal with prayer for rein-
statement, backwages and attorneys fees with the NLRC, Regional Arbitration Branch
No. IV.
In a decision dated April 28, 2001,8 LA Ramos dismissed the complaint. He noted that
punctuality and good attendance are required of employees in the companys Finishing
Department. For this reason, LA Ramos considered Michelles four absences without
official leave as habitual and constitutive of gross neglect of duty, a just ground for
termination of employment.
On appeal by Michelle, the NLRC referred the case to Executive LA Vito C. Bose for
review, hearing and report.10 Adopting LA Boses report, the NLRC rendered a deci-
sion11 dated May 7, 2003 reversing LA Ramos decision. The NLRC noted that for
Michelles first three absences, she had already been penalized ranging from a written
warning to six days suspension.
The CA agreed with the NLRC that since Cavite Apparel had already penalized
Michelle for her three prior absences, to dismiss her for the same infractions and for her
May 8, 2000 absence was unjust. Citing jurisprudence, The CA concluded that her
dismissal was too harsh, considering her six years of employment with Cavite Apparel;
it was also a disproportionate penalty as her fourth infraction appeared excusable.
Issue: Whether or not a spread out four absences without leave constitutes gross and
habitual neglect and therefore a just cause for dismissal.
Ruling: After a careful review of the merits of the case, particularly the evidence ad-
duced, we find no reversible error committed by the CA when it found no grave abuse
of discretion in the NLRC ruling that Michelle had been illegally dismissed.
Michelles four absences were not habitual; "totality of infractions" doctrine not appli-
cable
2
Neglect of duty, to be a ground for dismissal under Article 282 of the Labor Code, must
be both gross and habitual.22 Gross negligence implies want of care in the performance
of ones duties. Habitual neglect imparts repeated failure to perform ones duties for a
period of time, depending on the circumstances.23 Under these standards and the cir-
cumstances obtaining in the case, we agree with the CA that Michelle is not guilty of
gross and habitual neglect of duties.
Four absences in her six years of service cannot be considered gross and habitual ne-
glect of duty, especially so since the absences were spread out over a six-month period.
Michelles penalty of dismissal too harsh or not proportionate to the infractions she
commited. Although Michelle was fully aware of the company rules regarding leaves of
absence, and her dismissal might have been in accordance with the rules, it is well to
stress that the Supreme Court is not bound by such rules.
While managements prerogative is recognized to discipline its employees, the exercise
of this prerogative should at all times be reasonable and should be tempered with com-
passion and understanding. Dismissal is the ultimate penalty that can be imposed on an
employee. Where a penalty less punitive may suffice, whatever missteps may be com-
mitted by labor ought not to be visited with a consequence so severe for what is at stake
is not merely the employees position but his very livelihood and perhaps the life and
subsistence of his family.
CRC AGRICULTURAL TRADING vs NLRC
Facts: The respondent, Roberto Obias alleged that the petitioners employed him as a
driver sometime in 1985. The respondent worked for the petitioners until he met an
accident in 1989, after which the petitioners no longer allowed him to work. After six
years, or in February 1995, the petitioners again hired the respondent as a driver and
offered him to stay inside the companys premises.
The latter suspected that the receipts were falsified and stopped talking to him and giv-
ing him work assignments. The petitioners, however, still paid him P700.00 and
P500.00 on April 15 and 30, 2004, respectively, but no longer gave him any salary after
that. As a result, the respondent and his family moved out of the petitioners compound
and relocated to a nearby place. The respondent claimed that the petitioners paid him a
daily wage of P175.00, but did not give him service incentive leave, holiday pay, rest
day pay, and overtime pay. He also alleged that the petitioners did not send him a notice
of termination.
LA: Respondent had been illegally dismissed
NLRC: Reversed, Respondent himself decided to move his family out of the petitioner.
CA: Reinstated LAs Decision, Petitioner failed to show that there was a deliberate and
unjustified refusal in the part of the respondent to resume his employment. Filling of
complaint, also negates the petitioners charge of abandonment.
Issue: W/N the petitioners act of terminating the respondents employment is valid
Held: No, for the respondent did not abandon his job.
Abandonment of work, or the deliberate and unjustified refusal of an employee to re-
sume his employment, is a just cause for the termination of employment under para-
graph (b) of Article 282 of the Labor Code, since it constitutes neglect of duty. The
jurisprudential rule is that abandonment is a matter of intention that cannot be lightly
presumed from equivocal acts. To constitute abandonment, two elements must concur:
(1) the failure to report for work or absence without valid or justifiable reason, and (2) a
clear intent, manifested through overt acts, to sever the employer-employee relationship.
The employer bears the burden of showing a deliberate and unjustified refusal by the
employee to resume his employment without any intention of returning.
In the present case, the petitioners did not adduce any proof to show that the respondent
clearly and unequivocally intended to abandon his job or to sever the employer-
employee relationship. Moreover, the respondents filing of the complaint for illegal
dismissal on June 22, 2004 strongly speaks against the petitioners charge of abandon-
ment; it is illogical for an employee to abandon his employment and, thereafter, file a
complaint for illegal dismissal. Abandonment is a matter of intention and cannot lightly
be presumed from certain equivocal acts. To constitute abandonment, there must be
clear proof of deliberate and unjustified intent to sever the employer-employee relation-
ship. Clearly, the operative act is still the employees ultimate act of putting an end to his
employment.
ALDEGUER & CO., INC. vs TOMBOC
Facts:
Petitioner, a corporation engaged in the retail and wholesale of Loalde brand products,
hired Honeyline Tomboc (respondent).Petitioner promoted respondent in 1996 as Of-
ficer-in-Charge (OIC) of its Loalde Ayala Boutique (Loalde Ayala) in the Ayala Center,
Cebu City
After conducting an audit of sales in Loalde Ayala, petitioner concluded that respondent
misappropriated P28,137.70[p which is a just cause for termination under Art. 282 of
the Labor Code, and accordingly notified her on May 24, 1997 of the termination of her
services effective June 24, 1997.
Aside from these undeposited cash collections, there are reports submitted by three (3)
cashiers who were assigned in the Loalde Boutique that you, being the OIC in the bou-
tique meddles [sic] [with] the cash for deposit, and delaying [sic] such for more than
three (3) days. This has prompted the management to believe that you were really using
the money.[4] (Underscoring supplied)
Respondent thereupon filed a Complaint before the National Labor Relations Commis-
sion (NLRC).
In her Position Paper, respondent gave the following version:
After being cleared of her accountabilities on May 19, 1997 by Nenita Pamisa (Nenita),
the Accounting Manager of petitioner, she went on leave the following day, her applica-
tion for the purpose having been earlier approved. On her report back for work, she
received a memorandum[7] dated May 24, 1997 informing her that effective May 25,
1997, she was no longer allowed to enter the premises of Loalde Ayala and that she
should instead report to petitioners Head Office at Mandaue City. Complying, she re-
ported to the Head Office where she was assigned to fold and pile dresses in the stock-
room. ALSO, respondent posited that she was terminated from employment because she
refused to sign a voucher acknowledging receipt of wage differentials which she did not
in fact receive.[8]
When asked to explain, respondent claimed that the amounts were all deposits-in-
transit, meaning, the bank had already picked up the amounts but had not yet returned
the validated deposit slips.[16]
Labor Relations (Termination of Employment) 062817
Respondent having been scheduled to go on vacation leave starting May 20, 1997, she
was asked to and did report for work on even date during which she conferred with
Nenita and the General Boutique and Sales Manager Cora Anzano. At the conference,
respondent maintained that the questioned amounts were already deposited in the bank.
Petitioners bank passbook did not, however, reflect the amounts covered by the last
three above-indicated official receipts.[17]
Investigation showed that deposits on May 13, 1997 (comprising the proceeds of sales
for May 9, 11, and 12, 1997 which were Friday, Sunday, and election day, respectively)
and May 14, 1997 were all check deposits, and that there were no cash deposits even if
there were cash sales in the amount of P28,137.70 covering the said period.
On her scheduled return to work on May 24, 1997, respondent did not show up; hence,
the issuance of the notice of her dismissal which was mailed to her on May 29,
1997.[18]
Labor Arbiter Ernesto F. Carreon dismissed respondents complaint.
NLRC upheld the Labor Arbiters Decision
Court of Appeals, concluding that respondent was illegally dismissed, reversed the
NLRC decision and ordered her reinstatement with full payment of back wages and
without loss of seniority rights.[26]
ISSUE:
WHETHER OR NOT CA ERRED IN BRUSHING ASIDE THE FINDINGS OF
FACTS OF BOTH THE NLRC AND THE LABOR ARBITER WHICH HELD THE
TERMINATION OF RESPONDENT VALID BASED ON SUBSTANTIAL EVI-
DENCE ON RECORD.
HELD:
The petition is impressed with merits.
Petitioner has shown just cause for the termination of respondents employment under
Art. 282 of the Labor Code on the ground of fraud or willful breach by the employee of
the trust reposed in him by his employer or duly authorized representative.[39]
Nenitas affidavit and audit report are corroborated by petitioners Solidbank passbook
showing that the P12,090.00 cash sales for May 11, 1997, P9,203.40 cash sales for May
12, 1997, and P6,844.30 cash sales for May 13, 1997 all duly receipted[40] were not
deposited in petitioners account with Solidbank.[41]
The claim of Jinky, a cashier, in her affidavit that it was respondent who turned over
the deposits to the bank representative on May 13, 1997 was corroborated by Kay, the
branch head of the Solidbank-Gorordo Branch who personally picked up the deposits
from Loalde Ayala on May 13 and 14, 1997. Petitioner in fact presented deposit slips
showing that, contrary to its policy, cash sales for the day were on several occasions not
deposited on the next banking day.[42]
Respondents contention that the Labor Arbiter and the NLRC ignored the Memorandum
issued by petitioner on February 29, 1997 indicating her duties and responsibilities
which do not include handling cash collection of sales and making deposits with the
bank[43] does not lie. It has been established that while a boutique-in-charge is ordi-
narily not allowed to handle cashiering, she may do so, however, if the need arises.[44]
At any rate, Jinky and some of the affiants stated in their affidavits that respondent
interfered with cashiering tasks, in violation of company policy.
On respondents claim that petitioner framed her up in retaliation for her refusal to sign a
voucher showing receipt of payment of wage differentials which she never received,[45]
the same fails. The copy of the voucher dated April 1996 which respondent presented
shows that she did, in fact, sign it.[46]
IN FINE, the Court finds that respondents employment was terminated for just cause. It
finds, however, that petitioner failed to observe the requirements of procedural due
processs. Petitioner having failed to comply with the first notice requirement, respond-
ent is, following Agabon v. National Labor Relations Commission,[53] entitled to in-
demnity in the form of nominal damages in the amount of P30,000.
WHEREFORE, the February 27, 2001 Decision of the Court of Appeals is REVERSED
and SET ASIDE.
LOPEZ V. KEPPEL BANK
FACTS:
Petitioner Elmer Lopez was the Branch Manager of the respondent Keppel Bank Philip-
pines, Inc. (bank) in Iloilo City. Allegedly, through his efforts, Hertz Exclusive Cars,
Inc. (Hertz) became a client of the bank. By notice dated August 12, 2003, the bank
asked Lopez to explain in writing why he should not be disciplined for issuing, without
authority, two purchase orders (POs) for the Hertz account amounting to a total
of P6,493,000.00, representing the purchase price of 13 Suzuki Bravo and two Nissan
Exalta vehicles.
Lopez submitted his written explanation on the same day, but the bank refused to give it
credit. Through respondents Manuel Bosano III (Vice-President and Head of Retail
Banking Division/Consumer Banking Division) and Stefan Tong Wai Mun (Vice-
President/Comptroller), the bank terminated Lopezs employment effective immediately.
With this, Lopez filed a complaint for illegal dismissal and money claims against the
bank, Bosano and Tong.
Lopez alleged before the labor arbiter that he issued the POs as part of his strategy to
enhance the banks business, in line with his duty as branch manager to promote the
growth of the bank. He claimed that the bank honored the first PO for P1.8M from
which the bank derived an income of P142,000.00. He added that the second PO did not
materialize because Mr. James Puyat Concepcion, a Hertz incorporator and director
who opened the Hertz account, stopped depositing with the bank because of the nega-
tive credit rating he received from the banks credit committee. Allegedly, the committee
discovered that James Puyat Concepcion had several pending court cases.
For its part, the bank denied approving the first PO, arguing that Lopez did not have the
authority to issue the POs for the Hertz account as there was a standing advice that no
3
Hertz loan application was to be approved. It stressed that Lopez committed a serious
violation of company rules when he issued the POs.
LA RULING:
Lopez was illegally dismissed. The LA found that contrary to the banks claim, the evi-
dence showed that Lopez had been issuing POs which the bank had paid, including the
first of the two POs that led to his dismissal.
NLRC RULING:
Reversed LA ruling. The NLRC found merit in the banks submission that by issuing the
questioned POs without authority and against the banks express orders, Lopez thereby
committed a willful disobedience against his superiors a sufficient basis for the bank to
lose its trust and confidence in him as branch manager.
It thus found that Lopez had been dismissed for cause after the observance of due pro-
cess. Lopez moved for reconsideration, but the NLRC denied the motion in its resolu-
tion of January 25, 2006.
CA RULING:
Denied the petition and affirmed NLRC that petitioner is not illegally dismissed
ISSUE: W/N the petitioner is illegally dismissed without just cause
RULING:
NO. The petitioner was dismissed with just cause, by reason of loss of trust and confi-
dence, a just cause for an employees dismissal under the law
The right of an employer to freely select or discharge his employee is a recognized
prerogative of management; an employer cannot be compelled to continue employing
one who has been guilty of acts inimical to its interests. When this happens, the em-
ployer can dismiss the employee for loss of confidence.
At the same time, loss of confidence as a just cause of dismissal was never intended to
provide employers with a blank check for terminating employment. Loss of confidence
should ideally apply only (1) to cases involving employees occupying positions of trust
and confidence, or (2) to situations where the employee is routinely charged with the
care and custody of the employers money or property. To the first class belong manage-
rial employees, i.e., those vested with the powers and prerogatives to lay down man-
agement polices and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees, or effectively recommend such managerial actions. To the second
class belong cashiers, auditors, property custodians, or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money or
property.
As branch manager, Lopez clearly occupies a position of trust. His hold on his position
and his stay in the service depend on the employers trust and confidence in him and on
his managerial services. According to the bank, Lopez betrayed this trust and confi-
dence when he issued the subject POs without authority and despite the express di-
rective to put the clients application on hold. In response, Lopez insists that he had
sufficient authority to act as he did, as this authority is inherent in his position as bank
manager. He points to his record in the past when he issued POs which were honored
and paid by the bank and which constituted the arbiters overwhelming evidence in
support of the finding that complainants dismissal from work was without just cause,
hence, illegal.
As a bank official, the petitioner must have been aware that it is basic in every sound
management that people under ones supervision and direction are bound to follow in-
structions or to inform their superior of what is going on in their respective areas of
concern, especially regarding matters of vital interest to the enterprise. Under these
facts, we find it undisputed that Lopez disobeyed the banks directive to put the Hertz
loan application on hold, and did not wait until its negative credit rating was cleared
before proceeding to act. That he might have been proven right is immaterial. Neither
does the submission that the bank honored and paid the first PO and even realized a
profit from the transaction, mitigate the gravity of Lopezs defiance of the directive of
higher authority on a business judgment.
What appears clear is that the bank cannot in the future trust the petitioner as a manager
who would follow directives from higher authorities on business policy and directions.
The bank can be placed at risk if this kind of managerial attitude will be repeated, espe-
cially if it becomes an accepted rule among lower managers.
ALABANG COUNTRY CLUB, INC. V. NLRC
FACTS:
In April 1996, respondents Christopher Pizarro, Michael Braza, and Nolasco Castueras
were elected Union President, Vice-President, and Treasurer, respectively.
On June 21, 1999, petitioner Alabang Country Club, Inc. (Club) and Alabang Country
Club Independent Employees Union (Union) entered into a Collective Bargaining
Agreement (CBA), which provided for a Union shop and maintenance of membership
shop.
On July 2001, an election was held and a new set of officers was elected. The new
officers conducted an audit of the Union funds and discovered some irregularly record-
ed entries, unaccounted expenses and disbursements, and uncollected loans from the
Union funds. The three aforementioned officers were asked to explain the discrepancies
in writing.
On October 6, 2001 respondents Pizarro, Braza, and Castueras explained their side.
Braza- asked that the investigation be directed against CAstueras who was the Treasurer
at that time.
-unpaid loans are still being paid through salary deductions
-Union expenses without receipts are legitimate expenses like transportation
fares, food purchases and food and traspo allowances for Union members
for pending complaints
-unliquidated and cash advances amounting to P20,000 are payments for
Ricardo Ricafrente who loaned P200,000 to the Union
Pizarro- blamed Castueras for the uncollected loan and cash advances
-salaries are deducted for the payment of his loan
Castueras- Irregular entries in the records were unintentional and were due to inadvert-
ence because of his voluminous work
-his unpaid P27,00 are also being deducted from his salary
The three were expelled from the Union. The Union, invoking the Security Clause of
the CBA, demanded that the respondents be dismissed. The Club required the three
respondents to show cause in writing why they should not be dismissed.
Labor Relations (Termination of Employment) 062817
The Club concluded that said respondents failed to refute the validity of their expulsion
from the Union. On December 26, 2001 the respondents received their notices of termi-
nation.
LA: ruled in favor of the cub as there was justifiable cause in terminating said respond-
ents
NLRC: granted the appeal and declared the dismissal illegal since the DOLE had not
yet made any definitive ruling on their liability regarding the administration of the Un-
ions funds in accordance with Section 2, Rule XVIII of the Rules Implementing Book
V of the Labor Code.
CA: upheld the NLRC Ruling that the three were deprived of due process. The CA also
said the dismissal of the three respondents was contrary to the doctrine laid down
in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos (Malayang
Samahan), where this Court ruled that even on the assumption that the union had valid
grounds to expel the local union officers, due process requires that the union officers be
accorded a separate hearing by the employer company.
ISSUE: Whether the respondents were illegally dismissed
HELD: No. Under the Labor Code, an employee may be validly terminated on the fol-
lowing grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283;
(3) termination due to disease under Art. 284; and (4) termination by the employee or
resignation under Art. 285.
Another cause for termination is dismissal from employment due to the enforcement of
the union security clause in the CBA.
The CBA clearly states:
SECTION 4. TERMINATION UPON UNION DEMAND. Upon written
demand of the UNION and after observing due process, the Club shall dismiss a regular
rank-and-file employee on any of the following grounds:
(a) Failure to join the UNION within five (5) days from the time of regulariza-
tion;
(b) Resignation from the UNION, except within the period allowed by law;
(c) Conviction of a crime involving moral turpitude;
(d) Non-payment of UNION dues, fees, and assessments;
(e) Joining another UNION except within the period allowed by law;
(f) Malversation of union funds;
(g) Actively campaigning to discourage membership in the UNION; and
(h) Inflicting harm or injury to any member or officer of the UNION.
In accordance with the CBA, the Union properly requested the Club, through
the October 18, 2001 letter signed by Mario Orense, the Union President, and addressed
to Cynthia Figueroa, the Clubs HRD Manager, to enforce the Union security provision
in their CBA and terminate said respondents. Then, in compliance with the Unions
request, the Club reviewed the documents submitted by the Union, requested said re-
spondents to submit written explanations, and thereafter afforded them reasonable op-
portunity to present their side. After it had determined that there was sufficient evidence
that said respondents malversed Union funds, the Club dismissed them from their em-
ployment conformably with Sec. 4(f) of the CBA.
AUTHORIZED CAUSES
PHILIPPINE SHEET METAL WORKERS' UNION (CLO) v. CIR
G.R. No. L-2028 April 28, 1949
FACTS: The Court of Industrial Relations (CIR) issued an order involving an industrial
dispute between the respondent company (a corporation engaged in the manufacture of
tin plates, aluminum sheets, etc.) and its laborers some of whom belong to the Philip-
pine Sheet Metal Workers' Union (CLO) and some to the respondent Liberal Labor
Union. The dispute was over certain demands made upon the company by the laborers,
one of the demands being for the recall of eleven workers who had been laid off. It is
the opinion of the Court that the management of the company selected these 11 workers
because they organized a labor union. Although the company has the right to reduce its
personnel, the said company erred in abusing this right. It is, therefore, ordered that
these 11 workers be retained in the respondent company until the occurrence of facts
that may give rise to a just cause of their laying off or dismissal, or there is evidence of
sufficient weight to convince the Court that their conduct is not satisfactory.
As a separate incident from the above, the company, on February 10, 1947, that is, nine
days before the decision came down, filed a motion in the case, asking for authority to
lay off at least 15 workers in its can department on the ground that the installation and
operation of nine new labor-saving machines in said department had rendered the ser-
vices of the said workers unnecessary. The Philippine Sheet Metal Workers' Union
(CLO) opposed the motion, alleging that there was more than sufficient work in the
company to keep all its workers busy, and, on the further allegation that the company
had hired without the authority of the courts some ten new laborers pending resolution
of the principal case, it in turn asked that the company be declared guilty of contempt of
court. About a year later, the court, after due hearing and investigation, rendered an
order, granting the company's motion to lay off 15 workers and denied the petition to
have the company declared in contempt of court. This order is the one now before us for
review.
ISSUE: Whether or not the lay off of 15 workers is with authorized cause.
HELD: Yes. There was real justification for reducing the number of workers in re-
spondent company's factory, such a measure having been made necessary by the intro-
duction of machinery in the manufacture of its products, and that the company cannot
be charged with discrimination in recommendating the dismissal of the fifteen laborers
named in the above list since their selection was made by a committee composed of
both officers and employees who took no account of the laborers' affiliation to the un-
ions and only considered their proven record.
There can be no question as to the right of the manufacturer to use new labor-saying
devices with a view to effecting more economy and efficiency in its method of produc-
tion. The right to reduce personnel should, of course, not be abused. It should not be
made a pretext for easing out laborers on account of their union activities. But neither
should it be denied when it is shows that they are not discharging their duties in a man-
ner consistent with good discipline and the efficient operation of an industrial enter-
prise.
The petitioner contends that the order complained of was made with grave abuse of
discretion and in excess of jurisdiction in that it is contrary to the pronouncement made
by the lower court in its decision in the main case where it disapproved of the dismissal
of eleven workers "with whom the management is displeased due to their union activi-
ties." It appears, however, that the pronouncement was made upon a distinct set of facts,
which are different from those found by the court in connection with the present inci-
4
dent, and that very decision, in ordering the reinstatement of the eleven laborers, quali-
fies the order by saying that those laborers are to be retained only "until the occurrence
of facts that may give rise to a just cause of their laying off or dismissal, or there is
evidence of sufficient weight to convince the Court that their conduct is not satisfacto-
ry."
After a careful review of the record, we find that the Court of Industrial Relations has
neither exceeded its jurisdiction nor committed grave abuse of discretion in rendering
the order complained of. The petition for certiorari is therefore denied.
MAYA FARMS EMPLOYEES ORGANIZATION, MAYA REALTY AND
LIVESTOCK SUPERVISORY UNION, MAYA FARMS EMPLOYEES ASSO-
CIATION, and MAYA FARMS, INC. SUPERVISORY UNION, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MAYA REALTY & LIVE-
STOCK, INC., MAYA FARMS, INC., and LIBERTY FLOUR MILLS, INC.,
respondents.
FACTS:
This petition for review on certiorari seeks to set aside the decision of public
respondent National Labor Relations Commission (NLRC) which upheld the legality of
the separation of sixty-six (66) employees who are members of petitioner unions, there-
by dismissing petitioners' complaint against private respondents for violation of collec-
tive bargaining agreement (CBA) and unfair labor practice.
On April 12, 1991, private respondents announced the adoption of an early retirement
program as a cost-cutting measure considering that their business operations suffered
major setbacks over the years. The program was voluntary and could be availed of only
by employees with at least eight (8) years of service. 1 Dialogues were thereafter con-
ducted to give the parties an opportunity to discuss the details of the program. Accord-
ingly, the program was amended to reduce the minimum requirement of eight (8) years
of service to only five (5) years.
However, the response to the program was nil. There were only a few takers. To avert
further losses, private respondents were constrained to look into the companies' organi-
zational set-up in order to streamline operations. Consequently, the early retirement
program was converted into a special redundancy program intended to reduce the work
force to an optimum number so as to make operations more viable.
In December 1991, a total of sixty-nine (69) employees from the two companies availed
of the special redundancy program.
On January 17, 1992, the two companies sent letters to sixty-six (66) employees inform-
ing them that their respective positions had been declared redundant. The notices like-
wise stated that their services would be terminated effective thirty (30) days from re-
ceipt thereof. Separation benefits, including the conversion of all earned leave credits
and other benefits due under existing CBAs were thereafter paid to those affected.
On January 24, 1992, a notice of strike was filed by the petitioners which accused pri-
vate respondents, among others, of unfair labor practice, violation of CBA and discrim-
ination. Conciliation proceedings were held by the National Conciliation and Mediation
Board (NCMB) but the parties failed to arrive at a settlement.
NLRC (public respondent) rendered a decision confirming the legality of the separation
of the 66 employees of management thereby dismissing the charges of violation of CBA
and unfair labor practice on the part of management.
ISSUE:
Whether or not the termination of the employment of the 66 employees is in accordance
with the LIPO rule in the CBA and in Art. 283 of the Labor Code, thus lawful.
RULING:
Yes the dismissal is both in accordance with the LIPO rule in the CBA and
in Art. 283 of the Labor Code.
The termination of the sixty-six employees was done in accordance with
Article 283 of the Labor Code. The basis for this was the companies' study to streamline
operations so as to make them more viable. Positions which overlapped each other, or
which are in excess of the requirements of the service, were declared redundant.
We fully agree with the findings and conclusions of the public respondent on
the issue of termination, to wit:
We sustain the companies' prerogative to adopt the alleged redundancy/retrenchment
program to minimize if not, to avert losses in the conduct of its operations. This has
been recognized in a line of cases. (Wiltshire File Co. vs. NLRC, G.R. No. L-82249,
February 7, 1991). However, the companies' decision on this matter is not absolute. The
basis for such an action must be far from being whimsical and the same must be proved
by substantial evidence. In addition, the implementation of such a decision or policy
must be in accordance with existing laws, rules and procedure and provisions of the
CBA between the parties, if there be any. Short of any of these conditions, management
policy to pursue and terminate its employees allegedly to avert losses, must fail.
While it may be true that the Liberty Flour Mills Group of Companies as a whole posted
a net income of P83.3 Million, it is admitted that with respect to operations of the meat
processing and livestock which were undertaken by herein companies sustained losses
in the sum of P2,257,649.88 (Exh. "3"). This is the reason, as advanced by management,
for its decision to streamline positions resulting in the reduction of manpower compli-
ment (sic).
The NLRC correctly held that private respondents did not violate the LIFO rule under
Section 2, Article III of the CBA. It is not disputed that the LIFO rule applies to termi-
nation of employment in the line of work. Verily, what is contemplated in the LIFO rule
is that when there are two or more employees occupying the same position in the com-
pany affected by the retrenchment program, the last one employed will necessarily be
the first to go.
ANDRADA vs NLRC
FACTS: The petitioners in this case, whose names appear in the title, are employees of
Subic legend Resorts and Casino, Inc. who were hired on various dates from 1995 up to
1997 working as architects, draftsmen, operators, engineers, and surveyors in the Pro-
ject Development Division on various projects. Herein respondents Mr. Hwa Puay and
Ms. Flordeliza Maria Reyes Rayel are impleaded in this case in their official capacities
as officers of said resort and casino.
On January 6, 1998, Subic Legend Resorts and Casino, Inc. decided to retrench and
terminate the employment of some thirty four (34) employees including herein petition-
ers sending notice of such action to the Department of Labor and Employment. For the
same reasons, Legend sent to the 34 employees the notices of retrenchment and offering
them retrenchment options. After they have chosen their options they signed a quitclaim
reserving the right to sue should their separation benefits not be settled by January 30,
2008.
On that same day, Labor and Employment Center of Subic Bay Metropolitan Authority
advertised that Legend International Resorts, Inc. was in need of employees for the
positions which were very much similar to those vacated by the petitioners.
Labor Relations (Termination of Employment) 062817
On March 3, 1998, fourteen (14) of the 34 retrenched employees filed before the Re-
gional Arbitration Branch of the NLRC in San Fernando, Pampanga a complaint for
illegal dismissal based on the advertisement made by the Subic Bay Metropolitan Au-
thority saying that Legend have created positions similar to those which they have va-
cated. Legend however, invoked management prerogatives.
The Labor Arbiter decided that the petitioners were illegally dismissed on the ground of
insufficiency of documents showing that legend had suffered actual losses or that there
were redundancy of positions as occupied by the petitioners. Legend then appealed the
decision to the National Labor Relations which reversed the decision.
Herein petitioners appealed the NLRC decision to the Court of Appeals. The latter
however sustained the CAs ruling and held that the employees were validly terminated
from employment due to redundancy and not retrenchment. Aggrieved with the CAs
decision, the above petitioners appealed to the Supreme Court.
ISSUES: Whether or not the complainants were illegally dismissed? Corollary, was
there a valid retrenchment?
RULING: The Supreme Court favors the petitioners.
It held that a companys prerogative is not absolute. It cannot exercise its prerogative in
a cruel, repressive, or despotic manner. In the case of Ariola vs. Philex Mining Corpora-
tion, the following are requirements of a valid retrenchment:
1. It is undertaken to prevent losses, which are not merely de minimis, but substan-
tial, serious, actual and real, or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer
2. The employer serves written notice both to the employees and the DOLE at least
one month prior to the intended date of retrenchment
3. The employer pays the retrenched employees separation pay equivalent to one
month pay or at least month pay for every year of service, whichever is highter.
The court further added that the employer must use fair and reasonable criteria in ascer-
taining who would be dismissed and retained among the employees and that the re-
trenchment must be undertaken in good faith.
Supreme Court held that in the instant case, Legend glaringly failed to show its financial
conditions prior to and at the time it enforced its retrenchment program. Furthermore, it
failed to submit audited financial statements regarding its alleged financial losses. Thus,
the retrenchment was illegal.
On the issue of redundancy, Supreme Court held that Legend failed to establish it as
such. It further explains that retrenchment and redundancy are two different concepts.
The difference of which were clearly elaborated in the case of Sebuguero vs. NLRC. To
simply put it, redundancy according to the Supreme Court exists when the number of
employees is in excess of what is reasonably necessary to operate the business.
Thus, the Supreme Court finally held, that the basis for retrenchment was not estab-
lished by substantial evidence and it also ruled that Legend failed to establish by the
same quantum of proof the fact of redundancy; hence the petitioners termination from
employment was illegal.
NORTH DAVAO MINING CORP vs NLRC
FACTS:
Respondent Wilfredo Guillema is one among several employees of North Davao who
were separated by reason of the companys closure on May 31, 1992, and who were the
complainants in the cases before the respondent labor arbiter.On May 31, 1992, peti-
tioner North Davao completely ceased operations due to serious business reverses.
From 1988 until its closure in 1992, North Davao suffered net losses averaging three
billion pesos (P3,000,000,000.00) per year, for each of the five years prior to its closure.
When it ceased operations, its remaining employees were separated and given the
equivalent of 12.5 days pay for every year of service, computed on their basic monthly
pay, in addition to the commutation to cash of their unused vacation and sick leaves.
However, it appears that, during the life of the petitioner corporation, from the begin-
ning of its operations in 1981 until its closure in 1992, it had been giving separation pay
equivalent to thirty (30) days pay for every year of service. Moreover, inasmuch as the
region where North Davao operated was plagued by insurgency and other peace and
order problems, the employees had to collect their salaries at a bank in Tagum, Davao
del Norte, some 58 kilometers from their workplace and about 2 hours travel time by
public transportation; this arrangement lasted from 1981 up to 1990.
Labor Arbiter rendered a decision ordering petitioner North Davao to pay the complain-
ants NLRC: AFFIRMED
ISSUE:
Whether or not an employer whose business operations ceased due to serious business
losses or financial reverses is obliged to pay separation pay to its employees separated
by reason of such closure.
HELD:
To resolve this issue, it is necessary to revisit the provision of law adverted to by the
parties in their submissions, namely Art. 283 of the Labor Code, which reads as follows:
Art. 283. Closure of establishment and reduction of personnel. - The employer may also
terminate the employment of any employee due to the installation of labor saving devic-
es, redundancy, retrenchment to prevent losses or the closing or cessation of operation
of the establishment or under-taking unless the closing is for the purpose of circumvent-
ing the provisions of this Title, by serving a written notice on the workers and the Min-
istry of Labor and Employment at least one (1) month before the intended date thereof.
In case of termination due to the installation of labor saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases of closures or cessation
of operations of establishment or undertaking not due to serious business losses or fi-
nancial reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half () month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year. (italics supplied)
The underscored portion of Art. 283 governs the grant of seperation benefits in case of
closures or cessation of operation of business establishments NOT due to serious busi-
ness losses or financial reverses Where, however, the closure was due to business loss-
5
es - as in the instant case, in which the aggregate losses amounted to over P20 billion -
the Labor Code does not impose any obligation upon the employer to pay separation
benefits, for obvious reasons. There is no need to belabor this point. Even the public
respondents, in their Comment[10] filed by the Solicitor General, impliedly concede
this point.
However, respondents tenaciously insist on the award of separation pay, anchoring their
claim solely on petitioner North Davaos long-standing policy of giving separation pay
benefits equivalent to 30- days pay, which policy had been in force in the years prior to
its closure. Respondents contend that, by denying the same separation benefits to pri-
vate respondent and the others similarly situated, petitioners discriminated against them.
They rely on this Courts ruling in Businessday Information Systems and Services, Inc.
(BISSI) vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial
reverses, decided as a retrenchment measure to lay-off some employees on May 16,
1988 and gave them separation pay equivalent to one-half () month pay for every year
of service. BISSI retained some employees in an attempt to rehabilitate its business as a
trading company. However, barely two and a half months later, these remaining em-
ployees were likewise discharged because the company decided to cease business op-
erations altogether. Unlike the earlier terminated employees, the second batch received
separation pay equivalent to a full months salary for every year of service, plus a mid-
year bonus. This Court ruled that there was impermissible discrimination against the
private respondents in the payment of their separation benefits. The law requires an
employer to extend equal treatment to its employees. It may not, in the guise of exercis-
ing management prerogatives, grant greater benefits to some and less to others. x
In resolving the present case, it bears keeping in mind at the outset that the factual cir-
cumstances of BISSI are quite different from the current case. The Court noted that
BISSI continued to suffer losses even after the retrenchment of the first batch of em-
ployees; clearly, business did not improve despite such drastic measure. That notwith-
standing, when BISSI finally shut down, it could well afford to (and actually did) pay
off its remaining employees with MORE separation benefits as compared with those
earlier laid off; obviously, then, there was no reason for BISSI to skimp on separation
pay for the first batch of discharged employees. That it was able to pay one-month
separation benefit for employees at the time of closure of its business meant that it must
have been also in a position to pay the same amount to those who were separated prior
to closure. That it did not do so was a wrongful exercise of management prerogatives.
That is why the Court correctly faulted it with impermissible discrimination. Clearly, it
exercised its management prerogatives contrary to general principles of fair play and
justice.
In the instant case however, the companys practice of giving one months pay for every
year of service could no longer be continued precisely because the company could not
afford it anymore. It was forced to close down on account of accumulated losses of over
P20 billion. This could not be said of BISSI. In the case of North Davao, it gave 30-
days separation pay to its employees when it was still a going concern even if it was
already losing heavily. As a going concern, its cash flow could still have sustained the
payment of such separation benefits. But when a business enterprise completely ceases
operations, i.e., upon its death as a going business concern, its vital lifeblood -its cash-
flow - literally dries up. Therefore, the fact that less separation benefits were granted
when the company finally met its business death cannot be characterized as discrimina-
tion. Such action was dictated not by a discriminatory management option but by its
complete inability to continue its business life due to accumulated losses. Indeed, one
cannot squeeze blood out of a dry stone. Nor water out of parched land.
WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution by
SETTING ASIDE and deleting the award for additional separation pay of 17.5 days for
every year of service, and AFFIRMING it in all other aspects.
SEVILLANA vs IT INTERNATIONAL CORP
Facts: Sometime in November 1987, petitioner Omar Sevillana was contracted to work
as a driver by private respondent I.T. (International) Corporation (I.T., for brevity) for
its foreign accredited principal, Samir Maddah (Samir, for brevity), in Jeddah, Saudi
Arabia. The agreed monthly salary was US $370.00 for a period of two (2) years. Peti-
tioner alleged, however, that when he received his salaries from his employer, he was
only paid US $100.00 a month for twelve (12) months, instead of the agreed US
$370.00 per month. On November 2, 1988, after working twelve (12) months with his
employer, petitioner said that he was repatriated without any valid and justifiable rea-
son. Petitioner shouldered the cost of his return airfare in the amount of US $630.00.
Respondent alleged that Samir decided to repatriate the petitioner because his critical
health condition and to avoid further injury and complication to his health. Additionally,
they claimed that petitioner refuses to be repatriated and run away.
POEA: ordered the respondents to be jointly and severally liable to the complainants
monetary claims
NLRC: reversed, Corporation is a recruitment agency, thus it is only an agent of the
employer (Samir) and it does not have the employees documents. Burden of proof in
dismissal cases shifts to the employer only when the latter admits such dismissal.
Issue: W/N the petitioner was illegally dismissed
Held: Yes, Article 277(b) of the Labor Code puts the burden of proving that the dismis-
sal of an employee was for a valid or authorized cause on the employer. It should be
noted that the said provision of law does not distinguish whether the employer admits or
does not admit the dismissal. It is a well-known maxim in statutory construction that
where the law does not distinguish, the court should not distinguish.
For a disease to be a valid ground for the dismissal of the employee, the continued
employment of such employee is prohibited by law or prejudicial to his health or the
health of his co-employees, there must be 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. The defense of
complainant's medical problems (alleged hypertension of complainant) interposed by
respondents to justify the dismissal of the former is totally bereft of merit. The said
defense of respondents is not only uncorroborated by documentary evidence but is also
not a just or valid cause for termination of one's employment. While an employer (re-
spondents in this case) may validly terminate the services of an employee who has been
found to be suffering from any disease, it is authorized only if his continued employ-
ment is prohibited by law or is prejudicial to his health as well as to the health of his co-
employees (Art. 284, Labor Code). This is not present in the instant case, for there is no
finding from a medical practitioner certifying that complainant is really hypertensive."
DUE PROCESS
AGABON VS. NLRC
Labor Relations (Termination of Employment) 062817
FACTS: Private respondent Riviera Home Improvements, Inc. is engaged in the busi-
ness of selling and installing ornamental and construction materials. It employed peti-
tioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on
January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of
work. Petitioners then filed a complaint for illegal dismissal and payment of money
claims and on December 28, 1999.
LA RULING: LA rendered a decision declaring the dismissals illegal and ordered pri-
vate respondent to pay the monetary claims.
NLRC RULING: Reversed the LA
It found that the petitioners had abandoned their work, and were not entitled to back-
wages and separation pay. The other money claims awarded by the Labor Arbiter were
also denied for lack of evidence.
CA RULING: Affirmed the NLRC
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal
because they had abandoned their employment but ordered the payment of money
claims
ISSUE: W/N petitioners are illegally dismissed without just cause
W/N petitioner are accorded with due process when they were dismissed
RULING: NO. To dismiss an employee, the law requires not only the existence of a just
and valid cause but also enjoins the employer to give the employee the opportunity to be
heard and to defend himself.
Article 282 of the Labor Code enumerates the just causes for termination by the em-
ployer: (a) serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or the latters representative in connection with the employees
work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful
breach by the employee of the trust reposed in him by his employer or his duly author-
ized representative; (d) commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause for termination of em-
ployment by the employer. For a valid finding of abandonment, these two factors should
be present: (1) the failure to report for work or absence without valid or justifiable rea-
son; and (2) a clear intention to sever employer-employee relationship, with the second
as the more determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and unjustified.
In February 1999, petitioners were frequently absent having subcontracted for an instal-
lation work for another company. Subcontracting for another company clearly showed
the intention to sever the employer-employee relationship with private respondent.
This was not the first time they did this. In January 1996, they did not report for work
because they were working for another company. Private respondent at that time warned
petitioners that they would be dismissed if this happened again. Petitioners disregarded
the warning and exhibited a clear intention to sever their employer-employee relation-
ship. The record of an employee is a relevant consideration in determining the penalty
that should be meted out to him.
NO. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or opportunity to be
heard if requested by the employee before terminating the employment: a notice speci-
fying the grounds for which dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2)
if the dismissal is based on authorized causes under Articles 283 and 284, the employer
must give the employee and the Department of Labor and Employment written notices
30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for
a just cause under Article 282 of the Labor Code, for an authorized cause under Article
283, or for health reasons under Article 284, and due process was observed; (2) the
dismissal is without just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due process; and (4) the
dismissal is for just or authorized cause but due process was not observed.
The present case squarely falls under the fourth situation. The dismissal should be up-
held because it was established that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not follow the notice requirements
and instead argued that sending notices to the last known addresses would have been
useless because they did not reside there anymore. Unfortunately for the private re-
spondent, this is not a valid excuse because the law mandates the twin notice require-
ments to the employees last known address. Thus, it should be held liable for non-
compliance with the procedural requirements of due process.
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
JAKA FOOD PROCESSING CORPORATION vs. DARWIN PACOT, et. al.
FACTS:
Respondents were hired by JAKA until their termination on August 29, 1997 because
the Corporation was in dire financial straits. It was not disputed that they were termi-
nated without complying with the requirement under Art. 283 of the Labor Code regard-
ing the service of notice upon the employees and DOLE at least one month before the
intended date of termination.
The respondents filed complaints for illegal dismissal.
LA: the termination is illegal and awarded backwages, SIL, and 13th month pay.
NLRC: Affirmed in toto the Labor Arbiter at first but came on with another decision
granting the petition of JAKA setting aside the awards.
CA: Reversed and set aside the NLRC Decision, ordered the award of separation pay,
13th month pay, and backwages from the time of the termination and up to the promul-
gation of final Decision.
ISSUE: Whether the CA correctly awarded full backwages to respondents
HELD: No. The Statement of Income and Deficit of the respondent-appellant corpo-
ration to prove its alleged losses was prepared by an independent auditor, SGV & Co. It
6
convincingly showed that the respondent-appellant corporation was in dire financial
straits, which the complainants-appellees failed to dispute. The losses incurred by the
respondent-appellant corporation are clearly substantial and sufficiently proven with
clear and satisfactory evidence.
The respondents were dismissed due retrenchment, which is one of the au-
thorized causes mentioned in Article 283. A dismissal for an authorized cause under
Article 283 does not necessarily imply delinquency or culpability on the part of the
employee. Instead, the dismissal process is initiated by the employers exercise of his
management prerogative, i.e. when the employer opts to install labor saving devices,
when he decides to cease business operations or when, as in this case, he undertakes to
implement a retrenchment program. However, the dismissal based on an authorized
cause under Article 283 where the employer failed to comply with the notice require-
ment, the sanction should be stiffer because the dismissal process was initiated by the
employers exercise of his management prerogative.
JAKA failed to comply with the notice requirement under the same Article. Considering
that the closure of the business or cessation of operations is due to serious business
losses or financial reverses, the affected employees right to separation pay is lost for
obvious reasons.
ABBOTT LABORATORIES v. ALCARAZ
G.R. No. 192571, July 23, 2013
FACTS: Petitioner Abbott Laboratories, Philippines (Abbott) caused the publication in
a major broadsheet newspaper of its need for a Medical and Regulatory Affairs Manag-
er. Alcaraz showed interest and submitted her application. Abbott formally offered
Alcaraz the above-mentioned position.6 In Abbotts offer sheet,7 it was stated that
Alcaraz was to be employed on a probationary basis and she accepted the said offer. On
February 12, 2005, Alcaraz signed an employment contract which stated, inter alia, that
she was to be placed on probation for a period of six (6) months beginning February 15,
2005 to August 14, 2005.
On May 16, 2005, Alcaraz was informed that she failed to meet the regularization
standards for the position of Regulatory Affairs Manager. Petitioners requested Alcaraz
to tender her resignation, else they be forced to terminate her services. She was also told
that, regardless of her choice, she should no longer report for work and was asked to
surrender her office identification cards. She requested to be given one week to decide
on the same, but to no avail.19
On May 23, 2005, petitioners personally handed to Alcaraz a letter stating that her ser-
vices had been terminated effective May 19, 2005.21 The letter detailed the reasons for
Alcarazs termination. On May 27, 2005, Alcaraz received another copy of the said
termination letter via registered mail.23Alcaraz felt that she was unjustly terminated
from her employment and thus, filed a complaint for illegal dismissal and damages
against Abbott and its officers.
The LA dismissed Alcarazs complaint for lack of merit. The NLRC rendered a Deci-
sion annulling and setting aside the LAs ruling. The CA affirmed the ruling of the
NLRC and held that the latter did not commit any grave abuse of discretion in finding
that Alcaraz was illegally dismissed.
ISSUE: Whether or not the termination of Alcarazs employment is procedurally in-
firmed.
HELD: Yes. The fact that Abbot violated its own company procedure renders the
termination of Alcarazs employment procedurally infirm, warranting the payment of
nominal damages.
A different procedure is applied when terminating a probationary employee; the usual
two-notice rule does not govern.65 Section 2, Rule I, Book VI of the Implementing
Rules of the Labor Code states that [i]f the termination is brought about by the x x x
failure of an employee to meet the standards of the employer in case of probationary
employment, it shall be sufficient that a written notice is served the employee, within a
reasonable time from the effective date of termination.
As the records show, Alcaraz's dismissal was effected through a letter dated May 19,
2005 which she received on May 23, 2005 and again on May 27, 2005. Stated therein
were the reasons for her termination, i.e., that after proper evaluation, Abbott deter-
mined that she failed to meet the reasonable standards for her regularization considering
her lack of time and people management and decision-making skills, which are neces-
sary in the performance of her functions as Regulatory Affairs Manager.66Undeniably,
this written notice sufficiently meets the criteria set forth, thereby legitimizing the cause
and manner of Alcarazs dismissal as a probationary employee under the parameters set
by the Labor Code.67
Nonetheless, despite the existence of a sufficient ground to terminate Alcarazs em-
ployment and Abbotts compliance with the Labor Code termination procedure, it is
readily apparent that Abbott breached its contractual obligation to Alcaraz when it failed
to abide by its own procedure in evaluating the performance of a probationary employ-
ee.
Veritably, a company policy partakes of the nature of an implied contract between the
employer and employee. Once an employer establishes an express personnel policy and
the employee continues to work while the policy remains in effect, the policy is deemed
an implied contract for so long as it remains in effect. If the employer unilaterally
changes the policy, the terms of the implied contract are also thereby changed. Hence,
given such nature, company personnel policies create an obligation on the part of both
the employee and the employer to abide by the same.
In this case, it is apparent that Abbott failed to follow the company procedure in evalu-
ating Alcaraz. For one, there lies a hiatus of evidence that a signed copy of Alcarazs
PPSE form was submitted to the HRD. It was not even shown that a PPSE form was
completed to formally assess her performance. Neither was the performance evaluation
discussed with her during the third and fifth months of her employment. Nor did Abbott
come up with the necessary Performance Improvement Plan to properly gauge Al-
carazs performance with the set company standards.
In this light, while there lies due cause to terminate Alcarazs probationary employment
for her failure to meet the standards required for her regularization, and while it must be
further pointed out that Abbott had satisfied its statutory duty to serve a written notice
of termination, the fact that it violated its own company procedure renders the termina-
tion of Alcarazs employment procedurally infirm, warranting the payment of nominal
damages.
Case law has settled that an employer who terminates an employee for a valid cause but
does so through invalid procedure is liable to pay the latter nominal damages.
In Agabon v. NLRC (Agabon),71 the Court pronounced that where the dismissal is for a
just cause, 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.72
The Court modified Agabon in the case of Jaka Food Processing Corporation v.
Pacot (Jaka)74 where it created a distinction between procedurally defective dismissals
due to a just cause, on one hand, and those due to an authorized cause, on the other.
Labor Relations (Termination of Employment) 062817
If the dismissal is based on a just cause under Article 282 of the Labor Code (now Arti-
cle 296) but the employer failed to comply with the notice requirement, the sanction to
be imposed upon him should be tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee; if the dismissal is based on an authorized
cause under Article 283 (now Article 297) but the employer failed to comply with the
notice requirement, the sanction should be stiffer because the dismissal process was
initiated by the employers exercise of his management prerogative.
Alcarazs dismissal proceeded from her failure to comply with the standards required
for her regularization. As such, it is undeniable that the dismissal process was, in effect,
initiated by an act imputable to the employee, akin to dismissals due to just caus-
es under Article 296 of the Labor Code. Therefore, the Court deems it appropriate to fix
the amount of nominal damages at the amount of P30,000.00, consistent with its rulings
in both Agabon and Jaka.
KING OF KINGS TRANSPORT, INC VS MAMAC
FACTS: Petitioner KKTI is a corporation engaged in public transportation and managed
by Claire Dela Fuente and Melissa Lim. Respondent was a conductor for Don Mariano
Transit Corporation (DMTC). He was one of the few people who established Damayan
ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union. Pending the
unions certification election, respondent was transferred to KKTI. The KKTI employ-
ees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was
registered with DOLE. Respondent was elected KKKK president.
Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an
irregularity. It discovered that respondent declared several sold tickets as returned tick-
ets causing KKTI to lose an income of eight hundred and ninety pesos. While no irregu-
larity report was prepared on the October 28, 2001 incident, KKTI nevertheless asked
respondent to explain the discrepancy. In his letter, respondent said that the erroneous
declaration in his October 28, 2001 Trip Report was unintentional. He explained that
during that days trip, the windshield of the bus assigned to them was smashed; and they
had to cut short the trip in order to immediately report the matter to the police. As a
result of the incident, he got confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his employment effec-
tive November 29, 2001. The dismissal letter alleged that the October 28, 2001 irregu-
larity was an act of fraud against the company. KKTI also cited as basis for respond-
ents dismissal the other offenses he allegedly committed since 1999.
After that, he filed an action for illegal dismissal, among other claims. He denied com-
mitting any infraction and alleged that his dismissal was intended to bust union activi-
ties. Moreover, he claimed that his dismissal was effected without due process.
KKTI averred that it had observed due process in dismissing respondent and maintained
that respondent was not entitled to his money claims such as service incentive leave and
13th-month pay because he was paid on commission or percentage basis.
LABOR ARBITER: he was validly dismissed
NLRC: Affirmed. CA held that there was just cause for respondents dismissal. It ruled
that respondents act in declaring sold tickets as returned tickets x x x constituted fraud
or acts of dishonesty justifying his dismissal.
ISSUE: WON respondent was given due process (procedural)
HELD: NO. There was failure to observe the requirements of due process
Due process under the Labor Code involves two aspects: first, substantivethe valid
and authorized causes of termination of employment under the Labor Code; and second,
proceduralthe manner of dismissal.
Section 2(d) of Rule I of Book VI of the Omnibus Rules Implementing the Labor Code
provides:
SEC. 2. Standards of due process; requirements of notice.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
Code:
(a) A written notice served on the employee specifying the ground or grounds for termi-
nation, and giving said employee reasonable opportunity within which to explain his
side.
(b) 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.
(c) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
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. Reason-
able opportunity under the Omnibus Rules means every kind of assistance that man-
agement must accord to the employees to enable them to prepare adequately for their
defense.15 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. Last-
ly, 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.
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.
7
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.
Respondent was not issued a written notice charging him of committing an infraction. A
verbal appraisal of the charges against an employee does not comply with the first no-
tice requirement.
The court observed from the irregularity reports against respondent for his other offens-
es that such contained merely a general description of the charges against him. The
reports did not even state a company rule or policy that the employee had allegedly
violated.
No hearing was conducted. Regardless of respondents written explanation, a hearing
was still necessary in order for him to clarify and present evidence in support of his
defense. Moreover, respondent made the letter merely to explain the circumstances
relating to the irregularity in his October 28, 2001 Conductors Trip Report. He was
unaware that a dismissal proceeding was already being effected. Thus, he was surprised
to receive the November 26, 2001 termination letter indicating as grounds, not only his
October 28, 2001 infraction, but also his previous infractions.
FELIX B. PEREZ and AMANTE G. DORIA, Petitioners, vs PHILIPPINE TEL-
EGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, Re-
spondents.
FACTS: Petitioners Felix B. Perez and Amante G. Doria were employed by respondent
Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and supervi-
sor, respectively, in PT&Ts Shipping Section, Materials Management Group. Acting
on an alleged unsigned letter regarding anomalous transactions at the Shipping Section,
respondents formed a special audit team to investigate the matter. It was discovered that
the Shipping Section jacked up the value of the freight costs for goods shipped and that
the duplicates of the shipping documents allegedly showed traces of tampering, altera-
tion and superimposition.
Petitioners were placed on preventive suspension for 30 days for their alleged involve-
ment in the anomaly. Their suspension was extended for 15 days twice. Then in a
Memorandum, petitioners were dismissed from the service for having falsified company
documents. Petitioners filed a complaint for illegal suspension and illegal dismissal
alleging that they were dismissed on November 8, 1993, the date they received the
above-mentioned memorandum.
LA favored petitioners. NLRC reversed the decision of LA. Petitioners appealed to CA.
CA affirmed the NLRC decision insofar as petitioners illegal suspension for 15 days
and dismissal for just cause were concerned. However, it found that petitioners were
dismissed without due process. Petitioners now seek a reversal of the CA decision be-
fore the SC. They contend that there was no just cause for their dismissal, that they were
not accorded due process and that they were illegally suspended for 30 days.
ISSUE: WON petitioners were afforded due process.
RULING: Respondents evidence is insufficient to clearly and convincingly establish
the facts from which the loss of confidence resulted. Other than their bare allegations
and the fact that such documents came into petitioners hands at some point, respond-
ents should have provided evidence of petitioners functions, the extent of their duties,
the procedure in the handling and approval of shipping requests and the fact that no
personnel other than petitioners were involved. The alterations on the shipping docu-
ments could not reasonably be attributed to petitioners because it was never proven that
petitioners alone had control of or access to these documents.
Respondents illegal act of dismissing petitioners was aggravated by their failure to
observe due process. To meet the requirements of due process in the dismissal of an
employee, an employer must furnish the worker with 2 written notices: (1) a written
notice specifying the grounds for termination and giving to said employee a reasonable
opportunity to explain his side and (2) another written notice indicating that, upon due
consideration of all circumstances, grounds have been established to justify the employ-
ers decision to dismiss the employee.
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 re-
spond to the charge, present his evidence or rebut the evidence presented against him.
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.
The standard for the hearing requirement, ample opportunity, is couched in general
language revealing the legislative intent to give some degree of flexibility or adaptabil-
ity to meet the peculiarities of a given situation. To confine it to a single rigid proceed-
ing such as a formal hearing will defeat its spirit.
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 confer-
ence is ideal, it is not an absolute, mandatory or exclusive avenue of due process.
A hearing means that a party should be given a chance to adduce his evidence to sup-
port his side of the case and that the evidence should be taken into account in the adju-
dication of the controversy. To be heard does not mean verbal argumentation alone
inasmuch as one may be heard just as effectively through written explanations, submis-
sions or pleadings. Therefore, while the phrase ample opportunity to be heard may in
Labor Relations (Termination of Employment) 062817
fact include an actual hearing, it is not limited to a formal hearing only. The existence of
an actual, formal trial-type hearing, although preferred, is not absolutely necessary to
satisfy the employees right to be heard.
Due process of law simply means giving opportunity to be heard before judgment is
rendered. In fact, there is no violation of due process even if no hearing was conducted,
where the party was given a chance to explain his side of the controversy. What is
frowned upon is the denial of the opportunity to be heard. Twin requirements of notice
and hearing constitute the essential elements of due process in the dismissal of employ-
ees. It is deemed sufficient for the employer to follow the natural sequence of notice,
hearing and judgment.
In sum, the following are the guiding principles in connection with the hearing require-
ment in dismissal cases:
(a) ample opportunity to be heard means any meaningful opportunity (verbal or writ-
ten) 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 prac-
tice 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.
REINSTATEMENT
ALCANTARA & SONS, INC. VS CA
PFIZER, INC. VS VELASCO
FACTS: Velasco was employed with petitioner PFIZER, INC. as Professional Health
Care Representative since 1 August 1992. Sometime in April 2003, Velasco had a med-
ical work up for her high-risk pregnancy and was subsequently advised bed rest which
resulted in her extending her leave of absence. Velasco filed her sick leave for the peri-
od from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June 2003,
and leave without pay from 23 June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER served Velasco a "Show-
cause Notice" about an investigation on her possible violations of company work rules
regarding "unauthorized deals and/or discounts in money or samples and unauthorized
withdrawal and/or pull-out of stocks" and instructing her to submit her explanation on
the matter within 48 hours from receipt of the same, the notice also advised her that she
was being placed under "preventive suspension" for 30 days. Velasco sent a letter deny-
ing the charges. Velasco received a "Second Show-cause Notice" informing her of a
certain Carlito Jomen executed an affidavit pointing to Velasco as the one who transact-
ed with a printing shop to print PFIZER discount coupons. Velasco sent a letter asking
for additional time to answer the second Show-cause Notice.
That same day, Velasco filed a complaint for illegal suspension and opted to withhold
answering the Second Show-cause Notice. Velasco received a "Third Show-cause No-
tice," together with copies of the affidavits of two Branch Managers of Mercury Drug,
asking her for her comment. Finally, on 29 July 2003, PFIZER informed Velasco of its
"Management Decision" terminating her employment.
LA: The dismissal of Velasco is illegal. Reinstatement was ordered with backwages and
further awarding moral and exemplary damages with attorneys fees.
NLRC:
Upheld the ruling of LA, but deleted the award on moral and exemplary damages.
Pfizer then filed an MR but was denied for lack of merit in the next NLRC Resolu-
tion.
A special civil action for the issuance of a writ of certiorari under Rule 65 of the
Rules of Court to annul and set aside the aforementioned NLRC issuances was filed to
the CA
CA:
Reversed the ruling of LA and NLRC. Having found the termination of Geraldine L.
Velascos employment in accordance with the two notice rule pursuant to the due pro-
cess requirement and with just cause, her complaint for illegal dismissal was dismissed.
Velasco filed an MR with CA. It affirmed the legality of the dismissal of Velasco but
directed Pfizer to pay her wages from the date of the Labor Arbiters Decision dated
December 5, 2003 up to the Court of Appeals Decision dated November 23, 2005.
Velasco filed with the Court a petition for review under Rule 45 of the Rules of Civil
Procedure, which assailed the CA Decision but was denied by the SCs Second Divi-
sion.
ISSUE: Whether or not the CA committed a serious but reversible error when it ordered
Pfizer to pay Velasco wages from the date of the Labor Arbiters decision ordering her
reinstatement until November 23, 2005, when the Court of Appeals rendered its deci-
sion declaring Velascos dismissal valid
Pfizers Contention:
There was no unjustified refusal on its part to reinstate Velasco during the pen-
dency of the appeal. During the pendency of the appeal, PFIZER claimed that it had
already required respondent to report for work on July 1, 2005. However, according to
PFIZER, it was respondent who refused to return to work when she wrote PFIZER,
through counsel, that she was opting to receive her separation pay and to avail of PFIZ-
ERs early retirement program.
It should no longer be required to pay wages considering that (1) it had already
previously paid an enormous sum to respondent under the writ of execution issued by
the Labor Arbiter; (2) it was allegedly ready to reinstate respondent as of July 1, 2005
but it was respondent who unjustifiably refused to report for work; (3) it would purport-
edly be tantamount to allowing respondent to choose "payroll reinstatement" when by
law it was the employer which had the right to choose between actual and payroll rein-
statement; (4) respondent should be deemed to have "resigned" and therefore not enti-
tled to additional backwages or separation pay; and (5) this Court should not mechani-
cally apply Roquero but rather should follow the doctrine in Genuino v. National Labor
Relations Commission which was supposedly "more in accord with the dictates of fair-
ness and justice.
HELD: NO.
PFIZERs previous payment to respondent of the amount of P1,963,855.00 (represent-
ing her wages from December 5, 2003, or the date of the Labor Arbiter decision, until
8
May 5, 2005) that was successfully garnished under the Labor Arbiters Writ of Execu-
tion dated May 26, 2005 cannot be considered in its favor. Not only was this sum legal-
ly due to respondent under prevailing jurisprudence but also this circumstance high-
lighted PFIZERs unreasonable delay in complying with the reinstatement order of the
Labor Arbiter. A perusal of the records, including PFIZERs own submissions, con-
firmed that it only required respondent to report for work on July 1, 2005, as shown by
its Letter dated June 27, 2005, which is almost two years from the time the order of
reinstatement was handed down in the Labor Arbiters Decision dated December 5,
2003.
An award or order of reinstatement is immediately self-executory without the need for
the issuance of a writ of execution in accordance with the third paragraph of Article 223
of the Labor Code. The provision of Article 223 is clear that an award [by the Labor
Arbiter] for reinstatement shall be immediately executory even pending appeal and the
posting of a bond by the employer shall not stay the execution for reinstatement. If the
requirements of Article 224 [including the issuance of a writ of execution] were to
govern, then the executory nature of a reinstatement order or award contemplated by
Article 223 will be unduly circumscribed and rendered ineffectual.
In the case at bar, PFIZER did not immediately admit respondent back to work which,
according to the law, should have been done as soon as an order or award of reinstate-
ment is handed down by the Labor Arbiter without need for the issuance of a writ of
execution. Thus, respondent was entitled to the wages paid to her under the aforemen-
tioned writ of execution. At most, PFIZERs payment of the same can only be deemed
partial compliance/execution of the Court of Appeals Resolution dated October 23,
2006 and would not bar respondent from being paid her wages from May 6, 2005 to
November 23, 2005. It would also seem that PFIZER waited for the resolution of its
appeal to the NLRC and, only after it was ordered by the Labor Arbiter to pay the
amount of P1,963,855.00 representing respondents full backwages from December 5,
2003 up to May 5, 2005, did PFIZER decide to require respondent to report back to
work via the Letter dated June 27, 2005.
Under Article 223 of the Labor Code, 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 pay-
roll."
It is established in jurisprudence that reinstatement means restoration to a state or condi-
tion 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 un-
filled position which is substantially equivalent or of similar nature as the one previous-
ly occupied by the employee.
it cannot be said that with PFIZERs June 27, 2005 Letter, in belated fulfillment of the
Labor Arbiters reinstatement order, it had shown a clear intent to reinstate respondent
to her former position under the same terms and conditions nor to a substantially equiv-
alent position. To begin with, the return-to-work order PFIZER sent respondent is silent
with regard to the position or the exact nature of employment that it wanted respondent
to take up as of July 1, 2005. Even if we assume that the job awaiting respondent in the
new location is of the same designation and pay category as what she had before, it is
plain from the text of PFIZERs June 27, 2005 letter that such reinstatement was not
"under the same terms and conditions" as her previous employment, considering that
PFIZER ordered respondent to report to its main office in Makati City while knowing
fully well that respondents previous job had her stationed in Baguio City (respondents
place of residence) and it was still necessary for respondent to be briefed regarding her
work assignments and responsibilities, including her relocation benefits.
It is well-settled that when a person is illegally dismissed, he is entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages. In the
event, however, that reinstatement is no longer feasible, or if the employee decides not
be reinstated, the employer shall pay him separation pay in lieu of reinstatement. Such a
rule is likewise observed in the case of a strained employer-employee relationship or
when the work or position formerly held by the dismissed employee no longer exists. In
sum, an illegally dismissed employee is entitled to: (1) either reinstatement if viable or
separation pay if reinstatement is no longer viable, and (2) backwages.
In sum, the Court reiterates the principle that reinstatement pending appeal necessitates
that it must be immediately self-executory without need for a writ of execution during
the pendency of the appeal, if the law is to serve its noble purpose, and any attempt on
the part of the employer to evade or delay its execution should not be allowed. Further-
more, we likewise restate our ruling that an order for reinstatement entitles an employee
to receive his accrued backwages from the moment the reinstatement order was issued
up to the date when the same was reversed by a higher court without fear of refunding
what he had received. It cannot be denied that, under our statutory and jurisprudential
framework, respondent is entitled to payment of her wages for the period after Decem-
ber 5, 2003 until the Court of Appeals Decision dated November 23, 2005, notwith-
standing the finding therein that her dismissal was legal and for just cause. Thus, the
payment of such wages cannot be deemed as unjust enrichment on respondents part.
LEOPARD V. QUITOY
FACTS:
Alongside Numeriano Ondong, respondents Tomas Quitoy, Raul Sabang and Diego
Morales were hired as security guards by petitioner Leopard Security and Investigation
Agency (LSIA) which maintained its office at BCC House, 537 Shaw Boulevard, Man-
daluyong City.All being residents of Cebu City, respondents were assigned by LSIA to
the different branches of its only client in said locality, Union Bank of the Philippines
(Union Bank).
On 1 April 2005, it appears that Union Bank served a notice to LSIA, terminating the
parties security service contract effective at the end of business hours of 30 April 2005.
LSIA informed respondents on 29 April 2005 of the termination of its contract with
Union Bank which had decided to change its security provider.
On 3 May 2005, respondents and Ondong filed a complaint for illegal dismissal, unpaid
13th month pay and service incentive leave pay (SILP), moral and exemplary damages
as well as attorneys fees against LSIA,
With the complaint already filed before Regional Office of Cebu City it appears that
LSIA sent a notice requiring respondents to report for work to its Mandaluyong City
office.
In support of their complaint, respondents averred that they were hired and assigned by
LSIA to the different Cebu City branches of Union Bank which directly paid their sala-
ries and whose branch managers exercised direct control and supervision over them.
Required to work from 7:30 a.m. to 9:00 p.m. daily, respondents claimed that they took
orders and instructions from Union Banks branch managers since LSIA had no admin-
istrative personnel in Cebu City.
Labor Relations (Termination of Employment) 062817
Respondents further asserted that, after introducing himself as a representative of LSIA
on 29 April 2005, Morales belatedly informed them that their services would be termi-
nated at the end of the office hours on the same business day.
Directed by Morales to report to Union Banks Cebu Business Park Branch the next
day, respondents maintained that they surrendered their service firearms to Cortes who
told them that Union Bank would be engaging the services of another security agency
effective the next working day. Not even reimbursed their firearm bond nor told that
Union Bank had no monetary obligation to them, respondents claimed they were con-
strained to file their complaint and to pray that the former be held jointly and severally
liable with LSIA for their claims.
In its position paper, LSIA, on the other hand, asseverated that upon being hired, re-
spondents opted for an assignment in Cebu City and were, accordingly, detailed at the
different branches of Union Bank in said locality. Informed by Union Bank on 1 April
2005 of the termination of their security service contract effective 30 April 2005, LSIA
claimed that it relieved respondents from their assignments by the end of the business
hours of the latter date. Petitioners would, on 10 May 2005, direct respondents to report
LA RULING:
LA found LSIA liable for the illegal dismissal of respondents.
Faulting LSIA for informing respondents of the termination of their services only on 30
April 2005 despite Union Banks 1 April 2005 advice of the termination of its security
service contract, the LA ruled that the 10 May 2005 report to work order did not show a
sincere intention on the part of LSIA to provide respondents with other assignments.
Aside from respondents claims for backwages, LSIA was ordered by the Labor Arbiter
to pay the formers claim for separation pay on the ground that reinstatement was no
longer feasible under the circumstances.
Although absolved from liability for the foregoing awards upon the finding that LSIA
was an independent contractor, Union Bank was, however, held jointly and severally
liable with said security agency for the payment of respondents claims for proportion-
ate 13th month pay and SILP for the three years immediately preceding the institution
of the case
NLRC RULING:
Modified LA ruling
Applying the principle that security agencies like LSIA are allowed to put security
guards on temporary off-detail or floating status for a period not exceeding six months,
the NLRC discounted the factual and legal bases for the illegal dismissal determined by
the Labor Arbiter as well as the backwages awarded in favor of respondents.
Finding that the filing of the complaint on 3 May 2005 was premature, the NLRC took
note of the fact that respondents did not even protest against the report to work order
issued by LSIA.
Even then, the NLRC upheld the Labor Arbiters award of separation pay on the theory
that reinstatement was no longer viable.
CA RULING:
Affirmed NLRC
Applying the principle that respondents could not be considered illegally dismissed
before the lapse of six months from their being placed on floating status by LSIA, the
CA justified the awards of separation pay, proportionate 13th month pay and SILP
Respondents were caught off guard when Rogelio Morales, [LSIAs] representative
summarily told them not to report to Union Bank anymore. They did not understand its
implications as no one bothered to explain what would happen to them.
At any rate, it is clear as day that respondents no longer wish to continue their employ-
ment with [LSIA] because of the shabby treatment previously given them. Their rela-
tions have obviously turned sour. Such being the case, separation pay, in lieu of rein-
statement, is proper. Separation pay is granted where reinstatement is no longer advisa-
ble because of strained relations between the employer and the employee.
ISSUE: W/N an award of separation pay proper despite lack of showing of illegal dis-
missal
RULING:
NO. Applying Article 286 of the Labor Code by analogy, this Court has repeatedly
recognized that security guards may be temporarily sidelined by their security agency as
their assignments primarily depend on the contracts entered into by the latter with third
parties.
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, as here, 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.
For as long as such temporary inactivity does not continue for a period exceeding six
months, it has been ruled that placing an employee on temporary "off-detail" or "float-
ing status" is not equivalent to dismissal.
In the case at bench, respondents were informed on 29 April 2005 that they were going
to be relieved from duty as a consequence of the 30 April 2005 expiration of the securi-
ty service contract between Union Bank and LSIA. While respondents lost no time in
immediately filing their complaint on 3 May 2005, the record equally shows that they
were directed by LSIA to report for work at its Mandaluyong City office on 10 May
2005 or a mere ten days from the time the former were effectively sidelined.
Considering that a security guard is only considered illegally dismissed from service
when he is sidelined from duty for a period exceeding six months, the CA correctly
upheld the NLRCs ruling that respondents were not illegally dismissed by LSIA. Par-
enthetically, said ruling is binding on respondents who did not appeal either the decision
rendered by the NLRC or the CA in line with the entrenched procedural rule in this
jurisdiction that a party who did not appeal cannot assign such errors as are designed to
have the judgment modified.
9
Having correctly ruled out illegal dismissal of respondents, the CA reversibly erred,
however, when it sustained the NLRCs award of separation pay on the ground that the
parties relationship had already been strained. For one, liability for the payment of
separation pay is a legal consequence of illegal dismissal where reinstatement is no
longer viable or feasible.
Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to the
twin reliefs of full backwages and reinstatement without loss of seniority rights. Aside
from the instances provided under Articles 283 and 284 of the Labor Code, separation
pay is, however, granted when reinstatement is no longer feasible because of strained
relations between the employer and the employee. In cases of illegal dismissal, the
accepted doctrine is that separation pay is available in lieu of reinstatement when the
latter recourse is no longer practical or in the best interest of the parties.
As a relief granted in lieu of reinstatement, however, it consequently goes without say-
ing that an award of separation pay is inconsistent with a finding that there was no ille-
gal dismissal. Standing alone, the doctrine of strained relations will not justify an award
of separation pay, a relief granted in instances where the common denominator is the
fact that the employee was dismissed by the employer.
Even in cases of illegal dismissal, the doctrine of strained relations is not applied indis-
criminately as to bar reinstatement, especially when the employee has not indicated an
aversion to returning to work or does not occupy a position of trust and confidence in or
has no say in the operation of the employers business. Although litigation may also
engender a certain degree of hostility, it has likewise been ruled that the understandable
strain in the parties relations would not necessarily rule out reinstatement which would,
otherwise, become the rule rather than the exception in illegal dismissal cases.
BACKWAGES
OSMALIK S. BUSTAMANTE v. NLRC
FACTS:
The Court promulgated a Decision affirming the LA with modifications that backwages
shall be paid to petitioners from the time of their illegal dismissal up to the date of their
reinstatement. The respondents moves to reconsider the decision on the grounds that (a)
petitioners are not entitled to recover backwages because they were not actually dis-
missed but their probationary employment was not converted to permanent employ-
ment; and (b) assuming that petitioners are entitled to backwages, computation thereof
should not start from cessation of work up to actual reinstatement, and that salary
earned elsewhere (during the period of illegal dismissal) should be deducted from the
award of such backwages.
ISSUE: Whether or not the full backwages granted to the petitioners should be deducted
by the other earnings derived elsewhere during the time of dismissal of the employee
HELD:
Prior to the present case, SC had applied different methods in the computation of back-
wages.
Backwages under RA 875. Under RA 875, the Court of Industrial Relations (CIR) was
given wide discretion to grant or disallow payment of backpay (backwages) to an em-
ployee, it also had the implied power of reducing the backpay where backpay was al-
lowed. In the exercise of its jurisdiction, the CIR can increase or diminish the award of
backpay, depending on several circumstances, among them, the good faith of the em-
ployer, the employees employment in other establishments during the period of illegal
dismissal, or the probability that the employee could have realized net earnings from
outside employment if he had exercised due diligence to search for outside employment.
This method caused undue delay in the disposition of illegal dismissal cases.
Cases are usually held up in the determination of whether or not the computation of the
award of backwages is correct.
Mercury Drug Rule . In order prevent undue delay in the disposition of illegal dismissal
cases, the SC found occasion in the case of Mercury Drug Co vs. CIR, 1974, to rule that
a fixed amount of backwages without further qualifications should be awarded to an
illegally dismissed employee.
In subsequent cases (adopting the proposal of Justice Teehankee), backwages equivalent
to three years (unless the case is not terminated sooner) was made the base figure for
such awards without deduction, subject to deduction where there are mitigating circum-
stances in favor of the employer but subject to increase by way of exemplary damages
where there are aggravating circumstances (e.g. oppression or dilatory appeals) on the
employers part.
On 1 November 1974, the Labor Code of the Philippines took effect. Article 279 of the
said code provides:
[] An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to his back wages computed from the
time his compensation was was withheld from him up to the time of his reinstatement.
The above provision nothwithstanding, the rule generally applied by the
Court after the promulgation of the Mercury Drug case, and during the effectivity of
P.D. No. 442 was still the Mercury Drug rule. In effect, this qualified the provision
under P.D. No. 442 by limiting the award of backwages to 3 years.
Deduction of Earnings Elsewhere Rule. When RA 6715 took effect on 21 March
1989, the pertinent portion of Article 279 of the Labor Code was amended to read as
follows:
[] An employee who 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.
In accordance with the above provision, an illegally dismissed employee is
entitled to his full backwages from the time of his illegal dismissal up to the time of his
actual reinstatement.
Despite the amendment, however, in a subsequent case, Pines City Educational Center
vs. NLRC, 1993, the Court returned to the rule prior to the Mercury Drug rule that the
total amount derived from employment elsewhere by the employee from the date of
dismissal up to the date of reinstatement, if any, should be deducted from backwages.
The rationale for such ruling was that, the earning derived elsewhere by the
dismissed employee while litigating the legality of his dismissal, should be deducted
from the full amount of backwages which the law grants him upon reinstatement, so as
not to unduly or unjustly enrich the employee at the expense of the employer.
The provision calling for "full backwages" to illegally dismissed employees is clear,
plain and free from ambiguity and, therefore, must be applied without attempted or
strained interpretation. Index animi sermo est.
Labor Relations (Termination of Employment) 062817
Therefore, in accordance with R.A No. 6715, petitioners are entitled to their full back-
wages, inclusive of allowances and other benefits or their monetary equivalent, from the
time their actual compensation was with held from them up to the time of their actual
reinstatement. The amount of backwages shall be computed from the time of their ille-
gal termination on 25 June 1990 up to the time of finality of this decision
JACULBE v. SILLIMAN UNIVERSITY
G.R. No. 156934 March 16, 2007
FACTS: Jaculbe began working in 1958 for Sillimans medical center as a nurse. In
1992, Silliman informed her that she was approaching her 35th year of service with the
university and was due for automatic retirement on November 18, 1993. Sillimans
retirement plan provided that members could be automatically retired upon reaching
the age of 65 or after 35 years of uninterrupted service to the university. On November
18, 1993, respondent compulsorily retired petitioner. Petitioner emphatically insisted
that the compulsory retirement under the plan was tantamount to a dismissal, thus she
filed a complaint.
LA rendered a decision finding respondent guilty of illegal dismissal. NLRC reversed
the labor arbiters decision. CA affirmed the NLRC.
ISSUE: Whether or not the respondent is guilty of illegal dismissal.
HELD: Yes.
Retirement plans allowing employers to retire employees who are less than the compul-
sory retirement age of 65 are not per se repugnant to the constitutional guaranty of
security of tenure. Article 287 of the Labor Code 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. xxx
By its express language, the Labor Code permits employers and employees to fix the
applicable retirement age at below 60 years.13
However, after reviewing the assailed decision together with the rules and regulations of
respondents retirement plan, we find that the plan runs afoul of the constitutional guar-
anty of security of tenure.
Perusal of the rules and regulations of the plan shows that participation therein was not
voluntary at all. Rule III of the plan states that all full-time Filipino employees of the
University will automatically become members of the plan and that a member who
continues to serve the university cannot withdraw from the plan. The compulsory nature
of the plan debunked the theory that petitioners voluntary contributions were evidence
of her willing participation in the said plan. The retirement plan only came into being in
1970, 12 years after the she starting working for Silliman University. This means that it
was not part of the terms of employment to which Jaculbe agreed when she started
working.
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. In this case, neither the CA nor the re-
spondent cited any agreement, collective or otherwise, to justify the latters imposition
of the early retirement age in its retirement plan. Jaculbe was still a good eight years
away from the compulsory retirement age and that she was also still fully capable of
discharging her duties as a nurse when she was dismissed.
As already stated, an employer is free to impose a retirement age less than 65 for as
long as it has the employees consent. Stated conversely, employees are free to accept
the employers offer to lower the retirement age if they feel they can get a better deal
with the retirement plan presented by the employer. Thus, having terminated petitioner
solely on the basis of a provision of a retirement plan which was not freely assented to
by her, respondent was guilty of illegal dismissal.
At this point, reinstatement is out of the question. Petitioner is now 71 years old and
therefore well over the statutory compulsory retirement age. For this reason, we grant
her separation pay in lieu of reinstatement. It is also for this reason that we modify the
award of backwages in her favor, to be computed from the time of her illegal dismissal
on November 18, 1993 up to her compulsory retirement age.
ASSOCIATED LABOR UNIONS-TUCP and RENATO FELIZARDO, petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION, REPUBLIC FLOUR
MILLS, GROUP OF COMPANIES and/or SELECTA ICE CREAM CORPORA-
TION and BEN T. MAKIL, respondents.
FACTS:
On September 12, 1993, at around 7 oclock in the morning, petitioner was apprehended
by a security guard manning respondent companys gate while bringing out a pair of
boots, one (1) piece of aluminum container, and fifteen (15) pieces of hamburger pat-
ties. During the investigation, Felizardo submitted a written statement admitting the said
offenses but stated that he did such under the knowledge and approval of his supervisor,
D.M. Orpilla, Jr. However, D.M. Orpilla, Jr., in his memorandum to respondent compa-
nys management, recommended petitioners dismissal from employment
On September 13, 1993, he was placed under preventive suspension pending investiga-
tion of the incident by the company.
On September 27, 1993, petitioner was dismissed for dishonesty for theft of company
property.
Labor Arbiter: found that with the exception of the pair of boots, the articles which
petitioner took from the company were mere scraps which were of no value to respond-
ent company. He ruled that dismissal was too harsh a penalty to be imposed on a first-
time offender and that his unemployment for about eleven (11) months was sufficient
penalty for what he had done. Accordingly, the Labor Arbiter ordered petitioners rein-
statement without backwages.
NLRC reversed the decision of the LA. A careful examination of the record of the case
reveals that complainant was found guilty of theft for stealing a pair of company boots,
15 pieces of hamburger patties, and 1 piece of aluminum container.
Humanitarian consideration weighs heavily against harsh punishment but the offense
which complainant is admittedly guilty [of] . . . . is specifically defined both under
Article 282 of the Labor Code, as amended, and the company rules and regulations as a
just cause for dismissal.
ISSUE:
Whether or not the dismissal of petitioner is proper.
RULING:
No. In this case, we agree with the Labor Arbiter that dismissal would not
be proportionate to the gravity of the offense committed by petitioner considering the
value of the articles he pilfered and the fact that he had no previous derogatory record
during his two (2) years of employment in the company. The Labor Arbiter is certainly
mistaken in regarding the articles taken to be mere scraps and hence without value to
the company. They were of some value but not enough to warrant dismissal.
10
Finding of the National Labor Relations Commission that an employee violated the
company rules and regulations is subject to scrutiny by the Court to determine if the
dismissal is justified and, if so, whether the penalty imposed is commensurate to the
gravity of his offense.There is no question that the employer has the inherent right to
discipline, including that of dismissing its employees for just causes. This right is, how-
ever, subject to reasonable regulation by the State in the exercise of its police power.
The finding of the NLRC that an employee violated the company rules and regulations
is subject to scrutiny by the Court to determine if the dismissal is justified and, if so,
whether the penalty imposed is commensurate to the gravity of his offense.
It should also be taken into account that petitioner is not a managerial or confidential
employee in whom greater trust is placed by management and from whom greater fi-
delity to duty is correspondingly expected. It is easy to see why an unfaithful employee
who is holding a position of trust and confidence in a company poses a greater danger to
its security than a mere clerk or machine operator like petitioner.
As already stated, dismissal as a measure to protect the interests of respondent company
is unwarranted under the facts of this case. Suspension would have sufficed. Without
deciding for how long the suspension should be in cases such as this, considering that
petitioner has been prevented from working in respondent company since September
13, 1993, we hold that, for all purposes, he has served a reasonable period of suspension
commensurate to the gravity of his offense. Consequently, the Labor Arbiters order of
reinstatement of petitioner without backwages may be considered appropriate.
PEPSI COLA vs MOLON
Facts: Petitioner Pepsi-Cola Products Philippines, Inc. (Pepsi) is a domestic corporation
engaged in the manufacturing, bottling and distribution of soft drink products. In view
of its business, Pepsi operates plants all over the Philippines, one of which is located in
Sto. Nio, Tanauan, Leyte (Tanauan Plant).
Respondents, on the other hand, are members of the Leyte Pepsi-Cola Employees Un-
ion-Associated Labor Union (LEPCEU-ALU), a legitimate labor organization com-
posed of rank-and-file employees in Pepsi's Tanauan Plant, duly registered with the
Department of Labor and Employment (DOLE) Regional Office No. 8.6
In 1999, Pepsi adopted a company-wide retrenchment program denominated as Corpo-
rate Rightsizing Program.7 To commence with its program, it sent a notice of retrench-
ment to the DOLE8 as well as individual notices to the affected employees informing
them of their termination from work.9 Subsequently, on July 13, 1999, Pepsi notified
the DOLE of the initial batch of forty-seven (47) workers to be retrenched.10 Among
these employees were six (6) elected officers and twenty-nine (29) active members of
the LEPCEU-ALU, including herein respondents.11
On July 19, 1999, LEPCEU-ALU filed a Notice of Strike before the National Concilia-
tion and Mediation Board (NCMB) due to Pepsis alleged acts of union busting/ULP.
On July 27, 1999, Pepsi filed before the NLRC a petition to declare the strike illegal
with a prayer for the loss of employment status of union leaders and some union mem-
bers.15 On even date, then DOLE Secretary Bienvenido A. Laguesma certified the labor
dispute to the NLRC for compulsory arbitration.16 A return-to-work order was also
issued.17
Incidentally, one of the respondents, respondent Saunder Santiago Remandaban III
(Remandaban), failed to report for work within twenty-four (24) hours from receipt of
the said order. Because of this, he was served with a notice of loss of employment status
(dated July 30, 1999) which he challenged before the NLRC, asserting that his absence
on that day was justified because he had to consult a physician regarding the persistent
and excruciating pain of the inner side of his right foot.18
Eventually, Pepsi and LEPCEU-ALU agreed to settle their labor dispute arising from
the companys retrenchment program with the following stipulation: 1. The union will
receive 100% of the separation pay based on the employees basic salary and the re-
maining 50% shall be released by Management after the necessary deductions are made
from the concerned employees. Both parties signed the agreement. Notwithstanding the
foregoing, respondents21 still filed separate complaints for illegal dismissal with the
NLRC.22
Issues: 1. WON there was valid retrenchment
2. WON Remandaban is illegally dismissed. Thus, entitled to reinstatement with back-
wages.
Ruling: 1. Retrenchment is defined as the termination of employment initiated by the
employer through no fault of the employee and without prejudice to the latter, resorted
by management during periods of business recession, industrial depression or seasonal
fluctuations or during lulls over shortage of materials. It is a reduction in manpower, a
measure utilized by an employer to minimize business losses incurred in the operation
of its business. To properly effect a retrenchment, the employer must: (a) serve a written
notice both to the employees and to the DOLE at least one (1) month prior to the in-
tended date of retrenchment; and (b) pay 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.
In due regard of these requisites, the Court observes that Pepsi had validly implemented
its retrenchment program:
(1) Records disclose that both the CA and the NLRC had already determined that Pepsi
complied with the requirements of substantial loss and due notice to both the DOLE and
the workers to be retrenched.
(2) Records also show that the respondents had already been paid the requisite separa-
tion pay as evidenced by the September 1999 quitclaims signed by them. Effectively,
the said quitclaims serve inter alia the purpose of acknowledging receipt of their respec-
tive separation pays.56 Appositely, respondents never questioned that separation pay
arising from their retrenchment was indeed paid by Pepsi to them. As such, the forego-
ing fact is now deemed conclusive.
(3) Contrary to the CAs observation that Pepsi had singled out members of the
LEPCEU-ALU in implementing its retrenchment program,57 records reveal that the
members of the company union (i.e., LEPCEUUOEF#49) were likewise among those
retrenched.
(5) On the final requirement of fair and reasonable criteria for determining who would
or would not be dismissed, records indicate that Pepsi did proceed to implement its
rightsizing program based on fair and reasonable criteria recommended by the company
supervisors.62
Therefore, as all the requisites for a valid retrenchment are extant, the Court finds
Pepsis rightsizing program and the consequent dismissal of respondents in accord with
law.
Labor Relations (Termination of Employment) 062817
2. An illegally dismissed employee is entitled to either reinstatement, if viable, or sepa-
ration pay if reinstatement is no longer viable, and backwages.78 In certain cases, how-
ever, the Court has ordered the reinstatement of the employee without backwages con-
sidering the fact that (1) the dismissal of the employee would be too harsh a penalty;
and (2) the employer was in good faith in terminating the employee.
As may be gathered from the September 11, 2002 NLRC Decision, while Remandaban
was remiss in properly informing Pepsi of his intended absence, the NLRC ruled that
the penalty of dismissal would have been too harsh for his infractions considering that
his failure to report to work was clearly prompted by a medical emergency and not by
any intention to defy the July 27, 1999 return-to-work order.81 On the other hand, Pep-
si's good faith is supported by the NLRC's finding that "the return-to-work-order of the
Secretary was taken lightly by .Remandaban."82 In this regard, considering Remanda-
ban 's ostensible dereliction of the said order, Pepsi could not be blamed for sending
him a notice of termination and eventually proceeding to dismiss him. At any rate, it
must be hoted that while Pepsi impleaded Remandaban as party to the case, it failed to
challenge the NLRC ruling ordering his reinstateme:ot to his former position without
backwages. As such, the foregoing issue is now settled with finality.
All told, the NLRC's directive to reinstate Remandaban without backwages is upheld.
BEST WEAR GARMENTS VS DE LEMOS
FACTS:
Petitioner Best Wear Garments is a sole proprietorship represented by its General Man-
ager Alex Sitosta. Respondents Cecile M. Ocubillo and Adelaida B. De Lemos were
hired as sewers on piece-rate basis.
Both employee filed a complaint for illegal dismissal and alleged in their position paper
that in August 2003, Sitosta arbitrarily transferred them to other areas of operation of
petitioner's garments company, which they said amounted to constructive dismissal as it
resulted in less earnings for them.
De Lemos claimed that after two months in her new assignment, she was able to adjust
but Sitosta again transferred her to a "different operation where she could not earn [as]
much as before because by-products require long period of time to finish." She averred
that the reason for her transfer was her refusal "to render [overtime work] up to 7:00
p.m." Her request to be returned to her previous assignment was rejected and she was
"constrained not to report for work as Sitosta had become indifferent to her since said
transfer of operation." She further alleged that her last salary was withheld by petitioner
company.[7]
On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred
excessive absences since 2001." Her absences were due to the fact that her father be-
came very sick since 2001 until his untimely demise on November 9, 2003; aside from
this, she herself became very sickly. She claimed that from September to October 2003,
Sitosta assigned her to different machines "whichever is available" and that "there were
times, she could not earn for a day because there was no available machine to work for
[sic]." Sitosta also allegedly required her to render overtime work up to 7:00 p.m.
which she refused "because she was only paid up to 6:25 p.m."[8]
Petitioners denied having terminated the employment of respondents who supposedly
committed numerous absences without leave (AWOL).
Labor Arbiter Arden S. Anni rendered a Decision granting respondents' claims.
Petitioners appealed to the NLRC which reversed the Labor Arbiter's decision and dis-
missed respondents' complaints. The NLRC found no basis for the charge of construc-
tive dismissal, thus:
Issue: Whether or not respondents are illegally dismissed
Respondents filed a motion for reconsideration which the NLRC denied. Thus, they
elevated the case to the CA alleging grave abuse of discretion on the part of the NLRC.
By Decision dated February 24, 2009, the CA granted the petition for certiorari, re-
versed the ruling of the NLRC.
Issue:Whether or not respondents were illegally dismissed
Held:
The right of employees to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to change their as-
signments or to transfer them. Thus, an employer may transfer or assign employees
from one office or area of operation to another, provided there is no demotion in rank or
diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause.
Being piece-rate workers assigned to individual sewing machines, respondents' earnings
depended on the quality and quantity of finished products. That their work output might
have been affected by the change in their specific work assignments does not necessari-
ly implythat any resultingreduction in payis tantamount to constructive dismis-
sal. Workers under piece-rate employment have no fixed salaries and their compensa-
tion is computed on the basis of accomplished tasks. As admitted by respondent De
Lemos, some garments or by-products took a longer time to finish so they could not
earn as much as before. Also,the type of sewing jobs available would depend on the
specifications made by the clients of petitioner company. Under these circumstances, it
cannot be said that the transfer was unreasonable, inconvenient or prejudicial to the
respondents. Such deployment of sewers to work on different types of garments as
dictated by present business necessity is within the ambit of management prerogative
which, in the absence of bad faith, ill motive or discrimination, should not be interfered
with by the courts.
The records are bereft of any showing of clear discrimination, insensibility or disdain on
the part of petitioners in transferring respondents to perform a different type of sewing
job.It is unfair to charge petitioners with constructive dismissal simply because the
11
respondents insist that their transfer to a new work assignment was against their
will. We have long stated that "the objection to the transfer being grounded on solely
upon the personal inconvenience or hardship that will be caused to the employee by
reason of the transfer is not a valid reason to disobey an order of transfer."[19]That re-
spondents eventually discontinued reporting for work after their plea to be returned to
their former work assignment was their personal decision, for which the petitioners
should not be held liable particularly as the latter did not, in fact, dismiss them.
Indeed, there was no evidence that respondents were dismissed from employment. In
fact, petitioners expressed willingness to accept them back to work. There being no
termination of employment by the employer, the award of backwages cannot be sus-
tained. It is well settled tahat backwages may be granted only when there is a finding of
illegal dismissal.[20]In cases where there is no evidence of dismissal, the remedy is rein-
statement but without backwages.[21]
The constitutional policy of providing full protection to labor is not intended to oppress
or destroy management.[22] While the Constitution is committed to the policy of social
justice and the protection of the working class, it should not be supposed that every
labor dispute will be automatically decided in favor of labor. Management also has its
rights which are entitled to respect and enforcement in the interest of simple fair
play.[23] Thus, where management prerogative to transfer employees is validly exer-
cised, as in this case, courts will decline to interfere.
WHEREFORE, the petition for review on certiorari is GRANTED.
Cosare v. Broad com Asia- G.R.No. 201298
G.R. No. 201298 February 5, 2014
RAUL C. COSARE, Petitioner,
vs.
BROADCOM ASIA, INC. and DANTE AREVALO, Respondents.
FACTS
Cosare filed a complaint against the respondents for constructive dismissal, illegal sus-
pension, and monetary claims with the NLRC.
Cosare's claims:
1. He was first hired by respondent Arevalo (President of respondent Broad-
com Asia) as a salesman, when the latter was still selling broadcast equip-
ment to television networks and production houses.
2. When Arevalo set up Broadcom in December 2000 to continue his business,
Cosare was named an incorporator of Broadcom. He was assigned 100
shares of stock with par value of P1.00 per share. Later, in October of 2001
Cosare was promoted to AVP for Sales and Head of Technical Coordination.
3. In March 23, 2009, Cosare sent a confidential memo to Arevalo to inform
him of the anomalies being committed by Alex Abiog (VP for Sales, Co-
sares immediate supervisor).
4. Arevalo failed to act on the said information.
5. In March 25, 2009, Cosare was called for a meeting by Arevalo where he
was asked to resign in exchange for "financial assistance" of P300k. When
he refused to comply, Arevalo sent him a memo charging him of serious
misconduct and willful breach of trust on March 30, 2009. He was given 48
hours from the date of the memo within which to present his explanation on
the charges.
6. On March 31, 2009, Cosare was suspended from having access to company
files and records and precluded from reporting for work. On April 1, 2009,
he was totally barred from entering the company premises.
7. He tried to furnish the company with a Memo where he addressed and de-
nied the accusations against him. The respondents refused to receive the
memo on the ground of late filing, hence, Cosare served a copy of the same
by registered mail. On April 3, 2009, he filed a labor complaint against the
respondents.
Respondents' claims:
1. Cosare was neither illegally suspended nor dismissed from employment. He
abandoned his job by continually failing to report for work beginning April
1, 2009, prompting them to issue on April 14 a memo accusing Cosare of
absence without leave beginning April 1.
2. Cosare committed the ff acts inimical to the interests of Broadcom:
he failed to sell any broadcast equipment since 2007
he attempted to sell a camera sourced from a competitor
he made an unauthorized request in Broadcom's name for its
principal, Panasonic USA, to issue an invitation for Cosare's
friend, Alex Paredes, to attend the National Association of
Broadcasters' Conference in Las Vegas.
Labor Arbiter dismissed the complaint on the ground of Cosare's failure to establish
that he was dismissed from employment. NLRC ruled in favor of Cosare, finding the
respondents guilty of constructive illegal dismissal, on the conclusion that he was con-
structively dismissed when he was asked to resign from his employment. Respondents
appealed to the CA. During the pendency of their appeal, they raised a new argument,
stating that the case involved an intra-corporate controversy which was within the
jurisdiction of the RTC, and not of the LA. They argued that the case involved a
complaint against a corporation filed by a stockholder, who, at the same time, was
a corporate officer. CA granted the respondents' petition and dismissed the labor
complain for lack of jurisdiction. It ruled that the case involved an intra-corporate
controversy which, pursuant to PD 902-A was within the exclusive jurisdiction of the
RTC. The CA reasoned that Cosare was a stockholder of Broadcom and he was listed as
one of its directors. He also held the position of AVP for Sales which was listed as a
corporate office, and which was allowed by Broadcoms by-laws, and under Sec. 25 of
the Corporation Code (see Note*). The respondents were also able to present substantial
evidence that Cosare held a corporate office through the General Information Sheet they
submitted to the SEC on October of 2009.
Hence, this petition.
ISSUES
1. WON the case instituted by Cosare was an intra-corporate dispute that was within the
original jurisdiction of the RTC, and not of the LAs;
2. WON Cosare was constructively and illegally dismissed from employment by the
respondents
Labor Relations (Termination of Employment) 062817
RULING
1. It is not an intra-corporate dispute, hence, it is the Labor Arbiter, not the regu-
lar courts which has the original jurisdiction over the subject controversy.
An intra-corporate controversy, which falls within the jurisdiction of regular courts,
pertains to disputes that involve any of the following relationships: (1) between the
corporation, partnership or association and the public; (2) between the corporation,
partnership or association and the state in so far as its franchise, permit or license to
operate is concerned; (3) between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among the stockholders, partners or
associates, themselves. Settled jurisprudence, however, qualifies that when the dispute
involves a charge of illegal dismissal, the action may fall under the jurisdiction of
the LAs upon whose jurisdiction, as a rule, falls termination disputes and claims
for damages arising from employer-employee relations as provided in Article 217 of
the Labor Code. Consistent with this jurisprudence, the mere fact that Cosare was a
stockholder and an officer of Broadcom at the time the subject controversy developed
failed to necessarily make the case an intra-corporate dispute.
In Matling Industrial and Commercial Corporation v. Coros, it was explained that the
determination of whether the dismissed officer was a regular employee or corporate
officer unravels the conundrum" of whether a complaint for illegal dismissal is cogniza-
ble by the LA or by the RTC. "In case of the regular employee, the LA has jurisdiction;
otherwise, the RTC exercises the legal authority to adjudicate. Applying the foregoing
to the present case, the LA had the original jurisdiction over the complaint for
illegal dismissal because Cosare, although an officer of Broadcom for being its
AVP for Sales, was not a "corporate officer" as the term is defined by law.
Corporate officers are those officers of the corporation who are given that character by
the Corporation Code or by the corporations by-laws. Xxx (Real v Sangu Philippines,
Inc., citing Eastern Telecommunications Philippines, Inc.)
There are two circumstances which must concur in order for an individual to be consid-
ered a corporate officer, as against an ordinary employee or officer, namely: (1) the
creation of the position is under the corporations charter or by-laws; and (2) the elec-
tion of the officer is by the directors or stockholders. It is only when the officer claim-
ing to have been illegally dismissed is classified as such corporate officer that the
issue is deemed an intra-corporate dispute which falls within the jurisdiction of the
trial courts.
The respondents referred to Section 1, Article IV of the Broadcom's by-laws (See
Note*) to support their argument that Cosare was a corporate officer. The Court disa-
grees. As may be gleaned from the aforequoted provision, the only officers who are
specifically listed, and thus with offices that are created under Broadcoms by-laws are
the following: the President, Vice-President, Treasurer and Secretary. Although a blan-
ket authority provides for the Boards appointment of such other officers as it may deem
necessary and proper, the respondents failed to sufficiently establish that the posi-
tion of AVP for Sales was created by virtue of an act of Broadcoms board, and
that Cosare was specifically elected or appointed to such position by the directors.
No board resolutions to establish such facts form part of the case records. Further, it
was held in Marc II Marketing, Inc. v. Joson that an enabling clause in a corporations
by-laws empowering its board of directors to create additional officers, even with the
subsequent passage of a board resolution to that effect, cannot make such position a
corporate office. The board of directors has no power to create other corporate offices
without first amending the corporate by-laws so as to include therein the newly created
corporate office.
Moreover, the General Information Sheets which provided that Cosare was an "officer"
of Broadcom was misplaced. The said documents could neither govern nor establish the
nature of the office held by Cosare and his appointment thereto. Although Cosare could
indeed be classified as an officer as provided in the General Information Sheets, his
position could only be deemed a regular office, and not a corporate office as it is de-
fined under the Corporation Code.
Finally, the mere fact that Cosare was a stockholder of Broadcom at the time of the
cases filing did not necessarily make the action an intra- corporate controversy. Time
and again, the Court has ruled that in determining the existence of an intra-corporate
dispute, the (1) status or relationship of the parties and (2) the nature of the ques-
tion that is the subject of the controversy must be taken into account. Considering
that the pending dispute particularly relates to Cosares rights and obligations as a
regular officer of Broadcom, instead of as a stockholder of the corporation, the
controversy cannot be deemed intra-corporate. This is consistent with the "contro-
versy test" explained by the Court in Reyes v. Hon. RTC, Br. 142, to wit:
Under the nature of the controversy test, the incidents of that relationship must also be
considered for the purpose of ascertaining whether the controversy itself is intra-
corporate. The controversy must not only be rooted in the existence of an intra-
corporate relationship, but must as well pertain to the enforcement of the parties correl-
ative rights and obligations under the Corporation Code and the internal and intra-
corporate regulatory rules of the corporation. If the relationship and its incidents are
merely incidental to the controversy or if there will still be conflict even if the relation-
ship does not exist, then no intra-corporate controversy exists.
It is then evident that the CA erred in reversing the NLRCs ruling that favored Cosare
solely on the ground that the dispute was an intra-corporate controversy within the
jurisdiction of the regular courts.
2. There was constructive and illegal dismissal.
"Constructive dismissal occurs when there is cessation of work because continued em-
ployment is rendered impossible, unreasonable, or unlikely as when there is a demotion
in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by
an employer becomes unbearable to the employee leaving the latter with no other option
but to quit." (The University of the Immaculate Conception v. NLRC, citing La Rosa v.
Ambassador Hotel)
The test of constructive dismissal is whether a reasonable person in the employees
position would have felt compelled to give up his position under the circumstances. xxx
(Dimagan v. Dacworks United, Incorporated)
In this case, the respondents were already resolute on a severance of their working
relationship with Cosare. The fact that no further investigation and final disposition
appeared to have been made by the respondents on Cosares case only negated the claim
that they actually intended to first look into the matter before making a final determina-
12
tion as to the guilt or innocence of their employee. This also manifested from the fact
that even before Cosare was required to present his side on the charges of serious mis-
conduct and willful breach of trust, he was summoned to Arevalos office and was
asked to tender his immediate resignation in exchange for financial assistance.
The clear intent of the respondents to find fault in Cosare was also manifested by their
persistent accusation that Cosare abandoned his post, allegedly signified by his failure
to report to work or file a leave of absence beginning April 1, 2009. As the records
clearly indicated, however, Arevalo placed Cosare under suspension beginning March
30, 2009. The charge of abandonment was inconsistent with this imposed suspension.
Cosares failure to report to work beginning April 1, 2009 was neither voluntary nor
indicative of an intention to sever his employment with Broadcom. It was illogical to be
requiring him to report for work, and imputing fault when he failed to do so after he was
specifically denied access to all of the companys assets.
PETITION GRANTED. NLRC DECISION REINSTATED.
*Note:
(from Broadcoms By-Laws)
ARTICLE IV. OFFICER
Section 1. Election / Appointment Immediately after their election, the Board of Di-
rectors shall formally organize by electing the President, the Vice-President, the Treas-
urer, and the Secretary at said meeting.
The Board may, from time to time, appoint such other officers as it may determine to be
necessary or proper. Any two (2) or more compatible positions may be held concurrent-
ly by the same person, except that no one shall act as President and Treasurer or Secre-
tary at the same time.
SAN MIGUEL CORP. VS LAVATE
Facts: Respondent was a casual employee of the petitioner. He figured in an accident
and was initially confined and was on sick leave for a total of fifty six (56) days. Upon
his discharge from the hospital, private respondent was fetched by his immediate super-
visor to be brought to work that same day. However, they were unable to reach San
Miguel, Bulacan, as the roads were rendered impassable by typhoon Norming. To
prevent his being declared absent without leave, private respondent, with the assistance
of his supervisor, filed an application for vacation leave for eleven (11) days with pay
bit such application was disapproved since the application was not filed six (6) days
prior to its effectivity, as required by petitioner's rules and regulations.
After the unapproved leaves, respondent reported for work, respondent filed for an
additional fifteen (15) day vacation leave without pay from 29 August 1974 to 12 Sep-
tember 1974, to enable him to attend to the immediate repair of his house which was
destroyed by the typhoon. This application was likewise disapproved. Hence, the ab-
sences of private respondent were charged to his sick leave benefits.
Petitioner "compulsorily retired" the former for alleged exhaustion of sick leave benefits
based on the company's Health, Welfare and Retirement Plan. Respondent filed a com-
plaint challenging therein his illegal dismissal effected in the guise of a compulsory
retirement.
LA/NLRC/ Office of Sec. of Labor: SMC is hereby directed to reinstate the respondent
Petitioner: Respondent is estopped from assailing his retirement as he has accepted the
benefits under the retirement plan.
Issue: W/N an employee is estopped to assail the validity of their dismissal upon accept-
ing separation pay
Held: No, it does not estop him from questioning the legality of his dismissal. Employ-
ees 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.
DOLORES V. NLRC
FACTS:
Milagros I. Dolores was hired by San Miguel Corporation (hereinafter referred to as
SMC for brevity) as Chemist on August 21, 1965. She was promoted to Senior Chemist
on October 1, 1973, then to Senior Research Chemist on December 1, 1976 and finally,
to Head, Technical Information, Corporate Research and Development (CR & D) on
October 29, 1984.
During her stint, she received merit increases due to her satisfactory job performance
and the latest salary increase in the amount of P1,285.00 a month was given to her on
January, 1986 for her technical competence and dedication as borne out by her 1985
Performance Appraisal. At the time of her termination on December 1, 1986, she was
receiving a monthly salary of P7,715.00.
On September 16, 1986, she filed an application for leave of absence for two (2)
months, specifically from September 30 to November 28, 1986 in order to attend a six
(6) week course in French language at the Alliance de Franciase de Paris (France) at her
own expense. Pursuant to company rules and regulations, she submitted two (2) Person-
nel Leave Authority forms corresponding to: (1) 14 days vacation from September 30
to October 16, 1986 (regular annual leave); and (2) 34 1/2 days leave with permission
without pay (LWOP) from October 17 to November 28, 1986. She submitted a formal
request together with the said Personnel Leave Authority forms to her immediate supe-
rior Dr. Petronilo O. Juliano, Asst. Vice-President and Director, CR & D, and furnished
copies of said request to Mr. Manuel Mendez, Vice-President and Manager who is the
immediate superior of Dr. Juliano, and Mr. J. Punsalang, MSE, Personnel Officer.
On September 22, 1986, Dr. Juliano issued a memo limiting Ms. Dolores' leave to one
(1) calendar month due to the anticipated heavy workload on the last quarter of the year
and returned her Personnel Leave Authority forms to be revised accordingly. On the
same day, she submitted a request for reconsideration together with the two (2) Person-
nel Leave Authority forms to Dr. Juliano because the duration of her intended study
would exceed one (1) month. On September 30, 1986, Ms. Dolores left for Paris, France
without receiving any formal denial to her request for reconsideration and promptly
returned to Manila on November 30, 1986.
On her first working day on December 2, 1986, Mr. Conradino Santos, Administrative
Supervisor, CR & D, presented to her Dr. Juliano's letter dated November 25, 1986
Labor Relations (Termination of Employment) 062817
informing her of her termination effective December 1, 1986 for alleged continuous
absence without permission but with retirement benefits.
On February 4, 1987, Milagros Dolores filed a complaint before the NLRC challenging
the propriety of her dismissal
LA RULING:
The Labor Arbiter found that the circumstances of the case negate the existence of a
sufficient justifiable cause for dismissal and ordered the payment of separation pay and
backwages as well as actual and moral damages
CA RULING:
Sustained the Labor Arbiter but deleted the award of actual and moral damages
ISSUE: W/N the Dolores is dismissed without just cause; hence the NLRC erred in
awarding separation pay, limited backwages and in deleting the award of damages in
favor of Dolores.
RULING:
YES. At this point, deep analysis and consideration of the factors surrounding the com-
plainant's termination is in order. We are cognizant of the fact that when complainant
filed her application for leave, it was for the purpose of pursuing her studies in the
French language a study that would take two (2) months, thus necessitating an
equivalent period of leave; it was a laudable purpose, so to speak; a purpose that was
beneficial to the respondent company too, for unrefuted is complainant's claim that her
knowledge of the French language came in quite handy in her work as Head, Technical
Information Corporate Research & Development and the respondent company has
saved some, as it was spared from paying for translation services.
Apparently, complainant presumed in good faith, that since there was no direct refusal
from her immediate superior as regards her Motion for Reconsideration, (although
respondent claims that she received the final refusal annotated on top of her Motion for
Reconsideration) she left the country. Then complainant returned and still reported for
work the very next day, only to be furnished with the Memorandum of Termination. It
should be noted that the said Memorandum is dated November 25, 1986 and her termi-
nation effective December 1, 1986. The haste with which her dismissal was effected
cannot be overlooked not to speak of the untold miseries and shock it must have caused
herein complainant.
All these factors, taken in their proper context and buttressed by the denial of the em-
ployee's privilege to a maximum three-month leave as provided for in the Personnel
Policies and Procedures Manual, negates the existence of a sufficient, justifiable cause
for dismissal.
However, the only discordant factor of note to an otherwise clear picture of an arbitrary
termination of service is the fact that herein complainant is a top managerial official of
the company, one of the several employees on whose shoulders rests the burden of
running efficiently and smoothly the respondent's business. She was the Head of the
Technical Information, Corporate Research & Development.
Significantly, from the above findings of the Labor Arbiter herself, it was established
that petitioner employee is one of the top ranking officials of the company, tasked with
greater responsibility and a higher degree of dedication to the job unlike the other ordi-
nary employees to whom the first group of factors would perhaps apply.
By and large, it appears that this is not a simple case of contributory negligence on the
part of petitioner Dolores but an infraction of the rules and regulations for which as a
top managerial employee she should be the first to respect. Instead she blatantly disre-
garded the rules, absented herself without permission from her superior, which is a valid
ground for the imposition of disciplinary action including if warranted the extreme
penalty of dismissal.
Employers, generally, are allowed wider latitude of discretion in terminating the em-
ployment of managerial personnel which by their nature requires the employer's trust
and confidence in a greater degree than in the ordinary rank and file employees. Con-
sidering the fact that she was holding a managerial position, her refusal to abide by the
lawful orders of her employers would lead to erosion of trust and confidence reposed on
her. Loss of confidence is a valid ground for dismissing an employee and proof beyond
reasonable doubt is not required. All that is needed is for the employer to establish a
sufficient basis for the dismissal of an employee.
Dolores' plea that under company rules, she is entitled to three months leave without
pay is likewise unavailing as such privilege is not absolute but discretionary. In her case
the limitation to one month leave was based on the anticipated heavy workload which is
unquestionably a valid ground.
There is no question that petitioner Dolores is guilty of breach of trust and violation of
company rules, the penalty of which ranges from reprimand to dismissal, depending on
the gravity of the offense.
Nonetheless, considering petitioner Dolores' 21 years of service with San Miguel Corp.
and it appearing that this is her first offense which incidentally was beneficial to the
employer for unrefuted is her claim that her study of the French language spared the
company from paying for translation services, it appears that the penalty of dismissal
would be too harsh under the circumstances.
This Court has held time and again, in a number of decisions, that notwithstanding the
existence of a valid cause for dismissal, such as breach of trust by an employee, never-
theless dismissal should not be imposed as it is too severe a penalty if the latter has been
employed for a considerable length of time in the service of her employer. More equita-
bly therefore, she should be granted reinstatement but without damages, considering the
good faith of the employer in dismissing the employee; otherwise, it would have the
effect of rewarding rather than punishing the erring employee for her offense.
VICTORY LINER INC. V. PABLO RACE
FACTS:
Respondent was employed by Victory Liner as a bus driver and was as-
signed to the Alaminos, Pangasinan-Cubao, Quezon City route on the evening schedule.
On the night of 24 August 1994, respondent drove his assigned bus. While traversing
Moncada, Tarlac, the bus he was driving was bumped by a Dagupan-bound bus. As a
consequence thereof, respondent suffered a fractured left leg and was rushed to the
13
Country Medical and Trauma Center in Tarlac City where he was operated on and con-
fined from 24 August 1994 up to 10 October 1994. One month after his release from the
said hospital, the respondent was confined again for further treatment of his fractured
left leg at the Specialist Group Hospital in Dagupan City. His confinement therein last-
ed a month. Petitioner shouldered the doctors professional fee and the operation, medi-
cation and hospital expenses of the respondent in the aforestated hospitals.
In January 1998, the respondent, still limping heavily, went to the petition-
ers office to report for work. He was, however, informed by the petitioner that he was
considered resigned from his job. Respondent refused to accede and insisted on having
a dialogue with the petitioners officer named Yolanda Montes (Montes). During their
meeting, Montes told him that he was deemed to have resigned from his work and to
accept a consideration of P50,000.00. Respondent rejected the explanation and offer.
Thereafter, before Christmas of 1998, he again conversed with Montes who reiterated to
him that he was regarded as resigned but raised the consideration therein
to P100,000.00. Respondent rebuffed the increased offer. On 30 June 1999, respondent,
through his counsel, sent a letter to the petitioner demanding employment-related mon-
ey claims. There being no response from the petitioner, the respondent filed before the
Labor Arbiter on 1 September 1999 a complaint.
LA: Dismissed the petition for lack of merit. Respondents cause of action had already
prescribed, and he had committed several labor-related offenses which are considered
just causes for his termination. Respondent was a mere field personnel and not a regular
employee and he failed to present evidence that he was entitled for moneyclaims.
NLRC: Reversed the LA Decision. Ordered reinstatement. The respondents cause of
action accrued in January 1998 when petitioner rejected the respondents attendance for
work. The respondent was ILLEGALLY DISMISSED as due process was not accord-
ed.
CA: The respondents filing of complaint on September 1999 was within the four-year
prescriptive period. Race did not abandon his work and continued to be an employee of
Victory as evidenced by his pay slip for the period August 1-15,1998 and that he filed
for sick and disability leave. Petitioner failed to comply with due process.
ISSUE: Whether Race was illegally dismissed
HELD: Yes. He must be considered as unjustly terminated from work in January 1998
since this was the first time he was informed by the petitioner that he was deemed re-
signed from his work. During that same occasion, the petitioner, in fact, tried to con-
vince the respondent to accept an amount of P50,000.00 as a consolation for his dismis-
sal but the latter rejected it. Thus, it was only at this time that the respondents cause of
action accrued. Consequently, the respondents filing of complaint for illegal dismissal
on 1 September 1999 was well within the four-year prescriptive period.
It is also significant to note that from 10 November 1994 up to December 1997, the
petitioner never formally informed the respondent of the fact of his dismissal either
through a written notice or hearing. Indeed, it cannot be gainfully said that respondent
was unlawfully dismissed on 10 November 1994 and that the cause of action accrued on
that date.
Also, The respondent did not abandon his work. His absence from work for a long
period of time was obviously due to the fact that he was still recuperating from two
operations on his fractured leg. Petitioner knew this very well. In fact, petitioner shoul-
dered the respondents medication and hospital expenses during the latters confinement
and operation in two hospitals. Moreover, when the respondent was able to walk, alt-
hough limping heavily, he still reported for work to the petitioner and was granted sick
and disability leave. Clearly then, respondent did not abandon his job on 10 November
1994. There was nothing in the records which evinces that petitioner had sent a written
notice to the respondent informing him of the ground or grounds of his termination or
the reason why he was deemed resigned. It does not also appear that the petitioner held
a hearing or conference where the respondent was given the opportunity to answer the
charges of abandonment, insubordination and habitual neglect of duty against him.
Neither did the petitioner send a written notice to the respondent informing the latter
that his service is terminated after considering all the circumstances.
CONSTRUCTIVE DISMISSAL
CONCRETE AGGREGATES CORPORATION v. NLRC
G.R. No. 82458 September 7, 1989
FACTS: Private respondent started to work with petitioner as probationary personnel
department secretary and was promoted to Secretary "A" of the Administrative Le-
gal/Corporate Division of the petitioner. Sometime in 1983, the General Manager Mag-
tibay accused her as one of those spreading gossip to the effect that he has girlfriends in
the office. Since then, she felt a growing animosity of her boss towards her.
Subsequently, Magtibay informed her that the company was creating a new secretarial
staffing pattern and a special projects group. Private respondent was transferred to the
special projects committee. Another employee, Lilibeth Honrado was hired and as-
signed to the secretarial staff.
Feeling that she was being eased out, she handed a letter of resignation. She was given
her separation pay of one-half month pay for every year of service, 13th month pay and
the salary for October 1-15, 1985 for which she signed a quitclaim and waiver. Howev-
er, she still filed a complaint for illegal dismissal.
ISSUE: Whether or not private respondent was constructively dismissed from her em-
ployment.
HELD: No. The environmental circumstances of the case show that private respondent
voluntarily resigned from employment and signed the quitclaim and waiver after receiv-
ing all the benefits for her separation. While it may be true that her boss Mr. Magtibay
appeared to be hostile towards her, he did not show by his acts any desire to fire her
from employment. At that time, the company was suffering business losses and it had to
lay off 54 of its employees. Private respondent could have been included in the re-
trenchment but she was not.
Perhaps she felt misplaced when she was re-assigned to the special projects group with
a particular assignment to study manpower exports. Petitioner alleges that as she had
experience and training in personnel work, MBA units and connections in the Ministry
of Labor and Employment, she was considered most appropriate for this new assign-
ment that may open the way to expand the petitioner's business. On the other hand, her
former position was abolished and in a reorganization, a secretarial staff was created
wherein Honrado was appointed. Moreover, private respondent was not the only em-
ployee who resigned then. There were 100 other employees who resigned as they could
see that the future of the business was dim.
It is thus clear that she was not eased out much less was she forced to resign. This is a
case of voluntary resignation and not of a constructive dismissal.
Labor Relations (Termination of Employment) 062817
ADMIRAL REALTY COMPANY, INC. (ADMIRAL HOTEL), petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and ANGELINA N. BALA-
NI, respondents.
FACTS:
On July 1976, Admiral Hotel hired Angelina M. Balani as Cost Controller. She occu-
pied and served in that position for fifteen (15) years.
On June 21, 1991, petitioner, through Managing Director Ma. Victoria A. Concepcion,
issued a memorandum ordering respondent to explain in writing within 48 hours why
disciplinary actions should not be taken against her for the violations of hotel rules.
June 22, 1991, respondent replied thereto, denying the charges leveled
against her.
June 25, 1991, respondent submitted a letter of resignation, effective at the close of
office hours of June 30, 1991.4
June 28, 1991, petitioner accepted the resignation with deep regret.
July 18, 1991, respondent executed a release and quit-claim in favor of petitioner.
August 13, 1991, respondent Angelina M. Balani filed with the Labor Arbiter a com-
plaint against petitioner for forced resignation/harassment.
LABOR ARBITER: Judgement is hereby rendered declaring that harassments were
indeed committed by respondent but complainant was NOT forced to resign.
NLRC rendered a decision reversing the findings of the labor arbiter.
ISSUE:
Whether or not there is constructive dismissal.
RULING:
No. The Court is convinced that this is a case of voluntary resignation. Re-
spondent claims that she was constructively dismissed from her office as its location
was transferred from under the steps of the stairs to the kitchen. Such transfer caused
her mental torture which forced her to resign. However, it was not shown that her trans-
fer was prompted by ill will of management. Indeed, the resident manager of the hotel
swore that the transfer affected not only the Cost Control office but also other offices.
The transfer involved only a change in location of the office. It does not involve a
change in petitioners position. Even a transfer in position is valid when based on sound
judgment, unattended by demotion in rank or diminution of pay or bad faith.
There is no showing that petitioner was coerced into resigning from the
company. On the contrary, respondent resigned without any element of coercion attend-
ing her option. She voluntarily resigned from employment and signed the quitclaim and
waiver after receiving all the benefits for her separation. To allow respondent to repudi-
ate the same will be to countenance unjust enrichment on her part. The Court will not
permit such a situation.
DREAMLAND vs JOHNSON
Facts: Dreamland is a corporation duly registered with the Securities and Exchange
Commission on January 15, 2003 to exist for a period of fifty [50] years with registra-
tion number SEC A 1998-6436. Prentice is its current President and Chief Executive
Officer. It is engaged in the hotel, restaurant and allied businesses. Dreamland is pres-
ently undertaking operations of its business at National Highway, Sto. Tomas, Matain
Subic, Zambales, 2209.
Respondent Stephen B. Johnson is an Australian citizen who came to the Philippines as
a businessman/investor. Sometime on June 21, 2007, Prentice and Johnson entered into
an Employment Agreement, which stipulates among others, that the [sic] Johnson shall
serve as Operations Manager of Dreamland from August 1, 2007 and shall serve as such
for a period of three (3) years.
According to the petitioner, Johnson worked as a hotel and resort Operations Manager
only at that time. He worked for only about three (3) weeks until he suddenly aban-
doned his work and subsequently resigned as Operations Manager starting November 3,
2007. He never reported back to work despite several attempts of Prentice to clarify his
issues. x x x.
On the other hand, Johnson stated otherwise. As [Johnson] remained unpaid since
August 2007 and he has loaned all his money to petitioners, he asked for his salary after
the resort was opened in October 2007 but the same was not given to him by petitioners.
[Johnson] became very alarmed with the situation as it appears that there was no inten-
tion to pay him his salary, which he now depended on for his living as he has been left
penniless. He was also denied the benefits promised him as part of his compensation
such as service vehicles, meals and insurance.
Thus, on November 3, 2007, after another embarrassment was handed out by petitioner
Prentice in front of the staff, which highlighted his lack of real authority in the hotel and
the disdain for him by petitioners, respondent Johnson was forced to submit his resigna-
tion, x x x. In deference to the Employment Agreement signed, [Johnson] stated that he
was willing to continue work for the three month period stipulated therein.
On January 31, 2008, Johnson filed a Complaint for illegal dismissal and non-payment
of salaries, among others, against the petitioners.
Issue: WON Johnson was constructively dismissed.
Ruling: Yes. "There is constructive dismissal if an act of clear discrimination, insensi-
bility, or disdain by an employer becomes so unbearable on the part of the employee
that it would foreclose any choice by him except to forego his continued employment. It
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."34
It is impossible, unreasonable or unlikely that any employee, such as Johnson would
continue working for an employer who does not pay him his salaries. Applying the
Courts pronouncement in Duldulao v. CA35, the Court construes that the act of the
petitioners in not paying Johnson his salaries for three months has become unbearable
on the latters part that he had no choice but to cede his employment with them.
The above preceding statement only goes to show that while it was Johnson who ten-
dered his resignation, it was due to the petitioners acts that he was constrained to re-
sign. The petitioners cannot expect Johnson to tolerate working for them without any
compensation.
Since Johnson was constructively dismissed, he was illegally dismissed. As to the re-
liefs granted to an employee who is illegally dismissed, Golden Ace Builders v. Talde37
referring to Macasero v. Southern Industrial Gases Philippines38 is instructive:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and rein-
statement. The two reliefs provided are separate and distinct. In instances where rein-
statement is no longer feasible because of strained relations between the employee and
14
the employer, separation pay is granted. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and back wages
TUASON vs BANK OF COMMERCE
Facts: Tuason was hired by respondent Bank of Commerce with the rank of Assistant
Vice President, then officially appointed as the head of PMG. She was administratively
charged with irregularities regarding the sale of ROPOA properties to a certain Ana
Liza Cuizon. BOC found Tuason to have violated its Code of Discipline on Work Per-
formance, and imposed on her a 30-day suspension. Her sector head, Padilla, requested
her to resign and suggest a graceful exit because of the controversy. Petitioner reiter-
ated that she had no intention of resigning as she described herself as very much happy
with her work. However, the company already hired a replacement in her position.
Petitioner was directed to a "new assignment" and informed to get in touch otherwise
she would be deemed to have lost interest in her employment. Tuason filed a case for
constructive dismissal. BOC claimed that her non-reporting for work would be consid-
ered unauthorized leave of absence.
LA: Dismissed the Complaint
NLRC: Reversed, there was constructive dismissal.
CA: reassignment was a valid exercise of management prerogative
Issue: W/N the pressure exerted upon Tucson to resign without reason and the belated
transfer to another assignment constitute constructive dismissal.
Held: Yes. The test of constructive dismissal is whether a reasonable person in the
employee's position would have felt compelled to give up his position under the circum-
stances. It is an act amounting to dismissal but is made to appear as if it were not. Con-
structive dismissal is therefore a dismissal in disguise. 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.
The exchange of memos and letters above readily shows that Tuasons July 5, 2007
memo spoke the truth. BOC wanted her out. They sought her resignation. When this
was not forthcoming, and instead of offering her some viable options or alternatives for
her exit, BOC simply proceeded to install Estrada as the head of PMG. BOCs act of
hiring Estrada and having him take over the position of Tuason on July 16, 2007 was
certainly a definitive act, categorical and complete in itself, to effectively oust her from
her post.
Even though transfers or reassignments per se are indeed valid and fall within the ambit
of management prerogatives, the exercise of these rights must remain within the bound-
aries of justice and fair play.
FORMANTES V. DUNCAN
FACTS:
Petitioner Ramon B. Formantes was employed as a medical representative by respond-
ent Duncan Pharmaceuticals, Phils., Inc. on September 1, 1990. He later became the
Acting District Manager of respondent for the Ilocos District.
On March 18, 1994, petitioner received a long distance call from Rey Biscaro, Regional
Sales Manager of respondent, asking him to report at the head office on March 21,
1994. Thereafter, petitioner went to the head office and was confronted by said Mr.
Biscaro and Emeterio Shinyo, Marketing and Sales Director, due to his attempt to sex-
ually force himself upon his subordinate Cynthia Magat, one of the medical representa-
tives of respondent company.
Petitioner and Ms. Magat separately related their sides of the incident to the respondent
companys officers. Petitioner was then compelled by respondent to take a leave of ab-
sence.
Thereafter, Biscaro tried to induce petitioner to resign, which the latter re-
fused. Petitioner's salary was then withheld from him. He was not allowed to attend the
meetings and activities of the company. His subordinates no longer reported to him and
the company directed one of its district managers to take over his position and functions
without prior notice to him.
Due to the foregoing, petitioner was constrained to file a case for illegal suspension,
constructive dismissal, payment of salaries, allowances, moral and exemplary damages
on April 13, 1994 before the NLRC, Regional Arbitration Branch No. I, San Fernando,
La Union.
On April 19, 1994, petitioner received a telegram from the Human Resources Depart-
ment (HRD), advising him to report to the respondents' head office. Petitioner advised
her and Biscaro that he has not received his salary and reimbursements for incurred
expenses. He also informed them that he had already filed a case for constructive dis-
missal against the respondent company.
On April 25, 1994, petitioner received a telegram dated April 22, 1994 from respondent,
advising him that his reasons for not reporting were unacceptable, and ordering him to
report to the office in the morning of April 25, 1994.
Thereafter, respondent sent several letters to petitioner charging him of grave miscon-
duct on the attempted sexual abuse upon the person of Ms. Cynthia Magat, and direct-
ing him to submit his written explanation thereon; letter recalling the company car
issued to him; letter informing him of violation of Rule IV.5.a of the respondent's com-
pany rules by failing to turn over the company car, and directing him to explain in writ-
ing why no further disciplinary action should be given to him; letter suspending him for
one day for failure to carry out instructions, and ordering him to report to the company's
head office; letter placing him under suspension without pay for eight days for failure to
return the company car without explanation.
On May 19, 2004, petitioner received a letter dated May 18, 1994, terminating his em-
ployment with respondent company due to insubordination; for failure to report to the
respondent company; for failure to submit the required operations report; and for failure
to turn over the company car.
LA RULING:
Dismissed the complaint, finding that Formantes was validly dismissed for an attempt to
sexually abuse Cynthia Magat, but imposing a penalty on respondent for its failure to
give formal notice and conduct the necessary investigation before dismissing petitioner.
The LA found that when the first written notice was sent to petitioner on April 25, 1994,
regarding the incident with Cynthia Magat, petitioner had already been dismissed, or at
least, constructively dismissed, because as early as March 23, 1994, he was no longer
Labor Relations (Termination of Employment) 062817 15
allowed to participate in the activities of the company and his salary was withheld from
him.

The LA directed the respondent to pay petitioner the amount of P1,000.00.

NLRC RULING:
Affirmed the LA

CA RULING:
Affirmed the resolutions of the NLRC, but with the modification that the sanction im-
posed on respondent company for non-observance of due process be increased
from P1,000.00 to P5,000.00.

ISSUE:
W/N the petitioner was constructively dismissed
W/N the petitioner was accorded with due process prior his dismissal

RULING:
YES. Although petitioner was dismissed from work by the respondent on the ground of
insubordination, this Court cannot close its eyes to the fact that the ground of sexual
abuse committed against petitioner's subordinate actually exists and was established by
substantial evidence before the LA.

When petitioner filed the complaint for constructive dismissal on April 13, 1994, he was
still unsure of the actual ground for his suspension and constructive dismissal. The very
reason why he sought refuge in the labor tribunals was to ascertain the ground for his
termination. After analyzing the pleadings submitted before LA and the proceedings
taken thereon, the LA made a finding that petitioner was validly dismissed due to the
sexual abuse committed against his subordinate.

However, the LA imposed a monetary penalty upon respondent for its failure to observe
procedural due process.

Constructive dismissal exists when an act of clear discrimination, insensibility or dis-

dain by an employer has become so unbearable to the employee leaving him with no
option but to forego with his continued employment.

In the case at bar, petitioner, while still employed with the respondent, was compelled to
resign and forced to go on leave. He was not allowed to participate in the activities of
the company. His salary was no longer remitted to him. His subordinates were directed
not to report to him and the company directed one of its district managers to take over
his position and do his functions without prior notice to him.

These discriminatory acts were calculated to make petitioner feel that he is no longer
welcome nor needed in respondent company short of sending him an actual notice of
termination. We, therefore, hold that respondent constructively dismissed petitioner
from the service.

NO. While we hold the dismissal as valid, we find that there was non-compliance with
the twin procedural requirements of notice and hearing for a lawful dismissal.

Well settled is the dictum that the twin requirements of notice and hearing constitute the
essential elements of due process in the dismissal of employees. It is a cardinal rule in
our jurisdiction that the employer must furnish the employee with two written notices
before the termination of employment can be affected: (a) the first apprises the employ-
ee of the particular acts or omissions for which his dismissal is sought; and (b) the sec-
ond informs the employee of the employers decision to dismiss him.

The barrage of letters sent to petitioner, starting from a letter dated April 22, 1994 until
his termination on May 19, 1994, was belatedly made and apparently done in an effort
to show that petitioner was accorded the notices required by law in dismissing an em-
ployee. As observed by the LA in her decision, prior to those letters, petitioner was
already constructively dismissed.

Since the dismissal, although for a valid cause, was done without due process of law,
the employer should indemnify the employee with nominal damages.