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CONTRACTOR, CONTRACTOR INDEPENDENT CONTRACTOR, LABOR ONLY e#idence o+ such status. The +act o+ registration simply pre#ents the legal presumption o+ .eing a mere la.or8only contractor +rom arising. =LSC is ordered to reinstate the petitioners to their +ormer positions. >etitioners are declared as regular employees o+ LSC. 62TES: Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry. LSC entered into a General E uipment !aintenance "epair and !anagement Ser#ices Agreement (Agreement) $ith %est !anpo$er Ser#ices& 'nc. (%!S'). (nder the Agreement& %!S' undertoo) to pro#ide maintenance and repair ser#ices to LSC*s container #ans& hea#y e uipment& trailer chassis& and generator sets. %!S' +urther undertoo) to pro#ide chec)ers to inspect all containers recei#ed +or loading to and,or unloading +rom its #essels. Simultaneous $ith the e-ecution o+ the Agreement& LSC leased its e uipment& tools& and tractors to %!S'. The period o+ lease $as coterminous $ith the Agreement. %!S' then hired petitioners on #arious dates to $or) at LSC as chec)ers& $elders& utility men& cler)s& +or)li+t operators& motor pool and machine shop $or)ers& technicians& trailer dri#ers& and mechanics. 'n Septem.er /001& petitioners +iled $ith the La.or Ar.iter (LA) a complaint +or regularization against LSC and %!S'. 2n 2cto.er 3& /001& LSC terminated the Agreement& e++ecti#e 2cto.er 13& /001. Conse uently& petitioners lost their employment. %!S' asserted that it is an independent contractor. 't a#erred that it $as $illing to regularize petitioners4 ho$e#er& some o+ them lac)ed the re uisite uali+ications +or the 5o.. LSC a#erred that petitioners $ere employees o+ %!S' and $ere assigned to LSC .y #irtue o+ the Agreement. %!S' is an independent 5o. contractor $ith su.stantial capital or in#estment in the +orm o+ tools& e uipment& and machinery necessary in the conduct o+ its .usiness. The Agreement .et$een LSC and %!S' constituted legitimate 5o. contracting. Thus& petitioners $ere employees o+ %!S' and not o+ LSC. The La.or Ar.iter dismissed petitioners* complaint on the ground that petitioners $ere employees o+ %!S'. 't $as %!S' $hich hired petitioners& paid their $ages& and e-ercised control o#er them. The 6L"C re#ersed the La.or Ar.iter 'SS(E: 7hether or not respondent $as engaged in la.or8only contracting. 9EL:: ;es. 'n :e Los Santos #. 6L"C& the character o+ the .usiness& i.e.& $hether as la.or8only contractor or as 5o. contractor& should .e measured in terms o+& and determined .y& the criteria set .y statute. The parties cannot dictate .y the mere e-pedience o+ a unilateral declaration in a contract the character o+ their .usiness. The Court has o.ser#ed that: First& petitioners $or)ed at LSC*s premises& and no$here else. 2ther than the pro#isions o+ the Agreement& there $as no sho$ing that it $as %!S' $hich esta.lished petitioners* $or)ing procedure and methods& $hich super#ised petitioners in their $or)& or $hich e#aluated the same. There $as a.solute lac) o+ e#idence that %!S' e-ercised control o#er them or their $or). Second& LSC $as una.le to present proo+ that %!S' had su.stantial capital. There $as no proo+ pertaining to the contractor*s capitalization& nor to its in#estment in tools& e uipment& or implements actually used in the per+ormance or completion o+ the 5o.& $or)& or ser#ice that it $as contracted to render. 7hat is clear $as that the e uipment used .y %!S' $ere o$ned .y& and merely rented +rom& LSC. Third& petitioners per+ormed acti#ities $hich $ere directly related to the main .usiness o+ LSC. The $or) o+ petitioners as chec)ers& $elders& utility men& dri#ers& and mechanics could only .e characterized as part o+& or at least clearly related to& and in the pursuit o+& LSC*s .usiness. La.or8only contracting 8a prohi.ited act 8 is an arrangement $here the contractor or su.contractor merely recruits& supplies& or places $or)ers to per+orm a 5o.& $or)& or ser#ice +or a principal. 8 Elements:

Emmanuel Babas et. al. v Lorenzo Sh !! n" Cor!orat on #$.R. No. %&'()%* FACTS:

(a) the contractor or su.contractor does not ha#e su.stantial capital or in#estment to actually per+orm the 5o.& $or)& or ser#ice under its o$n account and responsi.ility (.) the employees recruited& supplied& or placed .y such contractor or su.contractor per+orm acti#ities $hich are directly related to the main .usiness o+ the principal. >ermissi.le 5o. contracting or su.contracting ? an arrangement $here.y a principal agrees to put out or +arm out $ith the contractor or su.contractor the per+ormance or completion o+ a speci+ic 5o.& $or)& or ser#ice $ithin a de+inite or predetermined period& regardless o+ $hether such 5o.& $or)& or ser#ice is to .e per+ormed or completed $ithin or outside the premises o+ the principal. Conditions: (a) The contractor carries on a distinct and independent .usiness and underta)es the contract $or) on his account under his o$n responsi.ility according to his o$n manner and method& +ree +rom the control and direction o+ his employer or principal in all matters connected $ith the per+ormance o+ his $or) e-cept as to the results thereo+4 (.) The contractor has su.stantial capital or in#estment4 and (c) The agreement .et$een the principal and the contractor or su.contractor assures the contractual employees@ entitlement to all la.or and occupational sa+ety and health standards& +ree e-ercise o+ the right to sel+8organization& security o+ tenure& and social $el+are .ene+its. RO++EL C. ORE$AS, ,S. NATIONAL LABOR RELATIONS CO++ISSION, D-SIT .OTELNI//O, 0$.R. No. %''121, 3ul4 5%, 5((&6 FACTS: >etitioners $or)ed as #alet par)ing attendants and door attendants inrespondent :usit 9otel 6i))o (:usit). As e#idence o+ their employment& they ha#eemployment contracts $ith respondent FAA.FAA recalled petitioners +rom :usit. >etitioners then instituted a complaint +orillegal dismissal& regularization& premium pay +or holiday and rest day& holiday pay&ser#ice incenti#e lea#e pay& 31th month pay and attorney@s +ees againstrespondents :usit. :usit and FAA .oth argued that FAA is a legitimate 5o.contractor registered $ith :2LE) and :T'). >ursuant to their Contract +orSer#icesBCD +or the supply o+ #alet par)ing and door attendant ser#ices& FAAassigned petitioners to :usit. Accordingly& petitioners@ real and actual employer is FAA. La.or Ar.iter rendered a decision declared that petitioners +ailed to pro#e thatthey $ere employees o+ :usit& also noted that petitioners signed application andemployment contracts $ith FAA and $ere under its payrolls and accounts. Thus&FAA $as petitioners@ employer. 2n appeal& the 6L"C o.ser#ed that the +our8+oldtest in determining the e-istence o+ an employer8 employee relationship is presentin petitioners@ relationship $ith FAA. 'SS(E: 7hether or not FAA is an independent contractor. 9EL:: 'n this case the La.or Ar.iter& the 6L"C& and the Court o+ Appeals $ereunanimous in +inding that FAA $as a legitimate 5o. contractor. Among thecircumstances that esta.lished the status o+ FAA as a legitimate 5o. contractor are:(3) FAA is registered $ith the :2LE and the :T'4B30D (/) FAA has a Contract +orSer#ices $ith :usit +or the supply o+ #alet par)ing and door attendantser#ices4 B33D (1) FAA has an independent .usiness and pro#ides #alet par)ing anddoor attendant ser#ices to other clients li)e !andarin 2riental& !anila 9otel4 and(E) FAA@s total assets +rom 3FFG to 3FFF amount to >3&C0/&CFG.G0 to >F&0/3&11C.31. 'n addition& it pro#ides the uni+orms and loc)ers o+ its employees. !oreo#er& .y applying the +our8+old test used in determining an employer8employee relationship& the status o+ FAA as the employer o+ petitioners isindu.ita.ly esta.lished. First& petitioners applied and signed employment contracts$ith FAA. They $ere merely assigned to :usit con+orma.ly $ith the Contract +orSer#ices .et$een FAA and

Lastly& %!S' had no other client e-cept +or LSC& and neither %!S' nor LSC re+uted this +inding& there.y .olstering the 6L"C +inding that %!S' is a la.or8only contractor. The CA erred in considering %!S'*s Certi+icate o+ "egistration as su++icient proo+ that it is an independent contractor. <urisprudence states that a Certi+icate o+ "egistration issued .y the :epartment o+ La.or and Employment is not conclusi#e

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:usit. Second& FAA assigned a super#isor in :usit tomonitor petitioners@ attendance& lea#es o+ a.sence& per+ormance and conduct.>etitioners also maintained their daily time records $ith FAA. Third& petitioners$ere duly noti+ied .y FAA that they $ould .e assigned to :usit +or +i#e months only.Therea+ter& they may either .e recalled +or trans+er to other clients or .e reassignedto :usit depending on the result o+ FAA@s e#aluation o+ their per+ormance. 'n thiscase& FAA opted to recall petitioners +rom :usit. Fourth& $hile FAA .illed :usit +orthe ser#ices rendered& it $as actually FAA $hich paid petitioners@ salaries. 7orthy o+ note& FAA registered petitioners $ith the %ureau o+ 'nternal "e#enue and theSocial Security System as its employees.'n summary& this Court accepts as esta.lished the +act that FAA is alegitimate 5o. contractor and& in contemplation o+ la$& the employer o+ petitioners.petition is :E6'E: 3OSE SON7A vs. ABS8CBN BROADCASTIN$ CORPORATION $.R. No. %9&(2% FACTS:'n !ay 3FFE& A%S8C%6 signed an agreement $ith the !el and <ay !anagement and :e#elopment Corporation (!<!:C). A%S8C%6 $as represented .y its corporate o++icers $hile !<!:C $as represented .y Sonza&as >resident and general manager& and Tiangco as its EA> and treasurer. "e+erred to in the agreement as agent& !<!:C agreed to pro#ide Sonza*s ser#ices e-clusi#ely to A%S8C%6 as talent +or radio and tele#ision. A%S8C%6 agreed to pay Sonza a monthly talent +ee o+ >130& 000 +or the +irst year and>13G& 000 +or the second and third year. 2n April 3FFH& Sonza $rote a letter to A%S8C%6@s >resident& Eugenio Lopez '''& $here he irre#oca.ly resigned in #ie$ o+ the recent e#ents concerning his program and career. The acts o+ the station are #iolati#e o+ the Agreement and said letter $ill ser#e as notice o+ rescission o+ said contract. The letteralso contained the $ai#er and renunciation +or reco#ery o+ the stipulated .ut reser#es the right to see) reco#ery o+ the other .ene+its under said Agreement .A+ter the said letter& Sonza +iled $ith the :epartment o+ La.or and Employment a complaint alleging that A%S8C%6 did not pay his salaries& separation pay& ser#ice incenti#e pay&31th month pay& signing .onus& tra#el allo$ance and amounts under the Employees Stoc) 2ption >lan (ES2>). A%S8C%6 contended that no employee8 employer relationship e-isted .et$een the parties. 9o$e#er& A%S8C%6 continued to remit Sonza*s monthly talent +ees .ut opened another account +or the same purpose. The La.or Ar.iter dismissed the complaint and +ound that there is no employee8employer relationship. The LA ruled that he is not an employee .y reason o+ his peculiar s)ill and talent as a TA host and a radio .roadcaster. (nli)e an ordinary employee& he $as +ree to per+orm his ser#ices in accordance $ith his o$n style. 6L"C and CA a++irmed the LA. Should there .e any complaint& it does not arise +rom an employer8employee relationship .ut +rom a .reach o+ contract. 'SS(E: 7hether or not there $as employer8employee relationship .et$eenthe parties. 9EL:: There is no employer8employee relationship .et$een Sonza and A%S8 C%6.>etition denied. <udgment decision a++irmed.Case la$ has consistently held that the elements o+ an employee8employer relationship are selection and engagement o+ the employee& the payment o+ $ages& the po$er o+ dismissal and the employer*s po$er to control the employee on the means and methods .y $hich the $or) is accomplished. The last element& the so8called Icontrol testI& is the most important element. The control test is the most important test our courts apply in distinguishing an employee +rom an independent contractor. This test is .ased on the e-tent o+ control the hirer e-ercises o#er a $or)er. The greater the super#ision and control the hirer e-ercises& the more li)ely the $or)er is deemed an employee. The con#erse holds true as $ell ? the less control the hirer e-ercises& the more li)ely the $or)er is considered an independent contractor. To per+orm his $or)& S26JA only needed his s)ills and talent. 9o$ S26JA deli#ered his lines& appeared on tele#ision& and sounded on radio $ere outside A%S8C%6*s control. A%S8C%6 did not instruct S26JA ho$ to per+orm his 5o.. A%S8C%6 merely reser#ed the right to modi+y the program +ormat and airtime schedule I+or more e++ecti#e programming.I A%S8C%6*s sole concern $as the uality o+ the sho$s and their standing in the ratings. Clearly& A%S8C%6 did not e-ercise control o#er the means and methods o+ per+ormance o+ Sonza*s $or). A radio .roadcast specialist $ho $or)s under minimal super#ision is an independent contractor. Sonza*s $or) as tele#ision and radio program host re uired special s)ills and talent& $hich S26JA admittedly possesses. A%S8C%6 claims that there e-ists a pre#ailing practice in the .roadcast and entertainment industries to treat talents li)e Sonza as independent contractors. The right o+ la.or to security o+ tenure as guaranteed in the Constitution arises only i+ there is an employer8employee relationship under la.or la$s. 'ndi#iduals $ith special s)ills& e-pertise or talent en5oy the +reedom to o++er their ser#ices as independent contractors. The right to li+e and li#elihood guarantees this +reedom to contract as independent contractors. The right o+ la.or to security o+ tenure cannot operate to depri#e an indi#idual& possessed $ith special s)ills& e-pertise and talent& o+ his right to contract as an independent contractor. 3oeb +. Al v a:o, et al. vs. Pro;ter < $amble Ph ls., In;. an: PRO++8$E+ In;. 0$R No. %'(2(' +ar;h ), 5(%(6

FACTS: >etitioners $or)ed as merchandisers o+ >KG. They all indi#idually signed employment contracts $ith either >romm8Gem or SA>S +or periods o+ more or less +i#e months at a time. They $ere assigned at di++erent outlets& supermar)ets and stores $here they handled all the products o+ >KG. They recei#ed their $ages +rom >romm8Gem or SA>S. SA>S and >romm8Gem imposed disciplinary measures on erring merchandisers +or reasons such as ha.itual a.senteeism& dishonesty or changing day8o++ $ithout prior notice. >KG is principally engaged in the manu+acture and production o+ di++erent consumer and health products& $hich it sells on a $holesale .asis to #arious supermar)ets and distri.utors. To enhance consumer a$areness and acceptance o+ the products& >KG entered into contracts $ith >romm8Gem and SA>S +or the promotion and merchandising o+ its products.

>etitioners +iled a complaint against >KG +or regularization& ser#ice incenti#e lea#e pay and other .ene+its $ith damages. The assert that >romm8Gem and SA>S are la.or8only contractors pro#iding ser#ices o+ manpo$er to their client. They claim that the contractors ha#e neither su.stantial capital nor tools and e uipment to underta)e independent la.or contracting. >etitioners insist that since they had .een engaged to per+orm acti#ities $hich are necessary or desira.le in the usual .usiness or trade o+ >KG& then they are its regular employees. The La.or Ar.iter dismissed the complaint +or lac) o+ merit and ruled that there $as no employer8employee relationship .et$een petitioners and >KG. 9e +urther +ound that >romm8Gem and SA>S $ere legitimate independent 5o. contractors. >etitioners +iled an appeal to 6L"C $hich a++irmed the decision o+ the la.or Ar.iter and also denied their motion +or reconsideration. 'SS(ES: 7hether or not >KG is the employer o+ petitioners SC "(L'6G: 'n order to resol#e the issue o+ $hether >KG is the employer o+ petitioners& it is necessary to +irst determine $hether >romm8Gem and SA>S are la.or8only contractors or legitimate 5o. contractors. The pertinent La.or Code pro#ision on the matter states: A"T. 30H. Contractor or su.contractor. ? LLL There is Ila.or8onlyI contracting $here the person supplying $or)ers to an employer does not ha#e su.stantial capital or in#estment in the +orm o+ tools& e uipment& machineries& $or) premises& among others& and the $or)ers recruited and placed .y such person are per+orming acti#ities $hich are directly related to the principal .usiness o+ such employer. 'n such cases& the person or intermediary shall .e considered merely as an agent o+ the employer $ho shall .e responsi.le to the $or)ers in the same manner and e-tent as i+ the latter $ere directly employed .y him. 'n the case o+ >romm8Gem& its +inancial statements sho$ that it has authorized capital stoc) o+ >3 million and a capital a#aila.le +or operations. >romm8Gem supplied its complainant8$or)ers $ith the rele#ant materials +or them to per+orm their $or) and also issued uni+orms to them. 't is also rele#ant to mention that >romm8Gem already considered the complainants $or)ing under it as its regular& not merely contractual or pro5ect employees. The court +inds that >romm8Gem has su.stantial in#estment $hich relates to the $or) to .e per+ormed. (nder the circumstances& it cannot .e sustained a la.or8only contractor .ut a legitimate independent contractor. 2n the other hand& SA>S is considered merely an agent o+ the principal employer and the latter is responsi.le to the employees o+ the la.or8only contractor as i+ such employees had .een directly employed .y the principal employer. Conse uently& the +ollo$ing petitioners& ha#ing .een recruited and supplied .y SA>S 88 $hich engaged in la.or8only contracting 88 are considered as the employees o+ >KG: >arenthetically& unli)e >romm8Gem $hich dismissed its employees +or gra#e misconduct and .reach o+ trust due to disloyalty& SA>S dismissed its employees upon the initiation o+ >KG. 't is e#ident that SA>S does not carry on its o$n .usiness .ecause the termination o+ its contract $ith >KG automatically meant +or it also the termination o+ its employees* ser#ices. 't is o.#ious +rom its act that SA>S had no other clients and had no intention o+ see)ing other clients in order to +urther its merchandising .usiness. From all indications SA>S& e-isted to cater solely to the need o+ >KG +or the supply o+ employees in the latter*s merchandising concerns only. (nder the circumstances pre#ailing in the instant case& $e cannot consider SA>S as an independent contractor. 79E"EF2"E& the petition is G"A6TE:.

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Complainants (<ose !el %ernarte and "enato Gue#arra) a#er that they $ere in#ited to 5oin the >%A as re+erees. :uring the leadership o+ Commissioner Emilio %ernardino& they $ere made to sign contracts on a year8to8year .asis. :uring the term o+ Commissioner Eala& ho$e#er& changes $ere made on the terms o+ their employment. Complainant %ernarte& +or instance& $as not made to sign a contract during the +irst con+erence o+ the All8Filipino Cup $hich $as +rom Fe.ruary /1&/001 to <une /001. 't $as only during the second con+erence $hen he $as made to sign a one and a hal+ month contract +or the period <uly 3 toAugust C& /001. 2n <anuary 3C& /00E& %ernarte recei#ed a letter +rom the 2++ice o+ the Commissioner ad#ising him that his contract $ould not .e rene$ed citing his unsatis+actory per+ormance on and o++ the court. 't $as a total shoc) +or %ernarte $ho $as a$arded "e+eree o+ the year in /001. 9e +elt that the dismissal $as caused .y his re+usal to +i- a game upon order o+ Ernie :e Leon. 2n the other hand& complainant Gue#arra alleges that he $as in#ited to 5oin the >%A pool o+ re+erees in Fe.ruary /003. 2n !arch 3& /003& he signed a contract as trainee. %eginning /00/& he signed a yearly contract as "egular Class C re+eree. 2n !ay H& /001& respondent !artinez issued a memorandum to Gue#arra e-pressing dissatis+action o#er his uestioning on the assignment o+ re+erees o++iciating out8o+8to$n games. %eginning Fe.ruary /00E& he $as no longer made to sign a contract. "espondents a#er& on the other hand& that complainants entered into t$o contracts o+ retainer $ith the >%A in the year /001. The +irst contract $as+ or the period <anuary 3& /001 to <uly 3C& /0014 and the second $as +or Septem.er 3 to :ecem.er /001. A+ter the lapse o+ the latter period& >%A decided not to rene$ their contracts. Complainants $ere not illegally dismissed .ecause they $ere not employees o+ the >%A. Their respecti#e contracts o+ retainer $ere simply not rene$ed. >%A had the prerogati#e o+ $hether or not to rene$ their contracts& $hich they )ne$ $ere +i-ed. 'n her 13 !arch /00C :ecision& the La.or Ar.iter declared petitioner an employee $hose dismissal .y respondents $as illegal. Accordingly& the La.or Ar.iter ordered the reinstatement o+ petitioner and the payment o+ .ac)$ages& moral and e-emplary damages and attorney*s +ees. The 6L"C a++irmed the La.or Ar.iter@s 5udgment. "espondents +iled a petition +or certiorari $ith the Court o+ Appeals& $hich o#erturned the decisions o+ the 6L"C and La.or Ar.iter. 'SS(E: 7hether petitioner is an employee o+ respondents& $hich in turn determines $hether petitioner $as illegally dismissed. 9EL:: 62& >etitioner is not an employee o+ the respondents. The SC :E6'E: the petition and AFF'"!E: the assailed decision o+ the Court o+ Appeals. To determine the e-istence o+ an employer8employee relationship& case la$ has consistently applied the +our8+old test& to $it: (a) the selection and engagement o+ the employee4 (.) the payment o+ $ages4 (c) the po$er o+ dismissal4 and (d) the employer*s po$er to control the employee on the means and methods .y $hich the $or) is accomplished. The so8called Ncontrol testO is the most important indicator o+ the presence or a.sence o+ an employer8employee relationship.3F 'n this case& >%A admits repeatedly engaging petitioner*s ser#ices& as sho$n in the retainer contracts. >%A pays petitioner a retainer +ee& e-clusi#e o+ per diem or allo$ances& as stipulated in the retainer contract. >%A can terminate the retainer contract +or petitioner*s #iolation o+ its terms and conditions. 9o$e#er& respondents argue that the all8important element o+ control is lac)ing in this case& ma)ing petitioner an independent contractor and not an employee o+ respondents. The contractual stipulations do not pertain to& much less dictate& ho$ and $hen petitioner $ill .lo$ the $histle and ma)e calls. 2n the contrary& they merely ser#e as rules o+ conduct or guidelines in order to maintain the integrity o+ the pro+essional .as)et.all league. As correctly o.ser#ed .y the Court o+ Appeals& Nho$ could a s)illed re+eree per+orm his 5o. $ithout .lo$ing a $histle and ma)ing callsP - - - B9Do$ can the >%A control the per+ormance o+ $or) o+ a re+eree $ithout controlling his acts o+ .lo$ing the $histle and ma)ing callsPO7e agree $ith respondents that once in the playing court& the re+erees e-ercise their o$n independent 5udgment& .ased on the rules o+ the game& as to $hen and ho$ a call or decision is to .e made. The re+erees decide $hether an in+raction $as committed& and the >%A cannot o#errule them once the decision is made on the playing court. The re+erees are the only& a.solute& and +inal authority on the playing court. "espondents or any o+ the >%A o++icers cannot and do not determine $hich calls to ma)e or not to ma)e and cannot control the re+eree $hen he .lo$s the $histle .ecause such authority e-clusi#ely .elongs to the re+erees. The #ery nature o+ petitioner*s 5o. o+ o++iciating a pro+essional .as)et.all game undou.tedly calls +or +reedom o+ control .y respondents. !oreo#er& unli)e regular employees $ho ordinarily report +or $or) eight hours per day +or +i#e days a $ee)& petitioner is re uired to report +or $or) only $hen >%A games are scheduled or three times a $ee) at t$o hours per game. 'n addition& there are no deductions +or contri.utions to the SocialSecurity System& >hilhealth or >ag8'.ig& $hich are the usual deductions +rom employees* salaries. These undisputed circumstances .uttress the +act that petitioner is an independent contractor& and not an employee o+ respondents RE$-LAR CAS-AL E+PLOYEE, PRO3ECT>SEASONAL. PROBATIONARY

San + "uel Cor!. vs. Sem llano et al., 0$R No. %'=521, 3ul4 2, 5(%(6 Facts: 't appears that A!>C2 hired the ser#ices o+ Aicente et al.& BAicente Semillano& 6elson !onde5ar& <o#ito "emada and Ale- 9a$od& respondents hereinD on di++erent dates in :ecem.er Bo+ 3FF3 andD 3FFE. All o+ them $ere assigned to $or) in S!C@s %ottling >lant situated at %rgy. Granada Sta. Fe& %acolod City& in order to per+orm the +ollo$ing tas)s: segregating .ottles& remo#ing dirt there+rom& +iling them in designated places& loading and unloading the .ottles to and +rom the deli#ery truc)s& and per+orming other tas)s as may .e ordered .y S!C@s o++icers. BTheyD $ere re uired to $or) inside the premises o+ S!C using BS!C@sD e uipment. BTheyD rendered ser#ice $ith S!C +or more than H months. Su.se uently& S!C entered into a Contract o+ Ser#ices $ith A!>C2 designating the latter as the employer o+ Aicente& et al.& As a result& Aicente et al.& +ailed to claim the rights and .ene+its ordinarily accorded a regular employee o+ S!C. 'n +act& they $ere not paid their 31th month pay. 2n <une H& 3FFC& they $ere not allo$ed to enter the premises o+ S!C. The pro5ect manager o+ A!>C2& !erlyn >olidario& told them to $ait +or +urther instructions +rom the S!C@s super#isor. Aicente et al.& $aited +or one month& un+ortunately& they ne#er heard a $ord +rom S!C. TCc'aA Conse uently& Aicente et al.& as complainants& +iled on <uly 3G& 3FFC a C2!>LA'6T F2" 'LLEGAL :'S!'SSAL $ith the La.or Ar.iter against A!>C2& !erlyn A. >olidario& S!C and "u+ino '. ;atar BS!C >lant !anagerD. 'ssue: 7hether or not A!>C2 is a legitimate 5o. contractor. "uling: Section C o+ :epartment 2rder 6o. 3M80/ (Series o+ /00/) o+ the "ules 'mplementing Articles 30H to 30F o+ the La.or Code +urther pro#ides that: ISu.stantial capital or in#estmentI re+ers to capital stoc)s and su.scri.ed capitalization in the case o+ corporations& tools& e uipment& implements& machineries and $or) premises& actually and directly used .y the contractor or su.contractor in the per+ormance or completion o+ the 5o. $or) or ser#ice contracted out. (emphasis supplied) The Iright to controlI shall re+er to the right reser#ed to the person +or $hom the ser#ices o+ the contractual $or)ers are per+ormed& to determine not only the end to .e achie#ed& .ut also the manner and means to .e used in reaching that end. The test to determine the e-istence o+ independent contractorship is $hether or not the one claiming to .e an independent contractor has contracted to do the $or) according to his o$n methods and $ithout .eing su.5ect to the control o+ the employer& e-cept only as to the results o+ the $or). 'n the case at .ench& petitioner +aults the CA +or holding that the respondents $ere under the control o+ petitioner $hene#er they per+ormed the tas) o+ loading in the deli#ery truc)s and unloading +rom them. 't& ho$e#er& +ails to sho$ ho$ A!>C2 too) Ientire charge& control and super#ision o+ the $or) and ser#ice agreed upon.I A!>C2@s Comment on the >etition is li)e$ise utterly silent on this point. 6ota.ly& .oth petitioner and A!>C2 chose to ignore the uni+orm +inding o+ the LA& 6L"C (in its original decision) and the CA that one o+ the assigned 5o.s o+ respondents $as to Iper+orm other acts as may .e ordered .y S!C@s o++icers.I Signi+icantly& A!>C2& opted not to challenge the original decision o+ the 6L"C that +ound it a mere la.or8only contractor. !oreo#er& the Court is not con#inced that A!>C2 $ielded Ie-clusi#e discretion in the dischargeI o+ respondents. :espite the +act that the ser#ice contracts contain stipulations $hich are earmar)s o+ independent contractorship& they do not ma)e it legally so. The language o+ a contract is neither determinati#e nor conclusi#e o+ the relationship .et$een the parties. >etitioner S!C and A!>C2 cannot dictate& .y a declaration in a contract& the character o+ A!>C2@s .usiness& that is& $hether as la.or8only contractor& or 5o. contractor. 3OSE +EL BERNARTE vs. P.ILIPPINE BAS/ETBALL ASSOCIATION #PBA*, 3OSE E++AN-EL +. EALA, an: PERRY +ARTINE7, $.R. No. %)5(&= Se!tember %=, 5(%% FACTS:

4
$O+A ,. PA+PLONA PLANTATION 221 SCRA %5= FACTS: >etitioner commencedB1D the instant suit .y +iling a complaint +or illegal dismissal& underpayment o+ $ages& non8payment o+ premium pay +or holiday and rest day& +i#e (C) days incenti#e lea#e pay& damages and attorney*s +ees& against the respondent. The case $as +iled $ith the Su.8"egional Ar.itration %ranch 6o. A'' o+ :umaguete City. >etitioner claimed that he $or)ed as a carpenter at the 9acienda >amplona since 3FFC4 that he $or)ed +rom G:10 a.m. to 3/:00 noon and +rom 3:00 p.m. to C:00 p.m. daily $ith a salary rate o+ >F0.00 a day paid $ee)ly4 and that he $or)ed continuously until 3FFG $hen he $as not gi#en any $or) assignment.BED 2n a claim that he $as a regular employee& petitioner alleged to ha#e .een illegally dismissed $hen the respondent re+used $ithout 5ust cause to gi#e him $or) assignment. Thus& he prayed +or .ac)$ages& salary di++erential& ser#ice incenti#e lea#e pay& damages and attorney*s +ees.BCD FACTS: "espondent Elite Shipping A.S. hired petitioner :ante :. de la Cruz as third engineer +or the #essel !,S Ar)tis !orning through its local agency in the >hilippines& co8respondent !aers) Filipinas Cre$ing 'nc. The contract o+ employment $as +or a period o+ nine months& starting April 3F& 3FFF& $ith a monthly .asic salary o+ (SR3&00E.00 plus other .ene+its. >etitioner $as deployed to <e.el Ali& (nited Ara. Emirates and .oarded !,S Ar)tis !orning on !ay 3E& 3FFF.

9o$e#er& chie+ engineer 6ormann >er 6ielsen e-pressed his dissatis+action o#er petitioner*s per+ormance& the latter has .een in+ormed that i+ he does not impro#e his <o.,7or)ing per+ormance $ithin a short time he $ill .e signed o++ according to C%A Article 3 (G) $hich pro#ides that the +irst si-ty (H0) days o+ ser#ice is to .e considered a pro.ationary period. 2n <une /G& 3FFF& petitioner $as in+ormed o+ his discharge. 7hen petitioner got .ac) to !anila& he +iled a complaint +or illegal dismissal $ith claims +or the monetary e ui#alent o+ the une-pired portion o+ his contract& damages and attorney*s +ees in the 6ational La.or "elations Commission (6L"C) on Septem.er /3& 3FFF. LA%2" A"%'TE": ruled that petitioner $as dismissed $ithout 5ust cause and due process as the log.oo) entry ($hich respondents claimed to .e the +irst notice to petitioner) $as #ague. 't +ailed to e-pound on or state the details o+ petitioner*s shortcomings or in+ractions. As such& petitioner $as depri#ed o+ a real or meaning+ul opportunity to e-plain his side.

2n the other hand& respondent denied ha#ing hired the petitioner as its regular employee. 't instead argued that petitioner $as hired .y a certain Antoy CaQa#eral& the manager o+ the hacienda at the time it $as o$ned .y !r. %o$er and leased .y !anuel Gonzales& a 5ai8alai pelotari )no$n as N;.arra.OBHD "espondent added that it $as not o.liged to a.sor. the employees o+ the +ormer o$ner. 'n 3FFC& >amplona >lantation Leisure Corporation (>>LC) $as created +or the operation o+ tourist resorts& hotels and .ars. >etitioner& thus& rendered ser#ice in the construction o+ the +acilities o+ >>LC. '+ at all& petitioner $as a pro5ect .ut not a regular employee. 'SS(E: 7hether or not the petitioner a regular employee o+ the respondentP

6L"C upheld the LA*s +inding o+ illegal dismissal .ut deleted the a$ard o+ moral and e-emplary damages. CA re#ersed.

9EL:: 'SS(E: $hether or not petitioner $as illegally dismissed .y respondents. Article /M0 o+ the La.or Code pro#ides that there are t$o )inds o+ "EG(LA" E!>L2;EES& namely: "egular employees .y nature o+ $or) 8 Those $ho are engaged to per+orm acti#ities $hich are usually necessary or desira.le in the usual .usiness or trade o+ the employer (regardless o+ length o+ ser#ice)4 and "egular employees .y years o+ ser#ice 8 Those $ho ha#e rendered at least one year o+ ser#ice& $hether continuous or .ro)en& $ith respect to the acti#ity in $hich they are employed (regardless o+ nature o+ $or)). '+ the la$ has .een per+orming the 5o. +or at least a year& e#en i+ the per+ormance is not continuous or merely intermittent& the la$ deems the repeated and continuing need +or its per+ormance as su++icient e#idence o+ the necessity& i+ not indispensa.ility& o+ that acti#ity to the .usiness. >etitioner $as engaged to per+orm carpentry $or). 9is ser#ices $ere needed +or a period o+ / years until such time that respondent decided not to gi#e him $or) assignment anymore. 2$ing to his length o+ ser#ice& petitioner .ecame a regular employee& .y operation o+ la$. The principal test used to determine $hether employees are >"2<ECT E!>L2;EES as distinguished +rom "EG(LA" E!>L2;EES& is $hether or not the employees $ere assigned to carry out a speci+ic pro5ect or underta)ing& the duration or scope o+ $hich $as speci+ied at the time the employees $ere engaged +or that pro5ect. 'n this case& apart +rom the respondent@s .are allegation that petitioner $as a pro5ect employee& it had not sho$n that petitioner $as in+ormed that he $ould .e assigned to a speci+ic pro5ect or underta)ing. 6either $as it esta.lished that he $as in+ormed o+ the duration and scope o+ such pro5ect or underta)ing at the time o+ his engagement. 7ell8settled is the rule that regular employees en5oy SEC("'T; 2F TE6("E and they can only .e dismissed +or 5ust cause and $ith due process& i.e.& a+ter notice and hearing. 'n cases in#ol#ing an employee@s dismissal& the .urden is on the employer to pro#e that the dismissal $as legal. This .urden $as not amply discharged .y the respondent in this case. The re uirement o+ su.stanti#e due process $as not complied $ith. 'n #ie$ o+ the non8o.ser#ance o+ .oth su.stanti#e and procedural due process& petitioner@s dismissal +rom employment is declared 'LLEGAL. DANTE D. DE LA CR-7 vs.+AERS/ ?ILIPINAS CRE@IN$, INC. an: ELITE S.IPPIN$ A.S., 22% SCRA 5&= 9EL:: ;ES >rocedural due process re uires that a seaman must .e gi#en a $ritten notice o+ the charges against him and a++orded a +ormal in#estigation $here he can de+end himsel+ personally or through a representati#e .e+ore he can .e dismissed and disem.ar)ed +rom the #essel. Furthermore& the notice must state $ith particularity the acts or omissions +or $hich his dismissal is .eing sought. This $as not complied $ith as the log.oo) $as #ague and did not contain the in+ractions .eing attri.uted to petitioner. 't $as petitioner*s position that he $as already a regular employee $hen his ser#ices $ere terminated4 respondents& on the other hand& insisted that he $as then still on pro.ationary status. This& according to respondents& entitled them to dismiss him in accordance $ith the pro#isions o+ Article 3 (G) o+ the C%A ($hich allo$s the master to terminate the contract o+ one under pro.ation .y merely ser#ing a $ritten notice 3E days prior to the contemplated discharge) 9E 'S 62T a regular employees& he is considered a contractual employee $hose rights and o.ligations are go#erned primarily .y the >2EA Standard Employment Contract +or Filipino Seamen the "ules and "egulations Go#erning 2#erseas Employment& and& more importantly& .y "epu.lic Act 6o. M0E/& other$ise )no$n as The !igrant 7or)ers and 2#erseas Filipinos Act o+ 3FFC. 7hile $e recognize that petitioner $as a registered mem.er o+ the Associated !arine 2++icers and Seamen*s (nion o+ the >hilippines $hich had a C%A $ith respondent Elite Shipping A.S. pro#iding +or a pro.ationary period o+ employment& the C%A cannot o#erride the pro#isions o+ the >2EA Standard Employment Contract. The la$ is read into& and +orms part o+& contracts. And pro#isions in a contract are #alid only i+ they are not contrary to la$& morals& good customs& pu.lic order or pu.lic policy. $RE$ORIO S. SABEROLA vs. RONALD S-ARE7 an: RAY+-NDO LIRASAN, 3R.

FACTS: Case is +or illegal dismissal $ith money claims +iled .y respondents against petitioner. Latter is the o$ner and manager o+ G.S. Sa.erola Electrical Ser#ices& a +irm engaged in the construction .usiness specializing in installing electrical de#ices in su.di#ision homes and in commercial and non8commercial .uildings.

5
"espondents $ere employed .y petitioner as electricians. They $or)ed +rom !onday to Saturday and& occasionally& on Sundays& $ith a daily $age o+ >330.00. >etitioner a#erred that respondents $ere part8time pro5ect employees and $ere employed only $hen there $ere electrical 5o.s to .e done in a particular housing unit contracted .y petitioner. 9e maintained that the ser#ices o+ respondents as pro5ect employees $ere coterminous $ith each pro5ect. As pro5ect employees& the time o+ rendition o+ their ser#ices $as not +i-ed. Thus& there $as no practical $ay o+ determining the appropriate compensation o+ the #alue o+ respondents* accomplishment& as their $or) assignment #aried depending on the needs o+ a speci+ic pro5ect. LA%2" A"%'TE": they are pro5ect employees& not entitled to .ene+its 6L"C: a++irmed& .ut said they $ere illegally dismissed CA: a++irmed 'SS(E: 7hat is their statusP And $ere they illegally dismissedP 9EL:: >ro5ect employees (%(T $ere illegally dismissed) >etitioner& as an electrical contractor& depends +or his .usiness on the contracts that he is a.le to o.tain +rom real estate de#elopers and .uilders o+ .uildings. Thus& the $or) pro#ided .y petitioner depends on the a#aila.ility o+ such contracts or pro5ects. The duration o+ the employment o+ his $or) +orce is not permanent .ut coterminous $ith the pro5ects to $hich the $or)ers are assigned. Aie$ed in this conte-t& the respondents are considered as pro5ect employees o+ petitioner. >etitioner@s .usiness& specializing in installing electrical de#ices& needs electricians only $hen there are electrical de#ices to .e installed in su.di#ision homes or .uildings co#ered .y an appropriate contract. >etitioner& as an electrical contractor& depends +or his .usiness on contracts that he is a.le to o.tain +rom real estate de#elopers and .uilders. Thus& the $or) pro#ided .y petitioner depends on the a#aila.ility o+ such contracts or pro5ects. The duration o+ the employment o+ his $or) +orce is not permanent .ut coterminous $ith the pro5ects to $hich the $or)ers are assigned. Aie$ed in this conte-t& the respondents are considered as pro5ect employees o+ petitioner. 'ndeed& the status o+ respondents as pro5ect employees $as upheld .y the CA .ased on the +indings o+ +acts o+ the La.or Ar.iter and the 6L"C. A >"2<ECT E!>L2;EE is one $hose employment has .een +i-ed +or a speci+ic pro5ect or underta)ing& the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employee or $here the $or) or ser#ice to .e per+ormed is seasonal in nature and the employment is +or the duration o+ the season. 9o$e#er& respondents& e#en i+ $or)ing as pro5ect employees& en5oy security o+ tenure. Section 1& Article L''' o+ the Constitution guarantees the right o+ $or)ers to security o+ tenure& and .ecause o+ this& an employee may only .e terminated +or 5ust or authorized causes that must comply $ith the due process re uirements mandated .y la$. 7hen a pro5ect employee is dismissed& such dismissal must still comply $ith the su.stanti#e and procedural re uirements o+ due process. Termination o+ his employment must .e +or a la$+ul cause and must .e done in a manner $hich a++ords him the proper notice and hearing. 'n this regard& $e hold that respondent Suarez $as illegally terminated .y petitioner. A pro5ect employee must .e +urnished a $ritten notice o+ his impending dismissal and must .e gi#en the opportunity to dispute the legality o+ his remo#al. 'n termination cases& the .urden o+ proo+ rests on the employer to sho$ that the dismissal $as +or a 5ust or authorized cause. employers $ho hire pro5ect employees are mandated to state and pro#e the actual .asis +or the employee@s dismissal once its #eracity is challenged. >etitioner +ailed to present any e#idence to dispro#e the claim o+ illegal dismissal. 6o e#idence $as presented .y petitioner to sho$ the termination o+ the pro5ect $hich $ould 5usti+y the cessation o+ the $or) or respondents. 6either $as there proo+ that petitioner complied $ith the su.stanti#e and procedural re uirements o+ due process. A pro5ect employee is one $hose Nemployment has .een +i-ed +or a speci+ic pro5ect or underta)ing& the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employee or $here the $or) or ser#ice to .e per+ormed is seasonal in nature and the employment is +or the duration o+ the season.O 9o$e#er& respondents& e#en i+ $or)ing as pro5ect employees& en5oy security o+ tenure. 6onetheless& $hen a pro5ect employee is dismissed& such dismissal must still comply $ith the su.stanti#e and procedural re uirements o+ due process. FACTS: (ni#ersal "o.ina Sugar !illing Corporation (respondent) is a corporation engaged in the cane sugar milling .usiness. >edy Caseres (petitioner Caseres) started $or)ing +or respondent in 3FMF& $hile Andito >ael (petitioner >ael) in 3FF1. At the start o+ their respecti#e employments& they $ere made to sign a Contract o+ Employment +or Speci+ic >ro5ect or (nderta)ing. >etitioners@ contracts $ere rene$ed +rom time to time4 until !ay 3FFF $hen they $ere in+ormed that their contracts $ill not .e rene$ed anymore. >etitioners +iled a complaint +or illegal dismissal& regularization& incenti#e lea#e pay& 31th month pay& damages and attorney*s +ees. Termination o+ his employment must .e +or a la$+ul cause and must .e done in a manner $hich a++ords him the proper notice and hearing. A pro5ect employee must .e +urnished a $ritten notice o+ his impending dismissal and must .e gi#en the opportunity to dispute the legality o+ his remo#al. 'n termination cases& the .urden o+ proo+ rests on the employer to sho$ that the dismissal $as +or a 5ust or authorized cause. Employers $ho hire pro5ect employees are mandated to state and pro#e the actual .asis +or the employee*s dismissal once its #eracity is challenged. >etitioner +ailed to present any e#idence to dispro#e the claim o+ illegal dismissal. 6o e#idence $as presented .y petitioner to sho$ the termination o+ the pro5ect $hich $ould 5usti+y the cessation o+ the $or) o+ respondents. 6either $as there proo+ that petitioner complied $ith the su.stanti#e and procedural re uirements o+ due process. Caseres vs. -n versal Rob na Su"ar + ll n" Cor! $.R. No. %2)9=9, Se!tember 5&, 5((1

'SS(E4 7hether or not the petitioners are seasonal,pro5ect,term employees and not regular employees o+ respondents 9EL:: Article /M0 o+ the La.or Code pro#ides: A"T. /M0. "egular and Casual Employees. ? The pro#ision o+ $ritten agreement to the contrary not$ithstanding and regardless o+ the oral agreement o+ the parties& an employment shall .e deemed to .e regular $here the employee has .een engaged to per+orm acti#ities $hich are usually necessary or desira.le in the usual .usiness or trade o+ the employer& e-cept $here the employment has .een +i-ed +or a speci+ic pro5ect or underta)ing the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employee or $here the $or) or ser#ices to .e per+ormed is seasonal in nature and the employment is +or the duration o+ the season. An employment shall .e deemed to .e casual i+ it is not co#ered .y the preceding paragraph: >ro#ided& That& any employee $ho has rendered at least one year o+ ser#ice& $hether such ser#ice is continuous or .ro)en& shall .e considered a regular employee $ith respect to the acti#ity in $hich he is employed and his employment shall continue $hile such actually e-ists. The +oregoing pro#ision pro#ides +or three )inds o+ employees: (a) regular employees or those $ho ha#e .een Nengaged to per+orm acti#ities $hich are usually necessary or desira.le in the usual .usiness or trade o+ the employerO4 (.) pro5ect employees or those N$hose employment has .een +i-ed +or a speci+ic pro5ect or underta)ing& the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employee or $here the $or) or ser#ices to .e per+ormed is seasonal in nature and the employment is +or the duration o+ the seasonO4 and (c) casual employees or those $ho are neither regular nor pro5ect employees. The principal test +or determining $hether an employee is a pro5ect employee or a regular employee is $hether the employment has .een +i-ed +or a speci+ic pro5ect or underta)ing& the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employee. A pro5ect employee is one $hose employment has .een +i-ed +or a speci+ic pro5ect or underta)ing& the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employee or $here the $or) or ser#ice to .e per+ormed is seasonal in nature and the employment is +or the duration o+ the season. A true pro5ect employee should .e assigned to a pro5ect $hich .egins and ends at determined or determina.le times& and .e in+ormed thereo+ at the time o+ hiring. >etitioners contend that respondent@s repeated hiring o+ their ser#ices uali+ies them to the status o+ regular employees. 2n this score& the LA ruled:

6
This is +urther .uttressed .y the +act that the relationship .et$een complainants and the respondent ("S(!C2& $ould clearly re#eal that the #ery nature o+ the terms and conditions o+ their hiring $ould sho$ that complainants $ere re uired to per+orm phases o+ special pro5ects $hich are not related to the main operation o+ the respondent +or a de+inite period& a+ter $hich their ser#ices are a#aila.le to any +arm o$ner. The 6L"C& agreeing $ith the LA& +urther ruled that: 'n the case at .ar& 7e note that complainants ne#er .othered to deny that they #oluntarily& )no$ingly and $ill+ully e-ecuted the contracts o+ employment. 6either $as there any sho$ing that respondents e-ercised moral dominance on the complainants& - - - it is clear that the contracts o+ employment are #alid and .inding on the complainants. The e-ecution o+ these contracts in the case at .ar is necessitated .y the peculiar nature o+ the $or) in the sugar industry $hich has an o++ milling season. The #ery nature o+ the terms and conditions o+ complainants@ hiring re#eals that they $ere re uired to per+orm phases o+ special pro5ects +or a de+inite period a+ter& their ser#ices are a#aila.le to other +arm o$ners. This is so .ecause the planting o+ sugar does not entail a $hole year operation& and utility $or)s are comparati#ely small during the o++8milling season. Finally& the CA noted: >etitioner >edy Caseres +irst applied $ith pri#ate respondent ("S(!C2 on <anuary F& 3FMF as a $or)er assisting the crane operator at the transloading station. (pon application& Caseres $as inter#ie$ed and made to understand that his employment $ould .e co8terminus $ith the phase o+ $or) to $hich he $ould .e then assigned& that is until Fe.ruary C& 3FMF and therea+ter he $ould .e +ree to see) employment else$here. Caseres agreed and signed the contract o+ employment +or speci+ic pro5ect or underta)ing. A+ter an a.sence o+ more than +i#e (C) months& Caseres re8applied $ith respondent as a seasonal pro5ect $or)er assisting in the general underchassis reconditioning to transport units on <uly 3G& 3FMF. Li)e his +irst assignment& Caseres $as made to understand that his ser#ices $ould .e co8 terminus $ith the $or) to $hich he $ould .e then assigned that is +rom <uly 3G& 3FMF to <uly /0& 3FMF and that therea+ter he is +ree to see) employment else$here to $hich Caseres agreed and readily signed the contract o+ employment +or speci+ic pro5ect or underta)ing issued to him. Therea+ter Caseres #oluntarily signed se#eral other employment contracts +or #arious underta)ings $ith a determina.le period. As in the +irst contract& Caseres@ ser#ices $ere co8terminus $ith the $or) to $hich he $as assigned& and that therea+ter& he $as +ree to see) employment $ith other sugar millers or else$here. The nature and terms and conditions o+ employment o+ petitioner Andito >ael $ere the same as that o+ his co8petitioner Caseres. 't must .e noted that there $ere inter#als in petitioners@ respecti#e employment contracts& and that their $or) depended on the a#aila.ility o+ such contracts or pro5ects. Conse uently& the employment o+ ("S(!C2@s $or) +orce $as not permanent .ut co8terminous $ith the pro5ects to $hich the employees $ere assigned and +rom $hose payrolls they $ere paid (>alomares #s. 6L"C& /GG SC"A E1F). >etitioners@ repeated and successi#e re8employment on the .asis o+ a contract o+ employment +or more than one year cannot and does not ma)e them regular employees. Length o+ ser#ice is not the controlling determinant o+ the employment tenure o+ a pro5ect employee ("ada #s. 6L"C& /0C SC"A HF). 't should .e stressed that contracts +or pro5ect employment are #alid under the la$. 'n Ailla #. 6ational La.or "elations Commission&B3HD the Court stated that: .y entering into such contract& an employee is deemed to understand that his employment is coterminous $ith the pro5ect. 9e may not e-pect to .e employed continuously .eyond the completion o+ the pro5ect. 't is o+ 5udicial notice that pro5ect employees engaged +or manual ser#ices or those +or special s)ills li)e those o+ carpenters or masons& are& as a rule& unschooled. 9o$e#er& this +act alone is not a #alid reason +or .esto$ing special treatment on them or +or in#alidating a contract o+ employment. >ro5ect employment contracts are not lopsided agreements in +a#or o+ only one party thereto. The employer*s interest is e ually important as that o+ the employee*s +or theirs is the interest that propels economic acti#ity. 7hile it may .e true that it is the employer $ho dra+ts pro5ect employment contracts $ith its .usiness interest as o#erriding consideration& such contracts do not& o+ necessity& pre5udice the employee. 6either is the employee le+t helpless .y a pre5udicial employment contract. A+ter all& under the la$& the interest o+ the $or)er is paramount. The +act that petitioners $ere constantly re8hired does not ipso +acto esta.lish that they .ecame regular employees. Their respecti#e contracts $ith respondent sho$ that there $ere inter#als in their employment. 'n petitioner Caseres@s case& $hile his employment lasted +rom August 3FMF to !ay 3FFF& the duration o+ his employment ranged +rom one day to se#eral months at a time& and such successi#e employments $ere not continuous. 7ith regard to petitioner >ael& his employment ne#er lasted +or more than a month at a time. These support the conclusion that they $ere indeed pro5ect employees& and since their $or) depended on the a#aila.ility o+ such contracts or pro5ects& necessarily the employment o+ respondent*s $or) +orce $as not permanent .ut co8terminous $ith the pro5ects to $hich they $ere assigned and +rom $hose payrolls they $ere paid. As ruled in >alomares #. 6ational La.or "elations Commission& it $ould .e e-tremely .urdensome +or their employer to retain them as permanent employees and pay them $ages e#en i+ there $ere no pro5ects to $or) on. !oreo#er& e#en i+ petitioners $ere repeatedly and successi#ely re8hired& still it did not uali+y them as regular employees& as length o+ ser#ice is not the controlling determinant o+ the employment tenure o+ a pro5ect employee& .ut $hether the employment has .een +i-ed +or a speci+ic pro5ect or underta)ing& its completion has .een determined at the time o+ the engagement o+ the employee. Further& the pro#iso in Article /M0& stating that an employee $ho has rendered ser#ice +or at least one (3) year shall .e considered a regular employee& pertains to casual employees and not to pro5ect employees. Accordingly& petitioners cannot complain o+ illegal dismissal inasmuch as the completion o+ the contract or phase thereo+ +or $hich they ha#e .een engaged automatically terminates their employment. Le4te $eothermal PoAer Pro"ress ve Em!lo4ees -n on v. Ph l Nat onal O l Co. $.R. No. %1'92%, +ar;h 9(, 5(%%

FACTS: B"espondent >hilippine 6ational 2il CorporationD8Energy :e#elopment Corporation B>62C8E:CD is a go#ernment8o$ned and controlled corporation engaged in e-ploration& de#elopment& utilization& generation and distri.ution o+ energy resources li)e geothermal energy. >etitioner is a legitimate la.or organization& duly registered $ith the :epartment o+ La.or and Employment (:2LE) "egional 2++ice 6o. A'''& Taclo.an City. Among Brespondent@sD geothermal pro5ects is the Leyte Geothermal >o$er >ro5ect located at the Greater Tongonan Geothermal "eser#ation in Leyte. The said >ro5ect is composed o+ the Tongonan 3 Geothermal >ro5ect (T3G>) and the Leyte Geothermal >roduction Field >ro5ect (LG>F) $hich pro#ide the po$er and electricity needed not only in the pro#inces and cities o+ Central and Eastern Aisayas ("egion A'' and A''')& .ut also in the island o+ Luzon as $ell. Thus& the BrespondentD hired and employed hundreds o+ employees on a contractual .asis& $here.y& their employment $as only good up to the completion or termination o+ the pro5ect and $ould automatically e-pire upon the completion o+ such pro5ect. !a5ority o+ the employees hired .y BrespondentD in its Leyte Geothermal >o$er >ro5ects had .ecome mem.ers o+ petitioner. 'n #ie$ o+ that circumstance& the petitioner demands +rom the BrespondentD +or recognition o+ it as the collecti#e .argaining agent o+ said employees and +or a C%A negotiation $ith it. 9o$e#er& the BrespondentD did not heed such demands o+ the petitioner. Sometime in 3FFM $hen the pro5ect $as a.out to .e completed& the BrespondentD proceeded to ser#e 6otices o+ Termination o+ Employment upon the employees $ho are mem.ers o+ the petitioner. 2n :ecem.er /M& 3FFM& the petitioner +iled a 6otice o+ Stri)e $ith :2LE against the BrespondentD on the ground o+ purported commission .y the latter o+ un+air la.or practice +or Ire+usal to .argain collecti#ely& union .usting and mass termination.I 2n the same day& the petitioner declared a stri)e and staged such stri)e. To a#ert any $or) stoppage& then Secretary o+ La.or %ien#enido E. Laguesma inter#ened and issued the 2rder& dated <anuary E& 3FFF& certi+ying the la.or dispute to the 6L"C +or compulsory ar.itration. Accordingly& all the stri)ing $or)ers $ere directed to return to $or) $ithin t$el#e (3/) hours +rom receipt o+ the 2rder and +or the BrespondentD to accept them .ac) under the same terms and conditions o+ employment prior to the stri)e. Further& the parties $ere directed to cease and desist +rom committing any act that $ould e-acer.ate the situation. 9o$e#er& despite earnest e++orts on the part o+ the Secretary o+ La.or and Employment to settle the dispute amica.ly& the petitioner remained adamant and unreasona.le in its position& causing the +ailure o+ the negotiation to$ards a peace+ul compromise. 'n e++ect& the petitioner did not a.ide .y BtheD assumption order issued .y the Secretary o+ La.or. Conse uently& on <anuary 3C& 3FFF& the BrespondentD +iled a Complaint +or Stri)e 'llegality& :eclaration o+ Loss o+ Employment and :amages at the 6L"C8"A% A''' in Taclo.an City and at the same time& +iled a >etition +or Cancellation o+ >etitioner@s Certi+icate o+ "egistration $ith :2LE& "egional 2++ice 6o. A'''. The t$o cases $ere later on consolidated pursuant to the 6e$ 6L"C "ules o+ >rocedure. The consolidated case $as doc)eted as 6L"C Certi+ied Case 6o. A80/8FF (6C!%8"A% A'''86S8 3/803F08FM4 "A% Case 6o. A'''838003F8FF). The said certi+ied case $as indorsed to the 6L"C Eth :i#ision in Ce.u City on <une /3& 3FFF +or the proper disposition thereo+. 'SS(E: 7hether the o++icers and mem.ers o+ petitioner (nion are pro5ect employees o+ respondent. "uling:

2n the +irst issue& petitioner (nion contends that its o++icers and mem.ers per+ormed acti#ities that $ere usually necessary and desira.le to respondent@s usual .usiness. 'n +act& petitioner (nion reiterates that its o++icers and mem.ers $ere

7
assigned to the Construction :epartment o+ respondent as carpenters and masons& and to other 5o.s pursuant to ci#il $or)s& $hich are usually necessary and desira.le to the department. >etitioner (nion li)e$ise points out that there $as no inter#al in the employment contract o+ its o++icers and mem.ers& $ho $ere all employees o+ respondent& $hich lac) o+ inter#al& +or petitioner (nion& Imani+ests that the Sunderta)ing@ is usually necessary and desira.le to the usual trade or .usiness o+ the employer.I 7e cannot su.scri.e to the #ie$ ta)en .y petitioner (nion. The distinction .et$een a regular and a pro5ect employment is pro#ided in Article /M0& paragraph 3& o+ the La.or Code: A"T. /M0. "egular and Casual Employment.88 The pro#isions o+ $ritten agreement to the contrary not$ithstanding and regardless o+ the oral agreement o+ the parties& an employment shall .e deemed to .e regular $here the employee has .een engaged to per+orm acti#ities $hich are usually necessary or desira.le in the usual .usiness or trade o+ the employer& e-cept $here the employment has .een +i-ed +or a speci+ic pro5ect or underta)ing the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employee or $here the $or) or ser#ice to .e per+ormed is seasonal in nature and the employment is +or the duration o+ the season. the $or)erBs@D consent. Thus& $e see no reason not to honor and gi#e e++ect to the terms and conditions stipulated therein. - - -. Thus& $e are hard pressed to +ind cause to distur. the +indings o+ the 6L"C $hich are supported .y su.stantial e#idence. 't is $ell8settled in 5urisprudence that +actual +indings o+ administrati#e or uasi8 5udicial .odies& $hich are deemed to ha#e ac uired e-pertise in matters $ithin their respecti#e 5urisdictions& are generally accorded not only respect .ut e#en +inality& and .ind the Court $hen supported .y su.stantial e#idence. "ule 311& Section C de+ines su.stantial e#idence as Ithat amount o+ rele#ant e#idence $hich a reasona.le mind might accept as ade uate to 5usti+y a conclusion.I Consistent there$ith is the doctrine that this Court is not a trier o+ +acts& and this is strictly adhered to in la.or cases. 7e may ta)e cognizance o+ and resol#e +actual issues& only $hen the +indings o+ +act and conclusions o+ la$ o+ the La.or Ar.iter or the 6L"C are inconsistent $ith those o+ the CA. 'n the case at .ar& .oth the 6L"C and the CA $ere one in the conclusion that the o++icers and the mem.ers o+ petitioner (nion $ere pro5ect employees. 6onetheless& petitioner (nion insists that they $ere regular employees since they per+ormed $or) $hich $as usually necessary or desira.le to the usual .usiness or trade o+ the Construction :epartment o+ respondent. >olicy 'nstruction 6o. 3/ o+ the :epartment o+ La.or and Employment discloses that the concept o+ regular and casual employees $as designed to put an end to casual employment in regular 5o.s& $hich has .een a.used .y many employers to pre#ent so 8 called casuals +rom en5oying the .ene+its o+ regular employees or to pre#ent casuals +rom 5oining unions. The same instructions sho$ that the pro#iso in the second paragraph o+ Art. /M0 $as not designed to sti+le small8scale .usinesses nor to oppress agricultural land o$ners to +urther the interests o+ la.orers& $hether agricultural or industrial. 7hat it see)s to eliminate are a.uses o+ employers against their employees and not& as petitioners $ould ha#e us .elie#e& to pre#ent small8scale .usinesses +rom engaging in legitimate methods to realize pro+it. 9ence& the pro#iso is applica.le only to the employees $ho are deemed IcasualsI .ut not to the Ipro5ectI employees nor the regular employees treated in paragraph one o+ Art. /M0. Clearly& there+ore& petitioners .eing pro5ect employees& or& to use the correct term& seasonal employees& their employment legally ends upon completion o+ the pro5ect or the Bend o+ theD season. The termination o+ their employment cannot and should not constitute an illegal dismissal. ARO ,. NLRC Article /M0 o+ the La.or Code& as $orded& esta.lishes that the nature o+ the employment is determined .y la$& regardless o+ any contract e-pressing other$ise. The supremacy o+ the la$ o#er the nomenclature o+ the contract and the stipulations contained therein is to .ring to li+e the policy enshrined in the Constitution to Ia++ord +ull protection to la.or.I Thus& la.or contracts are placed on a higher plane than ordinary contracts4 these are im.ued $ith pu.lic interest and there+ore su.5ect to the police po$er o+ the State. 9o$e#er& not$ithstanding the +oregoing iterations& pro5ect employment contracts $hich +i- the employment +or a speci+ic pro5ect or underta)ing remain #alid under the la$: - - - %y entering into such a contract& an employee is deemed to understand that his employment is coterminous $ith the pro5ect. 9e may not e-pect to .e employed continuously .eyond the completion o+ the pro5ect. 't is o+ 5udicial notice that pro5ect employees engaged +or manual ser#ices or those +or special s)ills li)e those o+ carpenters or masons& are& as a rule& unschooled. 9o$e#er& this +act alone is not a #alid reason +or .esto$ing special treatment on them or +or in#alidating a contract o+ employment. >ro5ect employment contracts are not lopsided agreements in +a#or o+ only one party thereto. The employer@s interest is e ually important as that o+ the employeeBs@D +or theirs is the interest that propels economic acti#ity. 7hile it may .e true that it is the employer $ho dra+ts pro5ect employment contracts $ith its .usiness interest as o#erriding consideration& such contracts do not& o+ necessity& pre5udice the employee. 6either is the employee le+t helpless .y a pre5udicial employment contract. A+ter all& under the la$& the interest o+ the $or)er is paramount. 'n the case at .ar& the records re#eal that the o++icers and the mem.ers o+ petitioner (nion signed employment contracts indicating the speci+ic pro5ect or phase o+ $or) +or $hich they $ere hired& $ith a +i-ed period o+ employment. The 6L"C correctly disposed o+ this issue: A deeper e-amination also sho$s that Bthe indi#idual mem.ers o+ petitioner (nionD indeed signed and accepted the Bemployment contractsD +reely and #oluntarily. 6o e#idence $as presented .y BpetitionerD (nion to pro#e improper pressure or undue in+luence $hen they entered& per+ected and consummated Bthe employmentD contracts. 'n +act& it $as clearly esta.lished in the course o+ the trial o+ this case& as e-plained .y no less than the >resident o+ BpetitionerD (nion& that the contracts o+ employment $ere read& comprehended& and #oluntarily accepted .y them. - - -. As clearly sho$n .y BpetitionerD (nion@s o$n admission& .oth parties had e-ecuted the contracts +reely and #oluntarily $ithout +orce& duress or acts tending to #itiate $.R. NO. %1=1)5, +ARC. 1, 5(%5

An employment shall .e deemed to .e casual i+ it is not co#ered .y the preceding paragraph: >ro#ided& That& any employee $ho has rendered at least one year o+ ser#ice& $hether such ser#ice is continuous or .ro)en& shall .e considered a regular employee $ith respect to the acti#ity in $hich he is employed and his employment shall continue $hile such actually e-ists.

The +oregoing contemplates +our (E) )inds o+ employees: (a) regular employees or those $ho ha#e .een Iengaged to per+orm acti#ities $hich are usually necessary or desira.le in the usual .usiness or trade o+ the employerI4 (.) pro5ect employees or those I$hose employment has .een +i-ed +or a speci+ic pro5ect or underta)ingB&D the completion or termination o+ $hich has .een determined at the time o+ the engagement o+ the employeeI4 (c) seasonal employees or those $ho $or) or per+orm ser#ices $hich are seasonal in nature& and the employment is +or the duration o+ the season4 and (d) casual employees or those $ho are not regular& pro5ect& or seasonal employees. <urisprudence has added a +i+th )ind88 a +i-ed8term employee.

FACTS: Se#eral employees o+ pri#ate respondent %enthel :e#elopment Corporation& including the petitioners& +iled a Complaint +or illegal dismissal $ith #arious money claims and prayer +or damages against the latter& in the 6L"C Ar.itration %ranch 6o. A'' in Ce.u City and doc)eted as "A% Case 6o. 0G80F83///8FG,3/8 3H0F8FG. Therea+ter& La.or Ar.iter Ernesto F. Carreon rendered a decision +inding pri#ate respondent guilty o+ illegal dismissal and ordering it to pay its thirty8si(1H) employees >EEH&FE0.00 as separation pay. The employees& including the petitioners herein& appealed +rom the said decision. The 6L"C& in 6L"C Case 6o. A80001FF8FM& a++irmed the decision o+ La.or Ar.iter Carreon in its :ecision dated <anuary 3/& 3FFF& $ith the modi+ication that pri#ate respondent pay .ac)$ages computed +rom the respecti#e dates o+ dismissal until +inality o+ the decision. >ri#ate respondent& unsatis+ied $ith the modi+ication made .y the 6L"C& +iled a motion +or reconsideration $ith the contention that& since it has .een +ound .y the La.or Ar.iter and a++irmed in the assailed decision that the employees $ere pro5ect employees& the computation o+ .ac)$ages should .e limited to the date o+ the completion o+ the pro5ect and not to the +inality o+ the decision. The 6L"C& ho$e#er& denied the motion ruling that pri#ate respondent +ailed to esta.lish the date o+ the completion o+ the pro5ect. As a recourse& pri#ate respondent +iled a petition +or certiorari $ith the CA& alleging that pu.lic respondent committed gra#e a.use o+ discretion in promulgating its assailed decision and denying its motion +or reconsideration. The CA granted the petition& there+ore& annulling and setting aside the decision and resolution o+ the 6L"C as to the a$ard +or .ac)$ages and remanded the case to the same pu.lic respondent +or the proper computation o+ the .ac)$ages due to each o+ the petitioners herein. 'SS(E:

8
7hether or not the CA gra#ely a.used its discretion in declaring petitioners as pro5ect employees& such that the petitioners8employees are entitled to payment o+ .ac)$ages until the date o+ the completion o+ the pro5ect. 9EL:: 't is not disputed that petitioners $ere hired +or the construction o+ the Cordo#a "ee+ Aillage "esort in Cordo#a& Ce.u. %y the nature o+ the contract alone& it is clear that petitioners@ employment $as to carry out a speci+ic pro5ect. 9ence& the CA did not commit gra#e a.use o+ discretion $hen it a++irmed the +indings o+ the La.or Ar.iter 't is settled that& $ithout a #alid cause& the employment o+ pro5ect employees cannot .e terminated prior to e-piration. 2ther$ise& they shall .e entitled to reinstatement $ith +ull .ac)$ages. 9o$e#er& i+ the pro5ect or $or) is completed during the pendency o+ the ensuing suit +or illegal dismissal& the employees shall .e entitled only to +ull .ac)$ages +rom the date o+ the termination o+ their employment until the actual completion o+ the $or). 7hile it may .e true that in the proceedings .elo$ the date o+ completion o+ the pro5ect +or $hich the pri#ate respondents $ere hired had not .een clearly esta.lished& it constitutes gra#e a.use o+ discretion on the part o+ the pu.lic respondent +or not determining +or itsel+ the date o+ said completion instead o+ merely ordering payment o+ .ac)$ages until +inality o+ its decision. There+ore& .eing pro5ect employees& petitioners are only entitled to +ull .ac)$ages& computed +rom the date o+ the termination o+ their employment until the actual completion o+ the $or). 'llegally dismissed $or)ers are entitled to the payment o+ their salaries corresponding to the une-pired portion o+ their employment $here the employment is +or a de+inite period. 'n this case& as +ound .y the CA& the Cordo#a "ee+ Aillage "esort pro5ect had .een completed in 2cto.er 3FFH and pri#ate respondent herein had signi+ied its $illingness& .y $ay o+ concession to petitioners& to set the date o+ completion o+ the pro5ect as !arch 3M& 3FFG4 hence& the latter date should .e considered as the date o+ completion o+ the pro5ect +or purposes o+ computing the +ull .ac)$ages o+ petitioners. L4nv l ? sh n" Enter!r ses vs. Ar ola, $.R. No. %&%)1=, ?ebruar4 %, 5(%5 2n the second uestion& the Court stated that nonetheless& e#en $ithout reliance on the prosecutor*s +inding& $e +ind that there $as #alid cause +or respondents* dismissal. <ust cause is re uired +or a #alid dismissal. The La.or Code pro#ides that an employer may terminate an employment .ased on +raud or $ill+ul .reach o+ the trust reposed on the employee. Such .reach is considered $ill+ul i+ it is done intentionally& )no$ingly& and purposely& $ithout 5usti+ia.le e-cuse& as distinguished +rom an act done carelessly& thoughtlessly& heedlessly or inad#ertently. 't must also .e .ased on su.stantial e#idence and not on the employer*s $hims or caprices or suspicions other$ise& the employee $ould eternally remain at the mercy o+ the employer. Loss o+ con+idence must not .e indiscriminately used as a shield .y the employer against a claim that the dismissal o+ an employee $as ar.itrary. And& in order to constitute a 5ust cause +or dismissal& the act complained o+ must .e $or)8related and sho$s that the employee concerned is un+it to continue $or)ing +or the employer. 'n addition& loss o+ con+idence as a 5ust cause +or termination o+ employment is premised on the +act that the employee concerned holds a position o+ responsi.ility& trust and con+idence or that the employee concerned is entrusted $ith con+idence $ith respect to delicate matters& such as the handling or care and protection o+ the property and assets o+ the employer. The .etrayal o+ this trust is the essence o+ the o++ense +or $hich an employee is penalized. %reach o+ trust is present in this case. 9o$e#er& Lyn#il contends that it cannot .e guilty o+ illegal dismissal .ecause the pri#ate respondents $ere employed under a +i-ed8term contract $hich e-pired at the end o+ the #oyage. Contrarily& the pri#ate respondents (employees) contend that they .ecame regular employees .y reason o+ their continuous hiring and per+ormance o+ tas)s necessary and desira.le in the usual trade and .usiness o+ Lyn#il. <urisprudence& laid t$o conditions +or the #alidity o+ a +i-ed8contract agreement .et$een the employer and employee: +irst& the +i-ed period o+ employment $as )no$ingly and #oluntarily agreed upon .y the parties $ithout any +orce& duress& or improper pressure .eing .rought to .ear upon the employee and a.sent any other circumstances #itiating his consent4 or second& it satis+actorily appears that the employer and the employee dealt $ith each other on more or less e ual terms $ith no moral dominance e-ercised .y the +ormer or the latter. 'n the conte-t o+ the +acts that: (3) the respondents $ere doing tas)s necessarily to Lyn#il*s +ishing .usiness $ith positions ranging +rom captain o+ the #essel to .odegero4 (/) a+ter the end o+ a trip& they $ill again .e hired +or another trip $ith ne$ contracts4 and (1) this arrangement continued +or more than ten years& the clear intention is to go around the security o+ tenure o+ the respondents as regular employees. And respondents are so .y the e-press pro#isions o+ the second paragraph o+ Article /M0& thus: --- >ro#ided& That any employee $ho has rendered at least one year o+ ser#ice& $hether such ser#ice is continuous or .ro)en& shall .e considered a regular employee $ith respect to the acti#ity in $hich he is employed and his employment shall continue $hile such acti#ity e-ists. 9a#ing +ound that respondents are regular employees $ho may .e& ho$e#er& dismissed +or cause as $e ha#e so +ound in this case& there is a need to loo) into the procedural re uirement o+ due process in Section /& "ule LL'''& %oo) A o+ the "ules 'mplementing the La.or Code. 't is re uired that the employer +urnish the employee $ith t$o $ritten notices: (3) a $ritten notice ser#ed on the employee speci+ying the ground or grounds +or termination& and gi#ing to said employee reasona.le opportunity $ithin $hich to e-plain his side4 and (/) a $ritten notice o+ termination ser#ed on the employee indicating that upon due consideration o+ all the circumstances& grounds ha#e .een esta.lished to 5usti+y his termination. 'n this case& it is clear that the employees $ere not gi#en the +inal $ritten notices o+ dismissal. The Court ruled that since employees $ere dismissed +or 5ust cause& they $ere not entitle to separation pay and .ac)$ages. 9o$e#er& they $ere to .e granted nominal damages +or +ailure o+ the employer to comply $ith statutory due process. LAC-ESTA ,. ATENEO DE +ANILA -NI,ERSITY 7hether the employees $ere #alidly terminatedP 9EL:: 2n the +irst issue& the Supreme Court ruled in the negati#e. 7e ruled that proo+ .eyond reasona.le dou.t o+ an employee*s misconduct is not re uired $hen loss o+ con+idence is the ground +or dismissal. 't is su++icient i+ the employer has Nsome .asisO to lose con+idence or that the employer has reasona.le ground to .elie#e or to entertain the moral con#iction that the employee concerned is responsi.le +or the misconduct and that the nature o+ his participation therein rendered him a.solutely un$orthy o+ the trust and con+idence demanded .y his position. Lyn#il cannot argue that since the 2++ice o+ the >rosecutor +ound pro.a.le cause +or the+t the La.or Ar.iter must +ollo$ the +inding as a #alid reason +or the termination o+ respondents* employment. The proo+ re uired +or purposes that di++er +rom one and the other are li)e$ise di++erent. $.R.NO. %&%)1=, DECE+BER ), 5((2 FACTS: "espondent Ateneo de !anila (ni#ersity (Ateneo) hired& on a contractual .asis& petitioner Lolita ". Lacuesta as a part8time lecturer in its English :epartment +or the second semester o+ school year 3FMM83FMF. She $as re8hired& still on a contractual .asis& +or the +irst and second semesters o+ school year 3FMF83FF0. 2n <uly 31& 3FF0& the petitioner $as +irst appointed as +ull8time instructor on pro.ation& in the same department e++ecti#e <une 3& 3FF0 until !arch 13& 3FF3. Therea+ter& her contract as +aculty on pro.ation $as rene$ed e++ecti#e April 3& 3FF3 until !arch 13& 3FF/. She $as again hired +or a third year e++ecti#e April 3& 3FF/ until !arch 13& 3FF1. :uring these three years she $as on pro.ation status.

FACTS: >etitioner Lyn#il Fishing Enterprises& 'nc. (Lyn#il) is engaged in deep8sea +ishing. "espondents* ser#ices $ere engaged in #arious capacities: Andres G. Ariola& captain4 <essie :. Alco#endas& chie+ mate4 <immy %. Calinao& chie+ engineer4 'smael G. 6u.la& coo)4 Elorde %aQez& oiler4 and Leopoldo G. Se.ullen& .odegero. 2n Aug. 3& 3FFM& Lyn#il recei#ed a report +rom "amonito Clarido& one o+ its employees& that on <uly 13& 3FFM& he $itnessed that $hile on .oard the company #essel Analyn A'''& respondents conspired $ith one another and stole eight tu.s o+ NpampanoO and NtangigueO +ish and deli#ered them to another #essel. >etitioner +iled a criminal complaint against respondents .e+ore the o++ice o+ the City >rosecutor o+ !ala.on City $hich +ound pro.a.le cause +or indictment o+ respondents +or the crime o+ uali+ied the+t. "elying on the +inding and 6asipit Lum.er Company #. 6L"C& /CG >hil. F1G (3FMF)& Lyn#il asserted there $as su++icient .asis +or #alid termination o+ employment o+ respondents .ased on serious misconduct and,or loss o+ trust and con+idence. 'SS(E: 7hether a +inding o+ the city prosecutor o+ pro.a.le cause to indict employees o+ uali+ied the+t is su++icient .asis +or #alid termination +or serious misconduct and,or loss o+ trust or con+idenceP

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'n a letter dated <anuary /G& 3FF1& respondent :r. Leo#ino !a. Garcia& :ean o+ Ateneo*s Graduate School and College o+ Arts and Sciences& noti+ied petitioner that her contract $ould no longer .e rene$ed .ecause she did not integrate $ell $ith the English :epartment. >etitioner then appealed to the >resident o+ the Ateneo at the time& Fr. <oa uin %ernas& S.<. 'n a letter dated Fe.ruary 33& 3FF1& Fr. %ernas e-plained to petitioner that she $as not .eing terminated& .ut her contract $ould simply e-pire. 9e also stated that the uni#ersity president ma)es a permanent appointment only upon recommendation o+ the :ean and con+irmation o+ the Committee on Faculty "an) and >ermanent Appointment. 9e added that any appointment he might e-tend $ould .e tantamount to a midnight appointment. 'n another letter dated !arch 33& 3FF1& Fr. %ernas o++ered petitioner the 5o. as .oo) editor in the (ni#ersity >ress under terms compara.le to that o+ a +aculty mem.er. 2n !arch /H& 3FF1& petitioner applied +or clearance to collect her +inal salary as instructor. >etitioner also signed a Tuitclaim& :ischarge and "elease on April 3H& 3FF1.BED >etitioner $or)ed as editor in the (ni#ersity >ress +rom April 3& 3FF1 to !arch 13& 3FFE including an e-tension o+ t$o months a+ter her contract e-pired. (pon e-piry o+ her contract& petitioner applied +or clearance to collect her +inal salary as editor. Later& she agreed to e-tend her contract +rom <une 3H& 3FFE to 2cto.er 13& 3FFE. >etitioner decided not to ha#e her contract rene$ed due to a se#ere .ac) pro.lem. She did not report .ac) to $or)& .ut she su.mitted her clearance on Fe.ruary /0& 3FFC. 2n :ecem.er /1& 3FFH& petitioner +iled a complaint +or illegal dismissal $ith prayer +or reinstatement& .ac) $ages& and moral and e-emplary damages. La.or Ar.iter !anuel >. Asuncion held that petitioner may not .e terminated .y mere lapse o+ the pro.ationary period .ut only +or 5ust cause or +ailure to meet the employer*s standards. The 6L"C upon appeal o+ respondents re#ersed. 'SS(E: 7hether the petitioner $as illegally dismissed. 9EL:: The !anual o+ "egulations +or >ri#ate Schools& and not the La.or Code& determines $hether or not a +aculty mem.er in an educational institution has attained regular or permanent status Section F1 o+ the 3FF/ !anual o+ "egulations +or >ri#ate Schools pro#ides that +ull8time teachers $ho ha#e satis+actorily completed their pro.ationary period shall .e considered regular or permanent. !oreo#er& +or those teaching in the tertiary le#el& the pro.ationary period shall not .e more than si- consecuti#e regular semesters o+ satis+actory ser#ice. The re uisites to ac uire permanent employment& or security o+ tenure& are (3) the teacher is a +ull8time teacher4 (/) the teacher must ha#e rendered three consecuti#e years o+ ser#ice4 and (1) such ser#ice must ha#e .een satis+actory. As pre#iously held& a part8time teacher cannot ac uire permanent status. 2nly $hen one has ser#ed as a +ull8time teacher can he ac uire permanent or regular status. The petitioner $as a part8time lecturer .e+ore she $as appointed as a +ull8time instructor on pro.ation. As a part8time lecturer& her employment as such had ended $hen her contract e-pired. Thus& the three semesters she ser#ed as part8time lecturer could not .e credited to her in computing the num.er o+ years she has ser#ed to uali+y her +or permanent status. >etitioner posits that a+ter completing the three8year pro.ation $ith an a.o#e8a#erage per+ormance& she already ac uired permanent status. 2n this point& $e are una.le to agree $ith petitioner. Completing the pro.ation period does not automatically uali+y her to .ecome a permanent employee o+ the uni#ersity. >etitioner could only uali+y to .ecome a permanent employee upon +ul+illing the reasona.le standards +or permanent employment as +aculty mem.er. Consistent $ith academic +reedom and constitutional autonomy& an institution o+ higher learning has the prerogati#e to pro#ide standards +or its teachers and determine $hether these standards ha#e .een met. At the end o+ the pro.ation period& the decision to re8hire an employee on pro.ation& .elongs to the uni#ersity as the employer alone. 7e reiterate& ho$e#er& that pro.ationary employees en5oy security o+ tenure& .ut only $ithin the period o+ pro.ation. Li)e$ise& an employee on pro.ation can only .e dismissed +or 5ust cause or $hen he +ails to uali+y as a regular employee in accordance $ith the reasona.le standards made )no$n .y the employer at the time o+ his hiring. (pon e-piration o+ their contract o+ employment& academic personnel on pro.ation cannot automatically claim security o+ tenure and compel their employers to rene$ their employment contracts. 'n the instant case& petitioner& did not attain permanent status and $as not illegally dismissed. As +ound .y the 6L"C& her contract merely e-pired. ON THE VALIDITY OF THE QUITCLAIM. Lastly& $e +ind that petitioner had already signed a #alid uitclaim& discharge and release $hich .ars the present action. This Court has held that not all uitclaims are per se in#alid or against pu.lic policy& e-cept (3) $here there is clear proo+ that the $ai#er $as $angled +rom an unsuspecting or gulli.le person& or (/) $here the terms o+ settlement are unconsciona.le on their +ace.B/3D 'n this case& there is no sho$ing that petitioner $as coerced into signing the uitclaim. 'n her s$orn uitclaim& she +reely declared that she recei#ed to her +ull satis+action all that is due her .y reason o+ her employment and that she $as #oluntarily releasing respondent Ateneo +rom all claims in relation to her employment. 6othing on the +ace o+ her uitclaim has .een sho$n as unconsciona.le. +O-NT CAR+EL COLLE$E INC ,. NLRC $.R.NO. %%12%= FACTS: 2n <une 3& 3FMF& petitioner school hired pri#ate respondent as grade school teacher under a $ritten Contract o+ >ro.ationary Employment. >aragraph C o+ the contract pro#ides +or pri#ate respondent@s salary and the duration o+ her employment& thus: 5. That my salary or wage shall e O!e Tho"sa!# $%& H"!#re# $e'e!ty F%'e (esos )(*+,-5.../ 0er mo!th a!# "!t%l s"1h t%me as the $1hool #e1%#es to reta%! me %! %ts 0erma!e!t em0loy+ my em0loyme!t there%! shall e #eeme# to r"! 2rom $Y *3435*33. to $Y *33*5*336 )#ay to #ay o2 mo!th to mo!th/ a!# my ser'%1e may e term%!ate# at a!y t%me a2ter I 2a%l to 1om0ly w%th the 2orego%!g 1o!#%t%o!s la%# #ow! y the $1hool. The $1hool shall ha'e !o 2"rther l%a %l%ty to me whatsoe'er+ e%ther y way o2 se0arat%o! 0ay or otherw%se. 6 )em0has%s s"00l%e#/ 'n !arch 3FF/& petitioner school terminated the ser#ices o+ pri#ate respondent as she did not pass the 6ational Teacher@s %oard e-amination. 1 >ri#ate respondent +iled a complaint +or illegal dismissal against the petitioners. 'SS(E: 7hether or not the 6L"C gra#ely a.used its discretion in +inding an Iune-pired portionI in pri#ate respondent@s pro.ationary contract& $hich e-pires at the end o+ the school year 3FF383FF/& and holding petitioners lia.le +or the payment o+ her salary e ui#alent to that Iune-pired portionI. 9EL:: >ri#ate respondent@s employment contract stipulated that her employment Ishall .e deemed to run +rom S; 3FMF83FF0 to S; 3FF383FF/ (day to day o+ month to month)I. (nder Section EM o+ the !anual o+ "egulations +or >ri#ate Schools& a school year or academic year .egins on the second !onday o+ <une and shall consist o+ Iappro-imately +orty $ee)s o+ normally +i#e school days each& e-clusi#e o+ appro#ed #acations and including legal and special holidays& and special acti#ities.I n the cases o+ Espiritu Santo >arochial School #s. 6L"C M and Colegio San Agustin #s. 6L"C& F the court recognized the distinction .et$een a calendar year and a school year. 'n Espiritu Santo >arochial School& $e held: . . . the petitioners can not tal) o+ a Ithree8year pro.ationary employment e-piring each school year.I '+ it e-pires per school year& it is not a three8year period. Then in Colegio San Agustin& $e said: . . . As applied to pri#ate school teachers& the pro.ationary period is three years as pro#ided in the !anual o+ "egulations +or >ri#ate Schools. 't must .e stressed that the la$ spea)s o+ three years not three school years. . . . 6eedless to say& a calendar year consists o+ t$el#e (3/) months& $hile a school year consists only o+ ten (30) months. A school year .egins in <une o+ one calendar year and ends in !arch o+ the succeeding calendar year. >u.lic respondent there+ore erred in +inding that pri#ate respondent@s pro.ationary employment $as supposed to end in <une 3FF/. The contract clearly states the

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duration o+ pri#ate respondent@s term U it shall .egin at the opening o+ school year 3FMF83FF0 (i.e.& <une 3FMF) and shall end at the closing o+ school year 3FF383FF/ (i.e.& !arch& 3FF/). 9ence& petitioners are not o.liged to pay pri#ate respondent her salary +or the months o+ April& !ay and <une as her employment already ceased in !arch& in accordance $ith the pro#isions o+ her employment contract. CALBS PO-LTRY S-PPLY CORPORATION ,. ROCO $.R.NO. %2(''(, 3-LY 9(, 5((5 FACTS: CALS >oultry Supply Corporation is engaged in the .usiness o+ selling dressed chic)en and other related products and managed .y :anilo ;ap. 2n !arch 3C& 3FME& CALS hired Al+redo "oco as its dri#er. 2n the same date& CALS hired Edna "oco& Al+redo*s sister& as a helper in the dressing room o+ CALS. 2n !ay 3H& 3FFC& it hired Candelaria "oco& another sister& as helper& also at its chic)en dressing plant on a pro.ationary .asis. 2n !arch C& 3FFH& Al+redo "oco and Candelaria "oco +iled a complaint +or illegal dismissal against CALS and :anilo ;ap alleging that Al+redo and Candelaria $ere illegally dismissed on <anuary /0& 3FFH and 6o#em.er C& 3FFH& respecti#ely. %oth also claimed that they $ere underpaid o+ their $ages. Edna "oco& li)e$ise& +iled a complaint +or illegal dismissal& alleging that on <une /H& 3FFH& she $as reassigned to the tas) o+ $ashing dirty sac)s and +or this reason& in addition to her .eing trans+erred +rom night shi+t to day time duties& $hich she considered as management act o+ harassment& she did not report +or $or). According to Al+redo "oco& he $as dismissed on <anuary /0& 3FFH $hen he re+used to accept >10&000.00 .eing o++ered to him .y CALS* la$yer& Atty. !yra Cristela A. ;ngcong& in e-change +or his e-ecuting a letter o+ #oluntary resignation. 2n the part o+ Candelaria "oco& she a#erred that she $as terminated $ithout cause +rom her 5o. as helper a+ter ser#ing more than si- (H) months as pro.ationary employee. The La.or Ar.iter +ound that Al+redo "oco applied +or and $as granted a lea#e o+ a.sence +or the period +rom <anuary E to 3M& 3FFH. 9e did not report .ac) +or $or) a+ter the e-piration o+ his lea#e o+ a.sence& prompting CALS& through its Chie+ !aintenance 2++icer to send him a letter on !arch 3/& 3FFH in uiring i+ he still had intentions o+ resuming his $or). Al+redo "oco did not respond to the letter despite receipt thereo+& thus& Al+redo $as not dismissed4 it $as he $ho unilaterally se#ered his relation $ith his employer.BGD 'n the case o+ Candelaria "oco& the La.or Ar.iter upheld CALS* decision not to continue $ith her pro.ationary employment ha#ing .een +ound her unsuited +or the $or) +or $hich her ser#ices $ere engaged. She $as hired on !ay 3H& 3FFC and her ser#ices $ere terminated on 6o#em.er 3C& 3FFC. Edna "oco& according to the La.or Ar.iter& .egan a.senting hersel+ on <une /C& 3FFH. She $as sent a memo on <uly 3& 3FFH re uiring her to report +or $or) immediately& .ut she did not respond. 'SS(E: 7hether or not the dismissal o+ Candelaria "2C2& a+ter .eing pro.ationary employed +or more than H months is proper. 9EL:: From the +acts esta.lished& $e are o+ the #ie$ that Al+redo "oco has not esta.lished con#incingly that he $as dismissed. 6o notice o+ termination $as gi#en to him .y CALS. There is no proo+ at all& e-cept his sel+8ser#ing assertion& that he $as pre#ented +rom $or)ing a+ter the end o+ his lea#e o+ a.sence on <anuary 3M& 3FFH. 'n +act& CALS noti+ied him in a letter dated !arch 3/& 3FFH to resume his $or). %oth the La.or Ar.iter and the 6L"C +ound that Al+redo& as $ell as Candelaria "oco& $as not dismissed. Their +indings o+ +act are entitled to great $eight. 7ith respect to Candelaria "oco& there is no dispute that she $as employed on pro.ationary .asis. She $as hired on !ay 3H& 3FFC and her ser#ices $ere terminated on 6o#em.er 3C& 3FFC due to poor $or) per+ormance. She did not measure up to the $or) standards on the dressing o+ chic)en. The La.or Ar.iter sustained CALS in terminating her employment. The 6L"C a++irmed the La.or Ar.iter*s ruling. The Court o+ Appeals did not disagree $ith the 6L"C*s +inding that Candelaria $as dismissed .ecause she did not uali+y as a regular employee in accordance $ith the reasona.le standards made )no$n .y the company to her at the time o+ her employment. For the duration o+ Candelaria "oco*s pro.ationary employment& she +ailed to comply $ith Cals standards in the $or) assigned to her. First& she +re uently +ailed 7e agree $ith CALS* contention as upheld .y .oth the La.or Ar.iter and the 6L"C that Candelaria*s ser#ices $as terminated $ithin and not .eyond the H8 month pro.ationary period. 'n Ce.u "oyal #. :eputy !inister o+ La.or&B31D our computation o+ the H8month pro.ationary period is rec)oned +rom the date o+ appointment up to the same calendar date o+ the Hth month +ollo$ing. Thus& $e held: The original +indings $ere contained in a one8page order reciting simply that Vcomplainant $as employed on a pro.ationary period o+ employment +or si- (H) months. A+ter said period& he under$ent medical e-amination +or uali+ication as regular employee .ut the results sho$ed that he is su++ering +rom >T% minimal. Conse uently& he $as in+ormed o+ the termination o+ his employment .y respondent.* The order then concluded that the termination $as V5usti+ied.* That $as all. As there is no mention o+ the .asis o+ the a.o#e order& $e may assume it $as the temporary payroll authority su.mitted .y the petitioner sho$ing that the pri#ate respondent $as employed on pro.ation on Fe.ruary 3H& 3FGM. E#en supposing that it is not sel+8ser#ing& $e +ind ne#ertheless that it is sel+8de+eating. The si-8month period o+ pro.ation started +rom the said date o+ appointment and so ended on August 3G& 3FGM& .ut it is not sho$n that the pri#ate respondent*s employment also ended then4 on the contrary& he continued $or)ing as usual. (nder Article /M/ o+ the La.or Code& Van employee $ho is allo$ed to $or) a+ter a pro.ationary period shall .e considered a regular employee.@* 9ence& >ilones $as already on permanent status $hen he $as dismissed on August /3& 3FGM& or +our days a+ter he ceased to .e a pro.ationer. TER+INATION BY E+PLOYEE %. RESI$NATION AL?ARO ,. CO-RT O? APPEALS 9'9 SCRA 1)) to o.ser#e the allo$a.le inches to .e cut& $hich must only .e 3.C inches& in per+orming the surgical incision o+ the chic)en .utt& either she cuts it too long& there.y distorting the appearance o+ the chic)ens or she cuts it too short& there.y ma)ing it di++icult to remo#e the chic)en parts $ithout damaging these parts4 Second& she +re uently mishandles the pull8out o+ chic)en parts& such that& she damaged said parts4 Third& she +re uently completes her assigned tas)s in t$enty (/0) to e#en t$enty8+i#e (/C) seconds& o#er and a.o#e the re uired time limit& $hich is only eight (M) to ten (30) seconds. "esultantly& the chic)ens,parts $hich passed through her hands +re uently su++er +rom premature decomposition,.acterial or salmonella contamination.

Vol"!tary res%g!at%o! %s a! a1t o2 a! em0loyee+ who 2%!#s h%msel2 %! a s%t"at%o! %! wh%1h he el%e'es that 0erso!al reaso!s 1a!!ot e sa1r%2%1e# %! 2a'or o2 the e&%ge!1y o2 the ser'%1e7 th"s+ he has !o other 1ho%1e "t to #%sasso1%ate h%msel2 2rom h%s em0loyme!t. I2 the agreeme!t was 'ol"!tar%ly e!tere# %!to a!# re0rese!te# a reaso!a le settleme!t+ %t %s %!#%!g o! the 0art%es a!# may !ot later e #%sow!e#+ s%m0ly e1a"se o2 a 1ha!ge o2 m%!#. FACTS: >etitioner Candido Al+aro (Al+aro) $as employed as a helper,operator o+ pri#ate respondent Star >aper Corp. (Star >aper). 7hen Al+aro reported .ac) to $or) a+ter a#ailing a sic) lea#e& he $as surprised to +ind out that another $or)er $as recruited to ta)e his place. Conse uently& he $as trans+erred to the $rapping section o+ Star >aper. Su.se uently& he $as assigned to a ne$ $or) $hich $as e#en more di++icult .2ne day& Al+aro alleged that he $as pressured to sign a resignation letter& and a W"elease and Tuit ClaimX in e-change +or >1&000 as his 31th month pay and 3C days sic) lea#e pay. A+ter a +e$ months& he +iled a complaint to the La.or Ar.iter (LA) +or non8payment o+ separation pay and complaint +or illegal dismissal. Contrastingly& Star >aper contends that& .ecause o+ his illness& it $as Al+aro $ho as)ed the company to allo$ him to resign. The LA& 6ational La.or "elations Commission(6L"C) and the Court o+ Appeals (CA) all ruled that Al+aro did resign #oluntarily. 'SS(E: 7hether or not Al+aro $as illegally dismissed (he did not resign #oluntarily) 9EL:: >etition :E6'E: .

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$ithheld +rom them up to the time o+ their actual reinstatement as pro#ided +or in Article /GF o+ the La.or Code. The +actual +indings o+ the LA& 6L"C& as a++irmed .y CA& re#eal that Al+aro resigned +rom his $or) due to his illness& $ith the understanding that Star >aper $ould gi#e him a separation payY$hichun+ortunately& Star >aper did not comply $ith. The claim o+ Al+aro that he $as illegally dismissed cannot .e sustained& considering that his #oluntary resignation has .een indu.ita.ly esta.lished as a +act .y the three tri.unals..Aoluntary resignation is de+ined as an act o+ an employee& $ho +inds himsel+ in a situation in $hich he .elie#es that personal reasons cannot .e sacri+iced in +a#or o+ the e-igency o+ the ser#ice4 thus& he has no other choice .ut to disassociate himsel+ +rom his employment. %ased on the +acts& it $as Al+aro $ho negotiated +or a resignation $ith separation pay as the manner in $hich his employment relations $ith Star >aper $ould end. Al+aro $as already su++ering +rom a lingering illness at the time he tendered his resignation. Al+aro@s continued employment $ould ha#e .een detrimental not only to his health& .ut also to his per+ormance as an employee o+ Star >aper. Al+aro@s resignation $ith separation pay $as the .est option +or him under the said circumstances. The Court adds +urther that not all $ai#ers and uitclaims are in#alid as against pu.lic policy. '+ the agreement $as #oluntarily entered into and represented a reasona.le settlement& it is .inding on the parties and may not later .e diso$ned& simply .ecause o+ a change o+ mind. !oreo#er& an employee $ho resigns and e-ecutes a uitclaim in +a#or o+ the employer is generally estopped +rom +iling any +urther money claims against the employer arising +rom the employment. Considering& ho$e#er& that Star >aper did not comply $ith its agreement $ith Al+aro& the Court ordered Star >aper to pay Al+aro his separation pay amounting to >M&EC/.C0. INTERTROD +ARITI+E ,. NLRC %)& SCRA 9%& FACTS: 'SS(E: 9EL:: BL-E AN$EL +ANPO@ER AND SEC-RITY SER,ICES, INC. ,. CA 2'( SCRA %21 FACTS: %lue Angel& a messengerial and security agency& hired pri#ate respondents "omel Castillo& 7ilson Ciriaco& Gary Garces& and Chester+ield !ercader as security guards and detailed them at the 6ational College o+ %usiness and Arts (6C%A) in Cu.ao& Tuezon City. Castillo and !ercader& later 5oined .y Ciriaco and Garces& +iled a complaint +or illegal deductions and other money claims against %lue Angel. E#entually& they amended their complaint to include illegal dismissal. According to the +our guards& they $ere re uired& $hile still $ith %lue Angel& to $or) +rom G:00 a.m. to G:00 p.m. $ithout o#ertime and premium holiday pay& among other .ene+its. They also alleged recei#ing only >h> C&000 a month or >h> 3HH per day and& +rom this amount& %lue Angel deducted >h> 300 as cash .ond. They +urther a#erred that %lue Angel& $hen apprised o+ their original complaint& illegally terminated Garces and Ciriaco& respecti#ely& and Castillo and !ercader. The +our guards prayed +or (3) payment o+ .ac)$ages& $age di++erentials& premium and o#ertime pay +or holidays& and 31th month pay4 (/) reim.ursement o+ their cash .ond4 (1) reinstatement or separation pay4 and (E) damages. 'SS(E: 7hether or not pri#ate respondents $ere illegally dismissed 9EL:: 7e rule that the resignations $ere in#oluntary and the termination o+ pri#ate respondents $as illegal. %lue Angel insists that the guards had pleaded to .e allo$ed to resign $hen they $ere told o+ the pending in#estigation& and that they e#entually tendered their pro8 +orma resignation letters +ollo$ed .y their o$n hand$ritten resignation letters. 2ur re#ie$ o+ the circumstances surrounding these resignation letters does not support %lue Angel@s contentions that these letters are indications that pri#ate respondents had #oluntarily resigned. 7e agree $ith the la.or ar.iter $hen he pointed out that the undated& similarly $orded resignation letters tended to sho$ that the guards $ere made to copy the pro8+orma letters& in their o$n hand& to ma)e them appear more con#incing that the guards had #oluntarily resigned. As the la.or ar.iter noted& the element o+ #oluntariness o+ the resignations is e#en more suspect considering that the second set o+ resignation letters $ere pre8dra+ted& similarly $orded& and $ith .lan) spaces +illed in $ith the e++ecti#ity dates o+ the resignations.BCD 'n their Comment& pri#ate respondents claimed .eing +orced to sign and copy the pro8+orma resignation letters and uitclaims on pain that they $ould not get their remaining compensations. 7ith the +inding that pri#ate respondents $ere illegally dismissed& they are entitled to reinstatement to their positions $ithout loss o+ their seniority rights and $ith +ull .ac)$ages& inclusi#e o+ allo$ances& and to other .ene+its or their monetary e ui#alent computed +rom the time pri#ate respondents@ compensation $as From the totality o+ e#idence on record& it $as clearly demonstrated that respondent Cinderella has su++iciently discharged its .urden to pro#e that petitioner*s resignation $as #oluntary. 'n #oluntary resignation& the employee is compelled .y personal reason(s) to disassociate himsel+ +rom employment. 't is done $ith the intention o+ relin uishing an o++ice& accompanied .y the act o+ a.andonment./3 To determine $hether the employee indeed intended to relin uish such employment& the act o+ the employee .e+ore and a+ter the alleged resignation must .e considered. >etitioner relin uished her position $hen she su.mitted the letters o+ resignation.The resignation letter su.mitted on Fe.ruary 3C& /000 con+irmed the earlier resignation letter she su.mitted on Fe.ruary G& /000. The resignation letter contained $ords o+ gratitude $hich can hardly come +rom an employee +orced to resign. A care+ul scrutiny o+ the said letter sho$s that it .ears the signature o+ petitioner (contrary to $hat the LA stated). !ore importantly& petitioner admitted ha#ing su.mitted the said letter& al.eit& due to an alleged intimidation. Su.se uently& petitioner stopped reporting +or $or) although she met $ith the o++icers o+ the corporation to settle her accounta.ilities .ut ne#er raised the alleged intimidation employed on her. Also& though the complaint $as +iled $ithin the E8 year prescripti#e period& its .elated +iling supports the contention o+ respondent +A. ?ININA E. ,ICENTE, vs. T.E .ON. CO-RT O? APPEALS CINDERELLA +AR/ETIN$ CORPORATION $.R.NO. %12)&&, OCTOBER =, %))' FACTS: >etitioner Finina E. Aicente $as employed .y respondent Cinderella !ar)eting Corporation (Cinderella) as !anagement Coordinator in <anuary 3FF0. >rior to her resignation in Fe.ruary /000& she held the position o+ Consignment 2perations !anager $ith a salary o+ >/G&000.00 a month.C She $as tas)ed $ith the o#ersight& super#ision and management o+ the Consignment :epartment dealing directly $ith Cinderella*s consignors. >etitioner alleged that it has .een a practice among the employees o+ Cinderella to o.tain cash ad#ances .y charging the amount +rom the net sales o+ Cinderella*s suppliers,consignors. "e uest +or cash ad#ances are appro#ed .y !r. TECS26 (AA>8Finance). A+ter some time& one o+ Cinderella*s suppliers complained a.out the unauthorized deductions +rom the net sales due them. Accordingly& an in#estigation $as conducted and upon initial re#ie$ o+ respondent*s .usiness records& it appears that petitioner $as among those in#ol#ed in the irregular and +raudulent preparation and encashment o+ respondent*s corporate chec)s amounting to at least >C00&000.00. >etitioner alleged that !r. Tecson demanded her resignation on se#eral occasions. 2n Fe.ruary 3C& /000& !r. Tecson allegedly told her N!AG8"ES'G6 ZA6A AGA: ZAS' !A''>'T ZA!'&O in the presence o+ Lizz Ailla+uerte& the Accounting !anager.F As a result o+ this alleged +orce and intimidation& petitioner tendered her resignation letter. Three (1) years a+ter her resignation& petitioner +iled a complaint against Cinderella alleging that her se#erance +rom employment $as in#oluntary amounting to constructi#e dismissal. Cinderella denied the charge o+ constructi#e dismissal. LA ruled in +a#our o+ petitioner4 6L"C a++irmed. !" denied4 CA re#ersed on stating that& Ntotality o+ e#idence on record sho$ed that petitioner #oluntarily resigned +rom her employment4 that the su.se uent acts o+ petitioner .elie the claim o+ constructi#e dismissal4 that a+ter the alleged +orced resignation& petitioner attended the meetings concerning her in#ol#ement in the anomalous transactions and e#en arranged +or the settlement o+ her conse uent lia.ilities as may .e determined during the in#estigation4 that the .elated +iling o+ the complaint militates against petitioner .ecause it is hardly e-pected +rom an aggrie#ed employee to $ait three years .e+ore instituting the case.O !" denied. 9ence& this petition +or re#ie$ on certiorari. 'SS(E: 7hether or not the petitioner $as constructi#ely dismissed .y Cinderella (or $as there #oluntary resignation on the part o+ petitionerP) 9EL:: 62& respondent #oluntarily resigned. 'n termination cases& .urden o+ proo+ rests upon the employer to sho$ that the dismissal is +or a 5ust and #alid cause and +ailure to do so $ould necessarily mean that the dismissal $as illegal.3F 'n !o.ile >rotecti#e K :etecti#e Agency #. 2mpad& the Court ruled that should an employer interpose the de+ense o+ resignation& as in the present case& it is still incum.ent upon respondent company to pro#e that the employee #oluntarily resigned.

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that it $as a mere a+terthought./E Ta)en together& these circumstances are su.stantial proo+ that petitioner*s resignation $as #oluntary. 9a#ing su.mitted a resignation letter& it is then incum.ent upon her to pro#e that the resignation $as not #oluntary .ut $as actually a case o+ constructi#e dismissal $ith clear& positi#e& and con#incing e#idence./H >etitioner +ailed to su.stantiate her claim o+ constructi#e dismissal. %are allegations o+ constructi#e dismissal& $hen uncorro.orated .y the e#idence on record& cannot .e gi#en credence. 'n St. !ichael Academy #. 6ational La.or "elations Commission&/M $e ruled that mere allegations o+ threat or +orce do not constitute su.stantial e#idence to support a +inding o+ +orced resignation. 7e enumerated the re uisites +or intimidation to #itiate consent as +ollo$s: (3) that the intimidation caused the consent to .e gi#en4 (/) that the threatened act .e un5ust or unla$+ul4 (1) that the threat .e real or serious& there .eing e#ident disproportion .et$een the e#il and the resistance $hich all men can o++er& leading to the choice o+ doing the act $hich is +orced on the person to do as the lesser e#il4 and (E) that it produces a $ell8grounded +ear +rom the +act that the person +rom $hom it comes has the necessary means or a.ility to in+lict the threatened in5ury to his person or property. - - 6one o+ the a.o#e re uisites $as esta.lished .y petitioner. 6either can $e consider the conduct o+ audits and other internal in#estigations as a +orm o+ harassment against petitioner. Said in#estigation $as legitimate and 5usti+ied !oreo#er& $e note that petitioner is holding a managerial position $ith a salary o+ >/G&000.00 a month. 9ence& she is not an ordinary employee $ith limited understanding such that she $ould .e easily maneu#ered or coerced to resign against her $ill. >ET'T'26 :E6'E:. TER+INATION BY E+PLOYER 3-ST CA-SES %. SERIO-S +ISCOND-CT> @ILL?-L DISOBEDIENCE COLE$IO DE SAN 3-AN DE LETRAN8 CALA+BA ,. ,ILLAS NA$/A/AISAN$ LA/AS N$ +AN$$A$A@A SA /EI.IN ,. /EI.IN P.ILIPPINES CORPORATION FACTS: >etitioner 9elen Aalenzuela (9elen) $as a production associate in respondent Zeihin >hilippines Corporation (Zeihin)& a company engaged in the production o+ inta)e mani+old and throttle .ody used in motor #ehicles manu+actured .y 9onda. 2n Septem.er C& /001& $hile 9elen $as a.out to lea#e the company premises& she sa$ a pac)ing tape near her $or) area and placed it inside her .ag .ecause it $ould .e use+ul in her trans+er o+ residence. 7hen the lady guard on duty inspected 9elen*s .ag& she +ound the pac)ing tape inside her .ag. The +ollo$ing day&respondent company issued a sho$ cause noticeG to 9elen accusing her o+ #iolating F./ o+ the company*s Code o+ Conduct& $hich says& IAny act constituting the+t or ro..ery& or any attempt to commit the+t or ro..ery& o+ any company property or other associate*s property. >enalty: : (dismissal).I >aul Cupon& 9elen*s super#isor& called her to his o++ice and directed her to e-plain in $riting $hy no disciplinary action should .e ta)en against her. 9elen admitted the o++ense and e#en mani+ested that she $ould accept $hate#er penalty $ould .e imposed upon her. She& ho$e#er& did not rec)on that respondent company $ould terminate her ser#ices +or her admitted o++ense. 2n Septem.er /H& /001& 9elen recei#ed a notice o+ disciplinary action in+orming her that Zeihin has decided to terminate her ser#ices on the ground o+ serious misconduct. 2n 2cto.er 3C& /001& petitioners +iled a complaintagainst respondent +or illegal dismissal& non8payment o+ 31th month pay& $ith a prayer +or reinstatement and payment o+ +ull .ac) $ages& as $ell as moral and e-emplary damages. 'SS(E: 7hether or not the dismissal $as illegal 9EL:: '. S9E 7AS G('LT; 2F SE"'2(S !'SC26:(CT The petitioners argue that serious misconduct under e-isting la$ and 5urisprudence could not .e attri.uted to 9elen .ecause she $as not moti#ated .y malicious intent. it $as 9elen*s honest .elie+ that the tape she too) $as o+ no use or #alue and that she did not hide the same. !isconduct is de+ined as Ithe transgression o+ some esta.lished and de+inite rule o+ action& a +or.idden act& a dereliction o+ duty& $ill+ul in character& and implies $rong+ul intent and not mere error in 5udgment.I For serious misconduct to 5usti+y dismissal under the la$& I(a) it must .e serious& (.) must relate to the per+ormance o+ the employee*s duties4 and (c) must sho$ that the employee has .ecome un+it to continue $or)ing +or the employer. 't is note$orthy that prior to this incident& respondent issued t$o memoranda implementing an intensi#e inspection procedure and reminding all employees that those $ho $ill .e caught stealing and per+orming acts o+ #andalism $ill .e dealt $ith in accordance $ith the company*s Code o+ Conduct. This $as due to some pro.lems o+ #andalism and loss in the company. The petitioners also argue that the penalty o+ dismissal is too harsh and disproportionate to the o++ense committed since the #alue o+ the thing ta)en is #ery minimal. >etitioners cite the case o+ Calte- "e+inery Employees Association #. 6ational La.or "elations Commission $hich in#ol#ed the the+t a .ottle o+ lighter +luid. The supreme court then re+rained +rom imposing the supreme penalty o+ dismissal since the employee had no #iolations Iin his eight years o+ ser#ice and the #alue o+ the lighter +luid is #ery minimal compared to his salary. 9o$e#er& supreme court says that the case at .ar is di++erent +rom the Calte- case +or t$o reasons: (3) 'n the Calte- case& the employee had .een employed +or eight years $ithout incident and (/) is that respondent company $as dealing $ith se#eral cases o+ the+t& #andalism& and loss o+ company and employees* property $hen the incident in#ol#ing 9elen transpired. >etition is :enied F'6AL 62TE: Supreme Court #ery .rie+ly dealt $ith the de+ense o+ a.sence o+ due process $hich the court .rushed aside .y saying: N7ith regard to the re uirement o+ a hearing& the essence o+ due process lies in an opportunity to .e heard. Such opportunity $as a++orded the petitioner $hen she $as as)ed to e-plain her side o+ the story. 'n !etropolitan %an) and Trust Company #. %arrientos& $e held that& Ithe essence o+ due process lies simply in an opportunity to .e heard& and not that an actual hearing should al$ays and indispensa.ly .e held.I Similarly in >hilippine >asay Chung 9ua Academy #. Edpan& $e held that& IBeD#en i+ no hearing or con+erence $as conducted& the re uirement o+ due process had .een met since he $as accorded a chance to e-plain his side o+ the contro#ersy.I APACIBLE ,. +-LTI+EDIA IND-STRIES, INC. $.R.NO. %1&)(9, +AY 9(, 5(%% FACTS: >etitioner <uliet Apaci.le $as hired sometime in 3FFE .y respondent. She rose +rom the ran)s to .ecome Assistant Area Sales !anager +or Ce.u 2perations& the position she held at the time she $as separated +rom the ser#ice in /001. 2n August E& /001& petitioner $as in+ormed .y respondent !arlene 2rozco (!arlene)& her immediate superior& that she $ould .e trans+erred to the company@s main o++ice in >asig City on account o+ the ongoing reorganization. >etitioner re uested that her trans+er .e made e++ecti#e in 2cto.er or 6o#em.er /001 and that she .e gi#en time to discuss it $ith her hus.and and daughter. A $ee) later& ho$e#er& or on August 33& /001& petitioner $as in+ormed that her trans+er $ould .e e++ecti#e August 3M& /001. 2n e#en date& she $as placed under in#estigation +or the delayed released o+ %C"s (cash .udget +or customer representation in sealed en#elopes $hich are gi#en to loyal clients) $hich she recei#ed +or distri.ution earlier in <uly /001. Finding that the delay in releasing the %C"s amounted to loss o+ trust and con+idence& petitioner claims that in a meeting $ith the respondents& she $as gi#en +our options: resignation& termination& a#ailment o+ an early retirement pac)age $orth >E0&000& or trans+er to >asig City. 7ithout a#ailing o+ any option& petitioner too) a lea#e o+ a.sence on August /M& /F and Septem.er 3& /001. 2n Septem.er 1& /001& respondent company sent petitioner a memorandum8 directi#e +or her to immediately report to the head o++ice in >asig City and to return the company #ehicle assigned to her to the Ce.u 2++ice $ithin /E hours. >etitioner did not heed the directi#e& ho$e#er. She instead +iled an application +or sic) lea#e until Septem.er 33& /001& and another until Septem.er /G& /001. 2n 2cto.er H& /001& petitioner re uested that she .e gi#en her daily $or) assignment in Ce.u& $hich re uest $as later to .e denied .y 2lga .y letter dated 2cto.er M& /001. 2n 2cto.er G& /001& petitioner $as gi#en a sho$ cause notice +or her to e-plain in $riting $hy she should not .e sanctioned +or insu.ordination +or +ailure to comply $ith the trans+er order. 2n 6o#em.er E& /00/& respondent company sent petitioner a notice o+ termination e++ecti#e 6o#em.er G& /001 +or insu.ordination& prompting petitioner to +ile a complaint +or illegal dismissal& non8payment o+ o#ertime pay& 31th month pay&

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ser#ice incenti#e lea#e pay& separation pay& damages and attorney@s +ees .e+ore the La.or Ar.iter. The Court o+ Appeals ruled that petitioner $as not entitled to separation pay .ecause& contrary to the 6L"C@s +inding& she Ilac)ed good +aith.I 't noted that petitioner& +rom the start& )ne$ and accepted the company policy on trans+ers $hene#er so re uired& and could not thus re+use Ianother #alid reassignment .y treating it as an imposition and .urden.I 'SS(E: 7hether petitioner is entitled separation pay .y $ay o+ +inancial assistance. 9EL:: 62. "eno Foods& 'nc. #. 6ag)a)aisang La)as ng !anggaga$a (6L!)8Zatipunan 3H e-plains the propriety o+ granting separation pay in termination cases in this $ise: The la$ is clear. Separation pay is only $arranted $hen the cause +or termination is not attri.uta.le to the employee@s +ault& such as those pro#ided in Articles /M1 and /ME o+ the La.or Code& as $ell as in cases o+ illegal dismissal in $hich reinstatement is no longer +easi.le. 't is not allo$ed $hen an employee is dismissed +or 5ust cause& such as serious misconduct. --- --- --'t is true that there ha#e .een instances $hen the Court a$arded +inancial assistance to employees $ho $ere terminated +or 5ust causes& on grounds o+ e uity and social 5ustice. The same& ho$e#er& has .een cur.ed and rationalized in >hilippine Long :istance Telephone Company #. 6ational La.or "elations Commission. 'n that case& $e recognized the harsh realities +aced .y employees that +orced them& despite their good intentions& to #iolate company policies& +or $hich the employer can rightly terminate their employment. For these instances& the a$ard o+ +inancial assistance $as allo$ed. %ut& in clear and unmista)a.le language& $e also held that the a$ard o+ +inancial assistance shall not .e gi#en to #alidly terminated employees& $hose o++enses are ini uitous or re+lecti#e o+ some depra#ity in their moral character. 7hen the employee commits an act o+ dishonesty& depra#ity& or ini uity& the grant o+ +inancial assistance is misplaced compassion. 't is tantamount not only to condoning a patently illegal or dishonest act& .ut an endorsement thereo+. 't $ill .e an insult to all the la.orers $ho despite their economic di++iculties& stri#e to maintain good #alues and moral conduct. 'n +act& in the recent case o+ Toyota !otors >hilippines& Corp. 7or)ers Association (T!>C7A) #. 6ational La.or "elations Commission& $e ruled that separation pay shall not .e granted to all employees $ho are dismissed on any o+ the +our grounds pro#ided in Article /M/ o+ the La.or Code. Such ruling $as reiterated and +urther e-plained in Central >hilippines %andag "etreaders& 'nc. #. :iasnes: To reiterate our ruling in Toyota& la.or ad5udicatory o++icials and the CA must demur the a$ard o+ separation pay .ased on social 5ustice $hen an employee@s dismissal is .ased on serious misconduct or $il+ul diso.edience4 gross and ha.itual neglect o+ duty4 +raud or $il+ul .reach o+ trust4 or commission o+ a crime against the person o+ the employer or his immediate +amily U grounds under Art. /M/ o+ the La.or Code that sanction dismissals o+ employees. They must .e most 5udicious and circumspect in a$arding separation pay or +inancial assistance as the constitutional policy to pro#ide +ull protection to la.or is not meant to .e an instrument to oppress the employers. The commitment o+ the Court to the cause o+ la.or should not em.arrass us +rom sustaining the employers $hen they are right& as assistance to the undeser#ing and those $ho are un$orthy o+ the li.erality o+ the la$. (italics in the original& emphasis and underscoring supplied) AST'E: >etitioner $as& it .ears reiteration& dismissed +or $il+ully diso.eying the la$+ul order o+ her employer to trans+er +rom Ce.u to >asig City. As correctly noted .y the appellate court& petitioner )ne$ and accepted respondent company@s policy on trans+ers $hen she $as hired and $as in +act e#en trans+erred many times +rom one area o+ operations to another U %acolod City& 'loilo City and Ce.u. Clearly& petitioner@s adamant re+usal to trans+er& coupled $ith her +ailure to heed the order +or her return the company #ehicle assigned to her and& more importantly& allo$ing her counsel to $rite letters couched in harsh language to her superiors un uestiona.ly sho$ that she $as guilty o+ insu.ordination& hence& not entitled to the a$ard o+ separation pay. $ROSS AND .ABIT-AL NE$LECT O? D-TY NATIONAL BOO/STORE ,. CO-RT O? APPEALS 91& SCRA %)= SALAS ,. ABOITI7 ONE 22' SCRA 91' FACTS: Salas $as a material controller o+ A.oitiz& and $as tas)ed $ith monitoring and maintaining the a#aila.ility and supply o+ Tuic).o- needed .y A.oitiz in its day8 to8day operations. At one point& Salas had run out o+ Large Tuic).o-& hampering A.oitiz* .usiness operation. A.oitiz then $rote Salas a memorandum re uiring him to e-plain in $riting $ithin se#enty8t$o hours $hy he should not .e disciplinarily dealt $ith +or his (i) +ailure to monitor the stoc) le#el o+ Large Tuic).o- $hich led to in#entory stoc) out4 and (ii) +ailure to report to BhisD immediate superior the Large Tuic).o- pro.lem $hen the stoc) le#el $as already critical& $hen the Large Tuic).o- le#el $as near stoc) out& and the stoc) le#el had a stoc) out. Fi#e days a+ter& an administrati#e hearing $as conducted to gi#e Salas opportunity to e-plain his side. T$enty8t$o days a+ter& A.oitiz sent him a decision notice& terminating him +or loss o+ trust and con+idence& e++ecti#e mid8month. Salas then sent a letter to !r. 9amoy re uesting reconsideration o+ the decision& as)ing i+ he could a#ail o+ the early retirement plan& ha#ing $or)ed +or A.oitiz +or ten years already. 9e also as)ed to .e allo$ed to tender his resignation instead o+ .eing terminated. Lastly& he as)ed to .e employed until the end o+ the month& so as to ha#e enough time to loo) +or another 5o.. !r. 9amoy denied the re uest +or early retirement plan& stating that the company@s ta.le o+ discipline pro#ided the penalty o+ dismissal +or the o++enses he had committed. The e-tension& ho$e#er& $as granted& and e#en e-tended +or a month. Claiming termination $ithout cause& Salas +iled $ith the La.or Ar.iter a complaint against A.oitiz and its president Sa.in A.oitiz +or illegal dismissal $ith prayer +or reinstatement& and +or payment o+ +ull .ac)$ages& moral and e-emplary damages& as $ell as attorney*s +ees. A.oitiz responded that there $as #alid termination& asserting that Salas $as dismissed +or 5ust cause and $ith due process& Salas ha#ing $ill+ully .reached his duty $hen he ran out o+ Large Tuic).o-& 5usti+ying the termination o+ his employment. The La.or Ar.iter sustained Salas@ dismissal. 2n appeal& the 6L"C re#ersed. Gross negligence .eing characterized .y $ant o+ e#en slight care acting or omitting to act in a situation $here there is a duty to act& $ill+ully and intentionally $ith a conscious indi++erence to conse uence& Salas could not .e held guilty& ha#ing done his duty to ma)e proper re uisition in ad#ance. Failure to +ollo$8up is not an indicator o+ remission o+ duty. Salas can only .e guilty o+ negligence& +or +ailing to properly monitor and document the stoc)s in his custody. As he admitted during the administrati#e hearing& there $ere those $hich $ere e#en missing. 7orst& he tampered the records to sho$ that the stoc) on 13 !ay /001 is +or 0/ <une /001. 7hile there $as no intention to de+raud the company. The 6L"C thus denied his prayer +or .ac)$ages& and ordered the payment o+ separation pay instead o+ reinstatement A.oitiz +iled a motion +or reconsideration& $hile Salas sought partial reconsideration o+ the decision& .oth o+ $hich $ere denied .y the 6L"C. Salas and A.oitiz +iled petitions +or certiorari $ith the CA. Salas uestioned the denial o+ his prayer +or .ac)$ages and other monetary .ene+its& ad the order directing payment o+ separation pay instead o+ reinstatement. A.oitiz uestioned 6L"C@s re#ersal. The CA sustained Salas@ dismissal& holding that Salas $as guilty o+ serious misconduct under Art. /M/(a) +or tampering the records to sho$ that the stoc) on !ay 13 /001 $as +or <une / /001& gross and ha.itual neglect under Art. /M/(.)& and $ill+ul .reach o+ the trust (Art. /M/ (c)) reposed on Salas .y A.oitiz& .ecause as I$arehousemanI& and there+ore a con+idential employee& Salas concededly tampered company records to hide his gross and ha.itual neglect& and $orse& sold the company*s eight units o+ used airconditioners $ithout authority. 'SS(E: 7hether simple negligence can .e a .asis +or dismissal on ground o+ loss o+ trust and con+idence. 9EL:: Salas $as terminated +or neglect o+ duty and $ill+ul .reach o+ trust. Gross negligence connotes $ant or a.sence o+ or +ailure to e-ercise slight care or diligence& or the entire a.sence o+ care. To $arrant remo#al +rom ser#ice& the negligence should not merely .e gross& .ut also ha.itual. Although it $as Salas@ duty to monitor and maintain the a#aila.ility and supply o+ Tuic).o-& records sho$ that Salas had made a re uisition as early as !ay /3& /001& e#en ma)ing se#eral +ollo$8ups. '+ there is anything that Salas can .e +aulted +or& it is his +ailure to promptly in+orm his immediate super#isor o+ the non8deli#ery o+ the re uisitioned items. 6e#ertheless& such +ailure did not amount to gross neglect o+ duty or to $ill+ul .reach o+ trust& $hich $ould 5usti+y his dismissal +rom ser#ice. !oreo#er& there appears nothing to suggest that Salas* position $as a highly or e#en primarily con+idential position& so that he can .e remo#ed +or loss o+ trust and con+idence .y the employer. A Iposition o+ trust and con+idenceO is one $here a person is Ientrusted $ith con+idence on delicate matters&I or $ith the custody& handling& or care and protection o+ the employer*s property. 'n the records o+ the case& there is no sem.lance o+ $ill+ul .reach o+ trust on the part o+ Salas. 't is true

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that there $as erasure or alteration on the .in card. A.oitiz& ho$e#er& +ailed to demonstrate that it $as done to co#er up Salas* alleged negligence. 2ther than the .in card and A.oitiz*s .are+aced assertion& no other e#idence $as o++ered to pro#e the alleged co#er8up. The CA& there+ore& erred in adopting A.oitiz*s unsu.stantiated assertion to 5usti+y Salas* dismissal. The loss o+ trust must .e .ased not on ordinary .reach .ut& in the language o+ Article /M/(c) o+ the La.or Code& on $ill+ul .reach. A .reach is $ill+ul i+ it is done intentionally& )no$ingly and purposely& $ithout 5usti+ia.le e-cuse& as distinguished +rom an act done carelessly& thoughtlessly& heedlessly or inad#ertently. 'n this case& A.oitiz utterly +ailed to esta.lish the re uirements prescri.ed .y la$ and 5urisprudence +or a #alid dismissal on the ground o+ .reach o+ trust and con+idence. 6either can A.oitiz #alidate Salas* dismissal on the ground o+ serious misconduct +or his alleged +ailure to account +or unused accounta.le +orms. The charge came only a+ter Salas* dismissal. The su.5ect accounta.le +orms $ere issued to Salas in /003. 'ne-plica.ly& this alleged in+raction $as ne#er included as ground in the notice o+ termination. 't $as only three (1) months a+ter the +iling o+ the complaint +or illegal dismissal that A.oitiz asserted that Salas +ailed to account +or these unused accounta.le +orms. 't is clear that such assertion o+ serious misconduct $as a mere a+terthought to 5usti+y the illegal dismissal. A.oitiz*s reliance on the past o++enses o+ Salas +or his e#entual dismissal is li)e$ise una#ailing. The correct rule has al$ays .een that such pre#ious o++enses may .e used as #alid 5usti+ication +or dismissal +rom $or) only i+ the in+ractions are related to the su.se uent o++ense upon $hich the .asis o+ termination is decreed. 7hile it is true that Salas had .een suspended on +or +ailure to meet the security re uirements o+ the company& and +or his +ailure to assist in the loading at the +uel depot& such o++enses are not related to Salas* latest in+raction& hence& cannot .e used as added 5usti+ication +or the dismissal. (ndou.tedly& no 5ust cause e-ists to $arrant Salas* dismissal. Conse uently& he is entitled to reinstatement to his +ormer position $ithout loss o+ seniority rights& and to payment o+ .ac)$ages. 9o$e#er& the a$ard o+ .ac)$ages is modi+ied .ecause Salas $as not entirely +aultless. C.ALLEN$E SOC/S CORP. ,. CO-RT O? APPEALS $.R. NO. %'2%5(, NO,E+BER &, 5((2. FACTS: 'SS(E: 9EL:: +ANSION PRINTIN$ CENTER ,. BITARA, 3R. $.R.NO. %'&%5(, 3AN-ARY 52, 5(%5. >etitioner !ansion >rinting Center is a single proprietorship registered under the name o+ its president and co8petitioner Clement Cheng. 't is engaged in the printing o+ uality sel+8adhesi#e la.els& .rochures& posters& stic)ers& pac)aging and the li)e. >etitioners engaged the ser#ices o+ respondent as a helper ()argador)& $ho $as later as the company@s sole dri#er tas)ed to pic)8up ra$ materials +or the printing .usiness& collect account recei#a.les and deli#er the products to the clients $ithin the deli#ery schedules. >etitioners a#er that the timely deli#ery o+ the products to the clients is one o+ the +oremost considerations material to the operation o+ the .usiness. 't .eing so& they closely monitored the attendance o+ respondent. They noted his ha.itual tardiness and a.senteeism. Thus& as early as /1 <une 3FFF& petitioners issued a !emorandum re uiring respondent to su.mit a $ritten e-planation $hy no administrati#e sanction should .e imposed on him +or his ha.itual tardiness. :espite ha#ing sent petitioners a letter stating his apologies and resolution to correct his tardiness and constant unauthorized a.sences& respondent still did not do $hat he had committed to do. %ecause o+ this& :a#is Cheng& General !anager o+ the company and son o+ petitioner Cheng& issued another !emorandum (6otice to E-plain) re uiring respondent to e-plain $hy his ser#ices should not .e terminated. 9e personally handed the 6otice to E-plain to respondent .ut the latter& a+ter reading the directi#e& re+used to ac)no$ledge receipt thereo+. 9e did not su.mit any e-planation and& therea+ter& ne#er reported +or $or). :ue to the actions o+ respondent& petitioner $as urged to ser#e upon him another !emorandum& this time a 6otice o+ Termination upon in+orming him that he $as +ound grossly negligent o+ his duties. "espondent met $ith management& re uesting that his termination +rom ser#ice $ould .e reconsidered. A+ter hearing the respondent& management still decided to implement the !emorandum& .ut out o+ the generosity o+ the management& respondent $as o++ered +inancial assistance e ui#alent to >H&330.00 e ui#alent to his one month salary. "espondent demanded that he .e gi#en the amount e ui#alent to t$o (/) months@ salary .ut the management declined as it .elie#ed it $ould& in e++ect& re$ard respondent +or .eing negligent o+ his duties. "espondent +iled a complaint illegal dismissal against petitioners .e+ore the LA& praying +or reinstatement and payment o+ +ull .ac)$ages& legal holiday pay& S'L pay& damages and attorney*s +ees. LA dismissed the complaint +or lac) o+ merit. 6L"C a++irmed such decision and denied the motion +or reconsideration. A+ter raising the issue that 6L"C rendered its decision $ith gra#e a.use o+ discretion and,or $ithout or in e-cess o+ 5urisdiction& the CA re#ersed the decision and +ound +or the respondent. 9ence& this petition. 'SS(E: 7hether or not respondent*s dismissal $as illegal. 9EL:: The Supreme Court rendered 5udgment +or petitioners. 'n order to #alidly dismiss an employee& the employer is re uired to o.ser#e .oth su.stanti#e and procedural aspects U the termination o+ employment must .e .ased on a 5ust or authorized cause o+ dismissal and the dismissal must .e e++ected a+ter due notice and hearing. >etitioners complied $ith su.stanti#e due process considering that his termination $as not only due to his recent a.sences .ut this $as .ecause o+ his pre#ious in+ractions capped .y his recent unauthorized a.sences. >etitioners $ere e#en a.le to satis+actorily esta.lish that respondent*s a.sences $ere indeed unauthorized. And they $ere a.le to esta.lish that respondent $as gross negligent o+ his duties as he $as ha.itually tardy e#idenced .y his admission in his apology& and yet e#en a+ter such apology& he continued to .e tardy. Clearly& petitioners also complied $ith procedural due process since they ser#ed him $ith notice& .e+ore ha#ing terminated him. 7e said that procedural due process called +or t$o re uisites: (3) the employer must in+orm the employee o+ the speci+ic acts or omissions +or $hich his dismissal is sought4 and (/) a+ter the employee has .een gi#en the opportunity to .e heard& the employer must in+orm him o+ the decision to terminate his employment >etitioners ha#e repeatedly called the attention o+ respondent concerning his ha.itual tardiness& and the +irst !emorandum gi#en to him re uired him to e-plain his tardiness. 9a#ing recei#ed this !emorandum& he su.mitted a letter o++ering an apology and undertoo) to hence+orth report +or duty on time& .ut a+ter$ard pro#ed una#ailing. The Supreme Court cited a pre#ious 5urisprudence de+ining gross negligence as I$ant o+ care in the per+ormance o+ one@s dutiesI C0 and ha.itual neglect as Irepeated +ailure to per+orm one@s duties +or a period o+ time& depending upon the circumstances.I C3 These are not o#erly technical terms& $hich& in the +irst place& are e-pressly sanctioned .y the La.or Code o+ the >hilippines. %earing in mind that the tardiness and a.sences o+ respondent $ere not isolated incidents& .ut mani+ested a pattern o+ ha.ituality& then petitioners $ere correct $ith their remedy o+ terminating him a+ter ha#ing properly ser#ed him $ith a 6otice o+ Termination that he re+used to accept.

+an la Ele;tr ; Co. vs. Beltran, $.R. No. %1911=, 3anuar4 9(, 5(%5 FACTS: %eltran $as employed .y !E"ALC2 and at the time material to this case& she $as holding the position o+ Senior %ranch Cler) at !E"ALC2*s >asig .ranch. 7hile rendering o#ertime $or) on Septem.er /M& 3FFH& a Saturday& %eltran accepted >3C&3HE.EM +rom Collection "oute Super#isor %erlin !arcos (!arcos)& $hich the latter recei#ed +rom customer Andy Chang (Chang). The cash payment $as .eing made in lieu o+ a returned chec) earlier issued as payment +or Chang*s electric .ill.%eltran recei#ed the payment and issued Au-iliary "eceipt 6o. MGFHE $hich she dated Septem.er 10& 3FFH& a !onday& instead o+ Septem.er /M& 3FFH. This $as done to sho$ that it $as an accommodation& an accepted practice in the o++ice. She therea+ter placed the money and the original au-iliary receipt and other documents pertinent to the returned chec) underneath her other +iles inside the dra$er o+ her ta.le. %eltran& ho$e#er& $as only a.le to remit Chang*s payment on <anuary 31& 3FFG. Thus& in a !emorandum dated <anuary 3H& 3FFG& she $as placed under pre#enti#e suspension e++ecti#e <anuary /0& 3FFG pending completion o+ an in#estigation. !E"ALC2 considered as misappropriation or $ithholding o+ company +unds her +ailure to immediately remit said payment in #iolation o+ its Code on Employee :iscipline.

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Garcia& the Administrati#e Super#isor o+ !E"ALC2*s >asig .ranch& on the other hand& testi+ied that $hile doing an accounting o+ all outstanding returned chec)s sometime in :ecem.er 3FFH& she noticed that Chang*s returned chec) $as missing. (pon +urther in uiry& she disco#ered that Chang had already redeemed the returned chec) a+ter paying >3C&3HE.EM to %eltran& $ho in turn issued an Au-iliary "eceipt dated Septem.er 10& 3FFH. 't $as also disco#ered that the payment has not yet .een remitted. This prompted her to in uire +rom %eltran on <anuary G& 3FFG a.out the supposed payment and immediately ordered the remittance o+ the same. %eltran& ho$e#er& +ailed to do so on that day and e#en on the ne-t day $hen she reported +or $or). %eltran su.se uently $ent on lea#e o+ a.sence on <anuary F and 30& 3FFG. 't $as only on <anuary 31& 3FFG that the money $ith the pertinent documents $as handed o#er. 'n a memorandum dated Fe.ruary /C& 3FFG& the in#estigator +ound %eltran guilty o+ misappropriating and $ithholding Chang*s payment o+ >3C&3HE.EM and recommended her dismissal +rom ser#ice. %eltran +iled a complaint +or illegal dismissal against !E"ALC2. She argued that she had no intention to $ithhold company +unds. %esides& it $as not her customary duty to collect and remit payments +rom customers. She claimed good +aith& .elie#ing that her acceptance o+ Chang*s payment is considered good$ill in +a#or o+ .oth !E"ALC2 and its customer. '+ at all& her only #iolation $as a simple delay in remitting the payment& $hich caused no considera.le harm to the company. 'n a :ecision o+ the La.or Ar.iter regarded the penalty o+ dismissal as not commensurate to the degree o+ in+raction committed as there $as no ade uate proo+ o+ misappropriation on the part o+ %eltran. '+ there $as delay in %eltran*s remittance o+ Chang*s payment& it $as unintentional and same cannot ser#e as su++icient .asis to conclude that there $as misappropriation o+ company +unds. 'n +act& %eltran did not e#en attempt to deny possession o+& or re+use to hand in& the money. The La.or Ar.iter thus ga#e compassionate consideration +or the neglect to remit the money promptly& stating that it is e-cusa.le +or %eltran to commit lapses in her $or) due to serious +amily di++iculties. (pon appeal& the 6L"C re#ersed the La.or Ar.iter*s :ecision and dismissed %eltran*s complaint against !E"ALC2 in its :ecision. 't +ound that %eltran $ithheld company +unds .y +ailing to remit it +or almost +our months. The 6L"C thus ruled that !E"ALC2 #alidly dismissed %eltran +rom the ser#ice in the e-ercise o+ its inherent right to discipline its employees. 7hen %eltran .rought the case to the CA the 6L"C*s ruling $as re#ersed. The CA instead agreed $ith the +indings o+ the La.or Ar.iter that there $ere no serious grounds to $arrant %eltran*s dismissal. The CA held that the penalty o+ dismissal is harsh considering the in+raction committed and %eltran*s nine years o+ un.lemished ser#ice $ith !E"ALC2. 'SS(E: 7hether or not %eltran dismissal is #alid +inding that she is guilty o+ $ithholding company +unds. 9EL:: Supreme Court support the CA*s +inding that there are no su++icient grounds to $arrant %eltran*s dismissal. For loss o+ trust and con+idence to .e a #alid ground +or dismissal& it must .e .ased on a $ill+ul .reach o+ trust and +ounded on clearly esta.lished +acts. A .reach is $ill+ul i+ it is done intentionally& )no$ingly and purposely& $ithout 5usti+ia.le e-cuse& as distinguished +rom an act done carelessly& thoughtlessly& heedlessly or inad#ertently. 'n addition& loss o+ trust and con+idence must rest on su.stantial grounds and not on the employer*s ar.itrariness& $hims& caprices or suspicion. 'n the case at .ench& %eltran attri.uted her delay in turning o#er Chang*s payment to her di++icult +amily situation as she and her hus.and $ere ha#ing marital pro.lems and her child $as su++ering +rom an illness. Admittedly& she $as reminded o+ Chang*s payment .y her super#isor on <anuary G& 3FFG .ut denied ha#ing .een ordered to remit the money on that day. She then reasoned that her continued delay $as caused .y an ine#ita.le need to ta)e a lea#e o+ a.sence +or her to attend to the needs o+ her child $ho $as su++ering +rom asthma. !E"ALC2 cannot claim or conclude that %eltran misappropriated the money .ased on mere suspicion. And e#en i+ %eltran delayed handing o#er the +unds to the company& !E"ALC2 still has the .urden o+ proo+ to sho$ clearly that such act o+ negligence is su++icient to 5usti+y termination +rom employment. %eltran $as remiss in her duties +or her +ailure to immediately turn o#er Chang*s payment to the company. Such negligence& ho$e#er& is not su++icient to $arrant separation +rom employment. To 5usti+y remo#al +rom ser#ice& the negligence should .e gross and ha.itual. NGross negligence - - - is the $ant o+ e#en slight care& acting or omitting to act in a situation $here there is duty to act& not inad#ertently .ut $ill+ully and intentionally& $ith a conscious indi++erence to conse uences inso+ar as other persons may .e a++ected.O 9a.itual neglect& on the other hand& connotes repeated +ailure to per+orm one*s duties +or a period o+ time& depending upon the circumstances. 6o concrete e#idence $as presented .y !E"ALC2 to sho$ that %eltran*s delay in remitting the +unds $as done intentionally. 6either $as it sho$n that same is $ill+ul& unla$+ul and +elonious contrary to !E"ALC2*s +inging as stated in the letter o+ termination it sent to %eltran. Surely& %eltran*s single and isolated act o+ negligence cannot 5usti+y her dismissal +rom ser#ice. LOSS O? TR-ST AND CON?IDENCE YAB-T ,. +ERALCO $.R.NO. %)(=9', 3AN-ARY %', 5(%5 FACTS: The petitioner had $or)ed $ith !eralco +rom Fe.ruary 3FMF until his dismissal +rom employment on Fe.ruary C& /00E. At the time o+ said dismissal& he $as assigned at the !eralco !ala.on %ranch 2++ice as a %ranch Field "epresentati#e tas)ed& among other things& to conduct sur#eys on ser#ice applications& test electric meters& in#estigate consumer8applicants@ records o+ Aiolations o+ Contract (A2C) and per+orm such other duties and +unctions as may .e re uired .y his superior. The 'nspection 2++ice claimed disco#ering shunting $ires installed on the meter .ase +or Ser#ice 'denti+ication 6um.er (S'6) G0MHHMC03& registered under petitioner ;a.ut@s name. These $ires allegedly allo$ed po$er transmission to the petitioner@s residence despite the +act that !eralco had earlier disconnected his electrical ser#ice due to his +ailure to pay his electric .ills. !eralco@s 9ead o+ 'n#estigation8Litigation 2++ice issued to the petitioner a notice dated 6o#em.er 1& /001&recei#ed .y the petitioner@s $i+e on the same day. ;a.ut admitted .eing the registered customer o+ !eralco at 6o. 3G Earth Street& !eralco Aillage & %atia& %ocaue& %ulacan. The petitioner claimed that his electrical ser#ice $as disconnected sometime in <uly /001 +or unpaid electric .ills. 9e con+irmed that the inspected meter .ase $as installed $ithin his lot@s premises. Claiming that he had .een o.taining electricity +rom a neigh.or& he argued that shunting $ires in his meter .ase could ha#e caused an electrical mal+unction. As to !eralco@s allegation that ;a.ut@s $i+e had admitted the petitioner@s authorship o+ the illegal connection& ;a.ut denied )no$ing o+ such admission. ;a.ut $i+e admitted that he $ere the one $ho installed the shunted $ires on your meter .ase to ha#e po$er .ecause she and his t$o children $ere sic). The illegal connection ena.led you to de+raud the company .y consuming unregistered electricity $hich ma)es him lia.le +or #iolation o+ Section G& par. 1 o+ the Company Code on Employee :iscipline& de+ined as [directly or indirectly tampering $ith electric meters or metering installations o+ the Company or the installation o+ any de#ice& $ith the purpose o+ de+rauding the Company& penalized therein $ith dismissal +rom the ser#ice. ;a.ut +iled $ith the 6ational La.or "elations Commission (6L"C) a complaint +or illegal dismissal and money claims against !eralco and Lopez. La.or Ar.iter Antonio ". !acam rendered his :ecision& declaring the petitioner illegally dismissed +rom the ser#ice and hence& entitled to reinstatement plus .ac)$ages and attorney@s +ees. 6L"C rendered its "esolution dismissing the herein respondents@ appeal +or lac) o+ merit. CA rendered the no$ assailed :ecision re#ersing the rulings o+ the 6L"C. 'SS(E: 7hether or not the CA committed an error o+ la$ in annulling and setting aside the resolutions o+ the 6L"C that declared the herein petitioner illegally dismissed .y the respondents. 9EL:: The petitioner@s #iolation o+ the company rules $as e#ident. 7hile he denies any in#ol#ement in the installation o+ the shunting $ires $hich !eralco disco#ered& it is signi+icant that said S'6G0MHHMC03 is registered under his name& and its meter .ase is situated $ithin the premises o+ his property. Said meter registered electric consumption during the time his electric ser#ice $as o++icially disconnected .y !eralco. 't $as the petitioner and his +amily $ho could ha#e .ene+ited +rom the illegal connection& .eing the residents o+ the area co#ered .y the ser#ice. 9is claim that he +ailed to )no$ or e#en notice the shunted $ires +ails to persuade as $e consider the meter located in the +ront o+ his house& the nature o+ his $or) as .ranch +ield representati#e& his long8time employment $ith !eralco and his +amiliarity $ith illegal connections o+ this )ind. 't is reasona.le that its commission is classi+ied as a se#ere act o+ dishonesty& punisha.le .y dismissal e#en on its +irst commission& gi#en the nature and gra#ity o+ the o++ense and the +act that it is a gra#e $rong directed against their employer. To reiterate& Article /M/ (a) pro#ides that an employer may terminate an employment .ecause o+ an employee@s serious misconduct& a cause that $as present in this case in #ie$ o+ the petitioner@s #iolation o+ his employer@s code o+ conduct. !isconduct is de+ined as the [transgression o+ some esta.lished and de+inite rule o+ action& a +or.idden act& a dereliction o+ duty& $ill+ul in character& and implies $rong+ul intent and not mere error in 5udgment. For serious misconduct to 5usti+y dismissal& the +ollo$ing re uisites must .e present: (a) it must .e serious4 (.) it must relate to the per+ormance o+ the employee@s duties4 and (c) it must sho$ that the employee has .ecome un+it to continue $or)ing +or the employer. To consider the petitioner@s duties and po$ers as a !eralco employee. And $e conclude that he committed a serious misconduct. 'nstallation o+ shunting $ires is $ithout dou.t a serious $rong as it demonstrates an act that is $ill+ul or deli.erate& pursued solely to $rong+ully o.tain electric po$er through unla$+ul means. The act clearly relates to the

16
petitioner@s per+ormance o+ his duties gi#en his position as .ranch +ield representati#e $ho is e uipped $ith )no$ledge on meter operations& and $ho has the duty to test electric meters and handle customers@ #iolations o+ contract. 'nstead o+ protecting the company*s interest& the petitioner himsel+ used his )no$ledge to illegally o.tain electric po$er +rom !eralco. 9is in#ol#ement in this incident deems him no longer +it to continue per+orming his +unctions +or respondent8company. Loss o+ con+idence as a 5ust cause +or termination o+ employment is premised +rom the +act that an employee concerned holds a position o+ trust and con+idence. This situation holds $here a person is entrusted $ith con+idence on delicate matters& such as the custody& handling& or care and protection o+ the employer@s property. %ut& in order to constitute a 5ust cause +or dismissal& the act complained o+ must .e [$or) 8 related such as $ould sho$ the employee concerned to .e un+it to continue $or)ing +or the employer. Ta)ing into account the results o+ its in#estigations& !eralco cannot .e e-pected to trust ;a.ut to properly per+orm his +unctions and to meet the demands o+ his 5o.. 9is dishonesty& in#ol#ement in the+t and tampering o+ electric meters clearly pre5udice respondent !eralco& since he +ailed to per+orm the duties $hich he $as e-pected to per+orm. NOR/IS DISTRIB-TORS, INC. AND ALEC D. B-AT vs DEL?IN S. DESCALLAR $.R. No. %&2522, +ar;h %=, 5(%5 9ere& there is no uestion that as petitioners* %ranch !anager in 'ligan City& respondent $as holding a position o+ trust and con+idence. 9e $as responsi.le +or the administration o+ the .ranch& and e-ercised super#ision and control o#er all the employees. 9e $as also incharge o+ sales and collection. 'n termination cases& the .urden o+ proo+ rests upon the employer to sho$ that the dismissal is +or a 5ust and #alid cause and +ailure to do so $ould necessarily mean that the dismissal $as illegal. The uantum o+ proo+ re uired in determining the legality o+ an employee*s dismissal is only su.stantial e#idence. CA correctly held that petitioners +ailed to discharge this .urden. Failure to reach the monthly sales uota cannot .e considered an intentional and un5usti+ied act o+ respondent amounting to a $ill+ul .reach o+ trust on his part that $ould call +or his termination .ased on loss o+ con+idence. This is not the $ill+ul .reach o+ trust and con+idence contemplated in Article /M/(c) o+ the La.or Code. Lo$ sales per+ormance could .e attri.uted to se#eral +actors $hich are .eyond respondent*s control. To .e a #alid ground +or an employee*s dismissal& loss o+ trust and con+idence must .e .ased on a $ill+ul .reach. To repeat& a .reach is $ill+ul i+ it is done intentionally& )no$ingly and purposely& $ithout 5usti+ia.le e-cuse. >etitioners ha#ing +ailed to esta.lish .y su.stantial e#idence any #alid ground +or terminating respondent*s ser#ices& $e uphold the +inding o+ the La.or Ar.iter and the CA that respondent $as illegally dismissed. An illegally dismissed employee is entitled to t$o relie+s: .ac) $ages and reinstatement. The t$o relie+s pro#ided are separate and distinct. 'n instances $here reinstatement is no longer +easi.le .ecause o+ strained relations .et$een the employee and the employer& separation pay is granted. The normal conse uences o+ respondent*s illegal dismissal& then& are reinstatement $ithout loss o+ seniority rights& and payment o+ .ac) $ages computed +rom the time compensation $as $ithheld +rom him up to the date o+ actual reinstatement. 7here reinstatement is no longer #ia.le as an option& separation pay e ui#alent to one month salary +or e#ery year o+ ser#ice should .e a$arded as an alternati#e. The payment o+ separation pay is in addition to payment o+ .ac) $ages. The CA merely clari+ied the period o+ payment o+ .ac) $ages and separation pay up to the +inality o+ its decision modi+ying the LA*s decision. 'n #ie$ o+ the modi+ication o+ monetary a$ards in the La.or Ar.iter*s decision& the time +rame +or the payment o+ .ac) $ages and separation pay is accordingly modi+ied to the +inality o+ the CA decision. 79E"EF2"E& the petition +or re#ie$ on certiorari is :E6'E:. ,ILLAN-E,A, 3R ,. NLRC $.R.NO. %1'&)9, 3-NE %9, 5(%5 7hile respondent $as still suspended& 6or)is also +ound that "espondent committed some inappropriate and irregular acts such as une-plained lo$ per+ormance o+ his .ranch& missing +unds& unauthorized dis.ursement o+ +unds& irregular transactions. >etitioners terminated respondent*s ser#ices +or loss o+ trust and con+idence and gross ine++iciency. "espondent +iled a complaint +or illegal suspension and illegal dismissal. LA +a#ored respondent. >etitioners appealed to 6L"C. 6L"C re#ersed the LA*s decision and +ound respondent to ha#e .een #alidly dismissed. The 6L"C& ho$e#er& upheld the LA*s +inding that petitioners are lia.le to respondent +or unpaid $ages. "espondent +iled !". 't $as denied so he +iled $ith the CA a petition +or certiorari. CA reinstated $ith modi+ication the decision o+ the LA. "espondent +iled a motion +or clari+ication as to the a$ards o+ separation pay and .ac) $ages $hile petitioners +iled !". CA issued a "esolution stating that as regards respondent*s motion +or clari+ication& the separation pay and .ac) $ages shall .e rec)oned +rom the time respondent $as illegally suspended until +inality o+ its earlier :ecision. The CA li)e$ise denied petitioners* !". 9ence& petitioners +iled the present petition. 'SS(E: 7as the +ailure o+ respondent to reach his monthly sales uota a #alid .asis +or loss o+ trust and con+idenceP 9EL:: ANALO$O-S CASES 3ohn .an;o;D L Ee Insuran;e Cor!. vs. Dav s, $.R. No. %')2=), Se!t. 9, 5((& Facts: <oanna Cantre :a#is $as agency administration o++icer o+ <ohn 9ancoc) Li+e 'nsurance Corporation. 2n 2cto.er 3M& /000& >atricia ;useco& <9L'C*s corporate a++airs manager& disco#ered that her $allet $as missing. She immediately reported the loss o+ her credit cards to A'G and %>' E-press. To her surprise& she $as in+ormed that I>atricia ;usecoI had 5ust made su.stantial purchases using her credit cards in #arious stores in the City o+ !anila. She $as also told that a proposed transaction in A.enson@s8"o.insons >lace $as disappro#ed .ecause IsheI ga#e the $rong in+ormation upon #eri+ication. %ecause loss o+ personal property among its employees had .ecome rampant in its o++ice& petitioner sought the assistance o+ 6%'. The 6%'& o.tained a security #ideo +rom A.enson@s sho$ing the person $ho used ;useco@s credit cards. ;useco and other $itnesses positi#ely identi+ied the person in the #ideo as :a#is 6%' and ;useco +iled a complaint +or uali+ied the+t against :a#is .ut .ecause the a++ida#its presented .y the 6%' (identi+ying respondent as the culprit) $ere not properly #eri+ied& the city prosecutor dismissed the complaint due to insu++iciency o+ e#idence. !ean$hile& petitioner placed :a#is under pre#enti#e suspension and instructed her to cooperate $ith its ongoing in#estigation. :a#is +iled a complaint +or illegal dismissal alleging that petitioner terminated her employment $ithout cause. The la.or ar.iter& in !ay /3& /00/& +ound that :a#is committed serious misconduct (she $as the principal suspect +or uali+ied the+t committed inside petitioner@s o++ice during $or) hours). There $as a #alid cause +or her dismissal. Thus& the complaint $as dismissed +or lac) o+ merit. (pon appeal& 6L"C a++irmed the la.or ar.iter in <uly 13& /001 and denied her motion +or reconsideration in 2cto.er 10& /001. (pon petition +or certiorari +iled $ith the CA& CA on <uly E& /00C granted the petition holding that the la.or ar.iter and 6L"C merely adopted the +indings o+ the 6%' regarding respondent@s culpa.ility. %ecause the a++ida#its o+ the $itnesses $ere not #eri+ied& they did not constitute su.stantial e#idence. The la.or ar.iter and 6L"C should ha#e assessed e#idence independently as Iunsu.stantiated suspicions& accusations and conclusions o+ employers (did) not pro#ide legal

FACTS: "espondent :el+in S. :escallar $as assigned at the 'ligan City %ranch o+ petitioner 6or)is :istri.utors& 'nc.& a distri.utor o+ ;amaha motorcycles. 9e .ecame a regular employee and $as promoted as %ranch !anager. 9e acted as .ranch administrator and had super#ision and control o+ all the employees. "espondent $as also responsi.le +or sales and collection 'n a memorandum& petitioners re uired respondent to e-plain in $riting $ithin EM hrs $hy he should not .e penalized or terminated +or .eing a.sent $ithout o++icial lea#e (A72L) or rendering under8time ser#ice on certain dates. "espondent e-plained that he reported to the o++ice on those dates& .ut he either $ent to the .an) or +ollo$ed8up on prospects. As he $as still $ithin city limits& he did not +ile any o++icial lea#e or tra#el record. 6or)is conducted an in#estigation. Finding that respondent $as not a.le to pro#e that he $as really in the .ranch or on o++icial tra#el& petitioners suspended him +or 3C days $ithout pay. According to petitioners& respondent admitted during the in#estigation that he used company time +or his personal a++airs& .ut only +or a +e$ hours and not the $hole day.

62. Loss o+ trust and con+idence as a ground +or termination o+ an employee under Article /M/ o+ the La.or Code re uires that the .reach o+ trust .e $ill+ul& meaning it must .e done intentionally& )no$ingly& and purposely& $ithout 5usti+ia.le e-cuse. The .asic premise +or dismissal on the ground o+ loss o+ con+idence is that the employee concerned holds a position o+ trust and con+idence. 't is the .reach o+ this trust that results in the employer*s loss o+ con+idence in the employee.

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5usti+ication +or dismissing an employeeI. >etitioner mo#ed +or reconsideration .ut it $as denied. 9ence& this petition $here petitioner argues that the ground +or an employee@s dismissal need only .e pro#en .y su.stantial e#idence. Thus& the dropping o+ charges against an employee (especially on a technicality such as lac) o+ proper #eri+ication) or his su.se uent ac uittal does not preclude an employer +rom dismissing him due to serious misconduct. 'SS(E: 7hether or not petitioner su.stantially pro#ed the presence o+ #alid cause +or respondent@s termination. 9EL:: Supreme Court granted the petition and ruled that petitioner #alidly dismissed :a#is +or cause analogous to serious misconduct. Article /M/ o+ the La.or Code pro#ides: Termination .y Employer. U An employer may terminate an employment +or any o+ the +ollo$ing causes: (a) Serious misconduct or $ill+ul diso.edience .y the employee o+ the la$+ul orders o+ his employer or his representati#es in connection $ith his $or)4 (e) 2ther causes analogous to the +oregoing. 7hether or not petitioner $as illegally dismissed. 9EL:: The o.esity o+ petitioner is a ground +or dismissal under Article /M/(e) o+ the La.or Code. The $eight standards o+ >AL constitute a continuing uali+ication o+ an employee in order to )eep the 5o.. Tersely put& an employee may .e dismissed the moment he is una.le to comply $ith his ideal $eight as prescri.ed .y the $eight standards. The dismissal $ould +all under Article /M/(e) o+ the La.or Code. As e-plained .y the CA: - - - BTDhe standards #iolated in this case $ere not mere NordersO o+ the employer4 they $ere the Nprescri.ed $eightsO that a ca.in cre$ must maintain in order to uali+y +or and )eep his or her position in the company. 'n other $ords& they $ere standards that esta.lish continuing uali+ications +or an employee*s position. \ The +ailure to meet the employer*s uali+ying standards is in +act a ground that does not s uarely +all under grounds (a) to (d) and is there+ore one that +alls under Article /M/(e) ? the Nother causes analogous to the +oregoing.O %y its nature& these N uali+ying standardsO are norms that apply prior to and a+ter an employee is hired. - - 7e hold that the o.esity o+ petitioner& $hen placed in the conte-t o+ his $or) as +light attendant& .ecomes an analogous cause under Article /M/(e) o+ the La.or Code that 5usti+ies his dismissal +rom the ser#ice. 9is o.esity may not .e unintended& .ut is nonetheless #oluntary. ''. The dismissal o+ petitioner can .e predicated on the .ona +ide occupational uali+ication de+ense. Employment in particular 5o.s may not .e limited to persons o+ a particular se-& religion& or national origin unless the employer can sho$ that se-& religion& or national origin is an actual uali+ication +or per+orming the 5o.. The uali+ication is called a .ona +ide occupational uali+ication (%F2T). A common carrier& +rom the nature o+ its .usiness and +or reasons o+ pu.lic policy& is .ound to o.ser#e e-traordinary diligence +or the sa+ety o+ the passengers it transports. Thus& it is only logical to hold that the $eight standards o+ >AL sho$ its e++ort to comply $ith the e-acting o.ligations imposed upon it .y la$ .y #irtue o+ .eing a common carrier. The primary o.5ecti#e o+ >AL in the imposition o+ the $eight standards +or ca.in cre$ is +light sa+ety. The tas) o+ a ca.in cre$ or +light attendant is not limited to ser#ing meals or attending to the $hims and caprices o+ the passengers. The most important acti#ity o+ the ca.in cre$ is to care +or the sa+ety o+ passengers and the e#acuation o+ the aircra+t $hen an emergency occurs. >assenger sa+ety goes to the core o+ the 5o. o+ a ca.in attendant. Truly& airlines need ca.in attendants $ho ha#e the necessary strength to open emergency doors& the agility to attend to passengers in cramped $or)ing conditions& and the stamina to $ithstand grueling +light schedules. 2n .oard an aircra+t& the .ody $eight and size o+ a ca.in attendant are important +actors to consider in case o+ emergency. Aircra+ts ha#e constricted ca.in space& and narro$ aisles and e-it doors. Thus& the arguments o+ respondent that NB$Dhether the airline*s +light attendants are o#er$eight or not has no direct relation to its mission o+ transporting passengers to their destinationO4 and that the $eight standards Nhas nothing to do $ith air$orthiness o+ respondent*s airlines&O must +ail. The 5o. o+ a ca.in attendant during emergencies is to speedily get the passengers out o+ the aircra+t sa+ely. %eing o#er$eight necessarily impedes mo.ility. 'ndeed& in an emergency situation& seconds are $hat ca.in attendants are dealing $ith& not minutes. Three lost seconds can translate into three lost li#es. E#acuation might slo$ do$n 5ust .ecause a $ide8.odied ca.in attendant is .loc)ing the narro$ aisles. >etitioner is entitled to separation pay. 6ormally& a legally dismissed employee is not entitled to separation pay. This may .e deduced +rom the language o+ Article /GF o+ the La.or Code that NBaDn employee $ho is un5ustly dismissed +rom $or) shall .e entitled to reinstatement $ithout loss o+ seniority rights and other pri#ileges and to his +ull .ac)$ages& inclusi#e o+ allo$ances& and to his other .ene+its or their monetary e ui#alent computed +rom the time his compensation $as $ithheld +rom him up to the time o+ his actual reinstatement.O Luc)ily +or petitioner& this is not an ironclad rule. E-ceptionally& separation pay is granted to a legally dismissed employee as an act Nsocial 5ustice&O or .ased on Ne uity.O 'n .oth instances& it is re uired that the dismissal (3) $as not +or serious misconduct4 and (/) does not re+lect on the moral character o+ the employee. 9ere& 7e grant petitioner separation pay e ui#alent to one8hal+ (3,/) month*s pay +or e#ery year o+ ser#ice. 't should include regular allo$ances $hich he might ha#e .een recei#ing. ABONDON+ENT RBC CABLE +ASTER SYSTE+ AND>OR E,ELYN CINENSE, vs. +ARCIAL BAL-YOT FACTS: 9erein petitioner "%C Ca.le !aster System (petitioner "%C) is a ca.le +irm engaged in the .usiness o+ pro#iding home ca.le ser#ice. Sometime in !arch 3FFH& petitioner "%C hired herein pri#ate respondent !arcial %aluyot as a Lineman.

!isconduct in#ol#es Ithe transgression o+ some esta.lished and de+inite rule o+ action& +or.idden act& a dereliction o+ duty& $ill+ul in character& and implies $rong+ul intent and not mere error in 5udgmentI. For misconduct to .e serious and there+ore a #alid ground +or dismissal& it must .e: 3. o+ gra#e and aggra#ated character and not merely tri#ial or unimportant and /. connected $ith the $or) o+ the employee. 'n this case& petitioner dismissed :a#is .ased on the 6%'@s +inding that the latter stole and used ;useco@s credit cards. %ut since the the+t $as not committed against petitioner itsel+ .ut against one o+ its employees& respondent@s misconduct $as not $or)8related and there+ore& she could not .e dismissed +or serious misconduct. 6onetheless& Article /M/ (e) o+ the La.or Code tal)s o+ other analogous causes or those $hich are suscepti.le o+ comparison to another in general or in speci+ic detail. For an employee to .e #alidly dismissed +or a cause analogous to those enumerated in Article /M/& the cause must in#ol#e a #oluntary and,or $ill+ul act or omission o+ the employee. A cause analogous to serious misconduct is a #oluntary and,or $ill+ul act or omission attesting to an employee@s moral depra#ity. The+t committed .y an employee against a person other than his employer& i+ pro#en .y su.stantial e#idence& is a cause analogous to serious misconduct. :id petitioner su.stantially pro#e the e-istence o+ #alid cause +or respondent@s separationP ;es. The la.or ar.iter and the 6L"C relied not only on the a++ida#its o+ the 6%'@s $itnesses .ut also on that o+ respondent. They li)e$ise considered petitioner@s o$n in#estigati#e +indings. Clearly& they did not merely adopt the +indings o+ the 6%' .ut independently assessed e#idence presented .y the parties. Their conclusion (that there $as #alid cause +or respondent@s separation +rom employment) $as there+ore supported .y su.stantial e#idence. Yrasue"u vs. Ph l A rl nes, $.R. No. %'&(&%, O;t. %1, 5((& Facts: Armando G. ;rasuegui $as a +ormer international +light ste$ard o+ >hilippine Airlines& 'nc. (>AL). 9e stands +i#e +eet and eight inches (C*MO) $ith a large .ody +rame. The proper $eight +or a man o+ his height and .ody structure is +rom 3EG to 3HH pounds& the ideal $eight .eing 3HH pounds& as mandated .y the Ca.in and Cre$ Administration !anual o+ >AL. 9is $eight pro.lem dates .ac) to 3FME $hen >AL ad#ised him to go on an e-tended #acation lea#e +rom :ecem.er /F& 3FME to !arch E& 3FMC to address his $eight concerns. For +ailure to meet the $eight standards another lea#e $ithout pay +rom !arch C& 3FMC to 6o#em.er 3FMC $as imposed. 9e met the re uired $eight and $as allo$ed to $or) .ut his $eight pro.lem recurred& thus another lea#e $ithout pay +rom 2cto.er 3G& 3FMM to Fe.ruary 3FMF. From 3FMF to 3FF/ his $eight +luctuated +rom /0Fl.& /3Cl.& /3Gl.& /3/l.& and /0C. :uring that period he $as re uested to lose $eight and to report +or $eight chec)s $hich he constantly +ailed to do. 'n the meantime his status $as No++8duty.O Finally in 3FF1& petitioner $as +ormally in+ormed .y >AL that due to his ina.ility to attain his ideal $eight& Nand considering the utmost leniencyO e-tended to him N$hich spanned a period co#ering a total o+ almost +i#e (C) years&O his ser#ices $ere considered terminated Ne++ecti#e immediately.O 9e then +iled a complaint +or illegal dismissal against >AL. The La.or Ar.iter ruled that he $as illegally dismissed and entitles to reinstatement& .ac)$ages and attorney*s +ees. The 6L"C a++irmed the LA. The CA re#ersed the 6L"C. 'SS(E:

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'n the middle part o+ the year /000& pri#ate respondent learned that his outstanding loan +rom cash ad#ances accumulated to >3M&000.00. The cash ad#ances he made B$ereD pursuant to a long time practice +or the employees o+ petitioner "%C to ad#ance amounts o+ money in the +orm o+ cash #ales $ith the condition that the same .e deducted +rom their monthly salaries on a staggered or periodic .asis. "espondent alleged that he deli#ered his motorcycle as a security +or said loans. %ut petitioner a#ers that such motorcycle $as actually leased& $hich lease only ceased $hen respondent no longer o$ned said #ehicle .ecause o+ non8payment o+ its +inancing. 2n Fe.ruary 3& /003& $hen pri#ate respondent reported +or $or)& he $as in+ormed that no .lan) o++icial receipts could .e issued to him +or his collection 5o. +or that day or +or a month .ecause he is .eing suspended. Thus& +or one month& he did not report +or $or) and $hen he reported .ac) to duty& he $as told .y petitioner "%C that he is no$ out o+ 5o. and is considered terminated. >etitioner "%C denied dismissing pri#ate respondent .y contending that it $as pri#ate respondent $ho a.andoned his $or) $hen& sometime in !arch /003& he le+t $ithout any notice and ne#er returned .ac) +or $or). They also alleged that respondent committed se#eral in+ractions such as misappropriations and +alsi+ication o+ documents. LA%2" A"%'TE" ruled that pri#ate respondent a.andoned his 5o. and committed acts o+ dishonesty such as the+t o+ company +unds and property. 6L"C ruled that pri#ate respondent did not a.andon his 5o. .ut $as illegally dismissed. 'SS(E: 7hether or not respondent $as illegally dismissed 9EL:: ;ES A+ter respondent $as punished $ith suspension .y petitioners& he $as admitted .ac) to $or) on the condition that he $ill not repeat the same #iolations and he $ill pay .ac) the sums he o$ed. This pro#ed that petitioners had condoned the in+ractions pre#iously committed .y the respondent. To constitute a.andonment& t$o elements must concur: (3) the +ailure to report +or $or) or a.sence $ithout #alid or 5usti+ia.le reason& and (/) a clear intention to se#er the employer8employee relationship& $ith the second element as the more determinati#e +actor and .eing mani+ested .y some o#ert acts. !ere a.sence is not su++icient. The employer has the .urden o+ proo+ to sho$ a deli.erate and un5usti+ied re+usal o+ the employee to resume his employment $ithout any intention o+ returning. 'n the case at .ar& the charge o+ a.andonment is .elied .y the +ollo$ing circumstances: First& the high impro.a.ility o+ pri#ate respondent to intentionally a.andon his $or) considering that he had already ser#ed a penalty o+ suspension +or his in+ractions and #iolations as $ell as the petitioner*s tacit condonation o+ the in+ractions he committed& .y permitting him to go .ac) to $or) and .y as)ing him to e-ecute a promissory note. 't is incongruent to human nature& that a+ter ha#ing ironed things out $ith his employer& an employee $ould 5ust not report +or $or) +or no apparent reason. Secondly& there $as no proo+ that petitioner sent pri#ate respondent a notice o+ termination on the ground o+ a.andonment& i+ indeed it is true that he really +ailed to go .ac) to $or). Section /& "ule LA'& %oo) A& "ules and regulations implementing the La.or Code pro#ides that any employer $ho see)s to dismiss a $or)er shall +urnish him a $ritten notice stating the particular act or omission constituting the ground +or his dismissal. 'n cases o+ a.andonment o+ $or)& the notice shall .e ser#ed at the $or)er*s last )no$n address. For this reason& 7e are constrained to gi#e credence to pri#ate respondent*s assertion that he attempted to report .ac) to $or) .ut he $as 5ust as)ed to lea#e as he $as considered terminated. And lastly& pri#ate respondent*s +iling o+ a case +or illegal dismissal $ith the la.or ar.iter negates a.andonment. As held .y the Supreme Court& a charge o+ a.andonment is totally inconsistent $ith the immediate +iling o+ a complaint +or illegal dismissal& more so $hen it includes a prayer +or reinstatement. Finally& an employee $ho is illegally dismissed is entitled to the t$in relie+s o+ +ull .ac)$ages and reinstatement. '+ reinstatement is not #ia.le& separation pay is a$arded to the employee. 'n a$arding separation pay to an illegally dismissed employee& in lieu o+ reinstatement& the amount to .e a$arded shall .e e ui#alent to one (3) month salary +or e#ery year o+ ser#ice. Cal !a4 vs. NLRC, $.R. No. %''=%%, Au"ust 9, 5(%( Appealed to CA $hich rendered its :ecision dismissing the petition. Calipay +iled a !otion +or "econsideration& .ut the CA denied 9ence& the instant petition o+ Calipay raising the +ollo$ing issues: 'ssue: 7hether or not there $as a.andonment o+ $or) a 5ust ground +or dismissal 9eld: Calipay and the other complainants +ailed to su++iciently re+ute these +indings o+ the La.or Ar.iter in their appeal +iled $ith the 6L"C. They simply insisted that they did not report +or $or)& .ecause they $ere already terminated. 9o$e#er& they did not present any e#idence to pro#e their allegation. 2n the other hand& as held .y the La.or Ar.iter& pri#ate respondents $ere a.le to present the :T"s and Salary Aouchers o+ Calipay and the other complainants sho$ing that they indeed reported +or $or) e#en a+ter their alleged termination +rom employment. /H Calipay and the other complainants also +ailed to present e#idence to pro#e their allegation that they $ere +orced to sign .lan) +orms o+ their :T"s and Salary Aouchers. La.or Ar.iter handling the case rendered a :ecision dismissing the Complaint +or lac) o+ merit. Calipay and the other complainants +iled an appeal $ith the 6ational La.or "elations Commission (6L"C) modi+ying the La.or Ar.iter@s decision and ordering respondents Triangle Ace Corporation 'nc.,<ose Lee to reinstatement. Aggrie#ed& pri#ate respondents +iled a !otion +or "econsideration $as Gi#en due course and the decision o+ the La.or Ar.iter $as reinstated and a++irmed. As a conse uence& Calipay and the other complainants mo#ed +or the reconsideration& .ut the same $as denied .y the 6L"C. Facts: 2n <uly 3H& 3FFF& a Complaint 1 +or illegal dismissal& un+air la.or practice& underpayment o+ $ages and 31th month pay& non8payment o+ ser#ice incenti#e lea#e pay& o#ertime pay& premium pay +or holiday& rest day& night shi+t allo$ances and separation pay $as +iled .y herein petitioner Elpidio Calipay& together $ith Al+redo !ission and Ernesto :imalanta against herein pri#ate respondents Triangle Ace Corporation (Triangle) and <ose Lee. Calipay and the other complainants alleged in their >osition >aper that in the course o+ their employment& they $ere not gi#en any speci+ic $or) assignment4 they per+ormed #arious )inds o+ $or) imposed upon them .y Lee4 in discharging their +unctions& they $ere re uired .y Lee to $or) +or nine (F) hours a day& .eginning +rom G:00 a.m. and ending at H:00 p.m. $ith a .rea) o+ one hour at 3/:00 noon4 they $ere also re uired to report +rom !onday to Sunday4 +or $or) rendered +rom !ondays to Saturdays .eyond the normal eight (M) $or)ing hours in a day& they $ere paid a uni+orm daily $age in the amount o+ >3E0.00 e#en during holidays4 +or $or) per+ormed on Sundays& they $ere not paid any $age due to the policy o+ Lee that his $or)ers must pro#ide $or) $ithout pay at least a day in the $ee) under his so8called I.ayanihan systemI4 in recei#ing their $ages& they $ere not gi#en any duly accomplished payslips4 instead& they $ere +orced to sign a .lan) +orm o+ their daily time records and salary #ouchers. 't $as +urther alleged that in !ay 3FFM& Lee con+ronted Calipay and !ission regarding their alleged participation and assistance in :imalanta@s claim +or disa.ility .ene+its $ith the Social Security System4 despite their denials& Lee scolded Calipay and !ission4 this incident later led to their dismissal in the same month.

2n the .asis o+ the +oregoing& the Court arri#es at the conclusion that the +iling o+ the complaint +or illegal dismissal appears only as a con#enient a+terthought on the part o+ petitioner and the other complainants a+ter they $ere dismissed in accordance $ith la$.

<urisprudence has held time and again that a.andonment is totally inconsistent $ith the immediate +iling o+ a complaint +or illegal dismissal& more so i+ the same is accompanied .y a prayer +or reinstatement. /G 'n the present case& ho$e#er& petitioner +iled his complaint more than one year a+ter his alleged termination +rom employment. !oreo#er& petitioner and the other complainants@ inconsistency in their stand is also sho$n .y the +act that in the complaint +orm $hich they personally +illed up and +iled $ith the 6L"C& they only as)ed +or payment o+ separation pay and other monetary claims. They did not as) +or reinstatement. 't is only in their >osition >aper later prepared .y their counsel that they as)ed +or reinstatement. This is an indication that petitioner and the other complainants ne#er had the intention or desire to return to their 5o.s. 'n +act& there is no e#idence to

19
pro#e that petitioner and his +ormer co8employees e#er attempted to return to $or) a+ter they $ere dismissed +rom employment. 2n the other hand& pri#ate respondents $ere a.le to present memoranda or sho$8 cause letters ser#ed on petitioner and the other complainants at their last )no$n address re uiring them to e-plain their a.sence& $ith a $arning that their +ailure $ould .e construed as a.andonment o+ $or). Also& pri#ate respondents ser#ed on petitioner and the other complainants a notice o+ termination as re uired .y la$. >ri#ate respondents@ compliance $ith said re uirements& ta)en together $ith the other circumstances a.o#e8discussed& only pro#es petitioner and the other complainants@ a.andonment o+ their $or). TOTALITY O? CIRC-+STANCES +ERALCO ,. $ALA $.R.NO. %)%5&&, +ARC. 1, 5(%5 Facts: "espondent <an Carlo Gala $as hired .y petitioner !eralco as a pro.ationary lineman on !arch /& /00H. 2n <uly /G& /00H& .arely +our months on the 5o.& Gala $as dismissed +or alleged complicity in pil+erages o+ !eralco*s electrical supplies& particularly& +or the incident $hich too) place on !ay /C& /00H. 2n that day& Gala and other !eralco $or)ers $ere instructed to replace a $orn8out electrical pole at the >acheco Su.di#ision in Aalenzuela City. 7hile the !eralco cre$ $as at $or)& one 6o.erto Llanes& a non8!eralco employee& arri#ed. 9e appeared to .e )no$n to the !eralco +oremen as they $ere seen con#ersing $ith him. Llanes .oarded the truc)s& $ithout .eing stopped& and too) out $hat $ere later +ound as electrical supplies. Aside +rom Gala& the +oremen and the other linemen $ho $ere at the $or)site $hen the pil+erage happened $ere later charged $ith misconduct and dishonesty +or their in#ol#ement in the incident. (n)no$n to them& a !eralco sur#eillance tas) +orce $as monitoring their acti#ities and recording e#erything $ith a #ideo camera. Gala denied in#ol#ement in the pil+erage& contending that e#en i+ his superiors might ha#e committed a $rongdoing& he had no participation in $hat they did. 9e claimed that: (3) he $as at some distance a$ay +rom the truc)s $hen the pil+erage happened4 (/) he did not ha#e an in)ling that an illegal acti#ity $as ta)ing place since his super#isors $ere con#ersing $ith Llanes& gi#ing him the impression that they )ne$ him4 (1) he did not call the attention o+ his superiors .ecause he $as not in a position to do so as he $as a mere lineman4 and (E) he $as 5ust +ollo$ing instructions in connection $ith his $or) and had no control in the disposition o+ company supplies and materials. 9e maintained that his mere presence at the scene o+ the incident $as not su++icient to hold him lia.le as a conspirator. :espite Gala*s e-planation& !eralco terminated his employment. Gala responded .y +iling an illegal dismissal complaint against !eralco. The La.or Ar.iter dismissed the complaint +or lac) o+ merit. She held that Gala*s participation in the pil+erage o+ !eralco*s property rendered him un uali+ied to .ecome a regular employee. 2n appeal& the 6L"C re#ersed the la.or ar.iter*s ruling. 't +ound that Gala had .een illegally dismissed& since there $as Nno concrete sho$ing o+ complicity $ith the alleged misconduct,dishonesty. The CA denied !eralco*s petition +or lac) o+ merit and partially granted Gala*s petition. 't concurred $ith the 6L"C that Gala had .een illegally dismissed. 't opined that nothing in the records sho$ Gala*s )no$ledge o+ or complicity in the pil+erage. 'ssue: 7hether or not Gala $as illegally dismissed. 9eld: 7e +ind merit in the petition. Contrary to the conclusions o+ the CA and the 6L"C& there is su.stantial e#idence supporting !eralco*s position that Gala had .ecome un+it to continue his employment $ith the company. Gala $as +ound& a+ter an administrati#e in#estigation& to ha#e +ailed to meet the standards e-pected o+ him to .ecome a regular employee and this +ailure $as mainly due to his Nundenia.le )no$ledge& i+ not participation& in the pil+erage acti#ities done .y their group& all to the pre5udice o+ the Company*s interests.O As pro.ationary employee& his o#erall 5o. per+ormance and his .eha#ior $ere .eing monitored and measured in accordance $ith the standards (i.e.& the terms and conditions) laid do$n in his pro.ationary employment agreement. (nder paragraph M o+ the agreement& he $as su.5ect to strict compliance $ith& and non8#iolation o+ the Company Code on Employee :iscipline& Sa+ety Code& rules and regulations and e-isting policies. >aragraph 30 re uired him to o.ser#e at all times the highest degree o+ transparency& sel+lessness and integrity in the per+ormance o+ his duties and responsi.ilities& +ree +rom any +orm o+ con+lict or contradicting $ith his o$n personal interest. 2n the $hole& the totality o+ the circumstances o.taining in the case con#inces us that Gala could not .ut ha#e )no$ledge o+ the pil+erage o+ company electrical supplies on !ay /C& /00H4 he $as complicit in its commission& i+ not .y direct participation& certainly& .y his inaction $hile it $as .eing perpetrated and .y not reporting the incident to company authorities. Thus& $e +ind su.stantial e#idence to support the conclusion that Gala does not deser#e to remain in !eralco*s employ as a regular employee. 9e #iolated his pro.ationary employment agreement& especially the re uirement +or him Nto o.ser#e at all times the highest degree o+ transparency& sel+lessness and integrity in the per+ormance o+ their duties and responsi.ilities.O 9e +ailed to uali+y as a regular employee. PRE,ENTI,E S-SPENSION Blue SD4 Tra: n" Co. vs. Blas, $.R. No. %)(22), +ar;h 1, 5(%5 Facts: >etitioner %lue S)y Trading Company& 'nc. (%lue S)y) is a duly registered domestic corporation engaged in the importation and sale o+ medical supplies and e uipment. The respondents Arlene >. %las (Arlene) and <oseph :. Sil#ano (<oseph) $ere regular employees o+ %lue S)y and they respecti#ely held the positions o+ stoc) cler) and $arehouse helper .e+ore they $ere dismissed +rom ser#ice on Fe.ruary C& /00C.

An incident occurred $here si- pairs o+ intensi+ying screens $ere missing. 2n Fe.ruary 1& /00C& <ean %. :e La >az (<ean)& 9uman "esource :epartment 9ead issued notices to e-plain,pre#enti#e suspension to Arlene& <oseph& deli#ery personnel <ayde Tano8an (<ayde) and maintenance personnel,dri#er 7il+redo Fasonilao (7il+redo). The notices in+ormed them that they $ere .eing accused o+ gross dishonesty in connection $ith their alleged participation in and conspiracy $ith other employees in committing the+t against company property& speci+ically relati#e to the loss o+ the si- intensi+ying screens. 2n Fe.ruary C& /00C& <ean issued to Arlene& <oseph& <ayde and 7il+redo notices o+ dismissal +or cause stating therein that e#idence that they had conspired $ith each other to commit the+t against company property $as too glaring to ignore. %lue S)y had lost its trust and con+idence on them and as an act o+ sel+8preser#ation& their termination +rom ser#ice $as in order. 2n Fe.ruary M& /00C& Arlene& <oseph& 9elario& <ayde and 7il+redo +iled $ith the 6ational La.or "elations Commission (6L"C) a complaint +or illegal dismissal and suspension& underpayment o+ o#ertime pay& and non8payment o+ emergency cost o+ li#ing allo$ance (EC2LA)& $ith prayers +or reinstatement and payment o+ +ull .ac)$ages. !ean$hile& an entrapment operation $as conducted .y the police during $hich <ayde and 9elario $ere caught allegedly attempting to sell to an operati#e an ultrasound pro.e $orth around >E00&000.00 .elonging to %lue S)y. Though e#entually& <ayde and 9elario e-ecuted a++ida#its o+ desistance stating that their dismissal $as +or cause. The La.or Ar.iter denied the claims o+ the respondents o+ illegal suspension and dismissal since they +ailed in their duties to e-ercise utmost protection& care& or custody o+ respondent@s property. 9ence& their dismissal +rom the ser#ice is $arranted. The +irst decision o+ the 6L"C ruled that respondents $ere not holding positions o+ trust and must there+ore .e reinstated and .e paid their .ac)$ages. Their second decision on the other hand re#ersed the pre#ious one $hich in turn reinstated the La.or Ar.iter*s dismissal o+ the complaint saying that respondents $ere holding positions o+ trust and that the loss o+ the company*s property are su.stantially pro#en. The CA on the other hand +ound merit on their claims& though +ound respondents to ha#e positions o+ trust and con+idence& petitioner in this case +ailed to su++iciently esta.lish the charge against respondents $hich $as the .asis +or its loss o+ trust and con+idence that $arranted their dismissal.

'SS(E: 7hether or not respondents %las and Sil#ano@s pre#enti#e suspension is proper. 9EL:: 'mpropriety o+ the >re#enti#e Suspension The purpose o+ the suspension is to pre#ent an employee +rom causing harm or in5ury to his colleagues and to the employer. The ma-imum period o+ suspension is 10 days& .eyond $hich the employee should either .e reinstated or .e paid $ages and .ene+its due to him. 7hile $e do not agree $ith %lue S)y@s su.se uent decision to terminate them +rom ser#ice& $e +ind no impropriety in its act o+ imposing pre#enti#e suspension upon

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the respondents since the period did not e-ceed the ma-imum imposed .y la$ and there $as a #alid purpose +or the same. TER+INATION O? PROBATIONARY E+PLOYEE Cana: an O!!ortun t es -nl m te: vs. Dalan" n, $.R. No. %15559, ?ebruar4 ', 5(%5 FACTS: :alangin $as hired .y Canadian 2pportunities (nlimited 'nc. on 2cto.er /003 as 'mmigration and Legal !anager. 9e $as placed on pro.ation +or si- months. 9is tas)s in#ol#ed principally the re#ie$ o+ the clients@ applications +or immigration to Canada to ensure that they are in accordance $ith Canadian and >hilippine la$s. %arely a month later& on 2cto.er /G& /003& the company terminated :alangin@s employment& declaring him Iun+itI and Iun uali+iedI to continue his $or). They alleged that during his .rie+ employment in the company& :alangin sho$ed lac) o+ enthusiasm to$ards his $or) and $as indi++erent to$ards his co8employees and the company clients. :alangin re+used to comply $ith the company@s policies and procedures& routinely ta)ing long lunch .rea)s& e-ceeding the one hour allotted to employees& and lea#ing the company premises $ithout in+orming his immediate superior& only to call the o++ice later and say that he $ould .e una.le to return .ecause he had some personal matters to attend to. 9e also sho$ed lac) o+ interpersonal s)ills and initiati#e. :alangin@s lac) o+ interest in the company $as +urther mani+ested $hen he re+used to attend company8sponsored seminars designed to ac uaint or update the employees $ith the company@s policies and o.5ecti#es. :alangin alleged that the company re uired its employees to attend a IAalues Formation SeminarI scheduled +or 2cto.er /G& /003 (a Saturday) at /:00 p.m. on$ards. 9e in uired +rom A.ad& the Chie+ 2perating 2++icer& a.out the su.5ect and purpose o+ the seminar and $hen he learned that it .ore no relation to his duties& he told A.ad that he $ould not attend the seminar as he $ould ha#e to lea#e at /:00 p.m. in order to .e $ith his +amily in the pro#ince. :alangin claimed that A.ad insisted that he attend the seminar. 2n 2cto.er /H& /003& A.ad re uired him to e-plain $hy he could not attend the seminar scheduled +or 2cto.er /G& /003 and the other +orthcoming seminars. The +ollo$ing day& 2cto.er /G& /003& A.ad in+ormed him that !r. ;adi 6. Sichani& the company@s !anaging :irector& $anted to meet $ith him regarding the matter. At that meeting& Sichani told him that his ser#ices $ere .eing terminated .ecause Sichani could not )eep in his company Ipeople $ho are hard8headed and $ho re+use to +ollo$ orders +rom management.I The La.or Ar.iter declared :alangin@s dismissal illegal. 9e +ound that the charges against :alangin $ere not esta.lished .y clear and su.stantial proo+. The 6L"C re#ersed the la.or ar.iter@s ruling. 't +ound :alangin@s dismissal to .e a #alid e-ercise o+ the company@s management prerogati#e .ecause :alangin +ailed to meet the standards +or regular employment. The CA held that the 6L"C erred $hen it ruled that :alangin $as not illegally dismissed. As the la.or ar.iter did& the CA +ound that the company +ailed to support& $ith su.stantial e#idence& its claim that :alangin +ailed to meet the standards to uali+y as a regular employee. 'SS(ES: 7hether :alangin $as illegally dismissed. 7hether the re uirements o+ notice and hearing in employee dismissals are applica.le to :alangin@s case& .eing a pro.ationary employee. 9EL:: The SC disagreed $ith the CA. The company is not lia.le +or illegal dismissal. A pro.ationary employee& as understood under Article /M3 o+ the La.or Code& is one $ho is on trial .y an employer& during $hich& the latter determines $hether or not he is uali+ied +or permanent employment. A pro.ationary appointment gi#es the employer an opportunity to o.ser#e the +itness o+ a pro.ationer $hile at $or)& and to ascertain $hether he $ould .e a proper and e++icient employee. The essence o+ a pro.ationary period o+ employment +undamentally lies in the purpose or o.5ecti#e o+ .oth the employer and the employee during the period. 7hile the employer o.ser#es the +itness& propriety and e++iciency o+ a pro.ationer to ascertain $hether he is uali+ied +or permanent employment& the latter see)s to pro#e to the +ormer that he has the uali+ications to meet the reasona.le standards +or permanent employment. The $ord @pro.ationary&@ as used to descri.e the period o+ employment& implies the purpose o+ the term or period& .ut not its length.I Thus& the +act that :alangin $as separated +rom the ser#ice a+ter only a.out +our $ee)s does not necessarily mean that his separation +rom the ser#ice is $ithout .asis. :alangin*s re+usal to attend the seminar .rings into +ocus and #alidates $hat $as $rong $ith him& as A.ad narrated in her a++ida#it and as re+lected in the termination o+ employment memorandum. 't highlights his lac) o+ interest in +amiliarizing himsel+ $ith the company@s o.5ecti#es and policies. 'n the +ace o+ A.ad@s direct statements& as $ell as those o+ his co8employees& it is puzzling that :alangin chose to .e silent a.out the charges& other than saying that the company could not cite any policy he #iolated. All along& he had .een complaining that he $as not a.le to e-plain his side& yet +rom the la.or ar.iter@s le#el& all the $ay to this Court& he o++ered no satis+actory e-planation o+ the charges. 'n this light& coupled $ith :alangin@s adamant re+usal to attend the company@s IAalues Formation SeminarI and a similar program scheduled earlier& $e +ind credence in the company@s su.mission that :alangin $as un+it to continue as its 'mmigration and Legal !anager. As $e stressed earlier& $e are con#inced that the company had seen enough +rom :alangin@s actuations& .eha#ior and deportment during a +our8 $ee) period to realize that :alangin $ould .e a lia.ility rather than an asset to its operations. To our mind& +our $ee)s $as enough +or the company to assess :alangin@s +itness +or the 5o. and he $as +ound $anting. 'n separating :alangin +rom the ser#ice .e+ore the situation got $orse& $e +ind the company not lia.le +or illegal dismissal. As +or the second issue& there is no need +or a hearing. Section /& "ule '& %oo) A' o+ the La.or Code@s 'mplementing "ules and "egulations pro#ides: '+ the termination is .rought a.out .y the completion o+ a contract or phase thereo+& or .y +ailure o+ an employee to meet the standards o+ the employer in the case o+ pro.ationary employment& it shall .e su++icient that a $ritten notice is ser#ed the employee $ithin a reasona.le time +rom the e++ecti#e date o+ termination. 9o$e#er& the notice ser#ed on :alangin did not gi#e him a reasona.le time& +rom the e++ecti#e date o+ his separation& as re uired .y the rules. 9e $as dismissed on the #ery day the notice $as gi#en to him& or on 2cto.er /G& /003. Although $e cannot in#alidate his dismissal in light o+ the #alid cause +or his separation& the company@s non8compliance $ith the notice re uirement entitles :alangin to indemnity& in the +orm o+ nominal damages o+ >30&000.00.

A-T.ORI7ED CA-SES RETRENC.+ENT TO PRE,ENT LOSSES

C.ENI,ER DECO PRINT TEC.NICS CORP v. NLRC F 952 SCRA 12& F ?ebruar4 %1, 5((( FACTS Cheni#er is a corporation operating its printing .usiness in !a)ati. The respondents are mem.ers o+ the la.or union and +ormer employees o+ Cheni#er. 2n <une C& 3FF/ Cheni#er in+ormed its employees that it $ill trans+er its operations to %atangas. "easons +or the trans+er are e-piration o+ lease contract on the premises o+ the !a)ati plant& and local authorities* action to +orce out Cheni#er*s operations +rom !a)ati .ecause o+ alleged hazards to residents near.y. Cheni#er ga#e its employees until the end o+ <une to in+orm management i+ they $anted $ith Cheni#er in its trans+er& other$ise it $ould hire replacements.Aug3 $as the scheduled start o+ operations in the ne$ plant in %atangas. 2n Aug E& 3FF/ Cheni#er $rote its employees to report to the ne$ location $ithin Gdays& other$ise they $ill .e deemed to ha#e lost interest in the 5o. and $ould .e replaced. 9o$e#er& no one reported +or $or) in .atangas& e#en a+ter e-tension o+ period o+ time to report to $or).8 "espondents +iled a complaint +or un+air la.or practice and illegal dismissal& and demanded separation pay (among others). LA ruled that the trans+er o+ operations $as #alid and a.sol#ed cheni#er o+ charges +or un+air la.or practice and illegal dismissal. 't ho$e#er ordered payment o+ separation pay. 6L"C a++irmed. Cheni#er contends that the trans+er o+ its .usiness is neither closure nor retrenchment& thus separation pay should not .e a$arded. Also& employees $ere not terminated .ut they resigned .ecause they +ind the ne$ site to +ar +rom their residences 'SS(E 7hether or not the employees are entitled to separation pay considering that the trans+er o+ the plant $as #alid 9EL: ;ES Art. /M1 o+ the La.or Code pro#ides (in part) A"T. /M1. Closure o+ esta.lishment and reduction o+ personnel. The employer may terminate the employment o+ any employee due to the installation o+ la.or sa#ing de#ices& redundancy& retrenchment to pre#ent losses or the closing or cessation o+ operation o+ the esta.lishment or

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underta)ing unless the closing is +or the purpose o+ circum#enting the pro#isions o+ this Title --- 'n case o+ retrenchment to pre#ent losses and in cases o+ closures or cessation o+ operations o+ esta.lishment or underta)ing not due to serious .usiness losses or +inancial re#erses& the separation pay shall .e e ui#alent to one (3) month pay or at least one8hal+ (3,/) month pay +or e#ery year o+ ser#ice& $hiche#er is higher. -There appears no complete dissolution o+ Cheni#er*s .usiness underta)ing .ut the relocation o+ its plant to %atangas& in our #ie$& amounts to cessation o+ petitioner@s .usiness operations in !a)ati. 't must .e stressed that the phraseN closure or cessation o+ operation o+ an esta.lishment or underta)ing not due to serious .usiness losses or re#ersesO under Art. /M1 includes .oth complete cessation o+ all .usiness operations and the cessation o+ only part o+ a company@s .usiness. There is no dou.t that petitioner has legitimate reason to relocate its plant .ecause o+ the e-piration o+ the lease contract on the premises it occupied. That is its prerogati#e. %ut e#en though the trans+er $as due to a reason .eyond its control& Cheni#er has to accord its employees some relie+ in the +orm o+ se#erance pay.8 Since the closure o+ the plant is not on account o+ serious .usiness losses& Cheni#er shall gi#e respondents separation pay e ui#alent to at least 3 month or ] month pay +or e#ery year o+ ser#ice8 that the employees resigned is not con#incing. The trans+er o+ Cheni#er to another place hardly accessi.le to its $or)ers resulted in the latter@s untimely separation +rom the ser#ice not to their o$n li)ing& hence& not construa.le as resignation. PROO? REG-IRED PT<T v. NLRC =2' SCRA 5'=, $.R. No. %=1((5. A!r l %2, 5((2 FACTS4 Agnes %ayao and !ildred Castillo $ere hired .y the >hilippine Telegraph K Telephone Corporation (>TKT) in 6o#em.er 3FF3 and August 3FFC&respecti#ely& .oth as account e-ecuti#es stationed in %aguio City. %oth %ayao and Castillo recei#ed a !emorandum dated !ay /3& 3FFM coming +rom !a. Elenita A. :el "osario& Aice8>resident o+ the Commercial 2perations Group (C2G) o+ >TKT& in#iting them to consider a t$o to three8month assignment to the pro#inces o+ "izal and Laguna in #ie$ o+ >TKT*s e-pansion in the a+oresaid area. %ayao and Castillo re+used the o++er& on the ground that the trans+er $ould entail additional e-pense on their part and there $ere no clear guidelines and procedures +or its implementation. !ean$hile& the e-pansion pro5ect o+ >TKT +ailed to materialize due to lac) o+ capital. >TKT realized that it needed to underta)e measures against losses to pre#ent the company +rom going .an)rupt& particularly .y reducing its $or)+orce +rom /&C00 to F00 employees. >ursuant thereto& it implemented a Aoluntary Sta++ "eduction >rogram (AS">) $hich $as a#ailed o+ .y EGMemployees. Failing to attain its target& >TKT implemented an e-tended AS">& .ut still not enough employees a#ailed o+ the program. >TKT decided to implement a temporary retrenchment o+ some employees du..ed as Temporary Sta++ "eduction >rogram (TS">) lasting +or not more than +i#e and a hal+ (C]) months& to commence +rom Septem.er 3& 3FFM to Fe.ruary3C& 3FFF. >ursuant to the program& a++ected employees $ould recei#e +inancial assistance e ui#alent to 3C days salary and a loan e ui#alent to t$o months salary chargea.le to the account o+ the employee concerned. %ayao and Castillo recei#ed a Letter +rom :el "osario& dated August /3& 3FFM&in+orming them that the cumulati#e net losses o+ >TKT +or the last +our years had reached >/F1.E million and that they $ere among the employees a++ected .y the TS">. 7hen %ayao and Castillo reported +or $or) on Septem.er /& 3FFM& they $ere in+ormed that the position o+ account e-ecuti#e no longer e-isted4 in its stead& the positions o+ Ser#ice Account "epresentati#es (SA") and Ser#ice Account Specialists (SAS) $ere created per C2G %ulletin 2rder 6o. FM803E e++ecti#e August /3& 3FFM& and had already .een +illed up. That same day& %ayao and Castillo promptly +iled a complaint +or illegal dismissal $ith the 6L"C& "egional Ar.itration %ranch& Cordillera Administrati#e "egion& against >TKT and :elia 2+icial in her capacity as manager +or %aguio City. La.or Ar.iter !onroe C. Ta.ingan rendered a :ecision in +a#or o+ %ayao and Castillo. >TKT and 2+icial interposed their appeal to the 6L"C. 2n 2cto.er 3/&3FFF& the 6L"C issued its "esolution dismissing the appeal and a++irmed the decision o+ the La.or Ar.iter& deleting& ho$e#er& the a$ard o+ legal interest& e-emplary damages& indemnity and attorney*s +ees +or lac) o+ merit. 2n <uly 13& /000& the CA issued its :ecision dismissing the petition and a++irmed the +indings o+ the 6L"C. The CA declared that there $as no #alid ground +or retrenchment& considering that $hen %ayao and Castillo returned& their positions $ere already +illed up4 at the same time& >TKT did not in+orm its employees and the :epartment o+ La.or and Employment (:2LE) o+ the scheduled retrenchment at least one month .e+ore its implementation. A motion +or reconsideration $as +iled& .ut the same $as denied .y the CA. 9ence this petition. 'SS(E: 7ether or not the retrenchment program implemented .y petitioner >TKT is #alid. 9EL:: "etrenchment has .een de+ined as the termination o+ employment initiated .y the employer through no +ault o+ the employees and $ithout pre5udice to the latter& resorted .y management during periods o+ .usiness recession& industrial depression& or seasonal +luctuations& or during lulls occasioned .y lac) o+ orders& shortage o+ materials& con#ersion o+ the plant +or a ne$ production program or the introduction o+ ne$ methods or more e++icient machinery& or o+ automation.B3/D't is a management prerogati#e resorted to .y an employer to a#oid or minimize .usiness losses $hich is consistently recognized .y the Court. The Court has pre#iously ruled that +inancial statements audited .y independent e-ternal auditors constitute the normal method o+ proo+ o+ the pro+it and loss per+ormance o+ a company. 'n this case& to pro#e that the company incurred losses& the petitioners presented its audited +inancial statements +or the corporate +iscal years 3FFH to 3FFM and emphasized that& in the 2cto.er /0&3FFM Audit "eport prepared .y SGA K Co.& the auditing +irm declared that petitioner >TKT incurred a su.stantial loss o+ a.out >CCM million +or the +iscal year ending <une 10& 3FFM& resulting to a total de+icit o+ a.out >CGE million as o+ the same date4 and that petitioner >TKT e#en negotiated $ith its creditors +or the suspension o+ payments o+ its outstanding .alances until the completion o+ an accepta.le restructuring plan. The +oregoing clearly indicates that the petitioner >TKT su++iciently complied $ith its .urden to pro#e that it incurred su.stantial losses as to $arrant the e-ercise o+ the e-treme measure o+ retrenchment to pre#ent the company +rom totally going under. 7hile an employer may ha#e a #alid ground +or implementing a retrenchment program& it is not e-cused +rom complying $ith the re uired $ritten notice ser#ed .oth to the employee concerned and the :2LE at least one month prior to the intended date o+ retrenchment. The purpose o+ this re uirement is not only to gi#e employees some time to prepare +or the e#entual loss o+ their 5o.s and their corresponding income& loo) +or other employment and ease the impact o+ the loss o+ their 5o.s .ut also to gi#e the :2LE the opportunity to ascertain the #erity o+ the alleged cause o+ termination. 'n the case at .ar& the memorandum o+ :el "osario& the #ice8president o+ the C2G& to respondents %ayao and Castillo in+orming the latter that they $ere included in the TS"> to .e implemented e++ecti#e Septem.er 3& 3FFM $as dated August /3& 3FFM. The said memorandum $as recei#ed .y Castillo on August /E&3FFM and %ayao on August /H& 3FFM. The respondents had .arely t$o $ee)s* notice o+ the intended retrenchment program. Clearly then& the one8month notice rule $as not complied $ith. At the same time& the petitioners ne#er sho$ed that any notice o+ the retrenchment $as sent to the :2LE. The petitioners* adherence to the a.o#e pronouncement o+ the Court is misplaced. The particular issue in#ol#ed in the said decision $as the duration o+ the period o+ temporary lay8o++& and not the compliance $ith the one month notice re uirement. The re uirement o+ notice to .oth the employees concerned and the :epartment o+ La.or and Employment (:2LE) is mandatory and must .e $ritten and gi#en at least one month .e+ore the intended date o+ retrenchment. 'n this case& it is undisputed that the petitioners $ere gi#en notice o+ the temporary lay8o++. There is& ho$e#er& no e#idence that any $ritten notice to permanently retrench them $as gi#en at least one month prior to the date o+ the intended retrenchment. The 6L"C +ound that GT' con#eyed to the petitioners the impossi.ility o+ recalling them due to the continued una#aila.ility o+ $or). %ut $hat the la$ re uires is a $ritten notice to the employees concerned and that re uirement is mandatory. The notice must also .e gi#en at least one month in ad#ance o+ the intended date o+ retrenchment to ena.le the employees to loo) +or other means o+ employment and there+ore to ease the impact o+ the loss o+ their 5o.s and the corresponding income. That they $ere already on temporary lay8o++ at the time notice should ha#e .een gi#en to them is not an e-cuse to +orego the one8month $ritten notice .ecause .y this time& their lay8o++ is to .ecome permanent and they $ere de+initely losing their employment. There is also nothing in the records to pro#e that a $ritten notice $as e#er gi#en to the :2LE as re uired .y la$. 'nterestingly enough& the e#idence on record indicates that respondents %ayao and Castillo $ere not merely temporarily laid8o++. The 2cto.er /H& 3FFM Letter o+ :el "osario addressed to the respondents clearly stated that the latter $ere to .e considered separated +rom the company e++ecti#e August 13& 3FFM and that they $ere each .eing e-tended a separation pac)age. 't must .e stressed& ho$e#er& that compliance $ith the one8month notice rule is mandatory regardless o+ $hether the retrenchment is temporary or permanent. This is so .ecause Article /M1 itsel+ does not spea) o+ temporary or permanent retrenchment4 hence& there is no need to uali+y the term. (.i le- non distinguit nec nos distinguere de.emus ($hen the la$ does not distinguish& $e must not distinguish). 9o$e#er& the employer*s +ailure to comply $ith the one month notice re uirement prior to retrenchment does not render the termination illegal4 it merely renders the same de+ecti#e& entitling the dismissed employee to payment o+ indemnity in the +orm o+ nominal damages. %ased on pre#ailing 5urisprudence& the amount o+ indemnity is pegged at>10&000.00.Finally& since petitioner >TKT $as a.le to esta.lish that it incurred serious .usiness losses& 5usti+ying the retrenchment& the +inal re uisite is the payment o+ separation pay. >ursuant to Section /M1 o+ the La.or Code& as amended& the retrenchment ha#ing .een e++ected due to serious .usiness losses& respondents %ayao and Castillo are each entitled to one month pay or to at least one8hal+ month pay +or e#ery year o+ ser#ice& $hiche#er is higher. A

22
+raction o+ at least si- months shall .e considered one $hole year. >etition partially granted. STANDARDS TO BE OBSER,ED +a4a ?arms Em!lo4ees Or"an zat on v. NLRC, 59) SCRA 2(& FACTS: >ri#ate respondents !aya Farms& 'nc. and !aya "ealty and Li#estoc)Corporation .elong to the Li.erty !ills group o+ companies $hose underta)ings include the operation o+ a meat processing plant $hich produces ham& .acon& cold cuts& sausages and other meat and poultry products. >etitioners& on the other hand& are the e-clusi#e .argaining agents o+ the employees o+ !aya Farms& 'nc. and the !aya "ealty and Li#estoc) Corporation. 2n April 3/& 3FF3& pri#ate respondents announced the adoption o+ an early retirement program as a cost8cutting measure considering that their .usiness operations su++ered ma5or set.ac)s o#er the years. The program $as #oluntary and could .e a#ailed o+ only .y employees $ith at least eight (M) years o+ ser#ice. :ialogues $ere therea+ter conducted to gi#e the parties an opportunity to discuss the details o+ the program. Accordingly& the program $as amended to reduce the minimum re uirement o+ eight (M) years o+ ser#ice to only +i#e (C) years. 9o$e#er& the response to the program $as nil. There $ere only a +e$ ta)ers. To a#ert +urther losses& pri#ate respondents $ere constrained to loo) into the companies@ organizational set8up in order to streamline operations. Conse uently& the early retirement program $as con#erted into a special redundancy program intended to reduce the $or) +orce to an optimum num.er so as to ma)e operations more #ia.le. 'n :ecem.er 3FF3& a total o+ si-ty8nine (HF) employees +rom the t$o companies a#ailed o+ the special redundancy program. 2n <anuary 3G& 3FF/& the t$o companies sent letters to si-ty8si- (HH) employees in+orming them that their respecti#e positions had .een declared redundant. The notices li)e$ise stated that their ser#ices $ould .e terminated e++ecti#e thirty (10) days +rom receipt thereo+. Separation .ene+its& including the con#ersion o+ all earned lea#e credits and other .ene+its due under e-isting C%As $ere therea+ter paid to those a++ected. 2n <anuary /E& 3FF/& a notice o+ stri)e $as +iled .y the petitioners $hich accused pri#ate respondents& among others& o+ un+air la.or practice& #iolation o+ C%A and discrimination. Conciliation proceedings $ere held .y the 6ational Conciliation and !ediation %oard (6C!%) .ut the parties +ailed to arri#e at a settlement. 2n Fe.ruary H& 3FF/& the t$o companies +iled a petition $ith the Secretary o+ La.or and Employment as)ing the latter to assume 5urisdiction o#er the case and,or certi+y the same +or compulsory ar.itration. Thus& on Fe.ruary 3/& 3FF/& then Acting La.or Secretary (no$ Secretary) 6ie#es Con+esor certi+ied the case to herein pu.lic respondent +or compulsory ar.itration. 2n !arch E& 3FF/& the parties $ere called to a hearing to identi+y the issues in#ol#ed in the case. Therea+ter& they $ere ordered to su.mit their respecti#e position papers. 'n their position paper& petitioners a#erred that in the dismissal o+ si-ty8si- (HH) union o++icers and mem.ers on the ground o+ redundancy& pri#ate respondents circum#ented the pro#isions in their C%A. >etitioners also alleged that the companies@ claim that they $ere in economic crisis $as +a.ricated .ecause in 3FF0& a net income o+ o#er M1 million pesos $as realized .y Li.erty Flour !ills Group o+ Companies. 'n#o)ing the $or)ers@ constitutional right to security o+ tenure& petitioners prayed +or the reinstatement o+ the si-ty8si- (HH) employees and the payment o+ attorney@s +ees as they $ere constrained to hire the ser#ices o+ counsel in order to protect the $or)ers@ rights. 2n their part& pri#ate respondents contend that their decision to implement a special redundancy program $as an e-ercise o+ management prerogati#e $hich could not .e inter+ered $ith unless it is sho$n to .e tainted $ith .ad +aith and ill moti#e. >ri#ate respondents e-plained that they had no choice .ut to reduce their $or) +orce& other$ise& they $ould su++er more losses. Furthermore& they denied that the program #iolated C%A pro#isions. 6L"C +a#ored the company. 'SS(E: 7hether or not there $as gra#e a.use o+ discretion amounting to lac) or in e-cess o+ 5urisdiction $ith the +actual +indings o+ pu.lic respondent 9EL:: The termination o+ the si-ty8si- employees $as done in accordance $ith Article /M1 o+ the La.or Code. The .asis +or this $as the companies@ study to streamline operations so as to ma)e them more #ia.le. >ositions $hich o#erlapped each other& or $hich are in e-cess o+ the re uirements o+ the ser#ice& $ere declared redundant. 7e +ully agree $ith the +indings and conclusions o+ the pu.lic respondent on the issue o+ termination. A close e-amination o+ the positions retained .y management sho$ that said positions such as egg sorter& de.onner $ere .ut the minimal positions re uired to sustain the limited +unctions,operations o+ the meat processing department. 'n the a.sence o+ any e#idence to pro#e .ad +aith on the part o+ management in arri#ing at such decision& $hich records on hand +ailed to sho$ in instant case& the rationality o+ the act o+ management in this regard must .e sustained. The rule is $ell8settled that la.or la$s discourage inter+erence $ith an employer@s 5udgment in the conduct o+ his .usiness. E#en as the la$ is solicitous o+ the $el+are o+ employees& it must also protect the right o+ an employer to e-ercise $hat are clearly management prerogati#es. As long as the company@s o+ the same is in good +aith to ad#ance its interest and not +or the purpose o+ de+eating or circum#enting the rights o+ employees under the la$s or #alid agreements& such e-ercise $ill .e upheld. Finally& contrary to petitioners@ contention& there is nothing on record to sho$ that the 108day notice o+ termination to the $or)ers $as disregarded and that same su.stituted $ith separation pay .y pri#ate respondents. As +ound .y pu.lic respondent& $ritten notices o+ separation $ere sent to the employees on <anuary 3G& 3FF/. The notices e-pressly stated that the termination o+ employment $as to ta)e e++ect one month +rom receipt thereo+. There+ore& the allegation that separation pay $as gi#en in lieu o+ the 108day notice re uired .y la$ is .aseless. >etition dismissed. $OLDEN T.READ /NITTIN$ IND-STIRES v. NLRC 9(= SCRA 15( +ar;h %%, %))) FACTS: Se#eral employees o+ Golden Thread Znitting 'ndustries (GTZ) $ere dismissed +or di++erent reasons. / employees $ere allegedly +or slashing the company*s products (to$els)& / +or redundancy& 3 +or threatening the personnel manager and #iolating the company rules& and 3 +or a.andonment o+ $or). The la.orers +iled complaints +or illegal dismissal. They allege that the company dismissed them in retaliation +or esta.lishing and .eing mem.ers o+ the La.or (nion. GTZ& on the other hand& contend that there $ere #alid causes +or the terminations. The dismissals $ere allegedly a result o+ the slashing o+ their products& rotation o+ $or)& $hich in turn $as caused .y the lo$ demand +or their products& and a.andonment o+ $or). 'n the cases in#ol#ing the slashing o+ their products and threats to the personnel manager& the dismissals $ere in e++ect a +orm o+ punishment. The la.or ar.iter ruled partially in +a#or o+ GTZ. 9e said that there $as no sho$ing that the dismissals $ere in retaliation +or esta.lishing a union. 9e& ho$e#er& a$arded separation pay to some employees. 6L"C& ho$e#er& appreciated the e#idence di++erently. 't held that there $as illegal dismissal and ordered reinstatement. 'SS(E: 7hether or not there $as illegal dismissal 9EL:: ;ES "atio :ismissal is the ultimate penalty that can .e meted to an employee. 't must there+ore .e .ased on a clear and not on an am.iguous or am.i#alent ground. 'n the case in#ol#ing the slashing o+ the to$els& the employees $ere not gi#en procedural due process. There $as no notice and hearing& only outright denial o+ their entry to the $or) premises .y the security guards. The charges o+ serious misconduct $ere not su++iciently pro#ed. 2n the employees dismissed +or redundancy& there $as also denial o+ procedural due process. 9earing and notice $ere not o.ser#ed. Thus& although the characterization o+ an employee*s ser#ices is a management +unction& it must +irst .e pro#ed $ith e#idence& $hich $as not done in this case. the company cannot merely declare that it $as o#ermanned. 2n the employee dismissed +or disrespect& the SC .elie#ed the story #ersion o+ the company ($hich essentially said that the personnel manager $as threatened upon mere ser#ice o+ a suspension order to the employee)& .ut ruled that the dismissal could not .e upheld.

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Nthe dismissal $ill not .e upheld $here it appears that the employee*s act o+ disrespect $as pro#o)ed .y the employer. --- the employee hurled incenti#es at the personnel manager .ecause she $as pro#o)ed .y the .aseless suspension imposed on her. The penalty o+ dismissal must .e commensurate $ith the act& conduct& or omission to the employee.O The dismissal $as too harsh a penalty4 a suspension o+ 3 $ee) $ould ha#e su++iced. NGTZ e-ercised their authority to dismiss $ithout due regard to the pro#isions o+ the La.or Code. The right to terminate should .e utilized $ith e-treme caution .ecause its immediate e++ect is to put an end to an employee@s present means o+ li#elihood $hile its distant e++ect& upon a su.se uent +inding o+ illegal dismissal& is 5ust as pernicious to the employer $ho $ill most li)ely .e re uired to reinstate the su.5ect employee and grant him +ull .ac) $ages and other .ene+its. :isposition :ecision AFF'"!E:. S-BSTANTIAL LOSS LOPE7 S-$AR CORP v. ?ED O? ?REE @OR/ERS P.ILIPPINE LABOR -NION ASSOCIATION #PL-A NAC-SIP* %&) SCRA %1),Au"ust 9(, %))( FACTS Lopez Sugar Corporation (L>C)& allegedly& to pre#ent losses due to ma5or economic pro.lems& and e-ercising its pri#ilege under the 3FGC83FGG C%A entered into $ith >L(A86AC(S'>& caused the retrenchment and retirement o+ a num.er o+ its employees. L>C +iled $ith the !2LE a com.ined report on retirement and application +or clearance to retrench a++ecting eighty si- (MH) o+ its employees. 2+ these MH employees& CF $ere retired and /G $ere to .e retrenched in order to pre#ent losses. Federation o+ Free 7or)ers (FF7)& as the certi+ied .argaining agent o+ the ran)8 and8+ile employees o+ L>C& also +iled $ith the !2LE a complaint +or un+air la.or practices and reco#ery o+ union dues. 'n said complainant& FF7 claimed that the terminations underta)en .y L>C $ere #iolati#e o+ the security o+ tenure o+ its mem.ers and $ere intended to I.ustI the union and hence constituted an un+air la.or practice. FF7 claimed that a+ter the termination o+ the ser#ices o+ its mem.ers& L>C ad#ised 330 casuals to report to its personnel o++ice. FF7 +urther argued that to 5usti+y retrenchment& serious .usiness re#erses must .e Iactual& real and amply supported .y su++icient and con#incing e#idence.I FF7 prayed +or reinstatement o+ its mem.ers $ho had .een retired or retrenched. L>C denied ha#ing hired casuals to replace those it had retired or retrenched. 't e-plained that the announcement calling +or 330 $or)ers to report to its personnel o++ice $as only +or the purpose o+ organizing a pool o+ e-tra $or)ers $hich could .e tapped $hene#er there $ere temporary #acancies .y reason o+ lea#es o+ a.sence o+ regular $or)ers. LA: denied L>C* s application +or clearance to retrench its employees on the ground that +or retrenchment to .e #alid& the employer@s losses must .e serious& actual and real and must .e amply supported .y su++icient and con#incing e#idence. The application to retire $as also denied on the ground that L>C@s prerogati#e to so retire its employees $as granted .y the 3FGC8GG C%A had long ago e-pired. L>C $as& there+ore& ordered to reinstate /G retired or retrenched employees represented .y >L(A and FF7 and to pay them +ull .ac)$ages +rom the time o+ termination until actual reinstatement. 2n appeal& the 6L"C& +inding no 5usti+ia.le reason +or distur.ing the decision o+ the La.or Ar.iter& a++irmed that decision 'SS(E: 7hether or not the 6L"C acted $ith GA: in denying L>C*s com.ined report on retirement and application +or clearance to retrench 9EL:: 62 8 Article /M1 o+ the La.or Code pro#ides: Article /M1. Closure o+ esta.lishment and reduction o+ personnel. U The employer may also terminate the employment o+ any employee due to the installation o+ la.or sa#ing de#ices& redundancy& retrenchment to pre#ent losses or the closing or cessation o+ operation o+ the esta.lishment or underta)ing unless the closing is +or the purpose o+ circum#enting the pro#isions o+ this Title& .y ser#ing a $ritten notice on the $or)ers and the !inistry o+ La.or and Employer at least one (3) 7hen& or under $hat circumstances does the employer .ecomes legally pri#ileged to retrench and reduce the num.er o+ his employeesP The general standards in terms o+ $hich the acts o+ petitioner employer must .e appraised: 3) the losses e-pected should .e su.stantial and not merely de minimis in e-tent. '+ the loss purportedly sought to .e +orestalled .y retrenchment is clearly sho$n to .e insu.stantial and inconse uential in character& the .ona +ide nature o+ the retrenchment $ould appear to .e seriously in uestion. /) The su.stantial loss apprehended must .e reasona.ly imminent& as such imminence can .e percei#ed o.5ecti#ely and in good +aith .y the employer. There should& in other $ords& .e a certain degree o+ urgency +or the retrenchment& $hich is a+ter all a drastic recourse $ith serious conse uences +or the li#elihood o+ the employees retired or other$ise laid8o++. 1) %ecause o+ the conse uential nature o+ retrenchment& it must .e reasona.ly necessary and li)ely to e++ecti#ely pre#ent the e-pected losses. The employer should ha#e ta)en other measures prior or parallel to retrenchment to +orestall losses& i.e.& cut other costs than la.or costs. To impart operational meaning to the constitutional policy o+ pro#iding I+ull protectionI to la.or& the employer@s prerogati#e to .ring do$n la.or costs .y retrenching must .e e-ercised essentially as a measure o+ last resort& a+ter less drastic means U e.g.& reduction o+ .oth management and ran)8and8+ile .onuses and salaries& going on reduced time& impro#ing manu+acturing e++iciencies& trimming o+ mar)eting and ad#ertising costs& etc. U ha#e .een tried and +ound $anting. E) '+ already realized& and the e-pected imminent losses sought to .e +orestalled& must .e pro#ed .y su++icient and con#incing e#idence. The reason +or re uiring this uantum o+ proo+ is readily apparent: any less e-acting standard o+ proo+ $ould render too easy the a.use o+ this ground +or termination o+ ser#ices o+ employees. Garcia #. 6ational La.or "elations Commissions: . . . %ut it is essentially re uired that the alleged losses in .usiness operations must .e pro#eBnD (6AFL( #s. 2ple& B3FMHD). 2ther$ise& said ground +or termination $ould .e suscepti.le to a.use .y scheming employers $ho might .e merely +eigning .usiness losses or re#erses in their .usiness #entures in order to ease out employees . 7hether or not an employer $ould imminently su++er serious or su.stantial losses +or economic reasons is essentially a uestion o+ +act +or the La.or Ar.iter and the 6L"C to determine. 'n the instant case& the LA +ound no su++icient and con#incing e#idence to sustain petitioner@s essential contention that it $as acting in order to pre#ent su.stantial and serious losses. The principal di++iculty $ith L>C@ s case as a.o#e presented $as that no proo+ o+ actual declining gross and net re#enues $as su.mitted. 6o audited +inancial statements sho$ing the +inancial condition o+ petitioner corporation during the a.o#e mentioned crop years $ere su.mitted. L>C conspicuous +ailed to speci+y the cost8reduction measures actually underta)en in good +aith .e+ore resorting to retrenchment. (pon the other hand& it appears +rom the record that petitioner& a+ter reducing its $or) +orce& ad#ised 330 casual $or)ers to register $ith the company personnel o++icer as e-tra $or)ers. month .e+ore the intended date thereo+. 'n case o+ termination due to the installation o+ la.or sa#ing de#ices or redundancy& the $or)er a++ected there.y shall .e entitled to a se pay e ui#alent to at least his one (3) month pay or to at least one (3) month pay +or e#ery year o+ ser#ice& $hiche#er is higher. 'n case o+ retrenchment to pre#ent losses and in cases& o+ closures or cessation o+ operations o+ esta.lishment or underta)ing not due to serious .usiness losses or +inancial re#erses& the separation pay shall .e e ui#alent to one (3) month pay or at least one hal+ (3,/) month pay +or e#ery year o+ ser#ice& $hiche#er is higher. A +raction o+ at least si- (H) months shall .e considered one (3) $hole year. 'n ordinary connotation& the phrase Ito pre#ent lossesI means that retrenchment or termination o+ the ser#ices o+ some employees is authorized to .e underta)en .y the employer sometime .e+ore the losses anticipated are actually sustained or realized. 't is not& in other $ords& the intention o+ the la$ma)er to compel the employer to stay his hand and )eep all his employees until sometime a+ter losses shall ha#e in +act materialized 4 i+ such an intent $ere e-pressly $ritten into the la$& that la$ may $ell .e #ulnera.le to constitutional attac) as ta)ing property +rom one man to gi#e to another.

24
L>C argued that it did not actually hire casual $or)ers .ut that it merely organized a pool o+ Ie-tra $or)ersI +rom $hich $or)ers could .e dra$n $hene#er #acancies occurred .y reason o+ regular $or)ers going on lea#e o+ a.sence .ut the LA and the 6L"C did not accord much credit to L>C@s e-planation. =AS "EGA":S the "ET'"E!E6TS e++ected .y L>C 2n this point& SC +inds +or L>C saying that Oalthough the C%A e-pired on 13 :ecem.er 3FGG& it continued to ha#e legal e++ects as .et$een the parties until a ne$ C%A had .een negotiated and entered into.O This proposition +inds legal support in Article /C1 o+ the La.or Code& $hich pro#ides: Article /C1 U :uty to .argain collecti#ely $hen there e-ists a collecti#e .argaining agreement. 7hen there is a collecti#e .argaining agreement& the duty to .argain collecti#ely shall also mean that neither party shall terminate nor modi+y such agreement during its li+etime. 9o$e#er& either party can ser#e a $ritten notice to terminate or modi+y the agreement at least si-ty (H0) days prior to its e-piration date. 't shall .e the duty o+ .oth parties to )eep the status uo and to continue in +ull +orce and e++ect the terms and conditions o+ the e-isting agreement during the H08day period and,or until a ne$ agreement is reached .y the parties. (Emphasis supplied) Accordingly& in the instant case& despite the lapse o+ the +ormal e++ecti#ity o+ the C%A .y #irtue o+ its o$n pro#isions& the la$ considered the same as continuing in +orce and e++ect until a ne$ C%A shall ha#e .een #alidly e-ecuted. 9ence& L>C acted $ithin legal .ounds $hen it decided to retire se#eral employees in accordance $ith the C%A. That the employees themsel#es similarly acted in accordance $ith the C%A is plain +rom the record. E#en a+ter the e-piration o+ the C%A& L>C@s employees continued to recei#e the .ene+its and en5oy the pri#ileges granted therein. '+ the $or)ers chose to a#ail o+ the C%A despite its e-piration& e uity U i+ not the la$Udictates that the employer should li)e$ise .e a.le to in#o)e the C%A. The +act that se#eral $or)ers signed uitclaims $ill not .y itsel+ .ar them +rom 5oining in the complaint. Tuitclaims e-ecuted .y la.orers are commonly +ro$ned upon as contrary to pu.lic policy and ine++ecti#e to .ar claims +or the +ull measure o+ the $or)er@s legal rights. AF> !utual %ene+it Association& 'nc. #. AF>8!%A'8E(: 'n la.or 5urisprudence& it is $ell esta.lish that uitclaims and,or complete releases e-ecuted .y the employees do not estop them +rom pursuing their claims arising +rom the un+air la.or practice o+ the employer. The .asic reason +or this is that such uitclaimants and,or complete releases are against pu.lic policy and& there+ore& null and #oid. The acceptance o+ termination pay does not di#est a la.orer o+ the right to prosecute his employer +or un+air la.or practice acts. CariQo #s. ACCFA& (3FHH) ^ <ustice Sanchez& said: Acceptance o+ those .ene+its $ould not amount to estoppel. The reason is plain. Employer and employee& o.#iously& do not stand on the same +ooting. The employer dro#e the employee to the $all. The latter must ha#e to get hold o+ money. %ecause& out o+ 5o.& he had to +ace the harsh necessities o+ li+e. 9e thus +ound himsel+ in no position to resist money pro++ered. 9is& then& is a case o+ adherence& not o+ choice. 2ne thing sure& ho$e#er& is that petitioners did not relent their claim. They pressed it. They are deemed not to ha#e $ai#ed any o+ their rights. "enuntiatio non praesumitur :isposition >etition +or Certiorari is partially G"A6TE: and 6L"C* s decision a++irming that portion o+ the :ecision o+ the La.or Ar.iter ordering the reinstatement 5udgment o+ employees $ho had .een retired .y L>C under the applica.le pro#isions o+ the C%A is AFF'"!E:. (=all illegally retrenched $ere ordered to .e reinstated and gi#en .ac)$ages4 those $ho e-ecuted uitclaims8said amount shall .e deducted +rom their .ac)$ages and $here reinstatement is no longer possi.le& .ac)$ages _ separation pay na lang. %(T those $ho $ere retired .y L>C $ere +ound to .e #alid as per the C%A. ?l "ht Atten:ants an: SteAar:s Asso; at on oE the Ph l !! nes v. PAL, 22) SCRA 525 FACTS: 2n <une 3C& 3FFM& >AL retrenched C&000 o+ its employees& including more than 3&E00 o+ its ca.in cre$ personnel& to ta)e e++ect on <uly 3C& 3FFM. >AL adopted the retrenchment scheme allegedly to cut costs and mitigate huge +inancial losses as a result o+ a do$nturn in the airline industry .rought a.out .y the Asian +inancial crisis. :uring said period& >AL claims to ha#e incurred >F0 .illion in lia.ilities& $hile its assets stood at >MC .illion. 2n Septem.er /1& 3FFM& >AL ceased its operations and sent notices o+ termination to its employees. T$o days later& >AL employees& through the >hilippine Airlines Employees Association (>ALEA) .oard& sought the inter#ention o+ then >resident <oseph E. Estrada. >ALEA o++ered a 308year moratorium on stri)es and similar actions and a $ai#er o+ some o+ the economic .ene+its in the e-isting C%A. Lucio Tan& ho$e#er& re5ected this counter8o++er. 'n a re+erendum conducted on 2cto.er /& 3FFM& >AL employees rati+ied the proposal. 2n 2cto.er G& 3FFM& >AL resumed domestic operations and& soon a+ter& international +lights as $ell. !ean$hile& in 6o#em.er 3FFM& or +i#e months a+ter the <une 3C& 3FFM mass dismissal o+ its ca.in cre$ personnel& >AL .egan recalling to ser#ice those it had pre#iously retrenched. Se#eral o+ those retrenched $ere called .ac) to ser#ice. 'n :ecem.er 3FFM& >AL su.mitted a Istand8aloneI reha.ilitation plan to the SEC .y $hich it undertoo) a reco#ery on its o$n $hile )eeping its options open +or the entry o+ a strategic partner in the +uture. Accordingly& it su.mitted an amended reha.ilitation plan to the SEC $ith a proposed re#ised .usiness and +inancial restructuring plan& $hich re uired the in+usion o+ (SR/00 million in ne$ e uity into the airline. 2n !ay 3G& 3FFF& the SEC appro#ed the proposed IAmended and "estated "eha.ilitation >lanI o+ >AL and appointed a permanent reha.ilitation recei#er +or the latter. 2n <une G& 3FFF& the SEC issued an 2rder con+irming its appro#al o+ the IAmended and "estated "eha.ilitation >lanI o+ >AL. 'n said order& the cash in+usion o+ (SR/00 million made .y Lucio Tan on <une E& 3FFF $as ac)no$ledged. "espondent >AL is ordered to pay the separation .ene+its to those complainants $ho ha#e not recei#ed their separation pay and to pay the .alance to those $ho ha#e recei#ed partial separation pay. 'SS(E: 7hether or not the CA decided the case a uo in a $ay contrary to la$ and,or 5urisprudence and 726 >AL*s retrenchment scheme $as 5usti+ied. 9EL:: 't is a settled rule that in the e-ercise o+ the Supreme Court@s po$er o+ re#ie$& the Court is not a trier o+ +acts and does not normally underta)e the ree-amination o+ the e#idence presented .y the contending parties during trial. 'n implementing the retrenchment scheme& >AL adopted its so8called I>lan 3EI $here.y >AL@s +leet o+ aircra+t $ould .e reduced +rom CE to 3E& thus re uiring the ser#ices o+ only HCE ca.in cre$ personnel. >rior to the +ull implementation o+ the assailed retrenchment program& FASA> and >AL conducted a series o+ consultations and meetings and e-plored all possi.ilities o+ cushioning the impact o+ the impending reduction in ca.in cre$ personnel. 9o$e#er& the parties +ailed to agree on ho$ the scheme $ould .e implemented. Thus >AL unilaterally resol#ed to utilize the criteria set +orth in Section 33/ o+ the >ALFASA> Collecti#e %argaining Agreement (C%A) in retrenching ca.in cre$ personnel: that is& that retrenchment shall .e .ased on the indi#idual employee@s e++iciency rating and seniority. >AL determined the ca.in cre$ personnel e++iciency ratings through an e#aluation o+ the indi#idual ca.in cre$ mem.er@s o#erall per+ormance +or the year 3FFG alone. The +actors ta)en into account on $hether the ca.in cre$ mem.er $ould .e retrenched& demoted or retained $ere: 3) the e-istence o+ e-cess sic) lea#es4 /) the cre$ mem.er@s .eing physically o#er$eight4 1) seniority4 and E) pre#ious suspensions or $arnings imposed. 7hile consultations .et$een FASA> and >AL $ere ongoing& the latter .egan implementing its retrenchment program .y initially terminating the ser#ices o+ 3E0 pro.ationary ca.in attendants only to rehire them in April 3FFM. !oreo#er& their employment $as made permanent and regular. 2n <uly 3C& 3FFM& ho$e#er& >AL carried out the retrenchment o+ its more than 3&E00 ca.in cre$ personnel. !ean$hile& in <une 3FFM& >AL $as placed under corporate reha.ilitation and a reha.ilitation plan $as appro#ed per Securities and E-change Commission (SEC) 2rder dated <une /1& 3FFM in SEC Case 6o. 0H8FM8H00E. 2n Septem.er E& 3FFM& >AL& through its Chairman and Chie+ E-ecuti#e 2++icer (CE2) Lucio Tan& made an o++er to trans+er shares o+ stoc) to its employees and three seats in its %oard o+ :irectors& on the condition that all the e-isting Collecti#e %argaining Agreements (C%As) $ith its employees $ould .e suspended +or 30 years& .ut it $as re5ected .y the employees. 2n Septem.er 3G& 3FFM& >AL in+ormed its employees that it $as shutting do$n its operations e++ecti#e Septem.er /1& 3FFM despite the pre#ious appro#al on <une /1& 3FFM o+ its reha.ilitation plan.

25
9o$e#er& there are se#eral e-ceptions to this rule such as $hen the +actual +indings o+ the La.or Ar.iter di++er +rom those o+ the 6L"C& as in the instant case& $hich opens the door to a re#ie$ .y this Court. The la$ recognizes the right o+ e#ery .usiness entity to reduce its $or) +orce i+ the same is made necessary .y compelling economic +actors $hich $ould endanger its e-istence or sta.ility. 7here appropriate and $here conditions are in accord $ith la$ and 5urisprudence& the Court has authorized #alid reductions in the $or) +orce to +orestall .usiness losses& the hemorrhaging o+ capital& or e#en to recognize an o.#ious reduction in the #olume o+ .usiness $hich has rendered certain employees redundant. The .urden clearly +alls upon the employer to pro#e economic or .usiness losses $ith su++icient supporting e#idence. 'ts +ailure to pro#e these re#erses or losses necessarily means that the employee@s dismissal $as not 5usti+ied. Any claim o+ actual or potential .usiness losses must satis+y certain esta.lished standards& all o+ $hich must concur& .e+ore any reduction o+ personnel .ecomes legal F'"ST ELE!E6T: That retrenchment is reasona.ly necessary and li)ely to pre#ent .usiness losses $hich& i+ already incurred& are not merely de minimis& .ut su.stantial& serious& actual and real& or i+ only e-pected& are reasona.ly imminent as percei#ed o.5ecti#ely and in good +aith .y the employer. The la$ spea)s o+ serious .usiness losses or +inancial re#erses. Sliding incomes or decreasing gross re#enues are not necessarily losses& much less serious .usiness losses $ithin the meaning o+ the la$. The +act that an employer may ha#e sustained a net loss& such loss& per se& a.sent any other e#idence on its impact on the .usiness& nor on e-pected losses that $ould ha#e .een incurred had operations .een continued& may not amount to serious .usiness losses mentioned in the la$. The employer must sho$ that its losses increased through a period o+ time and that the condition o+ the company $ill not li)ely impro#e in the near +uture or that it e-pected no a.atement o+ its losses in the coming years. The employer must also e-haust all other means to a#oid +urther losses $ithout retrenching its employees. "etrenchment is a means o+ last resort4 it is 5usti+ied only $hen all other less drastic means ha#e .een tried and +ound insu++icient. 'n the instant case& >AL +ailed to su.stantiate its claim o+ actual and imminent su.stantial losses $hich $ould 5usti+y the retrenchment o+ more than 3&E00 o+ its ca.in cre$ personnel. Although the >hilippine economy $as gra#ely a++ected .y the Asian +inancial crisis& ho$e#er& it cannot .e assumed that it has li)e$ise .rought >AL to the .rin) o+ .an)ruptcy. Li)e$ise& the +act that >AL under$ent corporate reha.ilitation does not automatically 5usti+y the retrenchment o+ its ca.in cre$ personnel. "ecords sho$ that >AL $as not e#en a$are o+ its actual +inancial position $hen it implemented its retrenchment program. 't em.ar)ed on the mass dismissal $ithout +irst underta)ing a $ell8considered study on the proposed retrenchment scheme. This #ie$ is underscored .y the +act that pre#iously& >AL terminated the ser#ices o+ 3E0 pro.ationary ca.in attendants& .ut rehired them almost immediately and e#en con#erted their employment into permanent and regular& e#en as a massi#e retrenchment $as already looming in the horizon the retrenchment program does not pro#e anything4 it has not .een sho$n to $hat e-tent or degree such sa#ings .ene+ited >AL& #is8a8#is its total e-penditures or its o#erall +inancial position. Li)e$ise& its claim that its lia.ilities reached >F0 .illion& $hile its assets amounted to >MC .illion only 8 or a de.t to asset ratio o+ more than 3:3 8 may not readily .e .elie#ed& considering that it did not su.mit its audited +inancial statements. All these allegations are sel+ser#ing e#idence. F2("T9 ELE!E6T: That the employer e-ercises its prerogati#e to retrench employees in good +aith +or the ad#ancement o+ its interest and not to de+eat or circum#ent the employees@ right to security o+ tenure. Concededly& retrenchment to pre#ent losses is an authorized cause +or terminating employment and the decision $hether to resort to such mo#e or not is a management prerogati#e. 9o$e#er& the right o+ an employer to dismiss an employee di++ers +rom and should not .e con+used $ith the manner in $hich such right is e-ercised. 't must not .e oppressi#e and a.usi#e since it a++ects one@s person and property. 2n the re uirement that the prerogati#e to retrench must .e e-ercised in good +aith& $e ha#e ruled that the hiring o+ ne$ employees and su.se uent rehiring o+ IretrenchedI employees constitute .ad +aith4 that the +ailure o+ the employer to resort to other less drastic measures than retrenchment seriously .elies its claim that retrenchment $as done in good +aith to a#oid losses4 and that the demonstrated ar.itrariness in the selection o+ $hich o+ its employees to retrench is +urther proo+ o+ the illegality o+ the employer@s retrenchment program& not to mention its .ad +aith. 7hen >AL implemented >lan //& instead o+ >lan 3E& $hich $as $hat it had originally made )no$n to its employees& it could not .e said that it acted in a manner compati.le $ith good +aith. 't o++ered no satis+actory e-planation $hy it a.andoned >lan 3E4 instead& it 5usti+ied its actions o+ su.se uently recalling to duty retrenched employees .y ma)ing it appear that it $as a sho$ o+ good +aith4 that it $as due to its good corporate nature that the decision to consider recalling employees $as made. F'FT9 ELE!E6T: That the employer used +air and reasona.le criteria in ascertaining $ho $ould .e dismissed and $ho $ould .e retained among the employees& such as status& e++iciency& seniority& physical +itness& age& and +inancial hardship +or certain $or)ers. 'n selecting employees to .e dismissed& +air and reasona.le criteria must .e used& such as .ut not limited to: (a) less pre+erred status (e.g.& temporary employee)& (.) e++iciency and (c) seniority. The appellate court held that there $as no need +or >AL to consult $ith FASA> regarding standards or criteria that the airline $ould utilize in the implementation o+ the retrenchment program4 and that the criteria actually used $hich $as unilaterally +ormulated .y >AL using its >er+ormance E#aluation Form in its Grooming and Appearance 9and.oo) $as reasona.le and +air. 'ndeed& >AL $as not o.ligated to consult FASA> regarding the standards it $ould use in e#aluating the per+ormance o+ the each ca.in cre$. 9o$e#er& $e do not agree $ith the +indings o+ the appellate court that the criteria utilized .y >AL in the actual retrenchment $ere reasona.le and +air. SC has repeatedly en5oined employers to adopt and o.ser#e +air and reasona.le standards to e++ect retrenchment. This is o+ paramount importance .ecause an employer@s retrenchment program could .e easily 5usti+ied considering the su.5ecti#e nature o+ this re uirement. The adoption and implementation o+ un+air and unreasona.le criteria could not easily .e detected especially in the retrenchment o+ large num.ers o+ employees& and in this aspect& a.use is a #ery distinct and real possi.ility. This is $here la.or tri.unals should e-ercise more diligence4 this aspect is $here they should concentrate $hen placed in a position o+ ha#ing to 5udge an employer@s retrenchment program. !oreo#er& in assessing the o#erall per+ormance o+ each ca.in cre$ personnel& >AL only considered the year 3FFG. This ma)es the e#aluation o+ each ca.in attendant@s e++iciency rating capricious and pre5udicial to >AL employees co#ered .y it. 'n sum& >AL@s retrenchment program is illegal .ecause it $as .ased on $rong+ul premise (>lan 3E& $hich in reality turned out to .e >lan //& resulting in retrenchment o+ more ca.in attendants than $as necessary) and in a set o+ criteria or rating #aria.les that is un+air and unreasona.le $hen implemented. 't +ailed to ta)e into account each ca.in attendant@s respecti#e ser#ice record& there.y disregarding seniority and loyalty in the e#aluation o+ o#erall employee per+ormance. Tuitclaims e-ecuted as a result o+ >AL@s illegal retrenchment program are li)e$ise annulled and set aside .ecause they $ere not #oluntarily entered into .y the retrenched employees4 their consent $as o.tained .y +raud or mista)e& as #olition $as clouded .y a retrenchment program that $as& at its inception& made $ithout .asis. The la$ loo)s $ith dis+a#or upon uitclaims and releases .y employees pressured into signing .y unscrupulous employers minded to e#ade legal responsi.ilities. As a rule& deeds o+ release or uitclaim cannot .ar employees +rom demanding .ene+its to $hich they are legally entitled or +rom contesting the legality o+ their dismissal. The acceptance o+ those .ene+its $ould not amount to estoppel. The amounts already recei#ed .y the retrenched employees as consideration +or signing the uitclaims should& ho$e#er& .e deducted +rom their respecti#e monetary a$ards. As to >AL@s recall and rehire process (o+ retrenched ca.in cre$ employees)& the same is li)e$ise de+ecti#e. Considering the illegality o+ the retrenchment& it +ollo$s that the su.se uent recall and rehire process is li)e$ise in#alid and $ithout e++ect. A corporate o++icer is not personally lia.le +or the money claims o+ discharged corporate employees unless he acted $ith e#ident malice and .ad +aith in terminating their employment. 7e do not see ho$ respondent >atria Chiong may .e held personally lia.le together $ith >AL& it appearing that she $as merely acting in accordance $ith $hat her duties re uired under the circumstances. %eing an Assistant Aice >resident +or Ca.in Ser#ices o+ >AL& she ta)es direct orders +rom superiors& or those $ho are charged $ith the +ormulation o+ the policies to .e implemented. >etition granted. S m zu Ph ls Contra;tors v. Callanta, $.R. No. %'2)59, Se!tember 5), 5(%(

Facts:

Shimizu >hils. a corporation engaged in the construction .usiness& employed Airgilio Callanta on August /1& 3FFE as Sa+ety 2++icer assigned at ;uta)a8Gi)en >ro5ect and e#entually as >ro5ect Administrator o+ petitioner*s Structural Steel :i#ision (SS:) in 3FFC. Airgilio Callanta $as in+ormed that his ser#ices $ill .e terminated e++ecti#e <uly F& 3FFG due to the lac) o+ any #acancy in other pro5ects and the need to re8align the company*s personnel re uirements .rought a.out .y the imperati#es o+ ma-imum +inancial commitments. 9e then +iled an illegal dismissal complaint against petitioner assailing his dismissal as $ithout any #alid cause.

26
Shimizu ad#anced that respondent*s ser#ices $as terminated in accordance $ith a #alid retrenchment program .eing implemented .y the company since 3FFH due to +inancial crisis that plague the construction industry. To pro#e its +inancial de+icit& petitioner presented +inancial statements +or the years 3FFC to 3FFG as $ell as the Securities and E-change Commission*s appro#al o+ petitioner*s application +or a ne$ paid8in capital amounting to >110&000&000. Shimizu alleged that in order not to 5eopardize the completion o+ its pro5ects& the a.olition o+ se#eral departments and the concomitant termination o+ some employees $ere implemented as each pro5ect is completed. 7hen respondent*s 9onda >ro5ect $as completed& petitioner o++ered respondent his separation pay $hich the latter re+used to accept and instead +iled an illegal dismissal complaint. !r. Callanta claimed that Shimizu +ailed to comply $ith the re uirements called +or .y la$ .e+ore implementing a retrenchment program there.y rendering it legally in+irmed. First& it did not comply $ith the pro#ision o+ the La.or Code mandating the ser#ice o+ notice o+ retrenchment. 9e pointed out that the notice sent to him ne#er mentioned retrenchment .ut only pro5ect completion as the cause o+ termination. Also& the notice sent to the :epartment o+ La.or and Employment (:2LE) did not con+orm to the 108day prior notice re uirement. Second& petitioner +ailed to use +air and reasona.le criteria in determining $hich employees shall .e retrenched or retained. 'n the termination report su.mitted to :2LE& he $as the only one dismissed out o+ 111 employees. 7orse& 5unior and ine-perienced employees $ere appointed,assigned in his stead to ne$ pro5ects thus also ignoring seniority in hiring and +iring employees. Shimizu argued that $hen it su.mitted the retrenchment notice,termination report to :2LE& there $as already su.stantial compliance $ith the re uirement. La.or Ar.iter rendered a decision holding that !r. Callanta $as #alidly retrenched. 9e +ound that su++icient e#idence $as presented to esta.lish company losses4 that petitioner o++ered respondent his separation pay4 and that petitioner duly noti+ied :2LE a.out the retrenchment. The La.or Ar.iter +urther relied on petitioner*s +actual #ersion relating to respondent*s employment .ac)ground $ith regard to his position and .eha#ioral conduct. 6L"C upheld the ruling that there $as #alid ground +or respondent*s termination .ut modi+ied the La.or Ar.iter*s :ecision .y holding that petitioner #iolated respondent*s right to procedural due process. The 6L"C +ound that petitioner +ailed to comply $ith the 108day prior notice to the :2LE and that there is no proo+ that petitioner used +air and reasona.le criteria in the selection o+ employees to .e retrenched. Shimizu >hilippine Contractor& 'nc.& is ordered to pay complainant8appellant Airgilio >. Callanta his separation pay e ui#alent to one (3) month pay +or e#ery year o+ ser#ice. For $ant o+ due notice& respondent is +urther directed to pay complainant an indemnity e ui#alent to one (3) month salary. CA re#ersed and set aside the 6L"C*s ruling. The CA opined that Shimizu +ailed to pro#e that there $ere employees other than respondent $ho $ere similarly dismissed due to retrenchment and that respondent*s alleged replacements held much higher ran)s and $ere more deser#ing employees. !oreo#er& there $ere no proo+s to sustain that petitioner used +air and reasona.le criteria in determining $hich employees to retrench. According to the CA& petitioner*s +ailure to produce e#idence raises the presumption that such e#idence $ill .e ad#erse to it. Conse uently& the CA in#alidated the retrenchment& held respondent to ha#e .een illegally dismissed& and ordered respondent*s reinstatement and payment o+ .ac)$ages. 'SS(E: 7hether or not Shimizu has +ailed to o.eser#e +air and reasona.le standards or criteria in e++ecting the dismissal or !r. CallantaP 9EL:: There $as su.stantial compliance +or a #alid retrenchment4 Shimizu used +air and reasona.le criteria in e++ecting retrenchment. As an authorized cause +or separation +rom ser#ice under Article /M1 o+ the La.or Code& retrenchment is a #alid e-ercise o+ management prerogati#e su.5ect to the strict re uirements set .y 5urisprudence: (3) That the retrenchment is reasona.ly necessary and li)ely to pre#ent .usiness losses $hich& i+ already incurred& are not merely de minimis& .ut su.stantial& serious& actual and real& or i+ only e-pected& are reasona.ly imminent as percei#ed o.5ecti#ely and in good +aith .y the employer4 (/) That the employer ser#ed $ritten notice .oth to the employees and to the :epartment o+ La.or and Employment at least one month prior to the intended date o+ retrenchment4 (1) That the employer pays the retrenched employees separation pay e ui#alent to one month pay or at least ] month pay +or e#ery year o+ ser#ice& $hiche#er is higher4 The termination notice sent to :2LE did not comply $ith the 108day notice re uirement& thus& respondent is entitled to indemnity +or #iolation o+ due process. 9o$e#er& petitioner admitted that the reports $ere su.mitted /3 days& in the case o+ the +irst notice& and 3H days& in the case o+ the second notice& .e+ore the intended date o+ respondent*s dismissal. (E) That the employer e-ercises its prerogati#e to retrench employees in good +aith +or the ad#ancement o+ its interest and not to de+eat or circum#ent the employees* right to security o+ tenure4 and (C) That the employer used +air and reasona.le criteria in ascertaining $ho $ould .e dismissed and $ho $ould .e retained among the employees& such as status& e++iciency& seniority& physical +itness& age& and +inancial hardship +or certain $or)ers.

%oth the La.or Ar.iter and the 6L"C +ound su++icient compliance $ith these su.stanti#e re uirements& there .eing enough e#idence to pro#e that petitioner $as sustaining .usiness losses& that separation pay $as o++ered to respondent& and that notices o+ termination o+ ser#ice $ere +urnished respondent and :2LE. 9o$e#er& the 6L"C modi+ied the :ecision o+ the La.or Ar.iter .y granting respondent indemnity since the notice to :2LE $as ser#ed short o+ the 108day notice re uirement and that there is no proo+ o+ the use o+ +air and reasona.le criteria in the selection o+ employees to .e retrenched or retained. The CA& then& re#ersed the :ecision o+ the 6L"C .y ruling that the a.sence o+ +air and reasona.le criteria in implementing the retrenchment in#alidates altogether the retrenchment. 'n implementing its retrenchment scheme& petitioner $as constrained to streamline its operations and to do$nsize its complements in a progressi#e manner in order not to 5eopardize the completion o+ its pro5ects. Thus& se#eral departments li)e the Ci#il 7or)s :i#ision& Electro8mechanical 7or)s :i#ision and the Territorial >ro5ect !anagement 2++ices& among others& $ere a.olished in the early part o+ 3FFH and therea+ter the Structural Steel :i#ision& o+ $hich respondent $as an Administrator. "espondent $as among the last .atch o+ employees $ho $ere retrenched and .y the end o+ year 3FFG& all o+ the employees o+ the Structural Steel :i#ision $ere se#ered +rom employment. !r. Callanta argued that that he $as singled out +or termination as allegedly sho$n in petitioner*s monthly termination report +or the month o+ <uly 3FFG +iled $ith the :2LE does not persuade this Court. Standing alone& this document is not proo+ o+ the total num.er o+ retrenched employees or that respondent $as the only one retrenched. 't merely ser#es as notice to :2LE o+ the names o+ employees terminated, retrenched only +or the month o+ <uly. 'n other $ords& it cannot .e deemed as an e#idence o+ the num.er o+ employees a++ected .y the retrenchment program. Thus $e cannot conclude that no other employees $ere pre#iously retrenched. Shimizu implemented its retrenchment program in good +aith .ecause it undertoo) se#eral measures in cutting do$n its costs& to $it& $ithdra$ing certain pri#ileges o+ petitioner*s e-ecuti#es and e-patriates4 limiting the grant o+ additional monetary .ene+its to managerial employees and cutting do$n e-penses4 selling o+ company #ehicles4 and in+using +resh capital into the company. "espondent did not attempt to re+ute that petitioner adopted these measures .e+ore implementing its retrenchment program.

Shimizu $as a.le to pro#e that it incurred su.stantial .usiness losses& that it o++ered to pay respondent his separation pay& that the retrenchment scheme $as arri#ed at in good +aith& and lastly& that the criteria or standard used in selecting the employees to .e retrenched $as $or) e++iciency $hich passed the test o+ +airness and reasona.leness.

The purpose o+ the one month prior notice rule is to gi#e :2LE an opportunity to ascertain the #eracity o+ the cause o+ termination. 6on8compliance $ith this rule clearly #iolates the employee*s right to statutory due process.

Conse uently& $e a++irm the 6L"C*s a$ard o+ indemnity to respondent +or $ant o+ su++icient due notice. %ut to .e consistent $ith our ruling in <a)a Food >rocessing Corporation #. >acot& the indemnity in the +orm o+ nominal damages should .e +i-ed in the amount o+ >C0&000.00.

79E"F2"E& the petition is G"A6TE:.& respecti#ely& upholding the legality o+ respondent*s dismissal and a$arding him separation pay e ui#alent to one (3)

27
month pay or one8hal+ (3,/) month pay +or e#ery year o+ ser#ice& $hiche#er is higher& are "E'6STATE: and AFF'"!E: $ith !2:'F'CAT'26 that the indemnity to .e a$arded to respondent is +i-ed in the amount o+ >C0&000.00 as nominal damages. S2 2":E"E:. RETRENC.+ENT O? O?@ Internat onal +ana"ement Serv ;es vs. Lo"arta 0$R No. %'9'21, A!r l %&, 5(%56 Facts: "ecruitment agency& 'nternational !anagement Ser#ices ('!S)& o$ned and operated .y !arilyn C. >ascual& deployed respondent "oel >.Logarta to $or) +or >etrocon Ara.ia Limited (>etrocon) in Al)ho.ar& Zingdom o+ Saudi Ara.ia& in connection $ith general engineering ser#ices o+ >etrocon +or the Saudi Ara.ian 2il Company (Saudi Aramco). "espondent $as employed +or a period o+ t$o (/) years& commencing on 2cto.er /& 3FFG& $ith a monthly salary o+ eight hundred (S :ollars ((SRM00.00).2n April /F& 3FFM& Saudi Aramco noti+ied >etrocon that due to changes in the general engineering ser#ices $or) +orecast +or 3FFM& the man8 hours that $ere +ormerly allotted to >etrocon is going to .e reduced .y E0` $hich constrained >etrocon to reduce its personnel. Thus& on <une 3& 3FFM& >etrocon ga#e respondent a $ritten notice in+orming the latter that due to the lac) o+ pro5ect $or)s related to his e-pertise& he is gi#en a 108day notice o+ termination& and that his last day o+ $or) $ith >etrocon $ill .e on <uly 3& 3FFM. >etrocon also in+ormed respondent that all due .ene+its in accordance $ith the terms and conditions o+ his employment contract $ill .e paid to respondent& including his tic)et .ac) to the >hilippines. %e+ore his departure +rom Saudi Ara.ia& respondent recei#ed his +inal paychec) +rom >etrocon amounting S"G& EMM.CG.(pon his return& respondent +iled a complaint $ith the "egional Ar.itration %ranch A''& 6ational La.or "elations Commission (6L"C)& Ce.u City& against petitioner as the recruitment agency $hich employed him +or employment a.road. 'n +iling the complaint& respondent sought to reco#er his unearned salaries co#ering the une-pired portion o+ his employment contract $ith >etrocon on the ground that he $as illegally dismissed. The La.or Ar.iter rendered 5udgment in +a#or o+ the respondent and ordered petitioner to pay the peso e ui#alent o+ (SRC&H00.00 .ased on the rate at the time o+ actual payment& as payment o+ his $ages +or the une-pired portion o+ his contract o+ employment. The 6L"C on appeal a++irmed the La.or Ar.iterVs decision .ut reduced the a$ard to only (SRE&M00.00 or its peso e ui#alent at the time o+ payment. The CA li)e$ise dismissed the petition and a++irmed the 6L"C decision. 'ssue: 7hether or not respondents dismissal through retrenchment illegal. 9EL:: 6o. "etrenchment is the reduction o+ $or) personnel usually due to poor +inancial returns& aimed to cut do$n costs +or operation particularly on salaries and $ages. 't is one o+ the economic grounds to dismiss employees and is resorted .y an employer primarily to a#oid or minimize .usiness losses. "etrenchment programs are purely .usiness decisions $ithin the pur#ie$ o+ a #alid and reasona.le e-ercise o+ management prerogati#e. 't is one $ay o+ do$nsizing an employer@s $or)+orce and is o+ten resorted to .y the employer during periods o+ .usiness recession& industrial depression& or seasonal +luctuations& and during lulls in production occasioned .y lac) o+ orders& shortage o+ materials& con#ersion o+ the plant +or a ne$ production program& or introduction o+ ne$ methods or more e++icient machinery or automation. 't is a #alid management prerogati#e& pro#ided it is done in good +aith and the employer +aith+ully complies $ith the su.stanti#e and procedural re uirements laid do$n .y la$ and 5urisprudence. >hilippine La$ recognizes retrenchment as a #alid cause +or the dismissal o+ a migrant or o#erseas Filipino $or)er under Article /M1 o+ the La.or Code. Thus& retrenchment is a #alid e-ercise o+ management prerogati#e su.5ect to the strict re uirements set .y 5urisprudence& to $it:(3)That the retrenchment is reasona.ly necessary and li)ely to pre#ent .usiness losses $hich& i+ already incurred& are not merely de minimis& .ut su.stantial& serious& actual and real& or i+ only e-pected& are reasona.ly imminent as percei#ed o.5ecti#ely and in good +aith .y the employer4(/)That the employer ser#ed $ritten notice .oth to the employees and to the :epartment o+ La.or and Employment at least one month prior to the intended date o+ retrenchment4(1)That the employer pays the retrenched employees separation pay e ui#alent to one month pay or at least 3,/ month pay +or e#ery year o+ ser#ice& $hiche#er is higher4 (E)That the employer e-ercises its prerogati#e to retrench employees in good +aith +or the ad#ancement o+ its interest and not to de+eat or circum#ent the employees@ right to security o+ tenure4 and(C)That the employer used +air and reasona.le criteria in ascertaining $ho $ould .e dismissed and $ho $ould .e retained among the employees& such as status&\e++iciency& seniority& physical +itness& age& and +inancial hardship +or certain $or)ers./MApplying the a.o#e8stated re uisites +or a #alid retrenchment in the case at .ar& it is apparent that the +irst& +ourth and +i+th re uirements $ere complied $ith .y respondent@s employer. 9o$e#er& the second and third re uisites $ere a.sent $hen >etrocon terminated the ser#ices o+ respondent. As aptly +ound .y the 6L"C and 5ustly sustained .y the CA& >etrocon e-ercised its prerogati#e to retrench its employees in good +aith and the considera.le reduction o+ $or) allotments o+ >etrocon .y Saudi Aramco $as su++icient .asis +or >etrocon to reduce the num.er o+ its personnel. As +or the notice re uirement& ho$e#er& contrary to petitioner@s contention& proper notice to the :2LE $ithin 10 days prior to the intended date o+ retrenchment is necessary and must .e complied $ith despite the +act that respondent is an o#erseas Filipino $or)er. 'n the present case& although respondent $as duly noti+ied o+ his termination .y >etrocon 10 days .e+ore its e++ecti#ity& no allegation or proo+ $as ad#anced .y petitioner to esta.lish that >etrocon e#er sent a notice to the :2LE 10 days .e+ore the respondent $as terminated. Thus& this re uirement o+ the la$ $as not complied $ith. 'n the case at .ar& despite the +act that respondent $as employed .y >etrocon as an 2F7 in Saudi Ara.ia& still .oth he and his employer are su.5ect to the pro#isions o+ the La.or Code $hen applica.le. The .asic policy in this 5urisdiction is that all Filipino $or)ers& $hether employed locally or o#erseas& en5oy the protecti#e mantle o+ >hilippine la.or and social legislations. Also& respondent is entitled to the payment o+ his separation pay. 9o$e#er& this Court disagrees $ith the conclusion o+ the La.or Ar.iter& the 6L"C and the CA& that respondent should .e paid his separation pay in accordance $ith the pro#ision o+ Section 30 o+ ".A. 6o. M0E/. A plain reading o+ the said pro#ision clearly re#eals that it applies only to an illegally dismissed o#erseas contract $or)er or a $or)er dismissed +rom o#erseas employment $ithout 5ust& #alid or authorized cause. 'n the case at .ar& not$ithstanding the +act that respondent@s termination +rom his employment $as procedurally in+irm& ha#ing not complied $ith the notice re uirement& ne#ertheless the same remains to .e +or a 5ust& #alid and authorized cause&i.e.& retrenchment as a #alid e-ercise o+ management prerogati#e. To stress& despite the employer@s +ailure to comply $ith the one8month notice to the :2LE prior to respondent*s termination& it is only a procedural in+irmity $hich does not render the retrenchment illegal. 'n Aga.on #. 6L"C& this Court ruled that $hen the dismissal is +or a 5ust cause& the a.sence o+ proper notice should not nulli+y the dismissal or render it illegal or ine++ectual. 'nstead& the employer should indemni+y the employee +or #iolation o+ his statutory rights. Conse uently& it is Article /M1 o+ the La.or Code and not Section 30 o+ ".A. 6o. M0E/ that is controlling. Thus& respondent is entitled to payment o+ separation pay e ui#alent to one (3) month pay& or at least one8hal+ (3,/) month pay +or e#ery year o+ ser#ice& $hiche#er is higher. Considering that respondent $as employed .y >etrocon +or a period o+ eight (M) months& he is entitled to recei#e one (3) month pay as separation pay. 'n addition& pursuant to current 5urisprudence& +or +ailure to +ully comply $ith the statutory due process o+ su++icient notice& respondent is entitled to nominal damages in the amount >C0&000.00. CLOS-RE O? B-SINESS North Davao + n n" v. NLRC #%))'* 52= SCRA 15% FACTS: >etitioner 6orth :a#ao !ining Corporation (6orth :a#ao) $as incorporated in 3FGE as a 300` pri#ately8o$ned company. Later& the >hilippine 6ational %an) (>6%) .ecame part o$ner thereo+ as a result o+ a con#ersion into e uity o+ a portion o+ loans o.tained .y 6orth :a#ao +rom said .an). 2n <une 10& 3FMH& >6% trans+erred all its loans to and e uity in 6orth :a#ao in +a#or o+ the national go#ernment $hich& .y #irtue o+ >roclamation 6o. C0 dated :ecem.er M& 3FMH& later turned them o#er to petitioner Asset >ri#atization Trust (A>T). As o+ :ecem.er 13& 3FF0 the national go#ernment held M3.M` o+ the common stoc) and 300` o+ the pre+erred stoc) o+ said company. "espondent 7il+redo Guillema is one among se#eral employees o+ 6orth :a#ao $ho $ere separated .y reason o+ the company*s closure on !ay 13& 3FF/& and $ho $ere the complainants in the cases .e+ore the respondent la.or ar.iter. 2n !ay 13& 3FF/& petitioner 6orth :a#ao completely ceased operations due to serious .usiness re#erses. From 3FMM until its closure in 3FF/& 6orth :a#ao su++ered net losses a#eraging three .illion pesos per year& +or each o+ the +i#e years prior to its closure. All told +i#e months prior to its closure& its total lia.ilities had e-ceeded its assets .y /0.1F/ .illion pesos. 7hen it ceased operations& its remaining employees $ere separated and gi#en the e ui#alent o+ 3/.C days* pay +or e#ery year o+ ser#ice& computed on their .asic monthly pay& in addition to the commutation to cash o+ their unused #acation and sic) lea#es. 9o$e#er& it appears that& during the li+e o+ the petitioner corporation& +rom the .eginning o+ its operations in 3FM3 until its closure in 3FF/& it had .een gi#ing separation pay e ui#alent to thirty days* pay +or e#ery year o+ ser#ice. !oreo#er& the employees had to collect their salaries at a .an) in Tagum& :a#ao del 6orte& and some CM )ilometers +rom their $or)place and a.out / ]hours* tra#el time .y pu.lic transportation4 this arrangement lasted +rom 3FM3 up to 3FF0. Su.se uently& a complaint $as +iled $ith respondent la.or ar.iter .y respondent 7il+redo Guillema and /G3 other separated employees +or additional separation pay4 .ac) $ages4 transportation allo$ance4 hazard pay4 etc.& amounting to >CM& 0//&MGM.13. 'SS(E:

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7hether or not the employees are entitled to separation pay despite the closure o+ the company. 9EL:: Art. /M1 go#erns the grant o+ seperation .ene+its Nin case o+ closures or cessation o+ operationO o+ .usiness esta.lishments N62T due to serious .usiness losses or +inancial re#erses - - -O. 7here& ho$e#er& the closure $as due to .usiness losses 8 as in the instant case& in $hich the aggregate losses amounted to o#er >/0 .illion 8 the La.or Code does not impose any o.ligation upon the employer to pay separation .ene+its& +or o.#ious reasons. There is no need to .ela.or this point. E#en the pu.lic respondents& in their CommentB30D +iled .y the Solicitor General& impliedly concede this point. 9o$e#er& respondents tenaciously insist on the a$ard o+ separation pay& anchoring their claim solely on petitioner 6orth :a#ao*s long8standing policy o+ gi#ing separation pay .ene+its e ui#alent to 108 days* pay& $hich policy had .een in +orce in the years prior to its closure. "espondents contend that& .y denying the same separation .ene+its to pri#ate respondent and the others similarly situated& petitioners discriminated against them. 'n the instant case ho$e#er& the company*s practice o+ gi#ing one month*s pay +or e#ery year o+ ser#ice could no longer .e continued precisely .ecause the company could not a++ord it anymore. As already stated& Art. /M1 o+ the La.or Code does not o.ligate an employer to pay separation .ene+its $hen the closure is due to losses. 'n the case .e+ore us& the .asis +or the claim o+ the additional separation .ene+it o+ 3G.C days is alleged discrimination& i.e.& une ual treatment o+ employees& $hich is proscri.ed as an un+air la.or practice .y Art. /EM (e) o+ said Code. (nder the +acts and circumstances o+ the present case& the grant o+ a lesser amount o+ separation pay to pri#ate respondent $as done& not .y reason o+ discrimination& .ut rather& out o+ sheer +inancial .an)ruptcy 8 a +act that is not controlled .y management prerogati#es. Stated di++erently& the total cessation o+ operation due to mind8 .oggling losses $as a super#ening +act that pre#ented the company +rom continuing to grant the more generous amount o+ separation pay. The +act that 6orth :a#ao at the point o+ its +orced closure #oluntarily paid any separation .ene+its at all 8 although not re uired .y la$ 8 and 3/.C8days* $orth at that& should ha#e elicited admiration instead o+ condemnation. %ut to re uire it to continue .eing generous $hen it is no longer in a position to do so $ould certainly .e unduly oppressi#e& un+air and most re#olting to the conscience. >9'L'>>'6E G2AE"6!E6T AS ST2CZ92L:E" CA662T %E 9EL: L'A%LE T2 >A; T9E E!>L2;EES. The Solicitor General stresses that 6orth :a#ao $as among the assets trans+erred .y >6% to the national go#ernment& 9e then concludes that N(i)t $ould& there+ore& .e incongruous to declare that the 6ational Go#ernment& $hich should al$ays .e presumed to .e sol#ent& could not pay no$ pri#ate respondents* money claims.O Such argumentation is completely misplaced. E#en i+ the national go#ernment o$ned or controlled M3.M` o+ the common stoc) and 300` o+ the pre+erred stoc) o+ 6orth :a#ao& it remains only a stoc)holder thereo+& and under e-isting la$s and pre#ailing 5urisprudence& a stoc)holder as a rule is not directly& indi#idually and,or personally lia.le +or the inde.tedness o+ the corporation. The o.ligation o+ 6orth :a#ao cannot .e considered the o.ligation o+ the national go#ernment& hence& $hether the latter .e sol#ent or not is not material to the instant case. The respondents ha#e not sho$n that this case constitutes one o+ the instances $here the corporate #eil may .e pierced.B3ED From another angle& the national go#ernment is not the employer o+ pri#ate respondent and his co8complainants& so there is no reason to e-pect any )ind o+ .ailout .y the national go#ernment under e-isting la$ and 5urisprudence. CESSATION O? B-SINESS OPERATIONS +anata: v. PT<T, 2=& SCRA '= FACTS: 'n Septem.er 3FMM& petitioner $as employed .y respondent >hilippine Telegraph and Telephone Corporation (>TKT) as 5unior cler) $ith a monthly salary o+ >1& M1F.GE. She $as later promoted as Account E-ecuti#e& the position she held until she $as temporarily laid o++ +rom employment on 3 Septem.er 3FFM. >etitioner temporary separation +rom employment $as pursuant to the Temporary Sta++ "eduction >rogram adopted .y respondent due to serious .usiness re#erses. 2n 3H 6o#em.er 3FFM& petitioner recei#ed a letter +rom respondent in#iting her to a#ail hersel+ o+ its Sta++ "eduction >rogram >ac)age e ui#alent to one8month salary +or e#ery year o+ ser#ice& one and one8hal+ month salary& pro8rated 31th month pay& con#ersion to cash o+ unused #acation and sic) lea#e credits& and 9ealth !aintenance 2rganization and group li+e insurance co#erage until +ull payment o+ the separation pac)age. >etitioner& ho$e#er& did not opt to a#ail hersel+ o+ the said pac)age. 2n /H Fe.ruary 3FFF& petitioner recei#ed a 6otice o+ "etrenchment +rom respondent permanently dismissing her +rom employment e++ecti#e 3H Fe.ruary 3FFF. >etitioner +iled illegal dismissal .e+ore the La.or Ar.iter. >etitioner su.mitted e#idence that the respondents ha#e no grounds +or retrenchment and that the company is not su++ering +rom serious losses. 9o$e#er& the respondent also su.mitted +inancial reports to sustain its ground o+ a #alid retrenchment. The La.or Ar.iter held in +a#or o+ the petitioner $hich $as a++irmed .y the 6L"C. 't +urther noted that the :epartment o+ La.or and Employment (:2LE) $as not noti+ied .y the respondent o+ its retrenchment program as re uired .y la$. 2n appeal to CA& the decision o+ the 6L"C $as re#ersed. 't held that the company is su++ering serious +inancial losses as re+lected on its +inancial statements su.mitted and prepared .y independent auditors o+ the company. 9ence& this petition. 'SS(E: 7hether there is a #alid retrenchment .y the respondent company. 9EL:: >ertinent pro#ision is Article /M1 o+ the La.or Code. For a #alid retrenchment& the +ollo$ing re uisites must .e complied $ith: (a) the retrenchment is necessary to pre#ent losses and such losses are pro#en4 (.) $ritten notice to the employees and to the :2LE at least one month prior to the intended date o+ retrenchment4 and (c) payment o+ separation pay e ui#alent to one8month pay or at least one8 hal+ month pay +or e#ery year o+ ser#ice& $hiche#er is higher. The +inancial statements re+lect that respondent su++ered su.stantial loss in the amount o+ >CCM !illion .y 10 <une 3FFM. The "eport o+ SGA K Co. su.stantiates the alleged precarious +inancial condition o+ the respondent. The +inancial statements audited .y independent e-ternal auditors constitute the normal method o+ pro#ing the pro+it and loss per+ormance o+ a company. The respondent complied $ith the re uisite notices to the employee and the :2LE to e++ect a #alid retrenchment. >etitioner +ailed to re+ute that she recei#ed the $ritten notice o+ retrenchment +rom respondent on 3H 6o#em.er 3FFM. Although respondent +ailed to +urnish :2LE $ith a +ormal letter noti+ying it o+ the retrenchment& it still su.stantially complied $ith the re uirement. Since the 6ational Conciliation and !ediation %oard& the reconciliatory arm o+ :2LE& super#ised the negotiation +or separation pac)age& $e agree $ith the Court o+ Appeals that it $ould .e super+luous to still re uire respondent to ser#e notice o+ the retrenchment to :2LE. 'n +act& e#en granting arguendo that respondent $as not e-periencing losses& it is still authorized .y Article /M1B/HD o+ the La.or Code to cease its .usiness operations. E-plicit in the said pro#ision is that closure or cessation o+ .usiness operations is allo$ed e#en i+ the .usiness is not undergoing economic losses. The o$ner& +or any .ona +ide reason& can la$+ully close shop anyone. <ust as no la$ +orces anyone to go into .usiness& no la$ can compel any.ody to continue in it. 't $ould indeed .e stretching the intent and spirit o+ the la$ i+ $e $ere to un5ustly inter+ere $ith the management prerogati#e to close or cease its .usiness operations& 5ust .ecause said .usiness operations are not su++ering any loss or simply to pro#ide the $or)ers continued employment. The la$ recognizes the right o+ e#ery .usiness entity to reduce its $or) +orce i+ the same is made necessary .y compelling economic +actors $hich $ould endanger its e-istence or sta.ility. 'n spite o+ o#er$helming support granted .y the social 5ustice pro#isions o+ our Constitution in +a#or o+ la.or& the +undamental la$ itsel+ guarantees& e#en during the process o+ tilting the scales o+ social 5ustice to$ards $or)ers and employees& Ithe right o+ enterprises to reasona.le returns o+ in#estment and to e-pansion and gro$th.I To hold other$ise $ould not only .e oppressi#e and inhuman& .ut also counter8producti#e and ultimately su.#ersi#e o+ the nation@s thrust to$ards a resurgence in our economy $hich $ould ultimately .ene+it the ma5ority o+ our people. 7here appropriate and $here conditions are in accord $ith la$ and 5urisprudence& the Court has authorized #alid reductions in the $or) +orce to +orestall .usiness losses& the hemorrhaging o+ capital& or e#en to recognize an o.#ious reduction in the #olume o+ .usiness $hich has rendered certain employees redundant.

7e also +ind that the respondent complied $ith the re uisite notices to the employee and the :2LE to e++ect a #alid retrenchment. >etitioner +ailed to re+ute that she recei#ed the $ritten notice o+ retrenchment +rom respondent on 3H 6o#em.er 3FFM. Although respondent +ailed to +urnish :2LE $ith a +ormal letter noti+ying it o+ the retrenchment& it still su.stantially complied $ith the re uirement. Since the 6ational Conciliation and !ediation %oard& the reconciliatory arm o+ :2LE& super#ised the negotiation +or separation pac)age& $e

29
agree $ith the Court o+ Appeals that it $ould .e super+luous to still re uire respondent to ser#e notice o+ the retrenchment to :2LE. RED-NDANCY @ILTS.IRE ?ILE CO INC v. NLRC %)9 SCRA ''2 ,?ebruar4 1, %))% FACTS: >ri#ate respondent Aicente T. 2ng $as the Sales !anager o+ petitioner 7iltshire File Co.& 'nc. (I7iltshireI) +rom 3H !arch 3FM3 up to 3M <une 3FMC. 2n 31 <une 3FMC& upon pri#ate respondent@s return +rom a .usiness and pleasure trip a.road& he $as in+ormed .y the >resident o+ petitioner 7iltshire that his ser#ices $ere .eing terminated. >ri#ate respondent maintains that he tried to get an e-planation +rom management o+ his dismissal .ut to no a#ail. 2n 3M <une 3FMC& $hen pri#ate respondent again tried to spea) $ith the >resident o+ 7iltshire& the company@s security guard handed him a letter $hich +ormally in+ormed him that his ser#ices $ere .eing terminated upon the ground o+ redundancy. >ri#ate respondent +iled& on /3 2cto.er 3FMC& a complaint .e+ore the La.or Ar.iter +or illegal dismissal alleging that his position could not possi.ly .e redundant .ecause no.ody (sa#e himsel+) in the company $as then per+orming the same duties. >ri#ate respondent +urther contended that retrenching him could not pre#ent +urther losses .ecause it $as in +act through his remar)a.le per+ormance as Sales !anager that the Company had an unprecedented increase in domestic mar)et share the preceding year. For that accomplishment& he continued& he $as promoted to !ar)eting !anager and $as authorized .y the >resident to hire +our (E) Sales E-ecuti#es +i#e (C) months prior to his termination. 'n its ans$er& petitioner company alleged that the termination o+ respondent@s ser#ices $as a cost8cutting measure: that in :ecem.er 3FME& the company had e-perienced an unusually lo$ #olume o+ orders: and that it $as in +act +orced to rotate its employees in order to sa#e the company. :espite the rotation o+ employees& petitioner alleged4 it continued to e-perience +inancial losses and pri#ate respondent@s position& Sales !anager o+ the company& .ecame redundant. 'SS(E: 7hether or not the termination o+ the respondent due to redundancy $as proper. 9EL:: Turning to the legality o+ the termination o+ pri#ate respondent@s employment& $e +ind merit in petitioner@s .asic argument. 7e are una.le to sustain pu.lic respondent 6L"C@s holding that pri#ate respondent@s dismissal $as not 5usti+ied .y redundancy and hence illegal. 'n the +irst place& $e note that $hile the letter in+orming pri#ate respondent o+ the termination o+ his ser#ices used the $ord IredundantI& that letter also re+erred to the company ha#ing IincurBredD +inancial losses $hich BinD +act has compelled BitD to resort to retrenchment to pre#ent +urther lossesI. 1 Thus& $hat the letter $as in e++ect saying $as that .ecause o+ +inancial losses& retrenchment $as necessary& $hich retrenchment in turn resulted in the redundancy o+ pri#ate respondent@s position. 't is o+ no legal moment that the +inancial trou.les o+ the company $ere not o+ pri#ate respondent@s ma)ing. >ri#ate respondent cannot insist on the retention o+ his position upon the ground that he had not contri.uted to the +inancial pro.lems o+ 7iltshire. The characterization o+ pri#ate respondent@s ser#ices as no longer necessary or sustaina.le& and there+ore properly termina.le& $as an e-ercise o+ .usiness 5udgment on the part o+ petitioner company. The $isdom or soundness o+ such characterization or decision $as not su.5ect to discretionary re#ie$ on the part o+ the La.or Ar.iter nor o+ the 6L"C so long& o+ course& as #iolation o+ la$ or merely ar.itrary and malicious action is not sho$n. 't should also .e noted that the position held .y pri#ate respondent& Sales !anager& $as clearly managerial in character ESCAREAL v. NLRC #P.ILIPPINE RE?ININ$ CO INC* 5%9 SCRA =15 Se!tember 5, %))5 FACTS: Escareal $as hired .y the >"C +or the position o+ >ollution Control !anager e++ecti#e on 3H Septem.er 3FGG $ith a starting monthly pay o+ >E&/10 004 the employment $as made permanent e++ecti#e on 3H !arch 3FGM. The contract o+ employment pro#ides& inter alia& that his Iretirement date $ill .e the day you reach your H0th .irthday& .ut there is pro#ision (sic) +or #oluntary retirement $hen you reach your C0th .irthday. %ases +or the hiring o+ Escareal are L2' 6o. CMM implementing the 6ational >ollution Control :ecree& >.: 6o. FME& and !emorandum Circular 6o. 0/& implementing L2' 6o. CMM& $hich amended !emorandum Circular 6o. 00G& Series o+ 3FGG& issued .y the 6ational >ollution Control Commission (6>CC). 3 April 3FGF: Escareal $as also designated as Sa+ety !anager pursuant to Article 3H/ o+ the La.or Code (>.:. EE/& as amended) and the pertinent implementing rule thereon. At the time o+ such designation& Escareal $as duly accredited as a Sa+ety >ractitioner .y the %ureau o+ La.or Standards& :epartment o+ La.or and Employment (:2LE) and the Sa+ety 2rganization o+ the >hilippines. 'n addition& the pertinent rules on 2ccupational 9ealth and Sa+ety implementing the La.or Code pro#ide +or the designation o+ +ull8time sa+ety men to ensure compliance $ith the sa+ety re uirements prescri.ed .y the %ureau o+La.or Standards. Conse uently& Escareal@s designation $as changed to >ollution Control and Sa+ety !anager. 'n the course o+ his employment& Escareal@s salary $as regularly upgraded4 the last pay hi)e $as granted on /M !arch 3FMM $hen he $as o++icially in+ormed that his salary $as .eing increased to >/1&300.00 per month e++ecti#e 3 April 3FMM. This last increase is indisputa.ly a +ar cry +rom his starting monthly salary o+ >E&/10.00. Sometime in the +irst $ee) o+ 6o#em.er 3FMG& >"C@s >ersonnel Administration !anager George %. :itching in+ormed Escareal a.out the company@s plan to declare the position o+ >ollution Control and Sa+ety !anager redundant. :itching attempted to con#ince Escareal to accept the redundancy o++er or a#ail o+ the company@s early retirement plan. Escareal re+used and instead insisted on completing his contract as he still had a.out three and a hal+ (1 3,/) years le+t .e+ore reaching the mandatory retirement age o+ si-ty (H0). 3C <une 3FMM: Escareal@s immediate superior& >"C@s Engg :ept !anager <esus >. <a#elona& +ormally in+ormed Escareal that the position o+ ISa+ety and >ollution Control !anager $ill .e declared redundant e++ecti#e at the close o+ $or) hours on 3Cth <uly 3FMM.I Escareal $as also noti+ied that the +unctions and duties o+ the position to .e declared redundant $ill .e a.sor.ed and integrated $ith the duties o+ the 'ndustrial Engineering !anager4 as a result thereo+& Escareal I$ill recei#e +ull separation .ene+its pro#ided under the >"C "etirement >lan and additional redundancy payment under the scheme applying to employees $ho are C0 years old and a.o#e and $hose 5o.s ha#e .een declared redundant .y !anagement.I 'SS(E: 7hether or not >"C had #alid and +actual .asis to declare the position held .y the employee redundant. 9EL:: 62. "edundancy& +or purposes o+ the La.or Code& e-ists $here the ser#ices o+ an employee are in e-cess o+ $hat is reasona.ly demanded .y the actual re uirements o+ the enterprise4 a position is redundant $hen it is super+luous& and super+luity o+ a position or positions may .e the outcome o+ a num.er o+ +actors& such as /CGthe o#erhiring o+ $or)ers& a decreased #olume o+ .usiness or the dropping o+ a particular product line or ser#ice acti#ity pre#iously manu+actured or underta)en .y the enterprise.

'n the second place& $e do not .elie#e that redundancy in an employer@s personnel +orce necessarily or e#en ordinarily re+ers to duplication o+ $or). That no other person $as holding the same position that pri#ate respondent held prior to the termination o+ his ser#ices& does not sho$ that his position had not .ecome redundant. 'ndeed& in any $ell8organized .usiness enterprise& it $ould .e surprising to +ind duplication o+ $or) and t$o (/) or more people doing the $or) o+ one person. 7e .elie#e that redundancy& +or purposes o+ our La.or Code& e-ists $here the ser#ices o+ an employee are in e-cess o+ $hat is reasona.ly demanded .y the actual re uirements o+ the enterprise. Succinctly put& a position is redundant $here it is super+luous& and super+luity o+ a position or positions may .e the outcome o+ a num.er o+ +actors& such as o#erhiring o+ $or)ers& decreased #olume o+ .usiness& or dropping o+ a particular product line or ser#ice acti#ity pre#iously manu+actured or underta)en .y the enterprise. E The employer has no legal o.ligation to )eep in its payroll more employees than are necessarily +or the operation o+ its .usiness.

'n the third place& in the case at .ar& petitioner 7iltshire& in #ie$ o+ the contraction o+ its #olume o+ sales and in order to cut do$n its operating e-penses& e++ected some changes in its organization .y a.olishing some positions and there.y e++ecting a reduction o+ its personnel. Thus& the position o+ Sales !anager $as a.olished and the duties pre#iously discharged .y the Sales !anager simply added to the duties o+ the General !anager& to $hom the Sales !anager used to report.

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"edundancy in an employer@s personnel +orce& ho$e#er& does not necessarily or e#en ordinarily re+er to duplication o+ $or). That no other person $as holding the same position $hich the dismissed employee held prior to the termination o+ his ser#ices does not sho$ that his position had not .ecome redundant. >"C had no #alid and accepta.le .asis to declare the position o+ >ollution Control and Sa+ety !anager redundant as the same may not .e considered as super+luous4 said positions are re uired .y la$. Thus& it cannot .e gainsaid that the ser#ices o+ Escareal are in e-cess o+ $hat is reasona.ly re uired .y the enterprise. 2ther$ise& >"C $ould not ha#e allo$ed ten (30) long years to pass .e+ore opening its eyes to that +act4 neither $ould it ha#e increased the Escareal@s salary to >/1&300.00 a month e++ecti#e 3 April 3FMM. That Escareal@s positions $ere not duplicitous is .est e#idenced .y >"C@s recognition o+ their imperati#e need thereo+& this is underscored .y the +act that !iguelito S. 6a#arro& the company@s 'ndustrial Engineering !anager& $as designated as >ollution Control and Sa+ety !anager on the #ery same day o+ Escareal@s termination. 'ndeed& the proposition that a department manned .y a num.er o+ engineers presuma.ly .ecause o+ the hea#y $or)load& could still ta)e on the additional responsi.ilities $hich $ere originally reposed in an altogether separate section headed .y Escareal& is di++icult to accept. '+ >"C +elt that either Escareal $as incompetent or that the tas) could .e per+ormed .y someone more uali+ied& then $hy is it that the person designated to the position hardly had any e-perience in the +ield concernedP And $hy re$ard Escareal& .arely +i#e (C) months .e+ore the dismissal& $ith an increase in salaryP '+ .ased on the ground o+ redundancy& such a mo#e $ould .e in#alid as the creation o+ said position is mandated .y the la$4 the same cannot there+ore .e declared redundant. '+ the aim $as to generate sa#ings in terms o+ the salaries that >"C $ould not .e paying Escareal any more as a result o+ the streamlining o+ operations +or impro#ed e++iciency& such a mo#e could hardly .e 5usti+ied in the +ace o+ >"C@s hiring o+ ten (30) +resh graduates +or the position o+ !anagement Trainee and ad#ertising +or #acant positions in the Engineering,Technical :i#ision at around the time o+ the termination. There $ould seem to .e no compelling reason to sa#e money .y remo#ing such an important position. As sho$n .y their recent +inancial statements& >"C@s year8end net pro+its had steadily increased +rom 3FMG to 3FF0. 7hile concededly& Article /M1 o+ the La.or Code does not re uire that the employer should .e su++ering +inancial losses .e+ore he can terminate the ser#ices o+ the employee on the ground o+ redundancy& it does not mean either that a company $hich is doing $ell can e++ect such a dismissal $himsically or capriciously. The +act that a company is su++ering +rom .usiness losses merely pro#ides stronger 5usti+ication +or the termination. DE OCA+PO ,. NLRC 5%9 SCRA '25 FACTS: >etitioners are employees o+ pri#ate respondent %ali$ag !ahogany Corporation. They are either o++icers or mem.ers o+ the %ali$ag !ahogany Corporation (nion8 CF7& the e-isting collecti#e .argaining agent o+ the ran) and +ile employees in the company. >ri#ate respondent %ali$ag !ahogany Corporation is an enterprise engaged in the production o+ $ooden doors and +urniture and has a total $or)+orce o+ a.out F00 employees. The company and the union entered into a C%A one o+ its contents allo$s the cash con#ersion o+ unused #acation and sic) lea#e. 'n 6o#em.er& 3FMF& the union made se#eral re uests +rom the company& one o+ $hich $as the cash con#ersion o+ unused #acation and sic) lea#e +or 3FMG83FMM and 3FMM83FMF. Acting on the matter& the company ruled to allo$ payment o+ unused #acation and sic) lea#es +or the period o+ 3FMG83FMM .ut disallo$ed cash con#ersion o+ the 3FMM83FMF unused lea#es. 2n <anuary 1& 3FF0& the company issued suspension orders a++ecting t$enty (/0) employees +or +ailure to render o#ertime $or) on :ecem.er 10& 3FMF. The suspension $as +or a period o+ three (1) days e++ecti#e <anuary 1& 3FFH to <anuary C& 3FF0. 2n the same day& the union +iled a notice o+ stri)e on the grounds o+ un+air la.or practice particularly the #iolation o+ the C%A pro#isions on non8payment o+ unused lea#es and illegal dismissal o+ se#en (G) employees in 6o#em.er& 3FMF. 2n <anuary 31& 3FF0& the company issued a notice o+ termination to three (1) employees or union mem.ers& namely& Cecile de 2campo& "ene Aillanue#a and !arcelo dela Cruz& o+ the machinery department& allegedly to e++ect cost reduction and redundancy. Conse uently& the union staged a stri)e on Fe.ruary H& 3FF0. 'SS(E: 7hether or not the dismissal is 5usti+ied .y redundancy. 9EL:: 7e sustain respondent Commission@s +inding that petitioners@ dismissal $as 5usti+ied .y redundancy due to super+luity and hence legal. 7e .elie#e that redundancy& +or purposes o+ our La.or Code& e-ists $here the ser#ices o+ an employee are in e-cess o+ $hat is reasona.ly demanded .y the actual re uirement o+ the enterprise. Succinctly put& a position is redundant $here it is super+luous& and super+luity o+ a position or positions may .e the outcome o+ a num.er o+ +actors& such as o#er hiring o+ $or)ers& decreased #olume o+ .usiness& or dropping o+ a particular product line or ser#ice acti#ity pre#iously manu+actured or underta)en .y the enterprise. The employer had no legal o.ligation to )eep in its payroll more employees& than are necessary +or the operation o+ its .usiness. (7iltshire File Co.& 'nc. #. 6ational La.or "elations Commission& G.". 6o. M//EF& Fe.ruary G& 3FF34 3F1 SC"A HHC&HG/). The reduction o+ the num.er o+ $or)ers in a company made necessary .y the introduction o+ the ser#ices o+ Gemac !achineries in the maintenance and repair o+ its industrial machinery is 5usti+ied. There can .e no uestion as to the right o+ the company to contract the ser#ices o+ Gemac !achineries to replace the ser#ices rendered .y the terminated mechanics $ith a #ie$ to e++ecting more economic and e++icient methods o+ production. 'n the same case& 7e ruled that I(t)he characterization o+ (petitioners@) ser#ices as no longer necessary or sustaina.le& and there+ore properly termina.le& $as an e-ercise o+ .usiness 5udgment on the part o+ (pri#ate respondent) company. The $isdom or soundness o+ such characterization or decision $as not su.5ect to discretionary re#ie$ on the part o+ the La.or Ar.iter nor o+ the 6L"C so long& o+ course& as #iolation o+ la$ or merely ar.itrary and malicious action is not sho$nI (i.id& p. HG1). 'n contracting the ser#ices o+ Gemac !achineries& as part o+ the company@s cost8 sa#ing program& the ser#ices rendered .y the mechanics .ecame redundant and super+luous& and there+ore properly termina.le. The company merely e-ercised its .usiness 5udgment or management prerogati#e. And in the a.sence o+ any proo+ that the management a.used its discretion or acted in a malicious or ar.itrary manner& the court $ill not inter+ere $ith the e-ercise o+ such prerogati#e. DISEASE S4 vs. Court oE A!!eals, $.R. No. %=55)9, ?ebruar4 51, 5((9 Facts: >ri#ate respondent <aime Sahot has .een $or)ing +or petitioners* +amily8o$ned truc)ing .usiness named Aicente Sy Truc)ing starting in 3FCM. Since that time& the +amily .usiness has changed names& +irst +rom T. >aulino Truc)ing Ser#ice& then to H%*s Truc)ing Corporation& and +inally to S%T Truc)ing Corporation. Throughout all these changes and +or 1H years& Sahot remained $ith the .usiness. 7hen Sahot $as already CF years old& he had recurring a.sences due to his su++ering #arious ailments. 9is le+t thigh& in particular& has .een causing him pain& $hich greatly a++ected his per+ormance as a dri#er. A+ter in uiring $ith the SSS regarding his medical and retirement .ene+its& he +ound that his premium payments had not .een remitted .y his employer. Later& he +iled a $ee)8long lea#e during $hich time he $as medically e-amined and treated +or se#eral illnesses. (pon the ad#ice o+ S%T Truc)ing Ser#ice management& he +iled a +ormal re uest +or e-tension o+ his lea#e. 't $as at this time that Sahot $as +irst threatened o+ termination +rom $or)& $ith his employers later carrying out this threat .y dismissing him. 'SS(E: 7hether or not there $as #alid dismissal 9EL:: Article /GG(.) o+ the La.or Code puts the .urden o+ pro#ing that the dismissal o+ an employee $as +or a #alid or authorized cause on the employer& $ithout distinction $hether the employer admits or does not admit the dismissal. For an

31
employee*s dismissal to .e #alid& (a) the dismissal must .e +or a #alid cause and (.) the employee must .e a++orded due process. Article /ME o+ the La.or Code authorizes an employer to terminate an employee on the ground o+ disease. 9o$e#er& in order to #alidly terminate employment on this ground& %oo) A'& "ule '& Section M o+ the 2mni.us 'mplementing "ules o+ the La.or Code re uires a medical certi+icate. This re uirement cannot .e dispensed $ith4 other$ise& it $ould sanction the unilateral and ar.itrary determination .y the employer o+ the gra#ity or e-tent o+ the employee*s illness and thus de+eat the pu.lic policy in the protection o+ la.or. 'n the case at .ar& the employer clearly did not comply $ith the medical certi+icate re uirement .e+ore Sahot*s dismissal $as e++ected. 'n addition& there is li)e$ise the determination i+ the procedural aspect o+ due process had .een complied $ith .y the employer. From the records& it clearly appears that procedural due process $as not o.ser#ed in the separation o+ pri#ate respondent .y the management o+ the truc)ing company. The employer is re uired to +urnish an employee $ith t$o $ritten notices .e+ore the latter is dismissed: (3) the notice to apprise the employee o+ the particular acts or omissions +or $hich his dismissal is sought& $hich is the e ui#alent o+ a charge4 and (/) the notice in+orming the employee o+ his dismissal& to .e issued a+ter the employee has .een gi#en reasona.le opportunity to ans$er and to .e heard on his de+ense. These& the petitioners +ailed to do& e#en only +or record purposes. 7hat management did $as to threaten the employee $ith dismissal& then actually implement the threat $hen the occasion presented itsel+ .ecause o+ pri#ate respondent*s pain+ul le+t thigh. 2n the other hand& the Court agrees $ith the CA in its o.ser#ation o+ the +ollo$ing circumstances as proo+ that respondent did not terminate petitioner@s employment: +irst& the only cause o+ action in petitioner@s original complaint is that he $as No++ered a #ery lo$ separation payO4 second& there $as no allegation o+ illegal dismissal& .oth in petitioner@s original and amended complaints and position paper4 and& third& there $as no prayer +or reinstatement. 'n consonance $ith the a.o#e +indings& the Court +inds that petitioner $as the one $ho initiated the se#erance o+ his employment relations $ith respondent. 't is e#ident +rom the #arious pleadings +iled .y petitioner that he ne#er intended to return to his employment $ith respondent on the ground that his health is +ailing. 'ndeed& petitioner did not as) +or reinstatement. 'n +act& he re5ected respondent@s o++er +or him to return to $or). This is tantamount to resignation. "esignation is de+ined as the #oluntary act o+ an employee $ho +inds himsel+ in a situation $here he .elie#es that personal reasons cannot .e sacri+iced in +a#or o+ the e-igency o+ the ser#ice and he has no other choice .ut to disassociate himsel+ +rom his employment. 't may not .e amiss to point out at this 5uncture that aside +rom Article /ME o+ the La.or Code& the a$ard o+ separation pay is also authorized in the situations dealt $ith in Article /M1B3HD o+ the same Code and under Section E (.)& "ule '& %oo) A' o+ the 'mplementing "ules and "egulations o+ the said CodeB3GD $here there is illegal dismissal and reinstatement is no longer +easi.le. %y $ay o+ e-ception& this Court has allo$ed grants o+ separation pay to stand as Na measure o+ social 5usticeO $here the employee is #alidly dismissed +or causes other than serious misconduct or those re+lecting on his moral character.B3MD 9o$e#er& there is no pro#ision in the La.or Code $hich grants separation pay to #oluntarily resigning employees. 'n +act& the rule is that an employee $ho #oluntarily resigns +rom employment is not entitled to separation pay& e-cept $hen it is stipulated in the employment contract or C%A& or it is sanctioned .y esta.lished employer practice or policy.B3FD 'n the present case& neither the a.o#ementioned pro#isions o+ the La.or Code and its implementing rules and regulations nor the e-ceptions apply .ecause petitioner $as not dismissed +rom his employment and there is no e#idence to sho$ that payment o+ separation pay is stipulated in his employment contract or sanctioned .y esta.lished practice or policy o+ herein respondent& his employer. Since petitioner $as not terminated +rom his employment and& instead& is deemed to ha#e resigned there+rom& he is not entitled to separation pay under the pro#isions o+ the La.or Code. The +oregoing not$ithstanding& this Court& in a num.er o+ cases& has granted +inancial assistance to separated employees as a measure o+ social and compassionate 5ustice and as an e uita.le concession. Ta)ing into consideration the +actual circumstances o.taining in the present case& the Court +inds that petitioner is entitled to this )ind o+ assistance. 'n this regard& the Court +inds credence in petitioner@s contention that he is in the employ o+ respondent +or more than 1C years. 'n the a.sence o+ a su.stantial re+utation on the part o+ respondent& the Court agrees $ith the +indings o+ the La.or Ar.iter and the 6L"C that respondent company is not distinct +rom its predecessors .ut& in +act& merely continued the operation o+ the latter under the same o$ners and the same .usiness #enture. The Court +urther notes that there is no e#idence on record to sho$ that petitioner has any derogatory record during his long years o+ ser#ice $ith respondent and that his employment $as se#ered not .y reason o+ any in+raction on his part .ut .ecause o+ his +ailing physical condition. Add to this the $illingness o+ respondent to gi#e him +inancial assistance. 9ence& .ased on the +oregoing& the Court +inds that the a$ard o+ >C0&000.00 to petitioner as +inancial assistance is deemed e uita.le under the circumstances. @uerth Ph l !! nes, In;. vs. Ro:ante Ynson $.R. No. %12)95.?ebruar4 %2, 5(%5 FACTS: 7uerth >hilippines& 'nc. (petitioner) hired "odante ;nson (respondent)) as its 6ational Sales !anager (6S!) +or Automoti#e. 9e +ailed to report to $or) starting <anuary /H& /001 and turned out that on <an. /E& /001& he su++ered a stro)e and $as con+ined at the :a#ao :octors* 9ospital. 9e re uested that administrati#e A plain reading o+ the a.o#e uoted pro#ision clearly presupposes that it is the employer $ho terminates the ser#ices o+ the employee +ound to .e su++ering +rom any disease and $hose continued employment is prohi.ited .y la$ or is pre5udicial to his health as $ell as to the health o+ his co8employees. 't does not contemplate a situation $here it is the employee $ho se#ers his or her employment ties. This is precisely the reason $hy Section M& "ule 3& %oo) A' o+ the 2mni.us "ules 'mplementing the La.or Code& directs that an employer shall not terminate the ser#ices o+ the employee unless there is a certi+ication .y a competent pu.lic health authority that the disease is o+ such nature or at such a stage that it cannot .e cured $ithin a period o+ si- (H) months e#en $ith proper medical treatment.

All told& .oth the su.stanti#e and procedural aspects o+ due process $ere #iolated. Clearly& there+ore& Sahot*s dismissal is tainted $ith in#alidity. , llaruel vs. Yeo .an $uan, $.R. No. %')%)%, 3une %, 5(%% FACTS: >etitioner alleged that in <une 3FH1& he $as employed as a machine operator .y "i.onette !anu+acturing Company& an enterprise engaged in the .usiness o+ manu+acturing and selling >AC pipes and is o$ned and managed .y herein respondent ;eo 9an Guan. 2#er a period o+ almost t$enty (/0) years& the company changed its name +our times. Starting in 3FF1 up to the time o+ the +iling o+ petitioner@s complaint in 3FFF& the company $as operating under the name o+ ;uhans Enterprises. :espite the changes in the company@s name& petitioner remained in the employ o+ respondent. >etitioner +urther alleged that on 2cto.er C& 3FFM& he got sic) and $as con+ined in a hospital4 on :ecem.er 3/& 3FFM& he reported +or $or) .ut $as no longer permitted to go .ac) .ecause o+ his illness4 he as)ed that respondent allo$ him to continue $or)ing .ut .e assigned a lighter )ind o+ $or) .ut his re uest $as denied4 instead& he $as o++ered a sum o+ >3C&000.00 as his separation pay4 ho$e#er& the said amount corresponds only to the period .et$een 3FF1 and 3FFF4 petitioner prayed that he .e granted separation pay computed +rom his +irst day o+ employment in <une 3FH1& .ut respondent re+used. Aside +rom separation pay& petitioner prayed +or the payment o+ ser#ice incenti#e lea#e +or three years as $ell as attorney@s +ees.

The La.or Ar.iter +ound +or the respondent& granting him separation pay +rom the <une 3FH1 up to the time o+ separation& and ser#ice incenti#e lea#e e ui#alent to 3C days. The 6L"C a++irmed. 2n appeal& the CA re#ersed the 6L"C on the issue o+ separation pay.

'SS(E: The assigned errors in the instant petition essentially .oil do$n to the uestion o+ $hether petitioner is entitled to separation pay under the pro#isions o+ the La.or Code& particularly Article /ME thereo+& $hich reads as +ollo$s: An employer may terminate the ser#ices o+ an employee $ho has .een +ound to .e su++ering +rom any disease and $hose continued employment is prohi.ited .y la$ or is pre5udicial to his health as $ell as to the health o+ his co8employees: >ro#ided& That he is paid separation pay e ui#alent to at least one (3) month salary or to one8 hal+ (]) month salary +or e#ery year o+ ser#ice $hiche#er is greater& a +raction o+ at least si- months .eing considered as one (3) $hole year.

9EL::

32
$or) .e gi#en to him $hile in :a#ao City& until completion o+ his therapy. The re uest $as disappro#ed .ecause petitioner did not ha#e a .ranch in :a#ao. REOR$ANI7ATION> ABOLITION ;nson $as later sent t$o communications to appear in in#estigations +or a.sence $ithout lea#e& a.andonment o+ $or) and gross ine++iciency. 'n his reply letters& he ga#e as a reason +or his ina.ility to attend in#estigations in !anila the recommendation o+ his doctors that he should continue $ith his reha.ilitation. The medical certi+icate dated <une E& /001 issued .y an attending physician sho$ed& among others& that ;nson $as allo$ed to resume $or)& .ut ad#ised to continue reha.ilitation +or at least another month and a hal+. 6ot satis+ied $ith respondent*s e-planation& petitioner terminated ;nson*s employment in a letter dated Aug. /G& /001 on the ground o+ continued a.sences $ithout +iling a lea#e o+ a.sence. ;nson then +iled a Complaint against petitioner +or illegal dismissal and non8 payment o+ allo$ances in the 6L"C $hich held respondents guilty o+ illegal dismissal and ordered petitioner@s reinstatement. Aggrie#ed& they +iled .e+ore the CA a >etition +or Certiorari. The CA ruled that pursuant to Article /ME o+ the La.or Code& respondent*s illness is considered an authorized cause to 5usti+y his termination +rom employment. The CA ruled that although petitioner did not comply $ith the medical certi+icate re uirement .e+ore respondent*s dismissal $as e++ected& this $as o++set .y respondent@s a.sence +or more than the si- (H)8month period that the la$ allo$s an employee to .e on lea#e in order to reco#er +rom an ailment. 9ence& this >etition +or "e#ie$ on Certiorari. 'SS(E: 7hether or not ;nson*s dismissal $as illegal. 9EL:: 6o. The Supreme Court agreed $ith the CA@s ruling. 7ith regard to disease as a ground +or termination& Article /ME o+ the La.or Code pro#ides that an employer may terminate the ser#ices o+ an employee $ho has .een +ound to .e su++ering +rom any disease and $hose continued employment is prohi.ited .y la$ or is pre5udicial to his health& as $ell as to the health o+ his co8employees. 'n order to #alidly terminate employment on this ground& Section M& "ule '& %oo) A' o+ the 2mni.us "ules 'mplementing the La.or Code re uires that: (i) the employee .e su++ering +rom a disease and his continued employment is prohi.ited .y la$ or pre5udicial to his health or to the health o+ his co8employees& and (ii) a certi+ication .y a competent pu.lic health authority that the disease is o+ such nature or at such a stage that it cannot .e cured $ithin a period o+ si- (H) months e#en $ith proper medical treatment. .ANTEC TRADIN$ CO. CO-RT O? APPEALS 9)( SCRA %)% FACTS: >ri#ate respondent %ernardo Singson $as employed .y petitioner 9ante- Trading Co.& 'nc. (9A6TEL) on M 6o#em.er 3FFE as sales representati#e. 9A6TEL $as engaged in selling laminating machines and ': supplies. 9e $as paid a regular salary o+ >3HC.00,day in addition to >C00.00 tra#elling allo$ance and a 1` 8 C` commission +rom his sales. Sometime in Fe.ruary 3FFH the management o+ 9A6TEL called the attention o+ Singson regarding his deteriorating sales per+ormance. :espite thereo+& Singson@s per+ormance sho$ed no sign o+ impro#ement as it remained inade uate and unsatis+actory. Thus& 9A6TEL& through its president& petitioner !ariano Chua& held a Ione8on8oneI con+erence $ith him on C August 3FFH. The parties presented con+licting #ersions o+ $hat actually transpired during the con+erence. Singson alleged that petitioner !ariano Chua as)ed +or his resignation +rom the company& and re uired him to su.mit a resignation letter other$ise his separation pay& 31th month pay and other monetary .ene+its $ould not .e paid. 7hen he re+used& petitioner !ariano Chua e5ected him +rom the premises o+ 9A6TEL and le+t instructions to the guards on8duty to re+use him admittance. 2n the other hand& petitioners denied that they dismissed Singson and maintained that the con+erence $as merely intended to moti#ate him Ito e-ert more e++ort in his 5o. and mend his $or) attitude4I and that Singson apparently resented petitioner Chua +or it that he ne#er reported .ac) +or $or) a+ter the con+erence. 2n M August 3FFH Singson +iled a complaint $ith the La.or Ar.iter +or illegal dismissal $ith prayer +or reinstatement asserting that he $as dismissed +rom his employment $ithout prior notice and hearing.B/D 2n the contrary& 9A6TEL a#erred that Singson $as not dismissed .ut a.andoned his 5o. a+ter he $as reprimanded. 'SS(E: 7hether pri#ate respondent %ernardo Singson deli.erately a.andoned his employment& or $as illegally dismissed .y the management o+ petitioner 9A6TEL. 9EL:: 7hat is more telling is that on M <une 3FFH& or three (1) days a+ter his employment $as terminated& respondent immediately instituted the instant case +or illegal dismissal $ith a prayer +or reinstatement against his employer. An employee $ho loses no time in protesting his layo++ cannot .y any reasoning .e said to ha#e a.andoned his $or)& +or it is already a $ell8settled doctrine that the +iling .y an employee o+ a complaint +or illegal dismissal $ith a prayer +or reinstatement is proo+ enough o+ his desire to return to $or)& thus negating the employer@s charge o+ a.andonment. Aerily& it $ould .e illogical +or respondent Singson to ha#e le+t his 5o. and therea+ter +ile the complaint against his employer. A.andonment is a matter o+ intention and cannot lightly .e presumed +rom certain e ui#ocal acts. For a.andonment to e-ist& it is essential (a) that the employee must ha#e +ailed to report +or $or) or must ha#e .een a.sent $ithout #alid or 5usti+ia.le reason4 and& (.) that there must ha#e .een a clear intention to se#er the employer8 employee relationship mani+ested .y some o#ert acts 8 the second element is the more determinati#e +actor. !ere a.sence o+ the employee is not su++icient. The .urden o+ proo+ is on the employer to sho$ a clear and deli.erate intent on the part o+ the employee to discontinue employment $ithout any intention o+ returning.

'+ the disease or ailment can .e cured $ithin the period& the employer shall not terminate the employee .ut shall as) the employee to ta)e a lea#e. The employer shall reinstate such employee to his +ormer position immediately upon the restoration o+ his normal health. 'n Triple Eight 'ntegrated Ser#ices& 'nc. #. 6L"C (G.". 6o. 3/FCME& :ecem.er 1& 3FFM)& the Court held that the re uirement +or a medical certi+icate under Article /ME o+ the La.or Code cannot .e dispensed $ith4 other$ise& it $ould sanction the unilateral and ar.itrary determination .y the employer o+ the gra#ity or e-tent o+ the employee*s illness and& thus& de+eat the pu.lic policy on the protection o+ la.or. 'n this case& ;nson should ha#e reported .ac) to $or) or attended the in#estigations conducted .y 7uerth >hilippines& 'nc. immediately upon .eing permitted to $or) .y his doctors& )no$ing that his position remained #acant +or a considera.le length o+ time. 9o$e#er& he did not e#en sho$ any sincere e++ort to return to $or). Clearly& since there is no more hindrance +or him to return to $or) and attend the in#estigations set .y 7uerth >hilippines& 'nc.& ;nson*s +ailure to do so $as $ithout any #alid or 5usti+ia.le reason. 9is conduct sho$s his indi++erence and utter disregard o+ his $or) and his employer*s interest& and displays his clear& deli.erate& and gross dereliction o+ duties. The po$er to dismiss an employee is a recognized prerogati#e inherent in the employer*s right to +reely manage and regulate his .usiness. The la$& in protecting the rights o+ the la.orers& authorizes neither oppression nor sel+8destruction o+ the employer. The $or)er*s right to security o+ tenure is not an a.solute right& +or the la$ pro#ides that he may .e dismissed +or cause. As a general rule& employers are allo$ed $ide latitude o+ discretion in terminating the employment o+ managerial personnel. The mere e-istence o+ a .asis +or .elie#ing that such employee has .reached the trust and con+idence o+ his employer $ould su++ice +or his dismissal. 6eedless to say& an irresponsi.le employee li)e ;nson does not deser#e a position in the $or)place& and it is 7uerth >hilippines& 'nc.*s management prerogati#e to terminate his employment. To .e sure& an employer cannot .e compelled to continue $ith the employment o+ $or)ers $hen continued employment $ill pro#e inimical to the employer*s interest.

>etitioners dismally +ailed to discharge their .urden. Their e#idence& consisting entirely o+ cash #ouchers o+ respondent S'6GS26 and his co8salesman "aul 9ista& +or the months o+ !ay& <une and <uly 3FFH&BFD is grossly anemic 8 i+ not totally irrele#ant 8 to esta.lish that respondent Singson indeed deli.erately and un5usti+ia.ly a.andoned his 5o.. At .est& these cash #ouchers merely sho$ respondent@s lac)luster per+ormance during those months& and that he paled in comparison $ith his co8salesman "aul 9ista in terms o+ sales output. PROCED-RAL D-E PROCESS T@IN NOTICE REG-IRE+ENT $LACO @ELLCO+E P.ILIPPINES E+PLEYADO N$ @ELLCO+E8D?A, INC v. NA$/A/AISAN$

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=29 SCRA 52',+ar;h %%, 5((2 FACTS: 'SS(E: (nion 6AGZAZA'SA6G E!>LE;A:2 6G 7ELLC2!E8:FA (6E78:FA) +iled a >etition +or Certi+ication Election $ith the :2LE86C" see)ing to represent the .argaining unit comprised o+ all the regular ran)8and8+ile employees o+ BpetitionerD company GLAL287ELLC2!E. Se#eral days .e+ore the election GLAL287ELLC2!E issued a circular relati#e to the impro#ement o+ the company*s retirement policy .ringing di++erent employees to di++erent resorts. 'n the meantime& GLAL287ELLC2!E adopted a ne$ Car Allocation >olicy. (nder the pro#isions o+ the said car plan& a prioritization schedule in the assignment o+ company #ehicles is to .e +i-ed .ased on the sales per+ormance o+ the employees. >ursuant to the same& se#eral company cars had to .e reassessed and re8assigned in +a#or o+ other employees more uali+ied under the priority list. 'ncidentally& included among the #ehicles that had to .e re8allocated in accordance $ith the priority schedule o+ the ne$ car plan $ere BthoseD o+ union o++icers 6orman Cerezo and <ossie "oda de Guzman. Accordingly& a memorandum $as sent .y the company to B"espondentD de Guzman ad#ising her that she $ould ha#e to surrender the #ehicle assigned to her in light o+ the ne$ car policy. :e Guzman re+used to turn o#er said car and instead sought reconsideration +rom the company*s 6ational Sales !anager. The latter did not accede to de Guzman*s re uest. :e Guzman& thru counsel& $rote the company& as)ing that the $ithdra$al o+ her car .e held in a.eyance. The company& ho$e#er& re5ected her petition. 2n :ecem.er G& 3FF0& de Guzman recei#ed another memorandum +rom the company& again instructing her to return the #ehicle. The +ollo$ing day& de Guzman sent a letter to the company reiterating her plea +or the suspension o+ the $ithdra$al o+ her car. 2n :ecem.er 3G& 3FF0& a +inal $arning $as sent to de Guzman instructing her to return her assigned #ehicle or else she $ould .e charged +or insu.ordination and .e dismissed. Finally& .ecause o+ de Guzman*s staunch re+usal to comply $ith the order& through a letter dated :ecem.er /0& 3FF0& she $as cited& and at the same time& terminated +or gross insu.ordination. 6orman Cerezo $as o+ the same case. The (nion alleged undue inter+erence due to a massi#e electioneering and manipulati#e acts o+ GLAL287ELLC2!E prior to and during the certi+ication election and that the ne$ Car Allocation >olicy adopted .y the company $as intended to harass& retaliate and discriminate against union o++icers and mem.ers. (nion also challenged the legality o+ the suspension and dismissal o+ t$o o+ its o++icers& namely: 6orman Cerezo and <ossie "oda de Guzman. 't argued that the suspension and dismissal $ere e++ected $ithout any prior hearing (7hich $as the only stic)ing issue in this case). La.or Ar.iter dismissed the charges o+ un+air la.or practice& illegal dismissal and illegal suspension +iled against GLAL287ELLC2!E .y union. 6L"C a++irmed the dismissal o+ the complaint. 6L"C li)e$ise denied the motion +or reconsideration. The CA a++irmed the ruling o+ the 6ational La.or "elations Commission (6L"C) adopted the +indings o+ the la.or ar.iter. 't held that respondents had +ailed to pro++er con#incing e#idence to pro#e that petitioner*s assailed acts $ere ill8moti#ated and deli.erately orchestrated to inter+ere $ith or other$ise in+luence the conduct o+ the certi+ication elections. !oreo#er& the CA ruled that there $as nothing o.5ectiona.le per se a.out the programs or incenti#e schemes that the company had pro#ided +or the employees. The appellate court said that the grant o+ .ene+its to the employees& as $ell as the adoption o+ the Car Allocation >olicy& constituted a proper e-ercise o+ the company*s management prerogati#es. This plain company practice had .een set up to ma)e petitioner*s employee .ene+its competiti#e $ith those o+ other pharmaceutical corporations. :e Guzman and Cerezo $ere among those ad#ersely a++ected .y the policy& .ecause they had +ailed to meet the sales per+ormance re uired thereunder& not .ecause they $ere o++icers o+ the union. 9o$e#er& the CA held that the dismissal o+ :e Guzman and the suspension o+ Cerezo had not .een #alidly e++ected. 2pining that their de+iant actuation to$ard management constituted $ill+ul diso.edience& $hich $as a 5ust cause +or the termination o+ their employment& the appellate court conceded the #alidity o+ the dismissal and suspension. 6onetheless& the CA said that those actions (dismissal and suspension) e++ected .y petitioner could not .e deemed legal& .ecause it had +ailed to comply $ith procedural due process mandated .y the La.or Code and $ith the t$o8notice re uirement under the 'mplementing "ules. According to the CA& petitioner did not accord pri#ate respondents the .ene+it o+ a proper charge& an opportunity to de+end themsel#es& and a +ormal in#estigation. The appellate court opined that the !emoranda $ere merely demands +or respondents to comply $ith the order to turn o#er their assigned cars. Those 7hether the Court o+ Appeals erred in ruling that petitioner did not o.ser#e procedural due process in terminating and suspending the employment o+ de Guzman and Cerezo& respecti#ely. 9EL:: ;ES& since there $as su.stantial compliance through the memoranda. 'n the present case& petitioner sent respondents a total o+ three !emoranda stating that their stu..orn re+usal to comply $ith the car policy and to surrender the su.5ect #ehicle constituted gross insu.ordination& +or $hich they could .e dismissed. The :ecem.er C& 3FF0 !emorandum sent to "espondent :e Guzman speci+ied her acts that constituted gross insu.ordination. To each !emorandum& respondents $ere a.le to reply and e-pla sincein& $ith the aid o+ their counsel& $hy they had re+used to return the #ehicles4 and& in e++ect& $hy they should not .e dismissed +or gross insu.ordination. 'nitially& they as)ed petitioner not to implement the car policy in the light o+ the Complaint and the !otion +or the 'ssuance o+ a 7rit o+ >reliminary 'n5unction that they had +iled. They e-plained that they could not $or) e++ecti#ely and e++iciently +or the company $ithout the cars that had .een assigned to them. 'n their $ritten replies to petitioner*s succeeding !emoranda 88 $hich reiterated that their actions constituted gross insu.ordination and could result in their termination 88 respondents& still through their counsel& reasoned that they $ere not claiming o$nership o+ the car. They said that their re+usal to surrender the car to the company could not .e denominated as gross insu.ordination& .ecause they $ere merely acting upon the ad#ice o+ their counsel. They added that& to en5oin the implementation o+ the car policy& they had already lodged $ith the 6L"C a complaint +or un+air la.or practice. Their counsel +urther alleged that :e Guzman $as apprehensi#e that she might not immediately .e gi#en a replacement upon the return o+ the car. 9e stressed that the #ehicle $as necessary to pre#ent ad#erse e++ects on the sales per+ormance o+ respondents. (ltimately& a+ter petitioner had sent them a +inal $arning& to $hich they also a.ly replied& it ser#ed them a letter terminating their employment. 6either Section / o+ %oo) A o+ "ule LL''' nor Section /(d) o+ "ule 3 o+ %oo) A' o+ the 'mplementing "ules re uire strict literal compliance $ith the stated procedure4 only su.stantial compliance is needed. 2n this .asis& the !emoranda sent to respondents may .e deemed to ha#e su++iciently con+ormed to the +irst notice re uired under the 'mplementing "ules. The !emoranda ser#ed the purpose o+ in+orming them o+ the pending matters .eclouding their employment and o+ e-tending to them an opportunity to clear the air. 'n +act& not only $ere respondents duly in+ormed o+ the particular acts +or $hich their dismissal $as sought4 they $ere& in truth and in +act& a.le to de+end themsel#es and to respond to the charges $ith the assistance o+ a counsel o+ their o$n choosing. "espondents $ere amply in+ormed o+ the cause o+ their dismissal. Their correspondence $ith petitioner too) almost a month& $hich $as su++icient Ncooling timeO $ithin $hich the parties could ha#e& and in +act had& tried to settle the pro.lem amica.ly. !oreo#er& petitioner*s !emoranda amply ga#e them a distinct& di++erent and e++ecti#e +irst le#el o+ remedy ($hich $as to surrender the #ehicles) to protect their 5o.s. Furthermore& they $ere still a.le to +ile a Complaint $ith the la.or ar.iter& $ith .etter )no$ledge o+ the cause o+ their dismissal& $ith longer time to prepare their case& and $ith greater opportunity to ta)e care o+ the +inancial needs o+ their +amily pendente lite. Aga.on #. 6L"C e++ecti#ely re#erted to 7enphil and ruled that a dismissal due to a.andonment 88 a 5ust cause 88 $as not illegal or ine++ectual& e#en i+ done $ithout due process4 .ut that the employer should indemni+y the employee $ith Nnominal damages +or non8compliance $ith statutory due process.O To stress& i+ the dismissal is .ased on a 5ust cause under Article /M/ o+ the La.or Code& the employer must gi#e the employee (3) t$o $ritten notices and (/) a hearing (or at least& an opportunity to .e heard). The +irst notice is intended to in+orm the employee o+ the employer*s intent to dismiss and the particular acts or omissions +or $hich the dismissal is sought. The second notice is intended to in+orm the employee o+ the employer*s decision to dismiss. This decision& ho$e#er& must come only a+ter the employee has .een gi#en a reasona.le period& +rom receipt o+ the +irst notice& $ithin $hich to ans$er the charge4 and ample opportunity to .e heard $ith the assistance o+ counsel& i+ the employee so desires. The t$in re uirements o+ (a) t$o notices and (.) hearing are necessary to protect the employee*s security o+ tenure& $hich is enshrined in the Constitution& the La.or Code and related la$s. / n" oE / n"s Trans!ort vs. NLRC, !emoranda merely intimated the possi.ility that :e Guzman and Cerezo might .e charged and dismissed i+ they continued to diso.ey the order.

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$.R. No. %''5(&, 3une 5), 5((1 FACTS: Accordingly& the implementing rule o+ the a+oresaid pro#ision states: "espondent !amac $as hired as .us conductor o+ :on !ariano Transit Corporation (:!TC) on April /F& 3FFF. "espondent $as re uired to accomplish a IConductor@s Trip "eportI and su.mit it to the company a+ter each trip. As a .ac)ground& this report indicates the tic)et opening and closing +or the particular day o+ duty. A+ter su.mission& the company audits the reports. 2nce an irregularity is disco#ered& the company issues an I'rregularity "eportI against the employee& indicating the nature and details o+ the irregularity. Therea+ter& the concerned employee is as)ed to e-plain the incident .y ma)ing a $ritten statement or counter8a++ida#it at the .ac) o+ the same 'rregularity "eport. A+ter considering the e-planation o+ the employee& the company then ma)es a determination o+ $hether to accept the e-planation or impose upon the employee a penalty +or committing an in+raction. That decision shall .e stated on said 'rregularity "eport and $ill .e +urnished to the employee. SEC. /.Standards o+ due process4 re uirements o+ notice. U 'n all cases o+ termination o+ employment& the +ollo$ing standards o+ due process shall .e su.stantially o.ser#ed: '.For termination o+ employment .ased on 5ust causes as de+ined in Article /M/ o+ the Code: (a)A $ritten notice ser#ed on the employee speci+ying the ground or grounds +or termination& and gi#ing said employee reasona.le opportunity $ithin $hich to e-plain his side. (.)A hearing or con+erence during $hich the employee concerned& $ith the assistance o+ counsel i+ he so desires is gi#en opportunity to respond to the charge& present his e#idence& or re.ut the e#idence presented against him. (c)A $ritten notice o+ termination ser#ed on the employee& indicating that upon due consideration o+ all the circumstances& grounds ha#e .een esta.lished to 5usti+y his termination. 'n case o+ termination& the +oregoing notices shall .e ser#ed on the employee@s last )no$n address. To clari+y& the +ollo$ing should .e considered in terminating the ser#ices o+ employees: (3)The +irst $ritten notice to .e ser#ed on the employees should contain the speci+ic causes or grounds +or termination against them& and a directi#e that the employees are gi#en the opportunity to su.mit their $ritten e-planation $ithin a reasona.le period. I"easona.le opportunityI under the 2mni.us "ules means e#ery )ind o+ assistance that management must accord to the employees to ena.le them to prepare ade uately +or their de+ense. This should .e construed as a period o+ at least +i#e (C) calendar days +rom receipt o+ the notice to gi#e the employees an opportunity to study the accusation against them& consult a union o++icial or la$yer& gather data and e#idence& and decide on the de+enses they $ill raise against the complaint. !oreo#er& in order to ena.le the employees to intelligently prepare their e-planation and de+enses& the notice should contain a detailed narration o+ the +acts and circumstances that $ill ser#e as .asis +or the charge against the employees. A general description o+ the charge $ill not su++ice. Lastly& the notice should speci+ically mention $hich company rules& i+ any& are #iolated and,or $hich among the grounds under Art. /M/ is .eing charged against the employees. (/)A+ter ser#ing the +irst notice& the employers should schedule and conduct a hearing or con+erence $herein the employees $ill .e gi#en the opportunity to: (3) e-plain and clari+y their de+enses to the charge against them4 (/) present e#idence in support o+ their de+enses4 and (1) re.ut the e#idence presented against them .y the management. :uring the hearing or con+erence& the employees are gi#en the chance to de+end themsel#es personally& $ith the assistance o+ a representati#e or counsel o+ their choice. !oreo#er& this con+erence or hearing could .e used .y the parties as an opportunity to come to an amica.le settlement. (1)A+ter determining that termination o+ employment is 5usti+ied& the employers shall ser#e the employees a $ritten notice o+ termination indicating that: (3) all circumstances in#ol#ing the charge against the employees ha#e .een considered4 and (/) grounds ha#e .een esta.lished to 5usti+y the se#erance o+ their employment. 'n the instant case& ZZT' admits that it had +ailed to pro#ide respondent $ith a Icharge sheet.I 9o$e#er& it maintains that it had su.stantially complied $ith the rules& claiming that Irespondent $ould not ha#e issued a $ritten e-planation had he not .een in+ormed o+ the charges against him.I 7e are not con#inced. Art. /GG o+ the La.or Code pro#ides the manner o+ termination o+ employment& thus: Art. /GG. !iscellaneous >ro#isions. U . . . (.)Su.5ect to the constitutional right o+ $or)ers to security o+ tenure and their right to .e protected against dismissal e-cept +or a 5ust and authorized cause $ithout pre5udice to the re uirement o+ notice under Article /M1 o+ this Code& the employer shall +urnish the $or)er $hose employment is sought to .e terminated a $ritten notice containing a statement o+ the causes +or termination and shall a++ord the latter ample opportunity to .e heard and to de+end himsel+ $ith the assistance o+ his representati#e i+ he so desires in accordance $ith company rules and regulations promulgated pursuant to guidelines set .y the :epartment o+ La.or and Employment. Any decision ta)en .y the employer shall .e $ithout pre5udice to the right o+ the $or)er to contest the #alidity or legality o+ his dismissal .y +iling a complaint $ith the regional .ranch o+ the 6ational La.or "elations Commission. First& respondent $as not issued a $ritten notice charging him o+ committing an in+raction. The la$ is clear on the matter. A #er.al appraisal o+ the charges against an employee does not comply $ith the +irst notice re uirement. 'n >epsi Cola %ottling Co. #. 6L"C& the Court held that consultations or con+erences are not a su.stitute +or the actual o.ser#ance o+ notice and hearing. Second& the Court o.ser#ed the irregularity reports against respondent +or his other o++enses that such contained merely a general description o+ the charges against him. The reports did not e#en state a company rule or policy that the employee had allegedly #iolated. Li)e$ise& there is no mention o+ any o+ the grounds +or termination o+ employment under Art. /M/ o+ the La.or Code. Thus& ZZT'@s IstandardI charge sheet is not su++icient notice to the employee. Third& no hearing $as conducted. "egardless o+ respondent@s $ritten e-planation& a hearing $as still necessary in order +or him to clari+y and present e#idence in The .urden o+ pro#ing that the termination $as +or a #alid or authorized cause shall rest on the employer.

(pon audit o+ the 2cto.er /M& /003 Conductor@s "eport o+ respondent& ZZT' noted an irregularity. 't disco#ered that respondent declared se#eral sold tic)ets as returned tic)ets causing ZZT' to lose an income o+ eight hundred and ninety pesos. 7hile no irregularity report $as prepared on the 2cto.er /M& /003 incident& ZZT' ne#ertheless as)ed respondent to e-plain the discrepancy. 'n his letter& respondent said that the erroneous declaration in his 2cto.er /M& /003 Trip "eport $as unintentional. 9e e-plained that during that day@s trip& the $indshield o+ the .us assigned to them $as smashed4 and they had to cut short the trip in order to immediately report the matter to the police. As a result o+ the incident& he got con+used in ma)ing the trip report.

2n 6o#em.er /H& /003& respondent recei#ed a letter terminating his employment e++ecti#e 6o#em.er /F& /003. The dismissal letter alleged that the 2cto.er /M& /003 irregularity $as an act o+ +raud against the company. ZZT' also cited as .asis +or respondent@s dismissal the other o++enses he allegedly committed since 3FFF.

"espondent +iled a Complaint +or illegal dismissal& illegal deductions& nonpayment o+ 31th8month pay& ser#ice incenti#e lea#e& and separation pay. 9e denied committing any in+raction and alleged that his dismissal $as intended to .ust union acti#ities. !oreo#er& he claimed that his dismissal $as e++ected $ithout due process. ZZT' contended that respondent $as legally dismissed a+ter his commission o+ a series o+ misconducts and misdeeds. 't claimed that respondent had #iolated the trust and con+idence reposed upon him .y ZZT'. Also& it a#erred that it had o.ser#ed due process in dismissing respondent and maintained that respondent $as not entitled to his money claims such as ser#ice incenti#e lea#e and 31th8month pay .ecause he $as paid on commission or percentage .asis. 'SS(E:

7hether or not procedural re uirements $ere complied $ith. 9EL:: :ue process under the La.or Code in#ol#es t$o aspects: +irst& su.stanti#e U the #alid and authorized causes o+ termination o+ employment under the La.or Code4 and second& procedural U the manner o+ dismissal. 6on8compliance $ith the :ue >rocess "e uirements

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support o+ his de+ense. !oreo#er& respondent made the letter merely to e-plain the circumstances relating to the irregularity. 9e $as una$are that a dismissal proceeding $as already .eing e++ected. Sanction +or 6on8compliance $ith :ue >rocess "e uirements As stated earlier& a+ter a +inding that petitioners +ailed to comply $ith the due process re uirements& the CA a$arded +ull .ac)$ages in +a#or o+ respondent in accordance $ith the doctrine in Serrano #. 6L"C. 9o$e#er& the doctrine in Serrano had already .een a.andoned in Aga.on #. 6L"C .y ruling that i+ the dismissal is done $ithout due process& the employer should indemni+y the employee $ith nominal damages. Thus& +or non8compliance $ith the due process re uirements in the termination o+ respondent@s employment& petitioner ZZT' is sanctioned to pay respondent the amount o+ thirty thousand pesos (>h>10&000) as damages. ?AIL-RE TO CO+PLY ,IR$ILIO A$ABON, et al. v. NLRC a. The un5usti+ied +ailure o+ the employee to report +or $or) .. A clear intention to se#er e8e relationship& mani+ested .y o#ert acts 9ere& the Aga.ons $ere +re uently a.sent +rom $or) +or ha#ing per+ormed installation $or) +or another company& despite prior $arning gi#en .y "i#iera. This clearly esta.lishes an intention to se#er the e8erelationship .et$een them& and $hich constitutes a.andonment. /. ;es. 7hile the employer has the right to e-pect good per+ormance& diligence& good conduct and loyalty +rom its employees& it also has the duty to pro#ide 5ust compensation to his employees and to o.ser#e the procedural re uirements o+ notice and hearing in the termination o+ his employees. >rocedure o+ termination (2mni.us "ules 'mplementing the La.or Code): a. A $ritten notice to the employee speci+ying the grounds +or termination and gi#ing the employee reasona.le opportunity to .e heard .. A hearing $here the employee is gi#en the opportunity to respond to the charges against him and present e#idence or re.ut the e#idence presented against him (i+ he so re uests)c. A $ritten notice o+ termination indicating that grounds ha#e .een esta.lished to 5usti+y his termination upon due consideration o+ all circumstances'n this case& "i#iera +ailed to noti+y the Aga.ons o+ their termination to their last )no$n addresses. 9ence& they #iolated the procedural re uirement laid do$n .y the la$ in the termination o+ employees.

FACTS Airgilio and <enny Aga.on $or)ed +or respondent "i#iera 9ome 'mpro#ements& 'nc. as gypsum and cornice installers +rom <anuary 3FF/ until Fe. 3FFF. Their employment $as terminated $hen they $ere dismissed +or allegedly a.andoning their $or). >etitioners Aga.on then +iled a case o+ illegal dismissal. The LA ruled in +a#or o+ the spouses and ordered "i#iera to pay them their money claims. The 6L"C re#ersed the LA& +inding that the Aga.ons $ere indeed guilty o+ a.andonment. The CA modi+ied the LA .y ruling that there $as a.andonment .ut ordering "i#iera to pay the Aga.ons* money claims. The arguments o+ .oth parties are as +ollo$s: The Aga.ons claim& among other sthat "i#iera #iolated the re uirements o+ notice and hearing $hen the latter did not send $ritten letters o+ termination to their addresses. "i#iera admitted to not sending the Aga.ons letters o+ termination to their last )no$n addresses .ecause the same $ould .e +utile& as the Aga.ons do not reside there anymore. 9o$e#er& it also claims that the Aga.ons a.andoned their $or). !ore than once& they su.contracted installation $or)s +or other companies. They already $ere $arned o+ termination i+ the same act $as repeated& still& they disregarded the $arning. 'SS(ES 3.7hether the Aga.ons $ere illegally dismissed /.7hether "i#iera #iolated the re uirements o+ notice and hearing 1. 's the #iolation o+ the procedural re uirements o+ notice and hearing +ortermination o+ employees a #iolation o+ the Constitutional due processP E. 7hat are the conse uences o+ #iolating the procedural re uirements o+ terminationP 9EL:: 't $as a #alid dismissal .ut #iolation o+ statutory due process a payment o+ nominal damages (>10&000) K .alance o+ 31th month pay& etc. 3. 6o. There $as 5ust cause +or their dismissal& i.e.& a.andonment. Art. /M/speci+ies the grounds +or 5ust dismissal& to $it: a. Serious misconduct or $ill+ul diso.edience o+ the la$+ul orders o+ the employer or his duly authorized representati#e in connection $ith the employee*s $or) .. Gross and ha.itual neglect o+ the .y the employee o+ his duties( includes a.andonment) c. Fraud or $ill+ul .reach o+ the trust reposed .y the employer or his duly authorized representati#e to the employeed. Commission o+ a crime or o++ense .y the employee against the person o+ the employer or any mem.er o+ his immediate +amily or his duly authorized representati#e e. Any other causes analogous to the +oregoing.To esta.lish a.andonment& t$o elements must .e present:

1. 6o. Constitutional due process is that pro#ided under the Constitution& $hich in#ol#es the protection o+ the indi#idual against go#ernmental oppression and the assurance o+ his rights 'n ci#il& criminal and administrati#e proceedings4 statutory due process is that +ound in the La.or Code and its 'mplementing "ules and protects the indi#idual +rom .eing un5ustly terminated $ithout 5ust or authorized cause a+ter notice and hearing. The t$o are similar in that they .oth ha#e t$o aspects: su.stanti#e due process and procedural due process 9o$e#er& they di++er in that under the La.or Code& the +irst one re+ers to the #alid and authorized causes o+ employment termination& $hile the second one re+ers to the manner o+ dismissal. A denial o+ statutory due process is not the same as a denial o+ Constitutional due process +or reasons enunciated in Serrano #. 6L"C. E. The dismissal is #alid& .ut "i#iera should pay nominal damages to the Aga.ons in #indication o+ the latter +or #iolating their right to notice and hearing. The penalty is in the nature o+ a penalty or indemni+ication& the amount dependent on the +acts o+ each case& including the nature o+ gra#ity o+ o++ense o+ the employer.'n this case& the Serrano doctrine $as re8e-amined. First& in the Serrano case& the dismissal $as upheld& .ut it $as held to .e ine++ectual ($ithout legal e++ect). 9ence& Serrano $as still entitled to the payment o+ his .ac)$ages +rom the time o+ dismissal until the promulgation o+ the court o+ the e-istence o+ an authorized cause. Further& he $as entitled to his separation pay as mandated under Art./M1. The ruling is un+air to employers and has the danger o+ the +ollo$ing conse uences: a. The encouragement o+ +iling +ri#olous suits e#en .y notorious employees $ho $ere 5ustly dismissed .ut $ere depri#ed o+ statutory due process4 they are re$arded .y in#o)ing due process .. 't $ould create a.surd situations $here there is 5ust or authorized cause .ut a procedural in+irmity in#alidates the termination& ie an employee $ho .ecame a criminal and threatened his co8 $or)ers* li#es& $ho +led and could not .e +ound c. 't could discourage in#estments that $ould generate employment in the economy Second & the payment o+ .ac)$ages is un5usti+ied as only illegal termination gi#es the employee the right to .e paid +ull .ac)$ages. 7hen the dismissal is #alid or upheld& the employee has no right to .ac)$ages. A::'T'26AL 62TES:3. :ismissals .ased on 5ust causes: 88acts or omissions attri.uta.le to the employee4 no right to claim .ac)$ages or to pay separation pay (separation pay is su.5ect to e-ception& ie i+ termination is not

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.ased on serious misconduct or a conduct re+lecting the moral depra#ity o+ a person& separation pay may .e granted .y reason o+ social 5ustice) :ismissals .ased on authorized causes: 88in#ol#e grounds pro#ided under the La.or Code4 employee (and :2LE) is entitled the payment o+ separation pay (redundancy and installation o+ la.or8sa#ing de#ices: 3 month pay or 3 month,yr o+ ser#ice& $hiche#er is higher4 retrenchment and closure or cessation o+ .usiness: 3month pay or ] month per year o+ ser#ice& $hiche#er is higher) 'llegal termination: 88employee is entitled to the payment o+ +ull.ac) $ages as $ell as reinstatement $ithout loss o+ seniority rights and other pri#ileges& inclusi#e o+ allo$ances and other monetary claims +rom the time compensation $as $ithheld until reinstatement4 i+ reinstatement is not possi.le& separation pay shall .e gi#en. 3A/A ?OOD PROCESSIN$ CORP. ,. PACOT FACTS: "espondents $ere employees o+ <a)a .ecause the company $as in dire +inancial straits. 9o$e#er& the termination $as e++ected $ithout <a)a complying $ith the re uirement regarding the ser#ice o+ $ritten notice upon the employees and the :2LE at least one month .e+ore the intended date o+ termination. The respondents +iled a complaint $ith the La.or Ar.iter $ho ruled in +a#or o+ the respondents. The 6L"C initially a++irmed the decision o+ the La.or Ar.iter .ut su.se uently re#ersed it decision upon the +iling o+ a !otion +or "econsideration. 2n appeal& the Court o+ Appeals re#ersed the decision o+ the 6L"C .ased on the ruling o+ the SC in the case o+ Serrano #s. 6L"C. 'SS(E: 7hat are the legal implications $hen an employee is dismissed $ithout complying $ith the notice re uirement under the La.or CodeP 9EL:: The di++erence .et$een this case and the case o+ Aga.on #s. 6L"C is that this case in#ol#es an authorized cause (particularly retrenchment) under Art. /M1 $hile the Aga.on case in#ol#es a 5ust cause under Art. /M/. The di++erence .et$een the t$o is that in a 5ust cause& the employee is the direct cause o+ the termination& $hile in an authorized cause& the main actor is usually the employer. %ecause o+ the distinction& the SC held that i+ the dismissal is .ased on a 5ust cause under /M/ and the employer +ailed to comply $ith the notice re uirement& the sanction on the employer should .e tempered .ecause the dismissal $as initiated .y an act imputa.le to the employee. 2n the other hand& i+ the cause o+ the dismissal is one o+ the authorized causes under /M1& +ailure o+ the employer to comply $ith the notice re uirement should merit a sti++er sanction .ecause the dismissal process $as initiated .y the employer*s e-ercise o+ management prerogati#e. 'n this case& the dismissal o+ the respondents $as indeed caused .y retrenchment due to +inancial losses o+ the company (one o+ the authorized causes). There+ore& <a)a is ordered to pay >C0&000 as indemnity (this is greater than the >10&000 indemnity +or +ailure to comply $ith the notice re uirement i+ the dismissal is due to a 5ust cause as held in the case o+ Aga.on). A+PLE OPPORT-NITY TO BE .EARDH .EARIN$H RI$.T TO CO-NSEL PERE7 ,. PT<T $.R.NO. %25(=&, APRIL 1, 5(() FACTS: >erez and :oria $ere employed .y >TKT as shipping cler) and super#isor& respecti#ely. >ursuant to an unsigned letter& in#estigations $ere commenced .y the company& yielding +indings that hipping Section 5ac)ed up the #alue o+ the +reight costs +or goods shipped and that the duplicates o+ the shipping documents allegedly sho$ed traces o+ tampering& alteration and superimposition. >etitioners $ere placed on pre#enti#e suspension +or 10 days. The 3C8day suspension $as e-tended t$ice. A memorandum $as issued charging criminal charges against petitioners and mandating their dismissal +or +alsi+ication o+ documents. Thus& petitioners +iled a complaint +or illegal suspension and illegal dismissal. La.or Ar.iter: +ound that the 108day e-tension o+ petitioners* suspension and their su.se uent dismissal $ere .oth illegal. 6L"C: "e#ersed. CA: A++irmed 6L"C 'SS(ES: 3. 7as there 5ust cause +or dismissalP /. 7as due process o.ser#edP 1. 's a hearing (or con+erence) mandatory in cases in#ol#ing the dismissal o+ an employeeP E. 7ere petitioners illegally suspendedP 9EL:: 86o. 7ithout undermining the importance o+ a shipping order or re uest& $e +ind respondents* e#idence insu++icient to clearly and con#incingly esta.lish the +acts +rom $hich the loss o+ con+idence resulted. 2ther than their .are allegations and the +act that such documents came into petitioners* hands at some point& respondents should ha#e pro#ided e#idence o+ petitioners* +unctions& the e-tent o+ their duties& the procedure in the handling and appro#al o+ shipping re uests and the +act that no personnel other than petitioners $ere in#ol#ed. There $as& there+ore& a patent paucity o+ proo+ connecting petitioners to the alleged tampering o+ shipping documents. The alterations on the shipping documents could not reasona.ly .e attri.uted to petitioners .ecause it $as ne#er pro#en that petitioners alone had control o+ or access to these documents. (nless duly pro#ed or su++iciently su.stantiated other$ise& impartial tri.unals should not rely only on the statement o+ the employer that it has lost con+idence in its employee. 86o. "espondents* illegal act o+ dismissing petitioners $as aggra#ated .y their +ailure to o.ser#e due process. To meet the re uirements o+ due process in the dismissal o+ an employee& an employer must +urnish the $or)er $ith t$o $ritten notices: (3) a $ritten notice speci+ying the grounds +or termination and gi#ing to said employee a reasona.le opportunity to e-plain his side and (/) another $ritten notice indicating that& upon due consideration o+ all circumstances& grounds ha#e .een esta.lished to 5usti+y the employer@s decision to dismiss the employee. >etitioners $ere neither apprised o+ the charges against them nor gi#en a chance to de+end themsel#es. They $ere simply and ar.itrarily separated +rom $or) and ser#ed notices o+ termination in total disregard o+ their rights to due process and security o+ tenure. Section /(d)& "ule ' o+ the 'mplementing "ules o+ %oo) A' o+ the La.or Code itsel+ pro#ides that the so8called standards o+ due process outlined therein shall .e o.ser#ed Isu.stantially&I not strictly. This is recognition that $hile a +ormal hearing or con+erence is ideal& it is not an a.solute& mandatory or e-clusi#e a#enue o+ due process. An employee may .e #alidly suspended .y the employer +or 5ust cause pro#ided .y la$. Such suspension shall only .e +or a period o+ 10 days& a+ter $hich the employee shall either .e reinstated or paid his $ages during the e-tended period. 'n this case& petitioners contended that they $ere not paid during the t$o 3C8 day e-tensions& or a total o+ 10 days& o+ their pre#enti#e suspension. "espondents +ailed to adduce e#idence to the contrary. 7here the dismissal $as $ithout 5ust or authorized cause and there $as no due process& Article /GF o+ the La.or Code& as amended& mandates that the employee is entitled to reinstatement $ithout loss o+ seniority rights and other pri#ileges and +ull .ac)$ages& inclusi#e o+ allo$ances& and other .ene+its or their monetary e ui#alent computed +rom the time the compensation $as not paid up to the time o+ actual reinstatement. 'n this case& ho$e#er& reinstatement is no longer possi.le .ecause o+ the length o+ time that has passed +rom the date o+ the incident to +inal resolution. Fourteen years ha#e transpired +rom the time petitioners $ere $rong+ully dismissed. To order reinstatement at this 5uncture $ill no longer ser#e any prudent or practical purpose. /IN$ O? /IN$S ,. +A+AC #PLEASE RE?ER TO T.E SA+E CASE DISC-SSED ABO,E.* @allem +ar t me Serv ;es In;. v. NLRC F $.R. No. %(&=99 F O;tober %2, %))' FACTS: >ri#ate respondent <oselito A. !acatuno $as hired .y 7allem Ship management Limited thru its local manning agent& 7allem !aritime Ser#ices& 'nc.& as an a.le8 .odied seaman on .oard the !,T Fortuna& a #essel o+ Li.erian registry. >ursuant to

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the contract o+ employment& pri#ate respondent $as employed +or ten (30) months co#ering the period Fe.ruary /H& 3FMF until :ecem.er /H& 3FMF $ith a monthly salary o+ t$o hundred se#enty8si- (S dollars ((S R/GH)4 hourly o#ertime rate o+ one dollar and se#enty8t$o cents ((S R3.G/)& and a monthly tan)er allo$ance o+ one hundred t$enty8se#en dollars and si-ty cents ((S R3/G.H0)& $ith si- (H) days lea#e $ith pay +or each month. 2n <une /E& 3FMF& $hile the #essel $as .erthed at the port o+ Za$asa)i& <apan& an altercation too) place .et$een pri#ate respondent and +ello$ Filipino cre$ mem.er& <ulius E. Gurim.ao& on the one hand& and a cadet,apprentice o++icer o+ the same nationality as the captain o+ the #essel on the other hand. The master entered the incident in the tan)er*s log.oo). As a conse uence& pri#ate respondent and Gurim.ao $ere repatriated to the >hilippines $here they lost no time in lodging separate complaints +or illegal dismissal $ith the >2EA. According to the a++ida#it pri#ate respondent e-ecuted .e+ore a >2EA administering o++icer& the +ollo$ing +acts led to the +iling o+ the complaint. At a.out C:C0 a.m. o+ <une /E& 3FMF& pri#ate respondent $as on duty along $ith Gurim.ao& chec)ing the mani+old o+ the #essel and loo)ing +or oil lea)ages& $hen a cadet,apprentice $ho $as o+ the same nationality as the #essel*s captain (Singh)& approached them. 9e ordered Gurim.ao to use a sho#el in draining the $ater $hich& mi-ed $ith oil and dirt& had accumulated at the rear portion o+ the upper dec) o+ the #essel. Gurim.ao e-plained to the cadet,apprentice that thro$ing dirty and oily $ater o#er.oard $as prohi.ited .y the la$s o+ <apan4 in +act& port authorities $ere roaming and chec)ing the sanitary conditions o+ the port. The cadet,apprentice got mad and& shouting& ordered Gurim.ao to get a hose and siphon o++ the $ater. To a#oid trou.le& Gurim.ao used a sho#el in thro$ing the dirty $ater into the sea. 9a#ing +inished his 5o.& Gurim.ao complained to pri#ate respondent a.out the Nimproper and unauthorized actO o+ the cadet,apprentice. The t$o $ent to the cadet,apprentice $ho $as idly standing in a corner. They reminded him that as a mere apprentice and not an o++icer o+ the #essel& he had no right $hatsoe#er to order around any mem.er o+ the cre$. 9o$e#er& the cadet,apprentice reacted #iolently 8 shouting in#ecti#es and gesturing Nas i+ challengingO the t$o to a +ight. To pre#ent him +rom NintimidatingO them& pri#ate respondent pushed t$ice the cadet,apprentice*s chest $hile Gurim.ao Nmildly hitO his arm. Frantic and shouting& the cadet,apprentice ran to the captain N$ho happened to $itness the incidentO +rom the ca.in*s $indo$. The captain summoned pri#ate respondent and Gurim.ao. 7ith their .osun (head o+ the dec) cre$)& they $ent to the captain*s ca.in. The captain told them to pac) up their things as their ser#ices $ere .eing terminated. They $ould disem.ar) at the ne-t port& the >ort o+ (.e& +rom $here they $ould .e +lo$n home to the >hilippines& the repatriation e-penses to .e shouldered .y them. The t$o attempted to e-plain their side o+ the incident .ut the captain ignored them and +irmly told them to go home. %e+ore disem.ar)ing& they $ere entrusted .y the .osun $ith a letter o+ their +ello$ cre$ mem.ers& addressed to Capt. :iQo& attesting to their innocence. At the >ort o+ (.e& an agent o+ the company handed them their plane tic)ets and a Cathay >aci+ic airplane .ound +or !anila. A +e$ days a+ter their arri#al in !anila or on <uly 3& 3FMF& the t$o ga#e the letter to Capt. :iQo and con+erred $ith him and !r. <ames 6ichols. The latter told pri#ate respondent that they could not secure a reim.ursement o+ their repatriation e-penses nor could they get their salaries +or the month o+ <une. >ri#ate respondent& in a letter addressed to Capt. :iQo& as)ed +or a reconsideration o+ their dismissal .ut the latter did not respond. Frustrated& pri#ate respondent sought the assistance o+ a la$yer $ho $rote 7allem a demand letter dated August /M& 3FMF .ut the same $as ignored.BED >etitioners& de+ending their position& alleged that the incident $as not the +irst in+raction committed .y the t$o. 'n his a+orementioned decision o+ Septem.er 3E& 3FF0 +inding pri#ate respondent*s dismissal to .e illegal. Granting that the entries in the log.oo) are true& a perusal thereo+ $ill readily sho$ that complainant $as not a++orded due process. The $arnings allegedly gi#en to complainant $ere not su.mitted in e#idence. Li)e$ise& no in#estigation report $as presented to pro#e that complainant $as gi#en the opportunity to air his side o+ the incident. 't is also note$orthy to mention that complainant $as a.le to descri.e $ith particularity the circumstances $hich led to his misunderstanding $ith the cadet,apprentice and $hich $e .elie#e is not su++icient to $arrant his dismissal.O 6L"C a++irmed the decision o+ the >2EA& adopting as its o$n the latter*s +indings and conclusions. 'SS(E: 7hether or not pri#ate respondent $as #alidly dismissed. 9EL:: 'SS(E: 62. An employer may dismiss or lay o++ an employee only +or 5ust and authorized causes enumerated in Articles /M/ and /M1 o+ the La.or Code. 9o$e#er& this .asic and normal prerogati#e o+ an employer is su.5ect to regulation .y the State in the 7hether or not there $ere in#alid dismissal and underpayment o+ $ages e-ercise o+ its paramount police po$er inasmuch as the preser#ation o+ li#es o+ citizens& as $ell as their means o+ li#elihood& is a .asic duty o+ the State more #ital them the preser#ation o+ corporate pro+its. 2ne*s employment& pro+ession& trade or calling is a property right $ithin the protection o+ the constitutional guaranty o+ due process o+ la$. The ship captain*s log.oo) is #ital e#idence as Article H3/ o+ the Code o+ Commerce re uires him to )eep a record o+ the decisions he had adopted as the #essel*s head. (nder the Ta.le o+ 2++enses and Corresponding Administrati#e >enalties appended to the contract o+ employment entered into .y petitioners and pri#ate respondent& the o++ense descri.ed .y the log.oo) entry may $ell +all under insu.ordination and may constitute assaulting a superior o++icer N$ith the use o+ deadly $eaponO punisha.le $ith dismissal i+ the #ictim is indeed a Nsuperior o++icer.O 9o$e#er& an Napprentice o++icerO cannot .e considered a Nsuperior o++icer.O An apprentice is a person .ound in the +orm o+ la$ to a master& to learn +rom him his art& trade& or .usiness& and to ser#e him during the time o+ his apprenticeship. >hysical #iolence against anyone at any time and any place is reprehensi.le. 9o$e#er& in cases such as this& $here a person*s li#elihood is at sta)e& strict interpretation o+ the contract o+ employment in +a#or o+ the $or)er must .e o.ser#ed to a++irm the constitutional pro#ision on protection to la.or. !oreo#er& the a+ore uoted entry in the log.oo) is so s)etchy that& unsupported .y other e#idence& it lea#es so many uestions unans$ered. Although pri#ate respondent candidly admitted in his a++ida#it ha#ing hit Sason on the chest t$ice& he did not admit using a spanner. 9ence& as the type$ritten e-cerpts +rom the Nlog.oo)O $ere the only pieces o+ e#idence presented .y petitioners to support the dismissal o+ pri#ate respondent& ha#e no pro.ati#e #alue at all& petitioners* cause must +ail. >etitioners* +ailure to su.stantiate the grounds +or a #alid dismissal $as aggra#ated .y the manner .y $hich the employment o+ pri#ate respondent $as terminated. 't must .e .orne in mind that the right o+ an employer to dismiss an employee is to .e distinguished +rom and should not .e con+used $ith the manner in $hich such right is e-ercised. :ismissal +rom employment must not .e e++ected a.usi#ely and oppressi#ely as it a++ects one*s person and property. 6either is the ship captain*s ha#ing $itnessed the altercation an e-cuse +or dispensing $ith the notice and hearing re uirements. Ser#ing notice to pri#ate respondent under the circumstances cannot .e regarded as an Na.surdity and super+luity.O The petition at .ar is :'S!'SSE:. Lo!ez v. Alturas $rou! oE Com!an es, $R %)%((&, A!r l %%, 5(%% FACTS: Tuirico Lopez $as hired .y respondent Alturas Group o+ Companies in 3FFG as truc) dri#er. Ten years later or sometime in 6o#em.er /00G& he $as dismissed a+ter he $as allegedly caught .y respondent*s security guard in the act o+ attempting to smuggle out o+ the company premises H0 )ilos o+ scrap iron $orth >ME0 a.oard respondents 'suzu Cargo Aluminum Aan $ith >late 6um.er >9> /G3 that $as then assigned to him. 7hen uestioned& petitioner allegedly admitted to the security guard that he $as ta)ing out the scrap iron consisting o+ li+t springs out o+ $hich he $ould ma)e a-es. >etitioner& in compliance $ith the Sho$ Cause 6otice dated :ecem.er C& /00G issued .y respondent company*s 9uman "esource :epartment !anager& denied the allegations .y a hand$ritten e-planation $ritten in the Aisayan dialect. Finding petitioner*s e-planation unsatis+actory& respondent company terminated his employment .y 6otice o+ Termination e++ecti#e :ecem.er 3E& /00G on the grounds o+ loss o+ trust and con+idence& and o+ #iolation o+ company rules and regulations. 'n issuing the 6otice& respondent company also too) into account the result o+ an in#estigation sho$ing that petitioner had .een smuggling out its cartons $hich he had sold& in conspiracy $ith one !aritess Ala.a& +or his o$n .ene+it to thus prompt it to +ile a criminal case +or Tuali+ied The+t against him .e+ore the "egional Trial Court ("TC) o+ %ohol. 't had in +act earlier +iled another criminal case +or Tuali+ied The+t against petitioner arising +rom the the+t o+ the scrap iron. >etitioner thereupon +iled a complaint against respondent company +or illegal dismissal and underpayment o+ $ages. La.or Ar.iter held that petitioner*s dismissal $as 5usti+ied& +or he& a truc) dri#er& held a position o+ trust and reposed upon him. 6L"C set aside said decision.

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9EL:: :ismissals ha#e t$o +acets: the legality o+ the act o+ dismissal& $hich constitutes su.stanti#e due process& and the legality o+ the manner o+ dismissal $hich constitutes procedural due process. B3/D As to su.stanti#e due process& the Court +inds that respondent company*s loss o+ trust and con+idence arising +rom petitioner*s smuggling out o+ the scrap iron& con+ounded .y his past acts o+ unauthorized selling cartons .elonging to respondent company& constituted 5ust cause +or terminating his ser#ices. Loss o+ trust and con+idence as a ground +or dismissal o+ employees co#ers employees occupying a position o+ trust $ho are pro#en to ha#e .reached the trust and con+idence reposed on them. >etitioner& a dri#er assigned $ith a speci+ic #ehicle& $as entrusted $ith the transportation o+ respondent company goods and property& and conse uently $ith its handling and protection& hence& e#en i+ he did not occupy a managerial position& he can .e said to .e holding a position o+ responsi.ility. >rocedural due process has .een de+ined as gi#ing an opportunity to .e heard .e+ore 5udgment is rendered. 'mportant: A+ter recei#ing the +irst notice apprising him o+ the charges against him& the employee may su.mit a $ritten e-planation($hich may .e in the +orm o+ a letter& memorandum& a++ida#it or position paper) and o++er e#idence in support thereo+& li)e rele#ant company records (such as his /03 +ile and daily time records) and the s$orn statements o+ his $itnesses. For this purpose& he may prepare his e-planation personally or $ith the assistance o+ a representati#e or counsel. 9e may also as) the employer to pro#ide him copy o+ records material to his de+ense. 9is $ritten e-planation may also include a re uest that a +ormal hearing or con+erence .e held. 'n such a case& the conduct o+ a +ormal hearing or con+erence .ecomes mandatory& 5ust as it is $here there e-ist su.stantial e#identiary disputes or $here company rules or practice re uires an actual hearing as part o+ employment pretermination procedure. >etitioner $as gi#en the opportunity to e-plain his side $hen he $as in+ormed o+ the charge against him and re uired to su.mit his $ritten e-planation $ith $hich he complied. >arenthetically& the Court +inds that it $as error +or the 6L"C to opine that petitioner should ha#e .een a++orded counsel or ad#ised o+ the right to counsel. 'n petitioner*s case& there is no sho$ing that he re uested +or a +ormal hearing to .e conducted or that he .e assisted .y counsel. An employee*s ac uittal in a criminal case does not automatically preclude a determination that he has .een guilty o+ acts inimical to the employer*s interest resulting in loss o+ trust and con+idence. Corollarily& the ground +or the dismissal o+ an employee does not re uire proo+ .eyond reasona.le dou.t4 as noted earlier& the uantum o+ proo+ re uired is merely su.stantial e#idence. >etition is denied. CONTENTS O? A ,ALID NOTICE /IN$ O? /IN$S ,. +A+AC #PLEASE RE?ER TO T.E EARLIER DI$ESTED CASE* TER+INATIN$ A PROBATIONARY E+PLOYEE P.IL. DAILY ING-IRER ,. +A$TIBAY 25& SCRA 922 FACTS: Facts: >hilippine :aily 'n uirer& 'nc. (>:') hired Leon !agti.ay (!agti.ay) as a contractual $or)er +or C months. A+ter the e-piration o+ the said contract& >:' hired him again $ith a pro.ationary period o+ H months. A $ee) .e+ore the end o+ the second contract& >:' handed him his termination letter due to +ailure in meeting company standards. !agti.ay then +iled a complaint +or illegal dismissal .e+ore the La.or Ar.iter stating that he has no$ .ecome a regular employee .y $or)ing +or more than H months. The >:' union supported him stating un+air la.or practice. Saying that he did not )no$ he $as supposed to +ollo$ company standards and that he $as not gi#en due process in his termination. >:' e-plained that his C8 month contract should not .e included $ith his H8month contract allo$ing him to .e considered a regular employee& and that he $as in +act gi#en an orientation on $hat the company standards $ere. The La.or Ar.iter agreed $ith >:' and dismissed his complaint and ac uitted >:' o+ illegal dismissal and un+air la.or practice. 7hen the case $as .rought to the 6L"C & it re#ersed the Ar.iter*s decision and charged >:' $ith illegal dismissal due to the +act that !agti.ay $as no$ considered a regular employee. Also& !agti.ay $as not told that he must a.ide .y company standards. The Court o+ Appeals agreed $ith the 6L"C 'SS(ES: 7hether or not a pro.ationary employees* +ailure to +ollo$ company standards is ground +or illegal dismissal. 7hether or not >:' is lia.le +or #iolating procedural due process in terminating !agti.ay. 9EL:: 7ithin the limited legal si-8month pro.ationary period& pro.ationary employees are still entitled to security o+ tenure. 't is e-pressly pro#ided in the a+ore8 uoted Article /M3 that a pro.ationary employee may .e terminated only on t$o grounds: (a) +or 5ust cause& or (.) $hen he +ails to uali+y as a regular employee in accordance $ith reasona.le standards made )no$n .y the employer to the employee at the time o+ his engagement. >:' in#o)es the second ground under the premises. 'n claiming that it had ade uately apprised !agti.ay o+ the reasona.le standards against $hich his per+ormance $ill .e gauged +or purposes o+ permanent employment& >:' cited the one8on8one seminar .et$een !agti.ay and its >ersonnel Assistant& !s. "achel 'sip8Cuzio. >:' also pointed to !agti.ay*s direct superior& %enita del "osario& $ho diligently .rie+ed him a.out his responsi.ilities in >:'. These +actual assertions $ere ne#er denied nor contro#erted .y !agti.ay. 6either did he .elie the e-istence o+ a speci+ic rule prohi.iting unauthorized persons +rom entering the telephone operator*s .ooth and that he #iolated that prohi.ition. This not$ithstanding& the 6L"C and the CA proceeded nonetheless to rule that the records o+ the case are .ere+t o+ any e#idence sho$ing that these rules and regulations +orm part o+ the so8called company standards. 't is undisputed that >:' apprised !agti.ay o+ the ground o+ his termination& i.e.& he +ailed to uali+y as a regular employee in accordance $ith reasona.le standards made )no$n to him at the time o+ engagement& only a $ee) .e+ore the e-piration o+ the si-8month pro.ationary period. Gi#en this perspecti#e& does this ma)e his termination unla$+ul +or .eing #iolati#e o+ his right to due process o+ la$P 't does not. (nli)e under the +irst ground +or the #alid termination o+ pro.ationary employment $hich is +or 5ust cause& the second ground does not re uire notice and hearing. :ue process o+ la$ +or this second ground consists o+ ma)ing the reasona.le standards e-pected o+ the employee during his pro.ationary period )no$n to him at the time o+ his pro.ationary employment. %y the #ery nature o+ a pro.ationary employment& the employee )no$s +rom the #ery start that he $ill .e under close o.ser#ation and his per+ormance o+ his assigned duties and +unctions $ould .e under continuous scrutiny .y his superiors. 't is in apprising him o+ the standards against $hich his per+ormance shall .e continuously assessed $here due process regarding the second ground lies& and not in notice and hearing as in the case o+ the +irst ground. E#en i+ perhaps he $anted to& !agti.ay cannot deny ? as he has not denied ? >:'*s assertion that he $as duly apprised o+ the employment standards e-pected o+ him at the time o+ his pro.ationary employment $hen he under$ent a one8on8one orientation $ith >:'*s personnel assistant& !s. "achel 'sip8Cuzio. 6either has he denied nor re.utted >:'*s +urther claim that his direct superior& %enita del "osario& .rie+ed him regarding his responsi.ilities in >:'. Lest it .e o#erloo)ed& !agti.ay had pre#iously $or)ed +or >:' as telephone operator +rom Fe.ruary G& 3FFC to <uly 13& 3FFC as a contractual employee. Thus& the Court entertains no dou.t that $hen >:' too) him in on Septem.er /3& 3FFC& !agti.ay $as already #ery much a$are o+ the le#el o+ competency and pro+essionalism >:' $anted out o+ him +or the entire duration o+ his pro.ationary employment. >:' $as only e-ercising its statutory hiring prerogati#e $hen it re+used to hire !agti.ay on a permanent .asis upon the e-piration o+ the si-8month pro.ationary period. This $as esta.lished during the proceedings .e+ore the la.or ar.iter and .orne out .y the records and the pleadings .e+ore the Court. 7hen the 6L"C disregarded the su.stantial e#idence esta.lishing the legal termination o+ !agti.ay*s pro.ationary employment and rendered 5udgment grossly and directly contradicting such clear e#idence& the 6L"C commits gra#e a.use o+ discretion amounting to lac) or e-cess o+ 5urisdiction. 't $as& there+ore& re#ersi.le error on the part o+ the appellate court not to annul and set aside such #oid 5udgment o+ the 6L"C. ?AIL-RE TO CO+PLY @IT. S-BSTANTI,E D-E PROCESS %. REINSTATE+ENTH DOCTRINE O? STRAINED RELATIONS A-RELIO ,. NLRC 55% SCRA =95 FACTS:

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>etitioner started as clinical instructor o+ the College o+ 6ursing o+ 6orth$estern College (67C) in <une 3F3G $ith a .asic salary o+ >H00.00 a month. 'n 2cto.er 3FGF& petitioner $as appointed :ean o+ the College o+ 6ursing $ith a starting salary o+ >1& 000.00 a month. 'n Septem.er 3FM3& petitioner $as promoted to College Administrator or Aice8>resident +or Administration& retaining concurrently her position o+ :ean o+ the College o+ 6ursing& $ith an increased salary o+ >1& C00.00 per month. She $as later promoted to E-ecuti#e Aice8>resident $ith the corresponding salary o+ >G& C00.00. 2n April 30& 3FMM& petitioner@s hus.and& 2scar Aurelio& a stoc)holder o+respondent 67C& $as elected Auditor. 2n !ay 3& 3FMM& the indi#idual respondents& as %oard o+ :irectors& too) o#er the management o+ respondent 67C. This ne$ management unleashed a series o+ reorganization a++ecting the petitioner and her hus.and& 2scar Aurelio. 2n !ay 10& 3FMM& petitioner@s hus.and& then in the (nited States& $as remo#ed as Auditor o+ the college. 7ithout prior notice& petitioner@s o++ice $as stripped o+ its +acilities. >etitioner@s salary $as reduced +rom >G& C00.00 to >C&000.00 then to >/&C00.00 a month& among others. %ecause o+ the indignities and humiliation su++ered .y the petitioner& she $rote a letter on Septem.er /0& 3FMM in+orming the >resident o+ 6orth$estern College that she $as going on an inde+inite lea#e& >etitioner sent a copy o+ the a.o#e letter to the Secretary o+ Education& Culture and Sports praying +or assistance. The representati#es o+ the "egional :irector su.mitted their o++icial +indings and recommendations con+irming the truth o+ the allegations o+ petitioner in her Septem.er /0& 3FMM letter. The :ECS also con+irmed the $illingness o+ petitioner to $ithdra$ her inde+inite lea#e o+ a.sence. The matter o+ petitioner@s resumption o+ her position as :ean o+ the College o+ 6ursing $as addressed .y the :ECS to the attention o+ respondents .ut >ri#ate respondents did not ans$er. They re+used to accept petitioner. 2n 6o#em.er 3H& 3FMM& petitioner +iled her complaint +or illegal dismissal against pri#ate respondents and prayed +or reinstatement plus .ac)$ages& moral and e-emplary damages& and attorney@s +ees. At the ar.itration le#el& petitioner and pri#ate respondents su.mitted their respecti#e position papers. 2n :ecem.er /F& 3FMF& the la.or ar.iter issued a decision dismissing the complaint. 2n April 10& 3FMM& the annual regular meeting o+ stoc)holders $as held at the principal o++ice o+ the corporation in Laoag City. Since their election into o++ice& the %oard mem.ers ha#e ta)en e++ecti#e control o+ the management o+ the college and ha#e regularly e-ercised their corporate po$ers. The ne$ %oard conducted a preliminary audit $hich re#ealed that the college $as +inancially distressed& una.le to meet its maturing o.ligations $ith its creditor .an). The ne$ management headed .y its >resident& %en 6icolas& em.ar)ed on a realignment o+ positions and +unctions o+ the di++erent department in order to minimize e-penditures. As a result o+ the audit& 67C $as compelled to a.olish the administrati#e positions held .y petitioner& $hich she did not contest. 'SS(E: 7hether or not the dismissal o+ the petitioner $as +or a 5ust and #alid cause 9EL:: "espondent had alleged and su.mitted e#idence o+ irregularities o+ complainant during her tenure at the college. The complainant instead o+ re+uting the charges cited alleged irregularities committed .y the respondents in their respecti#e o++ices. 't must .e emphasized that the rules o+ dismissal +or managerial employees are di++erent +rom those go#erning ordinary employees +or it $ould .e un5ust and ine uita.le to compel an employer to continue $ith the employment o+ a person $ho occupies a managerial and sensiti#e position despite loss o+ trust and con+idence. At the #ery least& the relationship must .e considered seriously strained& +oreclosing the remedy o+ reinstatement. 7e +ind that the allegations o+ irregularities $ere su++iciently su.stantiated thus 5usti+ying petitioner@s separation. !oreo#er& and still on the issue o+ dismissal& the records disclose that in holding on to the t$o positions& petitioner #iolated the Administrati#e !anual +or >ri#ate Schools. Thus& the respondent had no other recourse .ut to ta)e a$ay one o+ the positions +rom her or a.olish the same. (ndou.tedly& the College %oard o+ :irectors has the authority to reorganize and streamline the operations o+ the college $ith the end in #ie$ o+ minimizing e-penditures. The 6L"C +ound that complainant $as a managerial employee $ho has to ha#e the complete trust and con+idence o+ respondents. 9o$e#er& $e +ind that complainant $as not accorded notice and in#estigation prior to termination. E-cept +or the allegation on constructi#e dismissal& this petition is a repetition o+ $hat petitioner had already alleged .elo$ and $hich the la.or ar.iter and the 6L"C dismissed +or lac) o+ merit. >etitioner@s claim o+ constructi#e dismissal stems +rom her alleged remo#al +rom the positions o+ Administrator& Aice >resident +or Administration and E-ecuti#e Aice >resident. The management o+ 67C rests on its %oard o+ :irectors including the selection o+ mem.ers o+ the +aculty $ho may .e allo$ed to assume other positions in the college aside +rom that o+ teacher or instructor. 'n 3FMM& $hen the then ne$ %oard o+ :irectors a.olished the additional positions held .y the petitioner& it $as merely e-ercising its right. The %oard a.olished the positions not .ecause the petitioner $as the occupant thereo+ .ut .ecause the positions had .ecome redundant $ith +unctions o#erlapping those o+ the >resident o+ the college. The %oard realized that the college $as #iolating the Administrati#e !anual +or >ri#ate School $hich re uires that all collegiate departments should ha#e a +ull8 time head. The %oard o+ :irectors o+ 67C merely e-ercised rights #ested in it .y the Articles o+ 'ncorporation. >etitioner +ailed to re+ute the e#idence pro++ered .y 67C .e+ore the la.or ar.iter. 'n her appeal to the 6L"C& petitioner also +ailed to re.ut the +indings o+ the la.or ar.iter. 'n the instant petition& she has again +ailed to o#erturn pri#ate respondents@ e#idence as $ell as the +indings o+ the la.or ar.iter $hich $ere a++irmed .y the 6L"C. >etitioner@s application +or an inde+inite lea#e o+ a.sence $as not appro#ed .y the college authorities& .ut this not$ithstanding& she +ailed to +ollo$8up her application and did not report +or $or). %elie#ing she $as dismissed& petitioner +iled the complaint +or illegal dismissal& illegal deductions& underpayment& unpaid $ages or commissions and +or moral damages and attorney@s +ees on 6o#em.er 3H& 3FMM. As pointed out earlier& the rules on termination o+ employment& penalties +or in+ractions& and resort to concerted actions& inso+ar as managerial employees are concerned& are not necessarily the same as those applica.le to termination o+ employment o+ ordinary employees. %oth the la.or ar.iter and the pu.lic respondent 6L"C +ound that there is some .asis +or respondent 67C@s loss o+ trust and con+idence on petitioner. The dismissal o+ the petitioner $as +or a 5ust and #alid cause. 't appears on record that the in#estigation o+ petitioner@s alleged irregularities $as conducted a+ter the +iling o+ the complaint +or illegal dismissal. >u.lic respondent@s +inding that petitioner $as not a++orded due process is correct .ut the Commission erred $hen it a$arded separation pay in the amount o+ >1/&GC0.00. 'n the >aci+ic !ills& 'nc. and 7enphil cases& this Court merely a$arded >3&000.00 as penalty +or non8o.ser#ance o+ due process. The %oard o+ :irectors& composed o+ the indi#idual pri#ate respondents herein& has the po$er granted .y the Corporation Code to implement a reorganization o+ respondent college@s o++ices& including the a.olition o+ #arious positions& since it is implied or incidental to its po$er to conduct the regular .usiness a++airs o+ the corporation. The prerogati#e o+ management to conduct its o$n .usiness a++airs to achie#e its purposes cannot .e denied. 7hen petitioner $as stripped .y the %oard o+ her positions as E-ecuti#e Aice >resident and Aice >resident +or Administration& $ith a corresponding reduction in salary& the %oard did not act in a capricious& $himsical& and ar.itrary manner& thus negating malice and .ad +aith. 79E"EF2"E& the decision under re#ie$ is here.y AFF'"!E: $ith the !2:'F'CAT'26 that the a$ard o+ separation pay is :ELETE: Cab "t n" v. San + "uel ?oo:s, $R %'11(', Nov. 2, 5(() FACTS: >etitioner "eynaldo G. Ca.igting $as hired as a recei#er, issuer at the San !iguel Corporation& Feeds and Li#estoc) :i#ision (%8!eg) on Fe.ruary 3H& 3FME and a+ter years o+ ser#ice& he $as promoted as in#entory controller. 2n <une /H& /000& respondent San !iguel Foods& 'nc.& through its >resident& !r. Arnaldo A+rica& sent petitioner a letter in+orming him that his position as sales o++ice coordinator under its logistic department has .een declared redundant. Simultaneously& respondent terminated the ser#ices o+ petitioner e++ecti#e <uly 13& /000& and o++ered him an early retirement pac)age. Therea+ter& petitioner $as included in the list o+ retrenched employees (+or reason o+ redundancy) su.mitted .y respondent to the :epartment o+ La.or and Employment. >etitioner $as surprised upon receipt o+ the letter .ecause he $as not a sales o++ice coordinator& and yet he $as .eing terminated as such. Accordingly& petitioner re+used to a#ail o+ the early retirement pac)age. >rior to petitioner*s termination on <uly 13& /000& he $as an in#entory controller& per+orming at the same time the +unction o+ a $arehouseman. Furthermore& petitioner $as an acti#e union o++icer o+ respondent*s union .ut upon his termination& $as only a mem.er thereo+. 7ith the support o+ his union& petitioner +iled a Complaint uestioning his termination primarily .ecause he $as not a sales o++ice coordinator& .ut an in#entory controller& per+orming the +unctions o+ .oth an in#entory controller and a $arehouseman. 'n reply& respondent reiterated its declaration that petitioner*s position as sales o++ice coordinator $as redundant as a result o+ respondent*s e++ort to streamline its operations.

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La.or Ar.iter (LA) rendered a :ecision& $here it ruled that petitioner $as illegally dismissed. Accordingly& the LA ordered respondent to pay petitioner .ac)$ages& separation pay in lieu o+ reinstatement and attorney*s +ees. 6L"C rendered a :ecision a++irming the LA*s +inding that petitioner $as illegally dismissed .y respondent. CA rendered a :ecision partially granting respondent*s petition 'SS(E: 7hether or not Nstrained relationsO .ar petitioner*s reinstatement. 9EL:: (nder the la$ and pre#ailing 5urisprudence& an illegally dismissed employee is entitled to reinstatement as a matter o+ right. 9o$e#er& i+ reinstatement $ould only e-acer.ate the tension and strained relations .et$een the parties& or $here the relationship .et$een the employer and the employee has .een unduly strained .y reason o+ their irreconcila.le di++erences& particularly $here the illegally dismissed employee held a managerial or )ey position in the company& it $ould .e more prudent to order payment o+ separation pay instead o+ reinstatement. 'n Glo.e8!ac)ay Ca.le and "adio Corporation #. 6ational La.or "elations Commission& this Court discussed the limitations and uali+ications +or the application o+ the Nstrained relationsO principle& in this $ise: - - - '+& in the $isdom o+ the Court& there may .e a ground or grounds +or non8 application o+ the a.o#e8cited pro#ision& this should .e .y $ay o+ e-ception& such as $hen the reinstatement may .e inadmissi.le due to ensuing strained relations .et$een the employer and the employee. 'n such cases& it should .e pro#ed that the employee concerned occupies a position $here he en5oys the trust and con+idence o+ his employer4 and that it is li)ely that i+ reinstated& an atmosphere o+ antipathy and antagonism may .e generated as to ad#ersely a++ect the e++iciency and producti#ity o+ the employee concerned. 'n order +or the doctrine o+ strained relations to apply& it should .e pro#ed that the employee concerned occupies a position $here he en5oys the trust and con+idence o+ his employer and that it is li)ely that i+ reinstated& an atmosphere o+ antipathy and antagonism may .e generated as to ad#ersely a++ect the e++iciency and producti#ity o+ the employee concerned. A+ter a perusal o+ the LA :ecision& this Court +inds that the LA had no hard +acts upon $hich to .ase the application o+ the doctrine o+ strained relations& as the same $as not s uarely discussed nor ela.orated on. Also& it is o+ notice that said issue $as addressed .y the LA in 5ust one sentence $ithout indicating +actual circumstances $hy strained relations e-ist. The same is also true +or the CA :ecision $hich disposed o+ the issue in 5ust one sentence $ithout any ela.oration. Accordingly& this Court is o+ the opinion that .oth the LA and the CA .ased their conclusions on impression alone. Finally& it is noted that the position o+ $arehouseman and in#entory controller still e-ists up to date. The nature o+ the contro#ersy $here the parties to this case $ere engaged is not o+ such nature that $ould spa$n a situation $here the relations are se#erely strained .et$een them as $ould .ar the complainant to his continued employment. 6either may it .e said that his position entails a constant communion $ith the respondent such that hostilities may .ar smooth interactions .et$een them. There is no .asis +or an a$ard o+ separation pay in lieu o+ reinstatement. The claim o+ respondent is not meritorious. This Court shares petitioner*s #ie$ that the $ords allegedly imputing malice and .ad +aith to$ards the respondent cannot .e made a .asis +or denying his reinstatement. The doctrine o+ strained relations has .een made applica.le to cases $here the employee decides not to .e reinstated and demands +or separation pay. The same& ho$e#er& does not apply to herein petition& as petitioner is as)ing +or his reinstatement despite his illegal dismissal. 'n conclusion& it .ears to stress that it is human nature that some hostility $ill ine#ita.ly arise .et$een parties as a result o+ litigation& .ut the same does not al$ays constitute strained relations in the a.sence o+ proo+ or e-planation that such indeed e-ists. >etition is granted. BAN/ O? L-BAO ,. +ANABAT $.R.NO. %&&155, ?EBR-ARY %, 5(%5 FACTS: Sometime in /003& "ommel <. !ana.at (respondent) $as hired .y petitioner %an) o+ Lu.ao& a rural .an)& as a !ar)et Collector. Su.se uently& the respondent $as assigned as an encoder at the %an) o+ Lu.ao*s Sta. Cruz E-tension 2++ice& $hich he manned together $ith t$o other employees& teller Susan >. Lingad (Lingad) and !ay 2. !anasan. As an encoder& the respondent*s primary duty is to encode the clients* deposits on the .an)*s computer a+ter the same are recei#ed .y Lingad. The respondent& through a memorandum sent .y the petitioner& $as as)ed to e-plain in $riting the discrepancies that $ere disco#ered during the audit. "espondent su.mitted to the petitioner his letter8e-planation $hich& in essence& asserted that there $ere times $hen Lingad used the .an)*s computer $hile he $as out on errands. 'n 6o#em.er /00E& an initial audit on the %an) o+ Lu.ao*s Sta. Cruz E-tension 2++ice conducted .y the petitioner re#ealed that there $as a misappropriation o+ +unds in the amount o+ >1&000&000.00& more or less. Apparently& there $ere transactions entered and posted in the pass.oo)s o+ the clients .ut $ere not entered in the .an)*s .oo) o+ accounts. Further audit sho$ed that there $ere #arious deposits $hich $ere entered in the .an)*s computer .ut $ere su.se uently re#ersed and mar)ed as Nerror in postingO.

Administrati#e hearing $as conducted .y the .an)*s in#estigating committee $here the respondent $as +urther made to e-plain his side. Su.se uently& the in#estigating committee concluded that the respondent conspired $ith Lingad in ma)ing +raudulent entries disguised as error corrections in the .an)*s computer.That*s $hy the petitioner +iled se#eral criminal complaints +or uali+ied the+t against Lingad and the respondent $ith the !unicipal Trial Court (!TC) o+ Lu.ao& >ampanga. Therea+ter& citing serious misconduct tantamount to $ill+ul .reach o+ trust as ground& it terminated the respondent*s employment. %ut respondent +iled a Complaint +or illegal dismissal $ith the "egional Ar.itration %ranch o+ the 6ational La.or "elations Commission (6L"C) in San Fernando City& >ampanga. 'n the said complaint& the respondent& to .olster his claim that there $as no #alid ground +or his dismissal& a#erred that the charge against him +or uali+ied the+t $as dismissed +or lac) o+ su++icient .asis to conclude that he conspired $ith Lingad. The respondent sought an a$ard +or separation pay& +ull .ac)$ages& 31thmonth pay +or /00E and moral and e-emplary damages. The La.or Ar.iter (LA) rendered a decision sustaining the respondent*s claim o+ illegal dismissal thus ordering the petitioner to reinstate the respondent to his +ormer position and a$arding the latter .ac)$ages. The LA opined that the petitioner +ailed to adduce su.stantial e#idence that there $as a #alid ground +or the respondent*s dismissal. The 6L"C rendered a :ecision a++irming the :ecision o+ the LA. The 6L"C held that it $as su++iciently esta.lished that only Lingad $as the one responsi.le +or the said misappropriations 9o$e#er& the CA held that the respondent is entitled to separation pay e ui#alent to one8month salary +or e#ery year o+ ser#ice in lieu o+ reinstatement and .ac)$ages to .e computed +rom the time o+ his illegal dismissal until the +inality o+ the said decision. The CA agreed $ith the LA and the 6L"C that the petitioner +ailed to esta.lish .y su.stantial e#idence that there $as indeed a #alid ground +or the respondent*s dismissal. 6e#ertheless& the CA held that the petitioner should pay the respondent separation pay since the latter did not pray +or reinstatement .e+ore the LA and that the same $ould .e in the .est interest o+ the parties considering the animosity and antagonism that e-ist .et$een them. 'SS(ES: 7hether or not "ommel <. !ana.at $as illegally dismissed and $ill .e entitled to separation pay in lieu o+ reinstatement and payment o+ .ac)$ages. 9EL:: This Court notes that the LA& the 6L"C and the CA unanimously ruled that the respondent $as illegally dismissed. Factual +indings o+ uasi85udicial .odies li)e the 6L"C& i+ supported .y su.stantial e#idence& are accorded respect and e#en +inality .y this Court& more so $hen they coincide $ith those o+ the LA. Such +actual +indings are gi#en more $eight $hen the same are a++irmed .y the CA. 7e +ind no reason to depart +rom the +oregoing rule.

9ere& Court agree $ith the CA that the relations .et$een the parties had .een already strained there.y 5usti+ying the grant o+ separation pay in lieu o+ reinstatement in +a#or o+ the respondent. (ndou.tedly& the petitioner*s +iling o+ #arious criminal complaints against the respondent +or uali+ied the+t and the su.se uent +iling .y the latter o+ the complaint +or illegal dismissal against the latter& ta)en together $ith the pendency o+ the instant case +or more than si- years& had caused strained relations .et$een the parties. considering that the respondent*s +ormer position as .an) encoder in#ol#es the handling o+ accounts o+ the depositors o+ the %an) o+ Lu.ao& it $ould not .e e uita.le on the part o+ the petitioner to .e ordered to maintain the +ormer in its employ since it may only inspire #indicti#eness on the part o+ the respondent. Then the re+usal o+ the respondent to .e re8admitted to $or) is in itsel+ indicati#e o+ the e-istence o+ strained relations .et$een him and the petitioner.

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>alteng $as the Senior Assistant !anager,%ranch 2perations 2++icer o+ (C>%. A+ter conducting a diligence audit& the 'nternal Audit and Credit "e#ie$ :i#ision reported that >alteng committed se#eral o++enses under the Employee :iscipline Code in connection $ith !ercado*s (a client) >ast :ue :omestic %ills >urchased (%>). >alteng e-plained that at the time the %> accommodation $as e-tended& she $as not a$are that !ercado*s 2mni.us Line has .een reduced to >C0 !illion and that it contained a >C !illion su.limit on %>. 6e#ertheless& she accepted +ull responsi.ility +or granting the %> accommodation against !ercado*s personal chec)s .eyond her authority. 7hile she admitted committing a ma5or o++ense that may cause her dismissal& she claimed that it $as an honest mista)e. >alteng $as dismissed $ith +or+eiture o+ all .ene+its. >alteng +iled a complaint +or illegal dismissal. The La.or Ar.iter declared her dismissal illegal& entitling her to& among others& +ull .ac)$ages +rom the time o+ her dismissal until +inality o+ 5udgment. The CA modi+ied the decision& declaring that .ac)$ages should .e computed until the la.or ar.iter*s decision. 'SS(E: 's >alteng entitled to .ac)$agesP 9EL:: 6o. An employee $ho is illegally dismissed +rom $or) is entitled to reinstatement $ithout loss o+ seniority rights& and other pri#ileges as $ell as to +ull .ac)$ages& inclusi#e o+ allo$ances& and to other .ene+its or their monetary e ui#alent computed +rom the time his compensation $as $ithheld +rom him up to the time o+ his actual reinstatement. 9o$e#er& in the e#ent that reinstatement is no longer possi.le& the employee may .e gi#en separation pay instead. "einstatement and payment o+ .ac)$ages are distinct and separate relie+s gi#en to alle#iate the economic set.ac) .rought a.out .y the employee*s dismissal. The a$ard o+ one does not .ar the other. %ac)$ages may .e a$arded $ithout reinstatement& and reinstatement may .e ordered $ithout a$arding .ac)$ages. 'n a num.er o+ cases& the Court& despite ordering reinstatement or payment o+ separation pay in lieu o+ reinstatement& has not a$arded .ac)$ages as penalty +or the misconduct or in+raction committed .y the employee. 'n the case at .ar& petitioner admitted that she granted the %> accommodation against !ercado*s personal chec)s .eyond and outside her authority. The La.or Ar.iter& the 6L"C and the Court o+ Appeals all +ound her to ha#e committed an Ierror o+ 5udgment&I Ihonest mista)e&I #is8b8#is a Ima5or o++ense.I Since petitioner $as not +aultless in regard to the o++enses imputed against her& she is entitled to separation pay only& $ithout .ac)$ages. PERIOD CO,ER BAN/ O? L-BAO ,. +ANABAT #SEE T.E CASE DI$EST EARLIER* INTEREST EIu table BanD vs Sa:a;, $.R. No. %'=115, 3une &, 5((' Facts: "espondent Sadac $as appointed Aice >resident o+ the Legal :epartment o+ petitioner %an) e++ecti#e 3 August 3FM3& and su.se uently General Counsel thereo+ on M :ecem.er 3FM3. 2n /H <une 3FMF& nine la$yers o+ petitioner %an)*s Legal :epartment& in a letter8petition to the Chairman o+ the %oard o+ :irectors& accused respondent Sadac o+ a.usi#e conduct and petitioned +or a change in leadership o+ the department. 2n the ground o+ lac) o+ con+idence in respondent Sadac& under the rules o+ client and la$yer relationship& petitioner %an) instructed respondent Sadac to deli#er all materials in his custody in all cases in $hich the latter $as appearing as its counsel o+ record. 'n reaction thereto& respondent Sadac re uested +or a +ull hearing and +ormal in#estigation .ut the same remained unheeded. 2n F 6o#em.er 3FMF& respondent Sadac +iled a complaint +or illegal dismissal $ith damages against petitioner %an) and indi#idual mem.ers o+ the %oard o+ :irectors thereo+. A+ter learning o+ the +iling o+ the complaint& petitioner %an) terminated the ser#ices o+ respondent Sadac. Finally& on 30 August 3FMF& respondent Sadac $as remo#ed +rom his o++ice and ordered disentitled to any compensation and other .ene+its. The issues on the e-istence o+ employer8 employee relationship as $ell as the legality o+ the dismissal $ere decided .y the Court in the case o+ E uita.le %an)ing Corporation #s. 6L"C& G.". 6o. 30/EHG& <une 31& 3FFG& $herein it $as held that there $as employer8employee relationship .et$een petitioner %an) and respondent Sadac and that Sadac@s dismissal $as illegal& his dismissal not .eing grounded on any o+ the causes stated in Article /M/ o+ the La.or Code and there .eing disregard o+ the procedural re uirements in terminating Sadac@s employment. 'n said case& respondent Sadac $as held to .e

The .ac)$ages that should .e a$arded to the respondent should .e modi+ied. Employees $ho are illegally dismissed are entitled to +ull .ac)$ages& inclusi#e o+ allo$ances and other .ene+its or their monetary e ui#alent& computed +rom the time their actual compensation $as $ithheld +rom them up to the time o+ their actual reinstatement. %ut i+ reinstatement is no longer possi.le& the .ac)$ages shall .e computed +rom the time o+ their illegal termination up to the +inality o+ the decision. Thus& it is .ut +air that the .ac)$ages that should .e a$arded to the respondent .e computed +rom the time that the respondent $as illegally dismissed until the time $hen he $as re uired to report +or $or)& i.e. +rom Septem.er 3& /00C until !ay E& /00G. 't is only during the said period that the respondent is deemed to .e entitled to the payment o+ .ac)$ages.

BAC/@A$ES BASIS>RATIONALE B-STA+ANTE v. NLRC F 5'2 SCRA % F +ar;h %2, %))' FACTS >etitioners %ustamante& %antayan& Sumunod and Lamaran $ere employed as la.orers& har#esters and sprayers in pri#ate respondent company*s .anana plantation in :a#ao del 6orte. They all signed contracts o+ employment +or H months +rom <an./& 3FF0 to <uly /& 3FF0 .ut they had started $or)ing in Sept. 3FMF. They $ere pre#iously hired to do the same $or) +or periods lasting a month or more& +rom 3FMC to 3FMF. %e+ore the employment contracts e-pired on <uly /& 3FF0& petitioners* employments $ere terminated on the ground o+ poor per+ormance due to age& as none o+ them $as allegedly .elo$ E0 years old. >etitioners then +iled a complaint +or illegal dismissal $hich the La.or Ar.iter decided in their +a#or. The 5udgment declared the dismissal illegal& and ordered E#ergreen Farms to reinstate them immediately $ith H months .ac)$ages. >ri#ate respondent company appealed to the 6L"C .ut the appeal $as dismissed +or lac) o+ merit. A su.se uent !F" +iled .y respondent company $as similarly disposed o+ $ith the modi+ication that the a$ard +or .ac)$ages $as deleted& as there $as no .ad +aith on the part o+ E#ergreen Farms. The remo#al o+ the a$ard o+ .ac)$ages prompted petitioners to +ile this case& alleging that pu.lic respondent 6L"C gra#ely a.used its discretion. 'SS(E: 7hether or not the petitioners are entitled to .ac)$ages 9EL:: ;ES& .ecause petitioners are regular employees. "atio& "egular employees dismissed +or no #alid cause are entitled to +ull .ac)$ages and other .ene+its +rom the time their compensation $as $ithheld +rom them up to the time o+ their actual reinstatement. >etitioners $ere employed at #arious periods +rom 3FMC83FMF +or the same $or) they $ere hired to per+orm. They $ere engaged to per+orm acti#ities $hich are necessary in the usual .usiness o+ the employer. The contract +or pro.ationary employment $as utilized .y respondent company as a chicanery to deny petitioners their status as regular employees and to e#ade paying them the .ene+its attached to such status. They $ere hired and re8hired in a span o+ +rom /8E years to do the same type o+ $or) $hich conclusi#ely sho$s the necessity o+ petitioners* ser#ices to the respondent. The act o+ hiring and re8hiring the petitioners o#er a period o+ time $ithout considering them as regular employees e#idences .ad +aith on the part o+ pri#ate respondent. The pu.lic respondent made a +inding to this e++ect $hen it stated that the su.se uent rehiring o+ petitioners on a pro.ationary status Nclearly appears to .e a con#enient su.ter+uge on the part o+ management to pre#ent complainants (petitioners) +rom .ecoming regular employees.O :isposition "esolution o+ 6L"C is modi+ied& the deletion o+ the a$ard +or .ac)$ages is set aside. LA decision is AFF'"!E:& $ith modi+ication that .ac)$ages shall .e paid to petitioners +rom the time o+ their illegal dismissal up to the date o+ their reinstatement. NOT A,AILIN$ Palten" v. -CPB, $R %15%)), ?ebruar4 51, 5(() FACTS:

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entitled to .ac)$ages +rom termination o+ employment until turning si-ty (H0) years o+ age (in 3FFC) and& thereupon& to retirement .ene+its in accordance $ith la$. 9e shall also .e paid an additional amount o+ >C&000.00. The contro#ersy in the present case arises on the computation o+ .ac)$ages $herein respondent Sadac included the general salary increases in said computation $hile petitioner %an) insists that the general salary increases should not .e included in the computation o+ .ac)$ages .ut rather the computation should .e .ased on the $age rate at the time o+ dismissal. 'ssue: 7hether or not general salary increases should .e included in the .ase +igure to .e used in the computation o+ .ac)$ages. "uling: General salary increases are not included in the .ase +igure to .e used in the computation o+ .ac)$ages. Article /GF mandates that an employee*s +ull .ac)$ages shall .e inclusi#e o+ allo$ances and other .ene+its or their monetary e ui#alent. A salary increase cannot .e interpreted as either an allo$ance or a .ene+it. Salary increases are not a)in to allo$ances or .ene+its& and cannot .e con+used $ith either. The term Iallo$ancesI is sometimes used synonymously $ith Iemoluments&I as indirect or contingent remuneration& $hich may or may not .e earned& .ut $hich is sometimes in the nature o+ compensation& and sometimes in the nature o+ reim.ursement. Allo$ances and .ene+its are granted to the employee apart or separate +rom& and in addition to the $age or salary. 'n contrast& salary increases are amounts $hich are added to the employee*s salary as an increment thereto +or #aried reasons deemed appropriate .y the employer. Salary increases are not separate grants .y themsel#es .ut once granted& they are deemed part o+ the employee*s salary. To e-tend the co#erage o+ an allo$ance or a .ene+it to include salary increases $ould .e to strain .oth the imagination o+ the Court and the language o+ la$. As o.ser#ed .y the 6L"C& Ito other$ise gi#e the meaning other than $hat the la$ spea)s +or .y itsel+& $ill open the +loodgates to #arious interpretations.I 'ndeed& i+ the intent $ere to include salary increases as .asis in the computation o+ .ac)$ages& the same should ha#e .een e-plicitly stated in the same manner that the la$ used clear and unam.iguous terms in e-pressly pro#iding +or the inclusion o+ allo$ances and other .ene+its. Furthermore& salary increases are a mere e-pectancy. They are& .y its nature #olatile and are dependent on numerous #aria.les& including the company*s +iscal situation and e#en the employee*s +uture per+ormance on the 5o.& or the employee*s continued stay in a position su.5ect to management prerogati#e to trans+er him to another position $here his ser#ices are needed. 'n short& there is no #ested right to salary increases. That respondent Sadac may ha#e recei#ed salary increases in the past only pro#es +act o+ receipt .ut does not esta.lish a degree o+ assuredness that is inherent in .ac)$ages. From the +oregoing& the plain conclusion is that respondent Sadac*s computation o+ his +ull .ac)$ages $hich includes his prospecti#e salary increases cannot .e permitted. 'n addition& a cursory reading o+ the dispositi#e portion o+ the Court*s :ecision o+ 31 <une 3FFG in G.". 6o. 30/EHG& a$arding .ac)$ages to respondent Sadac& sho$s that the a$ard o+ .ac)$ages therein is un uali+ied. <udicial precedents tell us that an un uali+ied a$ard o+ .ac)$ages means that the employee is paid at the $age rate at the time o+ his dismissal. Thus& the .ase +igure to .e used in the computation o+ .ac)$ages is pegged at the $age rate at the time o+ the employee*s dismissal& inclusi#e o+ regular allo$ances that the employee had .een recei#ing such as the emergency li#ing allo$ances and the 31th month pay mandated under the la$. SEPARATION PAY BASIS O? CO+P-TATION Ph l Toba;;o ?lue Cur n" v. NLRC, 9(( SCRA 91 These re+er to the consolidated cases +or payment o+ separation pay lodged .y BtheD Lu.at Group& and +or illegal dismissal and underpayment o+ separation pay .y BtheD Luris group& $ith prayers +or damages and attorney*s +ees against the a.o#e respondents. FACTS: There are t$o groups o+ employees& namely& the Lu.at group and the Luris group. The Lu.at group is composed o+ petitioner*s seasonal employees $ho $ere not rehired +or the 3FFE to.acco season. At the start o+ that season& they $ere merely in+ormed that their employment had .een terminated at the end o+ the 3FF1 season. They claimed that petitioner*s re+usal to allo$ them to report +or $or) $ithout mention o+ any 5ust or authorized cause constituted illegal dismissal. 'n their Complaint& they prayed +or separation pay& .ac) $ages& attorney*s +ees and moral damages. 88888888888888888888888888888888888888888888888888888 - daily rate - 3C days total no. o+ $or)ing days in one year 'n their Complaint& they claimed that the computation should .e .ased not on the a.o#e mathematical e uation& .ut on the actual num.er o+ years ser#ed. 'n addition& they contended that they $ere illegally dismissed& and thus they prayed +or .ac) $ages. Against these +actual antecedents& the la.or ar.iter ordered the petitioner to pay complainants* separation pay di++erential plus attorney*s +ees in the total amount o+ >1&0F/&MFH.GH. :issatis+ied $ith said :ecision& >hilippine To.acco and the complainants +iled their respecti#e appeals .e+ore the 6L"C. As noted earlier& the 6L"C a++irmed the la.or ar.iter*s :ecision. %e+ore this Court& only >hilippine To.acco +iled the present recourse& as the complainants did not uestion the 6L"C :ecision. 'ssues: 9o$ should the separation pay o+ illegally dismissed seasonal employees .e computedP 9eld: The amount o+ separation pay is .ased on t$o +actors: the amount o+ monthly salary and the num.er o+ years o+ ser#ice. Although the La.or Code pro#ides di++erent de+initions as to $hat constitutes None year o+ ser#ice&O %oo) Si- does not speci+ically de+ine None year o+ ser#iceO +or purposes o+ computing separation pay. 9o$e#er& Articles /M1 and /ME .oth state in connection $ith separation pay that a +raction o+ at least si- months shall .e considered one $hole year. Applying this to the case at .ar& $e hold that the amount o+ separation pay $hich respondent mem.ers o+ the Lu.at and Luris groups should recei#e is one8hal+ (3,/) their respecti#e a#erage monthly pay during the last season they $or)ed multiplied .y the num.er o+ years they actually rendered ser#ice& pro#ided that they $or)ed +or at least si- months during a gi#en year. The +ormula that petitioner proposes& $herein a year o+ $or) is e ui#alent to actual $or) rendered +or 101 days& is .oth un+air and inapplica.le& considering that Articles /M1 and /ME pro#ide that in connection $ith separation pay& a +raction o+ at least si- months shall .e considered one $hole year. (nder these pro#isions& an employee $ho $or)ed +or only si- months in a gi#en year 88 $hich is certainly less than 101 days 88 is considered to ha#e $or)ed +or one $hole year. 6L"C :ecision is a++irmed $ith modi+ications. E+PLOYER NOT LIABLE Nat onal ?e:erat on oE Labor vs. NLRC $.R. No. %511%& #+ar;h 5,5(((* Facts: >etitioners are employees o+ the >atalon Coconut Estate in Jam.oanga. 7ith the ad#ent o+ the "A 6o. HHCG or the Comprehensi#e Agrarian "e+orm La$& the go#ernment sought the compulsory ac uisition o+ the land +or agrarian re+orm. %ecause o+ this& the pri#ate respondents $ho are o$ners o+ the estate decided to shut do$n its operation. >etitioners did not recei#e any separation pay. 6o$& the petitioners pray& $ith the representation o+ their la.or group& claiming that they $ere illegally dismissed. They cite Article /M1 o+ the La.or code $here an employer NmayO terminate the employment o+ any employee due to the installation o+ la.or sa#ing de#ices& redundancy& and retrenchment to pre#ent losses or the closing or cessation o+ operation. >etitioners .ecame co8o$ners o+ the land and su.se uently +iled complaints +or illegal dismissal. The "egional Ar.itration %ranch o+ the 6L"C dismissed the charge +or illegal dismissal .ut ordered the payment o+ separation pay. The 6L"C re#ersed the decision. 'ssues: a. 7hether or not the Court should apply the legal ma-im #er.al legis in construing Article /M1 o+ the La.or Code as regards its applica.ility to the case at .ar. 2n the other hand& the Luris group is made up o+ seasonal employees $ho $or)ed during the 3FFE season. 2n August 1& 3FFE& they recei#ed a notice in+orming them that& due to serious .usiness losses& petitioner planned to close its %alinta$a) plant and trans+er its to.acco processing and redrying operations to 'locos Sur. Although the closure $as to .e e++ecti#e Septem.er 3C& 3FFE& they $ere no longer allo$ed to $or) starting August E& 3FFE. 'nstead& petitioner a$arded them separation pay computed according to the +ollo$ing +ormula: total no. o+ days actually $or)ed

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.. 7,6 an employer that $as compelled to cease its operation .ecause o+ compulsory ac uisition .y the go#ernment o+ its land purposes o+ agrarian re+orm is lia.le to pay separation pay its a++ected employees. 9eld: a. ;es& the legal ma-im is applica.le in this case. The use o+ the $ord N!ay&O in its plain meaning& denotes that it is directory in nature and generally permissi#e only. Also& Article /M1 o+ the La.or Code does not contemplate a situation $here the closure o+ the .usiness esta.lishment is +orced upon the employer and ultimately +or the .ene+it o+ the employees. The >atalon Coconut Estate $as closed do$n .ecause a large portion o+ the said estate $as ac uired .y the :A" pursuant to the CA">. The se#erance o+ employer8employee relationship .et$een the parties came a.out in#oluntarily& as a result o+ an act o+ the State. Conse uently& complainants are not entitled to any separation pay. "easoning: 7here the $ords o+ a statute are clear& plain and +ree +rom am.iguity& it must .e gi#en its literal meaning and applied $ithout attempted interpretation. >olicy: Article /M1 o+ the La.or Code applies in cases o+ closures o+ esta.lishment and reduction o+ personnel. The peculiar circumstances in the case at .ar& ho$e#er& in#ol#es neither the closure o+ an esta.lishment nor a reduction o+ personnel as contemplated under the article. .. 6o. The peculiar circumstance in the case at .ar in#ol#es neither the closure o+ an esta.lishment nor a reduction in personnel as contemplated in Article /M1. The closure contemplated in /M1 is a #oluntary act on the part o+ the employer as may .e gleaned +or the $ording& Nthe employer !A; also terminate&O denoting that it is directory in nature. The La.or Code does not contemplate a situation $here the closure is +orced upon the employer. As such& petitioners are not entitled to separation pay as pri#ate respondents did not #oluntary shut do$n operation as they e#en sought to .e e-empted +rom the co#erage o+ "A HHCG CONSTR-CTI,E DIS+ISSAL 3O CINE+A CORP. ,. ABELLANA 9'( SCRA %=5 FACTS: >etitioner is a duly organized corporation engaged in the mo#ie .usiness. Sometime in Septem.er 3FFG& pri#ate respondent $as employed as theater porter. 2n 6o#em.er 33& 3FFE& petitioner issued a memorandumB/D reminding all tic)et sellers not to encash any chec) +rom their cash collections and to turn8o#er all cash collections to the petitioner. 2n August E& C& H and G& 3FFC& pri#ate respondent encashed& on .ehal+ o+ her +riend Luz#iminda Sil#a& +our (E) %anco del 6orte Chec)sB1D amounting to >HH&000.00& $ith Emperatriz ;nrig& tic)et seller o+ petitioner& assigned at (ltra Aistarama and Se#en Arts Theater. 7hen the said chec)s $ere deposited to the account o+ the petitioner& they $ere dishonored +or insu++iciency o+ +unds. Conse uently& on August 3C& 3FFC& pri#ate respondent $as sent a sho$8cause memorandum re uiring her to e-plain $hy no disciplinary action should .e ta)en against her relati#e to the chec)s in uestion&BED $hich she +ailed to comply. She $as li)e$ise placed under pre#enti#e suspension +or a period o+ t$enty (/0) days or until Septem.er E& 3FFC.BCD 2n August //& 3FFC& petitioner directed pri#ate respondent to appear and present her side at the administrati#e in#estigation scheduled on August /H& 3FFC.BHD >ri#ate respondent attended the said in#estigation $here she admitted to ha#e encashed the chec)s $ithout petitioners* permission.BGD >etitioners denied the allegations and argued that pri#ate respondent $as not dismissed .ut merely pre#enti#ely suspended +or t$enty (/0) days. 't added that e#en assuming that pri#ate respondent $as dismissed& the dismissal $as +or a #alid cause. >ri#ate respondent #iolated a company policy prohi.iting the encashment o+ chec)s $ithout her employer*s permission. 'SS(E: 7hether or not there $as constructi#e dismissal o+ the employee. 9EL:: :ismissal connotes a permanent se#erance or complete separation o+ the $or)er +rom the ser#ice on the initiati#e o+ the employer regardless o+ the reasons there+or. B3CD %ased on the a+oresaid de+inition& it is clear that pri#ate respondent $as not dismissed +rom the ser#ice .ut $as merely placed under pre#enti#e suspension. 9er suspension cannot .e construed as a dismissal since the cessation +rom $or) is only temporary. !oreo#er& pri#ate respondent could not ha#e .een dismissed on August 3C& 3FFC .ecause a +ormal in#estigation $as still .eing conducted. 'n +act& she e#en attended said in#estigation on August /H& 3FFC $here she admitted ha#ing encashed the chec)s. '+ she $as indeed dismissed on said date& as she claims& petitioners $ould not ha#e continued $ith the in#estigation. (ndou.tedly& pri#ate respondent pre8empted the outcome o+ the in#estigation .y +iling a complaint +or illegal dismissal. A constructi#e discharge is de+ined as a uitting .ecause continued employment is rendered impossi.le& unreasona.le or unli)ely4 as an o++er in#ol#ing demotion in ran) and a diminution in pay. >ri#ate respondent $as not demoted nor su++ered any diminution o+ pay& neither $as she pre#ented +rom returning +or $or). As discussed earlier& pri#ate respondent $as suspended +rom $or) +or t$enty (/0) days +or #iolating company rules. >etitioners stance to o.lige pri#ate respondent to pay the amount o+ the chec)s is 5ust +air and reasona.le considering that she indorsed the su.5ect chec)s. As an endorser& pri#ate respondent undertoo) to pay the amount o+ the dishonored chec)s.B3MD The payment o+ said amount is not discriminatory& impossi.le& and unreasona.le to +oreclose any choice on the part o+ the pri#ate respondent to +orego her continued employment. 't $as pri#ate respondent $ho signi+ied her intention not to report +or $or) $hen she +iled the instant case. .YATT TACI SER,ICES, INC. ,. CATINOY 92) SCRA 9&' FACTS: %oth respondent and Saturnino are employees o+ petitioner. They are also o++icers o+ the legitimate la.or organization,association o+ the petitioner. %oth o+ them had a +ist +ight. A+ter securing medical treatment& complainant on the same day +iled a criminal complaint +or physical in5uries $ith the +iscal*s 2++ice and Saturnino $as arrested .y the police +or in#estigation. 2n August /C& <aime :u.lin& Chairman o+ the %oard o+ the Association& issued a memorandum to the 2peration !anager o+ the petitioner company& !r. 9. Caraig recommending the inde+inite suspension o+ respondent and Saturnino. 2n August /H& 3FFC& the Asst. Aice8>resident o+ the petitioner company !elchor Acosta& <r. issued a memorandum pre#enti#ely suspending +or 10 days the ser#ices o+ the respondent and Saturnino pending in#estigation in response to the recommendation o+ the Chairman o+ the %oard o+ the Association.

"espondent& +iled a complaint +or illegal suspension& unpaid $ages& and damages against .oth the association8union and management on August /M& 3FFC .e+ore the 6L"C

7hile the case $as .eing deli.erated upon .y the petitioners& pri#ate respondent on Septem.er 3& 3FFC& +iled a pro +orma complaintBMD +or illegal dismissal and non8 payment o+ .ene+its .e+ore the "egional Ar.itration %oard 6o. A'' o+ the 6L"C& Ce.u City& $hich $as doc)eted as "A%8A''80F80F1M8FC. >ri#ate respondent claims that on the day she $as suspended& Atty. Tito >intor& <r.& original counsel +or petitioners& summoned her to his o++ice and $as ad#ised to resign and pay the .ounced chec)s* amount $hich respondent #ehemently protested. 2n that #ery same day she $as told that she $as dismissed +rom the ser#ice.

A+ter the lapse o+ his 10 days pre#enti#e suspension& respondent reported +or $or) .ut he $as not allo$ed to resume his duties as a ta-i dri#er allegedly& since he is pursuing the criminal complainant +or physical in5uries against Saturnino& the associations* >resident and the complaint +or the illegal suspension $ith the 6L"C.

2n 2cto.er 3/& 3FFC& since there $as no response +rom "espondent company& complainant decided to amend his complaint to include constructi#e dismissal as an additional cause o+ action since he $as not allo$ed to resume his employment a+ter the lapse o+ his pre#enti#e suspension.

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'ssue: 7hether or not the respondent is constructi#ely dismissed. 9eld: Clearly& constructi#e dismissal had already set in $hen the suspension $ent .eyond the ma-imum period allo$ed .y la$. Section E& "ule L'A& %oo) A o+ the 2mni.us "ules pro#ides that pre#enti#e suspension cannot .e more than the ma-imum period o+ 10 days. 9ence& $e ha#e ruled that a+ter the 108day period o+ suspension& the employee must .e reinstated to his +ormer position .ecause suspension .eyond this ma-imum period amounts to constructi#e dismissal. 't .ears stressing that in illegal dismissal cases& it is the employer $ho has the .urden o+ proo+.B30D Since petitioner claims that respondent a.andoned his $or)& petitioner has to esta.lish the concurrence o+ the +ollo$ing: (3) the employee*s intention to a.andon employment and (/) o#ert acts +rom $hich such intention may .e in+erredUas $hen the employee sho$s no desire to resume $or).B33D >etitioner +ailed to ma)e out its case o+ a.andonment. E#en the 6L"C in its modi+ied decision con+irmed that there $ere no o#ert acts unerringly pointing to the +act that respondent had no intention o+ returning to $or) anymore. Also& the +act that respondent +iled a complaint against his employer $ithin a reasona.le period o+ time .elies a.andonment. SIE+ENS P.ILIPPINES ,. DO+IN$O 2'( SCRA &' FACTS: :omingo $as a consultant employed .y the petitioner in the +ield o+ te-t and data net$or)s +or a period o+ t$el#e (3/) months. As compensation& he recei#ed :!/0&000.00& paya.le once +or e#ery t$el#e8month period. 2n !arch 33& 3FF1& $hile :omingo $as already in the employ o+ Siemens >hilippines& Siemens Germany e-tended the consultancy agreement $ith :omingo +or another t$el#e (3/) months. Again& on !arch 3H& 3FFE& Siemens Germany rene$ed the consultancy agreement $ith :omingo +or another si- (H) months. :omingo*s consultancy contract e-pired in Septem.er 3FFE. Complacent that the consultancy agreement $ould .e rene$ed in accordance $ith the guarantee letter& :omingo continued to render ser#ice as a consultant despite the a.sence o+ a +ormal notice o+ rene$al. 9e had e#ery reason to +eel secure .ecause& in <anuary 3FFC& $ithout his contract .eing rene$ed& he $as e#en made to accompany to 9ong Zong the General !anager o+ Siemens Germany and the :i#ision !anager o+ Siemens >hilippines to seal an agreement .et$een Siemens >hilippines and >hilippine Long :istance Telephone Company in#ol#ing a (SR3.0F! >ac)et S$itching Contract. Earlier& on 2cto.er 13& 3FFE& Siemens >hilippines sent a letter to :omingo proposing a ne$ incenti#e scheme. The incenti#e scheme $as& in e++ect& a replacement o+ his consultancy contract $ith Siemens Germany. (nder the scheme& :omingo $ould recei#e a sales compensation pac)age o+ /0` o+ his peso salary& or a ma-imum o+ a.out >hpG0&000.00 per annum& $hereas under the consultancy agreement& he $as recei#ing a +i-ed salary o+ >hp1G0&000.00 (:!/0&000.00) per annum. Feeling humiliated .y the diminution o+ his salary& :omingo $as +orced to resign. 2n <uly H& 3FFC& :omingo +iled a complaint +or illegal dismissal and prayed +or the payment o+ salaries& 31th month pay& .ac)$ages& damages& separation pay and attorney*s +ees. :omingo alleged that he $as +orced to resign .ecause o+ the act o+ Siemens >hilippines o+ not rene$ing the consultancy agreement. Siemens >hilippines countered that :omingo*s resignation $as #oluntary and that they $ere not pri#y to the consultancy agreement .et$een :omingo and Siemens Germany. 'SS(E: 7hether or not :omingo $as constructi#ely dismissed. 9EL:: 7e .elie#e& and so hold& that :omingo $as constructi#ely dismissed +rom employment. A diminution o+ pay is pre5udicial to the employee and amounts to constructi#e dismissal.B1CD The gauge +or constructi#e dismissal is $hether a reasona.le person in the employee*s position $ould +eel compelled to gi#e up his employment under the pre#ailing circumstances. Constructi#e dismissal is de+ined as uitting $hen continued employment is rendered impossi.le& unreasona.le or unli)ely as the o++er o+ employment in#ol#es a demotion in ran) or diminution in pay.B1HD 't e-ists $hen the resignation on the part o+ the employee $as in#oluntary due to the harsh& hostile and un+a#ora.le conditions set .y the employer. 't is .rought a.out .y the clear discrimination& insensi.ility or disdain sho$n .y an >ido $as employed as a security guard .y Cheru.im Security and General Ser#ices& 'nc. 9e $as assigned at the Ayala !useum& .ut $as later trans+erred on :ecem.er 3& 3FFC to the To$er and E-change >laza o+ Ayala Center $here he $or)ed as a computer operator at the Console "oom& responsi.le +or o.ser#ing occurrences that transpire inside ele#ators and other areas in .uildings $hich are recorded .y sur#eillance cameras and relayed to monitors.3 Li)e the other guards deployed .y respondent at the Ayala Center& petitioner $as under the operational control and super#ision o+ the Ayala Security Force (ASF) o+ the Ayala Group o+ Companies. 9 had an altercation $ith one o+ the ASF o++icers& (Alcantara)& and .ecause o+ the said incident a complaint $as +iled against him. An in#estigation on the incident transpired& he $as there put on pre#enti#e suspension. As more than nine months had elapsed since the in#estigation $as conducted .y respondent $ith no categorical +indings thereon made& petitioner +iled on 2cto.er /1& /000 a complaintM +or illegal constructi#e dismissal. 'SS(E: 7hether or not the nine (F) suspension tantamount to constructi#e dismissal. 9EL:: This Court +inds that& indeed& petitioner $as constructi#ely dismissed& .ut not on the grounds ad#anced .y the appellate court& $hich echoed those o+ the 6L"C and the La.or Ar.iter. 7e stress that Article /MH applies only $hen there is a .ona +ide suspension o+ the employer@s operation o+ a .usiness or underta)ing +or a period not e-ceeding si(H) months. 'n such a case& there is no termination o+ employment .ut only a temporary displacement o+ employees& al.eit the displacement should not e-ceed si- (H) months. The paramount consideration should .e the dire e-igency o+ the .usiness o+ the employer that compels it to put some o+ its employees temporarily out o+ $or). 'n security ser#ices& the temporary Io++8detailI o+ guards ta)es place $hen the security agency@s clients decide not to rene$ their contracts $ith the security agency& resulting in a situation $here the a#aila.le posts under its e-isting contracts are less than the num.er o+ guards in its roster. Aerily& a +loating status re uires the dire e-igency o+ the employer@s .ona +ide suspension o+ operation o+ a .usiness or underta)ing. 'n security ser#ices& this happens $hen the security agency*s clients $hich do not rene$ their contracts are more than those that do and the ne$ ones that the agency gets.// Also& in instances $hen contracts +or security ser#ices stipulate that the client may re uest the agency +or the replacement o+ the guards assigned to it e#en +or $ant o+ cause& the replaced security guard may .e placed on temporary Io++8detailI i+ there are no a#aila.le posts under respondent*s e-isting contracts./1 7hen a security guard is placed on a I+loating status&I he does not recei#e any salary or +inancial .ene+it pro#ided .y la$. :ue to the grim economic conse uences to the employee& the employer should .ear the .urden o+ pro#ing that there are no posts a#aila.le to $hich the employee temporarily out o+ $or) can .e assigned. This& respondent +ailed to discharge. 't is gathered that respondent intended to put petitioner under pre#enti#e suspension +or an inde+inite period o+ time pending the in#estigation o+ the complaint against him. The allo$a.le period o+ suspension in such a case is not si7e ha#e& under the la$*s mandate& consistently resol#ed this situation in +a#or o+ the employee in order to protect his rights and interests +rom the coerci#e acts o+ the employer. 'n the instant case& :omingo*s resignation $as .rought a.out .y the decision o+ the management o+ Siemens >hilippines not to rene$ [ or $or) +or the rene$al o+ [ his consultancy contract $ith Siemens Germany $hich clearly resulted in the su.stantial diminution o+ his salary. The situation .rought a.out the +eeling o+ oppression $hich compelled :omingo to resign. The diminution in pay created an ad#erse $or)ing en#ironment that rendered it impossi.le +or :omingo to continue $or)ing +or Siemens >hilippines. 9is resignation +rom the company $as in reality not his choice .ut a situation created .y the company& there.y amounting to constructi#e dismissal. PIDO ,. NLRC $.R.NO. %')&%5, ?EBR-ARY 59, 5((1 FACTS: employer $hich .ecomes un.eara.le to the employee. An employee $ho is +orced to surrender his position through the employer*s un+air or unreasona.le acts is deemed to ha#e .een illegally terminated and such termination is deemed to .e in#oluntary.B1GD

45
months .ut only 10 days& +ollo$ing Sections M and F o+ "ule LL'''& %oo) A o+ the 2mni.us "ules 'mplementing the La.or Code ('mplementing "ules) As a.o#e8 uoted Section F o+ the said 'mplementing "ules e-pressly pro#ides& in the e#ent the employer chooses to e-tend the period o+ suspension& he is re uired to pay the $ages and other .ene+its due the $or)er and the $or)er is not .ound to reim.urse the amount paid to him during the e-tended period o+ suspension e#en i+& a+ter the completion o+ the hearing or in#estigation& the employer decides to dismiss him. "espondent did not in+orm petitioner that it $as e-tending its in#estigation& nor did it pay him his $ages and other .ene+its a+ter the lapse o+ the 108day period o+ suspension. 6either did respondent issue an order li+ting petitioner*s suspension& or any o++icial assignment& memorandum or detail order +or him to assume his post or another post. "espondent merely chose to da$dle $ith the in#estigation& in a.solute disregard o+ petitioner*s $el+are. At the time petitioner +iled the complaint +or illegal suspension and,or constructi#e dismissal on 2cto.er /1& /000& petitioner had already .een placed under pre#enti#e suspension +or nine months. To date& there is no sho$ing or in+ormation that& i+ at all& respondent still intends to conclude its in#estigation. This Court thus rules that petitioner*s prolonged suspension& o$ing to respondent*s neglect to conclude the in#estigation& had ripened to constructi#e dismissal. +ORALES ,. .ARBO-R CENTER $.R.NO.%1=5(& 3AN-ARY 52, 5(%5 FACTS: <onathan A. !orales (!orales) $as hired .y respondent 9ar.our Centre >ort Terminal& 'nc.(9C>T') as an Accountant and Acting Finance 2++icer& $ho $as then promoted as the :i#ision !anager o+ the Accounting :epartment. Su.se uent to 9C>T'*s trans+er to its ne$ o++ices at Aitas& Tondo& !anila& !orales recei#ed an inter8o++ice memorandum reassigning him to 2perations Cost Accounting. As a result thereo+& !orales $rote Singson& the ne$ Administrati#e !anager $ho issued the memorandum& protesting that his reassignment $as a clear demotion since the position to $hi ch he $as trans+erred $as not e#en included in 9C>T'*s plantilla. 9o$e#er& Singson said that it*s a #alid e-ercise o+ management prerogati#e and that 9C>T' had the right and responsi.ility to +ind the per+ect .alance .et$een the s)ills and a.ilities o+ employees to the needs o+ the .usiness. For the $hole o+ the ensuing month !orales $as a.sent +rom $or) and,or tardy. :ue to continuous a.sences and tardiness !orales incurred& he $as gi#en se#eral $arnings +or #iolating the Code o+ Conduct. 'n the meantime& !orales +iled a complaint +or constructi#e dismissal& moral and e-emplary damages as $ell as attorney*s +ees .e+ore the La.or Ar.iter Facundo L. Leda $ho dismissed the complaint and ruled that !orales* reassignment $as a #alid e-ercise o+ 9C>T'*s management prerogati#e $hich cannot .e construed as constructi#e dismissal a.sent sho$ing that the same $as done in .ad +aith and resulted in the diminution o+ his salary and .ene+its. 9o$e#er& the decision $as re#ersed .y the 6ational La.or "elations Commissions. 9ence this petition. 'SS(E: 7hether or not the change in the designation or position o+ petitioner constituted constructi#edismissal 9EL:: 't is constituted as constructi#e dismissal. Constructi#e dismissal e-ists $here there is cessation o+ $or) .ecause continued employment is rendered impossi.le& unreasona.le or unli)ely& as an o++er in#ol#ing a demotion in ran) or a diminution in pay and other .ene+its. Aptly called a dismissal in disguise or an act amounting to dismissal .ut made to appear as i+ it $ere not& constructi#e dismissal may& li)e$ise& e-ist i+ an act o+ clear discrimination& insensi.ility& or disdain .y an employer .ecomes so un.eara.le on the part o+ the employee that it could +oreclose any choice .y him e-cept to +orego his continued employment. 'n cases o+ a trans+er o+ an employee& the rule is settled that the employer is charged $ith the .urden o+ pro#ing that its conduct and action are +or #alid and legitimate grounds such as genuine .usiness necessity and that the trans+er is not unreasona.le& incon#enient or pre5udicial to the employee. '+ the employer cannot o#ercome this .urden o+ proo+& the employee*s trans+er shall .e tantamount to unla$+ul constructi#e dismissal. 'n this case& the employer +ailed to pro#e that such trans+er did not constitute constructi#e dismissal. The reassignment $as e#idently a demotion since !orales* ne$ duties $hich& +ar +rom .eing managerial in nature& $ere #ery simply and #aguely descri.ed as inclusi#e o+ monitoring and e#aluating all consuma.les re uests& gears and e uipments related to the employer*s operations as $ell as close interaction $ith its su.8contractors. 7here+ore& the Court granted the petition. RETIRE+ENT -n versal Rob na Su"ar + ll n" Cor!. vs. Caballe:a $.R. No. %2''==. 3ul4 5&, 5((& Facts: Ca.alleda $or)ed as $elder +or ("S +rom !arch 3FMF until <une /1& 3FFG $ith a salary o+ >3/E.00 a day& $hile Cadalin $or)ed as crane operator +rom 3FGH up to <une 3C& 3FFG $ith a salary o+ >/0F.10 per day. 'n 3FF3& the company president& issued a !emorandum esta.lishing the company policy on NCompulsory "etirementO o+ its employees at H0. 'n 3FF/& "A GHE3 (retirement la$) $as enacted and it too) e++ect on <anuary G& 3FF1& amending Article /MG o+ the La.or Code. 'n 3FF1& the company and 6FL (.argaining agent) entered into a C%A& under $hich the retirement .ene+its o+ the mem.ers o+ the collecti#e .argaining unit shall .e in accordance $ith la$. !ean$hile& Ca.alleda and Cadalin& ha#ing reached the age o+ H0& $ere allegedly +orced to retire pursuant to the company !emorandum earlier issued. 'ssues: 3. 7hether ".A.GHE3 can .e gi#en retroacti#e e++ect /. 7hether respondents $ere illegally terminated on account o+ compulsory retirement 9eld: 3) "A GHE3& as a social legislation& has retroacti#e e++ect The issue o+ the retroacti#e e++ect o+ ".A. GHE3 on prior e-isting employment contracts has long .een settled. 'n Enri uez Security Ser#ices& 'nc. #. Ca.ota5e& "A GHE3 is undou.tedly a social legislation. The la$ has .een enacted as a la.or protection measure and as a curati#e statute that U a.sent a retirement plan de#ised .y& an agreement $ith& or a #oluntary grant +rom& an employer U can respond& in part at least& to the +inancial $ell8.eing o+ $or)ers during their t$ilight years soon +ollo$ing their li+e o+ la.or. $e held: There should .e little dou.t a.out the +act that the la$ can apply to la.or contracts still e-isting at the time the statute has ta)en e++ect& and that its .ene+its can .e rec)oned not only +rom the date o+ the la$@s enactment .ut retroacti#ely to the time said employment contracts ha#e started. >ursuant thereto& this Court imposed t$o (/) essential re uisites in order that ".A. GHE3 may .e gi#en retroacti#e e++ect: (a) the claimant +or retirement .ene+its $as still in the employ o+ the employer at the time the statute too) e++ect4 and (.) the claimant had complied $ith the re uirements +or eligi.ility +or such retirement .ene+its under the statute. 't is e#ident +rom the records that $hen respondents $ere compulsorily retired +rom the ser#ice& ".A. GHE3 $as already in +ull +orce and e++ect. The petitioners +ailed to pro#e that the respondents did not comply $ith the re uirements +or eligi.ility under the la$ +or such retirement .ene+its. 'n sum& the a+orementioned re uisites $ere ade uately satis+ied& thus& $arranting the retroacti#e application o+ ".A. GHE3 in this case.

/) "etirement is the result o+ a .ilateral act o+ the parties& a #oluntary agreement .et$een the employer and the employee $here.y the latter& a+ter reaching a certain age& agrees to se#er his or her employment $ith the +ormer. The age o+ retirement is primarily determined .y the e-isting agreement .et$een the employer and the employees. 9o$e#er& in the a.sence o+ such agreement& the retirement age shall .e +i-ed .y la$. (nder Art. /MG o+ the La.or Code as amended& the legally mandated age +or compulsory retirement is HC years& $hile the set minimum age +or optional retirement is H0 years. SC applied Art. /MG 'n this case& it may .e stressed that the C%A does not per se (a) compulsory (HC)4 and speci+ically pro#ide +or the compulsory retirement age nor does it pro#ide +or an optional retirement plan. 't merely pro#ides that the retirement .ene+its

46
accorded to an employee shall .e in accordance $ith la$. Thus& $e must apply Art. /MG o+ the La.or Code $hich pro#ides +or t$o types o+ retirement: (.) optional (C%A& employment contract& retirement plan4 H0 years or more& .ut not .eyond HC years& pro#ided he has ser#ed at least +i#e years in the esta.lishment concerned. 6%: That prerogati#e is e-clusi#ely lodged in the employee) "espondents $ere compulsorily retired. 'ndu.ita.ly& the #oluntariness o+ the respondents@ retirement is the meat o+ the instant contro#ersy. >etitioners postulate that respondents #oluntarily retired particularly $hen Ale5andro +iled his application +or retirement& su.mitted all the documentary re uirements& accepted the retirement .ene+its and e-ecuted a uitclaim in +a#or o+ ("S(!C2. "espondents claim other$ise& contending that they $ere merely +orced to comply as they $ere no longer gi#en any $or) assignment and considering that the se#erance o+ their employment $ith ("S(!C2 is a condition precedent +or them to recei#e their retirement .ene+its. 7e rule in +a#or o+ respondents. Generally& the la$ loo)s $ith dis+a#or on uitclaims and releases .y employees $ho ha#e .een in#eigled or pressured into signing them .y unscrupulous employers see)ing to e#ade their legal responsi.ilities and +rustrate 5ust claims o+ employees. They are +ro$ned upon as contrary to pu.lic policy. A uitclaim is ine++ecti#e in .arring reco#ery o+ the +ull measure o+ a $or)er@s rights& and the acceptance o+ .ene+its there+rom does not amount to estoppel. B%ecause employee and employer do not stand on same +ooting& employee is deemed not to ha#e $ai#ed any o+ their rights. "enuntiatio non praesumitur.D To .e precise& only Ale5andro $as a.le to claim a partial amount o+ his retirement .ene+it. Thus& it is clear +rom the decisions o+ the Ar.iter& 6L"C and CA that petitioners are still lia.le to pay Ale5andro the di++erential on his retirement .ene+its. 2n the other hand& Agripino $as actually and totally depri#e o+ his retirement .ene+its. I! the a se!1e o2 a ret%reme!t 0la! or agreeme!t 0ro'%#%!g 2or ret%reme!t e!e2%ts o2 em0loyees %! the esta l%shme!t+ a! em0loyee "0o! rea1h%!g the age o2 s%&ty ),./ years or more+ "t !ot eyo!# s%&ty52%'e ),5/ years wh%1h %s here y #e1lare# the 1om0"lsory ret%reme!t age+ who has ser'e# at least 2%'e )5/ years %! the sa%# esta l%shme!t+ may ret%re a!# shall e e!t%tle# to ret%reme!t 0ay e<"%'ale!t to at least o!e5hal2 )*=6/ mo!th salary 2or e'ery year o2 ser'%1e+ a 2ra1t%o! o2 at least s%& ),/ mo!ths e%!g 1o!s%#ere# as o!e whole year. The C%A in the case at .ar esta.lished H0 as the compulsory retirement age. 9o$e#er& it is not alleged that either <a#ier or Llagas had reached the compulsory retirement age o+ H0 years& .ut instead that they had rendered at least /0 years o+ ser#ice in the School& the last three (1) years continuous. Clearly& the C%A pro#ision allo$s the employee to .e retired .y the School e#en .e+ore reaching the age o+ H0& pro#ided that he,she had rendered /0 years o+ ser#ice. 7ould such a stipulation .e #alidP <urisprudence a++irms the position o+ the School. %y their acceptance o+ the C%A& the (nion and its mem.ers are o.liged to a.ide .y the commitments and limitations they had agreed to cede to management. The uestioned retirement pro#isions cannot .e deemed as an imposition +oisted on the (nion& $hich #ery $ell had the right to ha#e re+used to agree to allo$ing management to retire retire employees $ith at least /0 years o+ ser#ice. 't should not .e ta)en to mean that retirement pro#isions agreed upon in the C%A are a.solutely .eyond the am.it o+ 5udicial re#ie$ and nulli+ication. A C%A& as a la.or contract& is not merely contractual in nature .ut impressed $ith pu.lic interest. '+ the retirement pro#isions in the C%A run contrary to la$& pu.lic morals& or pu.lic policy& such pro#isions may #ery $ell .e #oided. Certainly& a C%A pro#ision or employment contract that $ould allo$ management to su.#ert security o+ tenure and allo$ it to unilaterally IretireI employees a+ter one month o+ ser#ice cannot .e upheld. 6either $ill the Court sustain a retirement clause that entitles the retiring employee to .ene+its less than $hat is guaranteed under Article /MG o+ the La.or Code& pursuant to the pro#ision*s e-press pro#iso thereto in the pro#ision. T$enty years is a more than ideal length o+ ser#ice an employee can render to one employer. (nder ordinary contemplation& a C%A pro#ision entitling an employee to retire a+ter /0 years o+ ser#ice and accordingly collect retirement .ene+its is Ire$ard +or ser#ices rendered since it ena.les an employee to reap the +ruits o+ his la.or U particularly retirement .ene+its& $hether lump8sum or other$ise U at an earlier age& $hen said employee& in presuma.ly .etter physical and mental condition& can en5oy them .etter and longer.I SERRANO ,. SE,ERINO SANTOS TRANSIT $.R.NO. %&1')&, A-$-ST ), 5(%( FACTS: >etitioner "odol+o <. Serrano $as hired on Septem.er /M& 3FF/ as .us conductor .y respondent Se#erino Santos Transit& a .us company o$ned and operated .y its co8respondent Se#erino Santos. A+ter 3E years o+ ser#ice or on <uly 3E& /00H& petitioner applied +or optional retirement +rom the company $hose representati#e ad#ised him that he must +irst sign the already prepared Tuitclaim .e+ore his retirement pay could .e released. As petitioner*s re uest to +irst go o#er the computation o+ his retirement pay $as denied& he signed the Tuitclaim on $hich he $rote N(.>.O (under protest) a+ter his signature& indicating his protest to the amount o+ >GC&/GG.EC $hich he recei#ed& computed .y the company at 3C days per year o+ ser#ice. >etitioner soon a+ter +iled a complaintB3D .e+ore the La.or Ar.iter& alleging that the company erred in its computation since under "epu.lic Act 6o. GHE3& other$ise )no$n as the "etirement >ay La$& his retirement pay should ha#e .een computed at //.C days per year o+ ser#ice to include the cash e ui#alent o+ the C8day ser#ice incenti#e lea#e (S'L) and 3,3/ o+ the 31th month pay $hich the company did not. The company maintained& ho$e#er& that the Tuitclaim signed .y petitioner .arred his claim and& in any e#ent& its computation $as correct since petitioner $as not entitled to the C8day S'L and pro8rated 31th month pay +or& as a .us conductor& he $as paid on commission .asis. "espondents& noting that the retirement di++erential pay amounted to only >3&E13.3C& e-plained that in the computation o+ petitioner*s retirement pay& +i#e months $ere inad#ertently not included .ecause some indecards containing his records had .een lost. 'SS(E4 7hether or not the petitioners retirement pay should include the cash e ui#alent o+ the C8day S'L and 3,3/ o+ the 31th month pay. 9EL:: Admittedly& petitioner $or)ed +or 3E years +or the .us company $hich did not adopt any retirement scheme. E#en i+ petitioner as .us conductor $as paid on

CAINTA CAT.OLIC SC.OOL ,. CAINTA CAT.OLIC SC.OOL E+PLOYEES -NION =&) SCRA ='& FACTS: The main issue +or resolution hinges on the #alidity o+ a stipulation in a Collecti#e %argaining Agreement (C%A) that allo$s management to retire an employee in its employ +or a predetermined lengthy period .ut $ho has not yet reached the minimum compulsory retirement age pro#ided in the La.or Code. <urisprudence has ans$ered the uestion in the a++irmati#e a num.er o+ times and our duty calls +or the application o+ the principle o+ stare decisis. As a conse uence& $e grant the petition and re#erse the Court o+ Appeals. 2n 3C 2cto.er 3FF1& the School retired Llagas and <a#ier& $ho had rendered more than t$enty (/0) years o+ continuous ser#ice& pursuant to Section /& Article L o+ the C%A& to $it: An employee may .e retired& either upon application .y the employee himsel+ or .y the decision o+ the :irector o+ the School& upon reaching the age o+ si-ty (H0) or a+ter ha#ing rendered at least t$enty (/0) years o+ ser#ice to the School the last three (1) years o+ $hich must .e continuous.G Three (1) days later& the (nion +iled a notice o+ stri)e $ith the 6ational Conciliation and !ediation %oard (6C!%) 'SS(E: 7hether the +orced retirement o+ Llagas and <a#ier $as a #alid e-ercise o+ management prerogati#e. 9EL:: A8T. 64-. 8et%reme!t. 9 A!y em0loyee may e ret%re# "0o! rea1h%!g the ret%reme!t age esta l%she# %! the 1olle1t%'e arga%!%!g agreeme!t or other a00l%1a le em0loyme!t 1o!tra1t. I! 1ase o2 ret%reme!t+ the em0loyee shall e e!t%tle# to re1e%'e s"1h ret%reme!t e!e2%ts as he may ha'e ear!e# "!#er e&%st%!g laws a!# a!y 1olle1t%'e arga%!%!g agreeme!t a!# other agreeme!ts: (ro'%#e#+ howe'er+ That a! em0loyee;s ret%reme!t e!e2%ts "!#er a!y 1olle1t%'e arga%!%!g agreeme!t a!# other agreeme!ts shall !ot e less tha! those 0ro'%#e# here%!.

47
commission .asis then& he +alls $ithin the co#erage o+ ".A. GHE3 and its implementing rules. As thus correctly ruled .y the La.or Ar.iter& petitioner*s retirement pay should include the cash e ui#alent o+ the C8day S'L and 3,3/ o+ the 31th month pay. For purposes& ho$e#er& o+ applying the la$ on S'L& as $ell as on retirement& the Court notes that there is a di++erence .et$een dri#ers paid under the N.oundary systemO and conductors $ho are paid on commission .asis. 'n practice& ta-i dri#ers do not recei#e +i-ed $ages. They retain only those sums in e-cess o+ the N.oundaryO or +ee they pay to the o$ners or operators o+ the #ehicles. BGD Conductors& on the other hand& are paid a certain percentage o+ the .us* earnings +or the day. 't .ears emphasis that under >.:. MC3 or the S'L La$& the co#erage o+ $or)ers $ho are paid on a purely commission respect to +ield personnel. The more recent case o+ Auto %us 'nc.& #. %autistaBMD clari+ies that an employee $ho is paid on .asis is entitled to S'L e-clusion +rom its .asis is only $ith Transport Systems& purely commission The sole issue to .e resol#ed in this case is $hether or not complainant@s termination is illegal. >2EA rendered a decision dismissing the complaint +or lac) o+ merit. ) 2n appeal to the 6L"C& the decision $as re#ersed. The dispositi#e portion o+ the 6L"C decision reads: 79E"EF2"E& the appealed decision is here.y SET AS':E and another one entered& directing respondents8appellees to: (3) pay complainant8appellant the amount o+ (SRGM0.00 representing his plane +are +rom Egypt to !anila4 and (/) pay complainant8appellant the amount o+ (SRH&100.00 representing his unearned salary +or nine (F) months& the une-pired portion o+ the contract. Foreign e-change con#ersions shall .e paid in >hilippine currency at the rate o+ e-change at the actual payment thereo+. S2 2":E"E:. %( $.R. No. &%(&1 3une %), %))% INTERTROD +ARITI+E, INC. an: TROODOS S.IPPIN$ CO., petitioners& #s. NATIONAL LABOR RELATIONS CO++ISSION an: ERNESTO DE LA CR-7, respondents. Del 8osar%o > Del 8osar%o 2or 0et%t%o!ers. 9ence& this petition. Article /3(c) o+ the La.or Code re uires that the >hilippine 2#erseas Employment Administration (+ormerly 6S%) should appro#e and #eri+y a contract +or o#erseas Employment. %% A contract& $hich is appro#ed .y the 6ational Seamen %oard& such as the one in this case& is the la$ .et$een the contracting parties4 and $here there is nothing in it $hich is contrary to la$& morals& good customs& pu.lic policy or pu.lic order& the #alidity o+ said contract must .e sustained.%5 'n its resolution& the 6L"C held that the immediate appro#al o+ pri#ate respondent@s re uest +or relie+ should ha#e resulted in his disem.ar)ation in >ort >ylos& Greece4 that +ailure o+ the !aster to allo$ disem.ar)ation in Greece nulli+ied the re uest +or relie+ and its appro#al& such that pri#ate respondent@s su.se uent disem.ar)ation in Egypt is no longer his doing .ut rather an illegal dismissal on the part o+ the !aster. %9 7e cannot support such a ruling +or it +ails to consider the clear import o+ the pro#isions o+ the employment contract .et$een petitioners and pri#ate respondent. >aragraph C o+ the Employment Contract .et$een petitioners and pri#ate respondent Ernesto de la Cruz pro#ides as +ollo$s: C. That& i+ the seaman decide to terminate his contract prior to the e-piration o+ the ser#ice period as stated and de+ined in paragraph E o+ this Employment Contract& $ithout due cause& he $ill gi#e the !aster thirty (10) days notice and agree to allo$ his repatriation e-penses to .e deducted +rom $ages due him. %= Clearly& there+ore& pri#ate respondent Ernesto de la Cruz $as re uired .y the employment contract not only to pay his o$n repatriation e-penses .ut also to gi#e thirty (10) days notice should he decide to terminate his employment prior to the e-piration o+ the period pro#ided in the contract. 7hen the !aster appro#ed his re uest +or relie+& the !aster emphasized that pri#ate respondent $as re uired to gi#e thirty (10) days notice and to shoulder his o$n repatriation e-penses. Appro#al o+ his re uest +or relie+& there+ore& did not constitute a $ai#er .y petitioners o+ the pro#isions o+ the contract& as pri#ate respondent $ould ha#e us .elie#e& +or it $as made clear to him that the pro#isions o+ the contract& inso+ar as the thirty (10) days notice and repatriation e-penses $ere concerned& $ere to .e en+orced. >ri#ate respondent claims that his re uest +or relie+ $as only +or the reason o+ ta)ing care o+ a +ello$ mem.er o+ the cre$ so much so that $hen he $as not allo$ed to disem.ar) in >ort >ylos& Greece& the reason no longer e-isted and& there+ore& $hen he $as +orced to Isign o++I at >ort Said& Egypt e#en $hen he signi+ied intentions o+ continuing his $or)& he $as illegally dismissed. %2 7e sympathize $ith the pri#ate respondent4 ho$e#er& $e cannot sustain such contention. "esignation is the #oluntary act o+ an employee $ho I+inds himsel+ in a situation $here he .elie#es that personal reasons cannot .e sacri+iced in +a#or o+ the e-igency o+ the ser#ice& then he has no other choice .ut to disassociate himsel+ +rom his employment.I %' The employer has no control o#er resignations and so& the noti+ication re uirement $as de#ised in order to ensure that no disruption o+ $or) $ould .e in#ol#ed .y reason o+ the resignation. This practice has .een recognized .ecause Ie#ery .usiness enterprise endea#ors to increase its pro+its .y adopting a de#ice or means designed to$ards that goal.I %1 "esignations& once accepted and .eing the sole act o+ the employee& may not .e $ithdra$n $ithout the consent o+ the employer. 'n the instant case& the !aster had already accepted the resignation and& although the pri#ate respondent $as .eing re uired to ser#e the thirty (10) days notice pro#ided in the contract& his resignation $as already appro#ed. >ri#ate respondent cannot claim that his resignation ceased to .e e++ecti#e .ecause he $as not immediately discharged in >ort >ylos& Greece& +or he could no longer unilaterally $ithdra$ such resignation. 7hen he later signi+ied his intention o+ continuing his $or)& it $as already up to the petitioners to accept his $ithdra$al o+ his resignation. The mere +act that they did not accept such $ithdra$al did not constitute illegal dismissal +or acceptance o+ the $ithdra$al o+ the resignation $as their (petitioners@) sole prerogati#e.

PADILLA, J.:p This petition see)s the annulment and,or modi+ication o+ the resolution J o+ the First :i#ision o+ the 6ational La.or "elations Commission promulgated on 33 :ecem.er 3FMG in 6S% Case 6o. 1FFG8M/ entitled IErnesto de la Cruz #s. 'ntertrod !aritime& 'nc. and Troodos Shipping Company&I $hich re#ersed the decision o+ then >2EA Administrator >atricia Sto. Tomas dated /0 :ecem.er 3FM1. 2n 30 !ay 3FM/& pri#ate respondent Ernesto de la Cruz signed a ship.oard employment contract $ith petitioner Troodos Shipping Company as principal and petitioner 'ntertrod !aritime& 'nc.& as agent to ser#e as Third Engineer on .oard the !,T I%"EE:E6I +or a period o+ t$el#e (3/) months $ith a .asic monthly salary o+ (SRFC0.00. % >ri#ate respondent e#entually .oarded a sister #essel& !,T IAFA!'SI and proceeded to $or) as the #essel@s Third Engineer under the same terms and conditions o+ his employment contract pre#iously re+erred to. 5 2n /H August 3FM/& $hile the ship (!,T IA+amisI) $as at >ort >ylos& Greece& pri#ate respondent re uested +or relie+& due to Ipersonal reason.I 9 The !aster o+ the ship appro#ed his re uest .ut in+ormed pri#ate respondent that repatriation e-penses $ere +or his account and that he had to gi#e thirty (10) days notice in #ie$ o+ the Clause C o+ the employment contract so that a replacement +or him (pri#ate respondent) could .e arranged. = 2n 10 August 3FM/& $hile the #essel $as at >ort Said in Egypt and despite the +act that it $as only +our (E) days a+ter pri#ate respondent@s re uest +or relie+& the !aster Isigned him o++I and paid him in cash all amounts due him less the amount o+ (SRGM0.00 +or his repatriation e-penses& as e#idenced .y the $ages account signed .y the pri#ate respondent. 2 2n his return to the >hilippines& pri#ate respondent +iled a complaint $ith the 6ational Seamen %oard (6S%)(no$ >2EA) charging petitioners +or .reach o+ employment contract and #iolation o+ 6S% rules and regulations. ' >ri#ate respondent alleged that his re uest +or relie+ $as made in order to ta)e care o+ a Filipino mem.er o+ the cre$ o+ !,T IAFA!'SI $ho $as hospitalized on /C August 3FM/ in Athens& Greece. 9o$e#er& the !aster o+ the ship re+used to let him immediately disem.ar) in Greece so that the reason +or his re uest +or relie+ ceased to e-ist. 9ence& $hen the !aster o+ the ship +orced him to step out in Egypt despite his protestations to the contrary& there .eing no more reason to re uest +or relie+& an illegal dismissal occurred and he had no other recourse .ut to return to the >hilippines at his o$n e-pense. 1 'n its Ans$er to the complaint& petitioners denied the allegations o+ the complainant and a#erred that the contract $as cut short .ecause o+ pri#ate respondent@s o$n re uest +or relie+ so that it $as only proper that he should pay +or his repatriation e-penses in accordance $ith the pro#isions o+ their employment contract. &

48
2nce an employee resigns and his resignation is accepted& he no longer has any right to the 5o.. '+ the employee later changes his mind& he must as) +or appro#al o+ the $ithdra$al o+ his resignation +rom his employer& as i+ he $ere re8applying +or the 5o.. 't $ill then .e up to the employer to determine $hether or not his ser#ice $ould .e continued. '+ the employer accepts said $ithdra$al& the employee retains his 5o.. '+ the employer does not& as in this case& the employee cannot claim illegal dismissal +or the employer has the right to determine $ho his employees $ill .e. To say that an employee $ho has resigned is illegally dismissed& is to encroach upon the right o+ employers to hire persons $ho $ill .e o+ ser#ice to them. Furthermore& the employment contract also pro#ides as +ollo$s: E. That all terms and conditions agreed herein are +or a ser#ice period o+ t$el#e (3/) months pro#ided the #essel is in a con#enient port +or his repatriation& other$ise at !aster@s discretion& on #essel@s arri#al at the +irst port $here repatriation is practica.le pro#ided that such continued ser#ice shall not e-ceed three months. %& (nder the terms o+ the employment contract& it is the ship@s !aster $ho determines $here a seaman re uesting relie+ may .e Isigned o++.I 't is& there+ore& erroneous +or pri#ate respondent to claim that his resignation $as e++ecti#e only in Greece and that .ecause he $as not immediately allo$ed to disem.ar) in Greece (as the employer $anted compliance $ith the contractual conditions +or termination on the part o+ the employee)& the resignation $as to .e deemed automatically $ithdra$n. The decision o+ the 6L"C is there+ore set aside. To sustain it $ould .e to authorize undue oppression o+ the employer. A+ter all& Ithe la$& in protecting the rights o+ the la.orer& authorizes neither oppression nor sel+8destruction o+ the employer.I %) 79E"EF2"E& the petition is G"A6TE:. The uestioned resolution o+ the 6ational La.or "elations Commission dated 33 :ecem.er 3FMG is here.y "EAE"SE: and SET AS':E and the decision o+ then >2EA Administrator >atricia Sto. Tomas dated /0 :ecem.er 3FM1 is "EA'AE:. 6o pronouncement as to costs. S2 2":E"E:. Mele!1%o5Herrera+ (aras a!# 8egala#o+ ??.+ 1o!1"r. $arm%e!to+ ?.+ %s o! lea'e. .. The ma-imum length o+ lea#e o+ a.sence that may .e applied +or .y the +aculty mem.er and granted .y administration is t$el#e (3/) months. '+& at the lapse o+ the period& the +aculty mem.er +ails to return +or $or)& the administration shall regard the +aculty mem.er as resigned.BED "espondent alleged that she intended to utilize the +irst semester o+ her study lea#e to +inish her masteral degree at the >hilippine 7omen*s (ni#ersity (>7(). (n+ortunately& it did not push through so she too) up an 2ld Testament course in a school o+ religion and at the same time utilized her +ree hours selling insurance and coo)$are to augment her +amily*s income. 9o$e#er& during the second semester o+ her study lea#e& she studied and passed 3/ units o+ education su.5ects at the Golden Gate Colleges in %atangas City. 'n response to the letters sent her .y petitioner to 5usti+y her study lea#e& she su.mitted a certi+ication +rom Golden Gate Colleges and a letter e-plaining $hy she too) up an 2ld Testament course instead o+ enrolling in her masteral class during the +irst semester. 2n <une 1& 3FFH& the >resident and "ector o+ the School& Fr. "amonclaro G. !endez& 2. >.& $rote her& stating that her +ailure to enroll during the +irst semester $as a #iolation o+ the conditions o+ the study lea#e and that the reasons she ad#anced +or +ailure to enroll during the +irst semester $ere not accepta.le& thus: 'n the +irst place& prudence dictates that you should ha#e ascertained +irst that you are still eligi.le to study at >7( to +inish your masteral degree .e+ore applying and securing the appro#al o+ your lea#e .y the School. 'n the second place& you should ha#e in+ormed the School at once that you could not enroll in the +irst semester so that your lea#e could ha#e .een ad5usted +or only one8hal+ (3,/) year. Thirdly& your engaging in some part8time .usiness instead o+ studying in the +irst semester o+ your lea#e is su++icient 5usti+ication +or the School to consider you as resigned under the Faculty !anual. And lastly& your +ailure to study in the +irst semester o+ your study lea#e $ithout in+orming the School .e+orehand constitutes deception& to say the least& $hich is not a good e-ample to the other teachers.BCD 9er case $as su.se uently re+erred to the grie#ance committee& as pro#ided +or in the collecti#e .argaining agreement& and the report $as su.mitted on <uly 3/& 3FFH& .oth to the union and the School. 9o$e#er& since the grie#ance committee could not reach a decision& the case $as re+erred +or #oluntary ar.itration. "espondent then +iled a case +or illegal dismissal and the case $as assigned to AA !ayuga $ho +ound that respondent $as illegally dismissed& thus: 79E"EF2"E premises considered& $e rule that complainant !rs. %ELE6 >. A'LLAS $as illegally dismissed +rom her employment .y respondent& and as prayed +or& respondent C2LEG'2 :E SA6 <(A6 :E LET"A68CALA!%A is here.y ordered to reinstate !rs. %elen >. Aillas to her +ormer position or 5o. in said school $ithout loss o+ seniority and $ith +ull .ac)$ages and other monetary .ene+its e++ecti#e the start o+ school year 3FFH83FFG up to the time she is reinstated.BHD (pon denial o+ its motion +or reconsideration& petitioner +iled a petition +or re#ie$ $ith the Court o+ Appeals. This $as denied. Thus& this petition +or re#ie$. The sole issue is $hether or not respondent*s alleged #iolation o+ the conditions o+ the study grant constituted serious misconduct $hich 5usti+ied her termination +rom petitioner School. >etitioner alleges that the dismissal o+ respondent $as la$+ul inasmuch as (a) the re uirements o+ due process $ere +ollo$ed and (.) she not only #iolated se#eral la$+ul regulations .ut also .reached her contractual o.ligations to the School. All this constituted a #alid ground +or her dismissal. 'n assailing the decision o+ the Court o+ Appeals& petitioner School .asically uestions the court a <"o*s +indings o+ +act on respondent*s alleged #iolation o+ petitioner School*s policy on study lea#e grants. The petition has no merit. (nder the La.or Code& there are t$in re uirements to 5usti+y a #alid dismissal +rom employment: (a) the dismissal must .e +or any o+ the causes pro#ided in Article /M/ o+ the La.or Code (su.stanti#e aspect) and (.) the employee must .e gi#en an opportunity to .e heard and to de+end himsel+ (procedural aspect).BGD The procedural aspect re uires that the employee .e gi#en t$o $ritten notices .e+ore she is terminated consisting o+ a notice $hich apprises the employee o+ the particular acts,omissions +or $hich the dismissal is sought and the su.se uent notice $hich in+orms the employee o+ the employer*s decision to dismiss him.BMD 'n the case at .ar& the re uirements +or .oth su.stanti#e and procedural aspects $ere not satis+ied. According to petitioner& respondent #iolated the +ollo$ing conditions o+ her study lea#e: (a) she +ailed to report +or $or) on April 3& 3FFH& the day a+ter the lapse o+ her lea#e period& $hich $as #iolati#e o+ Section E0 o+ the Faculty !anual4 (.) she +ailed to su.mit proo+ o+ her studies during the +irst semester o+ her lea#e period& suggesting that she $as not enrolled during this period4 and (c) she engaged in employment outside the School. 'n sum& petitioner School argues that the conduct o+ respondent .reached not only the pro#isions o+ the study grant ($hich $as a contractual o.ligation) .ut also the Faculty !anual. "espondent $as thus guilty o+ serious misconduct $hich $as a ground +or termination. 7e a++irm the +indings o+ the Court o+ Appeals that there $as no #iolation o+ the conditions o+ the study lea#e grant. Thus& respondent could not .e charged $ith serious misconduct $arranting her dismissal as a teacher in petitioner School. >etitioner has +ailed to con#ince us that the three alleged #iolations o+ the study

cccccccccccccccccccccccccccccccccc COLE$IO DE SAN 3-AN DE LETRAN K CALA+BA, petitioner, vs. BELEN P. ,ILLAS, respondent. DECISION CORONA, J.L This is a petition +or re#ie$ on 1ert%orar% o+ the decision B3D o+ the +ormer Ele#enth :i#isionB/D o+ the Court o+ Appeals a++irming the decision B1D o+ Aoluntary Ar.itrator (AA) Apolonio S. !ayuga that respondent %elen >. Aillas $as illegally dismissed .y petitioner Colegio de San <uan de Letran (School) and thus& entitled to reinstatement and +ull .ac)$ages. The antecedent +acts sho$ that respondent %elen Aillas $as employed .y the petitioner School as high school teacher in Septem.er 3FMC. 2n !ay 3C& 3FFC& she applied +or a study lea#e +or si- months& +rom <une to :ecem.er 13& 3FFC. 'n a letter dated <une /& 3FFC& !rs. Angelina Tuiatchon& principal o+ the high school department& told Aillas that her re uest +or study lea#e $as granted +or one school year su.5ect to the +ollo$ing conditions: 3. The re uested study lea#e ta)es e++ect on <une C& 3FFC and ends on !arch 13& 3FFH4 The re uested study lea#e in#ol#es no remuneration on the part o+ the School4 The documents that 5usti+y the re uested study lea#e should .e su.mitted upon return on April 3& 3FFH4 Faculty !anual ? Section E0 Special >ro#isions on the Granting o+ Lea#e o+ A.sence should .e o.ser#ed: a. 2nce pro#en .eyond reasona.le dou.t during the period o+ the appro#ed lea#e o+ a.sence that the +aculty mem.er shall engage himsel+ in employment outside the institution& the administration shall regard the +aculty mem.er on lea#e as resigned4

/.

1.

E.

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lea#e grant constituted serious misconduct $hich 5usti+ied the termination o+ respondent*s employment. !isconduct is improper or $rong+ul conduct. 't is the transgression o+ some esta.lished and de+inite rule o+ action& a +or.idden act& a dereliction o+ duty& $ill+ul in character& and implies $rong+ul intent and not mere error o+ 5udgment. BFD (nder Article /M/ o+ the La.or Code& the misconduct& to .e a 5ust cause +or termination& must .e serious. This implies that it must .e o+ such gra#e and aggra#ated character and not merely tri#ial or unimportant. B30D E-amples o+ serious misconduct 5usti+ying termination& as held in some o+ our decisions& include: se-ual harassment (the manager*s act o+ +ondling the hands& massaging the shoulder and caressing the nape o+ a secretary)4 B33D +ighting $ithin company premises4 B3/D uttering o.scene& insulting or o++ensi#e $ords against a superior4 B31D misrepresenting that a student is his nephe$ and pressuring and intimidating a co8teacher to change that student*s +ailing grade to passing.B3ED 'n this light& the alleged in+ractions o+ the respondent could hardly .e considered serious misconduct. 7ith regard to respondent*s alleged +ailure to report +or $or) on April 3& 3FFH and +ailure to enroll during the +irst semester& the Court o+ Appeals and the Aoluntary Ar.itrator +ound that she did in +act report +or $or) on April 3& 3FFH and that she $as in +act enrolled during the +irst semester. 7ell?settled is the rule that the +actual +indings o+ the Court o+ Appeals are conclusi#e on the parties and are not re#ie$a.le .y the Supreme Court. And they carry e#en more $eight $hen the Court o+ Appeals a++irms the +actual +indings o+ a lo$er +act8+inding .ody& in this case the Aoluntary Ar.itrator. B3CD Li)e$ise& +indings o+ +act o+ administrati#e agencies and uasi85udicial .odies $hich ha#e ac uired e-pertise .ecause their 5urisdiction is con+ined to speci+ic matters& are generally accorded not only great respect .ut e#en +inality. They are .inding upon this Court unless there is a sho$ing o+ gra#e a.use o+ discretion or $here it is clearly sho$n that they $ere arri#ed at ar.itrarily or in utter disregard o+ the e#idence on record.B3HD Assuming arg"e!#o that she did +ail to report +or $or) on April 3& 3FFH and enroll during the +irst semester& the most respondent could .e charged $ith $as simple misconduct. 'n .oth instances& there $as e#idence o+ su.stantial compliance .y respondent. 9er alleged +ailure to report +or $or) e-actly on April 3& 3FFH is not e ui#alent to N+ailure to return +or $or)&O a sanctiona.le o++ense under the Faculty !anual. As correctly pointed out .y the AA& petitioner +ailed to esta.lish that there $as a distinct and de+inite assignment that needed to .e done personally .y respondent& and speci+ically on April 3& 3FFH& $hich she +ailed to do on said date. Although $e gi#e credence to petitioner*s argument that a pri#ate high school teacher still has $or) at the end o+ the schoolyear ? to assist in the graduation preparations ? and in the .eginning o+ the school year ? to assist in the enrollment ? such tas)s cannot .e considered a teacher*s main duties& the +ailure to per+orm $hich $ould .e tantamount to dereliction o+ duty or a.andonment. %esides& there is no disagreement that respondent reported +or $or) on !ay 3C& 3FFH at $hich time petitioner School could ha#e as)ed her to assist in the enrollment period. At most& respondent +ailed to help out during the preparations +or graduation and this& to us& $as not a signi+icant reason +or terminating or dismissing her +rom her 5o.. 7ith regard to her alleged +ailure to enroll during the +irst semester& although $e agree $ith the >resident and "ector& Fr. !endez& that respondent should ha#e +irst ascertained $hether she $as still eligi.le to study at the >7( .e+ore applying +or a study lea#e& B3GD such lapse $as more o+ an error in 5udgment rather than an act o+ serious misconduct. '+ respondent intended to use her study lea#e +or other unauthorized purposes& as petitioner $ould li)e us to .elie#e& she $ould not ha#e enrolled at the Golden Gate Colleges during the second semester. ;et she did& as .orne out .y the certi+ication B3MD prepared .y the "egistrar o+ Golden Gate Colleges. Furthermore& $e +ind that respondent did not #iolate the prohi.ition on engaging in employment outside the school as speci+ied in her study lea#e grant and as pro#ided in the Faculty !anual. Section E0 (a) o+ the !anualB3FD states: a. 2nce pro#en .eyond reasona.le dou.t during the period o+ the appro#ed lea#e o+ a.sence that the +aculty mem.er shall en"a"e h mselE n em!lo4ment outs :e the nst tut on+ the administration shall regard the +aculty mem.er on lea#e resigned. (Emphasis supplied) 7e +ind the pro#ision o+ the Faculty !anual am.iguous as the term NemploymentO connotes a num.er o+ meanings. Employment in its general sense connotes any $or) or ser#ice rendered in e-change +or money. The loose connotation o+ employment may there+ore co#er 5o.s $ithout an employer8employee relationship. 9o$e#er& inasmuch as in this case& petitioner School dra+ted the said policy& the term NemploymentO should .e strictly construed against it. B/0D !oreo#er& it is a settled rule that in contro#ersies .et$een a la.orer and his master& dou.ts reasona.ly arising +rom the e#idence& or %! the %!ter0retat%o! o2 agreeme!ts a!# wr%t%!gs sho"l# e resol'e# %! the 2ormer;s 2a'or. B/3D The act o+ respondent in selling insurance and coo)$are $as not the NemploymentO prohi.ited .y the Faculty !anual. The prohi.ition against outside employment $as enacted to pre#ent the teacher +rom using the study lea#e period +or unsanctioned purposes since the School pays the teacher $hile pursuing +urther studies. That rationale $as not #iolated .y respondent +or the reason that her part8time acti#ity o+ selling insurance and coo)$are could not ha#e pre#ented her in any $ay +rom studying and& more importantly& she $as not .eing paid .y the School $hile on lea#e. 9o$ did the school e-pect her and her +amily to sur#i#e $ithout any income +or one $hole yearP >etitioner also +ailed to comply $ith the procedural re uirements +or a #alid dismissal. As earlier noted& the la$ re uires the employer to gi#e the $or)er to .e dismissed t$o $ritten notices .e+ore terminating his employment. Considering that these notices are mandatory& the a.sence o+ one renders any management decision to terminate null and #oid. >etitioner +ailed to gi#e respondent the +irst notice $hich should ha#e in+ormed the latter o+ the +ormer*s intention to dismiss her. >etitioner argues that it complied $ith this re uirement as there $ere se#eral e-changes o+ communication .et$een the School and respondent regarding the cause o+ her termination. 9o$e#er& $e +ind that these letters did not apprise respondent that her dismissal $as .eing sought .y petitioner School as said letters only re uired respondent to su.mit proo+ o+ enrollment. The letter o+ >rincipal Angelina T. Tuiatchon dated April 3G& 3FFHB//D $as $orded as +ollo$s: 'n accordance $ith the terms o+ your study lea#e +rom <une C& 3FFC to !arch 13& 3FFH& you must su.mit credentials,proo+s o+ your study to 5usti+y the appro#ed lea#e. To this date& April 3G& this o++ice has not recei#ed your credentials. >lease do so $ithin the ne-t three days +rom receipt hereo+ so that this o++ice can act accordingly. Similarly& the !ay 30& 3FFH letter B/1D o+ the Academic A++airs :irector& :r. "hodora G. 2de5ar& $as $orded thus: The Academic A++airs 2++ice has recei#ed your certi+ication o+ graduate studies completed in the second semester o+ Schoolyear 3FFC83FFH. 9o$e#er& there is no report as to ho$ you utilized your lea#e in the +irst semester. ;ou are there+ore instructed to su.mit your report on the matter $ithin three days +rom receipt hereo+. The ne-t letter +rom the petitioner& dated <une 1& 3FFH& already in+ormed respondent that she $as considered resigned e++ecti#e schoolyear 3FFH83FFG. These letters did not comply $ith the re uirements o+ the la$ that the +irst $ritten notice must apprise the employee that his termination is .eing considered due to a certain act or omission. These letters merely re uired petitioner to su.mit proo+ o+ her studies and respondent could not ha#e reasona.ly in+erred +rom them that her dismissal $as .eing considered .y the petitioner. The +act that there $as a hearing conducted .y the grie#ance committee pursuant to the collecti#e .argaining agreement did not $or) in petitioner*s +a#or .ecause this $as done aEter petitioner had in+ormed respondent that she $as already considered resigned +rom her teaching 5o.. %esides& the rights o+ an employee to .e in+ormed o+ his proposed dismissal are personal to him B/ED and& there+ore& the notice to the union $as not notice to the employee. 7ith regard to the respondent*s claim +or the si-8month study lea#e and #acation pay& $e a++irm the decision B/CD o+ the Aoluntary Ar.itrator that respondent is not entitled to such .ene+its: 7hile it is true that the collecti#e .argaining agreement .et$een respondent and complainant*s union pro#ides +or si- months* pay +or uali+ied teachers $ho $ill go on sa..atical or study lea#e& the same $as e-pressly $ai#ed .y complainant $hen she signed 1o!2orme to the letter dated <une /& 3FFC appro#ing her study lea#e $hich states among others& to $it: V/. The re<"este# st"#y lea'e %!'ol'es !o rem"!erat%o! o! the 0art o2 the s1hool.; And considering that her lea#e o+ a.sence +or the $hole school year 3FFC83FFH $as presumed to .e a lea#e o+ a.sence $ithout pay& then she did not earn her #acation lea#e incenti#e +or the ne-t coming summer. 7e +ind it 5ust& +air and reasona.le to grant #acation pay on April and !ay o+ e#ery calendar as additional incenti#e only to those teachers $ho rendered continuous ser#ice to the Collegio the preceding school year. 7e similarly a++irm the Aoluntary Ar.itrator*s decision that respondent is not entitled to moral and e-emplary damages and attorney*s +ees .ecause there is no e#idence sho$ing that .ad +aith or malice attended the dismissal o+ respondent. !oral damages are reco#era.le only $here the dismissal is attended .y .ad +aith or +raud& or constitutes an act oppressi#e to la.or& or is done in a manner contrary to morals& good customs or pu.lic policy. A dismissal may .e contrary to la$ .ut& .y itsel+ alone& it does not necessarily esta.lish .ad +aith.B/HD @.ERE?ORE& the petition is :E6'E:. SO ORDERED. ("!o+ )Cha%rma!/+ (a!ga!% ccccccccccccccccccccccccccccccccccccccccccccccc NATIONAL BOO/STORE, INC., an: AL?REDO C. RA+OS, petitioners, vs. CO-RT O? APPEALS SPECIAL EI$.T DI,ISION, NATIONAL LABOR RELATIONS CO++ISSION, +ARIETTA +. Y+ASA an: EDNA L. $ABRIEL, respondents. DECISION BELLOSILLO, J.L This petition +or re#ie$ under "ule EC see)s to set aside the 10 <une /000 :ecisionB3D and 30 <anuary /003 "esolutionB/D o+ the Court o+ Appeals& $hich a++irmed the "esolutions o+ the 6ational La.or "elations Commission (6L"C) dated M 2cto.er 3FFGB1D and F Fe.ruary 3FFF.BED >etitioner 6ational %oo)store& 'nc.& employed pri#ate respondent !arietta !. ;masa on 3E Fe.ruary 3FM0 and pri#ate respondent Edna L. Ga.riel on / Septem.er 3FGF. 2n /M August 3FF/$hen .oth claimed to ha#e .een illegally dismissed +rom employment& pri#ate respondents ;masa and Ga.riel $ere Cash Custodian and 9ead Cashier o+ petitioner 6ational %oo)store& respecti#ely.

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2n /M <une 3FF/& a Sunday& pri#ate respondents reported +or $or) at their place o+ assignment& i.e.& the S! 6orth Edsa %ranch o+ petitioner 6ational %oo)store to count the pre#ious day*s sales proceeds as a matter o+ routine. >ri#ate respondent ;masa counted the money intended to .e deposited $ith '6TE"%A6Z $hile pri#ate respondent Ga.riel attended to the money +or deposit $ith >C'%. The counting $as done in the presence o+ a $atcher& one !aricen Cupcupin. A+ter preparing the corresponding deposit slips $hich Cupcupin accordingly signed& the counted money $as placed inside t$o (/) separate plastic .ags $hich $ere sealed $ith scotch tapes. The plastic .ags $ere then tied together $ith ru..er .and& $ith the .ag containing the money intended +or deposit $ith '6TE"%A6Z placed on top. Therea+ter& pri#ate respondent ;masa put the plastic .ags inside her ca.inet $hich she accordingly loc)ed. Since .oth %ranch !anager Charito !. Gonzales and Assistant %ranch !anager "o.erto Tagalog $ere not in their o++ices& it $as only at around closing time at M:10 in the e#ening o+ /M <une 3FF/ that the t$o (/) plastic .ags earlier stored in pri#ate respondent ;masa*s ca.inet $ere ta)en out . These plastic .ags and the day*s sales placed in another .ag euphemistically called Nsand$ichO $ere handed o#er to the Assistant !anager +or sa+e)eeping in the %ranch #ault. 2n /F <une 3FF/& !onday& pri#ate respondents retrie#ed +rom the Assistant !anager the money already counted and placed inside the sealed plastic .ags to .e pic)ed up .y the ro#ing tellers o+ '6TE"%A6Z and >C'%. %ut .e+ore .eing deposited& the money $as again counted. The amount +or deposit to >C'% $as +ound short o+ >E/&GCM.G0. All e++orts made to locate the missing amount +ailed. Thus& on 10 <uly 3FF/ the !anagement8through >ersonnel !anager Atty. Cornelio A. >adilla& <r. as)ed pri#ate respondents to Ne-plain in $riting not later than end o+ store hours onAugust 3& 3FF/& $hy BtheyD should not .e dismissedO +or the loss o+ company +unds. The !anagement also placed pri#ate respondents under pre#enti#e suspension e++ecti#e immediately. 2n 13 <uly 3FF/ pri#ate respondents e-plained in $riting $hat transpired on /M and /F <une 3FF/& .asically denying responsi.ility o#er the lost company +unds. They emphasized that they had no access to petitioner 6ational %oo)store*s #ault and that .e+ore lea#ing the o++ice on .oth occasions and a+ter doing their tas)s& petitioner 6ational %oo)store*s lady guard& !s. "odaSung)ip& su.5ected them to a thorough .ody search. They asserted that NBtheyD ha#e .een in the ser#ice o+ the company +or the past 31 years and it has .een BtheirD practice to turn o#er BtheirD collection to BtheirD super#isor $ithout any proo+ o+ receipt e#ery end o+ the .usiness day.O !oreo#er& they appealed that they Nha#e .een honest and sincere to BtheirD $or) and religiously rendered BtheirD ser#ices to the company to the .est o+ BtheirD a.ility.O >etitioner 6ational %oo)store& a+ter +inding the e-planations o+ pri#ate respondents unsatis+actory& noti+ied them on /F August 3FF/ o+ the termination o+ their ser#ices +or gross neglect o+ duty and loss o+ con+idence to ta)e e++ect immediately and N$ithout pre5udice to appropriate legal action that the !anagement may ta)e +or the restitution o+ the missing Company +unds.O 2n E Fe.ruary 3FF1 pri#ate respondents +iled a complaint +or illegal dismissal against petitioner 6ational %oo)store and,or its >resident Al+redo C. "amos .e+ore the La.or Ar.iter $ho ruled in +a#or o+ pri#ate respondents on /0 <une 3FFE.BCD According to the La.or Ar.iter& the documentary and testimonial e#idence presented .y the parties sho$ed that although pri#ate respondents $ere a++orded due process .e+ore .eing dismissed& their dismissal $as not +ounded on #alid and 5usti+ia.le grounds as pro#ided under Art. /M/ o+ the La.or Code& as amended. Thus& the La.or Ar.iter declared pri#ate respondents to .e entitled to reinstatement $ith payment o+ +ull .ac) $ages under Art. /GF o+ the La.or Code& as amended. %ut a+ter considering the strained relations among the parties .rought a.out .y the litigation& the La.or Ar.iter instead ordered petitioners to pay pri#ate respondents separation pay& .ac) $ages& moral and,or actual damages and attorney*s +ees. 2n M 2cto.er 3FFG petitioners* appeal .e+ore the 6L"C $as denied. BHD The 6L"C a++irmed $ith modi+ication the decision o+ the La.or Ar.iter .y deleting the a$ard o+ damages and attorney*s +ees +or lac) o+ su++icient .asis. 2n F Fe.ruary 3FFF petitioners sought reconsideration .ut the 6L"C denied their motion. BGD Thus& on M !arch 3FFF petitioners +iled .e+ore the Court o+ Appeals a petition +or 1ert%orar% imputing gra#e a.use o+ discretion on the part o+ the 6L"C +or a++irming the decision o+ the La.or Ar.iter al.eit $ith modi+ication. 2n 10 <une /000 the Court o+ Appeals dismissed the petition +or lac) o+ merit and a++irmed the resolutions o+ the 6L"C dated M 2cto.er 3FFG and F Fe.ruary 3FFF.BMD >u.lic respondent +ound no reason to de#iate +rom the accepted doctrine that +indings o+ +act o+ the 6L"C a++irming those o+ the La.or Ar.iter are generally accorded respect and e#en +inality $hen supported .y su.stantial e#idence& or that amount o+ e#idence $hich a reasona.le mind might accept as ade uate to 5usti+y a conclusion. BFD 9ence& this petition raising the .asic issue o+ $hether pri#ate respondents $ere illegally dismissed. 7e +ind +or pri#ate respondents. The petition is $ithout merit. The o!"s o+ pro#ing that the dismissal o+ the employee $as +or a #alid and authorized cause rests on the employerB30D and +ailure to discharge the same $ould mean that the dismissal $as not 5usti+ied and there+ore illegal.B33D The re uisites +or a #alid dismissal are: (a) the employee must .e a++orded due process& i.e.& he must .e gi#en an opportunity to .e heard and to de+end himsel+4 and& (.) the dismissal must .e +or a #alid cause as pro#ided in Art. /M/B3/D o+ the La.or CodeB31D or +or any o+ the authorized causes under Arts. /M1B3ED and /MEB3CD o+ the same Code. Anent the +irst re uisite& the employer must +urnish the employee $ith t$o (/) $ritten notices: (a) a $ritten notice containing a statement o+ the cause +or the termination to a++ord the employee ample opportunity to .e heard and de+end himsel+ $ith the assistance o+ his representati#e& i+ he so desires4 and& (.) i+ the employer decides to terminate the ser#ices o+ the employee& the employer must noti+y him in $riting o+ the decision to dismiss him& stating clearly the reasons there+or.B3HD >etitioner 6ational %oo)store& as correctly pointed out .y the La.or Ar.iter in his decision& more than su.stantially o.ser#ed this re uirement. 2n 10 <uly 3FF/ it ga#e pri#ate respondents an opportunity to e-plain $hy they should not .e dismissed +or the loss o+ company +unds& $hich pri#ate respondents immediately complied $ith .y su.mitting their 5oint ans$er on 13 <uly 3FF/. !oreo#er& on /F August 3FF/ petitioner 6ational %oo)store sent another $ritten notice to pri#ate respondents in+orming them o+ its decision to terminate their ser#ices setting +orth the reasonsthere+or. %ut the .urden imposed on petitioner 6ational %oo)store does not stop here. 't must also sho$ $ith con#incing e#idence that the dismissal $as .ased on any o+ the 5ust or authorized causes pro#ided .y la$ +or termination o+ employment .y an employer. To uote petitioner 6ational %oo)store*s >ersonnel !anager >adilla& <r.& N$e are constrained to terminate your employment or ser#ices $ith the Company e++ecti#e immediately +or gross neglect o+ duty and loss o+ con+idence.O B3GD Gross neglect o+ duty and loss o+ con+idence are 5ust causes +or termination o+ employment .y an employer. B3MD Gross negligence has .een de+ined as the $ant or a.sence o+ or +ailure to e-ercise slight care or diligence& or the entire a.sence o+ care. 't e#inces a thoughtless disregard o+ conse uences $ithout e-erting any e++ort to a#oid them. B3FD A perusal o+ the records o+ the case does not in any $ay sho$ that pri#ate respondents $ere e#en remotely negligent o+ their duties so as to cause the loss o+ petitioner 6ational %oo)store*s +unds. >ri#ate respondents $ere a.le to illustrate $ith candor and sincerity the procedure they too) prior to the loss $hich $as $itnessed .y an employee o+ petitioner 6ational %oo)store. They $ere in +act su.5ected to a thorough .ody search .y petitioner 6ational %oo)store*s lady guard .e+ore lea#ing their place o+ $or) on the date in issue& a claim not contro#erted .y petitioners. !oreo#er& it $as not e#en sho$n that they had access to the #ault $here the money $as )ept. Signi+icantly& in order to constitute a 5ust cause +or the employee*s dismissal& the neglect o+ duties must not only .e gross .ut also ha.itual. Thus& the single or isolated act o+ negligence does not constitute a 5ust cause +or the dismissal o+ the employee. B/0D Aerily& assuming arg"e!#o that pri#ate respondents $ere negligent& although $e +ind other$ise& it could only .e a single or an isolated act that cannot .e categorized as ha.itual& hence& not a 5ust cause +or their dismissal. 2n the other hand& loss o+ trust and con+idence to .e a #alid ground +or dismissal must .e .ased on a $ill+ul .reach o+ trust and +ounded on clearly esta.lished +acts.B/3D A .reach is $ill+ul i+ it is done intentionally& )no$ingly and purposely& $ithout 5usti+ia.le e-cuse& as distinguished +rom an act done carelessly& thoughtlessly& heedlessly or inad#ertently. B//D The La.or Ar.iter& the 6L"C and the Court o+ Appeals $ere unanimous in declaring that there $as no $ill+ul .reach o+ con+idence in the instant case as petitioners +ailed to esta.lish $ith certainty the +acts upon $hich it could .e .ased. 'ndeed& petitioner 6ational %oo)store lost some +unds .ut that pri#ate respondents $ere responsi.le there+or $as not supported .y any su.stantial e#idence. >ri#ate respondents ha#e .een illegally dismissed. Conse uently& they are entitled to reinstatement to their +ormer positions $ithout loss o+ seniority rights and payment o+ .ac) $ages.B/1D9o$e#er& i+ such reinstatement $ould pro#e impractica.le and hardly in the .est interest o+ the parties& perhaps due to the lapse o+ time since their dismissal& pri#ate respondents should .e a$arded separation pay in lieu o+ reinstatementB/ED computed at one (3) month salary +or e#ery year o+ ser#ice $ith a +raction o+ si- (H) months e ui#alent to one (3) $hole year. B/CD Conse uently pri#ate respondents& +or ha#ing .een illegally dismissed a+ter /3 !arch 3FMF& con+orma.ly $ith esta.lished 5urisprudence& B/HD are granted +ull .ac) $ages inclusi#e o+ allo$ances and other .ene+its or their monetary e ui#alent +rom the time their actual compensation $as $ithheld +rom them up to the time o+ their actual reinstatement. The deletion o+ the a$ard o+ damages is sustained +or lac) o+ su++icient .asis to 5usti+y them. Certainly& the +inding that pri#ate respondents ha#e .een $rong+ully dismissed does not automatically signi+y that petitioners are lia.le +or moral and other damages. A$ard o+ moral damages cannot .e 5usti+ied solely upon the premise that the employer +ired his employee $ithout 5ust cause or due process. Additional +acts must .e pleaded and pro#ed to $arrant the grant o+ moral damages under the Ci#il Code& i.e.& that the act o+ dismissal $as attended .y .ad +aith or +raud& or $as oppressi#e to la.or& or done in a manner contrary to morals& good customs& or pu.lic policy4 and& that social humiliation& $ounded +eelings& gra#e an-iety& etc.& resulted there+rom.B/GD These $ere not sho$n in the instant case. As regards e-emplary damages& they may only .e a$arded i+ the dismissal $as sho$n to ha#e .een e++ected in a $anton& oppressi#e or male#olent manner& B/MD or $here the party in#ol#ed is entitled to moral or compensatory damages. B/FD Again& this $as not ade uately esta.lished .y e#idence. 9o$e#er& as +or attorney*s +ees& pri#ate respondents are entitled thereto as they $ere compelled to litigate $ith petitioners and incur e-penses to en+orce and protect their interests.B10D The a$ard .y the La.or Ar.iter o+ >//&/HM.// and >//&F3H.E3 as attorney*s +ees to pri#ate respondents !arietta !. ;masa and Edna L. Ga.riel& respecti#ely& .eing reasona.le is sustained. @.ERE?ORE& the >etition is :E6'E: +or lac) o+ merit. The :ecision o+ the Court o+ Appeals dated 10 <une /000 and its "esolution o+ 30 <anuary /003 a++irming the "esolutions o+ the 6ational La.or "elations Commission dated M 2cto.er 3FFG and F Fe.ruary 3FFF are AFF'"!E:. >etitioners 6ational %oo)store& 'nc. and Al+redo C. "amos are :'"ECTE: 5ointly and se#erally to reinstate pri#ate respondents !arietta !. ;masa and Edna L. Ga.riel to their +ormer positions $ithout loss o+ seniority rights plus payment o+ +ull .ac) $ages. 9o$e#er& i+ reinstatement is no longer practica.le& petitioners are li)e$ise :'"ECTE: to pay 5ointly and se#erally each pri#ate respondent separation pay

51
e ui#alent to one (3) month salary +or e#ery year o+ ser#ice& a +raction o+ si- (H) months .eing considered one (3) $hole year& and +ull .ac) $ages inclusi#e o+ allo$ances and other .ene+its or their monetary e ui#alent +rom /F August 3FF/ up to the time o+ the +inality o+ this :ecision& plus attorney*s +ees a$arded .y the La.or Ar.iter& $hich $e AFF'"!. Costs against petitioners. SO ORDERED. ccccccccccccccccccccccccccccccccccccccccc The 6ational La.or "elations Commission (6L"C) adopted the +indings o+ the la.or ar.iter. 't deniedB31D petitioner*s appeal and motion +or reconsideration. >etitioner +iled a petition +or certiorari .e+ore the Court o+ Appeals $hich rendered a :ecision on !ay 33& /00E re#ersing and setting aside that o+ the la.or ar.iter and the 6L"C& the dispositi#e portion o+ $hich pro#ides: 79E"EF2"E& the :ecision dated 2cto.er 10& /003 and the 2rder o+ :ecem.er 3F& /00/ o+ the 6ational La.or "elations Commission are here.y "EAE"SE: and SET AS':E and a ne$ one entered herein. :a#ide& <r.& C.?. (Chairman)&= 8 #ersus 8 Tuisum.ing&== ;nares8Santiago& Carp io& and Azcuna& ??. CO-RT O? APPEALS #?ormer ? rst D v s on*, NATIONAL LABOR RELATIONS CO++ISSION #? rst D v s on*, .ON. ANTONIO R. +ACA+, n h s ;a!a; t4 as >romulgated: Labor Arb ter an: EL,IE B-$-AT, "espondents. 6o#em.er M& /00C - 8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888 DECISION YNARES8SANTIA$O, J.: C9ALLE6GE S2CZS C2">2"AT'26& ha#ing terminated pri#ate respondent $ith 5ust and #alid cause .ut $ithout o.ser#ing the proper procedure in terminating pri#ate respondent*s ser#ices& is ordered to pay ELA'E %(G(AT +ull .ac)$ages +rom the time her employment $as terminated on !arch /& 3FFF up to the time the herein decision .ecomes +inal. For this purpose& this case is "E!A6:E: to the "egional La.or Ar.iter +or the computation o+ the .ac)$ages due pri#ate respondent. S2 2":E"E:.B3ED The appellate court +ound that there $as 5ust cause +or terminating the ser#ices o+ %uguat considering the series o+ in+ractions she committed. B3CD 9o$e#er& it $as noted that petitioner +ailed to comply $ith the t$in8notice re uirement in terminating an employee hence& the dismissal $as considered ine++ectual.B3HD >etitioner $as ordered to pay %uguat her .ac) $ages computed +rom the time o+ her dismissal up to the +inality o+ the decision. B3GD >etitioner sought reconsideration o+ the appellate court*s decision .ut the This petition +or re#ie$ on certiorari under "ule EC o+ the "ules o+ Court assails the !ay 33& /00E :ecision B3D o+ the Court o+ Appeals in CA8G.". S> 6o. GCGH3& and its Septem.er 31& /00E "esolution B/D denying the motion +or reconsideration. The issue +or resolution is the #alidity o+ %uguat*s termination. The antecedent +acts sho$ that respondent El#ie %uguat $as hired on <anuary 3G& 3FFG .y petitioner Challenge Soc)s Corporation as )nitting operator.B1D 'n the course o+ her employment& she incurred a.sences and tardiness $ithout prior appro#al and had .een neglect+ul o+ her duties. BED 2n !ay /C& 3FFM& she +ailed to chec) the soc)s she $as $or)ing on causing e-cess use o+ yarn and damage to the soc)s* design. She $as suspended +or +i#e days and $arned that a repetition o+ the same act $ould mean dismissal +rom the ser#ice. BCD 2n Fe.ruary /& 3FFF& she committed the same in+raction and $as gi#en a $arning. BHD :espite the pre#ious $arnings& %uguat continued to .e ha.itually a.sent and inattenti#e to her tas). 2n !arch 3& 3FFF& she again +ailed to properly count the .undle o+ soc)s assigned to her. Thus& on !arch /& 3FFF& petitioner terminated her ser#ices on grounds o+ ha.itual a.senteeism $ithout prior lea#e& tardiness and neglect o+ $or).
BGD

C.ALLEN$E SOC/S CORPORATION, >etitioner&

G.". 6o. 3HC/HM >resent:

same $as denied on Septem.er 31& /00E. 9ence& this petition.

2ne o+ the 5ust causes +or terminating an employment under Article /M/ o+ the La.or Code is gross and ha.itual neglect .y the employee o+ her duties. This cause includes gross ine++iciency& negligence and carelessness. Such 5ust causes is deri#ed +rom the right o+ the employer to select and engage his employees. B3MD 'n the instant case& there is no dou.t that %uguat $as ha.itually a.sent& tardy and neglect+ul o+ her duties. 7e agree $ith the Court o+ Appeals that: El#ie*s commission o+ three (1) #iolations o+ the company*s rules and regulations& including her unauthorized a.sences and tardiness& all committed in the span o+ t$o years& sho$s that she did not only +ail to o.ser#e due diligence in per+orming her 5o.& .ut she has little regard +or the conse uences o+ her acts and inactions. She repeatedly committed error in counting the soc)s to .e gi#en to the Looping Section. As a )nitting operator& El#ie $as re uired to chec) the soc)s she $as $or)ing on and to count the .undles o+ soc)s she had to pac) to .e +or$arded to the Looping Section. El#ie did not uestion the authenticity o+ the !ay /C& 3FFM suspension letter and the Fe.ruary /& 3FFF memorandum\. 7hile a +irst #iolation could .e considered e-cusa.le& repeated commission o+ the same o++ense could .e considered $ill+ul diso.edience. El#ie& despite the suspension and $arning& continued to disregard the company rules and regulations\.B3FD

Therea+ter& %uguat +iled a complaint +or illegal dismissal. BMD 2n Fe.ruary 33& /000& the la.or ar.iter BFD rendered a :ecision B30D holding that %uguat $as illegally dismissed. The dispositi#e portion o+ the decision reads: 79E"EF2"E& +ollo$ing the pronouncement in the case o+ AL(8T(C> #. 6L"C (G.". 6o. 3/0EC0& Fe.ruary 30& 3FFF)& 5udgment is here.y rendered ordering respondents to reinstate complainants $ithout loss o+ seniority rights and .ene+its& .ut $ithout .ac)$ages. S2 2":E"E:.B33D

9a.itual neglect implies repeated +ailure to per+orm one*s duties +or a period The la.or ar.iter +ound %uguat*s dismissal too harsh and o+ time. %uguat*s repeated acts o+ a.sences $ithout lea#e and her +re uent tardiness re+lect her indi++erent attitude to and lac) o+ moti#ation in her $or). 9er repeated and ha.itual in+ractions& committed despite se#eral $arnings& constitute gross misconduct. 9a.itual a.senteeism $ithout lea#e constitute gross negligence and is su++icient to 5usti+y termination o+ an employee. B/0D

disproportionate to the in+raction committed. 't $as o.ser#ed that counting #olumes o+ soc)s is tedious and the $or)er is prone to commit mista)es especially i+ the counting is done on a regular .asis. The la.or ar.iter ruled that mista)e in counting .undles o+ soc)s is tolera.le and should .e punished .y suspension only.
B3/D

52
7e +ind the penalty o+ dismissal +rom the ser#ice reasona.le and appropriate to %uguat*s in+raction. 9er repeated negligence is not tolera.le4 neither should it merit the penalty o+ suspension only. The record o+ an employee is a rele#ant consideration in determining the penalty that should .e meted out.
B/3D

cured& it should not in#alidate the dismissal. 9o$e#er& the employer should .e held lia.le +or non8compliance $ith the procedural re uirements o+ due process. B13D The #iolation o+ %uguat*s right to statutory due process .y the petitioner $arrants the payment o+ indemnity in the +orm o+ nominal damages in the amount o+ >10&000& $hich is appropriate under the circumstances.B1/D Con+orma.ly& the a$ard o+ .ac)$ages in the present case should .e deleted. 'nstead& pri#ate respondent should .e indemni+ied in the amount o+ >10&000.00 as nominal damages.B11D @.ERE?ORE& the !ay 33& /00E :ecision and the Septem.er 31& /00E "esolution o+ the Court o+ Appeals in CA8G.". S> 6o. GCGH3& $hich declared that petitioner Challenge Soc)s Corporation did not comply $ith the statutory due process re uirements in terminating the employment o+ pri#ate respondent El#ie %uguat& are A??IR+ED $ith the +ODI?ICATION that the a$ard o+ .ac)$ages is DELETED. >etitioner is ordered to pay pri#ate respondent El#ie %uguat nominal damages in the amount o+ >10&000.00.

%uguat committed se#eral in+ractions in the past and despite the $arnings and suspension& she continued to display a neglect+ul attitude to$ards her $or). An employee*s past misconduct and present .eha#ior must .e ta)en together in determining the proper imposa.le penalty.
B//D

The totality o+ in+ractions or the

num.er o+ #iolations committed during the period o+ employment shall .e considered in determining the penalty to .e imposed upon an erring employee. The o++enses committed .y him should not .e ta)en singly and separately .ut in their totality. Fitness +or continued employment cannot .e compartmentalized into tight little cu.icles o+ aspects o+ character& conduct& and a.ility separate and independent o+ each other.B/1D 't is the totality& not the compartmentalization& o+ such company in+ractions that %uguat had consistently committed $hich 5usti+ied her dismissal.B/ED %esides& terminating an employment is one o+ petitioner*s prerogati#es. As the employer& petitioner has the right to regulate& according to its discretion and .est 5udgment& all aspects o+ employment& including $or) assignment& $or)ing methods& processes to .e +ollo$ed& $or)ing regulations& trans+er o+ employees& $or) super#ision& lay8o++ o+ $or)ers and the discipline& dismissal and recall o+ $or)ers. !anagement has the prerogati#e to discipline its employees and to impose appropriate penalties on erring $or)ers pursuant to company rules and regulations.B/CD This Court has upheld a company*s management prerogati#es so long as they are e-ercised in good +aith +or the ad#ancement o+ the employer*s interest and not +or the purpose o+ de+eating or circum#enting the rights o+ the employees under special la$s or under #alid agreements.B/HD 'n the case at .ar& petitioner e-ercised in good +aith its management prerogati#e as there is no dispute that %uguat had .een ha.itually a.sent& tardy and neglect+ul o+ her $or)& to the damage and pre5udice o+ the company. 9er dismissal $as there+ore proper. The la$ imposes many o.ligations on the employer such as pro#iding 5ust compensation to $or)ers& o.ser#ance o+ the procedural re uirements o+ notice and hearing in the termination o+ employment. 2n the other hand& the la$ also recognizes the right o+ the employer to e-pect +rom its $or)ers not only good per+ormance& ade uate $or) and diligence& .ut also good conduct and loyalty. The employer may not .e compelled to continue to employ such persons $hose continuance in the ser#ice $ill patently .e inimical to his interests. B/GD The employer has the .urden o+ pro#ing that the dismissed $or)er has .een ser#ed t$o notices: (3) one to apprise him o+ the particular acts or omissions +or $hich his dismissal is sought& and (/) the other to in+orm him o+ his employer*s decision to dismiss him. B/MD As +ound .y the Court o+ Appeals& petitioner +ailed to comply $ith this re uirement& thus: A re#ie$ o+ the records sho$s that pri#ate respondent $as ser#ed a $ritten termination notice on the #ery day she $as actually dismissed +rom the ser#ice. The case records are .ere+t o+ any sho$ing that Challenge Soc)s Corporation noti+ied El#ie in ad#ance o+ the charge or charges against her. Li)e$ise& she $as not gi#en an opportunity to re+ute the charges made against her& thus& depri#ing her o+ the right to de+end hersel+. 'n other $ords& petitioner +ell short in o.ser#ing the t$o8notice rule re uired .y la$.B/FD

6o costs.

'n Aga o! '. Nat%o!al La or 8elat%o!s Comm%ss%o!&B10D $e upheld as #alid the dismissal +or 5ust cause although it did not comply $ith the re uirements o+ procedural due process. 7e ruled that $hile the procedural in+irmity cannot .e

53
proportionate 31th8month pay +or 3FF3 in the +ollo$ing amounts: . . . SO ORDERED. ccccccccccccccccccccccccccccccccccccccccccccccccc $.R. No. %%29)= Se!tember 51, %))2 ?E S. SEB-$-ERO, CARLOS ON$, NENE +ANAO$, 3-ANITO C-STODIO, CRISANTA LACSA+, SAT-RNINO $-RAL, @IL+A BALDERA, LEONILA ,ALDE7, ?ATI+A POTESTAD, E,AN$ELINE A$NADO, RESTIT-TO $LORIOSO, 3ANESE DE LOS REYES, RODOL?O SANC.E7, @IL+A ORBELLO, DAISY PASC-A, an: ALEC +ASAYA, petitioners& #s. NATIONAL LABOR RELATIONS CO++ISSION, $.T.I. SPORTS@EAR CORPORATION an:>or BENEDICTO Y-3-ICO, respondents. d. To pay complainants underpayment o+ $ages under 6C" 7age 03 and 6C" 7age 0/ in the +ollo$ing amounts: . . . e. To pay complainants the amount o+ >3/0&H3M.MG representing 30` attorney@s +ees .ased on the total 5udgment a$ard o+ >3&1/H&M0G.H1. The claims +or un+air la.or practice& nonpayment o+ o#ertime pay& moral damages& and e-emplary damages are here.y denied +or lac) o+ merit. S2 2":E"E:. 2 'n support o+ the disposition& the La.or Ar.iter made the +ollo$ing ratiocinations: DA,IDE, 3R., J.: This is a special ci#il action +or 1ert%orar% under "ule HC o+ the "ules o+ Court to set aside +or ha#ing .een rendered $ith gra#e a.use o+ discretion the decision o+ /F 6o#em.er 3FF1 % and resolution o+ F Fe.ruary 3FFE 5 o+ pu.lic respondent 6ational La.or "elations Commission (6L"C) in 6L"C 6C" CA Case 6o. 00EHG18F1. The +ormer modi+ied the decision o+ /H Fe.ruary 3FF1 o+ the La.or Ar.iter 9 .y setting aside the a$ard o+ .ac) $ages& proportionate 31th month pay +or 3FF3 and attorney@s +ees& $hile the latter denied the motion to reconsider the +ormer. The antecedent +acts as disclosed .y the decisions o+ the La.or Ar.iter and the 6L"C& as $ell as .y the pleadings o+ the parties& are not complicated. The petitioners $ere among the thirty8eight (1M) regular employees o+ pri#ate respondent GT' Sports$ear Corporation (hereina+ter @TI)& a corporation engaged in the manu+acture and e-port o+ ready8to8$ear garments& $ho $ere gi#en Itemporary lay8o++I notices .y the latter on // <anuary 3FF3 due to alleged lac) o+ $or) and hea#y losses caused .y the cancellation o+ orders +rom a.road and .y the garments em.argo o+ 3FF0. %elie#ing that their Itemporary lay8o++I $as a ploy to dismiss them& resorted to .ecause o+ their union acti#ities and $as in #iolation o+ their right to security o+ tenure since there $as no #alid ground there+or& the 1M laid8o++ employees +iled $ith the La.or Ar.iter@s o++ice in the 6ational Capital "egion complaints +or illegal dismissal& un+air la.or practice& underpayment o+ $ages under 7age 2rders 6os. 03 and 0/& and non8payment o+ o#ertime pay and 31th month pay. = >ri#ate respondent GT' denied the claim o+ illegal dismissal and asserted that it $as its prerogati#e to lay8o++ its employees temporarily +or a period not e-ceeding si- months to pre#ent losses due to lac) o+ $or) or 5o. orders +rom a.road& and that the lay8o++ a++ected .oth union and non8union mem.ers. 't 5usti+ied its +ailure to recall the 1M laid8o++ employees a+ter the lapse o+ si- months .ecause o+ the su.se uent cancellations o+ 5o. orders made .y its +oreign principals& a +act $hich $as communicated to the petitioners and the other complainants $ho $ere all o++ered se#erance pay. T$enty8t$o (//) o+ the 1M complainants accepted the separation pay. The petitioners herein did not. The cases then in#ol#ing those $ho accepted the separation pay $ere 0ro ta!to dismissed $ith pre5udice. 'n his decision o+ /H Fe.ruary 3FF1 $ith respect to the claims o+ the petitioners& La.or Ar.iter >a.lo C. Espiritu& <r. +ound +or them and disposed as +ollo$s: 79E"EF2"E& a.o#e premises considered& 5udgment is here.y rendered +inding "espondent& G.T.'. Sports$ear Corporation& lia.le +or constructi#e dismissal& underpayment o+ $ages under 6C" 03 and 0/& and 31th8month pay di++erentials and concomitantly& "espondent corporation is here.y ordered: a. To pay the +ollo$ing complainants .ac)$ages +rom the time o+ their constructi#e dismissal (<uly //& 3FF3) till promulgation considering that reinstatement is no longer decreed: . . . .. To pay complainants separation pay o+ 3,/ month +or e#ery year o+ ser#ice in lieu o+ reinstatement in the +ollo$ing amounts: . . . c. To pay complainants 31th8month pay di++erentials arising out o+ underpayment o+ $ages and 2n the #alidity o+ the temporary lay8o++& this Ar.itration %ranch +inds that there $as ample 5usti+ication on the part o+ "espondent company to lay8o++ temporarily some o+ its employees to pre#ent losses as a result o+ the reduction o+ the garment uota allocated to "espondent company due to the garment em.argo o+ 3FF0. 'n +act& in the months o+ !arch& April& and !ay o+ 3FF3 respondent company recei#ed se#eral messages,correspondence +rom its +oreign principals in+orming them ("espondent) that they are canceling,trans+erring some o+ their uotas,orders to other countries. The e#idence presented .y "espondent company pro#es this +act (E-hi.its I3/I& I31I& I3EI& I3CI& I3C8AI& I3HI& I3GI and Anne-es ICI& IHI& IGI& sho$ing the di++erent documentary e#idence on cancellation o+ orders and +orced lea#e schedules o+ $or)ers due to lac) o+ $or)). This is sustaina.le& as in this case& $here the "espondent +ound it unnecessary to continue employing some o+ its $or)ers .ecause o+ .usiness recession& lac) o+ materials to $or) on due to go#ernment controls (garments em.argo) and due to the lac) o+ the demand +or e-port uota +rom its principal +oreign .uyers. Although& as a general rule& "espondent company has the prerogati#e and right to resort to temporary lay8o++& such right is li)e$ise limited to a period o+ si- (H) months applying Art. /MH o+ the La.or Code on suspension o+ employer8employee relationship not e-ceeding si- (H) months. 'n this case& respondent company $as 5usti+ied in the temporary lay8o++ o+ some o+ its employees. 9o$e#er& "espondent company should ha#e recalled them a+ter the end o+ the si- month period or at the least reasona.ly in+ormed them (complainants) that the "espondent company is still not in a position to recall them due to the continuous drop o+ demand in the e-port mar)et (locally or internationally)& there.y e-tending the temporary lay8o++ $ith a de+inite period o+ recall and i+ the same cannot .e met& then the company should implement retrenchment and pay its employees separation pay. Failing in this regard& respondent company chose not to recall nor send notice to the complainants a+ter the lapse o+ the si- (H) month period. 9ence& there is in this complaint a clear case o+ constructi#e dismissal. 7hile there is a #alid reason +or the temporary lay8o++& the same is also limited to a duration o+ si- months. Therea+ter the employees& complainants herein& are entitled under the la$ (Art. /MH) to .e recalled .ac) to $or). As result thereo+& the temporary lay8o++ o+ the complainants +rom <anuary //& 3FF3 (date o+ lay8o++) to <uly //& 3FF3 is #alid& ho$e#er& therea+ter complainants are already entitled to .ac)$ages& in #ie$ o+ constructi#e dismissal& due to the +act that they $ere no longer recalled .ac) to $or). Complainants cannot .e placed on temporary lay8o++ +ore#er. The limited period o+ si- (H) months is .ased pro#isionally too pre#ent circum#ention on the right to security o+ tenure and to pre#ent gra#e a.use o+ discretion on the part o+ the employer. 9o$e#er& since during the trial it $as pro#en& as testi+ied .y the Aice8>resident +or mar)eting and personnel manager& that the lac) o+ $or) and selection o+ personnel continued to persist and considering the antagonism and hostility displayed .y .oth litigants& as o.ser#ed .y this Ar.iter& during the trial o+ this case and in #ie$ o+ the strained relations .et$een the parties& reinstatement o+ the complainants $ould not .e prudent. (:i#ine 7ord 9igh School #s. 6L"C& G.". G//0G& H Aug. 3FMH4 Esmalin #s. 6L"C& G.". HGMM0& 3C Sept. 3FMF4 9ernandez #s. 6L"C& G.". 1E10/& 30 Aug. 3FMF). 9ence& separation pay o+ 3,/ month +or e#ery year o+ ser#ice in lieu o+ reinstatement is in order. . . .

54
2n the issue o+ monetary claims this Ar.itration %ranch +inds that "espondent is lia.le +or underpayment o+ $ages under 6C" 7age 2rder 03 and 0/ considering that respondent +ailed to re.ut the claims o+ the complainants. "espondent +ailed to sho$ proo+ .y means o+ payrolls to dispro#e the claim o+ the complainants. Complainants are also entitled to their proportionate 31th8month pay di++erentials as a result o+ the underpayment o+ $ages under 6C"803 and 0/ and li)e$ise to their proportionate 31th8 month pay +or 3FF3 +or the month o+ <anuary 3FF3. . . . 9o$e#er& complainants are entitled to reasona.le attorney@s +ees considering they $ere +orced to engage the ser#ices o+ counsel in order to +ully #entilate their rights and grie#ances in accordance $ith the La.or Code as amended. ' The La.or Ar.iter +ound no su++icient e#idence to pro#e the petitioners@ charges o+ un+air la.or practice& o#ertime pay& and +or moral and e-emplary damages. >ri#ate respondent GT' seasona.ly appealed the a+oresaid decision to the 6L"C& $hich doc)eted the appeal as 6L"C 6C" CA Case 6o. 00EHG18F1. 'n its challenged decision& the 6L"C concurred $ith the +indings o+ the La.or Ar.iter that there $as a #alid lay8o++ o+ the petitioners due to lac) o+ $or)& .ut disagreed $ith the latter@s ruling granting .ac) $ages a+ter // <uly 3FF3. The 6L"C 5usti+ied its postulation as +ollo$s: 9o$e#er& $e cannot sustain the +indings o+ the La.or Ar.iter in a$arding the complainants .ac)$ages a+ter <uly //& 3FF3 in #ie$ o+ constructi#e dismissal& it .eing ac)no$ledged .y him that I. . . during the trial it $as pro#en& as testi+ied .y the Aice8>resident +or mar)eting and personnel manager& that the lac) o+ $or) and selection o+ personnel continued to persist . . .I %esides& it $as not denied .y the complainants that during the proceeding o+ the case& the respondents con#eyed to the complainants the impossi.ility o+ ha#ing them recalled in #ie$ o+ the continued una#aila.ility o+ $or) as the economic recession o+ the respondent@s principal mar)et persisted. 'n +act& the respondent company o++ered to complainants payment o+ their separation pay $hich o++er B$Das accepted .y // out o+ 1M complainants. 9a#ing esta.lished lac) o+ $or)& it necessarily +ollo$BsD that retrenchment did ta)e place and not constructi#e dismissal. :ismissal .y its term& presuppose that there $as still $or) a#aila.le and that the employer terminated the ser#ices o+ the employee there+rom. The same cannot .e said o+ the case at .ar. The complainants did not uestion the e#idence o+ lac) o+ $or) on account o+ reduction o+ go#ernment uota or cancellation o+ orders. Art. /MH o+ the La.or Code is precised Bs%1D in this regards $hen it pro#ided that: Art. /MH. 7hen employment not deemed terminated. U The o!a 2%#e suspension o+ the operation o+ a .usiness or underta)ing +or a period not e-ceeding si- (H) months& . . . shall not terminate employment . . . . 't is only a+ter the si- months period that an employee can .e presumed to ha#e .een terminated. 1 't thus set aside the a$ards +or .ac) $ages& proportionate 31th month pay +or 3FF3& and +or attorney@s +ees $hich it +ound to .e $ithout .asis& and disposed as +ollo$s: 79E"EF2"E& premises considered the decision o+ the La.or Ar.iter dated Fe.ruary /H& 3FF1 is here.y modi+ied .y deleting the a$ard o+ .ac)$ages& the proportionate 31th month pay +or 3FF3 and attorney@s +ees +or lac) o+ legal .asis and direct& the payment o+ separation pay e ual to one8hal+ month salary +or e#ery year o+ ser#ice as o+ <uly //& 3FF3. & (na.le to accept the 6L"C 5udgment& the petitioners +iled this special ci#il action +or 1ert%orar%. They contend that the 6L"C acted $ithout or in e-cess o+ 5urisdiction or $ith gra#e a.use o+ discretion $hen it: (a) ruled that there $as a #alid and legal reduction o+ .usiness and in sustaining the theory o+ redundancy in 5usti+ying the dismissal o+ the petitioners4 (.) +ailed to apply in +ull the pro#isions o+ la$ and o+ 5urisprudence as to the +ull payment o+ .ac) $ages in cases o+ illegal dismissal4 and (c) deleted the a$ard o+ attorney@s +ees. 7e ga#e due course to this petition a+ter the +iling o+ the separate comments to the petition .y the pu.lic and pri#ate respondents and the petitioners@ reply to the pu.lic respondent@s comment. The petitioners@ +irst contention is .ased on a $rong premise or on a miscomprehension o+ the statement o+ the 6L"C. 7hat the 6L"C sustained and a++irmed is not re#"!#a!1y& .ut retre!1hme!t as a ground +or termination o+ employment. They are not synonymous .ut distinct and separate grounds under Article /M1 o+ the La.or Code& as amended. ) "edundancy e-ists $here the ser#ices o+ an employee are in e-cess o+ $hat is reasona.ly demanded .y the actual re uirements o+ the enterprise. A position is redundant $here it is super+luous& and super+luity o+ a position or positions may .e the outcome o+ a num.er o+ +actors& such as o#erhiring o+ $or)ers& decreased #olume o+ .usiness& or dropping o+ a particular product line or ser#ice acti#ity pre#iously manu+actured or underta)en .y the enterprise. %( "etrenchment& on the other hand& is used interchangea.ly $ith the term Ilay8o++.I 't is the termination o+ employment initiated .y the employer through no +ault o+ the employee@s and $ithout pre5udice to the latter& resorted to .y management during periods o+ .usiness recession& industrial depression& or seasonal +luctuations& or during lulls occasioned .y lac) o+ orders& shortage o+ materials& con#ersion o+ the plant +or a ne$ production program or the introduction o+ ne$ methods or more e++icient machinery& or o+ automation. %% Simply put& it is an act o+ the employer o+ dismissing employees .ecause o+ losses in the operation o+ a .usiness& lac) o+ $or)& and considera.le reduction on the #olume o+ his .usiness& a right consistently recognized and a++irmed .y this Court. %5 Article /M1 o+ the La.or code $hich co#ers retrenchment& reads as +ollo$s: Art. /M1. Clos"re o2 esta l%shme!t a!# re#"1t%o! o2 0erso!!el. U The employer may also terminate the employment o+ any employee due to the installation o+ la.or sa#ing de#ices& redundancy& retrenchment to pre#ent losses or the closing or cessation o+ operation o+ the esta.lishment or underta)ing unless the closing is +or the purpose o+ circum#enting the pro#isions o+ this Title& .y ser#icing a $ritten notice on the $or)ers and the !inistry o+ La.or and Employment at least one (3) month .e+ore the intended date thereo+. 'n case o+ termination due to the installation o+ la.or sa#ing de#ices or redundancy& the $or)er a++ected there.y shall .e entitled to a separation pay e ui#alent to at least his one (3) month pay or to at least one (3) month pay +or e#ery year o+ ser#ice& $hiche#er is higher. 'n case o+ retrenchment to pre#ent losses and in cases o+ closure or cessation o+ operations o+ esta.lishment or underta)ing not due to serious .usiness losses or +inancial re#erses& the separation pay shall .e e ui#alent to one (3) month pay or at least one8hal+ (3,/) month pay +or e#ery year o+ ser#ice& $hiche#er is higher. A +raction o+ at least si- (H) months shall .e considered one (3) $hole year. This pro#ision& ho$e#er& spea)s o+ a permanent retrenchment as opposed to a temporary lay8o++ as is the case here. There is no speci+ic pro#ision o+ la$ $hich treats o+ a temporary retrenchment or lay8o++ and pro#ides +or the re uisites in e++ecting it or a period or duration there+or. These employees cannot +ore#er .e temporarily laid8o++. To remedy this situation or +ill the hiatus& Article /MH may .e applied .ut only .y analogy to set a speci+ic period that employees may remain temporarily laid8o++ or in +loating status. %9 Si- months is the period set .y la$ that the operation o+ a .usiness or underta)ing may .e suspended there.y suspending the employment o+ the employees concerned. The temporary lay8o++ $herein the employees li)e$ise cease to $or) should also not last longer than si- months. A+ter si- months& the employees should either .e recalled to $or) or permanently retrenched +ollo$ing the re uirements o+ the la$& and that +ailing to comply $ith this $ould .e tantamount to dismissing the employees and the employer $ould thus .e lia.le +or such dismissal. To determine& there+ore& $hether the petitioners $ere #alidly retrenched or $ere illegally dismissed& $e must determine $hether there $as compliance $ith the la$ regarding a #alid retrenchment at anytime $ithin the si- month8period that they $ere temporarily laid8o++. (nder the a+ore uoted Article /M1 o+ the La.or Code& there are three .asic re uisites +or a #alid retrenchment: (3) the retrenchment is necessary to pre#ent losses and such losses are pro#en4 (/) $ritten notice to the employees and to the :epartment o+ La.or and Employment at least one month prior to the intended date o+ retrenchment4 and (1) payment o+ separation pay e ui#alent to one month pay or at least 3,/ month pay +or e#ery year o+ ser#ice& $hiche#er is higher. As +or the +irst re uisite& $hether or not an employer $ould imminently su++er serious or su.stantial losses +or economic reasons is essentially a uestion o+ +act +or the La.or Ar.iter and the 6L"C to determine. %= 9ere& .oth the La.or Ar.iter and the 6L"C +ound that the pri#ate respondent $as su++ering and $ould continue to su++er serious losses& there.y 5usti+ying the retrenchment o+ some o+ its

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employees& including the petitioners. 7e are not prepared to disregard this +inding o+ +act. 't is settled that +indings o+ <"as%85udicial agencies $hich ha#e ac uired e-pertise in the matters entrusted to their 5urisdiction are accorded .y this Court not only $ith respect .ut $ith +inality i+ they are supported .y su.stantial e#idence. %2 The latter means that amount o+ rele#ant e#idence $hich a reasona.le mind might accept as ade uate to 5usti+y a conclusion. %' 'n the instant case& no claim $as made .y any o+ the parties that such a +inding $as not supported .y su.stantial e#idence. Furthermore& the petitioners did not appeal the +inding o+ the La.or Ar.iter that their temporary lay8o++ to pre#ent losses $as amply 5usti+ied. They cannot no$ uestion this +inding that there is a #alid ground to lay8o++ or retrench them. The re uirement o+ notice to .oth the employees concerned and the :epartment o+ La.or and Employment (:2LE) is mandatory and must .e $ritten and gi#en at least one month .e+ore the intended date o+ retrenchment. 'n this case& it is undisputed that the petitioners $ere gi#en notice o+ the temporary lay8o++. There is& ho$e#er& no e#idence that any $ritten notice to permanently retrench them $as gi#en at least one month prior to the date o+ the intended retrenchment. The 6L"C +ound that GT' con#eyed to the petitioners the impossi.ility o+ recalling them due to the continued una#aila.ility o+ $or). %1 %ut $hat the la$ re uires is a wr%tte! notice to the employees concerned and that re uirement is mandatory. %& The notice must also .e gi#en at least one month in ad#ance o+ the intended date o+ retrenchment to ena.le the employees to loo) +or other means o+ employment and there+ore to ease the impact o+ the loss o+ their 5o.s and the corresponding income. %) That they $ere already on temporary lay8o++ at the time notice should ha#e .een gi#en to them is not an e-cuse to +orego the one8month $ritten notice .ecause .y this time& their lay8o++ is to .ecome permanent and they $ere de+initely losing their employment. There is also nothing in the records to pro#e that a $ritten notice $as e#er gi#en to the :2LE as re uired .y la$. GT'@s position paper& 5( o++er o+ e-hi.its& 5% Comment to the >etition& 55 and !emorandum 59 in this case do not mention o+ any such $ritten notice. The la$ re uires two notices U one to the employee,s concerned and another to the :2LE U not 5ust one. The notice to the :2LE is essential .ecause the right to retrench is not an a.solute prerogati#e o+ an employer .ut is su.5ect to the re uirement o+ la$ that retrenchment .e done to pre#ent losses. The :2LE is the agency that $ill determine $hether the planned retrenchment is 5usti+ied and ade uately supported .y +acts. 5= 7ith respect to the payment o+ separation pay& the 6L"C +ound that GT' o++ered to gi#e the petitioners their separation pay .ut that the latter re5ected such o++er $hich $as accepted only .y // out o+ the 1M original complainants in this case. 52 As to $hen this o++er $as made $as not& ho$e#er& pro#en. All that the parties& the La.or Ar.iter and the 6L"C stated in their respecti#e pleadings and decisions $as that the o++er and payment $ere made during the pendency o+ the illegal dismissal case $ith the La.or Ar.iter. %ut $ith or $ithout this o++er o+ separation pay& our conclusion $ould remain the same: that the retrenchment o+ the petitioners is de+ecti#e in the +ace o+ our +inding that the re uired notices to .oth the petitioners and the :2LE $ere not gi#en. The lac) o+ $ritten notice to the petitioners and to the :2LE does not& ho$e#er& ma)e the petitioners@ retrenchment illegal such that they are entitled to the payment o+ .ac) $ages and separation pay in lieu o+ reinstatement as they contend. Their retrenchment& +or not ha#ing .een e++ected $ith the re uired notices& is merely de+ecti#e. 'n those cases $here $e +ound the retrenchment to .e illegal and ordered the employees@ reinstatement and the payment o+ .ac) $ages& the #alidity o+ the cause +or retrenchment& that is the e-istence o+ imminent or actual serious or su.stantial losses& $as not pro#en. 5' %ut here& such a cause is present as +ound .y .oth the La.or Ar.iter and the 6L"C. There is only a #iolation .y GT' o+ the procedure prescri.ed in Article /M1 o+ the La.or Code in e++ecting the retrenchment o+ the petitioners. 't is no$ settled that $here the dismissal o+ an employee is in +act +or a 5ust and #alid cause and is so pro#en to .e .ut he is not accorded his right to due process& %.e.& he $as not +urnished the t$in re uirements o+ notice and the opportunity to .e heard& the dismissal shall .e upheld .ut the employer must .e sanctioned +or non8compliance $ith the re uirements o+ or +or +ailure to o.ser#e due process. The sanction& in the nature o+ indemni+ication or penalty& depends on the +acts o+ each case and the gra#ity o+ the omission committed .y the employer and has ranged +rom >3&000.00 as in the cases o+ Ae!0h%l 's. Nat%o!al La or 8elat%o!s Comm%ss%o!& 51 $eahorse Mar%t%me Cor0. 's. Nat%o!al La or 8elat%o!s Comm%ss%o!& 5& $hoemart+ I!1. 's. Nat%o!al La or 8elat%o!s Comm%ss%o!+ 5)8" erworl# )(h%ls./+ I!1. 's. Nat%o!al La or 8elat%o!s Comm%ss%o!+ 9( (a1%2%1 M%lls+ I!1. 's. Alo!Bo+ 9% and A"rel%o 's. Nat%o!al La or 8elat%o!s Comm%ss%o! 95 to >30&000.00 in 8eta 's. Nat%o!al La or 8elat%o!s Comm%ss%o! 99 and Alham ra I!#"str%es+ I!1.'s. Nat%o!al La or 8elat%o!s Comm%ss%o!. 9= !ore recently& in Aorl#w%#e (a0erm%lls+ I!1. 's. Nat%o!al La or 8elat%o!s Comm%ss%o!+ 92 the sum o+ >C&000.00 $as a$arded to the employee as indemni+ication +or the employer@s +ailure to comply $ith the re uirements o+ procedural due process. Accordingly& $e a++irm the deletion .y the 6L"C o+ the a$ard o+ .ac) $ages. %ut .ecause the re uired notices o+ the petitioners@ retrenchment $ere not ser#ed upon the petitioners and the :2LE& GT' must .e sanctioned +or such +ailure and there.y re uired to indemni+y each o+ the petitioners the sum o+ >/&000.00 $hich $e +ind to .e 5ust and reasona.le under the circumstances o+ this case. As +or the a$ard o+ the 31th8month pay made .y the La.or Ar.iter and deleted .y the 6L"C& $e do not +ind anything in the decision o+ the 6L"C to support the deletion o+ this a$ard other than its opinion that there is lac) o+ legal .asis to support such an a$ard& $ithout& ho$e#er& +urnishing any e-planation +or this +inding. Thus& the a$ard o+ the 31th8month pay made and su++iciently 5usti+ied .y the La.or Ar.iter must .e reinstated as prayed +or .y the petitioners. Also& the petitioners are entitled to an a$ard +or attorney@s +ees pursuant to paragraph G& Article //0M o+ the Ci#il Code $hich must& ho$e#er& .e reasona.le. The a$ard o+ >3/0&H3M.MG& $hich is e ui#alent to ten percent (30`) o+ the amounts reco#ered& as attorney@s +ees should .e reduced to >/C&000.00& an amount $e +ind to .e reasona.le. The ten percent (30`) attorney@s +ees pro#ided +or in Article 333 o+ the La.or Code and Section 33& "ule A'''& %oo) ''' o+ the 'mplementing "ules is the ma&%m"m4 hence& any amount less than that may .e a$arded as the circumstances o+ the case may $arrant. 79E"EF2"E& the instant petition is partially G"A6TE: and the challenged decision o+ pu.lic respondent 6ational La.or "elations Commission in 6L"C 6C" CA Case 6o. 00EHG18F1 is modi+ied .y re#ersing and setting aside its deletion o+ the a$ards in the La.or Ar.iter@s decision o+ proportionate 31th month pay +or 3FF3 and attorney@s +ees& the latter .eing reduced to >/C&000.00. Separation pay e ui#alent to one8hal+ (3,/) month pay +or e#ery year o+ ser#ice shall .e computed +rom the dates o+ the commencement o+ the petitioners@ respecti#e employment until the end o+ their si-8month temporary lay8o++ $hich is // <uly 3FF3. 'n addition& pri#ate respondent G.T.'. Sports$ear Corporation is ordered to pay each o+ the petitioners the sum o+ >/&000.00 as indemni+ication +or its +ailure to o.ser#e due process in e++ecting the retrenchment. Costs against the pri#ate respondent. S2 2":E"E:.

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