231. WENPHIL CORPORATION vs.
infraction of the second requirement thus it must be imposed a sanction for its
NLRC and ROBERTO MALLARE
G.R. No. 80587 February 8, 1989
DOCTRINES:
Thus in the present case, where the private respondent, who appears to be of
violent temper, caused trouble during office hours and even defied his superiors as
they tried to pacify him, should not be rewarded with re employment and back
wages. It may encourage him to do even worse and will render a mockery of the
rules of discipline that employees are required to observe. Under the
circumstances, the dismissal of the private respondent for just cause should be
maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend
to private respondent his right to an investigation before causing his dismissal. The
rule is explicit as above discussed. The dismissal of an employee must be for just or
authorized cause and after due process. Petitioner committed an infraction of the
second requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before dismissing
petitioner from employment. Considering the circumstances of this case petitioner
must indemnify the private respondent the amount of P1,000.00. The measure of
this award depends on the facts of each case and the gravity of the omission
committed by the employer.
FACTS:
Private respondent Mallare had an altercation with a co-employee. The following
day, the Operations Manager served them memorandum of suspension and in the
afternoon of that same day, Mallare was dismissed from work.
Labor Arbiter dismissed Mallare’s petition for unfair labor practice for lack of merit.
NLRC reversed the decision and ordered the reinstatement of Mallare with full
backwages of one year without qualification and deduction.
ISSUE:
Whether an employee dismissed for just cause but without due process be
reinstated to work.
RULING:
The basic requirement of due proves is that which hears before it condemns,
proceeds upon inquiry and renders judgment only after trial. The dismissal of an
employee must be for a just cause and after due process. Petitioner committed an
failure to give a formal notice and conduct an investigation as required by law
before dismissing Mallare from employment. Petitioner must indemnify the
dismissed employee which depends on the facts of each case and the gravity of the
omission committed by the employer.
Where the private respondent appears to be of violent temper, caused trouble
during office hours and even defied his supervisors as they tried to pacify him, he
should not be rewarded with re-employment and backwages. The dismissal of the
respondent should be maintained.
232. RUBEN SERRANO vs. NLRC and ISETANN DEPARTMENT STORE
G.R. No. 117040. January 27, 2000
DOCTRINES:
Termination of petitioner’s services was for an authorized cause, i.e., redundancy.—
That the phase-out of the security section constituted a “legitimate business
decision”—is a factual finding of an administrative agency which must be accorded
respect and even finality by this Court since nothing can be found in the record
which fairly detracts from such findingy. Hence, pursuant to Art. 283 of the Labor
Code, petitioner should be given separation pay at the rate of one month pay for
every year of service.
It is now settled that where the dismissal of one employee is in fact for a just and
valid cause and is so proven to be but he is not accorded his right to due process x x
x the dismissal shall be upheld but the employer must be sanctioned for non-
compliance with the requirements of or for failure to observe, due process.
The rule reversed a long standing policy theretofore followed that even though the
dismissal is based on a just cause or the termination of employment is for an
authorized cause, the dismissal or termination is illegal if effected without notice to
the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v. NLRC. In
announcing the change, this Court said: x x x However, the petitioner must
nevertheless be held to account for failure to extend to private respondent his right
to an investigation before causing his dismissal.
FACTS:
Serrano was a regular employee of Isetann Department Store as the head of
Security Checker. In 1991, as a cost-cutting measure, Isetann phased out its entire
security section and engaged the services of an independent security
agency. Petitioner filed a complaint for illegal dismissal among others.
 Labor arbiter ruled in his favor as Isetann failed to establish that it had retrenched
its security section to prevent or minimize losses to its business; that private
respondent failed to accord due process to petitioner; that private respondent
failed to use reasonable standards in selecting employees whose employment
would be terminated.
NLRC reversed the decision and ordered petitioner to be given separation pay.
ISSUE:
Whether the hiring of an independent security agency by the private respondent to
replace its current security section a valid ground for the dismissal of the employees
classed under the latter.
RULING:
An employer’s good faith in implementing a redundancy program is not necessarily
put in doubt by the availment of the services of an independent contractor to
replace the services of the terminated employees to promote economy and
efficiency. Absent proof that management acted in a malicious or arbitrary manner,
the Court will not interfere with the exercise of judgment by an employer.
If termination of employment is not for any of the cause provided by law, it is illegal
and the employee should be reinstated and paid backwages. To contend that even
if the termination is for a just cause, the employee concerned should be reinstated
and paid backwages would be to amend Art 279 by adding another ground for
considering dismissal illegal.
If it is shown that the employee was dismissed for any of the causes mentioned in
Art 282, the in accordance with that article, he should not be reinstated but must
be paid backwages from the time his employment was terminated until it is
determined that the termination of employment is for a just cause because the
failure to hear him before he is dismissed renders the termination without legal
effect.
233. AGABON VS NLRC and RIVIERA HOME
G.R. No. 158693, November 17, 2004
DOCTRINES:
Dismissals based on just causes contemplate acts or omissions attributable to the
employee while dismissals based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate employees. A termination for an
authorized cause requires payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full backwages are mandated
under Article 279. If reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the
significant number of cases involving dismissals without requisite notices. We
concluded that the imposition of penalty by way of damages for violation of the
notice requirement was not serving as a deterrent. Hence, we now required
payment of full backwages from the time of dismissal until the time the Court finds
the dismissal was for a just or authorized cause. Serrano was confronting the
practice of employers to “dismiss now and pay later” by imposing full backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning
of Article 279 of the Labor Code which states: ART. 279. Security of Tenure.—In
cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual
reinstatement. This means that the termination is illegal only if it is not for any of
the justified or authorized causes provided by law. Payment of backwages and
other benefits, including reinstate ment, is justified only if the employee was
unjustly dismissed. The fact that the Serrano ruling can cause unfairness and
injustice which elicited strong dissent has prompted us to revisit the doctrine.
After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but
without observance of the twin requirements of notice and hearing, the better rule
is to abandon the Serrano doctrine and to follow Wenphil by holding that the
dismissal was for just cause but imposing sanctions on the employer. Such
sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this
Court would be able to achieve a fair result by dispensing justice not just to
employees, but to employers as well.
The violation of the petitioners’ right to statutory due process by the private
respondent warrants the payment of indemnity in the form of NOMINAL
DAMAGES. The amount of such damages is addressed to the sound discretion of
the court, taking into account the relevant circumstances. Considering the
prevailing circumstances in the case at bar, we deem it proper to fix it at
P30,000.00.
FACTS:
Petitioners were employed by Riviera Home as gypsum board and cornice installers
from January 1992 to February 23, 1999 when they were dismissed for
abandonment of work.
Petitioners filed a complaint for illegal dismissal and was decided in their favor by
the Labor Arbiter.
Riviera appealed to the NLRC contending just cause for the dismissal because of
petitioner’s abandonment of work. NLRC ruled there was just cause and petitioners
were not entitled to backwages and separation pay.
The CA in turn ruled that the dismissal was not illegal because they have abandoned
their work but ordered the payment of money claims.
ISSUE:
Whether petitioners were illegally dismissed.
RULING:
To dismiss an employee, the law required not only the existence of a just and valid
cause but also enjoins the employer to give the employee the right to be heard and
to defend himself. Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. For a valid finding or abandonment, two
factors are considered: failure to report for work without a valid reason; and, a
clear intention to sever employer-employee relationship with the second as the
more determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work.
Where the employer had a valid reason to dismiss an employee but did not follow
the due process requirement, the dismissal may be upheld but the employer will be
penalized to pay an indemnity to the employee. This became known as the Wenphil
Doctrine of the Belated Due process Rule.
Art 279 means that the termination is illegal if it is not for any of the justifiable or
authorized by law. Where the dismissal is for a just cause, the lack of statutory due
process should not nullify the dismissal but the employer should indemnify the
employee for the violation of his statutory rights. The indemnity should be stiffer to
discourage the abhorrent practice of “dismiss now, pay later” which we sought to
deter in Serrano ruling. The violation of employees’ rights warrants the payment
of NOMINAL DAMAGES.
Case no.234
JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT, ROBERT
PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN
CAGABCAB, respondents.
Labor Law; Dismissals; Distinction between a dismissal for just cause under Article
282 and a dismissal for authorized cause under Article 283.—A dismissal for just
cause under Article 282 implies that the employee concerned has committed, or is
guilty of, some violation against the employer, i.e. the employee has committed
some serious misconduct, is guilty of some fraud against the employer, or, as
in Agabon, he has neglected his duties. Thus, it can be said that the employee
himself initiated the dismissal process. On another breath, a dismissal for
an authorized cause under Article 283 does not necessarily imply delinquency or
culpability on the part of the employee. Instead, the dismissal process is initiated by
the employer’s exercise of his management prerogative, i.e. when the employer
opts to install labor saving devices, when he decides to cease business operations or
when, as in this case, he undertakes to implement a retrenchment program. The
clear-cut distinction between a dismissal for just cause under Article 282 and a
dismissal for authorized cause under Article 283 is further reinforced by the fact
that in the first, payment of separation pay, as a rule, is not required, while in the
second, the law requires payment of separation pay.
FACTS:
1. Respondents Darwin Pacot and others were hired by JAKA until the latter
terminated their employment on because the corporation was “in dire financial
straits”.
2. It is not disputed, however, that the termination was effected without JAKA
complying with the requirement under Article 283 of the Labor Code regarding the
service of a written notice upon the employees and the Department of Labor and
Employment at least one (1) month before the intended date of termination.
3. In time, respondents separately filed with the Regional Arbitration Branch of the
National Labor Relations Commission (NLRC) complaints for illegal dismissal,
underpayment of wages and nonpayment of service incentive leave and 13th
month pay against JAKA and its HRD Manager, Rosana Castelo.
4. Labor Arbiter rendered a decision declaring the termination illegal and ordering
JAKA and its HRD Manager to reinstate respondents with full backwages, and
separation pay if reinstatement is not possible. Therefrom, JAKA went on appeal to
the NLRC, which, in a decision dated August 30, 1999, 4 affirmed in toto that of the
Labor Arbiter.
ISSUE:W/N the CA erred in awarding full backwages to the employees
W/N they are correct in awarding separation pay
NOTE: As we see it, there is only one question that requires resolution, i.e. what are
the legal implications of a situation where an employee is dismissed for cause but
such dismissal was effected without the employer’s compliance with the notice
requirement under the Labor Code.
HELD:
1. Court held that at this point, they note that there are divergent implications of a
dismissal for just cause under Article 282, on one hand, and a dismissal for
authorized cause under Article 283, on the other.
A dismissal for just cause under Article 282 implies that the employee concerned
has committed, or is guilty of, some violation against the employer, i.e. the
employee has committed some serious misconduct, is guilty of some fraud against
the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that
the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not
necessarily imply delinquency or culpability on the part of the employee. Instead,
the dismissal process is initiated by the employer’s exercise of his management
prerogative, i.e. when the employer opts to install labor saving devices, when he
decides to cease business operations or when, as in this case, he undertakes to
implement a retrenchment program.
2. The clear-cut distinction between a dismissal for just cause under Article 282 and
a dismissal for authorized cause under Article 283 is further reinforced by the fact
that in the first, payment of separation pay, as a rule, is not required, while in the
second, the law requires payment of separation pay.
3. For these reasons, there ought to be a difference in treatment when the ground
for dismissal is one of the just causes under Article 282, and when based on one of
the authorized causes under Article 283.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under
Article 282 but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee; and (2) if the
dismissal is based on an authorized cause under Article 283 but the employer failed
to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer’s exercise of his management
prerogative.
4. The records before us reveal that, indeed, JAKA was suffering from serious
business losses at the time it terminated respondents’ employment. As aptly found
by the NLRC.
The losses incurred by the respondent-appellant corporation are clearly substantial
and sufficiently proven with clear and satisfactory evidence. Losses incurred were
adequately shown with respondent-appellant’s audited financial statement. Having
established the loss incurred by the respondent-appellant corporation, it
necessarily necessarily follows that the ground in support of retrenchment existed
at the time the complainants-appellees were terminated.
5. Court held that, It is, therefore, established that there was ground for
respondents’ dismissal, i.e., retrenchment, which is one of the authorized causes
enumerated under Article 283 of the Labor Code. Likewise, it is established that
JAKA failed to comply with the notice requirement under the same Article.
Considering the factual circumstances in the instant case and the above
ratiocination, therefore, deem it proper to fix the indemnity at P50,000.00.
6. Court ruled that they find the Court of Appeals to have been in error when it
ordered JAKA to pay respondents separation pay equivalent to one (1) month salary
for every year of service. This is because in Reah’s Corporation vs. NLRC, Court
made the following declaration:
“The rule, therefore, is that in all cases of business closure or cessation of operation
or undertaking of the employer, the affected employee is entitled to separation
pay. This is consistent with the state policy of treating labor as a primary social
economic force, affording full protection to its rights as well as its welfare. The
exception is when the closure of business or cessation of operations is due to
serious business losses or financial reverses; duly proved, in which case, the right
of affected employees to separation pay is lost for obvious reasons. x x x”. (

Case no. 235
ROBERTO SEGISMUNDO and ROGELIO MONTALVO, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION (Second Division) and ASSOCIATED FREIGHT
CONSOLIDATORS, INC., respondents.
Labor Law; Illegal Dismissal; Pilferage; Where the charge of pilferage against the
employees was fully supported by the investigation conducted by the employer,
the dismissal of the former was for a just cause.—We uphold the finding of the
public respondent that petitioners’ dismissal was for a just cause. The public
respondent’s findings on this score are fully supported by the results of the
investigation conducted by private respondent regarding the pilferages, and these
results were presented before the Labor Arbiter. The conclusion that petitioners
were involved in the pilferages was solidly premised on the tabulated complaints of
consignees, the records of pilfered packages delivered by petitioners’ team and
delivery receipts.
In the absence of evidence showing that the employer was motivated by any ill
feeling or bad faith in dismissing the employees charged with pilferage, it is clear
that its decision to terminate the employees was prompted by the necessity to
protect its good name and interests.—No evidence was presented to show that
private respondent was motivated by any ill feeling or bad faith in dismissing
petitioners. On the contrary, it could have been more difficult for private
respondent to dismiss petitioners considering that petitioner Segismundo was hired
upon the recommendation of respondent’s General Manager himself while
petitioner Montalvo was hired upon the recommendation of a member of private
respondent’s Board of Directors. In view of these recommendations, petitioners
could not have been dismissed unless there was sufficient cause therefor. It is thus
clear that private respondent’s decision to terminate petitioners’ services was
prompted by the necessity to protect its good name and interests.
Evidence; The employer’s documentary evidence showing the culpability of the
employees should prevail over the latter’s uncorroborated explanations and self-
serving denials regarding their involvement in the pilferages.—Private
respondent’s documentary evidence showing the culpability of petitioners should
prevail over petitioners’ uncorroborated explanations and self-serving denials
regarding their involvement in the pilferages. All administrative determinations
require only substantial proof and not clear and convincing evidence (Manalo v.
Roldan-Confesor, 215 SCRA 808). Proof beyond reasonable doubt of the employee’s
misconduct is not required, it being sufficient that there is some basis for the same
or that the employer has reasonable ground to believe that the employee is
responsible for the misconduct, and his participation therein renders him unworthy
of the trust and confidence demanded by his position (Riker v. Ople, 155 SCRA 85).
Thus, petitioners cannot assert that the public respondent closed its eyes to their
evidence. The latter’s findings are supported by substantial evidence which goes
beyond the minimum evidentiary support required by law.
FACTS:
1. Petitioners Roberto Segismundo and Rogelio Montalvo were regular employees
of private respondent Associated Freight Consolidators, Inc., a corporation engaged
in the air freight forwarding business. It picks up parcels and packages from
different parts of the globe and delivers them “door to door” to their consignees or
addressees in the country.
Segismundo was a driver whereas Montalvo was a loader/helper. They worked as a
team, delivering packages to their respective addressees or consignees.
2. The company began receiving complaints from its client/consignees regarding
missing items in their packages which were delivered by private respondent’s
personnel. The number of complaints increased, to the point that some of private
respondent’s delivery arrangements were in danger of being discontinued by
disgruntled clients.
3. This prompted private respondent to conduct an exhaustive investigation to
determine whether its delivery personnel were involved in the pilferages
complained of. The investigation yielded the unfortunate result that the pilferages
could only have taken place while the packages were in the custody of private
respondent’s delivery personnel.
4. In view of the results of the investigation, private respondent’s General Manager
called a meeting on of all delivery personnel to discuss the pilferage incidents.
During the meeting, petitioners denied any involvement therein. They were allowed
to inspect the records gathered in the course of the company investigation. But On
the same day, petitioners were given notices by management, placing them under
preventive suspension.
5. The company formally terminated petitioners’ services without first conducting a
hearing.
6. The employees then filed a complaint for illegal suspension and dismissal,
alleging that their dismissal was not based on a just cause and was effected in
violation of their right to due process.
7. LA rendered a decision in favor of petitioners, ordering their reinstatement with
backwages, damages and attorney’s fees.
ISSUE: W/N the company is able to comply with the burden of proof required by
law to justify the dismissal of the employees
HELD: Yes!
1. We uphold the finding of the public respondent that petitioners’ dismissal was
for a just cause. The public respondent’s findings on this score are fully supported
by the results of the investigation conducted by private respondent regarding the
pilferages, and these results were presented before the Labor Arbiter. The
conclusion that petitioners were involved in the pilferages was solidly premised on
the tabulated complaints of consignees, the records of pilfered packages delivered
by petitioners’ team and delivery receipts. No evidence was presented to show that
private respondent was motivated by any ill feeling or bad faith in dismissing
petitioners.
2. Private respondent’s documentary evidence showing the culpability of
petitioners should prevail over petitioners’ uncorroborated explanations and self-
serving denials regarding their involvement in the pilferages. All administrative
determinations require only substantial proof and not clear and convincing
evidence. Proof beyond reasonable doubt of the employee’s misconduct is not
required, it being sufficient that there is some basis for the same or that the
employer has reasonable ground to believe that the employee is responsible for the
misconduct, and his participation therein renders him unworthy of the trust and
confidence demanded by his position. Thus, petitioners cannot assert that the
public respondent closed its eyes to their evidence. The latter’s findings are
supported by substantial evidence which goes beyond the minimum evidentiary
support required by law.
However, we find that petitioners were dismissed from employment without being
accorded due process. As correctly observed by the Solicitor General, non-
compliance with the twin requirements of notice and hearing is fatal because these
requirements are conditions sine qua nonbefore a dismissal may be validly effected
(Manebo vs. NLRC, G.R. No. 107721, January 10, 1994, citing Tiu v. NLRC, 215 SCRA
540). Neither of these two requirements can be dispensed with without running
afoul with the due process requirement of the Constitution (Century Textile Mills,
Inc. v. NLRC, 161 SCRA 528).
Case no. 236
OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE,
MARIO D. SUMONOD, and SABU J. LAMARAN, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, FIFTH DIVISION, and EVERGREEN FARMS, INC.,
respondents.
Labor Law; Backwages; Court has applied different methods in the computation of
backwages.—This Court has, over the years, applied different methods in the
computation of backwages. The first labor relations law governing the award of
backwages was Republic Act No. 875, the Industrial Peace Act, approved on 17 June
1953.
Backpay could be awarded where in the opinion of the Court of lndustrial
Relations such was necessary to effectuate the policies of the Industrial Peace
Act.—In accordance with these provisions, backpay (the same as backwages) could
be awarded where, in the opinion of the Court of Industrial Relations (CIR), such
was necessary to effectuate the policies of the Industrial Peace Act. Only in one
case was backpay a matter of right, and that was, when an employer had declared a
lockout without having first bargained collectively with his employees in accordance
with the provisions of the Act.
Court ruled in the case of Mercury Drug Co., Inc., et al. v. CIR, et al. that a fixed
amount of backwages without qualifications should be awarded to an illegally
dismissed employee.—From this ruling came the burden of disposing of an illegal
dismissal case on its merits and of determining whether or not the computation of
the award of backwages is correct. In order not to unduly delay the disposition of
illegal dismissal cases, this Court found occasion in the case of Mercury Drug Co.,
Inc., et al. v. CIR, et al. to rule that a fixed amount of backwages without further
qualifications should be awarded to an illegally dismissed employee (hereinafter the
Mercury Drug rule). This ruling was grounded upon considerations of expediency in
the execution of the decision.
Under P.D. No. 442 it became mandatory to award backwages to illegally
dismissed regular employees.—Under the abovequoted provision, it became
mandatory to award backwages to illegally dismissed regular employees. The law
specifically declared that the award of backwages was to be computed from the
time compensation was withheld from the employee up to the time of his
reinstatement. This notwithstanding, the rule generally applied by the Court after
the promulgation of the Mercury Drug case, and during the effectivity of P.D. No.
442 was still the Mercury Drug rule. A survey of cases from 1974 until 1989, when
the amendatory law to P.D. No. 442, namely, R.A. No. 6715 took effect, supports
this conclusion.
Same; Same; Court declared in a later case that the general principle is that an
employee is entitled to receive as backwages all the amounts he may have
received from the date of his dismissal up to the time of his reinstatement.—In the
case of New Manila Candy Workers Union (Naconwa-Paflu) v, CIR (1978), or after
the Labor Code (P.D. No. 442) had taken effect, the Court still followed the Mercury
Drug rule to avoid the necessity of a hearing on earnings obtained elsewhere by the
employee during the period of illegal dismissal. In an even later case (1987) the
Court declared that the general principle is that an employee is entitled to receive
as backwages all the amounts he may have received from the date of his dismissal
up to the time of his reinstatement. However, in compliance with the
jurisprudential policy of fixing the amount of backwages to a just and reasonable
level, the award of backwages equivalent to three (3) years, without qualification or
deduction, was nonetheless followed in said case.
Any decision or order granting backwages in excess of three (3) years is null and
void as to the excess.—In a more direct approach to the rule on the award of
backwages, this Court declared in the 1990 case of Medado v. Court of Appealsthat
"any decision or order-granting backwages in excess of three (3) years is null and
void as to the excess."
Court qualified the provision under P.D. No. 442 by limiting the award of
backwages to three (3) years.—In sum, during the effectivity of P.D. 442, the Court
enforced the Mercury Drug rule and, in effect, qualified the provision under P.D.
No. 442 by limiting the award of backwages to three (3) years.
Backwages to be awarded to an illegally dismissed employee, should not, as a
general rule, be diminished or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal.—The Court deems it appropriate,
however, to reconsider such earlier ruling on the computation of backwages as
enunciated in said Pines City Educational Center case, by now holding that
conformably with the evident legislative intent as expressed in Rep. Act No. 6715,
above-quoted, backwages to be awarded to an illegally dismissed employee, should
not, as a general rule, be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal. The underlying reason for this
ruling is that the employee, while litigating the legality (illegality) of his dismissal,
must still earn a living to support himself and family, while full backwages have to
be paid by the employer as part of the price or penalty he has to pay for illegally
dismissing his employee. The clear legislative intent of the amendment in Rep. Act
No. 6715 is to give more benefits to workers than was previously given them under
the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e., without deducting from back-wages the
earnings derived elsewhere by the concerned employee during the period of his
illegal dismissal. In other words, the provision calling for "full backwages" to illegally
dismissed employees is clear, plain and free from ambiguity and, therefore, must be
applied without attempted or strained interpretation. Index animi sermo est.
FACTS:
1. The Court (First Division) promulgated a decision in this case, the dispositive part
of which states:
"WHEREFORE, the Resolution of the National Labor Relations Commission dated 3
May 1993 is modified in that its deletion of the award for backwages in favor of
petitioners, is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is
AFFIRMED with the modification that backwages shall be paid to petitioners from
the time of their illegal dismissal on 25 June 1990 up to the date of their
reinstatement. If reinstatement is no longer feasible, a one-month salary shall be
paid the petitioners as ordered in the labor arbiter's decision, in addition to the
adjudged backwages."
2. Company now moves to reconsider the decision on grounds that
(a) petitioners are not entitled to recover backwages because they were not
actually dismissed but their probationary employment was not converted to
permanent employment; and
(b) assuming that petitioners are entitled to backwages, computation thereof
should not start from cessation of work up to actual reinstatement, and that salary
earned elsewhere (during the period of illegal dismissal) should be deducted from
the award of such backwages.
ISSUE: Court stated: We here clarify the computation of backwages due an
employee on account of his illegal dismissal from employment.
HELD:
This Court has, over the years, applied different methods in the computation of
backwages conducive to lack of initiative on the part of a laborer. Both bear the
stamp of undesirability."
1. Republic Act No. 6715 took effect, amending the Labor Code. Article 279 thereof
states in part:
"ART. 279. Security of Tenure.—An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation is
withheld from him up to the time of his actual reinstatement."
2. In accordance with the above provision, an illegally dismissed employee is
entitled to his full backwages from the time his compensation was withheld from
him (which, as a rule, is from the time of his illegal dismissal) up to the time of his
actual reinstatement.
3. Court now states that, by now holding that conformably with the evident
legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be
awarded to an illegally dismissed employee, should not, as a general rule, be
diminished or reduced by the earnings derived by him elsewhere during the period
of his illegal dismissal. The underlying reason for this ruling is that the employee,
while litigating the legality (illegality) of his dismissal, must still earn a living to
support himself and family, while full backwages have to be paid by the employer as
part of the price or penalty he has to pay for illegally dismissing his employee. The
clear legislative intent of the amendment in Rep. Act No. 6715 is to give more
benefits to workers than was previously given them under the Mercury Drug rule or
the "deduction of earnings elsewhere" rule.
Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to
"full backwages" as meaning exactly that, i.e., without deducting from backwages
the earnings derived elsewhere by the concerned employee during the period of his
illegal dismissal.
4. In other words, the provision calling for "full backwages" to illegally dismissed
employees is clear, plain and free from ambiguity and, therefore, must be applied
without attempted or strained interpretation.
5. Thus in this case, in accordance with R.A. No. 6715, employees are entitled to
their full backwages, inclusive of allowances and other benefits or their monetary
equivalent, from the time their actual compensation was withheld from them up to
the time of their actual reinstatement.
As to reinstatement of petitioners, this Court has already ruled that since
reinstatement is no longer feasible, because the company would be unjustly
prejudiced by the continued employment of petitioners who at present are
overage, a separation pay equal to one-month salary granted to them in the Labor
Arbiter's decision was in order and, therefore, affirmed in the Court's decision.
Furthermore, since reinstatement in this case is no longer feasible, the amount of
backwages shall be computed from the time of their illegal termination on 25 June
1990 up to the time of finality of this decision.
237
PIONEER TEXTURIZING CORPORATION VS. NATIONAL LABOR RELATIONS
COMMISSION, PIONEER TEXTURIZING WORKERS UNION and LOURDES A. DE
JESUS, respondents. [G.R. No. 118651. October 16, 1997]
Doctrines
1. Lack of a just cause in the dismissal from service of an employee renders the
dismissal illegal, despite the employer’s observance of procedural due process – In
the case at bar, the petitioners accusation of dishonesty and tampering of official
records and documents with the intention of cheating was not substantiated by
clear and convincing evidence.
2. While an employer has the inherent right to discipline its employees, this right
must always be exercised humanely, and the penalty it must impose should be
commensurate to the offense involved and to the degree of its infraction. – the
employer should bear in mind that, in the exercise of such right, what is at stake is
not only the employees position but also his livelihood.
3. While loss of confidence is one of the valid grounds for termination of
employment, the same, however, cannot be used as a pretext to vindicate each
and every instance of unwarranted dismissal - to be a valid ground, it must be
shown that the employee concerned is responsible for the misconduct or
infraction and that the nature of his participation therein rendered him absolutely
unworthy of the trust and confidence demanded by his position. – the breach of
trust must be related to the performance of the employee’s function. Surely, the
accused who occupies the position of reviser/trimmer does not require the
petitioner’s perpetual and full confidence.
4. As a rule, “shall” in a statue commonly denotes an imperative obligation and is
inconsistent with the idea of discretion - the presumption is that the word
“shall”, when used in a statute is mandatory. – RA No. 6715, Article 233 of the
Labor Code indicates unequivocal intent to insert a new rule that will govern the
reinstatement aspect of a decision or resolution in any given labor dispute. In fact,
the law as now worded employs the phrase “shall immediately executory” without
qualification emphasizing the need for prompt compliance.
5. To require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would certainly betray
and run counter to the very object and intent of Article 233 of the Labor Code -
the immediate execution of a reinstatement order. – the need for a writ of
execution applies only within 5 years from the date of a decision, an order or award
becomes final and executory. It cannot relate to an award or order of reinstatement
still to be appealed or pending appeal which Article 223 contemplates. The
provision of Article 223 is clear that an award of reinstatement shall be immediately
executory even pending appeal and the posting of a bond by the employer shall not
stay the execution for reinstatement. DLLV XX
6. An award or order for reinstatement is self – executory – after receipt of the
decision or resolution ordering the employee’s reinstatement, the employer has
the right to choose whether to re – admit the employee to work under the same
terms and conditions prevailing prior to his dismissal or reinstate the employer in
the payroll. Thus, an order or award for reinstatement does not require a writ of
execution.
Facts:
De Jesus is petitioners’ reviser/trimmer who based her assigned work on a paper
note posted by petitioners. The posted paper is identified by its P.O. Number. De
Jesus worked on P.O. No. 3853 by trimming the cloths’ ribs and thereafter
submitted tickets corresponding to the work done to her supervisor. Three days
later, de Jesus received a memorandum requiring her to explain why no disciplinary
action should be taken against her for dishonesty and tampering of official records
and documents with the intention of cheating as P.O. No. 3853 allegedly required
no trimming. The memorandum also placed her under preventive suspension for
thirty days. In her explanation, de Jesus maintained that she merely committed a
mistake in trimming P.O. No. 3853 and admitted that she may have been negligent,
but not for dishonesty or tampering. Nonetheless, she was terminated from
employment.
De Jesus filed a complaint for illegal dismissal against petitioners. The Labor Arbiter
held petitioners guilty of illegal dismissal and were ordered to reinstate de Jesus to
her previous position without loss of seniority rights and with full backwages from
the time of her suspension. On appeal, the National Labor Relations Commission
(NLRC) declared that the status quo between them should be maintained and
affirmed the Labor Arbiter’s order of reinstatement, but without backwages. The
NLRC further directed petitioner to pay de Jesus her back salaries from the date she
filed her motion for execution up to the date of the promulgation of the decision.
Petitioners filed their partial motion for reconsideration which the NLRC denied,
hence this petition.
ISSUE:
Whether or not an order for reinstatement needs a writ of execution?
HELD
No. The provision of Article 223 is clear that an award for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the
employer shall not stay the execution for reinstatement. To require the application
for and issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray and run counter to the very object and
intent of Article 223, i. e., the immediate execution of a reinstatement order. The
reason is simple. An application for a writ of execution and its issuance could be
delayed for numerous reasons. A mere continuance or postponement of a
scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or
the NLRC could easily delay the issuance of the writ thereby setting at naught the
strict mandate and noble purpose envisioned by Article 223. On appeal, however,
the appellate tribunal concerned may enjoin or suspend the reinstatement order in
the exercise of its sound discretion.
Furthermore, the rule is that all doubts in the interpretation and implementation of
labor laws should be resolved in favor of labor. In ruling that an order or award for
reinstatement does not require a writ of execution the Court is simply adhering and
giving meaning to this rule. Henceforth, we rule that an award or order for
reinstatement is self-executory. After receipt of the decision or resolution ordering
the employee's reinstatement, the employer has the right to choose whether to re-
admit the employee to work under the same terms and conditions prevailing prior
to his dismissal or to reinstate the employee in the payroll. In either instance, the
employer has to inform the employee of his choice. The notification is based on
practical considerations for without notice, the employee has no way of knowing if
he has to report for work or not.
238
Pizza Inn VS. NLRC
Doctrines
1. Closure Due to legitimate business reasons; Employee is entitled to backwages
up to the date of closure.
2. Where reinstatement becomes a legal impssobility, NLRC cannot compel the
employer to reinstate the employee. Where an employer suffered business
recession, as in the case at bar such that its commercial or financial circumstances
have changed forcing it to close one outlet or branch and subsequently all other
outlets also closed, respondent commission, assuming that petitioner was guilty of
unfair labor practice cannot compel the employer to reinstate private respondent if
such reinstatement may exceed the petitioner’s needs under the altered conditions.
3. Normally, each outlet had only a sufficient number of employees who served
pizzas. It has its own “plantilla” and by accommodating complainant, it might
prejudice and displace other employees. Reinstatement pre – supposes that the
previous position from which one had been removed still exists or that there is an
unfilled position more or less of similar nature as the one previously occupied by
the employee. Admittedly, no such position is available. Reinstatement, therefore
becomes a legal impossibility. In such case, the dismissed employee can no longer
be reinstated but shall be entitled to backwages up to the date of dissolution or
closure.
4. When an employer is guilty of unfair labor practice for having transferred its
business operations to another corporation which later changed its name, to the
prejudice of workers, reinstatement is proper.
Facts
Felicidad Fontanilla (private respondent) was employed by petitioner in its Quad
Carpark Makati outlet on a probationary status with a monthly salary of 500 pesos.
Before the expiration of the 6 – month probationary period, Fontanilla resigned.
Claiming that she was forced to resign by the petitioner, the former filed a
complaint against the latter.
Fontanilla filed her counter manifestation alleging that petitioner refused to
reinstate complainant despite several representations of private respondent to the
petitioner by the NLRC Sheriff at the latter’s outlet contending that the Quad Park
outlet wherein Fontanilla worked was merely transferred and not really contrary to
the allegations of petitioner
ISSUE: May an employer be ordered to reinstate private respondent after the
closure of its branch or outlet where private respondent was employed and to
pay private respondent backwages even after the date of closure and
continuously without limit considering that there was no way to reinstate the
workers anymore?
HELD:
No, the records show that the petitioner’s Pizza - Inn Quad Carpark outlet ceased
its business operations due to poor business sales of pizzas. The fact of closure was
properly reported to the Municipal Treasurer of Makati wherein petitioner paid the
required closure fee. Even the contract of lease with Ayala Corporation over said
premises was also terminated. Hence the closure, of the business rendered the
reinstatement of complainant to her previous position impossible. However, she
will be entitled to the payment of bakcwages up to the date of dissolution or
closure.
Claimant imputes bad faith on the part of petitioner in refusing to reinstate her in
petitioner’s other Pizza Inn outlets or branches then still existing. There is indeed
authority for the proposition that complainant be reinstated to her position, if
available. However where an employer suffered business recession, as in the case
at bar such that its commercial or financial circumstances have changed forcing it to
close one outlet or branch , respondent commission, assuming that petitioner was
guilty of unfair labor practice cannot compel the employer to reinstate private
respondent if such reinstatement may exceed the petitioner’s needs under the
altered conditions.
239
Kunting VS NLRC
Doctrines
1. The decision of the NLRC is reviewable by way of petition for certiorari under
Rule 65
2. The peculiar circumstances surrounding the dismissal of petitioner do not show
such kind of strained relationship as to warrant the severance of the working
relationship between the parties. – Indeed, an illegally dismissed employee’s right
to reinstatement is not absolute. The court has a long line of decisions concerning
non – reinstatement of illegally dismissed employees on various grounds. One of
these grounds is when there is a finding that the relationship between the parties
has become so strained and ruptured as to preclude a harmonious working
relationship. In the case at bar, however, the dismissal of petitioner do not show
such kind of strained relationship as to warrant the severance of the working
relationship between the parties.
3. Strained relations must be of such nature or degree as to preclude
reinstatement. But where the differences between the parties are neither
personal nor physical, nor serious, then there is no reason why the illegally
dismissed employee should not be reinstated rather than simply given separation
pay and backwages. More so if the cause of the perceived “strained relations” is
the filing of a complaint for illegal dismissal, the principle of strained relations
cannot be applied indiscriminately.
4. No strained relations should arise from a valid and legal act of asserting one’s
right, otherwise, an employee who shall assert his right could be easily separated
from service by merely paying his separation pay on the excuse that his
relationship with his employer had already become strained.
5. Award of backwages in case of illegal dismissal initiated before the effectivity
of RA 6715 will have to be resolved by applying the 3 – year limit – while RA 6715
grants full backwages to dismissed employees computed from the date of their
illegal dismissal up to the date of actual reinstatement, the same cannot be applied
in the case at bar.
6. The rules of evidence prevailing in courts of law and equity are not controlling
in labor proceedings.
Facts
Consuelo Kunting was employed as a teacher by respondent St. Joseph School in
Zamboanga City. She was paid a basic pay and emergency cost of living allowance
(ECOLA) except during summer period when she was paid only the basic pay.
Every year from 1969 until the school year 1987 - 1988, Kunting and St. Joseph
School executed a teacher’s contract. For the school year 1987 – 1988, her
performance rating was very satisfactory. In spite of this, St. Joseph School did not
renew her employment contract for the school year 1988 - 1989, thereby
terminating her employment with the school.
Consuelo filed a complaint against St. Joseph School, its Director Fr. Aloysious
Chang and Principal for illegal dismissal, reinstatement and backwages, wage
differentials.
ISSUE: Whether or not the NLRC gravely abused its discretion in ordering the
payment of separation pay in lieu of reinstatement notwithstanding its finding
that she had been illegally dismissed? – that as a consequence of the NLRC’s
finding of illegal dismissal, she is entitled to reinstatement with full backwages
from the time of her illegal dismissal up to the date of actual reinstatement
HELD: In the case at bar, the peculiar circumstances surrounding the dismissal of
petitioner simply do not show the kind of strained relationship as to warrant the
severance of the working relationship between the parties. There is no proof that
such conduct actually caused animosity between the parties. There is no clear
showing that the perceived “strained relations” between the parties is of so serious
nature or of such degree as to justify petitioner’s dismissal.
Whatever resentment had been harboured by petitioner upon her dismissal after
having been employed by St. Joseph School for more than 16 years is
understandable. Such resentment, however, would not suffice to deny her re –
employment because to do so would render for naught her constitutional right to
security of tenure AND HER RIGHT TO REINSTATEMENT. Petitioner is, after all, a
permanent teacher as she had rendered more than 3 years of satisfactory service.
Thus, premises considered, St. Joseph School is hereby ordered to reinstate
petitioner Kunting to her former or equivalent position without loss of seniority
rights with payment of backwages for three (3) years and 13th month pay for 1988.
240. Congson vs. NLRC
Same; Reinstatement; Separation Pay; As a permissible exception to the general
rule, separation pay may be awarded to the employee in lieu of reinstatement, by
reason of strained relationship between the employer and employee.—With
respect to the issue concerning the propriety or correctness of the grant of
separation pay to private respondents, petitioner contends that, assuming
arguendo that Labor Arbiter Aponesto’s findings were proper as to private
respondents’ illegal dismissal, his decision did not state the reason why instead of
reinstatement, separation pay has to be awarded to private respondents. Petitioner
submits that under existing laws and jurisprudence, whenever there is a finding of
illegal dismissal, the available and logical remedy is reinstatement. As a permissible
exception to the general rule, separation pay may be awarded to the employee in
lieu of reinstatement, by reason of strained relationship between the employer and
employee. Since there was no finding or even allegation of strained relationship
between petitioner and private respondents, respondent NLRC should have
deleted, according to petitioner, the award of separation pay in Labor Arbiter
Aponesto’s decision.
Facts:
Petitioner is the owner of Southern Fishing Industry who hired the private
respondents as regular piece-rate workers. The latter worked for 7 days a week.
Petitioner notified the private respondents of the proposal to reduce the rate per
tuna because of the scarcity of tuna. The private respondents resisted such
proposal and the next day, they wer informed that they had been replaced by new
workers. Private respondents filed a complaint for non-payment of monetary
benefits as well as for constructive dismissal. On the other hand, petitioner claims
that the respondents abandoned their work upon being informed of the reduced
rate and it took them a period of 1 month to return to work. The Labor Arbiter ruled
in favor of the private respondents and upheld the complaint for the constructive
dismissal. Upon appeal, NLRC ruled that there was illegal dismissal.
Issue:
Whether or not the grant of the monetary awards was proper instead of
reinstatement
Held:
Yes. The records of the case readily discloses the existence of strained
relationship between the petitioner and the private respondent. Petitioner refused
to re-admit the private respondents in the establishment and replaced them with
new workers. Petitioner also never sincerely intended to effect the actual
reinstatement of the private respondents because they prayer for his supplemental
motion for reconsideration should have contained not just the mere deletion of the
award of the separation pay but precisely the reinstatement of the private
respondent. He was only interested in the deletion of the award of separation pay
to private respondents.
Secondly, the private respondents themselves indicated their aversion to
their continued employment in the establishment. They filed a second case
specifically for separation pay which is conclusive of private respondents’ intention
to sever their working ties with the petitioner.
241. Acesite Corporation vs. NLRC
Same; Same; “Strained Relations” Doctrine; The rule that reinstatement of an
illegally dismissed employee may be excused on the ground of “strained relations”
may be invoked against employees whose positions demand trust and confidence,
such as that of a Chief of Security, or whose differences with their employer are of
such nature or degree as to preclude reinstatement.—In illegal dismissal cases,
reinstatement to an illegally dismissed employee’s former position may be excused
on the ground of “strained relations.” This may be invoked against employees
whose positions demand trust and confidence, or whose differences with their
employer are of such nature or degree as to preclude reinstatement. In the case at
bar, Gonzales was Chief of Security, whose duty was to “manage the operation of
the security areas of the hotel to provide and ensure the safety and security of the
hotel guests, visitors, management, staff and their properties according to company
policies and local laws.” It cannot be gainsaid that Gonzales’ position is one of trust
and confidence, he being in charge of the over-all security of said hotel. Thus,
reinstatement is no longer possible. In lieu thereof, Acesite is liable to pay
separation pay of 1 month for every year of service.
Facts:
Private respondent Gonzales was hired as chief of security of manila
pavilion hotel. Petitioner took over the operations of the hotel and renamed it as
holiday inn manila and retained the private respondent as chief of security of the
hotel.
Private respondent used all the leaves that he was entitled for a year.
Before the expiration of his last leave, he filed for an emergency leave which was
not approved. He was given a telegram by the management informing him of the
disapproval. Private respondent did not report for work despite several notices. The
father of the private respondent informed the management that the latter was still
recovering from severe stomach disorder and attached a medical certificate. Private
respondent reported back for work and was asked to explain his absences. Gonzales
replied that it was necessary for him to go home to his province in Abra.
Private respondent went back to abra but was notified that he needed to
report back to work. Upon returning back to work, he was barred by the guard to
enter the premises. It appeared that he was terminated through a memo for gross
disobedience or insubordination.
Private respondent filed a complaint for illegal dismissal with
reinstatement and payment of full backwages but he failed to appear in 2
consecutive hearings which resulted in the dismissal of his complaint. He re-filed
the complaint but it was also dismissed. NLRC reversed the decision of the Labor
Arbiter and granted the reinstatement and backwages as well as other monetary
awards.
Issue:
Whether or not the award of reinstatement and various monetary awards was
proper
Held:
Yes. In illegal dismissal cases, reinstatement to an illegally dismissed
employee’s former position may be excused on the ground of “strained relations.”
This may be invoked against employees whose positions demand trust and
confidence or those whose differences with their employer are of such nature or
degree as to preclude reinstatement.
In the case at bar, the position of the private respondent as chief of
security is one of trust and confidence. He being in charge of the over-all security of
the said hotel. Thus, reinstatement is no longer possible. In lieu thereof, petitioner
is liable to pay separation pay of 1 month for every year of service.
The award for moral and exemplary damages is unwarranted. Moral
damages are recoverable only where the dismissal of the employees was attended
by bad faith or fraud or constituted an act oppressive to labor or was done in a
manner contrary to morals, good customs or public policy. Exemplary damages on
the other hand may be awarded only if the dismissal was effected in a wanton,
oppressive or malevolent manner. Though these grounds have been alleged, they
were not sufficiently proven.
The award of fringe benefits or their monetary equivalent is pursuant to
Article 279 of the Labor Code. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.
242. Manila Diamond Hotel Employees’ Union vs. CA and Manila Diamond Hotel
Same; Same; Court has held that when an official by-passes the law on the asserted
ground of attaining a laudable objective, the same will not be maintained if the
intendment or purpose of the law would be defeated.—It is, therefore, evident
from the foregoing that the Secretary’s subsequent order for mere payroll
reinstatement constitutes grave abuse of discretion amounting to lack or excess of
jurisdiction. Indeed, this Court has always recognized the “great breadth of
discretion” by the Secretary once he assumes jurisdiction over a labor dispute.
However, payroll reinstatement in lieu of actual reinstatement is a departure from
the rule in these cases and there must be showing of special circumstances
rendering actual reinstatement impracticable, as in the UST case aforementioned,
or otherwise not conducive to attaining the purpose of the law in providing for
assumption of jurisdiction by the Secretary of Labor and Employment in a labor
dispute that affects the national interest. None appears to have been established in
this case. Even in the exercise of his discretion under Article 236(g), the Secretary
must always keep in mind the purpose of the law. Time and again, this Court has
held that when an official by-passes the law on the asserted ground of attaining a
laudable objective, the same will not be maintained if the in-tendment or purpose
of the law would be defeated.
Facts:
Petitioner union filed a petition for certification election which was
dismissed by the DOLE. The union sent a letter to the management, informing it of
its desire to negotiate for a CBA. The management stated that it cannot recognize it
as the bargaining agent due to the dismissal of the petition for certification election.
The union informed the management that the negotiations was merely for the
members of the union only and not for all the rank and file employees.
The union took a strike vote on the ground of refusal to bargain and ULP. It
was followed by a strike which resulted in the dismissal of several employees. The
secretary certified the dispute and issued a return to work order. The employees
reported for work but the hotel refused to accept the returning workers. Another
order was issued which stated that instead of actual return to work, the strikers
should be reinstated only in the payroll.
Issue:
Whether or not the order of reinstatement only in payroll is proper
Held:
 No, there is no showing that the facts called for payroll reinstatement as
an alternative remedy. A strained relationship between the striking employees and
management is no reason for payroll reinstatement in lieu of actual reinstatement.
As a general rule, the state encourages an environment wherein employers and
employees themselves must deal with their problems in a manner that mutually
suits them best. Hence, voluntary instead of compulsory mode of dispute
settlement is the general rule.
Article 263(g) of the Labor Code which allows the Secretary of Labor to
assume jurisdiction over a labor dispute involving an industry to the national
interest is an exercise of police power of the state. All workers must immediately
return to work and all employers must readmit all of them under the same terms
and conditions prevailing before the strike or lockout. The phrase “under the same
terms and conditions” contemplates only actual reinstatement. This law was
written as a means to be used by the State to protect itself from an emergency or
crisis. It is not for labor, nor is it for management.
The subsequent order for mere payroll reinstatement constitutes grave
abuse of discretion amounting to lack or excess of jurisdiction. Payroll
reinstatement is a departure from the rule in these cases and there must be a
showing of special circumstances rendering actual reinstatement impracticable or
otherwise not conducive to attaining the purpose of the law in providing for
assumption of jurisdiction by the secretary of labor and employment in a labor
dispute that affects national interest. When an official by-passes the law on the
asserted ground of attaining a laudable objective, the same will not be maintained
if the intendment or purpose of the law would be defeated.
243
G.R. No. 152329. April 22, 2003.*
ALEJANDRO ROQUERO, petitioner, vs. PHILIPPINE AIRLINES, INC., respondent.
DOCTRINES:
-The order of reinstatement is immediately executory
-Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal.
FACTS
Roquero a ground equipment mechanics of PAL was caught red-handed using shabu
along with his co-employee, Pabayo. The two alleged that they did not voluntarily
indulge in the said act but were instigated by a certain Jojie Alipato. Inside the
company premises they locked the door and Alipato lost no time in preparing the
drugs to be used. When they started the procedure of taking the drugs, armed men
arrested Roquero and Pabayo, they were subjected to physical examination where
the results showed that they were positive of drugs. They were brought to the
security office of PAL where they executed written confessions without the benefit
of a counsel.
Roquero and Pabayo received a “notice of administrative charge”for violating the
PAL Code of Discipline. They were required to answer the charges and were placed
under preventive suspension. Roquero and Pabayo, in their “reply to notice of
administrative charge,” assailed their arrest and asserted that they were instigated
by PAL to take the drugs. They based their argument on the fact that Alipato was
not arrested. Moreover, Alipato has no record of employment with PAL.
Both were dismissed by PAL and filed a case for illegal dismissal.
LA: upheld the dismissal of Roquero and Pabayo. awarded separation pay and
attorney’s fees to the complainants.
NLRC: favored Roquero and Pabayo as it found PAL guilty of instigation. However It
ordered reinstatement to their former positions but without backwages.
Complainants did not appeal from the decision but filed a motion for a writ of
execution of the order of reinstatement. The Labor Arbiter granted the motion but
PAL refused to execute the said order on the ground that they have filed a Petition
for Review before the Supreme Court. In accordance with the case of St. Martin
Funeral Home vs. NLRC and Bienvenido Aricayos, PAL’s petition was referred to the
Court of Appeals.
(di na kasama sa case na ito si Pabayo kase during the pendecy ng appeal sa CA, nag
Compromise Agreement na sila ni PAL)
CA: reversed the Decision of NLRC. Affirmed LA, however, it denied the award of
separation pay and attorney’s fees to Roquero on the ground that one who has
been validly dismissed is not entitled to those benefits. Motion for Recon denied.
Hence, this case.
ISSUE: WON the employer who refused to reinstate an employee despite a writ duly
issued be held liable to pay the salary of the subject employee from the time that
he was ordered reinstated up to the time that the reversed decision was handed
down?
HELD
Yes. Article 223 (3rd paragraph) of the Labor Code, as amended by Section 12 of
Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under
RA No. 6715, Amending the Labor Code, provide that an order of reinstatement by
the Labor Arbiter is immediately executory even pending appeal. Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the
order of reinstatement. In the case at bar, no restraining order was granted. Thus, it
was mandatory on PAL to actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he
was reinstated, from the time of the decision of the NLRC until the finality of the
decision of this Court.
We reiterate the rule that technicalities have no room in labor cases where the
Rules of Court are applied only in a suppletory manner and only to effectuate the
objectives of the Labor Code and not to defeat them. Hence, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement
order is reversed with finality, the employee is not required to reimburse whatever
salary he received for he is entitled to such, more so if he actually rendered services
during the period.
Dismissal of petitioner Roquero is AFFIRMED, but respondent PAL is ordered to pay
the wages to which Roquero is entitled from the time the reinstatement order was
issued until the finality of this decision.
Note:
Serious misconduct is defined as “the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment.” For serious misconduct to
warrant the dismissal of an employee, it (1) must be serious; (2) must relate to the
performance of the employee’s duty; and (3) must show that the employee has
become unfit to continue working for the employer
244
G.R. Nos. 142732-33. December 4, 2007.*
MARILOU S. GENUINO, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA,
respondents.
G.R. Nos. 142753-54. December 4, 2007.*
CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and MARILOU GENUINO,
respondents
DOCTRINE: Where the decision of the labor arbiter is for the reinstatement of the
employee, the employee shall either be admitted back to work or, at the option of
the employer, merely reinstated in the payroll, and if the decision of the labor
arbiter is later reversed on appeal upon the finding that the ground for dismissal is
valid, then the employer has the right to require the dismissed employee on payroll
reinstatement to refund the salaries s/he received while the case was pending
appeal, or it can be deducted from the accrued benefits that the dismissed
employee may be entitled to receive from his/her employer under existing laws,
collective bargaining agreement provisions, and company practices
FACTS
Genuino was employed by Citibank as Treasury Sales Division Head. Citibank sent
Genuino a letter charging her with “knowledge and/or involvement” in transactions
“which were irregular or even fraudulent (used “facilities of Genuino’s family
corporation, namely, Global Pacific, personally and actively participated in the
diversion of bank clients’ funds to products of other companies that yielded
interests higher than what Citibank products offered and that Genuino and Santos
realized substantial financial gains, all in violation of existing company policy and
the Corporation Code).” In the same letter, Genuino was informed she was under
preventive suspension.
Genuino was directed to explain in writing three (3) days from receipt of the letter,
as to why ]her employment should not be terminated in view of her involvement in
the irregular transactions. At the same time, Genuino was also directed to appear in
an administrative investigation of the matter. However, Genuino did not appear in
the administrative investigation.
Citibank informed Genuino of the result of their investigation. Genuino’s
employment was terminated by Citibank on grounds of (1) serious misconduct, (2)
willful breach of the trust reposed upon her by the bank, and (3) commission of a
crime against the bank.
Genuino filed before the LA a complaint against Citibank for illegal suspension and
illegal dismissal.
LA: dismissal was sithout just cause and violative of the right to due process.
Ordered reinstatement of the complainant immediately to her former position as
Treasury Sales Division Head or its equivalent without loss of seniority rights and
other benefits, with backwages subject to adjustment until reinstated actually or in
the payroll.
(appeal) NLRC: reversed LA’s decision. Declared the dismissal valid and legal on the
ground of serious misconduct and breach of trust. Ordered the payment of salaries
due to genuine from the date reinstated up to and until the date of the decision.
Motions for recon were filed but was subsequently denied by the NLRC
CA: ordered Citibank to pay Genuino indemnity for non-observance of due process.
ISSUE
WON Genuino shall be reinstated by Citibank and must be paid the salaries due to
the complainant from the date it reinstated complainant in the payroll.
HELD: NO
Considering that Genuino was not reinstated to work or placed on payroll
reinstatement, and her dismissal is based on a just cause, then she is not entitled to
be paid the salaries. “WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE
the appealed decision of the Labor Arbiter; (2) DECLARING the dismissal of the
complainant valid and legal on the ground of serious misconduct and breach of
trust and confidence and consequently DISMISSING the complaint a quo; but (3)
ORDERING the respondent bank to pay the complainant nominal damages in the
amount of PhP 30,000.”
245
G.R. No. 164856. August 29, 2007.*
JUANITO A. GARCIA and ALBERTO J. DUMAGO, petitioners, vs. PHILIPPINE
AIRLINES, INC., respondent
-Upon appointment by the Securities and Exchange Commission (SEC) of a
rehabilitation receiver, all actions for claims against the corporation pending before
any court, tribunal or board shall ipso jure be suspended—the suspension of all
actions for claims against the corporation embraces all phases of the suit, be it
before the trial court or any tribunal or before the Supreme Court
-The actions that are suspended cover all claims against the corporation whether
for damages founded on a breach of contract of carriage, labor cases, collection
suits or any other claims of a pecuniary nature. No exception in favor of labor claims
is mentioned in the law.
FACTS
Petitioners Dumago and Garcia were employed by PAL as Aircraft Furnishers Master
“C” and Aircraft Inspector, respectively. They were assigned in the PAL Technical
Center.
They were raided by the combined team of PAL Security and NBI of PAL technical
center. They were allegedly caught in the act of sniffing shabu inside the Toolroom
section. A notice of administrative charge was served to petitioners then placed
under preventive suspension and required to submit their written explanation
within ten days from receipt of the notice.
Petitioners vehemently denied the allegations and challenged PAL to show proof
that they were indeed “caught in the act of sniffing shabu.” petitioners were
dismissed for violation of Chapter II, Section 6, Article 46 (Violation of Law/
Government Regulations) and Chapter II, Section 6, Article 48 (Prohibited Drugs) of
the PAL Code of Discipline. Both simultaneously filed a case for illegal dismissal and
damages.
LA: rendered a decision in petitioners’ favor finding the respondents guilty of illegal
suspension and illegal dismissal and ordering them to reinstate complainants to
their former position without loss of seniority rights and other privileges.
Respondents are hereby further ordered to pay jointly and severally unto the
complainants the following:
Alberto J. Dumago
— P409,500.00 backwages as of 1/10/99 34,125.00 for 13th month pay
Juanito A. Garcia
— P1,290,744.00 backwages as of 1/10/99 107,562.00 for 13th month pay
The amounts of P100,000.00 and P50,000.00 to each complainant as and by way of
moral and exemplary damages; and The sum equivalent to ten percent (10%) of the
total award as and for attorneys fees.
Respondents are directed to immediately comply with the reinstatement aspect of
this Decision. However, in the event that reinstatement is no longer feasible,
respondent[s] are hereby ordered, in lieu thereof, to pay unto the complainants
their separation pay computed at one month for [e]very year of service.
NLRC: NLRC reversed the Labor Arbiter’s decision and dismissed the case for lack of
merit. Reconsideration having been denied, an Entry of Judgment was issued on
July 13, 2000.
October 5, 2000, the Labor Arbiter issued a Writ of Execution commanding the
reinstatement of the complainants to their former position and to cause the
collection of backwages of said complainants on the reinstatement aspect. PAL filed
an Urgent Motion to Quash Writ of Execution, however, the Labor Arbiter issued a
Notice of Garnishment.
PAL moved to lift the Notice of Garnishment while petitioners moved for the
release of the garnished amount. PAL opposed petitioners’ motion. It also filed an
Urgent Petition for Injunction which the NLRC.
PAL Appealed to CA there was no longer any legal or factual basis to reinstate
petitioners as a result of the reversal by the NLRC of the Labor Arbiter’s decision.
The appellate court ruled that the Labor Arbiter issued the writ of execution and the
notice of garnishment without jurisdiction. Hence, the NLRC erred in upholding its
validity. Since PAL was under receivership, it could not have possibly reinstated
petitioners due to retrenchment and cash-flow constraints. The appellate court
declared that a stay of execution may be warranted by the fact that PAL was under
rehabilitation receivership.
ISSUE: In the light of new developments concerning PAL’s rehabilitation, are
petitioners entitled to execution of the Labor Arbiter’s order of reinstatement even
if PAL is under receivership
HELD
Worth stressing, upon appointment by the SEC of a rehabilitation receiver, all
actions for claims against the corporation pending before any court, tribunal or
board shall ipso jure be suspended. The purpose of the automatic stay of all
pending actions for claims is to enable the rehabilitation receiver to effectively
exercise its/his powers free from any judicial or extra-judicial interference that
might unduly hinder or prevent the rescue of the corporation.
More importantly, the suspension of all actions for claims against the corporation
embraces all phases of the suit, be it before the trial court or any tribunal or before
this Court. No other action may be taken, including the rendition of judgment
during the state of suspension. It must be stressed that what are automatically
stayed or suspended are the proceedings of a suit and not just the payment of
claims during the execution stage after the case had become final and executory.
Furthermore, the actions that are suspended cover all claims against the
corporation whether for damages founded on a breach of contract of carriage,
labor cases, collection suits or any other claims of a pecuniary nature. No exception
in favor of labor claims is mentioned in the law. This Court’s adherence to the
above-stated rule has been resolute and steadfast as evidenced by its oft-repeated
application in a plethora of cases involving PAL, the most recent of which is
Philippine Airlines, Inc. v. Zamora.
Since petitioners’ claim against PAL is a money claim for their wages during the
pendency of PAL’s appeal to the NLRC, the same should have been suspended
pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the
Court of Appeals should haveabstained from resolving petitioners’ case for illegal
dismissal and should instead have directed them to lodge their claim before PAL’s
receiver. However, to still require petitioners at this time to re-file their labor claim
against PAL under the peculiar circumstances of the case—that their dismissal was
eventually held valid with only the matter of reinstatement pending appeal being
the issue—this Court deems it legally expedient to suspend the proceedings in this
case.
Notes.—The power to hear and decide labor disputes is deemed suspended when
the Securities and Exchange Commission puts the corporation under rehabilitation.
(Rubberworld [Phils.], Inc. vs. National Labor Relations Commission, 336 SCRA 433
[2000]) It is crystal clear that the concept of liquidation is diametrically opposed or
contrary to the concept of rehabilitation, such that both cannot be undertaken at
the same time. (Philippine Veterans Bank Employees Union-N.U.B.E. vs. Vega, 360
SCRA 33 [2001])
*sorry di ko to maintindihan ☹
246) Primero v. IAC
Doctrines:
Labor; Illegal Dismissal; Complaints for illegal dismissal and
recovery of backwages; Legislative intent to allow recovery in
proceedings before Labor Arbiters of moral and other forms of
damages in all cases arising from employer-employee relations;
Question of Labor Arbiter's jurisdiction to award reliefs under the
labor laws based on the Labor Code and moral damages under the
Civil Code.— The legislative intent appears clear to allow recovery in
proceedings before Labor Arbiters of moral and other forms of
damages, in all cases or matters arising from employer-employee
relations. This would no doubt include, particularly, instances where
an employee has been unlawfully dismissed. In such a case the Labor
Arbiter has jurisdiction to award to the dismissed employee not only
the reliefs specifically provided by labor laws, but also moral and
other forms of damages governed by the Civil Code.Moral damages
would be recoverable, for example, where the dismissal of the
employee was not only effected without authorized cause and/or due
process—for which relief is granted by the Labor Code—but was
attended by bad faith or fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs or
public policy—for which the obtainable relief is determined by the
Civil Code (not the Labor Code). Stated otherwise, if the evidence
adduced by the employee before the Labor Arbiter should establish
that the employer did indeed terminate the employee's services without
just cause or without according him due process, the Labor Arbiter's
judgment shall be for the employer to reinstate the employee and pay
him his back wages or, exceptionally, for the employee simply to
receive separation pay. These are reliefs explicitly prescribed by the
Labor Code. But any award of moral damages by the Labor Arbiter
obviously cannot be based on the Labor Code but should be grounded
on the Civil Code.Such an award cannot be justified solely upon the
premise (otherwise sufficient for redress under the
Labor Code) that the employer fired his employee without just cause
or due process. Additional facts must be pleaded and proven to warrant
the grant of moral damages under the Civil Code, these being, to
repeat, that the act of dismissal was attended by bad faith or fraud, or
was oppressive to labor, or done in a manner con-trary to morals, good
customs, or public policy; and, of course, that social humiliation,
wounded feelings, grave anxiety, etc., resulted therefrom.
Same; Same; Same; Question of legality of the act of dismissal of an
employee intimately related to the issue of the legality of the manner
by which the act of dismissal was performed; Issue of whether moral
or other damages were suffered by an employee and the amount to be
properly awarded to him is determined under the provisions of the
Civil Code and not the Labor Code, not intended to create a cause of
action independent from illegal dismissal and place it beyond the
Labor Arbiter's jurisdiction
Facts:
Petitioner Primero was discharged from his employment as bus
driver of DM Transit Corporation (hereafter, simply DM) in August,
1974 after having been employed therein for over 6 years.
Primero instituted proceedings against DM with the Labor
Arbiters of the Department of Labor, for illegal dismissal, and for
recovery of back wages and reinstatement. It is not clear from the
record whether these proceedings consisted of one or two actions
separately filed. What is certain is that he withdrew his claims for back
wages and reinstatement.
 In any case, after due investigation, the Labor Arbiter rendered
judgment dated January 24, 1977 ordering DM to pay complainant
Primero P2,000.00 as separation pay in accordance with the
Termination Pay Law. The judgment was affirmed by the National
Labor Relations Commission and later by the Secretary of Labor.
And we have since held that under these "broad and
comprehensive" terms of the law, Labor Arbiters possessed original
jurisdiction over claims for moral and other forms of damages in labor
disputes. The jurisdiction of Labor Arbiters over such claims was
however removed by PD 1367, effective May 1, 1978, which
explicitly provided that "Regional Directors shall not indorse and
Labor Arbiters shall not entertain claims for moral or other forms of
damages. "
Some three months afterwards, Primero brought suit against
DM in the Court of First Instance of Rizal seeking recovery of
damages caused not only by the breach of his employment contract,
but also by the oppressive and inhuman, and consequently tortious,
acts of his employer and its officers antecedent and subsequent to his
dismissal from employment without just cause.
Issue: Whether or not, having recovered separation pay by judgment
of the Labor Arbiter—which held that he had been fired by respondent
DM Transit Corporation without just cause—he may subsequently
recover moral damages by action in a regular court, upon the theory
that the manner of his dismissal from employment was tortious and
therefore his cause of action was intrinsically civil in nature
Held:
No. An employee who has been illegally dismissed (i.e.,
discharged without just cause or being accorded due process), in such
a manner as to cause him to suffer moral damages (as determined by
the Civil Code), has a cause of action for reinstatement and recovery
of back wages and damages. When he institutes proceedings before the
Labor Arbiter, he should make a claim for all said reliefs. He cannot,
to be sure, be permitted to prosecute his claims piecemeal. He cannot
institute proceedings separately and contemporaneously in a court of
justice upon the same cause of action or a part thereof. He cannot and
should not be allowed to sue in two forums: one, before the Labor
Arbiter for reinstatement and recovery of back wages, or for separation
pay, upon the theory that his dismissal was illegal: and two, before a
court of justice for recovery of moral and other damages, upon the
theory that the manner of his dismissal was unduly injurious, or
tortious. This is what in procedural law is known as splitting causes of
action, engendering multiplicity of actions. It is against such mischief s
that the Labor Code amendments just discussed are evidently directed,
and it is such duplicity which the Rules of Court regard as ground for
abatement or dismissal of actions, constituting either litis pendentia
(auter action pendant) or res adjudicata, as the case may be. But this
was precisely what Primero's counsel did. He split Primero's cause of
action; and he made one of the split parts the subject of a cause of
action before a court of justice. Consequently, the judgment of the
Labor Arbiter granting Primero separation pay operated as a bar to his
subsequent action for the recovery of damages before the Court of
First Instance under the doctrine of res judicata. The rule is that the
prior "judgment or order is, with respect to the matter directly
adjudged of as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in
interest by title subsequent to the commencement of the action or
special proceeding, litigating for the same thing and under the same
title and in the same capacity.
247) Maglutac v. NLRC
Doctrines:
Labor Relations; Illegal Dismissal; Damages; In addition to the reliefs
granted under the Labor Code, moral and other forms of damages
under the Civil Code, may be awarded to an illegally dismissed
employee.—In the case of Primero v. Intermediate Appellate Court,
G.R. No. 72644, December 14, 1987, 156 SCRA 435, We held that in
cases of illegal dismissal, in addition to the reliefs granted under the
Labor Code, other forms of damages under the Civil Code may be
granted. Thus, “The legislative intent appears clear to allow recovery
in proceedings before Labor Arbiters of moral and other forms of
damages, in all cases or matters arising from employer-employee
relations. This would no doubt include, particularly, instances where
an employee has been unlawfully dismissed. In such a case, the Labor
Arbiter has jurisdiction to award to the dismissed employee not only
the reliefs specifically provided by labor laws, but also moral and other
forms of damages governed by the Civil Code. Moral damages would
be recoverable, for example, where the dismissal of the employee was
not only effected without authorized cause and/or due process—for
which relief is granted by the Labor Code—but was attended by bad
faith or fraud, or constituted an act oppressive to labor, or was done
in a manner contrary to morals, good customs or public policy—for
which the obtainable relief is determined by the Civil Code (not the
Labor Code). Stated otherwise, if the evidence adduced by the
employee before the Labor Arbiter should establish that the employer
did indeed terminate the employee’s services without just cause or
without according him due process, the Labor Arbiter’s judgment shall
be for the employer to reinstate the employee and pay him his
backwages or, exceptionally, for the employee simply to receive
separation pay. These are reliefs explicitly prescribed by the Labor
Code. But any award of moral damages by the Labor Arbiter
obviously cannot be based on the Labor Code but should be grounded
on the Civil Code.”
Same; Same; Same; Same; Exemplary Damages; Exemplary dam-ages
may be awarded to an employee who had been illegally dismissed in a
wanton, oppressive and malevolent manner.
Facts:
Jose M. Maglutac, (complainant) was employed by Commart
(Phils.), Inc. (Commart) sometime in February, 1980 and rose to
become the Manager of its Energy Equipment Sales. On October 3,
1984, he received a notice of termination signed by Joaquin S. Cenzon,
Vice-President-General Manager and Corporate Secretary of CMS
International, a corporation controlled by Commart.
Thereafter, Jose Maglutac filed a complaint for illegal
dismissal against Commart and Jesus T. Maglutac, President and
Chairman of the Board of Directors of Commart. The complainant
alleged that his dismissal was part of a vendetta drive against his
parents who dared to expose the massive and fraudulent diversion of
company funds to the company president's private accounts, stressing
that complainant's efficiency and effectiveness were never put to
question when very suddenly he received his notice of termination.
Commart and Jesus T. Maglutac, on the other hand, justified
the dismissal for lack of trust and confidence brought about by
complainant and his family's establishment of a company, MM
International, in direct competition with Commart. After the parties
submitted their respective position papers, the Labor Arbiter assigned
to the case, Jose Collado, Jr., rendered a decision on January 11, 1986
finding that complainant was illegally dismissed.
Issue: Whether or not Maglutac is entitled to moral and exemplary
damages under the Civil Code
Held:
Yes. From the findings of the Labor Arbiter as affirmed by the
NLRC, there is sufficient basis for an award of moral and exemplary
damages in the instant case. The alleged loss of trust and confidence
on complainant because of his family’s establishment of MM
International, a company allegedly in direct competition with
Commart, was belied by the findings of the Labor Arbiter.
Moreover, the complainant was dismissed without due process.
His dismissal was made effective immediately and he was not given an
opportunity to present his side.
 Where the employee’s dismissal was effected without
procedural fairness, an award of exemplary damages in her favor can
only be justified if her dismissal was affected in a wanton, oppressive
or malevolent manner. The Labor Arbiter justified the award of moral
damages from its finding of the oppressive and malevolent manner the
complainant and his relatives were treated after Jesus T. Maglutac
found out that a derivative suit was filed by complainant’s family with
the Securities and Exchange Commission accusing him and his wife of
diverting corporation assets to their personal accounts.
However, the Court agrees however, with the contention of the
Solicitor General that the award by the Labor Arbiter of P200,000.00
moral damages and P20,000.00 exemplary damages is excessive, In
the exercise of our discretion, We reduce the award of damages to
P40,000.00 as moral damages and P10,000.00 as exemplary damages.
248) Taganas v. NLRC
Doctrines:
Attorneys; Legal Ethics; Attorney’s Fees; Contingent Fees; Words and
Phrases; Contingent Fee Arrangement, Defined; A contract for a
contingent fee is always subject to the supervision of a court as to its
reasonableness.—A contingent fee arrangement is an agreement laid
down in an express contract between a lawyer and a client in which the
lawyer’s professional fee, usually a fixed percentage of what may be
recovered in the action, is made to depend upon the success of the
litigation. This arrangement is valid in this jurisdiction. It is, however,
under the supervision and scrutiny of the court to protect clients from
unjust charges. Section 13 of the Canons of Professional Ethics states
that “[a] contract for a contingent fee, where sanctioned by law, should
be reasonable under all the circumstances of the case including the risk
and uncertainty of the compensation, but should always be subject to
the supervision of a court, as to its reasonableness.”
Same; Same; Same; Same; The reduction of unreasonable attorney’s
fees is within the regulatory powers of the courts.—When it comes,
therefore, to the validity of contingent fees, in large measure it
depends on the reasonableness of the stipulated fees under the
circumstances of each case. The reduction of unreasonable attorney’s
fees is within the regulatory powers of the courts.
Same; Same; Same; Same; Labor Law; Fifty percent of the judgment
award in a labor case as attorney’s fees is excessive and
unreasonable.—We agree with the NLRC’s assessment that fifty
percent of the judgment award as attorney’s fees is excessive and
unreasonable. The financial capacity and economic status of the client
have to be taken into account in fixing the reasonableness of the fee.
Noting that petitioner’s clients were lowly janitors who receive
miniscule salaries and that they were precisely represented by
petitioner in the labor dispute for reinstatement and claim for
backwages, wage differentials, emergency cost of living allowance,
thirteenth-month pay and attorney’s fees to acquire what they have not
been receiving under the law and to alleviate their living condition, the
reduction of petitioner’s contingent fee is proper. Labor cases, it
should be stressed, call for compassionate justice.
Facts:
Petitioner Atty. Wilfredo E. Taganas represented herein private
respondents in a labor suit for illegal dismissal, underpayment and
non-payment of wages, thirteenth-month pay, attorney’s fees and
damages conditioned upon a contingent fee arrangement granting the
equivalent of fifty percent of the judgment award plus three hundred
pesos appearance fee per hearing. The Labor Arbiter ruled in favor of
private respondents and ordered Ultra Clean Services (Ultra) and the
Philippine Tuberculosis Society, Inc., (PTSI) respondents therein,
jointly and severally to reinstate herein private respondents with full
backwages, to pay wage differentials, emergency cost of living
allowance, thirteenth-month pay and attorney’s fees, but disallowed
the claim for damages for lack of basis. This decision was appealed by
Ultra and PTSI to the National Labor Relations Commission (NLRC),
and subsequently by PTSI to the Court but to no avail. During the
execution stage of the decision, petitioner moved to enforce his
attorney’s charging lien. Private respondents, aggrieved for receiving a
reduced award due to the attorney’s charging lien, contested the
validity of the contingent fee arrangement they have with petitioner,
albeit four of the fourteen private respondents have expressed their
conformity thereto.

Issue: Whether or not the reduction of petitioner’s contingent fee from
fifty percent to ten percent is warranted
Held:
Yes. The Court agrees with the NLRC’s assessment that fifty
percent of the judgment award as attorney’s fees is excessive and
unreasonable. The financial capacity and economic status of the client
have to be taken into account in fixing the reasonableness of the fee.
Noting that petitioner’s clients were lowly janitors who receive
miniscule salaries and that they were precisely represented by
petitioner in the labor dispute for reinstatement and claim for
backwages, wage differentials, emergency cost of living allowance,
thirteenth-month pay and attorney’s fees to acquire what they have not
been receiving under the law and to alleviate their living condition, the
reduction of petitioner’s contingent fee is proper. Labor cases, it
should be stressed, call for compassionate justice.
Furthermore, petitioner’s contingent fee falls within the
purview of Article 111 of the Labor Code. This article fixes the limit
on the amount of attorney’s fees which a lawyer, like petitioner, may
recover in any judicial or administrative proceedings since the labor
suit where he represented private respondents asked for the claim and
recovery of wages. In fact, We are not even precluded from fixing a
lower amount than the ten percent ceiling prescribed by the article
when circumstances warrant it. Nonetheless, considering the
circumstances and the able handling of the case, petitioner’s fee need
not be further reduced.
249
G.R. No. 79907 March 16, 1989
Lim vs NLRC
Facts:
These two cases have been consolidated because they relate to the same factual
antecedents and the same private respondent. The issues are:
1. In G.R. No. 79975, whether or not the private respondent was
an employee of the petitioner and, if so, had been illegally
dismissed; and corollarily, whether or not the NLRC had
jurisdiction over their dispute.
2. In G.R. No. 79907, whether or not the petitioner could be held
solidarity liable with Sweet Lines, Inc. to the private respondent.
Private respondent Victoria Calsado was hired by Sweet Lines, Inc. on March 5,
1981, as Senior Branch Officer of its International Accounts Department for a fixed
salary and a stipulated 5 % commission on sales production. On December 1, 1983,
after tendering her resignation to accept another offer of employment, she was
persuaded to remain with an offer of her promotion to Manager of the Department
with corresponding increase in compensation, which she accepted. She was also
allowed to buy a second-hand Colt Lancer pursuant to a liberal car plan under which
one-half of the cost was to be paid by the company and the other half was to be
deducted from her salary. Relations began to sour later, however, when she
repeatedly asked for payment of her commissions, which had accumulated and
were long overdue. She also complained of the inordinate demands on her time
even when she was sick and in the hospital. Finally, on July 16, 1985, she was served
with a letter from Samuel Casas Lim, the other petitioner, informing her that her
"employment with Sweet Lines" would terminate on August 5, 1985. Efforts were
also taken by Sweet Lines to forcibly take the car from her, culminating in an action
for replevin against her in the regional trial court of Manila.
On August 14, 1985, Calsado filed a complaint against both petitioners for illegal
dismissal, illegal deduction, and unpaid wages and commissions plus moral and
exemplary damages, among other claims
The respondents' defenses were based mainly on the claim that Calsado was not an
employee of Sweet Lines but an independent contractor.
On December 29, 1986, decision was rendered against the two petitioners by the
Labor Arbiter. The decision was appealed to the National Labor Relations
Commission and affirmed in toto except as to the attorney's fees.
Issue:
Whether or not the employees are entitled to Separation pay.
Held:
Separation pay is granted where reinstatement is no longer advisable because of
strained relations between the employee and the employer. Back wages represent
compensation that should have been earned but were not collected because of the
unjust dismissal. The bases for computing the two are different, the first being
usually the length of the employee's service and the second the actual period when
he was unlawfully prevented from working.
We have ordered the payment of both in proper case 14 as otherwise the employee
might be deprived of benefits justly due him. Thus, if an employee who has worked
only one year is sustained by the labor court after three years from his unjust
dismissal, granting him separation pay only would entitle him to only one month
salary. There is no reason why he should not also be paid three years back wages
corresponding to the period when he could not return to his work or could not find
employment elsewhere.
250
G.R. No. 83234 April 18, 1989
Osias Academy vs DOLE
Facts:
The award by the respondent Minister of Labor 1 of separation pay, on grounds of
equity, to two employees 2 of petitioner Osias Academy despite the avowedly
correct grant of clearance to it to terminate the services of said employees on the
ground of loss of confidence based on a satisfactory showing of embezzlement of
company funds, serious misconduct, etc., is challenged in the special civil action
of certiorari at bar.
Issue:
Whether or not the terminated should be entitled to separation pay
Held:
We hold that henceforth separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character. Where
the reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker,
the employer may not be required to give the dismissed employee separation pay,
or financial assistance, or whatever other name it is called, on the ground of social
justice.
A contrary rule would, as the petitioner correctly argues, have the effect of
rewarding rather than punishing the erring employee for his offense. And we do not
agree that the punishment is his dismissal only and that the separation pay has
nothing to do with the wrong he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted separation pay even as he is
validly dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a little leniency if he is again found
out. This kind of misplaced compassion is not going to do labor in general any good
as it will encourage the infiltration of its ranks by those who do not deserve the
protection and concern of the Constitution.
It is evident that the grant of separation pay to the private respondents is
unjustified, they having been dismissed for causes reflecting on their moral
character.
251
GR No. 146629 October 04, 2004
Gustilo vs Wyeth Philippines
Facts:
On November 7, 1990, Alan D. Gustilo, Petitioner, was employed by Wyeth
Philippines, Inc., respondent company, as a pharmaceutical territory manager.
Petitioner performed various functions, such as visiting hospitals, pharmacies,
drugstores and physicians concerned; preparing and submitting his pre-dated
itinerary; and submitting periodic reports of his daily call visits, monthly itinerary,
and weekly locator and incurred expenses.
Petitioner's employment records show that respondent company, on various dates,
reprimanded and suspended him for habitually neglecting to submit his periodic
reports
Respondent company, after integrating its pharmaceutical products with Lederle, a
sister company, conducted a nationwide on-the-job training of sales personnel.
With this development, petitioner was assigned in charge of promoting four
(4) Lederle pharmaceutical products.
Subsequently, petitioner submitted to respondent company a plan of action dated
February 6, 1996 where he committed to make an average of 18 daily calls to
physicians; submit promptly all periodic reports; and ensure 95% territory program
performance for every cycle.
However, petitioner failed to achieve the above objectives, prompting respondent
company to send him two (2) separate notices dated February 20, 1996 and April
10, 1996, charging him with willful violation of company rules and regulations and
directing him to submit a written explanation.
In his explanation, petitioner stated that he was overworked and an object of
reprisal by his immediate supervisor.
On May 22, 1996, upon recommendation of a Review Panel, respondent company
terminated the services of petitioner
Aggrieved, petitioner, on June 21, 1996, filed with the Regional Arbitration Branch
No. VI at Bacolod City a complaint against respondent company for illegal
suspension, illegal dismissal and payment of allowances, other monetary benefits,
damages and attorney's fees
On appael, the Appellate Court reersed the NLRC's Decision and dismissing
petitioner's complaint for illegal dismissal, but awarding him separation pay
considering the mitigating "factors" of length of service, the loyalty awards he
received, and respondent Verzano's "grudge" against him.
Issue:
Whether or not the petitioner is entitled to separation pay?
Held:
The rule embodied in the Omnibus Rules Implementing the Labor Code is that a
person dismissed for cause as defined therein is not entitled to separation
pay.7 However, in PLDT v. NLRC and Abucay,8 we held:
henceforth, separation pay shall be allowed as a measure of
social justice only in those instances where the employee is
validly dismissed for causes other than serious misconduct or
those reflecting on his moral character. Where the reason for the
valid dismissal is, x x x an offense involving moral turpitude x x x,
the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever
other name it is called, on the ground of social justice."
In the case at bar, we find no exceptional circumstances to warrant the grant of
financial assistance or separation pay to petitioner. It bears stressing that petitioner
did not only violate company disciplinary rules and regulations. As found by the
Court of Appeals, he falsified his employment application form. Also, he was
suspended for falsifying a gasoline receipt. He was warned for submitting a false
report of his trade outlet calls. He was found guilty of unauthorized availment of
sick, vacation and emergency leaves. These infractions manifest his slack of moral
principle. In simple term, he is dishonest.
In sum, we find that petitioner was legally dismissed from employment and is,
therefore, not entitled to reinstatement or an award of separation pay or other
benefits. Unfortunately, respondent company did not interpose an appeal to this
Court. Hence, no affirmative relief can be extended to it. A party in a case who did
not appeal is not entitled to any affirmative relief.11Thus, respondent company has
to comply with the Appellate Court's mandate to grant petitioner his separation
pay.
252
GR No. 146629 October 04, 2004
DBP vs NLRC
Facts:
On 21 March 1977 private respondent Leonor A. Ang started employment as
Executive Secretary with Tropical Philippines Wood Industries, Inc. (TPWII), a
corporation engaged in the manufacture and sale of veneer, plywood and sawdust
panel boards. In 1982 she was promoted to the position of Personnel Officer.
In September 1983 petitioner Development Bank of the Philippines, as mortgagee
of TPWII, foreclosed its plant facilities and equipment. Nevertheless TPWII
continued its business operations interrupted only by brief shutdowns for the
purpose of servicing its plant facilities and equipment. In January 1986 petitioner
took possession of the foreclosed properties. From then on the company ceased its
operations. As a consequence private respondent was on 15 April 1986 verbally
terminated from the service.
On 14 December 1987 aggrieved by the termination of her employment, private
respondent filed with the Labor Arbiter.
Issue:
Whether or not the declaration of bankruptcy or judicial liquidation required before
the worker's preference may be invoked under Art. 110 of the Labor Code?
Held:
In the present case, there is as yet no declaration of bankruptcy nor judicial
liquidation of TPWII. Hence, it would be premature to enforce the worker's
preference.
Art. 110 should not be treated apart from other laws but applied in conjunction
with the pertinent provisions of the Civil Code and the Insolvency Law to the extent
that piece-meal distribution of the assets of the debtor is avoided. Art. 110, then
prevailing, provides:
Art. 110. Worker preference in case of bankruptcy. — In the event
of bankruptcy or liquidation of an employer's business, his
workers shall enjoy first preference as regards wages due them
for services rendered during the period prior to the bankruptcy or
liquidation, any provision to the contrary notwithstanding. Unpaid
wages shall be paid in full before other creditors may establish
any claim to a share in the assets of the employer.
Complementing Art. 110, Sec. 10, Rule VIII, Book III, of the Revised Rules and
Regulations Implementing the Labor Code provides:
Sec. 10. Payment of wages in case of bankruptcy. — Unpaid wages
earned by the employees before the declaration of bankruptcy or
judicial liquidation of the employer's business shall be given first
preference and shall be paid in full before other creditors may
establish any claim to a share in the assets of the employer.
We interpreted this provision in Development Bank of the Philippines v. Santos4 to
mean that —
. . . a declaration of bankruptcy or a judicial liquidation must be
present before the worker's preference may be enforced. Thus,
Article 110 of the Labor Code and its implementing rule cannot be
invoked by the respondents in this case absent a formal
declaration of bankruptcy or a liquidation order.
The rationale is that to hold Art. 110 to be applicable also to extrajudicial
proceedings would be putting the worker in a better position than the State which
could only assert its own prior preference in case of a judicial proceeding.
253. DBP v. NLRC
FACTS: The case concerns private respondent Leonor Ang, who was terminated
from her job as a personnel officer at TPWI, upon the company ceasing its
operations. The petitioner was a mortgagee of TPWII who foreclosed its plant
facilities and equipment, and later took possession of the properties of TPWII.
Private respondent then filed a case with the Labor Arbiter against TPWII, its
general manager and the petitioner.
The Labor Arbiter held that TPWII was primarily liable, the petitioner being
subsidiarily liable in case the company failed to satisfy the judgment, and the
general manager was absolved from any liability. The NLRC affirmed the decision of
the Labor Arbiter.
ISSUE: Whether the NLRC correctly applied Art. 110 of the Labor Code to the
present case, notwithstanding the absence of any formal declaration of bankruptcy
or judicial liquidation of TPWII.
HELD: The Court held that the NLRC did not correctly applied the provisions of Art.
110 of the Labor Code. Its application should not be treated apart from other laws
but, applied in conjunction with the pertinent provisions of the Civil Code and the
Insolvency Law to the extent that piece-meal distribution of the assets of the debtor
is avoided.
Article 110 of the Labor Code, as amended provides:
Art. 110. Worker preference in case of bankruptcy.—In the event of bankruptcy or
liquidation of an employer’s business, his workers shall enjoy first preference as
regards their unpaid wages and other monetary claims, any provision of law to the
contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in
full before the claims of the Government and other creditors may be paid.
The Court explained that in the present case, there is no declaration of bankruptcy
nor judicial liquidation of TPWII, thus it is premature to enforce the worker’s
preference. There must be a declaration of bankruptcy or a judicial decree of
liquidation before the worker’s preference may be enforced. It is grounded on the
rationale that to hold Art. 110 to be applicable also to extra-judicial proceedings
would be putting the worker in a better position than the state which could only
assert its own prior preference in case of a judicial proceeding.
254 MAM realty vs NLRC
Doctrine: Corporate directors and officers solidarily liable with the corporation for
the termination of employment of employees done with malice or in bad fait
Facts:
The case originated from a complaint filed with the Labor Arbiter by private
respondent Celso B. Balbastro against herein petitioners, MAM Realty Development
Corporation ("MAM") and its Vice President Manuel P. Centeno, for wage
differentials, "ECOLA," overtime pay, incentive leave pay, 13th month pay (for the
years 1988 and 1989), holiday pay and rest day pay. Balbastro alleged that he was
employed by MAM as a pump operator in 1982 and had since performed such work
at its Rancho Estate, Marikina, Metro Manila. He earned a basic monthly salary of
P1,590.00 for seven days of work a week that started from 6:00 a.m. to up until
6:00 p.m. daily.
MAM countered that Balbastro had previously been employed by Francisco Cacho
and Co., Inc., the developer of Rancho Estates. Sometime in May 1982, his services
were contracted by MAM for the operation of the Rancho Estates' water pump. He
was engaged, however, not as an employee, but as a service contractor, at an
agreed fee of P1,590.00 a month. Similar arrangements were likewise entered into
by MAM with one Rodolfo Mercado and with a security guard of Rancho Estates III
Homeowners' Association. Under the agreement, Balbastro was merely made to
open and close on a daily basis the water supply system of the different phases of
the subdivision in accordance with its water rationing scheme. He worked for only a
maximum period of three hours a day, and he made use of his free time by offering
plumbing services to the residents of the subdivision. He was not at all subject to
the control or supervision of MAM for, in fact, his work could so also be done either
by Mercado or by the security guard. On 23 May 1990, prior to the filing of the
complaint, MAM executed a Deed of Transfer, 1 effective 01 July 1990, in favor of
the Rancho Estates Phase III Homeowners Association, Inc., conveying to the latter
all its rights and interests over the water system in the subdivision.
Issue:
Whether to hold a director or officer of a corporation solidarily obligated with the
latter for a corporate liability.
Ruling:
We agree with petitioners, however, that the NLRC erred in holding Centeno jointly
and severally liable with MAM. A corporation, being a juridical entity, may act only
through its directors, officers and employees. Obligations incurred by them, acting
as such corporate agents, are not theirs but the direct accountabilities of the
corporation they represent. True, solidary liabilities may at times be incurred but
only when exceptional circumstances warrant such as, generally, in the following
cases:
1. When directors and trustees or, in appropriate cases, the officers of a
corporation —
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation, its
stockholders or members, and other persons.
2. When a director or officer has consented to the issuance of watered stocks
or who, having knowledge thereof, did not forthwith file with the corporate
secretary his written objection thereto.
3. When a director, trustee or officer has contractually agreed or stipulated
to hold himself personally and solidarily liable with the Corporation. 12
4 When a director, trustee or officer is made, by specific provision of law,
personally liable for his corporate action. 13
In labor cases, for instance, the Court has held corporate directors and officers
solidarily liable with the corporation for the termination of employment of
employees done with malice or in bad faith. 14
In the case at Bench, there is nothing substantial on record that can justify,
prescinding from the foregoing, petitioner Centeno's solidary liability with the
corporation.
255 VIRGILIO CALLANTA VS. CARNATION PHILIPPINES, INC. AND NATIONAL
LABOR RELATIONS COMMISSION
Doctrine: The right is considered to be property within the protection of a
constitutional guaranty of due process of law. 12 Clearly then, when one is
arbitrarily and unjustly deprived of his job or means of livelihood, the action
instituted to contest the legality of one's dismissal from employment constitutes, in
essence, an action predicated "upon an injury to the rights of the plaintiff," as
contemplated under Art. 1146 of the New Civil Code, which must be brought within
four [4] years.
FACTS:
Virgilio Callanta is employed by Carnation Philippines, Inc. as a salesman. Carnation
filed an application for clearance to terminate the employment of Virgilio Callanta
for serious misconduct and misappropriation of company funds amounting to
12,000.
On June 26, 1979 the Ministry of Labor and Employment approved the said
clearance so Virgilio Callanta was terminated effective June 1, 1979.
On July 5, 1982, Callanta filed with MOLE, a complaint for illegal dismissal with
clains for reinstatement, back wages and damages against respondent Carnation.
Carnation alleged that the complaint is barred by prescription for having been filed
more than 3 years after the date of Callanta’s dismissal.
Labor Arbiter rendered a decision finding the termination of Callanta’s employment
to be without valid cause and ordered reinstatement.
Carnation appealed to NLRC. NLRC set aside the decision of the Labor Arbiter
and it declared that the complaint for illegal dismissal filed by Virgilio Callanta
to have already prescribed.
Labor Code provides that:
 Art. 291. Offenses. — Offenses penalized under this Code and the rules
and regulations issued pursuant thereto shall prescribe in
three [3] years.
Art. 292. Money claims. — All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall
be filed within three [3] years from the time the cause of action accrued;
otherwise, they shall be forever barred.
Callanta appealed to the supreme court and alleged that the period has not yet
prescribed because the applicable provision is Art. 1146 of the civil code which gives
4 years.

ISSUE/S: WON an action for illegal dismissal prescribes in three years pursuant to
Articles 291 and 292 of the Labor Code?

RULING/ RATIO: NO. The said action will prescribe in four years based on Article
1146 of the civil code. In the case of illegal dismissal, no penalty of fine nor
imprisonment is imposed on the employer upon a finding of illegality in the
dismissal. By the very nature of the reliefs sought, therefore, an action for illegal
dismissal cannot be generally categorized as an "offense" as used under Article 291
of the Labor Code, which must be brought within the period of three [3] years from
the time the cause of action accrued.
The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case
cited by petitioner, is applicable in the instant case insofar as it concerns the issue
of prescription of actions.
In said case, this Court had occasion to hold that an action for damages involving a
plaintiff seperated from his employment for alleged unjustifiable causes is one for "
injury to the rights of the plaintiff, and must be brought within four [4] years under
Art. 1146.
Furthermore, it is a principle in American jurisprudence which, undoubtedly, is well-
recognized in this jurisdiction that one's employment, profession, trade or calling is
a "property right," and the wrongful interference therewith is an actionable wrong.
The right is considered to be property within the protection of a constitutional
guaranty of due process of law. Clearly then, when one is arbitrarily and unjustly
deprived of his job or means of livelihood, the action instituted to contest the
legality of one's dismissal from employment constitutes, in essence, an action
predicated "upon an injury to the rights of the plaintiff," as contemplated under Art.
1146 of the New Civil Code, which must be brought within four [4] years.