Almodiel VS NLRC

GR No. 100641, June 14, 1993

FACTS

Petitioner is a CPA hired as Cost Accounting Manager of Respondent Raytheon Philippines, Inc.
As such, his major duties were (1) plan, coordinate, and carry out year-end physical inventory;
(2) formulate and issue out hard copies of standard product costing and other cost/pricing
analysis if needed and required; and set up the written cost accounting system for the whole
company. However, when the standard cost accounting system for Raytheon plans worldwide
was adopted and installed in the Philippine operations, the services of the petitioner was reduced
to only the submission of period reports that would use computerized forms prescribed and
designed by the international head office of the company in California, USA.

On January 27, 1989, petitioner was told of the abolition of his position on the ground of
redundance. He was constrained to file the complaint for illegal dismissal after his request to
have him transferred to another department was denied. He also alleged that the functions of his
position were absorbed by the Payroll/MIS/Finance Department which is headed by a resident
alien without working permit from the DOLE.

The NLRC ruled for Raytheon and directed the latter to pay the petitioner P100,000.00 as
separation pay.
Hence, this petition.

ISSUE
WON the termination of the petitioner on the ground of redundancy was tainted with malice, bad
faith and irregularity

HELD
An employer has no legal obligation to keep more employees that are necessary for the operation
of the business. Considering further that petitioner held a managerial position, Raytheon had a
broad latitude of discretion in abolishing the position. The reason obviously is that officers in
such key positions perform not only functions which by nature require the employer’s full trust
and confidence but also functions that spell the success or failure of an enterprise.

Likewise destitute of merit is petitioner’s imputation of unlawful discrimination when Raytheon

caused corollary functions appertaining to cost accounting to be absorbed by a resident alien
without working permit. Article 40 of the Labor Code which requires employment permit refers
to non-resident aliens.
Asia world vs Ople
G.R. No. 115394 September 27, 1995 FE S. SEBUGUERO vs. NATIONAL LABOR RELATIONS COMMISSION

Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI
Sportswear Corporation (hereinafter GTI), a corporation engaged in the manufacture and export of
ready-to-wear garments, who were given "temporary lay-off" notices by the latter on 22 January 1991
due to alleged lack of work and heavy losses caused by the cancellation of orders from abroad and by
the garments embargo of 1990. Believing that their "temporary lay-off" was a ploy to dismiss them,
resorted to because of their union activities and was in violation of their right to security of tenure since
there was no valid ground therefor, the 38 laid-off employees filed with the Labor Arbiter's office in the
National Capital Region complaints for illegal dismissal, unfair labor practice, underpayment of wages
under Wage Orders Nos. 01 and 02, and non-payment of overtime pay and 13th month pay.4 Private
respondent GTI denied the claim of illegal dismissal and asserted that it was its prerogative to lay-off its
employees temporarily for a period not exceeding six months to prevent losses due to lack of work or
job orders from abroad, and that the lay-off affected both union and non-union members. It justified its
failure to recall the 38 laid-off employees after the lapse of six months because of the subsequent
cancellations of job orders made by its foreign principals, a fact which was communicated to the
petitioners and the other complainants who were all offered severance pay. Twenty-two (22) of the 38
complainants accepted the separation pay. The petitioners herein did not. The cases then involving
those who accepted the separation pay were pro tanto dismissed with prejudice. Labor Arbiter:
WHEREFORE, above premises considered, judgment is hereby rendered finding Respondent, G.T.I.
Sportswear Corporation, liable for constructive dismissal, underpayment of wages under NCR 01 and 02,
and 13th-month pay differentials and concomitantly, Respondent corporation is hereby ordered: a.

To pay the following complainants backwages from the time of their constructive dismissal (July 22,
1991) till promulgation considering that reinstatement is no longer decreed: (SC: Not entitle since no
illegal dismissal) b.

To pay complainants separation pay of 1/2 month for every year of service in lieu of reinstatement in
the following amounts: (SC: Separation pay equivalent to one-half (1/2) month pay for every year of
service shall be computed from the dates of the commencement of the petitioners' respective
employment until the end of their six-month temporary lay-off which is 22 July 1991) c.

To pay complainants 13th-month pay differentials arising out of underpayment of wages and
proportionate 13th-month pay for 1991 in the following amounts: (SC: we do not find anything in the
decision of the NLRC to support the deletion of this award other than its opinion that there is lack of
legal basis to support such an award, without, however, furnishing any explanation for this finding. Thus,
the award of the 13th-month pay made and sufficiently justified by the Labor Arbiter must be reinstated
as prayed for by the petitioners).

d. To pay complainants underpayment of wages under NCR Wage 01 and NCR Wage 02 in the following
amounts: (affirm the deletion by the NLRC of the award of back wages) e.
To pay complainants the amount of P120,618.87 representing 10% attorney's fees based on the total
judgment award of P1,326,807.63. (SC: the petitioners are entitled to an award for attorney's fees
pursuant to paragraph 7, Article 2208 of the Civil Code which must, however, be reasonable. The award
of P120,618.87, which is equivalent to ten percent (10%) of the amounts recovered, as attorney's fees
should be reduced to P25,000.00, an amount we find to be reasonable. The ten percent (10%) attorney's
fees provided for in Article 111 of the Labor Code and Section 11, Rule VIII, Book III of the Implementing
Rules is the maximum; hence, any amount less than that may be awarded as the circumstances of the
case may warrant). The claims for unfair labor practice, nonpayment of overtime pay, moral damages,
and exemplary damages are hereby denied for lack of merit.

NLRC:

Not entitle for back wages in view of constructive dismissal, since the lack of work and selection of
personnel continued to persist and that the respondents conveyed to the complainants the impossibility
of having them recalled in view of the continued unavailability of work as the economic recession of the
respondent's principal market persisted and offered to complainants payment of their separation pay
which offer was accepted by 22 out of 38 complainants. Art. 286. When employment not deemed
terminated.

The bona fide suspension of the operation of a business or undertaking for a period not exceeding six
(6) months, . . . shall not terminate employment. It is only after the six months period that an employee
can be presumed to have been terminated.7 WHEREFORE, premises considered the decision of the
Labor Arbiter dated February 26, 1993 is hereby modified by deleting the award of backwages, the
proportionate 13th month pay for 1991 and attorney's fees for lack of legal basis and direct, the
payment of separation pay equal to one-half month salary for every year of service as of July 22, 1991.8.

There is retrenchment.

Issue:

Are the employees constructively dismissed?

Held

SC: Redundancy exists where the services of an employee are in excess of what is reasonably demanded
by the actual requirements of the enterprise. A position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number of factors, such as over-hiring of
workers, decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise. Retrenchment, on the other hand, is used
interchangeably with the term "lay-off." It is the termination of employment initiated by the employer
through no fault of the employee's and without prejudice to the latter, resorted to by management
during periods of business recession, industrial depression, or seasonal

fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant
for a new production program or the introduction of new methods or more efficient machinery, or of
automation.11 Simply put, it is an act of the employer of dismissing employees because of losses in the
operation of a business, lack of work, and considerable reduction on the volume of his business, a right
consistently recognized and affirmed by this Court.

three basic requisites for a valid retrenchment:

(1) the retrenchment is necessary to prevent losses and such losses are proven; (respondent was
suffering and would continue to suffer serious losses, thereby justifying the retrenchment of some of its
employees, including the petitioners) (2) written notice to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment; (The
requirement of notice to both the employees concerned and the Department of Labor and Employment
(DOLE) is mandatory and must be written and given at least one month before the intended date of
retrenchment. In this case, it is undisputed that the petitioners were given notice of the temporary lay-
off. There is, however, no evidence that any written notice to permanently retrench them was given at
least one month prior to the date of the intended retrenchment. The NLRC found that GTI conveyed to
the petitioners the impossibility of recalling them due to the continued unavailability of work.17 But
what the law requires is a written notice to the employees concerned and that requirement is
mandatory. There is also nothing in the records to prove that a written notice was ever given to the
DOLE as required by law. The notice to the DOLE is essential because the right to retrench is not an
absolute prerogative of an employer but is subject to the requirement of law that retrenchment be done
to prevent losses. The DOLE is the agency that will determine whether the planned retrenchment is
justified and adequately supported by facts) (3) payment of separation pay equivalent to one month pay
or at least 1/2 month pay for every year of service, whichever is higher (With respect to the payment of
separation pay, the NLRC found that GTI offered to give the petitioners their separation pay but that the
latter rejected such offer which was accepted only by 22 out of the 38 original complainants in this
case). Lack of notice does not make it illegal dismissal but retrenchment is only defective . (violation by
GTI of the procedure prescribed in Article 283 of the Labor Code)

It is now settled that where the dismissal of an employee is in fact for a just and valid cause
(Retrenchment) and is so proven to be but he is not accorded his right to due process
North Davao Mining Corp. & Asset Privatization Trust vs. NLRC 
254 SCRA 721 (1996)

Facts: Petitioner North Davao Mining Corporation was incorporated in 1974 as a 100% privately-owned
company. Later, the Philippine National Bank became part owner thereof as a result of a conversion into
equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred
all its loans to and equity in North Davao in favor of the national government which later turned them over
to petitioner Asset Privatization Trust As of December 31, 1990 the national government held 81.8% of
the common stock and 100% of the preferred stock of said company. 

Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by
reason of the company’s closure on May 31, 1992, and who were the complainants in the cases before
the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due
to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses
averaging three billion pesos per year, for each of the five years prior to its closure. All told five months
prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos. When it ceased
operations, its remaining employees were separated and given the equivalent of 12.5 days’ pay for every
year of service, computed on their basic monthly pay, in addition to the commutation to cash of their
unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation,
from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay
equivalent to thirty days’ pay for every year of service. Moreover, the employees had to collect their
salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2
½hours’ travel time by public transportation; this arrangement lasted from 1981 up to 1990. 

Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and
271 other seperated employees for additional separation pay; back wages; transportation allowance;
hazard pay; etc., amounting to P58,022,878.31. 

Issue: Whether or not time spent in collecting wages in a place other than the place of employment is
compensable notwithstanding that the same is done during official time. 

Ruling: It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC
maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the
workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not
official. Records also show that on February 12,1992, when an inspection was conducted by the
Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del
Norte, it was found out that petitioners had violated labor standards law, one of which is the place of
payment of wages. 

Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: Place of
payment. - (a) As a general rule, the place of payment shall be at or near the place of undertaking.
Payment in a place other than the workplace shall be permissible only under the following circumstances:
(1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace
and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or
other calamity rendering payment thereat impossible; (2) When the employer provides free transportation
to the employees back and forth; and (3) Under any analogous circumstances; provided that the time
spent by the employees in collecting their wages shall be considered as compensable hours worked. 

From the evidence on record, we find that the hours spent by complainants in collecting salaries at a bank
in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the
distance between Amacan, Maco to Tagum which is 2½ hours by travel and the risks in commuting all the
time in collecting complainants’ salaries, would justify the granting of backwages equivalent to 2 days in a
month.
Balasbas vs NLRC
Rolando Revidad vs NLRC G.R. No. 111105, June 27, 1995

FACTS:

Pursuant to Presidential Directive No. 0191 issued by the company president and containing manageme
nt’s decision to lay off 40% or 705 employees due to financial losses incurred from 1989-1990, AG & P i
mplemented and effected, the temporary lay-off. The labor unions and the management officials had a c
onference and agreed to extend financial assistance for the meantime. But the management failed to re
call them.

ISSUE:

Whether or not the temporary mass lay off of employees due to financial losses and to prevent losses is 
valid considering that the management failed to recall them.

RULING:

Yes, temporary lay-off is valid and justified, and that by reason of management’s failure to recall them, t
heir services shall be considered duly terminated and they shall be entitled to separation pay equivalent 
to one month pay or at least one-half (½) month pay for every year of service, whichever is higher. The fi
nancial assistance which petitioners have received shall be deducted from the amount of separation pay 
they will receive.

In its ordinary connotation, the phrase “to prevent losses” means that retrenchment or termination of t
he services of some employees is authorized to be undertaken by the employer sometime before the an
ticipated losses are actually sustained or realized. It is not, in other words, the intention of the lawmaker 
to compel the employer to stay his hand and keep all his employees until after losses shall have in fact m
aterialized. If such intent were expressly written into the law, that law may well be vulnerable to constit
utional attack as unduly taking property from one man to be given to another.

At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is suffi
cient legal warrant for the reduction of personnel. In the nature of things, the possibility of incurring loss
es is constantly present, in greater or lesser degree, in the carrying on of business operations, since som
e, indeed many, of the factors which impact upon the profitability or viability of such operations may be 
substantially outside the control of the employer.
Businessday Information Systems and Services, AUTHOR: TIGLAO
Inc. v. NLRC NOTES:
G.R. No. 103575 | 05 April 1993  Appeal from the NLRC Decision by Petition for
TOPIC: Limits of MP Certiorari.
PONENTE: J. Griño-Aquino  BSSI is a corporation engaged in the business of
manufacturing and sale of computer forms.
 Take note of the separation pay received.

CASE LAW/ DOCTRINE:

 LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EMPLOYER MAY
NOT, IN THE GUISE OF EXERCISING MANAGEMENT PREROGATIVES, PAY SEPARATION
BENEFITS UNEQUALLY; CASE AT BAR. — Petitioners' right to terminate employees on account of
retrenchment to prevent losses or closure of business operations, is recognized by law, but it may not pay
separation benefits unequally for such discrimination breeds resentment and ill-will among those who
have been treated less generously than others... xxx Clearly, there was impermissible discrimination
against the private respondents in the payment of their separation benefits. The law requires an employer
to extend equal treatment to its employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others. Management prerogatives are not absolute
prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair
play and justice (UST vs. NLRC, 190 SCRA 758). Article 283 of the Labor Code, as amended, protects
workers whose employment is terminated because of closure of the establishment or reduction of
personnel (Abella vs. NLRC, 152 SCRA 141, 145).

FACTS:
 Businessday Information Systems and Services Inc. (BSSI) and its President/Manager (Raul Locsin)
sought to annul an NLRC Decision which affirmed the finding that BSSI is liable to pay the respondents
separation pay differentials and mid-year bonus.
 BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its creditors
namely the DBP and the Asset Privatization Trust (APT) took possession of BSSI’s assets including its
manufacturing plant in Marilao, Bulacan.
 Due to the action of its creditors, BSSI had to lay off some plant employees, after prior notice, as a
retrenchment measure. They were provided separation pay equivalent to ½ month pay for every year
of service. Upon receipt, they signed individual releases and quitclaims in favor of BSSI.
 Not all employees were laid off. Some were retained in an attempt to rehabilitate the company.
 Unfortunately, 2 and ½ months later, the remaining employees were also laid off when the company
decided to end the business altogether. Unlike the first batch of laid employees, this batch received
separation pay equivalent to a full month’s salary for every year of service plus mid-year bonus.
 Due to this obvious discrimination, the first batch of laid employees (27) filed a protest against BSSI and
Raul Locsin.
 During the conciliation proceedings with the Labor Arbiter, BSSI denied that there was unlawful
discrimination in the payment of separation benefits to the first batch of laid workers. BSSI argued that
they were paid “retrenchment” benefits mandated by law, while the remaining employees were granted
higher “separation” benefits because their termination was on account of the closure of the business.
 Labor Arbiter Decision: In favor of the first batch of laid employees.
 NLRC: Affirmed Decision of the Labor Arbiter. MR was likewise denied.

ISSUE(S):
 W/N BSSI is liable for separation pay differentials and mid-year bonus to the first batch of laid
employees.

HELD:
 Yes, BSSI is liable to pay separation pay differentials to the employees. However, mid-year bonus is
deleted and set aside. Further, Raul Locsin is absolved from any personal liability.

RATIO:
 While the law recognizes BSSI’s right to terminate its employees on account of retrenchment to prevent
 losses or closure of business operations, it may not pay separation benefits unequally for such
discrimination breeds resentment and ill-will among those who have been treated less generously.
 The NLRC observed that the business climate did not improve during the small gaps in between the
retrenchment.
 There was obviously discrimination against the first batch of employees. The law requires an employer
to extend equal treatment to its employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others.
 Management prerogatives are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and justice. Article 283 of the Labor Code
protects workers whose employment is terminated because of closure of the establishment or reduction
of personnel.
 In so far as the mid-year bonus, it is settled doctrine that the grant of a bonus is a prerogative, not an
obligation, of the employer. The matter of giving a bonus over and above the worker’s lawful salaries
and allowances is entirely dependent on the financial capability of the employer to give it. The fact that
the BSSI was no longer profitable and that the workers did not work up to the middle of the year were
valid reasons for not granting them a mid-year bonus.
 As regards Raul Locsin, he is not liable as a corporate officer unless he acted with evident malice and
bad faith in terminating their employment. No evidence was presented.
G.R. No. 127718             March 2, 2000

NATIONAL FEDERATION OF LABOR, et.al., petitioners, 

vs.
NATIONAL LABOR RELATIONS COMMISSION (5th Division), PATALON COCONUT ESTATE and/or
CHARLIE REITH as General Manager and SUSIE GALLE REITH, as owner, respondents.

FACTS: Petitioners are bona fide members of the National Federation of Labor (NFL), a legitimate labor
organization duly registered with the Department of Labor and Employment. They were employed by
private respondents Charlie Reith and Susie Galle Reith, general manager and owner, respectively, of the
354-hectare Patalon Coconut Estate located at Patalon, Zamboanga City. Patalon Coconut Estate was
engaged in growing agricultural products and in raising livestock.

In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), which mandated the compulsory acquisition of all covered
agricultural lands for distribution to qualified farmer beneficiaries under the so-called Comprehensive
Agrarian Reform Programme (CARP).

Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the Patalon Estate Agrarian
Reform Association (PEARA), a cooperative accredited by the Department of Agrarian Reform (DAR), of
which petitioners are members and co-owners.

As a result of this acquisition, private respondents shut down the operation of the Patalon Coconut
Estate and the employment of the petitioners was severed on July 31, 1994. Petitioners did not
receive any separation pay.

Subsequently, the cooperative took over the estate. Being beneficiaries of the Patalon Coconut Estate
pursuant to the CARP, the petitioners became part-owners of the land.

Petitioners, thereafter, filed individual complaints before the Regional Arbitration Branch (RAB) of the
National Labor Relations Commission (NLRC) in Zamboanga City, praying for their reinstatement with full
backwages on the ground that they were illegally dismissed.

RAB dismissed the complaints for lack of merit. However, ordered respondents thru [sic] its owner-
manager or its duly authorized representative to pay complainants’ separation pay in view of the latter’s
cessation of operations or forced sale, and for 13th month differential pay.
NLRC on appeal, set aside the decision of RAB ordering respondents to pay separation pay and
13th month differentials stating that, the severance of employer-employee relationship between the
parties came about INVOLUNTARILY, as a result of an act of the State. MR Denied. Hence, this petition.

ISSUE: whether or not an employer that was compelled to cease its operation because of the
compulsory acquisition by the government of its land for purposes of agrarian reform,  is liable to pay
separation pay to its affected employees

HELD: NO

Petitioners contend that they are entitled to separation pay citing Article 283 of the Labor Code (see
codal)

It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction
of personnel.1âwphi1 The peculiar circumstances in the case at bar, however, involves neither the
closure of an establishment nor a reduction of personnel as contemplated under the aforesaid
article. When the Patalon Coconut Estate was closed because a large portion of the estate was acquired
by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely transferred to
PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence,
Article 283 of the Labor Code is not applicable to the case at bench.

In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of
the business establishment is forced upon the employer and ultimately for the benefit of the
employees.

Capital and management sectors must also be protected under a regime of justice and the rule of law.

PETITION DENIED.
G.R. No. L-58639 August 12, 1987
CEBU ROYAL PLANT (SAN MIGUEL CORPORATION), vs.
THE HONORABLE DEPUTY MINISTER OF LABOR and RAMON PILONES
Subject: Labor Standards
FACTS:
Ramon Pilones, private respondent, was employed on February 16, 1978 on a probationary
period of employment for six (6) months with petitioner CRP. After said period, he underwent
medical examination for qualification as regular employee but the results showed that he is
suffering from PTB minimal. Consequently, he was informed of the termination of his
employment by respondent since his illness was not curable within 6 months.

Pilones complained against his termination before the Ministry of Labor which dismissed the
same. The dismissal was reversed by the public respondent who ordered the reinstatement and
payment of back wages.

Granting reinstatement, the public respondent argues that Pilones was already a permanent
employee at the time of his dismissal and so was entitled to security of tenure. The alleged
ground for his removal, to wit, “pulmonary tuberculosis minimal,” was not certified as incurable
within six months as to justify his separation and that the petitioner should have first obtained a
clearance, as required by the regulations then in force, for the termination of his employment.

CRP claims that the private respondent was still on probation at the time of his dismissal and so
had no security of tenure. The dismissal was necessary for the protection of the public health, as
he was handling ingredients in the processing of soft drinks which were being sold to the public.

ISSUE: Whether the dismissal was proper.

HELD:

No. The dismissal was not proper. Under Article 282 of the Labor Code, “an employee who is
allowed to work after a probationary period shall be considered a regular employee.” Pilones was
already on permanent status when he was dismissed on August 21, 1978, or four days after he
ceased to be a probationer. As such, he could validly claim the security of tenure guaranteed to
him by the Constitution and the Labor Code.

The petitioner claims it could not have dismissed the private respondent earlier because the x-ray
examination was made only on August 17, 1978, and the results were not immediately available.
That excuse is untenable. We note that when the petitioner had all of six months during which to
conduct such examination, it chose to wait until exactly the last day of the probation period.

The applicable rule on the ground for dismissal invoked against him is Section 8, Rule I, Book
VI, of the Rules and Regulations Implementing the Labor Code which states that “the employer
shall not terminate his employment unless there is a certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment.” The record does not contain the
certification required by the above rule. Hence, dismissal was illegal.

It is also worth noting that the petitioner’s application for clearance to terminate the employment
of the private respondent was filed with the Ministry of Labor only on August 28, 1978, or seven
days after his dismissal. As the NLRC has repeatedly and correctly said, the prior clearance rule
(which was in force at that time) was not a “trivial technicality.” It required “not just the mere
filing of a petition or the mere attempt to procure a clearance” but that “the said clearance be
obtained prior to the operative act of termination.

Although we must rule in favor of his reinstatement, this must be conditioned on his fitness to
resume his work, as certified by competent authority.

**Another Doctrine under Sec4 of Labor Code on construction:

Concern for the lowly worker who, often at the mercy of his employers, must look up to the law
for his protection. Fittingly, that law regards him with tenderness and even favor and always with
faith and hope in his capacity to help in shaping the nation’s future. It is error to take him for
granted. He deserves our abiding respect. How society treats him will determine whether the
knife in his hands shall be a caring tool for beauty and progress or an angry weapon of defiance
and revenge. The choice is obvious, of course. If we cherish him as we should, we must resolve
to lighten “the weight of centuries” of exploitation and disdain that bends his back but does not
bow his head
Manlimos v. National Labor Relations Commission

G.R. No. 113337

March 2, 1995

Facts:

Petitioners were among the regular employees of the Super Mahogany Plywood Corporation, a
domestic corporation based in Butuan City. They were hired as patchers, taper-graders and
receivers-dryers.

However, a new owner/ management group acquired complete ownership of the corporation
headed by Alfredo Roxas. 

Upon the change of ownership, petitioners continued to work for the new owner until their
termination when they received their separation pay and other benefits due them. Each of them
executed a release a s waiver acknowledged by Atty. Discipulo and Hearing Officer of Butuan
City District Office of DOLE.

The new owner caused a publication for the hiring of workers. Petitioners filed their applications
and were hired on probationary basis except for Rosario Cuarto. 

Two (2) of the employees hired were terminated for their alleged absence without leave and were
considered to have abandoned their work. The rest were dismissed. Thus, the filing of a
complaint for illegal dismissal.

The Labor Arbiter declared the dismissal invalid. Saying that the transfer of ownership partook
of a cessation of business operation not due to business reverses and must comply with the
following requisites: (1) service of written notice to the employees and to the MOLE at least one
(1) month before the intended date thereof, (2) the cessation of or withdrawal from business
operations must be bona fide in character and (3) payment to the employees of termination pay
amounting to at least one-half month pay for each year of service or one month pay whichever is
higher. The first and third requisites were present in this cade. However, there was no cessation
of operations which would lead to the dismissal of employees. And that upon resumpton of
work, the complainants were regular employees for they were engaged in work which was
necessary and desirable to the company’s operations. Thus, they could not be dismissed without
cause and due process.

NLRC however, reversed the judgment of the Labor Arbiter finding that the change of
ownership was made in good faith since there was no evidence that the former owners conspired
with the new owners to insulate the former management of any liability to its workers. And sale
or disposition of a business enterprise which has been motivated by good faith is an element of
exemption from liability. Thus, an innocent transferee of a business has no liability to the
employees of the transferor to continue employing them. Nor is the transferee liable for past
unfair labor practices of the previous owner, except, when the liability is assumed by the new
employer under the contract of sale, or when liability arises because the new owners participated
in thwarting or defeating the right of the employees. 

Hence, this special civil action for certiorari.

Issue:

WON the transfer of ownership was done in good faith making private respondent not guilty of
illegal dismissal

Ruling:

The rule is that sale or disposition of a business enterprise which has been motivated by good
faith is an element of exemption from liability. Thus, an innocent transferee of a business has no
liability to the employees of the transferor to continue employing them. Nor is the transferee
liable for past unfair labor practices of the previous owner, except, when the liability is assumed
by the new employer under the contract of sale, or when liability arises because the new owners
participated in thwarting or defeating the right of the employees. 

Where such transfer of ownership is in good faith, the transferee is under no obligation to absorb
the transferor’s employees as there is no law compelling such absorption. 

In this case, the transfer of ownership was made in good faith given that there was no evidence
that there was conspiracy to insulate the former management of any liability to its workers. Thus,
petitioners were validly dismissed. 
  

NOTE:

 The new owner has the option to terminate all the employees because labor contracts are
contracts in personam hence, they only apply to the current employer. If there is a change
in the person of the employer from A to B there is no obligation on the part of B to retain
the employees so he can terminate them. 
Sicangco vs NLRC
Jose S. Santos v. NLRC et al. case brief summary

G.R. No. 115795, March 6, 1998

FACTS: Petitioner is a married man and is employed as a teacher by private respondent Hagonoy
Institute Inc. from June 1980 until his dismissal on June 1, 1991. Petitioner and Mrs. Arlene T. Martin,
also a teacher employed at Hagonoy Institute, fell in love and had an affair. Private respondent, upon
hearing of circulating rumors among faculty and school officials, of the illicit relationship of petitioner
and Mrs. Martin, advised the latter to take a leave of absence, Mrs. Martin ignored such notice and was
henceforth prevented from entering the campus of private respondent, effectively dismissing her from
work. Private respondent set-up a committee to investigate the veracity of the rumors, after two weeks
of investigation, the illicit relationship of petitioner and Mrs. Martin was confirmed. Petitioner was
charged administratively for immorality and asked to present his side, on May 1991, petitioner was
dismissed effective June 1, 1991. Petitioner filed a complaint for illegal dismissal with the NLRC Regional
Arbitration Branch No. III, San Fernando, Pampanga and petitioner’s complaint was dismissed but
awarded financial assistance of PHP 13,750. On appeal, the NLRC affirmed the decision of the labor
arbiter.

ISSUE: Can the illicit relationship between the petitioner and Mrs. Martin be considered immoral as to
constitute a cause for termination under Art. 282 of the Labor Code?

RULING: Court reiterates that to constitute a valid dismissal, two requisites must concur: (a) it must be
for any offense expressed in Art. 282 of the Labor Code, (b) employee must be accorded due process,
that is, the opportunity to be heard and to defend oneself. Art. 282 of the Labor Code lists the following
just causes to terminate an employee: (1) serious misconduct or willful disobedience by employee of
lawful orders of the employer or his representative in connection with his work, (2) gross and habitual
neglect by employee of his duties; (3) fraud or willful breach, (4) commission of crime or offense of the
person of his employer or his family or his authorized representative, (5) other courses analogous to the
foregoing.

In addition, Section 94, Manual of Regulations for Private Schools, paragraph E, lists “disgraceful or
immoral conduct” as ground for termination. Furthermore, the Court ruled that Art. 68 of the Family
Code enjoins the husband and wife to live together, observe mutual love, respect and fidelity, and
render mutual help and support.” As a teacher, one stands in loco parentis to his students and must
therefore act with a high standard of integrity and honesty. It is settled therefore that a teacher who
engages in extra marital affairs, when both are married, amounts to gross immorality justifying
termination from employment.

Petition is dismissed, NLRC decision is affirmed with modification, deleting financial assistance.

Landmark Case: CHUA – QUA vs. CLAVE G.R. No. L-49549

August 30, 1990 (Case Digest)
A truly remarkable case wherein the Supreme Court ruled in favor of “love”.  The setting of the case
was in  when marriage between minors was still legal, way before the Family Code. In this case, a 30
year old teacher had married her student which prompted the school to terminate her. And against all
odds the Supreme Court Ruled in favor of her, hence, creating this Landmark Case. “truism that the
heart has reasons of its own which reason does not know.”

CHUA – QUA vs. CLAVE G.R. No. L-49549 August 30, 1990
Digested Case

A Landmark Case

FACTS:

This would have been just another illegal dismissal case were it not for the controversial and unique
situation that the marriage of herein petitioner, then a classroom teacher, to her student who was
fourteen (14) years her junior, was considered by the school authorities as sufficient basis for
terminating her services.

The case was about an affair and marriage of 30 years old teacher Evelyn Chua in Tay Tung High School
in Bacolod City to her 16 years old student. The petitioner teacher was suspended without pay and was
terminated of his employment “for Abusive and Unethical Conduct Unbecoming of a Dignified School
Teacher” which was filed by a public respondent as a clearance for termination.

ISSUE:

Was her dismissal valid?

Whether or not there is substantial evidence to prove that the antecedent facts which culminated in
the marriage between petitioner and her student constitute immorality and or grave misconduct?

RULING:
 
The Supreme Court declared the dismissal illegal saying:
“Private respondent [the school] utterly failed to show that petitioner [30-year old lady teacher] took
advantage of her position to court her student [16-year old]. If the two eventually fell in love, despite
the disparity in their ages and academic levels, this only lends substance to the truism that the
heart has reasons of its own which reason does not know. But, definitely, yielding to this gentle and
universal emotion is not to be so casually equated with immorality. The deviation of the circumstances
of their marriage from the usual societal pattern cannot be considered as a defiance of contemporary
social mores.”

Finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged
violation of Code of Ethics governing school teachers would have no basis. Private respondent utterly
failed to show that petitioner took advantage of her position to court her student. The deviation of the
circumstances of their marriage from the usual societal pattern cannot be considered as a defiance of
contemporary social mores.

JRS Business vs NLRC

Gaco vs NLRC
Ledesma vs NLRC
G.R. No. 156963 November 11, 2004
THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE CO., petitioner,
vs.
ANGELITA S. GRAMAJE, respondent.

Facts: Petitioner Philippine American Life and General Insurance Company is a corporation duly
organized and existing under Philippine laws. Private Respondent was the Assistant Vice President
and Head of the Pensions Department and in concurrent capacity as Trust Officer. Later on, she was
offered a new position by Cuisia (Chairman of the Board). However, respondent's marketing
manager and marketing officer were immediately transferred without replacements. Thus, he ran
the Pensions Department single-handedly with only one administrative assistant as her staff.
Sometime later, respondent availed of her housing and car benefits and applied for a car loan and
housing loan. Private respondent through Centeno and Sotelo, offered her P250,000.00 for her to
vacate her position by December 1998. But she declined the offer. Afterwhich, a memorandum was
issued instructing her to move to the Legal Department.

Issue/s: Whether or not respondent was constructively dismissed or was her transfer a legitimate
exercise of management prerogative?

Ruling/s: Respondent was constructively dismissed. In the pursuit of its legitimate business
interests, management has the prerogative to transfer or assign employees from one office or area
of operation to another – provided there is no demotion in rank or diminution of salary, benefits,
and other privileges; and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause.

Discrimination is the unequal treatment of employees, which is proscribed as an unfair labor

practice by Art. 248(e) of the Labor Code. It is the failure to treat all persons equally when no
reasonable distinction can be found between those favored and those not favored. Bad faith has
been defined as a state of mind affirmatively operating with furtive design or with some motive of
self-interest or ill will or for an ulterior purpose. It implies a conscious and intentional design to do
a wrongful act for a dishonest purpose or moral obliquity.

In the case at bar, unknown to the respondent, petitioner had already advertised in the Manila
Bulletin for the former's replacement. Respondent was not even notified in advance of an
impending transfer. Also, the transfer of respondent to the Legal Department was unreasonable,
inconvenient and prejudicial to her. Petitioner must have known that respondent has no adequate
exposure in the field of litigation, and yet she was transferred to that Department. Discrimination
was also evident since the Pensions Department was practically run with no support from the
management. Respondent’s request for a car loan was also deferred saying that respondent's
employment status has been the subject of several discussions between the high ranking officers of
petitioner. Therefore, the Court ruled that there was constructive dismissal.

Lucky Textile Mills vs NLRC

Mendoza vs NLRC
Meralco vs NLRC
Valiao v. Court of Appeals is instructive:
xxx It bears stressing that petitioner’s absences and tardiness were not isolated
incidents but manifested a pattern of habituality. xxx The totality of infractions or the
number of violations committed during the period of employment shall be considered
in determining the penalty to be imposed upon an erring employee. The offenses
committed by him should not be taken singly and separately but in their totality.
Fitness for continued employment cannot be compartmentalized into tight little
cubicles of aspects of character, conduct, and ability separate and independent of each
other.
In Valiao, we defined gross negligence as “want of care in the performance of one’s
duties”and habitual neglect as “repeated failure to perform one’s duties for a period of
time, depending upon the circumstances.” These are not overly technical terms,
which, in the first place, are expressly sanctioned by the Labor Code of the
Philippines, to wit:
ART. 282. Termination by employer. – An employer may terminate an employment
for any of the following causes: