ROBINSONS GALLERIA/ROBINSONS G.R. No.

177937
SUPERMARKET CORPORATION  
and/or JESS MANUEL, Present:
Petitioners,  
  CARPIO, J.,
  Chairperson,
  NACHURA,
- versus - LEONARDO-DE CASTRO,*
  ABAD, and
  MENDOZA, JJ.
   
IRENE R. RANCHEZ, Promulgated:
Respondent.  
  January 19, 2011
 
DECISION
 
NACHURA, J.:
 
 
 
 
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court, assailing the Decision[1] dated August 29, 2006 and the
Resolution[2]dated May 16, 2007 of the Court of Appeals (CA) in CA-G.R. SP
No. 91631.
 
 
The Facts
 
The facts of the case are as follows.
 
Respondent was a probationary employee of petitioner Robinsons
Galleria/Robinsons Supermarket Corporation (petitioner Supermarket) for a
period of five (5) months, or from October 15, 1997 until March 14, 1998.
[3]
 She underwent six (6) weeks of training as a cashier before she was hired
as such on October 15, 1997.[4]
 
Two weeks after she was hired, or on October 30, 1997, respondent reported
to her supervisor the loss of cash amounting to Twenty Thousand Two
Hundred Ninety-Nine Pesos (P20,299.00) which she had placed inside the
company locker. Petitioner Jess Manuel (petitioner Manuel), the Operations
Manager of petitioner Supermarket, ordered that respondent be strip-
searched by the company guards. However, the search on her and her
personal belongings yielded nothing.[5]
 
Respondent acknowledged her responsibility and requested that she be
allowed to settle and pay the lost amount. However, petitioner Manuel did not
heed her request and instead reported the matter to the police. Petitioner
Manuel likewise requested the Quezon City Prosecutors Office for an inquest.
[6]

 
On November 5, 1997, an information for Qualified Theft was filed with the
Quezon City Regional Trial Court. Respondent was constrained to spend two
weeks in jail for failure to immediately post bail in the amount of Forty
Thousand Pesos (P40,000.00).[7]
 
On November 25, 1997, respondent filed a complaint for illegal dismissal and
damages.[8]
 
On March 12, 1998, petitioners sent to respondent by mail a notice of
termination and/or notice of expiration of probationary employment dated
March 9, 1998.[9]
 
On August 10, 1998, the Labor Arbiter rendered a decision,[10] the fallo of
which reads:
 
CONFORMABLY WITH THE FOREGOING, judgment is hereby
rendered dismissing the claim of illegal dismissal for lack of merit.
 
Respondents are ordered to accept complainant to her former or
equivalent work without prejudice to any action they may take in
the premises in connection with the missing money
of P20,299.00.
 
SO ORDERED.[11]
 
In dismissing the complaint for illegal dismissal, the Labor Arbiter ratiocinated
that at the time respondent filed the complaint for illegal dismissal, she was
not yet dismissed by petitioners. When she was strip- searched by the
security personnel of petitioner Supermarket, the guards were merely
conducting an investigation. The subsequent referral of the loss to the police
authorities might be considered routine. Respondents non-reporting for work
after her release from detention could be taken against her in the investigation
that petitioner supermarket would conduct.[12]
 
On appeal, the National Labor Relations Commission (NLRC) reversed the
decision of the Labor Arbiter in a decision[13] dated October 20, 2003. The
dispositive portion of the decision reads:
 
WHEREFORE, the appealed decision is SET ASIDE. The
respondents are hereby ordered to immediately reinstate
complainant to her former or equivalent position without loss of
seniority rights and privileges and to pay her full backwages
computed from the time she was constructively dismissed on
October 30, 1997 up to the time she is actually reinstated.
 
SO ORDERED.[14]
 
In reversing the decision of the Labor Arbiter, the NLRC ruled that respondent
was denied due process by petitioners. Strip-searching respondent and
sending her to jail for two weeks certainly amounted to constructive dismissal
because continued employment had been rendered impossible,
unreasonable, and unlikely. The wedge that had been driven between the
parties was impossible to ignore.[15] Although respondent was only a
probationary employee, the subsequent lapse of her probationary contract of
employment did not have the effect of validly terminating her employment
because constructive dismissal had already been effected earlier by
petitioners.[16]
 
Petitioners filed a motion for reconsideration, which was denied by the NLRC
in a resolution[17] dated July 21, 2005.
 
Petitioners filed a petition for certiorari under Rule 65 of the Rules of Court
before the CA. On August 29, 2006, the CA rendered a Decision, the
dispositive portion of which reads:
 
WHEREFORE, premises considered, the challenged Decision of
the National Labor Relations Commission
is AFFIRMED with MODIFICATION in that should reinstatement
be no longer possible in view of the strained relation between the
parties, Petitioners are ordered to pay Respondent separation pay
equivalent to one (1) month pay in addition to backwages from the
date of dismissal until the finality of the assailed decision.
 
SO ORDERED.[18]
 
Petitioners filed a motion for reconsideration. However, the CA denied the
same in a Resolution dated May 16, 2007.
 
Hence, this petition.
 
Petitioners assail the reinstatement of respondent, highlighting the fact that
she was a probationary employee and that her probationary contract of
employment lapsed on March 14, 1998. Thus, her reinstatement was
rendered moot and academic. Furthermore, even if her probationary contract
had not yet expired, the offense that she committed would nonetheless
militate against her regularization.[19]
 

On the other hand, respondent insists that she was constructively

dismissed by petitioner Supermarket when she was strip-searched, divested
of her dignity, and summarily thrown in jail. She could not have been expected
to go back to work after being allowed to post bail because her continued
employment had been rendered impossible, unreasonable, and unlikely. She
stresses that, at the time the money was discovered missing, it was not with
her but locked in the company locker. The company failed to provide its
cashiers with strong locks and proper security in the work place. Respondent
argues that she was not caught in the act and even reported that the money
was missing. She claims that she was denied due process.[20]
 
The Issue
 
The sole issue for resolution is whether respondent was illegally terminated
from employment by petitioners.
 
The Ruling of the Court
We rule in the affirmative.
 
There is probationary employment when the employee upon his engagement
is made to undergo a trial period during which the employer determines his
fitness to qualify for regular employment based on reasonable standards
made known to him at the time of engagement.[21]
 
A probationary employee, like a regular employee, enjoys security of tenure.
[22]
 However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under
Article 281 of the Labor Code, i.e., the probationary employee may also be
terminated for failure to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the
time of the engagement. Thus, the services of an employee who has been
engaged on probationary basis may be terminated for any of the following: (1)
a just or (2) an authorized cause; and (3) when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the
employer.[23]
 
Article 277(b) of the Labor Code mandates that subject to the constitutional
right of workers to security of tenure and their right to be protected against
dismissal, except for just and authorized cause and without prejudice to the
requirement of notice under Article 283 of the same Code, the employer shall
furnish the worker, whose employment is sought to be terminated, a written
notice containing a statement of the causes of termination, and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance
of a representative if he so desires, in accordance with company rules and
regulations pursuant to the guidelines set by the Department of Labor and
Employment.
 
In the instant case, based on the facts on record, petitioners failed to accord
respondent substantive and procedural due process. The haphazard manner
in the investigation of the missing cash, which was left to the determination of
the police authorities and the Prosecutors Office, left respondent with no
choice but to cry foul. Administrative investigation was not conducted by
petitioner Supermarket. On the same day that the missing money was
reported by respondent to her immediate superior, the company already pre-
judged her guilt without proper investigation, and instantly reported her to the
police as the suspected thief, which resulted in her languishing in jail for two
weeks.
 
As correctly pointed out by the NLRC, the due process requirements under
the Labor Code are mandatory and may not be supplanted by police
investigation or court proceedings. The criminal aspect of the case is
considered independent of the administrative aspect. Thus, employers should
not rely solely on the findings of the Prosecutors Office. They are mandated to
conduct their own separate investigation, and to accord the employee every
opportunity to defend himself. Furthermore, respondent was not represented
by counsel when she was strip-searched inside the company premises or
during the police investigation, and in the preliminary investigation before the
Prosecutors Office.
 
Respondent was constructively dismissed by petitioner Supermarket effective
October 30, 1997. It was unreasonable for petitioners to charge her with
abandonment for not reporting for work upon her release in jail. It would be
the height of callousness to expect her to return to work after suffering in jail
for two weeks. Work had been rendered unreasonable, unlikely, and definitely
impossible, considering the treatment that was accorded respondent by
petitioners.
 
As to respondents monetary claims, Article 279 of the Labor Code provides
that an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges, to full
backwages, inclusive of allowances, and to other benefits or their monetary
equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement. However, due to the strained
relations of the parties, the payment of separation pay has been considered
an acceptable alternative to reinstatement, when the latter option is no longer
desirable or viable.  On the one hand, such payment liberates the employee
from what could be a highly oppressive work environment.  On the other, the
payment releases the employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust.[24]
 
Thus, as an illegally or constructively dismissed employee, respondent is
entitled to: (1) either reinstatement, if viable, or separation pay, if
reinstatement is no longer viable; and (2) backwages. These two reliefs are
separate and distinct from each other and are awarded conjunctively.[25]
 
In this case, since respondent was a probationary employee at the time
she was constructively dismissed by petitioners, she is entitled to separation
pay and backwages. Reinstatement of respondent is no longer viable
considering the circumstances.
 
However, the backwages that should be awarded to respondent shall be
reckoned from the time of her constructive dismissal until the date of the
termination of her employment, i.e., from October 30, 1997 to March 14,
1998. The computation should not cover the entire period from the time her
compensation was withheld up to the time of her actual reinstatement. This is
because respondent was a probationary employee, and the lapse of her
probationary employment without her appointment as a regular employee of
petitioner Supermarket effectively severed the employer-employee
relationship between the parties.
In all cases involving employees engaged on probationary basis, the employer
shall make known to its employees the standards under which they will qualify
as regular employees at the time of their engagement. Where no standards
are made known to an employee at the time, he shall be deemed a regular
employee,[26]unless the job is self-descriptive, like maid, cook, driver, or
messenger. However, the constitutional policy of providing full protection to
labor is not intended to oppress or destroy management.[27] Naturally,
petitioner Supermarket cannot be expected to retain respondent as a regular
employee considering that she lost P20,299.00 while acting as a cashier
during the probationary period. The rules on probationary employment should
not be used to exculpate a probationary employee who acts in a manner
contrary to basic knowledge and common sense, in regard to which, there is
no need to spell out a policy or standard to be met.[28]
 
WHEREFORE, in view of the foregoing, the petition is DENIED. The
Decision of the Court of Appeals in CA-G.R. SP No. 91631 is
hereby AFFIRMED with the MODIFICATION that petitioners are hereby
ordered to pay respondent Irene R. Ranchez separation pay equivalent to one
(1) month pay and backwages from October 30, 1997 to March 14, 1998.

G.R. No. L-63316 July 31, 1984

ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and MA.

MERCEDES P. INTENGAN, petitioners, 
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of
the Ministry of Labor & Employment, and GENERAL TELEPHONE
DIRECTORY, CO., respondents.

Jimenez, Apolo & Leynes Law Office for petitioners.

The Solicitor General for respondent Deputy Minister.

Abad, Legayada & Associates for private respondent.

GUERRERO, J.:

This is a petition for certiorari seeking to set aside the Order of the Deputy
Minister of Labor and Employment, affirming the Order of the Regional
Director, National Capital Region, in Case No. NCR-STF-5-2851-81, which
dismissed the petitioners' complainant for alleged illegal dismissal and unpaid
commission.

Petitioners were employed by the private respondent GENERAL

TELEPHONE DIRECTORY COMPANY as sales representatives and charged
with the duty of soliciting advertisements for inclusion in a telephone directory.

The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P.
Intengan entered into an "Employment Contract (on Probationary Status)" on
May 26, 1980 with private respondent, a corporation engaged in the business
of publication and circulation of the directory of the Philippine Long Distance
Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna entered into the same
employment contract on June 11, 1980 with the private respondent.
Among others, the "Employment Contract (On Probationary Status)" included
the following common provisions:

l. The company hereby employs the employee as telephone

representative on a probationary status for a period of eighteen
(18) months, i.e. from May 1980 to October 1981, inclusive. It is
understood that darung the probationary period of employment,
the Employee may be terminated at the pleasure of the company
without the necessity of giving notice of termination or the
payment of termination pay.

The Employee recognizes the fact that the nature of the telephone
sales representative's job is such that the company would be able
to determine his true character, conduct and selling capabilities
only after the publication of the directory, and that it takes about
eighteen (18) months before his worth as a telephone saw
representative can be fully evaluated inasmuch as the
advertisement solicited by him for a particular year are published
in the directory only the following year.

Corollary to this, the private respondent prescribed sales quotas to be

accomplished or met by the petitioners. Failing to meet their respective sales
quotas, the petitioners were dismissed from the service by the private
respondent. The records show that the private respondent terminated the
services of petitioners Iluminada Ver Buiser and Cecilia Rillo-Acuna on May
14, 1981 and petitioner Ma. Mercedes P. Intengan on May 18, 1981 for their
failure to meet their sales quotas.
Thus, on May 27, 1981, petitioners filed with the National Capital Region,
Ministry of Labor and Employment, a complaint for illegal dismissal with
claims for backwages, earned commissions and other benefits, docketed as
Case No. NCR-STF-5-2851-81.

The Regional Director of said ministry, in an Order dated September 21, 1982,
dismissed the complaints of the petitioners, except the claim for allowances
which private respondent was ordered to pay. A reconsideration of the Order
was sought by the petitioners in a motion filed on September 30, 1982. This
motion, however, was treated as an appeal to the Minister of Labor.

On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor

issued an Order dated January 7, 1983, affirming the Regional Director's
Order dated September 21, 1982, wherein it ruled that the petitioners have not
attained permanent status since private respondent was justified in requiring a
longer period of probation, and that the termination of petitioners' services was
valid since the latter failed to meet their sales quotas.

Hence, this petition for certiorari on the alleged ground that public respondent
committed grave abuse of discretion amounting to lack of jurisdiction.
Specifically, petitioners submit that:

1. The Hon. Regional Director and the Hon. Deputy Minister committed grave
abuse of discretion amounting to lack of jurisdiction in ruling that the
probationary employment of petitioners herein is eighteen (18) months instead
of the mandated six (6) months under the Labor Code, and in consequently
further ruling that petitioners are not entitled to security of tenure while under
said probation for 18 months.
2. The Hon. Regional Director and the Hon. Deputy Minister committed grave
abuse of discretion amounting to lack of jurisdiction in ruling that petitioners
were dismissed for a just and valid cause.

3. The Hon. Regional Director and the Hon. Deputy Minister committed grave
abuse of discretion amounting to lack of jurisdiction in ruling that petitioners
are not entitled to the commissions they have earned and accrued during their
period of employment.

Petitioners contend that under Articles 281-282 of the Labor Code, having
served the respondent company continuously for over six (6) months, they
have become automatically regular employees notwithstanding an agreement
to the contrary. Articles 281-282 read thus:

Art. 282. Probationary Employment. — Probationary employment

shall not exceed six (6) months from the date the employee
started working, unless it iscCovered by an apprenticeship
agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known
by the employer to the employee at the time of his engagement.
An employee who is allowed to work after a probationary period
shall be considered a regular employee. (As amended by PD
850).

Art. 281. Regular and Casual Employment. — The provisions of

written agreement to the contrary notwithstanding and regardless
of the oral agreements of the parties, an employment shall be
 deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered

by the preceeding paragraph. Provided, That, any employee who
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his
employment shall continue while such actually exists. (As
amended by PD 850).

It is petitioners' submission that probationary employment cannot exceed six

(6) months, the only exception being apprenticeship and learnership
agreements as provided in the Labor Code; that the Policy Instruction of the
Minister of Labor and Employment nor any agreement of the parties could
prevail over this mandatory requirement of the law; that this six months
prescription of the Labor Code was mandated to give further efficacy to the
constitutionally-guaranteed security of tenure of workers; and that the law
does not allow any discretion on the part of the Minister of Labor and
Employment to extend the probationary period for a longer period except in
the aforecited instances. Finally, petitioners maintain that since they are
regular employees, they can only be removed or dismissed for any of the just
and valid causes enumerated under Article 283 of the Labor Code.

We reject petitioners' contentions. They have no basis in law.

Generally, the probationary period of employment is limited to six (6) months.

The exception to this general rule is When the parties to an employment
contract may agree otherwise, such as when the same is established by
company policy or when the same is required by the nature of work to be
performed by the employee. In the latter case, there is recognition of the
exercise of managerial prerogatives in requiring a longer period of
probationary employment, such as in the present case where the probationary
period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981
inclusive, especially where the employee must learn a particular kind of work
such as selling, or when the job requires certain qualifications, skills,
experience or training.

Policy Instruction No. 11 of the Minister of Labor and Employment has

clarified any and all doubts on the period of probationary employment. It
states as follows:

Probationary Employment has been the subject of

misunderstanding in some quarter. Some people believe six (6)
months is the probationary period in all cases. On the other hand
employs who have already served the probationary period are
sometimes required to serve again on probation.

Under the Labor Code, six (6) months is the general probationary
period ' but the probationary period is actually the period needed
 to determine fitness for the job. This period, for lack of a better
measurement is deemed to be the period needed to learn the job.

The purpose of this policy is to protect the worker at the same

time enable the employer to make a meaningful employee
selection. This purpose should be kept in mind in enforcing this
provision of the Code. This issuance shall take effect immediately.

In the case at bar, it is shown that private respondent Company needs at least
eighteen (18) months to determine the character and selling capabilities of the
petitioners as sales representatives. The Company is engaged in
advertisement and publication in the Yellow Pages of the PLDT Telephone
Directories. Publication of solicited ads are only made a year after the sale
has been made and only then win the company be able to evaluate the
efficiency, conduct, and selling ability of its sales representatives, the
evaluation being based on the published ads. Moreover, an eighteen month
probationary period is recognized by the Labor Union in the private
respondent company, which is Article V of the Collective Bargaining
Agreement, ... thus:

Probationary Period — New employees hired for regular or

permanent shall undergo a probationary or trial period of six (6)
months, except in the cases of telephone or sales representatives
where the probationary period shall be eighteen (I 8) months.

And as indicated earlier, the very contracts of employment signed and

acquiesced to by the petitioners specifically indicate that "the company hereby
employs the employee as telephone sales representative on a probationary
status for a period of eighteen (18) months, i.e. from May 1980 to October
1981, inclusive. This stipulation is not contrary to law, morals and public
policy.

We, therefore, hold and rule that the probationary employment of petitioners
set to eighteen (18) months is legal and valid and that the Regional Director
and the Deputy Minister of Labor and Employment committed no abuse of
discretion in ruling accordingly.

On the second assignment of error that public respondent committed grave

abuse of discretion in ruling that petitioners were dismissed for a just and valid
cause, this is not the first time that this issue has been raised before this
Court. Earlier, in the case of "Arthur Golez vs. The National Labor Relations
Commission and General Telephone Directory Co. "G.R. No. L-64459, July
25, 1983, the petition for certiorari which raised the same issue against the
herein private respondent was dismissed by this Court for lack of merit.

The practice of a company in laying off workers because they failed to make
the work quota has been recognized in this jurisdiction. (Philippine American
Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634, 639). In
the case at bar, the petitioners' failure to meet the sales quota assigned to
each of them constitute a just cause of their dismissal, regardless of the
permanent or probationary status of their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by
failing to complete the same within the alloted reasonable period, or by
producing unsatisfactory results. This management prerogative of requiring
standards availed of so long as they are exercised in good faith for the
advancement of the employer's interest.
Petitioners anchor their claim for commission pay on the Collective Bargaining
Agreement (CBA) of September 1981, in support of their third assignment of
error. Petitioners cannot avail of this agreement since their services had been
terminated in May, 1981, at a time when the CBA of September, 1981 was not
yet in existence.

In fine, there is nothing in the records to show any abuse or misuse of power
properly vested in the respondent Deputy Minister of Labor and Employment.
For certiorari to lie, "there must be capricious, arbitrary and whimsical exercise
of power, the very antithesis of the judicial prerogative inaccordance with
centuries of both civil and common law traditions." (Panaligan vs. Adolfo, 67
SCRA 176, 180). The "abuse of discretion must be grave and patent, and it
must be shown that the discretion was exercised arbitrarily or despotically."
(Palma and Ignacio vs. Q. & S., Inc., et al., 17 SCRA 97, 100; Philippine
Virginia Tobacco Administration vs. Lucero, 125 SCRA 337, 343).

WHEREFORE, the petition is DISMISSED for lack of merit.

G.R. No. 148372. June 27, 2005]

CLARION PRINTING HOUSE, INC., and EULOGIO

YUTINGCO, petitioners, vs. THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION (Third Division) and MICHELLE
MICLAT, respondents.

DECISION
CARPIO-MORALES, J.:

Respondent Michelle Miclat (Miclat) was employed on April 21, 1997 on a

probationary basis as marketing assistant with a monthly salary of P6,500.00
by petitioner Clarion Printing House (CLARION) owned by its co-petitioner
Eulogio Yutingco. At the time of her employment, she was not informed of the
standards that would qualify her as a regular employee.

On September 16, 1997, the EYCO Group of Companies of which

CLARION formed part filed with the Securities and Exchange Commission
(SEC) a Petition for the Declaration of Suspension of Payment, Formation and
Appointment of Rehabilitation Receiver/ Committee, Approval of Rehabilitation
Plan with Alternative Prayer for Liquidation and Dissolution of
Corporation[1] the pertinent allegations of which read:

xxx

5. The situation was that since all these companies were sister companies
and were operating under a unified and centralized management team, the
financial requirements of one company would normally be backed up or
supported by one of the available fundings from the other companies.

6. The expansion exhausted the cash availability of Nikon, NKI, and 2000
because those fundings were absorbed by the requirements of NPI and
EYCO Properties, Inc. which were placed on real estate investments.
However, at the time that those investments and expansions were made,
there was no cause for alarm because the market situation was very bright
and very promising, hence, the decision of the management to implement the
expansion.
7. The situation resulted in the cash position being spread thin. However,
despite the thin cash positioning, the management still was very positive and
saw a very viable proposition since the expansion and the additional
investments would result in a bigger real estate base which would be very
credible collateral for further expansions. It was envisioned that in the end,
there would be bigger cash procurement which would result in greater volume
of production, profitability and other good results based on the expectations
and projections of the team itself.

8. Unfortunately, factors beyond the control and anticipation of the

management came into play which caught the petitioners flat-footed, such as:

a) The glut in the real estate market which has resulted in the bubble

economy for the real estate demand which right now has resulted
in a severe slow down in the sales of properties;

b) The economic interplay consisting of the inflation and the errati
c changes in the peso-dollar exchange rate which precipitated
a soaring banking interest.

c) Labor problems that has precipitated adverse company effect on

the media and in the financial circuit.

d) Liberalization of the industry (GATT) which has resulted in

flooding the market with imported goods;

e) Other related adverse matters.

9. The inability of the EYCO Group of Companies to meet the obligations as

they fall due on the schedule agreed with the bank has now become a stark
reality. The situation therefore is that since the obligations would not be met
within the scheduled due date, complications and problems would definitely
arise that would impair and affect the operations of the entire
conglomerate comprising the EYCO Group of Companies.

xxx

12. By virtue of this development, there is a need for suspension of all

accounts o[r] obligations incurred by the petitioners in their separate and
combined capacities in the meantime that they are working for the
rehabilitation of the companies that would eventually redound to the benefit of
these creditors.

13. The foregoing notwithstanding, however, the present combined financial

condition of the petitioners clearly indicates that their assets are more than
enough to pay off the credits.

x x x (Emphasis and underscoring supplied)[2]

On September 19, 1997, the SEC issued an Order[3] the pertinent portions

of which read:

xxx

It appearing that the petition is sufficient in form and

substance, the corporate petitioners prayer for the creation of management or 
receivership committee and creditors approval of theproposed Rehabilitation 
Plan is hereby set for hearing on October 22, 1997 at 2:00 oclock in the
afternoon at the SICD, SEC Bldg., EDSA, Greenhills, Mandaluyong City.

xxx
Finally, the petitioners are hereby enjoined from disposing any and all of their
properties in any manner, whatsoever, except in the ordinary course of
business and from making any payment outside of the legitimate business
expenses during the pendency of the proceedings and as a consequence of
the filing of the Petition, all actions, claims and proceedings against herein
petitioners pending before any court, tribunal, office board and/or commission
are deemed SUSPENDED until further orders from this Hearing Panel
pursuant to the rulings of the Supreme Court in the cases of RCBC v. IAC et
al., 213 SCRA 830 and BPI v. CA, 229 SCRA 223. (Underscoring supplied)

And on September 30, 1997, the SEC issued an Order[4] approving the

creation of an interim receiver for the EYCO Group of Companies.

On October 10, 1997, the EYCO Group of Companies issued to its

employees the following Memorandum:[5]

This is to formally announce the entry of the Interim Receiver

Group represented by SGV from today until October 22, 1997 or until further
formal notice from the SEC.

This interim receiver groups function is to make sure that all assets of the
company are secured and accounted for both for the protection of us and our
creditors.

Their function will involve familiarization with the different processes and
controls in our organization & keeping physical track of our assets like
inventories and machineries.

Anything that would be required from you would need to be in writing and duly
approved by the top management in order for us to maintain a clear line.
We trust that this temporary inconvenience will benefit all of us in the spirit of
goodwill. Lets extend our full cooperation to them.

Thank you. (Underscoring supplied)

On October 22, 1997, the Assistant Personnel Manager of CLARION

informed Miclat by telephone that her employment contract had been
terminated effective October 23, 1997. No reason was given for the
termination.

The following day or on October 23, 1997, on reporting for work, Miclat
was informed by the General Sales Manager that her termination was part of
CLARIONs cost-cutting measures.

On November 17, 1997, Miclat filed a complaint[6] for illegal dismissal

against CLARION and Yutingco (petitioners) before the National Labor
Relations Commission (NLRC).

In the meantime, or on January 7, 1998, the EYCO Group of Companies

issued a Memorandum[7] addressed to company managers advising them of a
temporary partial shutdown of some operations of the Company commencing
on January 12, 1998 up to February 28, 1998:

In view of the numerous external factors such as slowdown in business and

consumer demand and consistent with Art. 286 of the Revised Labor Code of
the Philippines, we are constrained to go on a temporary partial shutdown of
some operations of the Company.

To implement this measure, please submit to my office through your local

HRAD the list of those whom you will require to report for work and their
specific schedules. Upon revalidation and approval of this list, all those not in
the list will not receive any pay nor will it be credited against their VL.

Please submit the listing no later than the morning of Friday, January 09,
1998.

Shutdown shall commence on January 12, 1998 up to February 28, 1998,

unless otherwise recalled at an earlier date.

Implementation of th[ese] directives will be done through your HRAD

departments. (Underscoring supplied)

In her Position Paper[8] dated March 3, 1998 filed before the labor arbiter,
Miclat claimed that she was never informed of the standards which would
qualify her as a regular employee. She asserted, however, that she qualified
as a regular employee since her immediate supervisor even submitted a
written recommendation in her favor before she was terminated without just or
authorized cause.

Respecting the alleged financial losses cited by petitioners as basis for her
termination, Miclat disputed the same, she contending that as marketing
assistant tasked to receive sales calls, produce sales reports and conduct
market surveys, a credible assessment on production and sales showed
otherwise.

In any event, Miclat claimed that assuming that her termination was
necessary, the manner in which it was carried out was illegal, no written notice
thereof having been served on her, and she merely learned of it only a day
before it became effective.
 Additionally, Miclat claimed that she did not receive separation pay,
13th month pay and salaries for October 21, 22 and 23, 1997.

On the other hand, petitioners claimed that they could not be faulted for
retrenching some of its employees including Miclat, they drawing attention to
the EYCO Group of Companies being placed under receivership, notice of
which was sent to its supervisors and rank and file employees via a
Memorandum of July 21, 1997; that in the same memorandum, the EYCO
Group of Companies advised them of a scheme for voluntary separation from
employment with payment of severance pay; and that CLARION was only
adopting the LAST IN, FIRST OUT PRINCIPLE when it terminated Miclat who
was relatively new in the company.

Contending that Miclats termination was made with due process,

petitioners referred to the EYCO Group of Companies abovesaid July 21,
1997 Memorandum which, so they claimed, substantially complied with the
notice requirement, it having been issued more than one month before Miclat
was terminated on October 23, 1997.

By Decision[9] of November 23, 1998, the labor arbiter found that Miclat
was illegally dismissed and directed her reinstatement. The dispositive portion
of the decision reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby

rendered ordering the respondent to reinstate complainant to her former or
equivalent position without loss of seniority rights and benefits and to pay her
backwages, from the time of dismissal to actual reinstatement,
proportionate 13th month pay and two (2) days salary computed as follows:

a.1) Backwages 10/23/97 to 11/30/98

P6,500.00 x 13.25 months = P86,125.00
 a.2) Proportionate 13th month pay
1/12 of P86,125 = 7,177.08

b) 13th month pay - 1997

=P6,500 x 9.75 months/12 = 5,281.25

c) Two days salary

=P6,500/26 x 2 days = 500.00

TOTAL P 99,083.33

(Emphasis and underscoring supplied).

Before the National Labor Relations Commission (NLRC) to which

petitioners appealed, they argued that:[10]

1. [CLARION] was placed under receivership thereby evidencing the fact

that it sustained business losses to warrant the termination of [Miclat]
from her employment.

2. The dismissal of [Miclat] from her employment having been effected in

accordance with the law and in good faith, [Miclat] does not deserve to
be reinstated and paid backwages, 13th month pay and two (2) days
salary.

And petitioners pointed out that CLARION had expressed its decision to
shutdown its operations by Memorandum[11] of January 7, 1998 to its company
managers.

Appended to petitioners appeal before the NLRC were photocopies of

their balance sheets from 1997 to November 1998 which they claimed to
unanimously show that x x x [petitioner] company experienced business
reverses which were made the basis x x x in retrenching x x x.[12]

By Resolution[13] of June 17, 1999, the NLRC affirmed the labor arbiters
decision. The pertinent portion of the NLRC Resolution reads:

There are three (3) valid requisites for valid retrenchment: (1) the
retrenchment is necessary to prevent losses and such losses are proven; (2)
written notices to the employees and to the Department of Labor and
Employment at least one (1) month prior to the intended date of retrenchment;
and (3) payment of separation pay equivalent to one (1) month pay or at least
month pay for every year of service, whichever is higher. The two notices are
mandatory. If the notice to the workers is later than the notices sent to DOLE,
the date of termination should be at least one month from the date of notice to
the workers.

In Lopez Sugar Corporation v. Federation of Free Workers Philippine Labor

Union Association (PLUA-NACUSIP) and National Labor Relations
Commission, the Supreme Court had the occasion to set forth four standards
which would justify retrenchment, being, firstly, - the losses expected should
be substantial and not merely de minimis in extent. If the loss purportedly
sought to be forestalled by retrenchment is clearly shown to be insubstantial
and inconsequential in character, the bona fide nature of the retrenchment
would appear to be seriously in question; secondly, - the substantial loss
apprehended must be reasonably imminent, as such imminence can be
perceived objectively and in good faith by the employer. There should, in other
words, be a certain degree of urgency for the retrenchment, which is after all a
drastic course with serious consequences for the livelihood of the employees
retired or otherwise laid-off; thirdly, - because of the consequential nature of
retrenchment, it must be reasonably necessary and likely to effectively
prevent the expected losses. The employer should have taken other
measures prior or parallel to retrenchment to forestall losses, i.e., cut other
cost than labor costs; and lastly, - the alleged losses if already realized and
the expected imminent losses sought to be forestalled, must be proven by
sufficient and convincing evidence.

The records show that these requirements were not substantially complied
with. And proofs presented by respondents-appellants were short of being
sufficient and convincing to justify valid retrenchment. Their position must
therefore fail. The reason is simple. Evidences on record presented fall short
of the requirement of substantial, sufficient and convincing evidence to
persuade this Commission to declare the validity of retrenchment espoused
by respondents-appellants. The petition before the Securit[ies] and Exchange
Commission for suspension of payment does not prove anything to come
within the bounds of justifying retrenchment. In fact, the petition itself lends
credence to the fact that retrenchment was not actually reinstated under the
circumstances prevailing when it stated, The foregoing notwithstanding,
however, the present combined financial condition of the petitioners clearly
indicates that their assets are more than enough to pay off the credits. Verily,
reading further into the petition, We are not ready to disregard the fact that
the petition merely seeks to suspend payments of their obligation from creditor
banks and other financing institutions, and not because of imminent
substantial financial loss. On this account, We take note of paragraph 7 of the
petition which stated: The situation resulted in cash position being spread
thin. However, despite the thin cash positioning, the management was very
positive and saw a very viable proposition since the expansion and the
additional investments would result in a bigger real estate base which would
be a very credible collateral for further expansions. It was envisioned that in
the end, there would a bigger cash procurement which would result in greater
volume of production, profitability and other good results based on the
expectations and projections of the team itself. Admittedly, this does not
create a picture of retrenchable business atmosphere pursuant to Article 283
of the Labor Code.

We cannot disregard the fact that respondent-appellants failed in almost all of

the criteria set by law and jurisprudence in justifying valid retrenchment. The
two (2) mandatory notices were violated. The supposed notice to the DOLE
(Annex 4, List of Employees on Shutdown) is of no moment, the same having
no bearing in this case. Herein complainant-appellee was not even listed
therein and the date of receipt by DOLE, that is, January 18, 1999, was way
out of time in relation to this case. And no proof was adduced to evidence cost
cutting measures, to say the least. Nor was there proof shown that separation
pay had been awarded to complainant-appellee.

WHEREFORE, premises considered, and finding no grave abuse of discretion

on the findings of Labor Arbiter Nieves V. De Castro, the appeal is DENIED
for lack of merit.

The decision appealed from is AFFIRMED in toto. (Italics in the original;

underscoring supplied; citations omitted)

Petitioners Motion for Reconsideration of the NLRC resolution having

been denied by Resolution[14] of July 29, 1999, petitioners filed a petition
for certiorari[15] before the Court of Appeals (CA) raising the following
arguments:
 1. PETITIONER CLARION WAS PLACED UNDER RECEIVERSHIP
THEREBY EVIDENCING THE FACT THAT IT SUSTAINED
BUSINESS LOSSES TO WARRANT THE TERMINATION OF
PRIVATE RESPONDENT MICLAT FROM HER EMPLOYMENT.

2. THE DISMISSAL OF PRIVATE RESPONDENT MICLAT FROM HER

EMPLOYMENT HAVING BEEN EFFECTED IN ACCORDANCE WITH
THE LAW AND IN GOOD FAITH, PRIVATE RESPONDENT DOES
NOT DESERVE TO BE REINSTATED AND PAID BACKWAGES,
13TH MONTH PAY AND TWO (2) DAYS SALARY. (Underscoring
supplied)

By Decision[16] of November 24, 2000, the CA sustained the resolutions of

the NLRC in this wise:

In the instant case, Clarion failed to prove its ground for retrenchment as well

as compliance with the mandated procedure of furnishing the employee and
the Department of Labor and Employment (hereafter, DOLE) with one (1)
month written notice and payment of separation pay to the employee. Clarions
failure to discharge its burden of proof is evident from the following instances:

First, Clarion presented no evidence whatsoever before the Labor Arbiter. To

prove serious business losses, Clarion presented its 1997 and 1998 financial
statements and the SEC Order for the Creation of an Interim Receiver, for
the first time on appeal before the NLRC. The Supreme Court has
consistently disallowed such practice unless the party making the belated
submission of evidence had satisfactorily explained the delay. In the instant
case, said financial statements are not admissible in evidence due to Clarions
failure to explain the delay.
Second, even if such financial statements were admitted in evidence, they
would not alter the outcome of the case as statements have weak probative
value. The required method of proof in such case is the presentation of
financial statements prepared by independent auditors and not merely by
company accountants. Again, petitioner failed in this regard.

Third, even audited financial statements are not enough. The employer must
present the statement for the year immediately preceding the year the
employee was retrenched, which Clarion failed to do in the instant case, to
prove not only the fact of business losses but more importantly, the fact that
such losses were substantial, continuing and without immediate prospect of
abatement. Hence, neither the NLRC nor the courts must blindly accept such
audited financial statements. They must examine and make inferences from
the data presented to establish business losses. Furthermore, they must be
cautioned by the fact that sliding incomes or decreasing gross revenues alone
are not necessarily business losses within the meaning of Art. 283 since in the
nature of things, the possibility of incurring losses is constantly present in
business operations.

Last, even if business losses were indeed sufficiently proven, the employer
must still prove that retrenchment was resorted to only after less drastic
measures such as the reduction of both management and rank-and-file
bonuses and salaries, going on reduced time, improving manufacturing
efficiency, reduction of marketing and advertising costs, faster collection of
customer accounts, reduction of raw materials investment and others, have
been tried and found wanting. Again, petitioner failed to prove the exhaustion
of less drastic measures short of retrenchment as it had failed with the other
requisites.
It is interesting to note that Miclat started as a probationary employee on 21
April 1997. There being no stipulation to the contrary, her probation period
had a duration of six (6) months from her date of employment. Thus, after the
end of the probation period on 22 October 1997, she became a regular
employee as of 23 October 1997 since she was allowed to work after the end
of said period. It is also clear that her probationary employment was not
terminated at the end of the probation period on the ground that the employee
failed to qualify in accordance with reasonable standards made known to her
at the time of engagement.

However, 23 October 1997 was also the day of Miclats termination from
employment on the ground of retrenchment. Thus, we have a bizarre situation
when the first day of an employees regular employment was also the day of
her termination. However, this is entirely possible, as had in fact happened in
the instant case, where the employers basis for termination is Art. 288,
instead of Art. 281 of the Labor Code. If petitioner terminated Miclat with Art.
281 in mind, it would have been too late to present such theory at this stage
and it would have been equally devastating for petitioner had it done so
because no evidence exists to show that Miclat failed to qualify with
petitioners standards for regularization. Failure to discharge its burden of
proof would still be petitioners undoing.

Whichever way We examine the case, the conclusion is the

same Miclat was illegally dismissed. Consequently, reinstatement without loss
of seniority rights and full backwages from date of dismissal on 23 October
1997 until actual reinstatement is in order.
WHEREFORE, the instant petition is hereby DISMISSED and the 29 July
1999 and 7 June 1999 resolutions of the NLRC are SUSTAINED. (Emphasis
and underscoring supplied)

By Resolution[17] of May 23, 2001, the CA denied petitioners motion for

reconsideration of the decision.

Hence, the present petition for review on certiorari, petitioners contending

that:

WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS

GRAVELY ERRED IN SUSTAINING THE ASSAILED DECISIONS OF
HONORABLE PUBLIC RESPONDENT COMMISSION:

A. HOLDING THAT PRIVATE RESPONDENT MICLAT WAS ILLEGALLY

DISMISSED; and

B. ORDERING THE REINSTATEMENT OF PRIVATE RESPONDENT

MICLAT TO HER FORMER OR EQUIVALENT POSITION WITHOUT
LOSS OF SENIORITY RIGHTS AND BENEFITS AND PAYMENT OF
BACKWAGES, 1[3]TH MONTH PAY AND TWO (2) DAYS SALARY.[18]

Petitioners argue that the conclusion of the CA that no sufficient proof of

financial losses on the part of CLARION was adduced is patently erroneous,
given the serious business reverses it had gravely suffered as reflected in its
financial statements/balance sheets, thereby leaving as its only option the
retrenchment of its employees including Miclat.[19]

Petitioners further argue that when a company is under receivership and a

receiver is appointed to take control of its management and corporate affairs,
one of the evident reasons is to prevent further losses of said company and
protect its remaining assets from being dissipated; and that the submission of
financial reports/statements prepared by independent auditors had been
rendered moot and academic, the company having shutdown its operations
and having been placed under receivership by the SEC due to its inability to
pay or comply with its obligations.[20]

Respecting the CAs holding that the financial statements CLARION

submitted for the first time on appeal before the NLRC are inadmissible in
evidence due to its failure to explain the delay in the submission thereof,
petitioners lament the CAs failure to consider that technical rules on evidence
prevailing in the courts are not controlling in proceedings before the NLRC
which may consider evidence such as documents and affidavits submitted by
the parties for the first time on appeal.[21]

As to the CAs holding that CLARION failed to prove the exhaustion of less
drastic measures short of retrenching, petitioners advance that prior to the
termination of Miclat, CLARION, together with the other companies under the
EYCO Group of Companies, was placed under receivership during which
drastic measures to continue business operations of the company and
eventually rehabilitate itself were implemented.[22]

Denying Miclats entitlement to backwages, petitioners proffer that her

dismissal rested upon a valid and authorized cause. And petitioners assail as
grossly erroneous the award of 13th month pay to Miclat, she not having
sought it and, therefore, there was no jurisdiction to award the same.[23]

The petition is partly meritorious.

Contrary to the CAs ruling, petitioners could present evidence for the first
time on appeal to the NLRC. It is well-settled that the NLRC is not precluded
from receiving evidence, even for the first time on appeal, because technical
rules of procedure are not binding in labor cases.

The settled rule is that the NLRC is not precluded from receiving evidence on
appeal as technical rules of evidence are not binding in labor cases. In fact,
labor officials are mandated by the Labor Code to use every and all
reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure, all in the
interest of due process. Thus, in Lawin Security Services v. NLRC, and Bristol
Laboratories Employees Association-DFA v. NLRC, we held that even if the
evidence was not submitted to the labor arbiter, the fact that it was duly
introduced on appeal to the NLRC is enough basis for the latter to be more
judicious in admitting the same, instead of falling back on the mere
technicality that said evidence can no longer be considered on appeal.
Certainly, the first course of action would be more consistent with equity and
the basic notions of fairness. (Italics in the original; citations omitted)[24]

It is likewise well-settled that for retrenchment to be justified, any claim of

actual or potential business losses must satisfy the following standards: (1)
the losses are substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably necessary and is
likely to be effective in preventing expected losses; and (4) the alleged losses,
if already incurred, or the expected imminent losses sought to be forestalled,
are proven by sufficient and convincing evidence.[25] And it is the employer
who has the onus of proving the presence of these standards.

Sections 5 and 6 of Presidential Decree No. 902-A (P.D. 902-A)

(REORGANIZATION OF THE SECURITIES AND EXCHANGE
COMMISSION WITH ADDITIONAL POWERS AND PLACING SAID AGENCY
UNDER THE ADMINISTRATIVE SUPERVISION OF THE OFFICE OF THE
PRESIDENT),[26] as amended, read:

SEC. 5 In addition to the regulatory and adjudicative functions of THE

SECURITIES AND EXCHANGE COMMISSION over corporations,
partnerships and other forms of associations registered with it as expressly
granted under existing laws and decrees, it shall have original and exclusive
jurisdiction to hear and decide cases involving:

xxx

(d) Petitions of corporations, partnerships or associations declared in

the state of suspension of payments in cases where the corporation,
partnership or association possesses sufficient property to cover all
debts but foresees the impossibility of meeting them when they
respectively fall due or in cases where the corporation, partnership,
association has no sufficient assets to cover its liabilities, but is under
the management of a Rehabilitation Receiver or Management Committee
created pursuant to this Decree.

SEC. 6. In order to effectively exercise such jurisdiction, the Commission shall

possess the following powers:

xxx

(c) To appoint one or more receivers of the property, real and personal,
which is the subject of the action pending before the Commission in
accordance with the provisions of the Rules of Court in such other cases
whenever necessary in order to preserve the rights of the parties-litigants
and/or protect the interest of the investing public and creditors:
Provided, however, That the Commission may in appropriate cases,
appoint a rehabilitation receiver of corporations, partnerships or other
associations not supervised or regulated by other government agencies
who shall have, in addition to powers of the regular receiver under the
provisions of the Rules of Court, such functions and powers as are
provided for in the succeeding paragraph (d) hereof: x x x

(d) To create and appoint a management committee, board or body upon

petition or motu propio to undertake the management of corporations,
partnership or other associations not supervised or regulated by other
government agencies in appropriate cases when there is imminent danger
of dissipation, loss, wastage or destruction of assets or other properties
or paralization of business operations of such corporations or
entities which may be prejudicial to the interest of minority
stockholders, parties-litigants of the general public: x x x (Emphasis and
underscoring supplied).

From the above-quoted provisions of P.D. No. 902-A, as amended, the

appointment of a receiver or management committee by the SEC
presupposes a finding that, inter alia, a company possesses sufficient
property to cover all its debts but foresees the impossibility of meeting them
when they respectively fall due and there is imminent danger of dissipation,
loss, wastage or destruction of assets of other properties or paralization of
business operations.

That the SEC, mandated by law to have regulatory functions over

corporations, partnerships or associations,[27] appointed an interim receiver for
the EYCO Group of Companies on its petition in light of, as quoted above, the
therein enumerated factors beyond the control and anticipation of the
management rendering it unable to meet its obligation as they fall due, and
thus resulting to complications and problems . . . to arise that would impair
and affect [its] operations . . . shows that CLARION, together with the other
member-companies of the EYCO Group of Companies, was suffering
business reverses justifying, among other things, the retrenchment of its
employees.

This Court in fact takes judicial notice of the Decision[28] of the Court of
Appeals dated June 11, 2000 in CA-G.R. SP No. 55208, Nikon Industrial
Corp., Nikolite Industrial Corp., et al. [including CLARION], otherwise
known as the EYCO Group of Companies v. Philippine National Bank,
Solidbank Corporation, et al., collectively known and referred as the
Consortium of Creditor Banks, which was elevated to this Court via Petition
for Certiorari and docketed as G.R. No. 145977, but which petition this Court
dismissed by Resolution dated May 3, 2005:

Considering the joint manifestation and motion to dismiss of petitioners and

respondents dated February 24, 2003, stating that the parties have reached a
final and comprehensive settlement of all the claims and counterclaims
subject matter of the case and accordingly, agreed to the dismissal of the
petition for certiorari, the Court Resolved to DISMISS the petition
for certiorari (Underscoring supplied).

The parties in G.R. No. 145977 having sought, and this Court having
granted, the dismissal of the appeal of the therein petitioners including
CLARION, the CA decision which affirmed in toto the September 14, 1999
Order of the SEC, the dispositive portion of which SEC Order reads:

WHEREFORE, premises considered, the appeal is as it is hereby, granted

and the Order dated 18 December 1998 is set aside. The Petition to be
Declared in State of Suspension of payments is hereby disapproved and the
SAC Plan terminated. Consequently, all committee, conservator/ receivers
created pursuant to said Order are dissolved and discharged and all acts and
orders issued therein are vacated.

The Commission, likewise, orders the liquidation and dissolution of the

appellee corporations. The case is hereby remanded to the hearing panel
below for that purpose.

x x x (Emphasis and underscoring supplied),

has now become final and executory. Ergo, the SECs disapproval of the
EYCO Group of Companies Petition for the Declaration of Suspension of
Payment . . . and the order for the liquidation and dissolution of these
companies including CLARION, must be deemed to have been unassailed.

That judicial notice can be taken of the above-said case of Nikon Industrial
Corp. et al. v. PNB et al., there should be no doubt.

As provided in Section 1, Rule 129 of the Rules of Court:

SECTION 1. Judicial notice, when mandatory. A court shall take judicial

notice, without the introduction of evidence, of the existence and territorial
extent of states, their political history, forms of government and symbols of
nationality, the law of nations, the admiralty and maritime courts of the world
and their seals, the political constitution and history of the Philippines,
the official acts of the legislative, executive and judicial departments of the
Philippines, the laws of nature, the measure of time, and the geographical
divisions. (Emphasis and underscoring supplied)

which Mr. Justice Edgardo L. Paras interpreted as follows:

A court will take judicial notice of its own acts and records in the same
case, of facts established in prior proceedings in the same case, of the
authenticity of its own records of another case between the same parties, of
the files of related cases in the same court, and of public records on file
in the same court. In addition judicial notice will be taken of the record,
pleadings or judgment of a case in another court between the same parties or
involving one of the same parties, as well as of the record of another case
between different parties in the same court. Judicial notice will also be taken
of court personnel. (Emphasis and underscoring supplied)[29]

In fine, CLARIONs claim that at the time it terminated Miclat it was

experiencing business reverses gains more light from the SECs disapproval of
the EYCO Group of Companies petition to be declared in state of suspension
of payment, filed before Miclats termination, and of the SECs
consequent order for the group of companies dissolution and liquidation.

This Courts finding that Miclats termination was justified notwithstanding,

since at the time she was hired on probationary basis she was not informed of
the standards that would qualify her as a regular employee, under Section 6,
Rule I of the Implementing Rules of Book VI of the Labor Code which reads:

SEC. 6. Probationary employment. There is probationary employment where

the employee, upon his engagement, is made to undergo a trial period during
which the employer determines his fitness to qualify for regular employment,
based on reasonable standards made known to him at the time of
engagement.

Probationary employment shall be governed by the following rules:

xxx
(d) In all cases of probationary employment, the employer shall make
known to the employee the standards under which he will qualify as a
regular employee at the time of his engagement. Where no standards are
made known to the employee at that time, he shall be deemed a regular
employee (Emphasis and underscoring supplied),

she was deemed to have been hired from day one as a regular employee.[30]

CLARION, however, failed to comply with the notice requirement provided

for in Article 283 of the Labor Code, to wit:

ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF

PERSONNEL. The employer may also terminate the employment of any
employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written
notice on the worker and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. x x x (Emphasis and
underscoring supplied)

This Court thus deems it proper to award the amount equivalent to Miclats
one (1) month salary of P6,500.00 as nominal damages to deter employers
from future violations of the statutory due process rights of employees.[31]

Since Article 283 of the Labor Code also provides that [i]n case of
retrenchment to prevent losses, . . . the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. . . , [a] fraction of at least six (6) months [being]
considered one (1) whole year, this Court holds that Miclat is entitled to
separation pay equivalent to one (1) month salary.

As to Miclats entitlement to 13th month pay, paragraph 6 of the Revised

Guidelines on the 13th Month Pay Law provides:

6. 13th Month Pay of Resigned or Separated Employee

An employee x x x whose services were terminated any time before the time
for payment of the 13th month pay is entitled to this monetary benefit in
proportion to the length of time he worked during the calendar year up to the
time of his resignation or termination from the service. Thus if he worked only
from January up to September his proportionate 13th month pay shall be
equivalent to 1/12 of his total basic salary he earned during that period.

xxx

Having worked at CLARION for six months, Miclats 13th month pay should
be computed as follows:

(Monthly Salary x 6 ) / 12 = Proportionate 13th month pay

(P6,500.00 x 6) / 12 = P3,250.00

With the appointment of a management receiver in September 1997,

however, all claims and proceedings against CLARION, including labor
claims,[32] were deemed suspended during the existence of the receivership.
[33]
 The labor arbiter, the NLRC, as well as the CA should not have proceeded
to resolve respondents complaint for illegal dismissal and should instead have
directed respondent to lodge her claim before the then duly-appointed
receiver of CLARION. To still require respondent, however, at this time to
refile her labor claim against CLARION under the peculiar circumstances of
the case that 8 years have lapsed since her termination and that all the
arguments and defenses of both parties were already ventilated before the
labor arbiter, NLRC and the CA; and that CLARION is already in the course of
liquidation this Court deems it most expedient and advantageous for both
parties that CLARIONs liability be determined with finality, instead of still
requiring respondent to lodge her claim at this time before the liquidators of
CLARION which would just entail a mere reiteration of what has been already
argued and pleaded. Furthermore, it would be in the best interest of the other
creditors of CLARION that claims against the company be finally settled and
determined so as to further expedite the liquidation proceedings. For the
lesser number of claims to be proved, the sooner the claims of all creditors of
CLARION are processed and settled.

WHEREFORE, the Court of Appeals November 24, 2000 Decision,

together with its May 23, 2001 Resolution, is SET ASIDE and another
rendered declaring the legality of the dismissal of respondent, Michelle Miclat.
Petitioners are ORDERED, however, to PAY her the following in accordance
with the foregoing discussions:

1) P6,500.00 as nominal damages for non-compliance with statutory due

process;

2) P6,500.00 as separation pay; and

3) P3,250.00 as 13th month pay.

Let a copy of this Decision be furnished the SEC Hearing Panel charged
with the liquidation and dissolution of petitioner corporation for inclusion, in the
list of claims of its creditors, respondent Michelle Miclats claims, to be
satisfied in accordance with Article 110 of the Labor Code in relation to the
Civil Code provisions on Concurrence and Preference of Credits.

Costs against petitioners.