On February 10, 1988, private respondent Estrada filed with

PHILIPPINE-SINGAPORE TRANSPORT SERVICES,

the POEA Adjudication Department a complaint against PSTS
INC., petitioner, vs. NATIONAL LABOR RELATIONS
and Intra-Oil for illegal dismissal, docketed as POEA Case No.
COMMISSION and Capt. WENEFREDO N.
M-88-02-102. He asked for the reimbursement of his plane fare
ESTRADA, respondents.
and payment of his leave pay and of the remaining salaries for
the unexpired portion of his six-month contractual period.
DECISION
In its answer, PSTS alleged that the dismissal of private
TORRES, JR., J.: respondent Estrada was due to a valid cause, which is
incompetency. It asserted that his incompetency is evidenced
The instant case basically revolves around the issue of by the telexes of the charterer to PSTS complaining about the
whether or not private respondent Wenefredo N. Estrada, the private respondents incompetency in handling the vessel for any
complainant in POEA Case No. M-88-02-102 entitled Capt. tow or even approaching the oil drilling platforms, and informing
Wenefredo N. Estrada vs. Philippine Singapore Transport about its (charterers) decision to terminate the services of
Services, Inc., et. al., is validly dismissed from the service on private respondent as master of the vessel and to off-hire the
account of his alleged incompetence as the master/captain of Sea Carrier I due to private respondents
the vessel Sea Carrier I. incompetence. According to PSTS, it had no choice but to give
It appears that on November 24, 1987, herein petitioner its consent to the dismissal of private respondent by the
Philippine-Singapore Transport Services, Inc. (PSTS, for charterer because the latter was in a best position to determine
brevity), a manning agency, hired private respondent Estrada as the qualification of the private respondent.
master of the vessel Sea Carrier I for its foreign principal, Intra- In his position paper, private respondent revealed that his
Oil Supplies Sbn Bhd (Intra-Oil, for brevity). Intra-Oil had a termination from service was an offshoot of his justified refusal
charter agreement, then, with a company which was engaged in to obey the order of the charterer to tow another of its vessel.He
a project of oil drilling in the high seas of Bombay, India. explained that during the voyage from Singapore to Bombay, in
On January 21, 1988 or barely two months following his the course of maneuvering the charterers barge, specifically
employment, private respondent Estrada was informed by a alongside jetties, quays and in navigational channels, all the
representative of Modest Shipping, an agent of Intra-Oil, that he ropes on board the Sea Carrier I suffered extreme wear and
would be relieved from his employment and repatriated back to tear, that when the charterer ordered him to tow its barge, he
the Philippines. He was not given any explanation or reason for refused to do so since the ropes were worn out and inadequate
his relief. On that same day, someone took over as captain of to maneuver a barge in close water situation and, in his
Sea Carrier I, which prompted Estrada to relinquish his post. On professional opinion, damage would result from using
account of this unfortunate incident, he decided to return to inadequate ropes. This shortage of ropes was made known to
Manila the following day. Upon his arrival, he readily went to Mr. Bala of Essar Shipping, who was asked by the private
petitioner PSTS to ask about his dismissal from employment respondent to supply additional mooring ropes. According to the
and to claim for his unpaid salary and the sum corresponding to private respondent, the relationship between him and the
his plane fare which was deducted from his salary. Petitioner charterer degenerated rapidly following this particular incident.
PSTS informed him that his service was terminated due to his On June 7, 1989, the POEA Adjudication Department ruled
incompetence. It also denied his claim for the sum of money. in favor of the private respondent by holding that his dismissal
from service was illegal, the dispositive portion of its decision the voyage could only be attributed to his incompetency. As
states: master of the vessel, he was required to see to it that the ship
was fitted with all the things necessary for its smooth
WHEREFORE, in view of all the foregoing operation. The fact that the shortage of ropes was made known
circumstances, judgment is hereby rendered by private respondent to Mr. Bala did not cure his
incompetency. The request for fresh ropes should have been
ordering respondent Philippine-Singapore Transport directed to his principal, and not to a third person (Mr. Bala) who
Services, its principal Intra Oil Supplies SBN BND was not even connected with the petitioner nor with its principal.
and Fortune Life and General Insurance Co., Inc.
Petitioner likewise asserted that in defying the charterers
(PSTSIs surety) to pay complainant (Estrada) jointly request to tow its barge, the private respondent failed to comply
and severally the sum of THIRTEEN THOUSAND with his duty to maintain good relationship and cooperate with
FIVE HUNDRED THIRTY MALAYSIAN DOLLARS the charterer as laid down on his employment contract, an
incident which led to the off-hiring of Sea Carrier I and the
(M$13,530.00) or its peso equivalent at the time of
consequent cancellation of the charter agreement. And the
payment (representing Estradas salaries covering cancellation of the charter agreement carried with it the
the unexpired portion of his contract of dismissal from service of private respondent because he was a
employment) plus the sum of TEN THOUSAND project employee whose employment was coterminous with the
PESOS (P10,000.00) as refund of airplane charter of Sea Carrier I. It could not therefore be said that the
dismissal was not valid.
expenses.[1]
As to the procedural aspect of private respondents
Dissatisfied, PSTS appealed to the NLRC on July 12, dismissal, petitioner alleged that his termination was done
1989. The NLRC, however, through its questioned Resolution pursuant to the terms of the employment contract, hence, with
dated August 17, 1990,[2] held that the charge of private due regard to due process of law.
respondents incompetency was unmeritorious. The real reason We are not persuaded by the foregoing arguments of
for private respondents repatriation was not due to his petitioner.
incompetence but due to his refusal to tow another barge
belonging to the charterer and which refusal had been shown to It is noteworthy to state that an employer is free to manage
be justified and fully explained by the private respondent. Thus, and regulate, according to his own discretion and judgment, all
the NLRC affirmed the decision of the POEA and dismissed the phases of employment, which includes hiring, work
appeal of petitioner for lack of merit. assignments, working methods, time, place and manner of
work, supervision of workers, working regulations, transfer of
A motion for reconsideration dated September 14, 1990 was employees, lay-off of workers, and the discipline, dismissal and
filed by petitioner, but the same was denied in a Resolution recall of work.[5] While the law recognizes[6] and
dated September 25, 1990.[3] safeguards[7] this right of an employer to exercise what are
Hence, this petition.[4] clearly management prerogatives, such right should not be
abused and used as a tool of oppression against labor. The
Petitioner argued that the private respondents inability to companys prerogatives must be exercised in good faith and with
foresee and anticipate the quantity of ropes to be used during due regard to the rights of labor. A priori, they are not absolute
prerogatives but are subject to legal limits, collective bargaining dismissed without just cause, he is entitled to reinstatement with
agreements and the general principles of fair play and justice.[8] backwages up to the time of his actual reinstatement, if the
contract of employment is not for a definite period; or to the
The power to dismiss an employee is a recognized
payment of his salaries corresponding to the unexpired portion
prerogative that is inherent in the employers right to freely
of the employment contract, if the contract is for the definite
manage and regulate his business. Corollarily, an employer can
period. If the dismissal is for a just cause but it was made
not rationally be expected to retain the employment of a person
without due process, the employee is entitled to the payment of
whose lack of morals, respect and loyalty to his employer,
an indemnity.[18]
regard for his employers rules and appreciation of the dignity
and responsibility of his office, has so plainly and completely Guided by the foregoing rules and principles, this Court
been bared.[9] He may not be compelled to continue to employ holds that the dismissal of private respondent from service is
such person whose continuance in the service will patently be done without just cause, in apparent violation of Article 279 in
inimical to his employers interest.[10] The right of the company to relation to Article 282 of the Labor Code of the Philippines, as
dismiss an employee is a measure of self-protection.[11] Such amended, and without due process, in obvious contravention of
right, however, is subject to regulation by the State, basically in Article 277 (b) of the said Code.
the exercise of its paramount police power.[12] Thus, the
Petitioners imputation of incompetence on the part of the
dismissal of employees must be made within the parameters of
private respondent due to his lack of foresight to anticipate the
the law and pursuant to the basic tenets of equity, justice and
number of mooring ropes to be used is unworthy of being given
fairplay. It must not be done arbitrarily and without just cause.[13]
credence. As explained by private respondent, the Sea Carrier I
Due process must be observed because the dismissal was sufficiently furnished with mooring ropes prior to the
affects not only the employees position but also his means of voyage. It so happened that the ropes would later on suffer(ed)
livelihood. Truly, unemployment brings untold misery and extreme wear and tear during its voyage from Singapore to
hardship not only to the workingmen but also to those who are Bombay especially along jetties and quays, and in navigational
dependent on the wage earners. When a person has no channels. Faced by such problem, he immediately reported the
property, his job may possibly be his only possession or means situation to, and at the same time, requested for new mooring
of livelihood.Therefore he should be protected against arbitrary ropes from, Mr. Bala of Essar Shipping, a person whom the
deprivation of his job.[14] private respondent alleged to be connected with the petitioner
and its principal. No new ropes came, however. So, when the
No less than the Constitution recognizes and guarantees
charterer ordered private respondent to tow its barge, he
the labors right to security of tenure.[15] Under the Labor Code of
explained that the ropes were worn out and, in his professional
the Philippines, as amended, specifically, Article 279 of the said
opinion, inadequate for maneuvering a barge in close water
Code, the security of tenure has been construed to mean as
situation, hence, damage would result if towing of the barge
that the employer shall not terminate the services of an
would proceed. Evidently, as called for by the circumstances of
employee except for a just cause or when authorized by the
the situation, the private respondent complied with his
Code.[16] The two facets of this legal provision are: (a) the
responsibility as master of the vessel. To ask for more from him
legality of the act of dismissal; and (b) the legality in the manner
is to require an undertaking that is beyond or in excess of the
of dismissal. The illegality of the act of dismissal constitutes
scope of his duty as master of the vessel. Even the NLRC
discharge without just cause, while illegality in the manner of
belied the claim of petitioner that private respondent was
dismissal is dismissal without due process.[17] If an employee is
incompetent, thus:
To our mind, respondents charge of incompetence off-hire the Sea Carrier I and eventually canceled the charter
is rather sweeping xxx. Complainants refusal to agreement because of the alleged incompetence of the master
of the vessel. But as discussed earlier, the imputation of
carry out the towing order on the basis of his incompetence on the part of the private respondent is bereft of
professional opinion that there was a shortage in any basis. Thus, the alleged incompetence can not be utilized
towing ropes, a situation which was known to a as a valid and justifiable reason to dismiss the private
certain Mr. Bala of Essar Shipping, or that they respondent from employment, much less, to cancel the charter
agreement.In like manner, the procedural aspect of private
were inadequate and that it might result in an
respondents termination from employment leaves much to be
accident or cause damage certainly does not prove desired.
that he was incompetent. On the other hand, it
Before an employee can be dismissed, the Labor Code, as
would even show that he was very professional in amended, requires the employer to furnish the employee a
his job as master, regardless of the intrusions of written notice containing a statement of the causes for
the charterer into his area of responsibility. It termination and to afford said employee ample opportunity to be
would have been a different story had complainant heard and to defend himself with the assistance of his
representative if he so desires. If the employer decides to
refused the towing order simply because he didnt terminate the services of the employee, the employer mush
know how to, in which case he could be said to be notify the worker in writing of the decision to dismiss him, stating
incompetent in that area of expertise.[19] clearly the reasons therefor.[21] The record of the instant case
clearly shows that the foregoing requirements are not complied
The contention of petitioner that Mr. Bala was not in any with. Private respondent Estrada was caught by surprise when
way connected with it or to its principal deserves scant on January 21, 1988 he was told by the agent of the principal
consideration. Suffice it to say that during the proceedings that he would be replaced as master of the vessel and would be
below, petitioner did not raise this issue. It is only now when repatriated to the Philippines. He was not given any explanation
petitioner elevated the case to this Court that it is challenging or reason for his dismissal. His replacement as master of the
the claim of private respondent that Mr. Bala was connected vessel came in the afternoon of the same day he was informed
with the petitioner and its principal. Settled is the rule that issues of his repatriation. He was thus forced to disembarked from the
not raised in the proceedings below can not be ventilated for the vessel. Obviously, the dismissal of private respondent was
first time before this Court.[20] impetuously made without the benefit of the required notice and
hearing.
Petitioner argued that private respondent is a project
employee whose term of service depends upon the charter of Petitioner seeks to justify the absence of the said notice and
Sea Carrier I, hence, the cancellation of the charter agreement hearing by invoking a provision in the contract of employment
carries with it the termination from service of the private which authorizes the company to terminate employment without
respondent. This argument has no leg to stand on because the notice. The pertinent provision of the said employment contract
cancellation of the charter agreement, which was the very basis reads as follows:
for terminating the services of the private respondent, was
unjustifiable. It must be pointed out that the charter decided to
However, in the event of serious misconduct or
neglect of duty or breach by you of any rules or
regulations imposed by the Company, the Company
may without notice or payment in lieu of notice
terminated your employment and all expenses for
your repatriation will be borne by you.[22]

The foregoing contractual provision is inapplicable in the

situation of private respondent. The said provision applies only
when the employee is liable for serious misconduct, neglect of
duty or violation of company rules and regulations. Apparently,
private respondent Estrada was not found guilty of any of these
offenses. The allegation of petitioner that the private respondent
committed neglect of duty or serious misconduct for refusing to
obey the order of the charterer to tow the barge is
unmeritorious. It was the professional opinion of private
respondent that the mooring ropes which had been worn out
during the vessels voyage were inadequate for maneuvering in
close water situations and that an accident might result from
using the said ropes. Thus, the private respondent, in refusing
to tow the other vessel, wanted to secure the vessel of its safety
and to save it from an impending peril. He simply did what a
prudent and careful master of the vessel ought to do under the
circumstances. By faithfully complying with his duty as master of
the vessel, it would not be justified to punish him by terminating
his employment for reasons not sanctioned by law and maritime
usage.
ACCORDINGLY, the instant petition is hereby DISMISSED
for lack of merit. The resolution of the NLRC dated August 17,
1990 and its Resolution dated September 25, 1990 are hereby
AFFIRMED.
AGUSTIN CHU, petitioner, and other organizational changes. Pursuant to the memoranda,
vs. petitioner was transferred to the Sugar Sales Department.
NATIONAL LABOR RELATIONS COMMISSION and
VICTORIAS MILLING COMPANY, INC. respondents. Petitioner protested his transfer and requested a
reconsideration thereof, which was denied. Consequently, on
Legaspi, Rufon, Necesario & Asso. Law Office for petitioner. February 27, 1989, petitioner filed a complaint for illegal
dismissal, contending that he was constructively dismissed from
Decena, Tabat, Jardaleza & Tañoso Law Office for private his employment (RAB IV Case No. 06-02-10081-89).
respondent.
In support of his decision holding that there was no constructive
dismissal of petitioner, the Labor Arbiter said that: (1) petitioner
was transferred to the Sugar Sales Department from the
Warehousing, Sugar, Shipping and Marine Department, both of
QUIASON, J.: which are under the Sugar Sales Area; (2) petitioner’s transfer
was without change in rank or salary; (3) petitioner’s designation
This is a petition for certiorari under Rule 65 of the Revised in either department was the same; (4) the personnel rotation
Rules of Court to reverse and set aside the Decision of the was pursuant to organizational changes done in the valid
Fourth Division of the National Labor Relations Commission exercise of management prerogatives; (5) there was no bad
(NLRC) in Case No. 06-02-10081-89 which dismissed faith in the transfer of petitioner, as other employees similarly
petitioner’s appeal and its Resolution dated March 20, 1992, situated as he were likewise affected; and (6) petitioner failed to
which denied petitioner’s motion for reconsideration. show that he was prejudiced by the changes or transferred to a
demeaning or humiliating position.
We dismiss the petition.
Petitioner appealed to the NLRC which, in a resolution dated
I January 13, 1992, affirmed the Labor Arbiter’s decision. In a
resolution dated March 20, 1992, the NLRC denied petitioner’s
Petitioner retired from the service of private respondent upon motion for reconsideration.
reaching the age of sixty under its regular retirement program.
He was granted an extention of service by the Board of II
Directors of private respondent under a "Special Contract of
Employment." The contract provided, inter alia, that its term was In this petition, petitioner contends that there was no valid
for a period of one year commencing on August 1, 1988; that exercise of management prerogative because: (1) his transfer
petitioner was employed as Head of the Warehousing, Sugar, violated the "Special Contract of Employment" which was the
Shipping and Marine Department; and that he was to receive a law between the parties; and (2) said transfer was unreasonable
basic salary of P6,941.00 per month. and caused inconvenience to him.

Private respondent issued Memorandum No. 1012-PS dated Petitioner argues that private respondent’s prerogative to
December 12, 1988 and Memorandum No. 1028-PS dated transfer him was limited by the "Special Contract of
January 16, 1989, both providing for a rotation of the personnel Employment," which was the "law" between the parties. Thus,
petitioner urges that private respondent, by employing him him, and it does not involve a demotion in rank or
specifically as Head of the Warehousing, Sugar, Shipping, and a diminution of his salaries, benefits, and other
Marine Department, waived its prerogative to reassign him privileges, the employee may not complain that it
within the term of the contract to another department. amounts to a constructive dismissal.

We disagree. In Abbot Laboratories (Phils.) Inc. v. NLRC, 154 SCRA 713

(1987), we also held in referring to the prerogative of transfer of
An owner of a business enterprise is given considerable leeway employees, that:
in managing his business because it is deemed important to
society as a whole that he should succeed. Our law, therefore, This is a function associated with the employer’s
recognizes certain rights as inherent in the management of inherent right to control and manage effectively its
business enterprises. These rights are collectively called enterprise. Even as the law is solicitous of the
management prerogatives or acts by which one directing a welfare of employees, it must also protect the right
business is able to control the variables thereof so as to of an employer to exercise what are clearly
enhance the chances of making a profit. "Together, they may be management prerogatives. The free will of
taken as the freedom to administer the affairs of a business management to conduct its own business affairs to
enterprise such that the costs of running it would be below the achieve its purpose cannot be denied.
expected earnings or receipts. In short, the elbow room in the
quest for profits" (Fernandez and Quiason, The Law on Labor Of course, like other prerogatives, the right to transfer or re-
Relations, 1963 ed., p. 43). assign is subject to limitations arising under the law, contract or
general principles of fair play and justice (Abbot Laboratories
One of the prerogatives of management, and a very important (Phil.) Inc. v. NLRC, 154 SCRA 713 [1987]). Jurisprudence
one at that, is the right to transfer employees in their work proscribes transfers or re-assignments of employees when such
station. In Philippine Japan Active Carbon Corporation v. acts are unreasonable and cause inconvenience or prejudice to
National Labor Relations Commission, 171 SCRA 164 (1989), them (Philippine Japan Active Carbon Corporation v.
we held: NLRC, supra).

It is the employer’s prerogative, based on its We find nothing in the "Special Contract of Employment"
assessment and perception of its employees’ invoked by petitioner wherein private respondent had waived its
qualifications, aptitudes, and competence to move right to transfer or re-assign petitioner to any other position in
them around in the various areas of its business the company. Before such right can be deemed to have been
operations in order to ascertain where they will waived or contracted away, the stipulation to that effect must be
function with maximum benefit to the company. An clearly stated so as to leave no room to doubt the intentions of
employee’s right to security of tenure does not the parties. The mere specification in the employment contract
give him such a vested right in his position as of the position to be held by the employee is not such
would deprive the company of its prerogative to stipulation.
change his assignment or transfer him where he
will be most useful. When his transfer is not As held in Philippine Japan Active Carbon Corporation v.
unreasonable, nor inconvenient, nor prejudicial to National Labor Relations Commission, supra:
 An employee’s right to security of tenure does not
give him such a vested right in his position as
would deprive the company of its prerogatives to
change his assignment or transfer him where he
will be most useful.

Petitioner’s bare assertion that the transfer was unreasonable

and caused him inconvenience cannot override the fact, as
found by the Labor Arbiter and respondent Commission, that the
rotation was made in good faith and was not discriminatory, and
that there was no demotion in rank or a diminution of his salary,
benefits and privileges.

WHEREFORE, the petition for certiorari is DISMISSED.

UNION CARBIDE LABOR UNION (NLU), petitioner, normally work from Monday to
vs. Saturday, the last working day being
UNION CARBIDE PHILIPPINES, INC. AND THE HON. Friday or forty (40) hours a week or
SECRETARY OF LABOR, respondents. from Monday to Friday.

Sometime in July 1972, there seems

to be a change in the working
schedule from Monday to Friday as
MELO, J.: contained in the collective bargaining
agreement aforecited to Sunday thru
This refers to a petition for review of the decision of the then Thursday. The change became
Secretary of Labor Blas Ople handed down on February 7, 1975 effective July 5, 1972. The third shift
which set aside the decision of the Arbitrator ordering employees were required to start the
reinstatement with backwages, and instead adjudged the new work schedule from Sunday thru
payment of separation pay; and the resolution dated July 24, Thursday.
1975 denying petitioner's motion for reconsideration for lack of
merit. On November 6, 1972, the night shift
employees filed a demand to
The undisputed facts as found by the Secretary of Labor are as maintain the old working schedule
follows: from Monday thru Friday. (Letter of
November 6, 1972 addressed to the
. . . Complainants Agapito Duro, Alfredo Torio, and Committee on Labor Relation,
Rustico Javillonar, were dismissed from their UCLU). The demand was referred to
employment after an application for clearance to the Labor Management Relation
terminate them was approved by the Secretary of Committee and discussed from
Labor on December 19, 1972. Respondent's November 15, up to November 24,
application for clearance was premised on "willful 1972. In the discussions had, it was
violation of Company regulations, gross arrived at that all night shift operating
insubordination and refusal to submit to a personnel were allowed to start their
Company investigation . . . ." work Monday and on Saturday. This
excepted the employees in the
Prior events leading to the dismissal of maintenance and preparation crews
complainants are recited in the Arbitrator's whose work schedule is presumed to
decision, which we quote: be maintained from Sunday to
Thursday. The work schedule
It appears that the Company is between management
operating on three (3) shifts namely: representatives and the alleged
morning, afternoon and night shifts. officers of the Union (Varias group)
The workers in the third shift was approved and disseminated to
 take effect November 26, 1972. Petitioner further contends that the dismissal of the
(Exh. "2" Respondent). complainants violated Section 9, Article II of the 1973
Constitution which provides "the right of workers to self-
In manifestation of their dissention to organization, collective bargaining, security of tenure, and just
the new work schedule, the three and humane conditions of work."
respondents Duro, Torio, and
Javillonar did not report for work on The petition has no merit.
November 26, 1972 which was a
Sunday since it was not a working Although Article XIX of the CBA provides for the duration of the
day according to the provisions of agreement, which We quote:
the Collecrtive Bargaining
Agreement. (Exh. "A" Complainant). This agreement shall become effective on
Their absence caused their September 1, 1971 and shall remain in full force
suspension for fourteen (14) days. and effect without change until August 31, 1974.
(pp. 29-30, Rollo). Unless the parties hereto agree otherwise,
negotiation for renewal, or renewal and
On May 4, 1973, the Arbitrator rendered a decision ordering the modification, or a new agreement may not be
reinstatement with backwages of the complainants. On June 8, initiated before July 1, 1974.
1973, the National Labor Relations Commission dismissed
respondent company's appeal for having been filed out of time. this does not necessarily mean that the company can no
A motion for reconsideration which was treated as an appeal longer change its working schedule, for Section 2, Article
was then filed by respondent company before the Secretary of II of the same CBA expressly provides that:
Labor, resulting in the modification of the Arbitrator's decision by
awarding complainants separation pay. A motion for Sec. 2. In the exercise of its functions of
reconsideration subsequently filed by the petitioner was denied management, the COMPANY shall have the sole
for lack of merit. and exclusive right and power, among other
things, to direct the operations and the working
Hence, this petition. force of its business in all respects; to be the sole
judge in determining the capacity or fitness of an
The main issue in this case is whether or not the complainants employee for the position or job to which he has
could be validly dismissed from their employment on the ground been assigned; to schedule the hours of work,
of insubordination for refusing to comply with the new work shifts and work schedules; to require work to be
schedule. done in excess of eight hours or Sundays or
holidays as the exigencies of the service may
Petitioner alleges that the change in the company's working require; to plan, schedule, direct, curtail and
schedule violated the existing Collective Bargaining Agreement control factory operations and schedules of
of the parties. Hence, complainants cannot be dismissed since production; to introduce and install new or
their refusal to comply with the re-scheduled working hours was improved methods or facilities; to designate the
based on a provision of the Collective Bargaining Agreement. work and the employees to perform it; to select
 and hire new employees; to train new employees Finally, it should be observed that the provisions of
and improve the skill and ability of employees from the Constitution should be given only a
one job to another or form one shift to another; to prospective application unless the contrary is
classify or reclassify employees; and to make such clearly intended. Were the rule otherwise, rights
changes in the duties of its employees as the already acquired or vested might be unduly
COMPANY may see fit or convenient for the disturbed or withdrawn even in the absence of an
proper conduct of its business. unmistakable intention to place them within the
scope of the Constitution.
Verily and wisely, management retained the prerogative,
whenever exigencies of the service so require, to change the (p.10, Constitutional Law, Isagani Cruz, 1991
working hours of its employees. And as long as such Edition)
prerogative is exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or We agree with the findings arrived at by both Arbitrator and the
circumventing the rights of the employees under special laws or Secretary of Labor that there is no unfair labor practice in this
under valid agreements, this Court will uphold such exercise case. Neither was there gross and habitual neglect of
(San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, complainants' duties. Nor did the act of complainants in refusing
170 SCRA 25 [1989]). to follow the new working hours amount to serious misconduct
or willful disobedience to the orders of respondent company.
Thus, in the case of Abbott Laboratories (Phil.),
Inc. vs. NLRC (154 SCRA 713 [1987]), We ruled: Although no serious objections may be offered to the Arbitrator's
conclusion to order reinstatement with backwages of the
. . . Even as the law is solicitous of the welfare of complainants, We now refrain from doing so considering that
employees, it must also protect the right of an reinstatement is no longer feasible due to the fact that the
employer to exercise what are clearly controversy started more than 20 years ago aside from the
management prerogatives. The free will of obviously strained relations between the parties.
management to conduct its own business affairs to
achieve its purpose cannot be denied. (p.717) WHEREFORE, the decision appealed from is hereby
AFFIRMED.
Further, the incident complained of took place sometime in
1972, so there is no violation of the 1973 Constitution to speak
of because the guarantee of security of tenure embodied under
Section 9, Article II may not be given a retroactive effect. It is
the basic norm that provisions of the fundamental law should be
given prospective application only, unless legislative intent for
its retroactive application is so provided.

As pointed out by Justice Isagani Cruz, to wit:

SAN MIGUEL BREWERY SALES FORCE UNION (CDS) whereby its beer products were offered for sale directly to
(PTGWO), petitioner, wholesalers through San Miguel's sales offices.
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL The labor union (herein petitioner) filed a complaint for unfair
CORPORATION, respondents. labor practice in the Ministry of Labor, with a notice of strike on
the ground that the CDS was contrary to the existing marketing
Lorenzo F. Miravite for petitioner. scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and
Isidro D. Amoroso for New San Miguel Corp. Sales Force wholesalers had to buy beer products from them, not from the
Union. company. It was alleged that the new marketing scheme
violates Section 1, Article IV of the collective bargaining
Siguion Reyna, Montecillo & Ongsiako for private respondent. agreement because the introduction of the CDS would reduce
the take-home pay of the salesmen and their truck helpers for
the company would be unfairly competing with them.

The complaint filed by the petitioner against the respondent

GRIÑO-AQUINO, J.: company raised two issues: (1) whether the CDS violates the
collective bargaining agreement, and (2) whether it is an indirect
This is a petition for review of the Order dated February 28, way of busting the union.
1980 of the Minister of Labor in Labor Case No. AJML-069-79,
approving the private respondent's marketing scheme, known In its order of February 28, 1980, the Minister of Labor found:
as the "Complementary Distribution System" (CDS) and
dismissing the petitioner labor union's complaint for unfair labor ... We see nothing in the record as to suggest that
practice. the unilateral action of the employer in
inaugurating the new sales scheme was designed
On April 17, 1978, a collective bargaining agreement (effective to discourage union organization or diminish its
on May 1, 1978 until January 31, 1981) was entered into by influence, but rather it is undisputable that the
petitioner San Miguel Corporation Sales Force Union (PTGWO), establishment of such scheme was part of its
and the private respondent, San Miguel Corporation, Section 1, overall plan to improve efficiency and economy
of Article IV of which provided as follows: and at the same time gain profit to the highest.
While it may be admitted that the introduction of
Art. IV, Section 1. Employees within the new sales plan somewhat disturbed the present
appropriate bargaining unit shall be entitled to a set-up, the change however was too insignificant
basic monthly compensation plus commission as to convince this Office to interpret that the
based on their respective sales. (p. 6, Annex A; p. innovation interferred with the worker's right to
113, Rollo.) self-organization.

In September 1979, the company introduced a marketing Petitioner's conjecture that the new plan will sow
scheme known as the "Complementary Distribution System" dissatisfaction from its ranks is already a
 prejudgment of the plan's viability and dismissal and recall of work. ... (NLU vs. Insular La
effectiveness. It is like saying that the plan will not Yebana Co., 2 SCRA 924; Republic Savings Bank
work out to the workers' [benefit] and therefore vs. CIR 21 SCRA 226, 235.) (Perfecto V.
management must adopt a new system of Hernandez, Labor Relations Law, 1985 Ed., p.
marketing. But what the petitioner failed to 44.) (Emphasis ours.)
consider is the fact that corollary to the adoption of
the assailed marketing technique is the effort of Every business enterprise endeavors to increase its profits. In
the company to compensate whatever loss the the process, it may adopt or devise means designed towards
workers may suffer because of the new plan over that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We
and above than what has been provided in the ruled:
collective bargaining agreement. To us, this is one
indication that the action of the management is ... Even as the law is solicitous of the welfare of
devoid of any anti-union hues. (pp. 24-25, Rollo.) the employees, it must also protect the right of an
employer to exercise what are clearly
The dispositive part of the Minister's Order reads: management prerogatives. The free will of
management to conduct its own business affairs to
WHEREFORE, premises considered, the notice of achieve its purpose cannot be denied.
strike filed by the petitioner, San Miguel Brewery
Sales Force Union-PTGWO is hereby dismissed. So long as a company's management prerogatives are
Management however is hereby ordered to pay an exercised in good faith for the advancement of the employer's
additional three (3) months back adjustment interest and not for the purpose of defeating or circumventing
commissions over and above the adjusted the rights of the employees under special laws or under valid
commission under the complementary distribution agreements, this Court will uphold them (LVN Pictures Workers
system. (p. 26, Rollo.) vs. LVN, 35 SCRA 147; Phil. American Embroideries vs.
Embroidery and Garment Workers, 26 SCRA 634; Phil. Refining
The petition has no merit. Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to
compensate the members of its sales force who will be
Public respondent was correct in holding that the CDS is a valid adversely affected by the implementation of the CDS by paying
exercise of management prerogatives: them a so-called "back adjustment commission" to make up for
the commissions they might lose as a result of the CDS proves
Except as limited by special laws, an employer is the company's good faith and lack of intention to bust their
free to regulate, according to his own discretion union.
and judgment, all aspects of
employment, including hiring, work assignments, WHEREFORE, the petition for certiorari is dismissed for lack of
working methods, time, place and manner of work, merit.
tools to be used, processes to be
followed,supervision of workers, working
regulations, transfer of employees, work
supervision, lay-off of workers and the discipline,
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, issued a return-to- work order which, among others, required
vs. the General Manager of the GSIS and the President of the
GOVERNMENT SERVICE INSURANCE SYSTEM GSISSU to sit down together and amicably settle the disputes
SUPERVISORS' UNION, THE COURT OF INDUSTRIAL relative to questioned appointments and promotions complained
RELATIONS AND/OR THE NATIONAL LABOR RELATIONS of by the GSISSU as discriminatory. The General Manager
COMMISSION, respondents. thereafter met and rectified many of the demands of the Union
but the dispute continued.
Leopoldo M. Abellera Manuel M Lazaro, Vicente M.
Constantino, Jr., Office of the Gov't. Corporate Counsel and On March 8, 1969, the Government Service Insurance System
Romulo P. Untalan Legal Officer of GSIS for petitioner. Supervisors' Union filed a petition with the Court of industrial
Relations stating the stand of the GSISSU on the strike and the
Magadia & Uy for respondent Union. causes thereof as follows: (1) consistent refusal of the GSIS to
bargain with the petitioner and (2) union busting activities of the
Gabriel Manansala for respondent Dr. Orlando Misa. GSIS and its continuing commission of unfair labor practices on
11 specific and separate counts. It alleged that promotions are
based on union affiliation and that to further discourage
membership in the GSISSU the GSIS bargained with a rank and
GUERRERO, J.: file union in the GSIS on the terms and conditions of
employment of employees who pertain to the certified
This is a petition for review on certiorari of the Order dated supervisory bargaining unit, such that promotions to positions in
October 8, 1974 of the Court of Industrial Relations in CIR Case Pay Classes 7 to 13 were processed by a CBA Personnel, Pool
No. 87- IPA entitled "Government Service Insurance System composed of rank and file employees.
Supervisors' Union GSISSU Petitioner, vs. Government Service
Insurance System, Respondent," which Order was affirmed by The GSIS through the Government Corporate Counsel
the CIR en banc in its Resolution of October 25, 1974 directing answered on March 29, 1969 the petition and denied the
the Government Service Insurance System to Appoint Dr. imputed acts of discrimination; the GSIS alleged that it did not
Andrea Moral as Acting Assistant Medical Director in place of interfere in the employees' right to self-organization and never
Dr. Orlando Misa, the. present incumbent . considered union affiliation as a ground for promotion; that
promotions are made on the basis of competence, merit and
On February 27, 1969, a strike was called and staged by the qualification to hold the position and on the basis of appropriate
Government Service Insurance System Supervisors' Union civil service eligibility; that promotions to position in Pay Classes
GSISSU in protest against the discriminatory acts constituting 7 to 13 are not processed by the CBA Personnel Pool
unfair labor practices in matters of promotion, among others, composed of rank and file employees; and it finally prayed that
committed by the management of the Government Service the strike be declared illegal
Insurance System against the GSISSU and its members.
Thereafter, the GSISSU Med a supplemental petition dated
The labor dispute was certified by the President of the January 13, 1970, specifying, among others, that the GSIS had
Philippines to the Court of Industrial Relations for compulsory failed and refused to revoke or amend several questionable
arbitration. On March 5, 1969, the Court of Industrial Relations office orders so as to enable the substitution of personnel as in
the case of Orlando Misa as Acting Assistant Manager, Medical Organization Ibero-Americano de Seguridad
Department, to be replaced by Demetrio Lopez or Andrea Moral Social.
(par. 6 [e] of the Supplemental Petition).
Before a designation was made, the qualifications of Dr. Misa
Answering the supplemental petition, the GSIS averred in its and those of Drs. Demetrio Lopez, Andrea Moral and other all
answer under par. 6e dated February 26, 1970 that in point of medical supervisors in the Medical Department, were carefully
qualification, Dr. Orlando Misa had the highest points over the scrutinized and evaluated. As a matter of fact even only a
other aspirants and that in the judgment of the GSIS, Dr. Misa cursory glance at their respective efficiency ratings for the last
was best qualified to occupy the position of Acting Assistant three rating periods ending June 30, 1968 as appearing below
Manager, Medical Department, GSIS, as shown below: will reveal that Dr. Misa always had a better efficiency rating
than any of them except only as of June 30, 1968 when Dr.
(e) Re: Case of Dr. Orlando Misa, Actg. Assistant Lopez had the same rating.
Manager, Medical Department vs. Demetrio Lopez
or Andrea Moral. Name As As of
of December
An evaluation of the qualifications of these June 31, 1967
officials, based on (1) rank or salary; (2) efficiency 30,
rating, (3) education and training, (4) seniority in 1967
the GSIS; (5) seniority in the same department;
and (6) civil service eligibility and in-service Orlando 91.6 91.6
training, shows the following. Misa

Andrea 90.1 90.1

Name Points
Moral
Orlando 64.68
Demetrio 88.3 88.3
Misa
Lopez
Demetrio 63.17
Lopez In the selection of officials for such a high position
in the supervisory level it is always part of the
Andrea 63.97 objective to choose one among prospective
Moral appointees who has demonstrated some qualities
of leadership. This is obviously an essential
It is clear that Dr. Misa has the highest points. He element because a super visor accomplishes
had undergone a special training in Madrid where things not only by himself but mostly thru others. A
he participated in a course "La Especialization supervisor should be a good leader. Believe the
Medico de la Seguridad Social" of the Central Office Order designating Dr. Misa is justified.
International de Formacion de Technics of the Furthermore, the following information is relevant:
 DE. ORLANDO MISA The Court of Industrial Relations thereupon commissioned Atty.
Francisco de los Reyes as Hearing Officer to receive the
Appointed Clinic evidence and submit his report on the specification, among
Supervisor..........................................................Jul others, "... (5) that the respondent (GSIS) to discourage
y 1, 1960 membership in the petitioning union discriminated against its
members by said respondent's failure and refusal to upgrade
Appointed Medical and/or convert the position of ... (e) Dr. Orlando Misa as Acting
Supervisor.......................................... December Assistant Manager, Medical Department, to be replaced by
16, 1962 Demetrio Lopez or Andrea Moral."

DR. DEMETRIO LOPEZ After receiving the evidence, the Hearing Officer submitted his
report, and recommended that "it would seem to be equitable
Appointed Medical Officer which is below the rank that Dra. Andrea Moral should have been appointed Acting
of Cc Assistant Medical Director rather than Dr. Orlando Misa."
Supervisor............................................................... Accordingly, the Court thru Acting Associate Judge Pedro F.
1960 Perez in his Order dated October 8, 1974 approved the Report
and adopted it as the Court's Order in the case, for the GSIS to
Appointed Medical appoint Dra. Andrea Moral as Acting Assistant Medical Director
Supervisor.........................................December 16, in place of Dr. Orlando Misa, present incumbent.
1962
The GSIS and the private respondent, Dr. Orlando Misa, moved
DR. ANDREA MORAL for reconsideration of the Order above-cited which the GSISSU
oppose On October 25, 1974, the Court en banc denied the
Appointed Medical motions for reconsideration and affirmed the Order of October 8,
Officer...................................................................... 1974. The GSIS now comes to Us on appeal assailing the
..1960 legality and/or validity of the aforementioned Order and the
Resolution en banc of the Court of Industrial Relations.
Appointed Clinic
Supervisor............................................................... Petitioner lists the following assignment of errors;
......1961
I
Appointed Medical
Supervisor.........................................December The defunct Court of Industrial Relations,
16,1962 hereinafter merely referred to as CIR, now the
National Labor Relations Commission, hereinafter
(Records, pp. 114-115) merely referred to as NLRC, committed a grave
abuse of discretion amounting to lack of and/or in
excess of jurisdiction in substituting the judgment
or discretion of your petitioner Government
 Service Insurance System, hereinafter merely business by the employer. Labor may not impose-nor demand
referred to as GSIS, as to who is best qualified to who is to be appointed originated logged management of his
occupy the position of the Assistant Medical discretion or judgment lodged in management may not
Director in the GSIS; therefore, be controlled, interfered with or substituted by the
court of Industrial Relations upon petition or representation of
II the striking labor union.

The defunct CIR or the NLRC committed a grave In the case of National Labor Union, petitioner, vs. Insular
abuse of discretion amounting to lack of and/or in Yebana Tobacco Corporation, respondent, 2 SCRA 924, 931,
excess of jurisdiction when it issued the orders the Supreme Court, speaking thru Justice labrador, said:
substituting the judgment or discretion of GSIS
contrary to CIR's own findings; A similar or parallel case is that t his National
Labor Relations Board vs. Union Pacific Stages,
III 99 F. (2d) pp. 153, 177-179, in which the following
principles are laid down.
The defunct CIR now the NLRC committed a
grave abuse of discretion amounting to lack of ... The National Labor Relations At was not
and/or in excess of jurisdiction in holding that the intended to empower the National Labor Relations
person claiming a right to an office may still bring Board to substitute its judgment for that of the
an action one year and three months after another employer in the conduct of his business, and did
person had been appointed to the same position; not deprive the employer of the right to select or
dismiss his employees for any cause except
IV where the employee we s actually discriminated
against because of his union activities or affiliation.
The defunct CIR now the NLRC committed a It did not authorize the Board to absolve
grave abuse of discretion amounting to lack of employees from compliance with reasonable
and/or in excess of jurisdiction in not holding that regulations for their government and guidance.
the instant case has now become moot and The Act does not vest in the Board managerial
academic. authority ...

The contention of the petitioner that the Court of Industrial In American labor jurisprudence, Rothenberg on Labor
Relations, in ordering the GSIS to appoint Dr. Andrea Moral as Relations, commenting on the provisions of the Labor
Acting Assistant Medical Director, replacing the present Management Relations Act prohibiting an employer form
incumbent, Dr. Orlando Misa, substituted the judgment or discriminating against an employee or prospective employee
discretion of management and thereby committed a grave because of the latter's union activities, the following principles
abuse of discretion ing to lack and/or excess of jurisdiction, is are held: "(I)t must not be supposed that the Act is intended to
meritorious The right to select and appoint employees is the or permits usurpation of the employer's normal prerogatives in
prerogative of the employer, the privilege of management hiring or firing employees. The prohibiting of the Act is not
because such right interest in the conduct and operation f the asynonym for deprivation of those basic rights of an employer,
but is merely an injunction against the use of the right to employ coercion or similar interference with the
or discharge as an instrument of discrimination, interference or employee's rights or of the commission of an
oppression because of one's labor activities." 'unfair labor practice. Rothenberg on Labor
Relations, pp. 398- 400).
In absence of the use of the right of Hiring and
firing as a vehicle for discrimination, the exercise In the case at bar, petitioner exercising the privilege, prerogative
of these rights by the employer are unimpaired by or right of management had appointed Dr. Orlando Misa as
the Act. They may not be usurped by the National Acting Assistant Medical Director as of October 1, 1968, after
Labor Relations Board in an effort by that agency considering and evaluating the rank or salary, efficiency rating,
to dictate to an employer, who has not violated the education and training, seniority in the GSIS, seniority in the
Act, who shall be employed or discharged. same department and civil service eligibility and in service
training of the qualified personnel at its Medical Department,
In absence of the use of these rights for the namely Dr. Orlando Misa, Dr. Andrea Moral and Dr. Demetrio
purpose of interfering with the rights guaranteed Lopez. The GSIS found that based on the "CPA Evaluation
by the Act to employees or applicants to Sheet on Promotion" Dr. Misa was the best qualified for the
employment, an employer's right to "hire and fire" position after an evaluation of their respective qualifications.
remains inviolate and unabridged. Presupposing
that such action is not intended to interfere with or The evaluation, which has been quoted earlier, appears to be
discourage the employeesz union or labor factual, fair and made in good faith. It has not been shown by
activities or affiliations in violation of the Act and any credible proof submitted to the Hearing Officer or to the
further, assuming that, no breach of an existing Court of Industrial Relations that such selection was whimsical,
contract is entailed, an employer is free to hire, unfair or arbitrary. The claim of the respondent Union that the
demote, reprimand suspend, discipline, transfer, designation of Dr. Misa and not Dr. Moral is discriminatory on
or discharge his employees or any of them even account of the latter's being a member of the union has not
as he would in absence of the Act. The employer been sufficiently proved for there is nothing in the Report
may exercise these rights at will and for any cause submitted by the Hearing Officer clearly indicating that the GSIS
or reason, good or bad, just or unjust or for no preferred Dr. Misa instead of Dr. Moral in order to bust the
reason at are The sole prohibition prescribed by GSISSU or to discourage membership in said union. The Report
the Act is directed against the use of these rights made no finding if the protagonists belong to different camps or
to disturb or impede the exercise by employees or even slightly that for union considerations, the GSIS favored
applicants for employment of the rights assured to one or the other. This is evident in the Report which We quote:
them by the Act. Whether or not a given exercise
by an employer of his rights constitutes a violation Atty. Francisco de los Reyes, Hearing Examiner
of the Act, depends on whether or not the commissioned to receive the evidence, submitted
evidence discloses that his conduct was his report in the above-entitled case which is
calculated to or did interfere with employees' rights quoted here under, to wit:
under the Act. It is clear, however, that an
employer's exercise of his prerogatives with or Among the issues raised in the
without reason, does not, per se constitute proof of above-entitled case which was
 certified by the President of the based on (1) rank or salary;(2)
Philippines as embodied in efficiency rating, (3) education and
Supplementary Petition filed in training, (4) seniority in the GSIS(5)
behalf of the Government Service seniority in the same department;
Insurance System Supervisors and (6) civil service elegibility and in-
Union, GSISSU in short (pp. 180 to service training, claimed that Dr.
199 of records), particularly in Misa has the highest points. The
relation to the present incident, the records of this case do not show that
following are the specifications: Dr. Demetrio Lopez, the other
person who supposedly is not
xxx xxx xxx protesting the appointment in an
acting capacity of Dr. Misa has ever
5. That the respondent, to made any steps by way of pursuing
discourage membership in petitioner his claim. So that what remains here
union, discriminated against its is the GSISSU Supplemental Petition
members by said respondent's in behalf of Dra. Andrea Moral
failure and refusal to upgrade and/or
convert the position of- Neccesarily, the determination of the
above-named specifications as
L. xxx xxx xxx embodied in the said supplemental
petition of the GSISSU would revolve
(e) Dr. Orlando Misa as Acting Assistant Manager, on the different qualifications of both
Medical Department, to be replaced by Demetrio Dr. Misa and Dra. Moral, since it is
Lopez or And dread Moral. evident that the discrimination will
primarily be based on their
The Office Order appears to have respective qualifications.
been questioned by petitioner
GSISSU This must be so, considering the
background of the instant case
The GSIS in its Answer filed in where it is a matter of judicial as well
February 27, 1970 with respect to as common knowledge that during
the designation of Orlando Misa as the period or years wherein these
Acting Assistant Manager, Medical occurences or circumstances
Department answered, by way of happened, the union rivalry was so
denying the material averments of intense between what is known as
the said Supplemental Petition and the GSIS Employees association
in relation to Orlando Misa stated GSISEA and the GSIS Supervisors
that an evaluation of the Union GSISSU And as found in the
qualifications of those officials, records of the different cases in this
 Court, the rivalry involved the was preferred over the recommendees of the union that the
classification of positions with which preference constituted an act of discrimination against the union
these unions sought to represent in on account of alleged union activities of either Dr. Moral or Dr.
the bargaining table, particularly Lopez, of which none was cited or hinted to say the least, in the
those positions involving Pay Clan" 6 Report of the Hearing Officer. If the choice of management did
to 8. We should, therefore, proceed not fall on either of the two union candidates, it was so by
in accordance with the foregoing reason of their respective professional qualifications as admitted
consideration, on a comparative in the Report. The fact that Dr. Misa was designated as Acting
inquiry into the respective Assistant Medical Director at a time when there was intense
qualifications of both Dra. Moral and rivalry between the two unions is no proof that there was
Dr. Misa discrimination on the part of GSIS management to discourage
membership in the respondent Union. We also note that even
xxx xxx xxx the criterion used in the Report as equitable basis of the
recommendation submitted to the CIR, although favoring the
On the basis of the foregoing testimony, together union recommended, centered on the professional efficiency,
with the different parties submitted, it would am performance and standing of the aspirants concerned which
different exhibits of both parties submitted in his cannot, by any stretch of imagination, constitute an unfair labor
case m o be equitable that Dra. Andrea Moral practice. In the last analysis, in choosing the appointee or
should have been appointed Acting Assistant making the designation, there must necessarily be a selection,
Medical Director rather than Dr. Orlando Misa. which cannot be avoided, among different contenders of varying
personal circumstances and Capabilities, including dissimilar
WHEREFORE, it is respectfully recommended professional skills, talents and faculties such that We cannot
that this particular incident in the Supplemental accept that the final selection was p y motivated by union
Petition of 1970 be decided in favor of the considerations or affiliation in the absence of clear proof to the
petitioner GSISSU and the GSIS should be contrary.
Wanted to appoint Dra. Andrea Moral as Acting
Assistant Medical Director. (Records, pp. 203-209) Moreover, We cannot lose sight of the fact that the GSIS is a
governmental agency, although performing a proprietary
The findings of the Hearing Officer that "the determination of the function (GSISEA vs. Alvendia, 108 Phil. 505; Boys Scouts of
above-named specifications as embodied in the said the Phils. vs. Araos 102 Phil. 1080) and that the officers and
supplemental petition of the GSISSU would revolve on the personnel therein while entitled to the same rights and privileges
different qualifications of both Dr. Misa and Dra. Moral, since it under the Industrial Peace Act are still governmental personnel
is evident that the discrimination will primarily be based on their covered by and subject to civil service rules and regulations.
respective qualifications," do not support the contention of the Hence, in matters of appointment, discipline, suspension and
respondent union that the GSIS discriminated against its removal, the general principles of public administration must
members by the latter's refusal and failure to up-grade and/or govern their conduct, the terms and conditions of their
convert the position of Demetrio Lopez or Andrea Moral as employment. Thus, that the power of appointment is largely
Acting Assistant Medical Director, Medical Department. It discretional that the appointing power has the right of choice
cannot be logically maintained that simply because Dr. Misa which he may exercise freely according to his judgment,
deciding for himself who is best qualified for any competitive Assuming that Dr. Moral was next in rank and entitled to the
position in the civil service (Jimenez vs. Francisco, 100 Phil. designation as Acting Assistant Medical Director in two of the
1025); and that the appointing power is not restricted by a rigid, six categories considered in the promotion to a higher position,
straight, and hard-and-fast rule in the choice of personnel, that is, education and training, and seniority, whereas Dr. Misa
particularly of a supervisory character as in the case at bar, are outranks her in the other four departments and that is, (1) rank
rules that hold strong and pertinent government here, or s (2) efficiency rating, (3) seniority in the same department;
considering that in so exercising such power, the overriding and (4) civil service eligibility and in-service training, the basic
consideration is the promotion of the public welfare and the consideration that must rule the exercise of discretion by the
exigencies of the public service (Reyes va. Abeleda, 22 SCRA appointing power is to effect efficiency and responsibility in
825; Aguilar vs. Nieva, Jr., 40 SCRA 113). public service, even to the disappointment of those aspirants
longer in the service. The pronouncement of the Court in Aguilar
Furthermore, it is to be noted that the position to which the vs. Nieva, Jr., 40 SCRA 11 3, gives the rationale for such rule
candidates are contending involves medical duties of and We quote:
supervision over the regional offices of the GSIS and if Dr.
Orlando Misa was designated to the position, according to the Whatever sympathy might be elicited for public
Report because of "(t)he most important factor that we have to officials who had stayed long in the public service
take into account is the nature of the job because that was the and who, for some reason or another, did not
time that the Assistant General Manager in charge of the receive the promotion to which they felt they
regional office of the GSIS requested me to appoint someone should be entitled, cannot obscure the discretion
who could easily be picked up without any question and that he that the law leaves in the hands of the appointing
could easily be told right away for supervision in the regional officials. ... The basic intent of the law itself is to
offices. Another thing is that the Assistant General Manager foster a more efficient public service. It is ever
wanted somebody to be appointed who could accompany him in timely to keep in mind the public trust character of
going around the different regional offices and of course before any governmental office. Its creation is justifiable
that he was already going out along with Dr. Misa and he told only if it serves to assure that the functions of
me that it should be Dr. Misa so that he will not have a hard time government, whether through the traditional public
in g somebody who could go with him around the different offices or government-owned or controlled
regional offices. He wants somebody who could just be called corporations, be attended to with dispatch and
up at any time to go with him or to be requested to go around competence. Necessarily then, -the appointing
the different regional offices for inspection. I have that also in official especially so where his position is a
mind and so I made my recommendation because I believe that constitutional creation, as in this case, must be left
Dr. Orlando Misa who is a male physician can do the job better that necessary latitude of choice as to who can
so that prompted me to recommend him to that position as best discharge the responsibilities of the office
Acting Assistant Medical Director. ..." It stands to reason that the where the vacancy occurs. This is what happened
principal consideration for such designation was a choice of who here, and no legal infirmity can validly he said to
can do the job better, Dr. Misa or Dr. Moral, and not by reason have vitiated such an appointment.
of any union affiliation, activity, sentiment or sympathy
manifested by one or the other. The respondent maintains that the rule advanced by the
petitioner "that the CIR or NLRC cannot substitute the judgment
or discretion of the GSIS as to who is best qualified or fitted to the broad discretion of the court. However, where, as in the
the position," citing Reyes vs. Abeleda, 22 SCRA 825; Aguilar case at bar, there is no factual basis of the solution ordered,
vs. Nieva, 40 SCRA 113; Pineda vs. Claudia 28 SCRA 34; del where We find no substantial evidence to support the Order and
Rosario vs. Subido, 31 SCRA 382 and the cases cited therein, the Resolution now being assailed by the petitioner, We hold
is not applicable to the present case considering that this is a that the CIR gravely abused its discretion and committed a
certified labor dispute, and that the correct point of inquiry is the reversible error. The Presidential certification is no authority for
extent of the powers of the Court of Industrial Relations in the CIR to exceed its discretion which amount to lack and/or in
certified labor disputes. Respondent further contends that excess of jurisdiction.
"When a case is certified to the CIR by the President of the
Philippines pursuant to See. 10 of R.A. 875, the CIR is granted We have discussed and resolved petitioner's first and second
authority to find a solution to the industrial dispute; and the assigned errors, sustaining the contention of the petitioner,
solution which the CIR has found under the authority of the thereby rendering superfluous and unnecessary further
presidential certification and conformable thereto cannot be consideration and resolution of the remaining assigned errors.
questioned." (Radio Operators Association of the Philippines vs.
Philippines Marine Officers Association, et al., 102 Phil. 526; WHEREFORE, IN VIEW OF THE FOREGOING, the Order
Feati University vs. Bautista, 18 SCRA 1191). appealed from and the Resolution en banc of the defunct Court
of Industrial Relations (now the National Labor Relations
We disagree with respondent's position in the light of the Commission) are hereby vacated and the same set aside. No
specific facts established in the case at bar which clearly sustain pronouncement as to costs.
the basic right of management in hiring and firing employees, in
regulating according to its own discretion and judgment, all Petition granted.
aspects of employment which include work assignments,
working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, layoff of
workers and the discipline, dismissal and recall of workers.
These prerogatives of management may be availed of without
liability provided they are exercised in good faith for the
advancement of the employer's interest, and not for the purpose
of defeating or circumventing the rights of the employees under
special laws or under valid agreements, and provided further
that. such prerogatives are not exercised in a malicious, harsh,
oppressive, vindictive o wanton manner, or out of malice or
spite. (Labor and Social Legislation, Fernandez and Quiazon,
pp. 19, 2 Admittedly the CIR has the power and authority to find
the solution to this particular dispute when the case was
certified to it by the President pursuant to Sec. 10 of the
Industrial Peace Act and generally, such solution may not be
questioned as the said solution may be considered to be within
PHILIPPINE TELEGRAPH & TELEPHONE November 16, 1986, promoted as TTY Operator
CORPORATION, petitioner, vs. COURT OF APPEALS, General on November 1, 1989 and designated as
NATIONAL LABOR RELATIONS COMMISSION, PT&T TRITY Operator Regions on July 1, 1997;
PROGRESSIVE WORKERS UNION-NAFLU-KMU,
4. Benjamin Lakandula as a Counter-Clerk at the Iligan
CRISTINA RODIEL, JESUS PARACALE, ROMEO TEE,
City Branch on January 16, 1982;
BENJAMIN LAKANDULA, AVELINO ACHA, IGNACIO
DELA CERNA and GUILLLERMO 5. Avelino Acha as Probationary Junior Counter at the
DOMEGILLO, respondents. Naga City Branch, regularized on June 10, 1983,
transferred to Legaspi City Branch on November 16,
DECISION 1989;
CALLEJO, SR., J.: 6. Ignacio Dela Cerna as a Probationary Junior CW-
Operator in at the Pagadian City Branch regularized
This is a petition for review filed by petitioner Philippine on March 15, 1986 and designated as TR/TTY
Telegraph and Telephone Corporation (PT&T) of the Operator Regions on July 1, 1993 at the Pagadian
Decision[1] of the Court of Appeals in CA-G.R. SP No. 54346 City Branch, and
promulgated on June 15, 2001 affirming the resolution of the
7. Guillermo Demigillo as Clerk.[2]
National Labor Relations Commission (NLRC) promulgated on
May 31, 1999 reversing the decision of the Labor Arbiter, and its Sometime in 1997, after conducting a series of studies
Resolution dated February 6, 2002 denying the petitioners regarding the profitability of its retail operations, its existing
motion for reconsideration. branches and the number of employees, the petitioner came up
with a Relocation and Restructuring Program designed to (a)
The petitioner is a domestic corporation engaged in the
sustain its (PT&Ts) retail operations; (b) decongest surplus
business of providing telegraph and communication services
workforce in some branches, to promote efficiency and
thru its branches all over the country. It employed various
productivity; (c) lower expenses incidental to hiring and training
employees, among whom were the following:
new personnel; and (d) avoid retrenchment of employees
1. Cristina Rodiel, initially as a Probationary Junior occupying redundant positions.[3]
Counter- Clerk on July 1, 1995 at the Cabanatuan
On August 11, 1997, private respondents Cristina Rodiel,
Branch, regularized on November 28, 1995;
Jesus Paracale, Romeo Tee, Benjamin Lakandula, Avelino
2. Jesus Paracale as a Probationary Junior CW Acha, Ignacio Dela Cerna and Guillermo Demigillo received
Operator in Padada, Davao del Sur on November 16, separate letters from the petitioner, giving them the option to
1988, regularized on April 15, 1990, transferred to choose the branch to which they could be
Malita, Davao Branch on November 16, 1990, to transferred. Thereafter through HRAG Bulletin No. 97-06-16, the
Makar, South Cotabato Branch on September 1, private respondents and other petitioners employees were
1994 and to Kiamba, South Cotabato Branch on April directed to relocate to their new PT&T Branches. The affected
1, 1995; employees were directed to report to their respective relocation
assignments in a Letter dated September 16, 1997.
3. Romeo Tee as Counter-Clerk at the Zamboanga
Branch on January 16, 1982, as a TTY Operator on
 The petitioner offered benefits/allowances to those bringing P10,000.00 P15,000
employees who would agree to be transferred under its new along his
program, thus:
qualified
EXISTING SPECIAL FLAT MOVING depende
RELOCATI RELOCATI RELOCATI EXPENS nt/s
ON ON ON ES
ALLOWAN ALLOWAN ALLOWAN (FREIGH 2.4 Single
CE CE CE T) employe
P7,000.00 N/A[4]
e not
1. 2.1 Married
bringing
Tempora employe
P17,500.00 P15,000 along his
ry e
depende
relocatio bringing
nt/s
n per along his
diem of family Moreover, the employees who would agree to the transfers
P260.00/ would be considered promoted, thus:
day
FROM TO
NAME
2. 2.2 Married POSITIO WORK POSIT WOR
Permane employe N/JG* LOCAT ION K
P10,000.00 N/A
nt e not ION LOCA
relocatio bringing TION
n a flat along his
1. Jr. Legasp Couri Romb
monthly family
ACH Counter- i (Br) er lon/
allowanc
A, JG2 JG3 Odion
e of
AVEL gan
P5,100.0
INO (SL)
0
2. Jr. Cabana Clerk- Bagui
2.3 Single
RODI Counter tuan JG4 o
employe
EL, Clerk- (CL) (NWL)
e
CRIS JG2
 TINA respondents requiring them to explain in writing why no
disciplinary action should be taken against them for their refusal
3. Jr. CW Cotaba Clerk- Kidap to be transferred/relocated.[6]
DELA Operator to City JG4 awan In their respective replies to the petitioners letters, the
CER -JG2 (CM) (CM) private respondents explained that:
NA,
The transfers imposed by the management would
IGNA
cause enormous difficulties on the individual
CIO
complainants. For one, their new assignment
involve distant places which would require their
4. Jr. CW Midsay Couri Lebak
separation from their respective families. For
DEMIGI Operator ap er- (CM)
instance, in the case of Avelino Acha who would be
LLO -JG2 North JG3
coming from Bicol Region, he would have to take a
GUILLE
boat in going to his new assignment in Odiongan,
RMO
Romblon. The voyage would take a considerable
5. Counter- Iligan Clerk Butua period of time and it would be imperative for him to
LAKAND JG3 (NM) JG4 n relocate to Romblon to be able to attend to his new
ULA, (EM) assignment.
BENJAM
The same holds true with the other
IN
complainants. Romeo Tee for instance, will have to
6. Jr. CW Makar, Clerk Butua take an overnight boat trip from his previous
PARACA Operator Gen. JG4 n assignment in Zamboanga to his new assignment in
LE, -JG2 Santos (EM) Jolo, Sulu. He would have to part with his family
JESUS (SM) and resettle to Jolo in connection with his
transfer. Cristina Rodiel on the other hand, would
7. TEE, TTY Zambo Clerk Jolo be transferred to Baguio City which is quite distant
ROMEO Operator anga JG4 (WM)[5 from her previous workbase and residence at
-Gen. City ] Cabanatuan. Jesus Paracale finds himself in the
JG4 (WM) same difficult situation as he would be transferred
from General Santos City at the Southern tip of
The private respondents rejected the petitioners offer. On Mindanao to Butuan City, almost a days travel by
October 2, 1997, the petitioner sent letters to the private
bus and located at the northernmost tip of the 6. Guillermo Demigillo, from Midsayap to Lebak
island. Benjamin Lakandula and Guillermo Cotabato Branch.[12]
Demigillo, are also in the same situation as their For its part, the petitioner (respondent therein) alleged that
new assignments are quite distant from their the private respondents transfers were made in the lawful
exercise of its management prerogative and were done in good
previous places of work.[7]
faith. The transfers were aimed at decongesting surplus
employees and detailing them to a more demanding branch.
Dissatisfied with this explanation, the petitioner considered
the private respondents refusal as insubordination and willful In their reply to the petitioners position paper, the private
disobedience to a lawful order; hence, the private respondents respondents opined that since their respective transfers resulted
were dismissed from work.[8] They forthwith filed their respective in their promotion, they had the right to refuse or decline the
complaints against the petitioner before the appropriate sub- positions being offered to them. Resultantly, the refusal to
regional branches of the NLRC.[9] accept the transfer could not have amounted to insubordination
or willful disobedience to the lawful orders of the employer.
Subsequently, the private respondents bargaining agent,
PT&T Workers Union-NAFLU-KMU, filed a complaint against After the parties filed their respective pleadings, the
the petitioner for illegal dismissal and unfair labor practice for Honorable Labor Arbiter Celenito N. Daing rendered a Decision
and in behalf of the private respondents, including Ignacio Dela on September 25, 1998 dismissing the complaint for lack of
Cerna, before the arbitration branch of the NLRC.[10] merit.[13]
In their position paper, the complainants (herein private The labor arbiter ratiocinated that an employer, in the
respondents) declared that their refusal to transfer could not exercise of his management prerogative, may cause the
possibly give rise to a valid dismissal on the ground of willful transfer of his employees provided that the same is not attended
disobedience, as their transfer was prejudicial and inconvenient; by bad faith nor would result in the demotion of the transferred
thus unreasonable. The complainants further asserted that employees. The labor arbiter ruled in favor of the petitioner,
since they were active union members, the petitioner was finding that the aforesaid transfers indeed resulted in the private
clearly guilty of unfair labor practice[11] especially considering respondents promotion, and that the complaint for unfair labor
their new work stations: practice was not fully substantiated and supported by evidence.
1. Jesus Paracale, from General Santos Branch to Aggrieved, the private respondents appealed that aforesaid
Butuan City Branch; decision to the NLRC.
2. Romeo Tee, from Zamboanga Branch to Jolo On May 31, 1999, the NLRC issued a Resolution which
Branch; reversed and set aside the decision of the labor arbiter. The
NLRC ruled that the petitioner illegally dismissed the private
3. Benjamin Lakandula, from Iligan City to Butuan City; respondents, thus:
4. Avelino Acha, from Legaspi City Branch to Odiongan
Branch; WHEREFORE, premises considered, the Appeal is
5. Ignacio Dela Cerna, from Pagadian City Branch to hereby GRANTED. Accordingly, the Decision
Butuan Branch; and appealed from is REVERSED and SET ASIDE and a
new one entered declaring respondent-appellee FAC BEING PROMOTED AND NOT TRANSFERRED,
guilty of illegal dismissal and ordering Philippine THUS RENDERING THE LATTERS DISOBEDIENCE
JUSTIFIED.
Telegraph and Telephone Corporation to reinstate
individual complainants-appellants to their former PUBLIC RESPONDENTS (SIC) COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF
positions without loss of seniority rights and other
JURISDICTION WHEN IT RULED THAT PRIVATE
privileges and to pay them full backwages from the RESPONDENTS ARE ENTITLED TO
date of their dismissal up to the date of their actual REINSTATEMENT WITHOUT LOSS OF SENIORITY
reinstatement, computed as follows [14] RIGHTS AND OTHER PRIVILEGES, AS WELL AS
PAYMENT OF FULL BACKWAGES FROM DATE OF
The NLRC interpreted the said transfers of the respondents DISMISSAL UP TO DATE OF ACTUAL
as a promotion; that the movement was not merely lateral but of REINSTATEMENT.[15]
scalar ascent, considering the movement of the job grades, and On June 15, 2001, the Court of Appeals rendered a
the corresponding increase in salaries. As such, the Decision affirming the resolution of the NLRC, the dispositive
respondents had the right to accept or refuse the said portion of which reads:
promotions. The NLRC concluded that in the exercise of their
right to refuse the promotion given them, they could not be WHEREFORE, finding no grave abuse of discretion
dismissed.
on the part of the respondent commission, the
Without filing a motion for reconsideration, the petitioner petition is hereby DISMISSED for lack of merit. The
filed a petition for certiorari under Rule 65 of the 1997 Rules of
assailed May 31, 1999 Resolution of the National
Civil Procedure before the Court of Appeals, assailing the May
31, 1999 Resolution of the NLRC. The petitioner raised the Labor Relations Commission, Third Division is
following errors: hereby AFFIRMED IN TOTO.[16]
4.1
The petitioner filed a motion for reconsideration. On
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE February 6, 2002, the CA issued a Resolution denying the
OF DISCRETION AMOUNTING TO LACK OF motion.[17]
JURISDICTION WHEN IT RULED AGAINST PRIVATE
Dissatisfied, the petitioner filed its petition for review
RESPONDENTS DISMISSAL ON THE GROUND OF
assailing the decision and resolution of the CA, insisting that:
INSUBORDINATION FOR REFUSING TO HEED TO
THE TRANSFER ORDER OR THE PETITIONER. I
4.2
PUBLIC RESPONDENT COURT OF APPEALS
PUBLIC RESPONDENT COMMITTEE GRAVE ABUSE COMMITTED GRAVE ABUSE OF DISCRETION
OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT SUSTAINED PRIVATE AMOUNTING TO LACK OF JURISDICTION
RESPONDENTS CONTENTION THAT THEY WERE IN WHEN IT ISSUED THE ORDERS DATED JUNE
15, 2001 AND FEBRUAR 6, 2002 AFFIRMING d. PETITIONER ACTED IN GOOD FAITH IN
THE ORDER DATED MAY 31, 1999 OF THE IMPLEMENTING ITS RELOCATION AND
THIRD DIVISION OF THE NATIONAL LABOR RESTRUCTUTING PROGRAM WHICH RESULTED
RELATIONS COMMISSION, CONSIDERING IN THE TERMINATION OF THE PRIVATE
THAT: RESPONDENTS. AND AS SUCH, THE PRIVATE
RESPONDENTS ARE NOT ENTITLED TO THE
a. THE ORDER DATED MAY 31, 1999 OF THE PAYMENT OF ANY BACKWAGES.[18]
NATIONAL LABOR RELATIONS COMMISSION IS
NOT SUPPORTED BY SUBSTANTIAL EVIDENCE; In their Comment, the private respondents argue that the
petition should be dismissed for the following reasons: (a) that a
b. THE PETITIONER DID NOT ADMIT IN ITS petition for review under Ruler 45 is limited to questions of law;
(b) the private respondents were promoted and not only
POSITION PAPER FILED BEFORE THE LABOR transferred as established by the evidence on record; and (b)
ARBITER THAT THE PRIVATE RESPONDENTS private respondents could not be penalized with dismissal for
WERE BEING PROMOTED. ON THE CONTRARY, declining their promotions.
IT HAS ALWAYS BEEN THE CONTENTION OF The petition is denied due course.
THE PETITIONER THAT THE PRIVATE
As has been enunciated in numerous cases, the issues that
RESPONDENTS WERE SIMPLY ORDERED can be delved into a petition for review under Rule 45 are
TRANSFERRED TO OTHER WORK STATIONS limited to questions of law. Thus, the Court is not tasked to
WITHOUT DEMOTION IN RANK AND calibrate and assess the probative weight of evidence adduced
DIMINUTION IN SALARY; by the parties during trial all over again.[19] The test of whether
the question is one of law or of fact is whether the appellate
court can determine the issue raised without reviewing or
c. THE PRIVATE RESPONDENTS WERE evaluating the evidence, in which case, it is a question of law;
LEGALLY TERMINATED FOR JUST AND otherwise, it is a question of fact.[20]
AUTHORIZED CAUSE FOR WILFULL
In the case at bar, the petitioner would want this Court to
DISOBEDIENCE TO THE LAWFUL ORDERS OF ascertain whether or not the findings of NLRC, as affirmed by
THE PETITIONER (TRANSFER ORDER the CA, are substantiated by the evidence on record; hence,
PURSUANT TO ITS RELOCATION AND requiring a review involving questions of facts. For this reason
alone, this case should be dismissed.
RESTRUCTURING PROGRAM), AFTER
AFFORDING THEM DUE PROCESS OF LAW AND Even if the Court were to review the instant case on its
THUS NOT ENTITLED TO REINSTATEMENT; merits, the dismissal of the petition is inevitable.
AND Section 3, Rule V of the NLRC provides that:
Section 3. Submission of Position Clearly, the transfer of the complainants is not
Papers/Memorandum Should the parties fail to unreasonable nor does it involve demotion in
agree upon an amicable settlement, either in whole rank. They are being moved to branches where the
or in part, during the conferences, the Labor Arbiter complainants will function with maximum benefit
shall issue an order stating therein the matters to the company and they were in fact promoted not
taken up and agree upon during the conferences demoted from a lower job-grade to a higher job-
and directing the parties to simultaneously file their grade and receive even higher salaries than
respective verified position papers. before. Thus, transfer of the complainants would
not also result in diminution in pay benefit and
These verified position papers shall cover only privilege since the salaries of the complainant
those claims and causes of action raised in the would be receiving a bigger salary if not the same
complaint excluding those that may have been salary plus additional special relocation
amicably settled, and shall be accompanied by all package. Although the increase in the pay is not
supporting documents including the affidavits of significant this however would be translated into
their respective witnesses which shall take the an increase rather than decrease in their salary
place of the latters direct testimony. The parties because the complainants who were transferred
shall thereafter not be allowed to allege facts, or from the city to the province would greatly benefit
present evidence to prove facts, not referred to and because it is of judicial notice that the cost of
any cause or causes of action not included in the living in the province is much lower than in the
complaint or position papers. Without prejudice to city. This would mean a higher purchasing power of
the provisions of Section 2 of this Rule, the Labor the same salary previously being received by the
Arbiter shall direct both parties to submit complainants.[21]
simultaneously their position papers with
supporting documents and affidavits within an Indeed, the increase in the respondents responsibility can
inextendible period of ten (10) days from notice of be ascertained from the scalar ascent of their job grades. With
or without a corresponding increase in salary, the respective
termination of the mandatory conciliation. transfer of the private respondents were in fact promotions,
mediation conference. following the ruling enunciated in Homeowners Savings and
Loan Association, Inc. v. NLRC:[22]
In its position with the labor arbiter, the petitioner adverted
that when the private respondents were transferred, they were [P]romotion, as we defined in Millares v, Subido, is
also promoted, thus:
the advancement from one position to another with
an increase in duties and responsibilities as
authorized by law, and usually accompanied by an
increase in salary. Apparently, the indispensable
element for there to be a promotion is that there
must be an advancement from one position to
another or an upward vertical movement of the
employees rank or position. Any increase in salary
should only be considered incidental but never
determinative of whether or not a promotion is
bestowed upon an employee. This can be likened to
the upgrading of salaries of government employees
without conferring upon the, the concomitant
elevation to the higher positions.[23]

The admissions of the petitioner are conclusive on it. An

employee cannot be promoted, even if merely as a result of a
transfer, without his consent. A transfer that results in promotion
or demotion, advancement or reduction or a transfer that aims
to lure the employee away from his permanent position cannot
be done without the employees consent.[24]
There is no law that compels an employee to accept a
promotion for the reason that a promotion is in the nature of a
gift or reward, which a person has a right to refuse. [25] Hence,
the exercise by the private respondents of their right cannot be
considered in law as insubordination, or willful disobedience of a
lawful order of the employer. As such, there was no valid cause
for the private respondents dismissal.
As the questioned dismissal is not based on any of the just
or valid grounds under Article 282 of the Labor Code, the NLRC
correctly ordered the private respondents reinstatement without
loss of seniority rights and the payment of backwages from the
time of their dismissal up to their actual reinstatement.
IN LIGHT OF THE ALL THE FOREGOING, the Decision of
the Court of Appeals dated June 15, 2001 is hereby
AFFIRMED.
ELMER M. MENDOZA, petitioner, vs. RURAL BANK OF On April 25, 1999, the Board of Directors of the Rural Bank
LUCBAN, respondent. of Lucban, Inc., issued Board Resolution Nos. 99-52 and 99-53,
which read:
DECISION
PANGANIBAN, J.: Board Res. No. 99-52

The law protects both the welfare of employees and the RESOLVED AS IT IS HEREBY RESOLVED that in line
prerogatives of management. Courts will not interfere with with the policy of the bank to familiarize bank
business judgments of employers, provided they do not violate employees with the various phases of bank
the law, collective bargaining agreements, and general
operations and further strengthen the existing
principles of fair play and justice. The transfer of personnel from
one area of operation to another is inherently a managerial internal control system[,] all officers and
prerogative that shall be upheld if exercised in good faith -- for employees are subject to reshuffle of
the purpose of advancing business interests, not of defeating or assignments. Moreover, this resolution does not
circumventing the rights of employees. preclude the transfer of assignment of bank
officers and employees from the branch office to
The Case the head office and vice-versa.

Board Res. No. 95-53

The Court applies these principles in resolving the instant
Petition for Review[1] under Rule 45 of the Rules of Court,
assailing the June 14, 2002 Decision[2] and September 25, 2002 Pursuant to Resolution No. 99-52, the following
Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. branch employees are hereby reshuffled to their
68030. The assailed Decision disposed as follows: new assignments without changes in their
compensation and other benefits.
WHEREFORE, the petition for certiorari is
hereby DISMISSED for lack of merit.[4] NAME OF EMPLOYEES PRESENT
ASSIGNMENT NEW ASSIGNMENT
The challenged Resolution denied petitioners Motion for
Reconsideration.
JOYCE V. ZETA Bank Teller C/A Teller
CLODUALDO ZAGALA C/A Clerk Actg.
The Facts Appraiser
ELMER L. MENDOZA Appraiser Clerk-Meralco
Collection
 CHONA R. MENDOZA Clerk-Meralco Bank six (6) years in good standing and never involved in
Teller[5] any anomalous conduct, my being reshuffled to
Collection [C]lerk-[M]eralco [C]ollection is a blatant
harassment on your part as a prelude to my
In a letter dated April 30, 1999, Alejo B. Daya, the banks termination in due time. This will constitute an
board chairman, directed Briccio V. Cada, the manager of the
banks Tayabas branch, to implement the reshuffle. [6] The new unfair labor practice.
assignments were to be effective on May 1, 1999 without
changes in salary, allowances, and other benefits received by Meanwhile, may I beseech your good office that I
the aforementioned employees.[7] may remain in my position as Appraiser until the
On May 3, 1999, in an undated letter addressed to Daya, reason [for] my being reshuffled is made clear.
Petitioner Elmer Mendoza expressed his opinion on the
reshuffle, as follows: Your kind consideration on this request will be
highly appreciated.[8]
RE: The recent reshuffle of employees as per
On May 10, 1999, Daya replied:
Board Resolution dated April 25, 1999
Dear Mr. Mendoza,
Dear Sir:
Anent your undated letter expressing your
This is in connection with the aforementioned resentment/comments on the recent managements
subject matter and which the undersigned received decision to reshuffle the duties of bank employees,
on April 25, 1999. please be informed that it was never the intention
(of management) to downgrade your position in the
Needless to state, the reshuffling of the bank considering that your due compensation as
undersigned from the present position as Appraiser Bank Appraiser is maintained and no future
to Clerk-Meralco Collection is deemed to be a reduction was intended.
demotion without any legal basis. Before this
action on your part[,] the undersigned has been Aside from giving bank employees a wider
besieged by intrigues due to [the] malicious experience in various banking operations, the
machination of a certain public official who is reshuffle will also afford management an effective
bruited to be your good friend. These malicious tool in providing the bank a sound internal control
insinuations were baseless and despite the fact system/check and balance and a basis in
that I have been on my job as Appraiser for the past evaluating the performance of each employee. A
continuing bankwide reshuffle of employees shall Complaint -- for illegal dismissal, underpayment, separation pay
be made at the discretion of management which and damages -- was filed against the Rural Bank of Lucban
and/or its president, Alejo B. Daya; and its Tayabas branch
may include bank officers, if necessary as manager, Briccio V. Cada. The case was docketed as NLRC
expressed in Board Resolution No. 99-53, dated Case SRAB-IV-6-5862-99-Q.[12]
April 25, 1999. Management merely shifted the
The labor arbiters June 14, 2000 Decision upheld
duties of employees, their position title [may be] petitioners claims as follows:
retained if requested formally.
WHEREFORE, premises considered, judgment is
Being a standard procedure in maintaining an hereby rendered as follows:
effective internal control system recommended by
the Bangko Sentral ng Pilipinas, we believe that the 1. Declaring respondents guilty of illegal dismissal.
conduct of reshuffle is also a prerogative of bank
management.[9] 2. Ordering respondents to reinstate complainant to
his former position without loss of seniority rights
On June 7, 1999, petitioner submitted to the banks Tayabas with full backwages from date of dismissal to
branch manager a letter in which he applied for a leave of actual reinstatement in the amount of P55,000.00
absence from work:
as of June 30, 2000.
Dear Sir:
3. Ordering the payment of separation pay if
I wish I could continue working but due to the reinstatement is not possible in the amount
ailment that I always feel every now and then, I of P30,000.00 in addition to 13th month pay
have the honor to apply for at least ten (10) days of P5,000.00 and the usual P10,000.00 annual
sick leave effective June 7, 1999. bonus afforded the employees.

Hoping that this request [merits] your favorable and 4. Ordering the payment of unpaid salary for the
kind consideration and understanding.[10] period covering July 1-30, 1999 in the amount
of P5,000.00
On June 21, 1999, petitioner again submitted a letter asking
for another leave of absence for twenty days effective on the 5. Ordering the payment of moral damages in the
same date.[11] amount of P50,000.00.
On June 24, 1999, while on his second leave of absence,
petitioner filed a Complaint before Arbitration Branch No. IV of
the National Labor Relations Commission (NLRC). The
6. Ordering the payment of exemplary damages in at the Tayabas branch were similarly
the amount of P25,000.00 reshuffled. The only logical conclusion therefore is
that the Board Resolution was not aimed solely at
7. Ordering the payment of Attorneys fees in the the [petitioner], but for all the other employees of
amount of P18,000.00 which is 10% of the monetary the x x x bank as well. Besides, the complainant
award.[13] has not shown by clear, competent and convincing
evidence that he holds a vested right to the
On appeal, the NLRC reversed the labor arbiter.[14] In its
July 18, 2001 Resolution, it held: position of Appraiser. x x x.

We can conceive of no reason to ascribe bad faith How and by what manner a business concern
or malice to the respondent bank for its conducts its affairs is not for this Commission to
implementation of its Board Resolution directing interfere with, especially so if there is no showing,
the reshuffle of employees at its Tayabas branch to as in the case at bar, that the reshuffle was
positions other than those they were motivated by bad faith or ill-will. x x x.[15]
occupying. While at first the employees thereby
After the NLRC denied his Motion for
affected would experience difficulty in adjusting to [16]
Reconsideration, petitioner brought before the CA a Petition
their new jobs, it cannot be gainsaid that the for Certiorari[17] assailing the foregoing Resolution.
objective for the reshuffle is noble, as not only
would the employees obtain additional knowledge,
Ruling of the Court of Appeals
they would also be more well-rounded in the
operations of the bank and thus help the latter
further strengthen its already existing internal Finding that no grave abuse of discretion could be attributed
to the NLRC, the CA Decision ruled thus:
control system.
The so-called harassment which Mendoza allegedly
The only inconvenience, as [w]e see it, that the
experienced in the aftermath of the reshuffling of
[petitioner] may have experienced is that from an
employees at the bank is but a figment of his
appraiser he was made to perform the work of a
imagination as there is no evidence extant on
clerk in the collection of Meralco payments, which
record which substantiates the same. His alleged
he may have considered as beneath him and his
demotion, the cold shoulder stance, the things
experience, being a pioneer employee. But it
about his chair and table, and the alleged reason
cannot be discounted either that other employees
for the harassment are but allegations bereft of
proof and are perforce inadmissible as self-serving leave, he filed the illegal dismissal case against his
statements and can never be considered employer for no apparent reason at all.[18]
repositories of truth nor serve as foundations of
court decisions anent the resolution of the litigants Hence, this Petition.[19]
rights.
The Issues
When Mendoza was reshuffled to the position of
clerk at the bank, he was not demoted as there
Petitioner raises the following issues for our consideration:
was no [diminution] of his salary benefits and
rank. He could even retain his position title, had he I. Whether or not the petitioner is deemed to have
only requested for it pursuant to the reply of the voluntarily separated himself from the service
Chairman of the banks board of directors and/or abandoned his job when he filed his
to Mendozas letter protesting the reshuffle. There Complaint for constructive and consequently illegal
is, therefore, no cause to doubt the reasons which dismissal;
the bank propounded in support of its move to
reshuffle its employees, viz: II. Whether or not the reshuffling of private
respondent[s] employees was done in good faith
1. to familiarize bank employees with the various and cannot be made as the basis of a finding of
phases of bank operations, and constructive dismissal, even as the [petitioners]
demotion in rank is admitted by both parties;
2. to further strengthen the existing internal control
system of the bank. III. Whether or not the ruling in the landmark case
of Ruben Serrano vs. NLRC [and Isetann
The reshuffling of its employees was done in good
Department Store (323 SCRA 445)] is applicable to
faith and cannot be made the basis of a finding of
the case at bar;
constructive dismissal.
IV. Whether or not the Court of Appeals erred in
The fact that Mendoza was no longer included in
dismissing the petitioners money claims, damages,
the banks payroll for July 1 to 15, 1999 does not
and unpaid salaries for the period July 1-30, 1999,
signify that the bank has dismissed the former from
although this was not disputed by the private
its employ.Mendoza separated himself from the
respondent; and
banks employ when, on June 24, 1999, while on
V. Whether or not the entire proceedings before the Jurisprudence recognizes the exercise of management
Honorable Court of Appeals and the NLRC are a prerogatives. For this reason, courts often decline to interfere in
legitimate business decisions of employers.[24] Indeed, labor
nullity since the appeal filed by private respondent laws discourage interference in employers judgments
before the NLRC on August 5, 2000 was on the concerning the conduct of their business.[25] The law must
15th day or five (5) days beyond the reglem[e]ntary protect not only the welfare of employees, but also the right of
period of ten (10) days as provided for by law and employers.
the NLRC Rules of Procedure.[20] In the pursuit of its legitimate business interest,
management has the prerogative to transfer or assign
In short, the main issue is whether petitioner was employees from one office or area of operation to another --
constructively dismissed from his employment. 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
The Courts Ruling punishment or demotion without sufficient cause.[26] This
privilege is inherent in the right of employers to control and
manage their enterprise effectively.[27] The right of employees to
The Petition has no merit. security of tenure does not give them vested rights to their
positions to the extent of depriving management of its
prerogative to change their assignments or to transfer them.[28]
Main Issue:
Constructive Dismissal Managerial prerogatives, however, are subject to limitations
provided by law, collective bargaining agreements, and general
principles of fair play and justice.[29] The test for determining the
Constructive dismissal is defined as an involuntary validity of the transfer of employees was explained in Blue Dairy
resignation resorted to when continued employment is rendered Corporation v. NLRC[30] as follows:
impossible, unreasonable or unlikely; when there is a demotion
in rank or a diminution of pay; or when a clear discrimination, [L]ike other rights, there are limits thereto. The
insensibility or disdain by an employer becomes unbearable to
managerial prerogative to transfer personnel must
the employee.[21] Petitioner argues that he was compelled to file
an action for constructive dismissal, because he had been be exercised without grave abuse of discretion,
demoted from appraiser to clerk and not given any work to do, bearing in mind the basic elements of justice and
while his table had been placed near the toilet and eventually fair play. Having the right should not be confused
removed.[22] He adds that the reshuffling of employees was
with the manner in which that right is
done in bad faith, because it was designed primarily to force him
to resign.[23] exercised. Thus, it cannot be used as a subterfuge
by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to
Management Prerogative show that the transfer is not unreasonable,
to Transfer Employees
inconvenient or prejudicial to the employee; nor competence and maximize their full potential for the
does it involve a demotion in rank or a diminution of advancement of the establishment. Petitioner was not singled
out; other employees were also reassigned without their
his salaries, privileges and other benefits. Should express consent.
the employer fail to overcome this burden of proof,
Neither was there any demotion in the rank of petitioner; or
the employees transfer shall be tantamount to
any diminution of his salary, privileges and other benefits. This
constructive dismissal, which has been defined as fact is clear in respondents Board Resolutions, the April 30,
a quitting because continued employment is 1999 letter of Bank President Daya to Branch Manager Cada,
rendered impossible, unreasonable or unlikely; as and the May 10, 1999 letter of Daya to petitioner.
an offer involving a demotion in rank and diminution On the other hand, petitioner has offered no sufficient proof
in pay. Likewise, constructive dismissal exists to support his allegations. Given no credence by both lower
when an act of clear discrimination, insensibility or tribunals was his bare and self-serving statement that he had
been positioned near the comfort room, made to work without a
disdain by an employer has become so unbearable table, and given no work assignment.[35] Purely conjectural is his
to the employee leaving him with no option but to claim that the reshuffle of personnel was a harassment in
forego with his continued employment.[31] retaliation for an alleged falsification case filed by his relatives
against a public official.[36] While the rules of evidence prevailing
in courts of law are not controlling in proceedings before the
Petitioners Transfer Lawful NLRC,[37] parties must nonetheless submit evidence to support
their contentions.

The employer bears the burden of proving that the transfer

of the employee has complied with the foregoing test. In the Secondary Issues:
instant case, we find no reason to disturb the conclusion of the
NLRC and the CA that there was no constructive
dismissal. Their finding is supported by substantial evidence -- Serrano v. NLRC Inapplicable
that amount of relevant evidence that a reasonable mind might
accept as justification for a conclusion.[32]
Serrano v. NLRC[38] does not apply to the present factual
Petitioners transfer was made in pursuit of respondents
milieu. The Court ruled therein that the lack of notice and
policy to familiarize bank employees with the various phases of
hearing made the dismissal of the employee ineffectual, but not
bank operations and further strengthen the existing internal
necessarily illegal.[39] Thus, the procedural infirmity was
control system[33] of all officers and employees. We have
remedied by ordering payment of his full back wages from the
previously held that employees may be transferred -- based on
time of his dismissal.[40] The absence of constructive dismissal
their qualifications, aptitudes and competencies -- to positions in
in the instant case precludes the application
which they can function with maximum benefit to the of Serrano. Because herein petitioner was not dismissed, then
company.[34] There appears no justification for denying an
he is not entitled to his claimed monetary benefits.
employer the right to transfer employees to expand their
Alleged Nullity of NLRC
and CA Proceedings

Petitioner argues that the proceedings before the NLRC and

the CA were void, since respondents appeal before the NLRC
had allegedly been filed beyond the reglementary period.[41]A
careful scrutiny of his Petition for Review[42] with the appellate
court shows that this issue was not raised there. Inasmuch as
the instant Petition challenges the Decision of the CA, we
cannot rule on arguments that were not brought before it. This
ruling is consistent with the due-process requirement that no
question shall be entertained on appeal, unless it has been
raised in the court below.[43]
WHEREFORE, this Petition is DENIED, and the June 14,
2002 Decision and the September 25, 2002 Resolution of the
Court of Appeals are AFFIRMED. Costs against petitioner.
PHILIPPINE TELEGRAPH AND TELEPHONE On April 12, 1984, Mrs. Arogo reiterated her directive for
CORPORATION, petitioner, Laplana's transfer to the Laoag Branch, this time in the form of a
vs. written Memorandum, informing Laplana that "effective April 16,
ALICIA LAPLANA, Hon. RICARDO ENCARNACION, and 1984, you will be reassigned to Laoag branch assuming the
NATIONAL LABOR RELATIONS COMMISSION, respondents. same position of branch cashier," and ordering her "to turn over
your accountabilities such as PCF, undeposited collections,
D.P. Mercado & Associates for petitioner. used and unused official receipts, other accountable forms and
files to Rose Caysido who will be in charge of cashiering in
Baguio."

Apparently Laplana was not allowed to resume her work as

NARVASA, J.: Cashier of the Baguio Branch when April 16, 1984 came. She
thereupon wrote again to Mrs. Arogo advising that the directed
Alicia Laplana was the cashier of the Baguio City Branch Office transfer was unacceptable, reiterating the reasons already given
of the Philippine Telegraph and Telephone Corporation by her in her first letter dated March 27, 1984. On April 30,
(hereafter, simply PT & T). Sometime in March 1984, PT & T's 1984, Laplana received a telegram from Mrs. Arogo reading as
treasurer, Mrs. Alicia A. Arogo, directed Laplana to transfer to follows:
the company's branch office at Laoag City. Laplana refused the
reassignment and proposed instead that qualified clerks in the PLEASE REPORT TO MANILA ON MAY 2, 1984 FOR
Baguio Branch be trained for the purpose. She set out her NEW JOB ASSIGNMENT
reasons therefor in her letter to Mrs. Arogo dated March 27,
1984, viz.: IF YOU DON'T REPORT ON MAY 2, 1984, WE WILL
CONSIDER THIS AS ABANDONMENT OF YOUR JOB
1. I have established Baguio City as my permanent AND THIS MIGHT CONSTRAIN US TO IMPOSE
residence. Working in Laoag will involve additional DISCIPLINARY ACTION AGAINST YOU
expenses like for my board and lodgingly, fare, and other
miscellaneous expenses. My salary alone will not be YOU CAN GET YOUR CASH ADVANCE FOR
enough — there will be no savings and my family will TRANSPORTATION PETITION FROM MRS. BAUTISTA
spend more on account of my transfer. TODAY.

2. I will be away from my family. A far assignment would On May 8, 1984, Laplana in turn sent a telex message to Mrs.
be a big sacrifice on my part keeping me away from my Arogo which reads as follows:
husband and family which might affect my efficiency.
I LOVE WORKING FOR OUR COMPANY HOWEVER I
3. Since I have been with PT & T for more than six years AM SORRY I CANNOT ACCEPT YOUR JOB OFFER IN
already, I have learned to work with my co-employees MANILA THANK YOU AND RETRENCH ME INSTEAD.
here more effectively. Working in another place with MY BEST REGARDS.
entirely different environment will require long adjustment
period, thereby affecting performance of my job.
Thereafter, Laplana sent a letter to Mrs. Arogo on May 15, On October 9, 1984, Laplana filed with the Labor Arbiters' Office
1984, expatiating on her telex message and reiterating her at Baguio City, thru the CLAO, a complaint against PT & T its
request to be retrenched, as follows: "Baguio Northwestern Luzon Branch, Baguio City," and
Paraluman Bautista, Area Manager. In her complaint, she set
Dear Mrs. Arogo: forth substantially the facts just narrated, and alleged, as right of
action, that "when she insisted on her right of refusing to be
Thank you for the job in Manila. However, I cannot transferred, the Defendants made good its warning by
accept the said offer because I have established Baguio terminating her services on May 16, 1984 on alleged ground of
City as my permanent residence. Considering the high "retrenchment," although the truth is, she was forced to be
cost of living in Manila it will surely involve additional terminated and that there was no ground at all for the
expenses on my part. My salary alone will not be enough retrenchment;" that the company's "act of transferring is not only
to sustain my expenses. Furthermore, a far assignment without any valid ground but also arbitrary and without any
will be a big sacrifice on my part keeping me away from purpose but to harass and force . . . (her) to eventually resign."
my husband which might affect my health due to an
entirely new environment and climate, thereby affecting In answer, the defendants alleged that —
my efficiency.
1) Laplana "was being transferred to Laoag City because
In view of the above reasons, I hereby request of increase in sales due to the additional installations of
management to retrench me. vodex line;"

xxx xxx xxx 2) in connection with her transfer, Laplana had been
informed "that she would be given ten (10) days.
Termination of Laplana's employment on account of relocation allowance and transportation expense from
retrenchment thereupon followed.1awp++i1 On May 19, 1984, Baguio to Laoag City;"
PT & T issued an "Employees's Service Report" which
contained the following remarks regarding Laplana: "Services 3) the company "was exercising management
terminated due to retrenchment with corresponding termination prerogatives in transferring complainant . . . and there is
pay effective May 16, 1984. " And on June 30, 1984, Mrs. Arogo no showing that this exercise was arbitrarily and
sent a Memorandum to the company's Baguio Branch Manager whimsically done;"
embodying the computation of the separation and 13th month
pay due to Laplana, together with a check for the amount 4) Laplana's services were terminated on her explicit
thereof, P2,512.50 and a quitclaim deed, and instructing said declaration that "she was willing to be retrenched rather
manager to "have the quitclaim signed by Alicia Laplana before than be assigned to Laoag City or Manila;"
releasing the check and return all copies of said form . . .
immediately." On July 4, 1984, Laplana signed the quitclaim and 5) in any event, the company had been actually suffering
received the check representing her 13th month and separation losses; in fact, in June, 1984, several employees "were
pay. retrenched because of losses incurred due to rising costs
in wages, rentals, production supplies and other
operational costs."
Upon the issues thus raised, judgment was rendered on March 2) the dismissal of the claim for moral and exemplary
28, 1985 by the Labor Arbiter in Laplana's favor.1 The Arbiter's damages for lack of merit; and
verdict was made to rest essentially on the following
pronouncements (made avowedly in reliance on the doctrine 3) the dismissal of the case against Mrs. Paraluman
laid down by this Court in Helmut Dosch v. NLRC and Bautista also for lack of merit.
Northwest Airlines, Inc., G.R. No. 51182, July 5, 19832), to wit:
The National Labor Relations Commission affirmed the Arbiter's
Transferring an employee from one place to another is judgment and dismissed the respondents' appeal, by Resolution
not by itself unlawful. It is within the inherent right of an dated August 5, 1986.3
employer to transfer or assign an employee in the pursuit
of its legitimate business interests. However, this right is There can be no quarrel with the Arbiter's formulation of the
not absolute. general principle governing an employer's prerogative to
transfer his employees from place to place or from one position
Transfer becomes unlawful where it is motivated by to another. The Arbiter acknowledges "the inherent right of an
discrimination or in bad faith, or is effected as a form of employer to transfer or assign an employee in the pursuit of its
punishment or demonition without sufficient cause. legitimate business interests" subject only to the condition that it
be not "motivated by discrimination or (made) in bad faith, or . . .
The transfer of the complainant from Baguio City to effected as a form of punishment or demotion without sufficient
Laoag City or to Manila is patently a demotion and a form cause." This is a principle uniformly adhered to by this Court.4
of punishment without just cause and would cause untold
suffering on the part of the complainant. . . . The case law on the matter is succinctly set out by a noted
commentator on Labor Relations Law as follows:5
With these premises in mind, the Arbiter ruled "that the
complainant was illegally dismissed . . . (and her) acceptance of . . . Except as limited by special laws, the employer is
separation pay . . . cannot cure the illegality of her dismissed free to regulate, according to his own discretion and
because it was forced upon her — she was compelled to accept judgment, all aspects of employment, including hiring,
the lesser evil," and that there was "no evidence to show that work assignments, working methods, time, place and
the complainant was retrenched to prevent losses," but that on manner of work, tools to be used, processes to be
the contrary, "it is continuously expanding and improving its followed, supervision of workers, working regulations,
facilities, and hiring new employees." Accordingly, he ordered — transfer of employees, work supervision, lay-off of
workers, and the discipline, dismissal and recall of
1) PT & T "to reinstate immediately the complainant, workers. This flows from the established rule that labor
Alicia R. Laplana, to her former position or equivalent law does not authorize the substitution of the judgment of
position without loss of seniority rights and benefits the employer in the conduct of his business and does not
earned with full backwages and benefits less P2,512.50, deprive the employer of the right to select or dismiss his
the amount she received as separation, from the time her employees for any cause, except in cases of unlawful
compensation was suspended until reinstated;" discrimination (NLU v. Insular-Yebana Tobacco Corp., 2
SCRA 924, 931; Republic Savings Bank v. CIR, 21
SCRA 226, 235).
 . . . The employer has the prerogative of making transfers assignment or transfer him where he will be most useful.
and reassignment of employees to meet the When his transfer is not unreasonable, nor inconvenient,
requirements of the business. Thus, where the rotation of nor prejudicial to him, and it does not involve a demotion
employees from the day shift to the night shift was a in rank or diminution of his salaries, benefits, and other
standard operating procedure of management, an privileges, the employee may not complain that it
employee who had been on the day shift for some time amounts to a constructive dismissal.
may be transferred to the night shift (Castillo v. CIR, 39
SCRA 81). Similarly, transfers effected pursuant to a In Yuco Chemical Industries, Inc. v. MOLE et al. (judgment
company policy to transfer employees from one theater promulgated on May 28, 1990)7 the same "general principles on
to other theaters operated by the employer, in order to transfer" were re-stated. The Court said:
prevent connivance among them, was sustained
(Cinema, Stage and Radio Entertainment Free Workers . . . In a number of cases, the Court has recognized and
v. CIR, 18 SCRA 1071). Similar transfers and re- upheld the prerogative of management to transfer an
assignments of employees have been upheld such as the employee from one office to another within the business
re-assignment of one from a position of supervisor to that establishment provided that there is no demotion in rank
of engineer at the power house (Interwood Employees or diminution of his salary, benefits and other privileges.
Assn. v. Interwood, 99 Phil. 82), or the transfer of the This is a privilege inherent in the employer's right to
union president from his position of messenger clerk in a control and manage its enterprise effectively. Even as the
hotel to purely office work and two other unionists from law is solicitous of the employees' welfare, it cannot
the position of hotel guard to line and elevator men, ignore the right of the employer to exercise what are
without diminution of pay or other employee's rights (Bay clearly and obviously management prerogatives. The
View Hotel Employees Union v. Bay View Hotel, L- freedom of management to conduct its business
10393, March 30, 1960), or the temporary assignment of operations to achieve its purpose cannot be denied.
a sales clerk to another section of the store (Marcaida v.
PECO, 63 O.G. 8559). But like all other rights, there are limits. The managerial
prerogative to transfer personnel must be exercised
Subsequent decisions of this Court have made no deviation without grave abuse of discretion and putting to mind the
from the doctrine. In Philippine Japan Active Carbon Corp. v. basic elements of justice and fair play. Having the right
NLRC, promulgated on March 8, 19896 this Court made the should not be confused with the manner in which that
following pronouncement, to wit: right must be exercised. Thus it cannot be used as a
subterfuge by the employer to rid himself of an
It is the employer's prerogative, based on its assessment undesirable worker. Nor when the real reason is to
and perception of its employees' qualifications, aptitudes, penalize an employee for his union activities and thereby
and competence, to move them around in the various defeat his right to self-organization. But the transfer can
areas of its business operations in order to ascertain be upheld when there is no showing that it is
where they will function with maximum benefit to the unnecessary, inconvenient and prejudicial to the
company. An employee's right to security of tenure does displaced employee.
not give him such a vested right in his position as would
deprive the company of its prerogative to change his
The acceptability of the proposition that transfers made by an In this case, the employee (Laplana) had to all intents and
employer for an illicit or underhanded purpose — e.g., to evade purposes resigned from her position. She had unequivocally
the duty to bargain collectively, or to defeat the welfare, right of asked that she be considered dismissed, herself suggesting the
collective bargaining, or discriminate against one or some of reason therefor –– retrenchment. When so dismissed, she
them on account of their union activities — is self-evident and accepted separation pay. On the other hand, the employer has
cannot be gainsaid. The difficulty lies in the situation where no not been shown to be acting otherwise than in good faith, and in
such illicit, improper or underhanded purpose can be ascribed to the legitimate pursuit of what it considered its best interests, in
the employer, the objection to the transfer being ground solely deciding to transfer her to another office. There is no showing
upon the, personal inconvenience or hardship that will be whatever that the employer was transferring Laplana to another
caused to the employee by reason of the transfer. What then? work place, not because she would be more useful there, but
merely "as a subterfuge to rid . . . (itself) of an undesirable
In Dosch v. NLRC, supra, this Court found itself unable to agree worker," or "to penalize an employee for . . . union activities. . .
with the NLRC that the petitioner employee was guilty of ." The employer was moreover not unmindful of Laplana's initial
disobedience and insubordination in refuse to accept his plea for reconsideration of the directive for her transfer to
transfer from the Philippines to an overseas post. Said the Laoag; in fact, in response to that plea not to be moved to the
Court: Laoag Office, the employer opted instead to transfer her to
Manila, the main office, offering at the same time the normal
. . . The only piece of evidence on which (respondent benefits attendant upon transfers from an office to another.
employer) Northwest bases the charge of contumacious
refusal is petitioner's letter dated August 28, 1975 to R.C. The situation here presented is of an employer transferring an
Jenkins wherein petitioner acknowledged receipt of the employee to another office in the exercise of what it took to be
former's memorandum dated August 18, 1975, sound business judgment and in accordance with pre-
appreciated his promotion to Director of International determined and established office policy and practice, and of
Sales but at the same time regretted "that at this time for the latter having what was believed to be legitimate reasons for
personal reasons and reasons of my family, I am unable declining that transfer, rooted in considerations of personal
to accept the transfer from the Philippines' and thereafter convenience and difficulties for the family. Under these
expressed his preference to remain in my Position of circumstances, the solution proposed by the employee herself,
Manager-Philippines until such time that my services in of her voluntary termination of her employment and the delivery
that capacity are no longer required by Northwest to her of corresponding separation pay, would appear to be the
Airlines." From this evidence, We cannot discern even most equitable. Certainly, the Court cannot accept the
the slightest hint of defiance, much less imply proposition that when an employee opposes his employer's
insubordination on the part of petitioner. decision to transfer him to another work place, there being no
bad faith or underhanded motives on the part of either party, it is
Withal, it is evident that the courteous tone of the employee's the employee's wishes that should be made to prevail. In
letter did not alter the actuality of his refusal to accept the adopting that proposition by way of resolving the controversy,
transfer decreed by his employer in the exercise of its sound the respondent NLRC gravely abused its discretion.
business judgment and discretion; and that the transfer of an
employee to an overseas post cannot be likened to a transfer
from a city to another within the country, as in the case at bar.
YUCO CHEMICAL INDUSTRIES, INC., petitioner, A day after or on August 13, 1981, instead of complying with the
vs. memorandum, private respondents filed a complaint with the
MINISTRY OF LABOR AND EMPLOYMENT thru provincial labor office for illegal dismissal, 13th month pay and
HONORABLE VICENTE LEOGARDO, JR., DEPUTY service incentive leave pay. 3
MINISTER, GEORGE HALILI and AMADO
MAGNO, respondents. As a countermove, on August 21, 1981, petitioner filed an
application for clearance to terminate the two employees on the
Ricardo C. Atienza for petitioner. ground of abandonment. On September 25,1981, the OIC of the
Tarlac labor office issued an order directing petitioner to give
Bienvenido B. Balot for private respondents. private respondents their separation pay within ten (10) days
from receipt of notice.

Private respondents appealed to the Office of the Minister of

FERNAN, C.J.: MOLE through Deputy Minister Leogardo, Jr. who rendered the
order in question with the following reasons cited:
Assailed in this petition for certiorari is the order dated April 8,
1986 of Deputy Minister Leogardo, Jr. of the then Ministry of 1. At the time of acceptance of the employment relation
Labor and Employment (MOLE) which reversed the order of the between the parties, it was assumed that the place of work was
officer-in-charge of the Tarlac provincial labor office and in Matatalaib, Tarlac, Tarlac. Thus, to transfer the place of work
directed petitioner "to reinstate complainants with backwages at such a distant place as Manila without the consent of the
fixed at two years without deduction or qualification." 1 employees concerned can no longer be construed as a
reasonable exercise of management prerogative in the
In 1978, private respondents (complainants) George Halili and assignment of personnel dictated by business exigencies;
Amado Magno were employed by petitioner company which is
engaged in the manufacture/assembly of ice boxes in Barangay 2. If petitioner company had indeed relocated its operations
Matatalaib, Tarlac, Tarlac. They were assigned to make from Tarlac to Manila, it is puzzling why out of the 50
aluminum handles for the ice boxes. employees, it singled out the two (2) plain laborers to man the
Manila operations. Such actuation tended to support the
On August 12,1981, after obtaining a favorable legal opinion allegation that private respondents were discriminated against
from the Tarlac provincial office of MOLE concerning the legality because of their union activities and their refusal to disaffiliate
of moving the production of aluminum handles from Tarlac to from the union.
Manila, petitioner addressed a memorandum to private
respondents directing them to report for work within one week A motion for reconsideration subsequently filed by the petitioner
from notice at their new place of work at Felix Huertas Street, was denied.
Sta. Cruz, Manila. The memorandum further stated that private
respondents would be paid with a salary of P27.00 and an Hence this present petition.
additional allowance of P2.00 "to meet the higher cost of living
in Manila. 2 First, some general principles on transfer. In a number of cases,
the Court has recognized and upheld the prerogative of
management to transfer an employee from one office to another discriminated against Magno and Halili when the duo was
within the business establishment provided that there is no selected for reassignment to Manila. The transfer was timed at
demotion in rank or a diminution of his salary, benefits and other the height of union concerted activities in the firm, deliberately
privileges. This is a privilege inherent in the employer's right to calculated to demoralize the other union members. Under such
control and manage its enterprise effectively. Even as the law is questionable circumstances, private respondents had a valid
solicitous of the employees' welfare, it cannot ignore the right of reason to refuse the Manila re-assignment. 7Public respondent
the employer to exercise what are clearly and obviously did not err or abuse his discretion in upholding the employees'
management prerogatives. The freedom of management to cause.
conduct its business operations to achieve its purpose cannot
be denied .4 WHEREFORE, the questioned order dated April 8, 1986 of
Deputy Minister Leogardo, Jr. is hereby AFFIRMED. Assuming
But like all other rights, there are limits. The managerial that the positions of private respondents have been filled up,
prerogative to transfer personnel must be exercised without they should be reinstated to substantially equivalent position
grave abuse of discretion and putting to mind the basic without loss of seniority rights, privileges and benefits due them.
elements of justice and fair play. 5 Having the right should not be Costs against petitioner.
confused with the manner in which that right must be exercised.
Thus it cannot be used as a subterfuge by the employer to rid
himself of an undesirable worker. Nor when the real reason is to
penalize an employee for his union activities and thereby defeat
his right to self-organization. But the transfer can be upheld
when there is no showing that it is unnecessary, inconvenient
and prejudicial to the displaced employee .6

The reassignment of Halili and Magno to Manila is legally

indefensible on several grounds. Firstly, it was grossly
inconvenient to private respondents. They are working students.
When they received the transfer memorandum directing their
relocation to Manila within seven days from notice, classes had
already started. The move from Tarlac to Manila at such time
would mean a disruption of their studies. Secondly, there
appears to be no genuine business urgency that necessitated
their transfer. As well pointed out by private respondents'
counsel, the fabrication of aluminum handles for ice boxes does
not require special dexterity. Many workers could be contracted
right in Manila to perform that particular line of work.

Altogether, there is a strong basis for public respondent's

conclusion that the controversial transfer was not prompted by
legitimate reasons. Petitioner company had indeed
CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA) grant the permission sought, de Villa referred Clarete to
and ARNELIO M. CLARETE, petitioners, Dominador Castillo, the security supervisor. When so
vs. approached, however, Castillo told Clarete to leave the bottle in
NATIONAL LABOR RELATIONS COMMISSION (Third his office. Clarete complied and left for home.
Division), CALTEX PHILIPPINES, INC. and/or EDGARDO C.
CATAQUIS, respondents. Respondent Caltex gave a different version of the incident: On
said date, de Villa noticed a black bag which Clarete did not
submit for inspection. When requested by de Villa to open the
same for inspection, Clarete retorted that it was not necessary
to inspect the bag as it contained only dirty clothes.
QUIASON, J.: Unconvinced, de Villa opened the bag and found a one-liter
sample bottle filled with lighter fluid surreptitiously hidden inside
This is a petition for certiorari under Rule 65 of the Revised in the sleeves of Clarete's working clothes, which, in turn, were
Rules of Court to reverse the Resolution dated August 30, 1991 covered by other clothes. When asked if he had a gate pass to
of the National Labor Relations Commission (NLRC) in NLRC bring the bottle out of the premises, Clarete replied that he did
Case No. L-000063 and its Resolution dated October 15, 1991 not secure a gate pass as the lighter fluid was for his personal
denying the motion for reconsideration of the decision. use.

I On April 18, 1989, Clarete received a letter from his immediate

supervisor, requiring him to explain in writing why he should not
Petitioner Arnelio M. Clarete was hired by respondent Caltex be subjected to disciplinary action for violation of company rules
Philippines, Inc. (Caltex) as Mechanic C on November 3, 1981. and regulations. In his written explanation of April 20, 1989,
He was later promoted to the position of Mechanic B and Clarete stated: (1) that he had no intention of bringing the bottle
assigned to the Mechanical/Metal Grades Section of respondent of lighter fluid out of the company premises without the guard's
Caltex's refinery in San Pascual, Batangas. permission; (2) that he did seek permission but was denied; and
(3) that he left the bottle behind with the guard when told to do
According to Clarete, at about 4:00 p.m. on April 13, 1989, on so.
his way to the refinery's main gate after completing a day's work
at the Maintenance Area IV, he saw on a pile of rubbish a bottle On August 16, 1989, Clarete was charged with the crime of theft
of lighter fluid, which mechanics use to remove grease from before the Municipal Trial Court of San Pascual, Batangas
their hands. He picked up the bottle and placed it in the basket (Criminal Case No. 3331). On October 19, 1989, he received a
attached to the handlebar of his bicycle with the intention of letter from Antonio Z. Palad, Section Head, Mechanical/Metal
asking the security guard at the gate to allow him to bring it Section, requiring him to explain why his services should not be
home. terminated for cause in view of Criminal Case No. 3331 and his
violation of the "policy on disciplinary action per G.M. Circular
Upon reaching the gate, he took the bottle of lighter fluid from No. 484 of August 28, 1974, specifically '(f) Removing or
the basket, punched out his time card at the bundy clock and attempting to remove Company property from the Refinery
then asked Juan de Villa, the security guard on duty, permission without authorization.'" (Rollo, p. 58).
to take home the bottle. Replying that he was not authorized to
In reply, Clarete requested time to consult his lawyer, which On August 27, 1990, Clarete filed a complaint for illegal
request respondent Caltex granted on November 14, 1989. dismissal against private respondents Caltex and/or Edgardo C.
Clarete was given up to November 30, 1989 to submit his Cataquio, in his capacity as Vice President of the Company with
explanation. However, instead of submitting a written the Regional Arbitration Branch IV of the National Labor
explanation, petitioner served a letter on Palad, requesting a Relations Commission. On January 15, 1991, Labor Arbiter
formal investigation of the allegations against him, at the same Joaquin A. Tanodra rendered a decision, finding Clarete neither
time, invoking his right to be represented by the Union and his culpable of theft nor of violating GM Circular No. 484 of August
legal counsel. The request was granted and a hearing was 28, 1974 as "his purpose in going to security guard de Villa was
scheduled on January 5, 1990. Said hearing, as well as a precisely to ask the latter's permission to bring out the lighter
subsequent one, was however deferred upon the request of fluid from the Refinery Compound." (Rollo, p. 27). He, therefore,
Clarete. directed the reinstatement of Clarete with full back wages which
then totaled P40,081.60, without loss of seniority rights and
Believing that Clarete has been given enough time to consult his other privileges.
lawyer and to prepare his explanation, a final meeting was
scheduled on February 27, 1990. At the said meeting, Clarete, On appeal by private respondents, NLRC rendered judgment on
through counsel, requested a formal trial-type investigation of August 20, 1991, vacating the decision of the Labor Arbiter and
the case. A letter reiterating that request was addressed by entering a new one dismissing the complaint for lack of merit.
Clarete's counsel to Palad on March 12, 1990. In his letter dated NLRC gave credence to the version of respondent Caltex of the
April 26, 1990, Palad denied the request on the ground that a incident. It found no reason to doubt the veracity of the narration
trial-type hearing and confrontation of witnesses were not of the security guard, who was simply doing his job of protecting
applicable to the company's administrative fact-finding the property of private respondent and who was not shown to
investigation. Clarete was then given only up to May 4, 1990 to hold a personal grudge or ill motive to testify falsely against
submit his written explanation. He finally did so on May 3, 1990. Clarete. Nonetheless, NLRC awarded Clarete financial
assistance equivalent to one month salary for every year of
In the meantime, on April 19, 1990, a decision was rendered in service in the amount of P76,752.00.
Criminal Case No. 3331, acquitting Clarete of the crime charged
based on the insufficiency of the evidence to establish his guilt Both parties moved for reconsideration — Clarete, on the
beyond reasonable doubt. ground that his dismissal was without valid cause as there was
no violation of company rules, and private respondents on the
On August 20, 1990, Clarete was informed that his services ground that Clarete was not entitled to the award of financial
were being terminated effective August 24, 1990 for "serious assistance pursuant to the ruling in Philippine Long Distance
misconduct and loss of trust and confidence resulting from your Telephone Company v. National Labor Relations
having violated a lawful order of the Company, i.e., GM Circular Commission, 164 SCRA 671 (1988).
No. 484 of 8-28-74 which gave notice that the Company
considers 'removing or attempting to remove Company property Hence, this petition filed by Clarete and The Caltex Refinery
from the Refinery without authorization' to be sufficiently serious Employees Association, the exclusive bargaining representative
that the erring employee be dismissed." (Rollo, p. 63). Clarete of all rank and file employees of respondent Caltex.
was placed under preventive suspension with pay upon notice
up to the termination of his services on August 24, 1990. II
Petitioners contend that NLRC acted with grave abuse of followed, supervision of workers, working regulations, transfer of
discretion calling for the exercise of this Court's corrective employees, discipline, dismissal and recall of workers. (San
power. They maintain that Clarete's version of the incident is Miguel Corporation v. Ubaldo, 218 SCRA 293 [1993]). This
more in accord with logic and common experience. They further prerogative must, however, be exercised in good faith for the
allege that loss of confidence, to be valid ground for dismissal, advancement of the employer's interest and not for the purpose
must be based on just and duly substantiated causes. Since of defeating the rights of the employees granted by law or
Clarete's position as mechanic is not one of trust and does not contract. (Garcia v. Manila Times, 224 SCRA 399 [1993]). There
involve the production, safekeeping or even the handling of are restrictions to guide the employers in the exercise of
lighter fluid, his act of picking up the bottle of lighter fluid with management prerogatives, particularly the right to discipline or
the intention of asking permission to bring it home, cannot serve dismiss employees, for both the Constitution and the law
as basis for loss of confidence. guarantee employees' security of tenure. Thus, employees may
be dismissed only in the manner provided by law. (Radio
Respondent Caltex, on the other hand, asserts that G.M. Communications of the Phil., Inc. v. National Labor Relations
Circular No. 484 was issued pursuant to its management Commission, 223 SCRA 656 [1993]). The right of the employer
prerogative to prescribe rules and regulations necessary for the must not be exercised arbitrarily and without just cause.
conduct of its business and specifically to put a stop to rampant Otherwise, the constitutional mandate of security of tenure of
pilferages of company property by its employees, which has the workers would be rendered nugatory. (China City
resulted not only in substantial losses in its operations but also Restaurant Corporation v. National Labor Relations
in the perceptible breakdown in employee discipline. The Commission, 217 SCRA 443 [1993]).
findings of fact of NLRC, which are supported by evidence on
record, show that petitioner Clarete attempted to remove a We concur in NLRC's conclusion that the version of respondent
bottle of lighter fluid owned by respondent Caltex from the Caltex of the incident under consideration is more credible. As
company premises; therefore, Clarete committed not only a correctly pointed out by NLRC, there is no reason to doubt the
serious misconduct but also a willful breach of trust and veracity of the Report of Security Guard Juan de Villa dated
confidence reposed upon him in the performance of his duties. April 14, 1989 and his Sinumpaang Salaysay dated April 21,
The loss of trust and confidence is not precluded by the fact that 1989 as "he simply did what he was primarily tasked to do — to
Clarete's position does not require the safekeeping or handling protect the company property and to apprehend misdeeds
a lighter fluid. If this were the rule, an employee may then help committed thereat — neither ill motive nor personal grudge
himself to his employer's property without fear of disciplinary against complainant-appellee (Clarete) was attributed to him to
action as long as the property taken was not entrusted to his falsely testify against the former" (Rollo, p. 36). Undoubtedly,
care or is not related to his function. the lighter fluid is a property of private respondent and to take
the same out of its premises without the corresponding gate
III pass is a violation of company rules on theft and pilferage of
company property.
The prerogative of employers to regulate all aspects of
employment subject to the limitation of special laws is But while Clarete may be guilty of violation of company rules,
recognized. A valid exercise of management prerogative we find the penalty of dismissal imposed upon him by
encompasses hiring, work assignments, working methods, time, respondent Caltex too harsh and unreasonable. As enunciated
place and manner of work, tools to be used, procedure to be in Radio Communications of the Philippines, Inc. v. National
Labor Relations Commission, supra, "such a penalty (of Court of Appeals, 215 SCRA 501 [1992]). As in the case
dismissal) must be commensurate with the act, conduct or of Pines City v. National Labor Relations Commission, 224
omission imputed to the employee and imposed in connection SCRA 110 (1993) and Pines City Educational Center v. National
with the employer's disciplinary authority" (at p. 667). Even Labor Relations Commission, 227 SCRA 655 (1993), the Court
when there exist some rules agreed upon between the employer stated that in ascertaining the total amount of back wages
and employee on the subject of dismissal, we have ruled payable to them, we go back to the rule prior to the Mercury
in Gelmart Industries Phils., Inc. v.National Labor Relations Drug rule that the total amount derived from employment
Commission, 176 SCRA 295 (1989), that the same cannot elsewhere by the employee from the date of dismissal up to the
preclude the State from inquiring on whether its rigid application date of reinstatement, if any, should be deducted therefrom.
would work too harshly on the employee. (Itogon-Suyoc Mines, Inc. v. Sangilo-Itogon Workers' Union, et
al., 24 SCRA 873 [1968]). Inasmuch as petitioner received pay
Of the same mind is the Solicitor General who, invoking Gelmart during his preventive suspension, the same must also be
Industries, prayed in his Manifestation, in lieu of Comment, that deducted from the monetary awards to be received by him.
the assailed decision of NLRC be set aside and reinstatement of
petitioner Clarete be ordered. WHEREFORE, the Resolution of National Labor Relations
Commission dated August 30, 1991 is REVERSED and SET
Indeed, considering that Clarete has no previous record in his ASIDE. Respondent Caltex Phil., Inc. is ORDERED to reinstate
eight years of service; that the value of the lighter fluid, placed petitioner Clarete to his former position of Mechanic B without
at P8.00, is very minimal compared to his salary of P325.00 a loss of seniority rights and to pay him his full back wages
day; that after his dismissal, he has undergone mental torture; inclusive of allowances, and other benefits or their monetary
that respondent Caltex did not lose anything as the bottle of equivalent pursuant to Art. 279 of the Labor Code, as amended
lighter fluid was retrieved on time; and that there was no by Section 34 of R.A. No. 6715, computed from the time his
showing that Clarete's retention in the service would work undue compensation was withheld from him up to the time of his actual
prejudice to the viability of employer's operations or is patently reinstatement deducting therefrom the amount received by
inimical to its interest, we hold that the penalty of dismissal petitioner during his preventive suspension and any income
imposed on Clarete is unduly harsh and grossly earned elsewhere during the period of dismissal if any. No
disproportionate to the reason for terminating his employment. pronouncement as to costs.
Hence, we find that the preventive suspension imposed upon
private respondent is a sufficient penalty for the misdemeanor
committed by petitioner. (Gelmart Industries Phils., Inc. v.
National Labor Relations Commission, supra).

Since the dismissal took place on August 24, 1990, or after the
passage of R.A. No. 6715, Clarete is entitled to reinstatement
without loss of seniority rights and other privileges and his full
back wages inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement. (Maranaw Hotels and Resorts Corporation v.
FIRESTONE TIRE AND RUBBER COMPANY OF THE Lariosa, on the other hand, sued Firestone before the Ministry of
PHILIPPINES, petitioner, Labor and Employment for illegal dismissal, violation of Batas
vs. Pambansa Blg. 130 and its related rules and regulations, and
CARLOS LARIOSA and NATIONAL LABOR RELATIONS damages. The Labor Arbiter, in his decision dated May 8, 1984,
COMMISSION, respondents. found Lariosa's dismissal justified. 3 However, on appeal, the
National Labor Relations Commission on December 28, 1984
reversed the decision of the Labor Arbiter [with one
commissioner voting for affirmance] and held that the dismissal
of Lariosa was too severe a penalty. It therefore ordered
FERNAN, J: Lariosa's reinstatement but without backwages, the period when
he was out of work to be considered a suspension. 4
In this petition for certiorari, petitioner Firestone Tire and Rubber
Company of the Philippines [Firestone for brevity] assails the Petitioner Firestone, in this special civil action for certiorari,
decision of public respondent National Labor Relations contends that the NLRC erred in not dismissing Lariosa's appeal
Commission which ordered the reinstatement without for being late, in finding that Lariosa was not accorded due
backwages of Carlos Lariosa, a dismissed tire builder of process and in reversing the Labor Arbiter.
petitioner, as having been rendered with grave abuse of
discretion amounting to lack of jurisdiction. We shall deal first with the timeliness of the appeal. It is
admitted that Lariosa filed his appeal on June 7, 1984 or after
The facts are as follows: the lapse of fourteen days from notice of the decision of the
Labor Arbiter. Article 223 of the Labor Code clearly provides for
Carlos Lariosa started working with Firestone on January 3, a reglementary period of ten days within which to appeal
1972 as a factory worker. At the time of his dismissal, he was a decision of the Labor Arbiter to the NLRC. The ten-day period
tire builder. has been interpreted by this Court in the case of Vir-jen
Shipping and Marine Services, Inc. vs. NLRC, G.R. No. 58011-
At around 2:00 o'clock in the afternoon of July 27, 1983, as he 12, July 20, 1982, 115 SCRA 347, 361, to mean ten "calendar"
was about to leave the company premises Lariosa submitted days and not ten "working" days. However, the "Notice of
himself to a routine check by the security guards at the west Decision" which Lariosa's lawyer received together with a copy
gate. He was frisked by Security Guard Ambrosio Liso [Lizo] of the arbiter's decision advised them that an appeal could be
while his personal bag was inspected by Security Guard Virgilio taken to the NLRC within ten "working" days from receipt of the
Olvez. In the course of the inspection, sixteen [16] wool flannel said decision. 5
swabs, all belonging to the company, were found inside his bag,
tucked underneath his soiled clothes. Mindful of the fact that Lariosa's counsel must have been misled
by the implementing rules of the labor commission and
As a result of the incident, Firestone terminated Lariosa's considering that the shortened period for appeal is principally
services on August 2, 1983, citing as grounds therefor: "stealing intended more for the employees' benefit, rather than that of the
company property and loss of trust." 1 Firestone also filed a employer, We are inclined to overlook this particular procedural
criminal complaint against him with the Rizal provincial fiscal for lapse and to proceed with the resolution of the instant case.
attempted theft [IS No. 83-436-M]. 2
A review of the record shows that Lariosa was indubitably Thus, under Article 283 of the Labor Code, an employer may
involved in the attempted theft of the flannel swabs. During the terminate an employment for "serious misconduct" or for "fraud
investigation called by the company's industrial relations or willful breach by the employee of the trust reposed in him by
manager Ms. Villavicencio on July 28, 1983, or one day after the his employer or representative."
incident, Security Guards Liso and Olvez contradicted Lariosa's
bare claim that he had no intention to bring home the swabs and If there is sufficient evidence that an employee has been guilty
that he had simply overlooked that he had earlier placed them of a breach of trust or that his employer has ample reasons to
inside his bag after they were given to him by his shift distrust him, the labor tribunal cannot justly deny to the
supervisor while he was busy at work. Guard Olvez stated that employer the authority to dismiss such an employee. 9
when he confronted Lariosa with the swabs, the latter replied
that they were for "home use." And when he requested Lariosa As a tire builder, Lariosa was entrusted with certain materials for
to stay behind while he reported the matter to the authorities, use in his job. On the day in question, he was given two bundles
Lariosa refused and hurriedly left the premises and boarded a of wool flannel swabs [ten pieces per bundle] for cleaning disks.
passing jeepney. 6 He used four swabs from one pack and kept the rest [sixteen
pieces] in his "blue travelling bag." 10 Why he placed the swabs
From the records, it is likewise clear that Firestone did not act in his personal bag, which is not the usual receptacle for
arbitrarily in terminating Lariosa's services. On the contrary, company property, has not been satisfactorily explained.
there are transcripts to prove that an investigation of the incident
was promptly conducted in the presence of the employee If Lariosa, by his own wrong-doing, could no longer be trusted, it
concerned, the union president and the security guards who would be an act of oppression to compel the company to retain
witnessed the attempted asportation. Records also belie the him, fully aware that such an employee could, in the long run,
allegation that Lariosa was shown his walking papers on the endanger its very viability.
very day of the incident. The letter of Ms. Villavicencio to
Lariosa dated August 1, 1983 informing the latter of his The employer's obligation to give his workers just compensation
dismissal effective August 2, 1983 conclusively shows that he and treatment carries with it the corollary right to expect from
was discharged only on August 2, 1983, after an investigation the workers adequate work, diligence and good conduct. 11
was held to ventilate the truth about the July 27 incident. 7 Thus,
we cannot agree with the NLRC's conclusion that even if In view of the foregoing, We rule that Firestone had valid
Firestone had found substantial proof of Lariosa's misconduct, it grounds to dispense with the services of Lariosa and that the
did not observe the statutory requirements of due process. NLRC acted with grave abuse of discretion in ordering his
reinstatement. However, considering that Lariosa had worked
There is no gainsaying that theft committed by an employee with the company for eleven years with no known previous bad
constitutes a valid reason for his dismissal by the employer. record, the ends of social and compassionate justice would be
Although as a rule this Court leans over backwards to help served if he is paid full separation pay but not reinstatement
workers and employees continue with their employment or to without backages as decreed by the NLRC. 12
mitigate the penalties imposed on them, acts of dishonesty in
the handling of company property are a different matter. 8 WHEREFORE, the petition is granted. The decision of the
National Labor Relations Commission dated December 28,
1984 is reversed and set aside. Petitioner Firestone Tire and
Rubber Company of the Philippines is directed to pay its
dismissed worker Carlos Lariosa the separation pay to which he
may be entitled under the law, or any collective bargaining
agreement or company rules or practice, whichever is higher.
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and employee will explore the possibility of a "transfer to another
PEDRO A. TECSON, petitioners, department in a non-counterchecking position" or preparation
vs. for employment outside the company after six months.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
Tecson was initially assigned to market Glaxo’s products in the
RESOLUTION Camarines Sur-Camarines Norte sales area.

TINGA, J.: Subsequently, Tecson entered into a romantic relationship with

Bettsy, an employee of Astra Pharmaceuticals3 (Astra), a
Confronting the Court in this petition is a novel question, with competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in
constitutional overtones, involving the validity of the policy of a Albay. She supervised the district managers and medical
pharmaceutical company prohibiting its employees from representatives of her company and prepared marketing
marrying employees of any competitor company. strategies for Astra in that area.

This is a Petition for Review on Certiorari assailing Even before they got married, Tecson received several
the Decision1 dated May 19, 2003 and the Resolution dated reminders from his District Manager regarding the conflict of
March 26, 2004 of the Court of Appeals in CA-G.R. SP No. interest which his relationship with Bettsy might engender. Still,
62434.2 love prevailed, and Tecson married Bettsy in September 1998.

Petitioner Pedro A. Tecson (Tecson) was hired by respondent In January 1999, Tecson’s superiors informed him that his
Glaxo Wellcome Philippines, Inc. (Glaxo) as medical marriage to Bettsy gave rise to a conflict of interest. Tecson’s
representative on October 24, 1995, after Tecson had superiors reminded him that he and Bettsy should decide which
undergone training and orientation. one of them would resign from their jobs, although they told him
that they wanted to retain him as much as possible because he
Thereafter, Tecson signed a contract of employment which was performing his job well.
stipulates, among others, that he agrees to study and abide by
existing company rules; to disclose to management any existing Tecson requested for time to comply with the company policy
or future relationship by consanguinity or affinity with co- against entering into a relationship with an employee of a
employees or employees of competing drug companies and competitor company. He explained that Astra, Bettsy’s
should management find that such relationship poses a possible employer, was planning to merge with Zeneca, another drug
conflict of interest, to resign from the company. company; and Bettsy was planning to avail of the redundancy
package to be offered by Astra. With Bettsy’s separation from
The Employee Code of Conduct of Glaxo similarly provides that her company, the potential conflict of interest would be
an employee is expected to inform management of any existing eliminated. At the same time, they would be able to avail of the
or future relationship by consanguinity or affinity with co- attractive redundancy package from Astra.
employees or employees of competing drug companies. If
management perceives a conflict of interest or a potential In August 1999, Tecson again requested for more time resolve
conflict between such relationship and the employee’s the problem. In September 1999, Tecson applied for a transfer
employment with the company, the management and the in Glaxo’s milk division, thinking that since Astra did not have a
milk division, the potential conflict of interest would be court held that Glaxo’s policy prohibiting its employees from
eliminated. His application was denied in view of Glaxo’s "least- having personal relationships with employees of competitor
movement-possible" policy. companies is a valid exercise of its management prerogatives.4

In November 1999, Glaxo transferred Tecson to the Butuan Tecson filed a Motion for Reconsideration of the appellate
City-Surigao City-Agusan del Sur sales area. Tecson asked court’s Decision, but the motion was denied by the appellate
Glaxo to reconsider its decision, but his request was denied. court in its Resolution dated March 26, 2004.5

Tecson sought Glaxo’s reconsideration regarding his transfer Petitioners filed the instant petition, arguing therein that (i) the
and brought the matter to Glaxo’s Grievance Committee. Glaxo, Court of Appeals erred in affirming the NCMB’s finding that the
however, remained firm in its decision and gave Tescon until Glaxo’s policy prohibiting its employees from marrying an
February 7, 2000 to comply with the transfer order. Tecson employee of a competitor company is valid; and (ii) the Court of
defied the transfer order and continued acting as medical Appeals also erred in not finding that Tecson was constructively
representative in the Camarines Sur-Camarines Norte sales dismissed when he was transferred to a new sales territory, and
area. deprived of the opportunity to attend products seminars and
training sessions.6
During the pendency of the grievance proceedings, Tecson was
paid his salary, but was not issued samples of products which Petitioners contend that Glaxo’s policy against employees
were competing with similar products manufactured by Astra. marrying employees of competitor companies violates the equal
He was also not included in product conferences regarding such protection clause of the Constitution because it creates invalid
products. distinctions among employees on account only of marriage.
They claim that the policy restricts the employees’ right to
Because the parties failed to resolve the issue at the grievance marry.7
machinery level, they submitted the matter for voluntary
arbitration. Glaxo offered Tecson a separation pay of one-half They also argue that Tecson was constructively dismissed as
(½) month pay for every year of service, or a total of ₱50,000.00 shown by the following circumstances: (1) he was transferred
but he declined the offer. On November 15, 2000, the National from the Camarines Sur-Camarines Norte sales area to the
Conciliation and Mediation Board (NCMB) rendered Butuan-Surigao-Agusan sales area, (2) he suffered a diminution
its Decision declaring as valid Glaxo’s policy on relationships in pay, (3) he was excluded from attending seminars and
between its employees and persons employed with competitor training sessions for medical representatives, and (4) he was
companies, and affirming Glaxo’s right to transfer Tecson to prohibited from promoting respondent’s products which were
another sales territory. competing with Astra’s products.8

Aggrieved, Tecson filed a Petition for Review with the Court of In its Comment on the petition, Glaxo argues that the company
Appeals assailing the NCMB Decision. policy prohibiting its employees from having a relationship with
and/or marrying an employee of a competitor company is a valid
On May 19, 2003, the Court of Appeals promulgated exercise of its management prerogatives and does not violate
its Decision denying the Petition for Review on the ground that the equal protection clause; and that Tecson’s reassignment
the NCMB did not err in rendering its Decision. The appellate from the Camarines Norte-Camarines Sur sales area to the
Butuan City-Surigao City and Agusan del Sur sales area does Glaxo likewise insists that Tecson’s reassignment to another
not amount to constructive dismissal.9 sales area and his exclusion from seminars regarding
respondent’s new products did not amount to constructive
Glaxo insists that as a company engaged in the promotion and dismissal.
sale of pharmaceutical products, it has a genuine interest in
ensuring that its employees avoid any activity, relationship or It claims that in view of Tecson’s refusal to resign, he was
interest that may conflict with their responsibilities to the relocated from the Camarines Sur-Camarines Norte sales area
company. Thus, it expects its employees to avoid having to the Butuan City-Surigao City and Agusan del Sur sales area.
personal or family interests in any competitor company which Glaxo asserts that in effecting the reassignment, it also
may influence their actions and decisions and consequently considered the welfare of Tecson’s family. Since Tecson’s
deprive Glaxo of legitimate profits. The policy is also aimed at hometown was in Agusan del Sur and his wife traces her roots
preventing a competitor company from gaining access to its to Butuan City, Glaxo assumed that his transfer from the Bicol
secrets, procedures and policies.10 region to the Butuan City sales area would be favorable to him
and his family as he would be relocating to a familiar territory
It likewise asserts that the policy does not prohibit marriage per and minimizing his travel expenses.15
se but only proscribes existing or future relationships with
employees of competitor companies, and is therefore not In addition, Glaxo avers that Tecson’s exclusion from the
violative of the equal protection clause. It maintains that seminar concerning the new anti-asthma drug was due to the
considering the nature of its business, the prohibition is based fact that said product was in direct competition with a drug
on valid grounds.11 which was soon to be sold by Astra, and hence, would pose a
potential conflict of interest for him. Lastly, the delay in Tecson’s
According to Glaxo, Tecson’s marriage to Bettsy, an employee receipt of his sales paraphernalia was due to the mix-up created
of Astra, posed a real and potential conflict of interest. Astra’s by his refusal to transfer to the Butuan City sales area (his
products were in direct competition with 67% of the products paraphernalia was delivered to his new sales area instead of
sold by Glaxo. Hence, Glaxo’s enforcement of the foregoing Naga City because the supplier thought he already transferred
policy in Tecson’s case was a valid exercise of its management to Butuan).16
prerogatives.12 In any case, Tecson was given several months
to remedy the situation, and was even encouraged not to resign The Court is tasked to resolve the following issues: (1) Whether
but to ask his wife to resign form Astra instead.13 the Court of Appeals erred in ruling that Glaxo’s policy against
its employees marrying employees from competitor companies
Glaxo also points out that Tecson can no longer question the is valid, and in not holding that said policy violates the equal
assailed company policy because when he signed his contract protection clause of the Constitution; (2) Whether Tecson was
of employment, he was aware that such policy was stipulated constructively dismissed.
therein. In said contract, he also agreed to resign from
respondent if the management finds that his relationship with an The Court finds no merit in the petition.
employee of a competitor company would be detrimental to the
interests of Glaxo.14 The stipulation in Tecson’s contract of employment with Glaxo
being questioned by petitioners provides:
 … c. To avoid outside employment or other interests
for income which would impair their effective job
10. You agree to disclose to management any existing or performance.
future relationship you may have, either by consanguinity
or affinity with co-employees or employees of competing d. To consult with Management on such activities
drug companies. Should it pose a possible conflict of or relationships that may lead to conflict of
interest in management discretion, you agree to resign interest.
voluntarily from the Company as a matter of Company
policy. 1.1. Employee Relationships

…17 Employees with existing or future relationships either by

consanguinity or affinity with co-employees of competing
The same contract also stipulates that Tescon agrees to abide drug companies are expected to disclose such
by the existing company rules of Glaxo, and to study and relationship to the Management. If management
become acquainted with such policies.18 In this regard, the perceives a conflict or potential conflict of interest, every
Employee Handbook of Glaxo expressly informs its employees effort shall be made, together by management and the
of its rules regarding conflict of interest: employee, to arrive at a solution within six (6) months,
either by transfer to another department in a non-counter
1. Conflict of Interest checking position, or by career preparation toward
outside employment after Glaxo Wellcome. Employees
Employees should avoid any activity, investment must be prepared for possible resignation within six (6)
relationship, or interest that may run counter to the months, if no other solution is feasible.19
responsibilities which they owe Glaxo Wellcome.
No reversible error can be ascribed to the Court of Appeals
Specifically, this means that employees are expected: when it ruled that Glaxo’s policy prohibiting an employee from
having a relationship with an employee of a competitor company
a. To avoid having personal or family interest, is a valid exercise of management prerogative.
financial or otherwise, in any competitor supplier
or other businesses which may consciously or Glaxo has a right to guard its trade secrets, manufacturing
unconsciously influence their actions or decisions formulas, marketing strategies and other confidential programs
and thus deprive Glaxo Wellcome of legitimate and information from competitors, especially so that it and Astra
profit. are rival companies in the highly competitive pharmaceutical
industry.
b. To refrain from using their position in Glaxo
Wellcome or knowledge of Company plans to The prohibition against personal or marital relationships with
advance their outside personal interests, that of employees of competitor companies upon Glaxo’s employees is
their relatives, friends and other businesses. reasonable under the circumstances because relationships of
that nature might compromise the interests of the company. In
laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor employee to comply with the policy. Indeed, the application of
company will gain access to its secrets and procedures. the policy was made in an impartial and even-handed manner,
with due regard for the lot of the employee.
That Glaxo possesses the right to protect its economic interests
cannot be denied. No less than the Constitution recognizes the In any event, from the wordings of the contractual provision and
right of enterprises to adopt and enforce such a policy to protect the policy in its employee handbook, it is clear that Glaxo does
its right to reasonable returns on investments and to expansion not impose an absolute prohibition against relationships
and growth.20 Indeed, while our laws endeavor to give life to the between its employees and those of competitor companies. Its
constitutional policy on social justice and the protection of labor, employees are free to cultivate relationships with and marry
it does not mean that every labor dispute will be decided in favor persons of their own choosing. What the company merely seeks
of the workers. The law also recognizes that management has to avoid is a conflict of interest between the employee and the
rights which are also entitled to respect and enforcement in the company that may arise out of such relationships. As succinctly
interest of fair play.21 explained by the appellate court, thus:

As held in a Georgia, U.S.A case,22 it is a legitimate business The policy being questioned is not a policy against
practice to guard business confidentiality and protect a marriage. An employee of the company remains free to
competitive position by even-handedly disqualifying from jobs marry anyone of his or her choosing. The policy is not
male and female applicants or employees who are married to a aimed at restricting a personal prerogative that belongs
competitor. Consequently, the court ruled than an employer that only to the individual. However, an employee’s personal
discharged an employee who was married to an employee of an decision does not detract the employer from exercising
active competitor did not violate Title VII of the Civil Rights Act management prerogatives to ensure maximum profit and
of 1964.23 The Court pointed out that the policy was applied to business success. . .28
men and women equally, and noted that the employer’s
business was highly competitive and that gaining inside The Court of Appeals also correctly noted that the assailed
information would constitute a competitive advantage. company policy which forms part of respondent’s Employee
Code of Conduct and of its contracts with its employees, such
The challenged company policy does not violate the equal as that signed by Tescon, was made known to him prior to his
protection clause of the Constitution as petitioners erroneously employment. Tecson, therefore, was aware of that restriction
suggest. It is a settled principle that the commands of the equal when he signed his employment contract and when he entered
protection clause are addressed only to the state or those acting into a relationship with Bettsy. Since Tecson knowingly and
under color of its authority.24 Corollarily, it has been held in a voluntarily entered into a contract of employment with Glaxo, the
long array of U.S. Supreme Court decisions that the equal stipulations therein have the force of law between them and,
protection clause erects no shield against merely private thus, should be complied with in good faith."29 He is therefore
conduct, however, discriminatory or wrongful.25 The only estopped from questioning said policy.
exception occurs when the state29 in any of its manifestations or
actions has been found to have become entwined or involved in The Court finds no merit in petitioners’ contention that Tescon
the wrongful private conduct.27 Obviously, however, the was constructively dismissed when he was transferred from the
exception is not present in this case. Significantly, the company Camarines Norte-Camarines Sur sales area to the Butuan City-
actually enforced the policy after repeated requests to the Surigao City-Agusan del Sur sales area, and when he was
excluded from attending the company’s seminar on new In Abbott Laboratories (Phils.), Inc. v. National Labor Relations
products which were directly competing with similar products Commission,32 which involved a complaint filed by a medical
manufactured by Astra. Constructive dismissal is defined as a representative against his employer drug company for illegal
quitting, an involuntary resignation resorted to when continued dismissal for allegedly terminating his employment when he
employment becomes impossible, unreasonable, or unlikely; refused to accept his reassignment to a new area, the Court
when there is a demotion in rank or diminution in pay; or when a upheld the right of the drug company to transfer or reassign its
clear discrimination, insensibility or disdain by an employer employee in accordance with its operational demands and
becomes unbearable to the employee.30 None of these requirements. The ruling of the Court therein, quoted hereunder,
conditions are present in the instant case. The record does not also finds application in the instant case:
show that Tescon was demoted or unduly discriminated upon by
reason of such transfer. As found by the appellate court, Glaxo By the very nature of his employment, a drug salesman
properly exercised its management prerogative in reassigning or medical representative is expected to travel. He should
Tecson to the Butuan City sales area: anticipate reassignment according to the demands of
their business. It would be a poor drug corporation which
. . . In this case, petitioner’s transfer to another place of cannot even assign its representatives or detail men to
assignment was merely in keeping with the policy of the new markets calling for opening or expansion or to areas
company in avoidance of conflict of interest, and thus where the need for pushing its products is great. More so
valid…Note that [Tecson’s] wife holds a sensitive if such reassignments are part of the employment
supervisory position as Branch Coordinator in her contract.33
employer-company which requires her to work in close
coordination with District Managers and Medical As noted earlier, the challenged policy has been implemented
Representatives. Her duties include monitoring sales of by Glaxo impartially and disinterestedly for a long period of time.
Astra products, conducting sales drives, establishing and In the case at bar, the record shows that Glaxo gave Tecson
furthering relationship with customers, collection, several chances to eliminate the conflict of interest brought
monitoring and managing Astra’s inventory…she about by his relationship with Bettsy. When their relationship
therefore takes an active participation in the market war was still in its initial stage, Tecson’s supervisors at Glaxo
characterized as it is by stiff competition among constantly reminded him about its effects on his employment
pharmaceutical companies. Moreover, and this is with the company and on the company’s interests. After Tecson
significant, petitioner’s sales territory covers Camarines married Bettsy, Glaxo gave him time to resolve the conflict by
Sur and Camarines Norte while his wife is supervising a either resigning from the company or asking his wife to resign
branch of her employer in Albay. The proximity of their from Astra. Glaxo even expressed its desire to retain Tecson in
areas of responsibility, all in the same Bicol Region, its employ because of his satisfactory performance and
renders the conflict of interest not only possible, but suggested that he ask Bettsy to resign from her company
actual, as learning by one spouse of the other’s market instead. Glaxo likewise acceded to his repeated requests for
strategies in the region would be inevitable. more time to resolve the conflict of interest. When the problem
[Management’s] appreciation of a conflict of interest is could not be resolved after several years of waiting, Glaxo was
therefore not merely illusory and wanting in factual constrained to reassign Tecson to a sales area different from
basis…31 that handled by his wife for Astra. Notably, the Court did not
terminate Tecson from employment but only reassigned him to
another area where his home province, Agusan del Sur, was
included. In effecting Tecson’s transfer, Glaxo even considered
the welfare of Tecson’s family. Clearly, the foregoing dispels
any suspicion of unfairness and bad faith on the part of Glaxo. 34

WHEREFORE, the Petition is DENIED for lack of merit. Costs

against petitioners.
UNION OF NESTLE WORKERS CAGAYAN DE ORO claimed that the policy is in keeping with the governments thrust
FACTORY (UNWCF for brevity), represented by its to eradicate the proliferation of drug abuse, explaining that the
President YURI P. BERTULFO and officers, namely, company has the right: (a) to ensure that its employees are of
DEXTER E. AGUSTIN, DANTE S. SEAREZ, EDDIE P. sound physical and mental health and (b) to terminate the
OGNIR, JEFFREY C. RELLIQUETE, ENRIQUITO B. services of an employee who refuses to undergo the drug test.
BUAGAS, EDWIN P. SALVAA, RAMIL B. MONSANTO,
On August 23, 1999, petitioners filed with the Regional Trial
JERRY A. TABILIRAN, ARNOLD A. TADLAS,
Court (RTC), Branch 40, Cagayan de Oro City, a complaint
REYQUE A. FACTURA, NAPOLEON S. GALERINA,
for injunction with prayer for the issuance of a temporary
JR., TOLENTINO T. MICABALO and EDDIE O.
restraining order against Nestle, Rudy P. Trillanes, Factory
MACASOCOL, petitioners, vs. NESTLE PHILPPINES,
Manager of the Cagayan de Oro City Branch, and Francis L.
INC., represented by its President JUAN B. SANTOS,
Lacson, Cagayan de Oro City Human Resources Manager
RUDY P. TRILLANES, Factory Manager, Cagayan de
(respondents herein), docketed as Civil Case No. 99-471.
Oro City Branch and FRANCIS L. LACSON, Cagayan
de Oro City Human Resources Manager,respondents. On August 24, 1999, the RTC issued a temporary
restraining order enjoining respondents from proceeding with
DECISION the drug test. Forthwith, they filed a motion to dismiss the
complaint on the ground that the RTC has no jurisdiction over
SANDOVAL-GUTIERREZ, J.:
the case as it involves a labor dispute or enforcement of a
company personnel policy cognizable by the Voluntary
Before us is a petition for review on certiorari[1] challenging Arbitrator or Panel of Voluntary Arbitrators. Petitioners filed their
the Decision of the Court of Appeals dated December 28, 2000 opposition, contending that the RTC has jurisdiction since the
and its Resolution dated April 19, 2001 in CA GR-SP No. complaint raises purely constitutional and legal issues.
56656, Union of Nestle Workers Cagayan de Oro Factory, et al.
vs. Nestle Philippines, Inc. et al. On September 8, 1999, the RTC dismissed the complaint
for lack of jurisdiction, thus:
On August 1, 1999, Nestle Philippines, Inc. (Nestle) adopted
Policy No. HRM 1.8, otherwise known as the Drug Abuse
Policy. Pursuant to this policy, the management shall conduct This Court originally is of the honest belief that the
simultaneous drug tests on all employees from different issue involved in the instant case is more
factories and plants. Thus, on August 17, 1999, drug testing constitutional than labor. It was convinced that the
commenced at the Lipa City factory, then followed by the other dispute involves violation of employees
factories and plants.
constitutional rights to self-incrimination, due
However, there was resistance to the policy in the Nestle process and security of tenure. Hence, the
Cagayan de Oro factory. Out of 496 employees, only 141 or issuance of the Temporary Restraining Order.
28.43% submitted themselves to drug testing. On August 20,
1999, the Union of Nestle Workers Cagayan de Oro Factory and
its officers, petitioners, wrote Nestle challenging the However, based on the pleadings and
implementation of the policy and branding it as a mere pronouncements of the parties, a close scrutiny of
subterfuge to defeat the employees constitutional rights. Nestle the issues would actually reveal that the main
issue boils down to a labor dispute. The company Settled is the rule that the remedy against a final
implemented a new drug abuse policy whereby all order is an appeal, and not a petition for certiorari
its employees should undergo a drug test under under Rule 65 of the 1997 Rules of Civil
pain of penalty for refusal. The employees who are Procedure. The party aggrieved does not have the
the union members questioned the implementation option to substitute the special civil action of
alleging that: can they be compelled to undergo the certiorari under Rule 65 for the remedy of
drug test even against their will, which violates appeal. The existence and availability of the right
their right against self-incrimination? At this point, of appeal are antithetical to the availment of the
the issue seems constitutional. But if we go further special civil action of certiorari. And while the
and ask the reason for their refusal to undergo the special civil action of certiorari may be resorted to
drug test, the answer is because the policy was even if the remedy of appeal is available, it must be
formulated and implemented without proper shown that the appeal is inadequate, slow,
consultation with the union members. So that, the insufficient and will not promptly relieve a party
issue here boils down to a labor dispute between from the injurious effects of the order complained
an employer and employees. of, or where the appeal is ineffective.

xxxxxxxxx Inasmuch as only questions of law are raised by

petitioners in assailing the Order of respondent
Clearly, in the case at bar, the constitutional issue
Judge dismissing their complaint for injunction, the
is closely related or intertwined with the labor proper remedy, therefore, is appeal to the Supreme
issue, so much so that this Court is inclined to Court by petition for review on certiorari in
believe that it has no jurisdiction but the NLRC.[2]
accordance with Rule 45 of the 1997 Rules of Civil
Petitioners filed a motion for reconsideration but was Procedure. Other than the bare, stereotyped
denied, prompting them to file with this Court a petition for allegation in the petition that there is no appeal,
certiorari under Rule 65 of the 1997 Rules of Civil Procedure, nor any plain, speedy, and adequate remedy in the
as amended. They alleged that in dismissing their complaint for ordinary course of law available to the petitioner
lack of jurisdiction, the RTC gravely abused its discretion.
herein whose right has been violated, petitioners
On November 24, 1999, this Court referred the petition to have not justified their resort to Rule 65 of the 1997
the Court of Appeals for consideration and adjudication on the Rules of Civil Procedure.
merits or any other action as it may deem appropriate.
On December 28, 2000, the Appellate Court rendered its xxxxxxxxx
Decision[3] dismissing the petition, thus:
It is noteworthy that petitioners have not disputed 5. Plaintiffs are aggrieved employees of the Nestle
the allegations in paragraph 28 of private Philippines, Inc. who are subjected to the new
respondents Comment on the petition that drug policy of the management for compulsory Drug
testing of the entire workforce of Nestle Cagayan Test, without their consent and approval;
de Oro factory, including herein petitioners,
submitted themselves to the drug test required by xxxxxxxxx
management and was confirmed free from illegal
drug abuse. In view thereof, the instant petition, 8. That the said policy was implemented last
which prays for an injunction of the drug test of the August 1, 1999, and the Union was only informed
Nestle Cagayan de Oro factory workers, had last August 20, 1999, during a meeting held on that
become moot and academic. The remedy of day, that all employees who are assigned at the
injunction could no longer be entertained because CDO Factory will be compulsorily compelled to
the act sought to be prevented had been undergo drug test, whether they like it or not,
consummated. without even informing the Union on this new
policy adopted by the Management and no
Petitioners sought reconsideration but to no avail. Hence guidelines was set pertaining to this drug test
this petition for review on certiorari. policy.
Petitioners raise the following issues for our resolution:
9. That there was no consultation made by the
I. Whether the Regional Trial Court has jurisdiction over
petitioners suit for injunction; and management or even consultation from the
employees of this particular policy, as the nature of
II. Whether petitioners resort to certiorari under Rule 65
the policy is punitive in character, as refusal to
is in order.
submit yourself to drug test would mean
On the first issue, we hold that petitioners insistence that the
suspension from work for four (4) to seven (7) days,
RTC has jurisdiction over their complaint since it raises
constitutional and legal issues is sorely misplaced. The fact that for the first refusal to undergo drug test and
the complaint was denominated as one for injunction does not dismissal for second refusal to undergo drug test,
necessarily mean that the RTC has jurisdiction. Well-settled is hence, they were not afforded due process x x x;
the rule that jurisdiction is determined by the allegations in the
complaint.[4] xxxxxxxxx
The pertinent allegations of petitioners amended complaint
read: 12. That it is not the question of whether or not the
person will undergo the drug test but it is the
xxxxxxxxx
manner how the drug test policy is being Company personnel policies are guiding principles
implemented by the management which is arbitrary stated in broad, long-range terms that express the
in character. philosophy or beliefs of an organizations top
authority regarding personnel matters. They deal
xxxxxxxxx with matter affecting efficiency and well-being of
employees and include, among others, the
16. That the exercise of management prerogative procedure in the administration of wages, benefits,
to implement the said drug test, even against the promotions, transfer and other personnel
will of the employees, is not absolute but subject to movements which are usually not spelled out in the
the limitation imposed by law x x x;[5] collective agreement.
It is indubitable from the foregoing allegations that Considering that the Drug Abuse Policy is a company
petitioners are not per se questioning whether or not the person personnel policy, it is the Voluntary Arbitrators or Panel of
will undergo the drug test or the constitutionality or legality of the Voluntary Arbitrators, not the RTC, which exercises jurisdiction
Drug Abuse Policy. They are assailing the manner by which over this case. Article 261 of the Labor Code, as amended,
respondents are implementing the policy. According to them, it pertinently provides:
is arbitrary in character because: (1) the employees were not
consulted prior to its implementation; (2) the policy is punitive
inasmuch as an employee who refuses to abide with the policy Art. 261. Jurisdiction of Voluntary Arbitrators or
may be dismissed from the service; and (3) such Panel of Voluntary Arbitrators. The Voluntary
implementation is subject to limitations provided by law which Arbitrator or panel of Voluntary Arbitrators shall
were disregarded by the management. have original and exclusive jurisdiction to hear and
Is the complaint, on the basis of its allegations, cognizable decide all unresolved grievances arising from the
by the RTC? interpretation or implementation of the Collective
Respondent Nestles Drug Abuse Policy states that (i)llegal Bargaining Agreement and those arising from the
drugs and use of regulated drugs beyond the medically interpretation or enforcement of company
prescribed limits are prohibited in the workplace. Illegal drug use personnel policies x x x. (Emphasis supplied)
puts at risk the integrity of Nestle operations and the safety of
our products. It is detrimental to the health, safety and work-
With respect to the second issue raised by petitioners, what
performance of employees and is harmful to the welfare of
they should have interposed is an appeal to the Court of
families and the surrounding community.[6] This pronouncement Appeals, not a petition for certiorari which they initially filed with
is a guiding principle adopted by Nestle to safeguard its this Court, since the assailed RTC order is final.[8] Certiorari is
employees welfare and ensure their efficiency and well-
not a substitute for an appeal.[9] For certiorari to prosper, it is not
being. To our minds, this is a company personnel policy. In San
enough that the trial court committed grave abuse of discretion
Miguel Corp. vs. NLRC,[7] this Court held:
amounting to lack or excess of jurisdiction, as alleged by
petitioners. The requirement that there is no appeal, nor any
plain, speedy and adequate remedy in the ordinary course of
law must likewise be satisfied.[10] We must stress that the
remedy of appeal was then available to petitioners, but they did
not resort to it. And while this Court in exceptional instances
allowed a partys availment of certiorari instead of appeal, we
find that no such exception exists here.
WHEREFORE, the instant petition for review on certiorari
is DENIED. The Decision of the Court of Appeals dated
December 28, 2000 and its Resolution dated April 19, 2001 in
CA GR-SP No. 56656 are AFFIRMED.
MANILA ELECTRIC COMPANY, petitioner, Secretary
vs.
Hon. SECRETARY OF LABOR LEONARDO QUISUMBING Loan to coops - denied granted
and MERALCO EMPLOYEES and WORKERS ASSOCIATION
(MEWA), respondent. GHSIP, HMP
and granted up to
RESOLUTION Housing loans - P60,000.00 granted
Signing bonus - denied granted
YNARES-SANTIAGO, J.:
Union leave - 40 days (typo error) 30 days
In the Decision promulgated on January 27, 1999, the Court
High - not apply to those members of a
disposed of the case as follows:
voltage/pole who are team
not exposed to the
WHEREFORE, the petition is granted and the orders of
risk
public respondent Secretary of Labor dated August 19,
1996 and December 28, 1996 are set aside to the extent Collectors - no need for cash
set forth above. The parties are directed to execute a bond, no
Collective Bargaining Agreement incorporating the terms need to reduce
and conditions contained in the unaffected portions of the quota and MAPL
Secretary of Labor's orders of August 19, 1996 and
December 28, 1996, and the modifications set forth exclude confidential
CBU - include
above. The retirement fund issue is remanded to the employees
Secretary of Labor for reception of evidence and
maintenance of
determination of the legal personality of the MERALCO Union security - closed shop
membership
retirement fund.1
Contracting no need to consult
The modifications of the public respondent's resolutions include - consult first
out union
the following:
existing terms and
All benefits - all terms
conditions
January 27, 1999 Secretary's
decision resolution Dec. 28, 1996-Dec. from Dec. 1,
Retroactivity -
27, 199(9) 1995
P1,900.00 for 1995-
Wages - P2,200.00
96
Dissatisfied with the Decision, some alleged members of private
modified to one respondent union (Union for brevity) filed a motion for
X'mas bonus - 2 months
month intervention and a motion for reconsideration of the said
Decision. A separate intervention was likewise made by the
Retirees - remanded to the granted
supervisor's union (FLAMES2) of petitioner corporation alleging
that it has bona fidelegal interest in the outcome of the compilation is published for use by persons engaged in
case.3 The Court required the "proper parties" to file a comment that occupation and is generally used and relied upon by
to the three motions for reconsideration but the Solicitor-General them therein.
asked that he be excused from filing the comment because the
"petition filed in the instant case was granted" by the Under the afore-quoted rule, statement of matters contained in a
Court.4 Consequently, petitioner filed its own consolidated periodical, may be admitted only "if that compilation is published
comment. An "Appeal Seeking Immediate Reconsideration" was for use by persons engaged in that occupation and is generally
also filed by the alleged newly elected president of the used and relied upon by them therein." As correctly held in our
Union.5 Other subsequent pleadings were filed by the parties Decision dated January 27, 1999, the cited report is a mere
and intervenors. newspaper account and not even a commercial list. At most, it is
but an analysis or opinion which carries no persuasive weight
The issues raised in the motions for reconsideration had already for purposes of this case as no sufficient figures to support it
been passed upon by the Court in the January 27, 1999 were presented. Neither did anybody testify to its accuracy. It
decision. No new arguments were presented for consideration cannot be said that businessmen generally rely on news items
of the Court. Nonetheless, certain matters will be considered such as this in their occupation. Besides, no evidence was
herein, particularly those involving the amount of wages and the presented that the publication was regularly prepared by a
retroactivity of the Collective Bargaining Agreement (CBA) person in touch with the market and that it is generally regarded
arbitral awards. as trustworthy and reliable. Absent extrinsic proof of their
accuracy, these reports are not admissible.6 In the same
Petitioner warns that if the wage increase of P2,200.00 per manner, newspapers containing stock quotations are not
month as ordered by the Secretary is allowed, it would simply admissible in evidence when the source of the reports is
pass the cost covering such increase to the consumers through available.7 With more reason, mere analyses or projections of
an increase in the rate of electricity. This is a non sequitur. The such reports cannot be admitted. In particular, the source of the
Court cannot be threatened with such a misleading argument. report in this case can be easily made available considering that
An increase in the prices of electric current needs the approval the same is necessary for compliance with certain governmental
of the appropriate regulatory government agency and does not requirements.
automatically result from a mere increase in the wages of
petitioner's employees. Besides, this argument presupposes Nonetheless, by petitioner's own allegations, its actual total net
that petitioner is capable of meeting a wage increase. The All income for 1996 was P5.1 billion.8 An estimate by the All Asia
Asia Capital report upon which the Union relies to support its financial analyst stated that petitioner's net operating income for
position regarding the wage issue cannot be an accurate basis the same year was about P5.7 billion, a figure which the Union
and conclusive determinant of the rate of wage increase. relies on to support its claim. Assuming without admitting the
Section 45 of Rule 130 Rules of Evidence provides: truth thereof, the figure is higher than the P4.171 billion
allegedly suggested by petitioner as its projected net operating
Commercial lists and the like. — Evidence of statements income. The P5.7 billion which was the Secretary's basis for
of matters of interest to persons engaged in an granting the P2,200.00 is higher than the actual net income of
occupation contained in a list, register, periodical, or P5.1 billion admitted by petitioner. It would be proper then to
other published compilation is admissible as tending to increase this Court's award of P1,900.00 to P2,000.00 for the
prove the truth of any relevant matter so stated if that two years of the CBA award. For 1992, the agreed CBA wage
increase for rank-and-file was P1,400.00 and was reduced to the expiry date of the past CBA. Based on the provision
P1,350.00; for 1993; further reduced to P1,150.00 for 1994. For of Section 253-A, its retroactivity should be agreed upon
supervisory employees, the agreed wage increase for the years by the parties. But since no agreement to that effect was
1992-1994 are P1,742.50, P1,682.50 and P1,442.50, made, public respondent did not abuse its discretion in
respectively. Based on the foregoing figures, the P2,000.00 giving the said CBA a prospective effect. The action of
increase for the two-year period awarded to the rank-and-file is the public respondent is within the ambit of its authority
much higher than the highest increase granted to supervisory vested by existing law.
employees.9 As mentioned in the January 27, 1999 Decision,
the Court does "not seek to enumerate in this decision the On the other hand, the Union argues that the award should
factors that should affect wage determination" because retroact to such time granted by the Secretary, citing the 1993
collective bargaining disputes particularly those affecting the decision of St. Luke's.16
national interest and public service "requires due consideration
and proper balancing of the interests of the parties to the Finally, the effectivity of the Order of January 28, 1991,
dispute and of those who might be affected by the must retroact to the date of the expiration of the previous
dispute."10 The Court takes judicial notice that the new amounts CBA, contrary to the position of petitioner. Under the
granted herein are significantly higher than the weighted circumstances of the case, Article 253-A cannot be
average salary currently enjoyed by other rank-and-file properly applied to herein case. As correctly stated by
employees within the community. It should be noted that the public respondent in his assailed Order of April 12, 1991
relations between labor and capital is impressed with public dismissing petitioner's Motion for Reconsideration —
interest which must yield to the common good.11 Neither party
should act oppressively against the other or impair the interest Anent the alleged lack of basis for the retroactivity
or convenience of the public.12 Besides, matters of salary provisions awarded; we would stress that the
increases are part of management prerogative.13 provision of law invoked by the Hospital, Article
253-A of the Labor Code, speaks of agreements
On the retroactivity of the CBA arbitral award, it is well to recall by and between the parties, and not arbitral
that this petition had its origin in the renegotiation of the parties' awards . . .
1992-1997 CBA insofar as the last two-year period thereof is
concerned. When the Secretary of Labor assumed jurisdiction Therefore, in the absence of a specific provision of law
and granted the arbitral awards, there was no question that prohibiting retroactivity of the effectivity of arbitral awards
these arbitral awards were to be given retroactive effect. issued by the Secretary of Labor pursuant to Article
However, the parties dispute the reckoning period when 263(g) of the Labor Code, such as herein involved, public
retroaction shall commence. Petitioner claims that the award respondent is deemed vested with plenary and
should retroact only from such time that the Secretary of Labor discretionary powers to determine the effectivity thereof.
rendered the award, invoking the 1995 decision in Pier 8
case14 where the Court, citing Union of Filipino Employees v. In the 1997 case of Mindanao Terminal,17 the Court applied the
NLRC,15 said: St. Luke's doctrine and ruled that:

The assailed resolution which incorporated the CBA to be In St. Luke's Medical Center v. Torres, a deadlock also
signed by the parties was promulgated on June 5, 1989, developed during the CBA negotiations between
 management and the union. The Secretary of Labor It is true that an arbitral award cannot per se be categorized as
assumed jurisdiction and ordered the retroaction of the an agreement voluntarily entered into by the parties because it
CBA to the date of expiration of the previous CBA. As in requires the interference and imposing power of the State thru
this case, it was alleged that the Secretary of Labor the Secretary of Labor when he assumes jurisdiction. However,
gravely abused its discretion in making his award the arbitral award can be considered as an approximation of a
retroactive. In dismissing this contention this Court held: collective bargaining agreement which would otherwise have
been entered into by the parties.19 The terms or periods set forth
Therefore, in the absence of a specific provision of in Article 253-A pertains explicitly to a CBA. But there is nothing
law prohibiting retroactive of the effectivity of that would prevent its application by analogy to an arbitral award
arbitral awards issued by the Secretary of Labor by the Secretary considering the absence of an applicable law.
pursuant to Article 263(g) of the Labor Code, such Under Article 253-A: "(I)f any such agreement is entered into
as herein involved, public respondent is deemed beyond six months, the parties shall agree on the duration of
vested with plenary and discretionary powers to retroactivity thereof." In other words, the law contemplates
determine the effectivity thereof. retroactivity whether the agreement be entered into before or
after the said six-month period. The agreement of the parties
The Court in the January 27, 1999 Decision, stated that the need not be categorically stated for their acts may be
CBA shall be "effective for a period of 2 years counted from considered in determining the duration of retroactivity. In this
December 28, 1996 up to December 27, 1999." Parenthetically, connection, the Court considers the letter of petitioner's
this actually covers a three-year period. Labor laws are silent as Chairman of the Board and its President addressed to their
to when an arbitral award in a labor dispute where the Secretary stockholders, which states that the CBA "for the rank-and-file
had assumed jurisdiction by virtue of Article 263 (g) of the Labor employees covering the period December 1, 1995 to November
Code shall retroact. In general, a CBA negotiated within six 30, 1997 is still with the Supreme Court,"20 as indicative of
months after the expiration of the existing CBA retroacts to the petitioner's recognition that the CBA award covers the said
day immediately following such date and if agreed thereafter, period. Earlier, petitioner's negotiating panel transmitted to the
the effectivity depends on the agreement of the parties.18 On the Union a copy of its proposed CBA covering the same period
other hand, the law is silent as to the retroactivity of a CBA inclusive.21 In addition, petitioner does not dispute the allegation
arbitral award or that granted not by virtue of the mutual that in the past CBA arbitral awards, the Secretary granted
agreement of the parties but by intervention of the government. retroactivity commencing from the period immediately following
Despite the silence of the law, the Court rules herein that CBA the last day of the expired CBA. Thus, by petitioner's own
arbitral awards granted after six months from the expiration of actions, the Court sees no reason to retroact the subject CBA
the last CBA shall retroact to such time agreed upon by both awards to a different date. The period is herein set at two (2)
employer and the employees or their union. Absent such an years from December 1, 1995 to November 30, 1997.
agreement as to retroactivity, the award shall retroact to the first
day after the six-month period following the expiration of the last On the allegation concerning the grant of loan to a cooperative,
day of the CBA should there be one. In the absence of a CBA, there is no merit in the union's claim that it is no different from
the Secretary's determination of the date of retroactivity as part housing loans granted by the employer. The award of loans for
of his discretionary powers over arbitral awards shall control. housing is justified because it pertains to a basic necessity of
life. It is part of a privilege recognized by the employer and
allowed by law. In contrast, providing seed money for the
establishment of the employee's cooperative is a matter in the exercise of judgment by an employer.27 As mentioned in the
which the employer has no business interest or legal obligation. January 27, 1999 Decision, the law already sufficiently regulates
Courts should not be utilized as a tool to compel any person to this matter.28 Jurisprudence also provides adequate limitations,
grant loans to another nor to force parties to undertake an such that the employer must be motivated by good faith and the
obligation without justification. On the contrary, it is the contracting out should not be resorted to circumvent the law or
government that has the obligation to render financial must not have been the result of malicious or arbitrary
assistance to cooperatives and the Cooperative Code does not actions.29 These are matters that may be categorically
make it an obligation of the employer or any private individual.22 determined only when an actual suit on the matter arises.

Anent the 40-day union leave, the Court finds that the same is a WHEREFORE, the motion for reconsideration is PARTIALLY
typographical error. In order to avoid any confusion, it is herein GRANTED and the assailed Decision is MODIFIED as follows:
declared that the union leave is only thirty (30) days as granted (1) the arbitral award shall retroact from December 1, 1995 to
by the Secretary of Labor and affirmed in the Decision of this November 30, 1997; and (2) the award of wage is increased
Court. from the original amount of One Thousand Nine Hundred Pesos
(P1,900.00) to Two Thousand Pesos (P2,000.00) for the years
The added requirement of consultation imposed by the 1995 and 1996. This Resolution is subject to the monetary
Secretary in cases of contracting out for six (6) months or more advances granted by petitioner to its rank-and-file employees
has been rejected by the Court. Suffice it to say that the during the pendency of this case assuming such advances had
employer is allowed to contract out services for six months or actually been distributed to them. The assailed Decision is
more. However, a line must be drawn between management AFFIRMED in all other respects.
prerogatives regarding business operations per se and those
which affect the rights of employees, and in treating the latter,
the employer should see to it that its employees are at least
properly informed of its decision or modes of action in order to
attain a harmonious labor-management relationship and
enlighten the workers concerning their rights.23 Hiring of workers
is within the employer's inherent freedom to regulate and is a
valid exercise of its management prerogative subject only to
special laws and agreements on the matter and the fair
standards of justice.24 The management cannot be denied the
faculty of promoting efficiency and attaining economy by a study
of what units are essential for its operation. It has the ultimate
determination of whether services should be performed by its
personnel or contracted to outside agencies. While there should
be mutual consultation, eventually deference is to be paid to
what management decides.25Contracting out of services is an
exercise of business judgment or management
prerogative.26 Absent proof that management acted in a
malicious or arbitrary manner, the Court will not interfere with
GTE DIRECTORIES CORPORATION, petitioner, share of advertising budget from clients as early as possible;
vs. and (3) to ensure an even flow of work throughout the company.
HON. AUGUSTO S. SANCHEZ and GTE DIRECTORIES
CORPORATION EMPLOYEES UNION,respondents. This practice was observed from 1980 until sometime in June,
1984 when GTE realized that competition among media for a
Siguion Reyna, Montecillo & Ongsiako for petitioner. share of the advertising revenue had become so keen as to
Ignacio P. Lacsina for respondent Union. require quick reaction. GTE therefore launched an aggressive
campaign to get what it considered to be its rightful share of the
NARVASA, J.: advertising budget of its clientele before it could be allocated to
other media (newspaper, television, radio, etc.) It adopted a new
GTE Directories Corporation (hereafter, simply GTE) is a foreign strategy by which:
corporation engaged in the Philippines in the business of
publishing the PLDT (Philippine Long Distance Telephone (1) all its sales representatives were required, as in the
Company) telephone directories for Metro Manila and several past, to achieve specified revenue targets
provinces. (advertisements sold) within pre-determined periods;

The record shows that initially, the practice was for its sales (2) in cases of cancelled revenue accounts or
representatives to be given work assignments within specific advertisements, it required all its salespersons to re-
territories by the so-called "draw method." These sales establish contact and renew the same within a fixed
territories were so plotted or mapped out as to have "an equal period;
number of advertisers as well as . . . revenue. . ." Within these
territories, the sales representatives therein assigned were (3) if the cancelled revenue accounts were not renewed
given quotas; i.e., they had to "achieve a certain amount of within the assigned period, said accounts were declared,
revenue or advertisements sold, decreased, increased or for a set period, OPEN TERRITORY to all sales
cancelled within a given period of time." representatives including the one who reported the
cancellation;
A territory was not fully released to the salesperson for handling
at one time, but assigned in increments or partial releases of (4) if not renewed during said open territory period, said
account. Now, increments were given by the so-called "Grid cancelled accounts were deemed no longer "open
System," grids (divisions or sections) within each territory territory," and the same could be referred for handling to
usually numbering five (i.e., Grids I to V). Each grid was contractual salespersons and/or outside agencies.
assigned a fixed closing dated. At such closing date, a
salesperson should have achieved a certain amount of the A new "Sales Evaluation and Production Policy" was thereafter
revenue target designated for his grid; otherwise, he loses the drawn up. GTE informed all its sales representatives of the new
forthcoming grid or forfeits the remaining grids not yet received. policy in a Memorandum dated October 12, 1984. The new
The Grid System was installed for the following reasons: (1) to policy was regarded as an improvement over the previous Sales
give all salespersons an opportunity to contact advertisers Production Policy, which solely considered quota attainment
within a reasonable period; (2) to assure GTE that it will get its and handling in the Sales Report for the purpose of evaluating
performance.
It appears that the new policy did not sit well with the union. It Employees Union (hereafter, simply the union), sent a letter to
demanded that it be given 15 days "to raise questions or the Sales Manager dated August 5, 1985.1 The letter stated that
objections to or to seek reconsideration of the sales and in fact "only one out of nineteen sales representatives met the
administrative practices issued by the Company on June 14, P20,000 revenue handled on our first grid deadline of August 2;"
1984." This, GTE granted, and by letter dated October 26, 1984, that the schedule was not "drawn (up) as a result of an
the union submitted its proposals for "revisions, corrections and agreement of all concerned" since GTE had failed to get
deletions of some policies incorporated in the Sales "affirmative responses" from "clustered groups of SRs;" that the
Administrative Practices issued on June 14, 1984 including the union could not "Comprehend how cancelling non-cancelling
new policies recently promulgated by Management." accounts help production;" and that its members would fail
"expectations of cancelling . . . non-cancelling accounts" since it
GTE next formulated a new set of "Sales Administrative "would result to further reduction of our pay which (they) believe
Practices," pursuant to which it issued on July 9, 1985, a is the purpose of your discriminate and whimsical memo."
memorandum requiring all Premise Sales Representatives
(PSRs) to submit individual reports reflecting target revenues as The following day, on August 6, 1985, the union filed in behalf of
of deadlines, set at August 2, 1985. This was superseded by the sales representatives, a notice of strike grounded on alleged
another memorandum dated July 16, 1985, revising the unfair labor practices of GTE consisting of the following:
previous schedules on the basis of "the consensus reached
after several discussions with your DSMs, as well as, most of 1. Refusal to bargain on unjust sales policies particularly
you," and pointing out that "the amount required on the 1st on the failure to meet the 75% of the average sales
deadline (P30,000) . . . has been reduced further (to P20,000) production for two consecutive years;
having taken into consideration that most of your accounts you
have already on hand are with your respective "prep artists"" 2. Open territory of accounts;

On August 5, 1985, GTE's Sales Manager sent another 3. Illegal suspension of Brian Pineda, a union officer; and
Memorandum to "all premise sales personnel." That
memorandum observed that most of them had omitted to submit 4. Non-payment of eight days' suspension pay increase.
reports regarding "the target of P20,000.00 revenue handled on
. . . (the) first Grid deadline of August 2, 1985" notwithstanding In due course, the Bureau of Labor Relations undertook to
that "several consultations/discussions . . . (had) been held with conciliate the dispute.
your DSMs, as well as yourselves in different and separate
occasions," and "these schedules/targets were drawn up by no On the same day, August 6, 1985, GTE sent still another
less than you, collectively," and notwithstanding that "this has memorandum to sixteen (16) of its premise sales
been a practice of several years." It closed with the expressed representatives, this time through its Director for Marketing &
expectation that the sales reports would be submitted "no later Sales, requiring submission of "individual reports reflecting
than 2:00 P.M. reflecting P20,000.00 revenue handled, as per target revenues as of grid deadlines . . . not later than 4:00 P.M.
memo re: Grid Deadlines dated July 16, 1985." . . ."2 No compliance was made. GTE thereupon suspended its
sales representatives "without pay effective August 12, 1985 for
But as before, the sales representatives did not submit the five (5) working days" and warned them that their failure to
reports. Instead their union, GTE Directories Corporation submit the requisite reports by August 19, 1985 would merit
"more drastic disciplinary actions." Still, no sales representative During all this time, conciliation efforts were being exerted by
complied with the requirement to submit the reports ("list of the Bureau of Labor Relations, including attempts to prevent the
accounts to be cancelled"). So, by memorandum of the imposition of sanctions by GTE on its employees, and the strike
Marketing Director dated August 19, 1985, all the sales itself. When these proved futile, Acting Labor Minister Vicente
representatives concerned were suspended anew "effective Leogardo, Jr. issued an Order dated December 6, 1985
August 20, 1985 until you submit the . . . (report)." assuming jurisdiction over the dispute. The order made the
following disposition, to wit:
Finally, GTE gave its sales representatives an ultimatum. By
memorandum dated August 23, 1985, individually addressed to WHEREFORE, this Office hereby assumes jurisdiction
its sales representatives, GTE required them, for the last time, over the labor dispute at G.T.E. Directories, pursuant to
to submit the required reports ("list of accounts to be cancelled") Article 264 (g) of the Labor Code of the Philippines, as
within twenty-four (24) hours from receipt of the memorandum; amended. Accordingly, all striking workers including
otherwise, they would be terminated "for cause." Again not one those who were dismissed during the conciliation
sales representatives submitted a report. Instead, on August 29, proceedings, except those who have already resigned,
1985, the Union President sent an undated letter to GTE are hereby directed to return to work and the
(addressed to its Director for Marketing & Sales) acknowledging management of G.T.E. Directories to accept all returning
receipt of the notice of their suspension on August 19, 1985 in employees under the same terms and conditions
view of their "continued refusal to submit the list of accounts to prevailing previous to the strike notice and without
be cancelled," professing surprise at being "served with a prejudice to the determination of the obligation and rights
contradictory notice, giving us this time 24 hours to submit the of the parties or to the final outcome of this dispute. The
required list, without the suspension letter, which we consider as Bureau of Labor Relations is hereby directed to hear the
still in force, being first recalled or withdrawn," asking that they dispute and submit its recommendations within 15 days
be informed which of the two directives should be followed, and upon submission of the case for resolution.
reserving their "right to take such action against you personally
for your acts of harassment and intimidation which are clearly All concerned including the military and police authorities
designed to discourage our legitimate union activities in are hereby requested to assist in the implementation of
protesting management's continious (sic) unfair labor practices." this Order."

Consequently, by separate letters dated August 29, 1985 The Acting Secretary opined that the dispute "adversely affects
individually received, GTE terminated the employment of the the national interest," because:
recalcitrant sales representatives, numbering fourteen, with the
undertaking to give them "separation pay, upon proper 1) GTE, a "100% foreign owned" company, had, as publisher of
clearance and submission of company documents, material etc., "PLDT's Metro Manila and provincial directories . . . earned a
in . . . (their) possession." Among those dismissed were the total of P127,038,463 contributing close to P10 million in income
union's president and third vice president, and several members tax alone to the Philippine government," and that "major
of its board of directors. On September 2, 1985, the union contribution to the national economy . . . (was) being threatened
declared a strike in which about 60 employees participated. because of the strike;" and
2) "top officers of the union were dismissed during the which are best threshed out through negotiations, . . . (and that)
conciliation process thereby compounding the dispute," it is recognized that company policies and regulations are,
unless shown to be grossly oppressive or contrary to law,
Reconsideration of this Order was sought by GTE by motion generally binding and valid on the parties until finally revised or
filed on December 16, 1985, on the ground that— amended unilaterally or preferably through negotiations or by
competent authorities;"
1) "the basis for assumption of jurisdiction is belied by the
facts and records of the case and hence, unwarranted;" 2) affirmed the "recognized principle of law that company
policies and regulations are, unless shown to be grossly
2) "national interest is not adversely affected to warrant oppressive or contrary to law, generally binding (and) valid on
assumption of jurisdiction by (the) Office of the Minister of the parties and must be complied with until finally revised or
Labor and Employment;" and amended unilaterally or preferably through negotiations or by
competent authorities;" and
3) "assumption of jurisdiction by the . . . Minister . . .
without prior consultation with the parties violates the 3) closed by pointing out that "as a basic principle, the matter of
company's right to due process of law." the acceptability of company policies and rules is a proper
subject of collective negotiations between the parties or
GTE however reiterated its previously declared "position that arbitration if necessary."
with or without the order now being questioned, it will accept all
striking employees back to work except the fourteen (14) In a clarificatory Order dated January 21, 1986, Minister Ople
premise sales representatives who were dismissed for cause reiterated the proposition that "promulgations of company
prior to the strike." policies and regulations are basic management prerogatives,"
and that "unless shown to be grossly oppressive or contrary to
By Resolution of then Labor Minister Blas Ople dated January law," they are "generally binding and valid on the parties and
20, 1986, GTE's motion for reconsideration was denied. The must be complied with until finally revised or amended
order noted inter alia that GTE had "accepted back to work all unilaterally or preferably, through negotiations or by competent
the returning workers except fourteen (14) whom it previously authorities."
dismissed insisting that they were legally dismissed for violation
of company rules and, therefore, are not included and may not Adjudication of the dispute on the merits was made on March
be reinstated on the basis of a return-to-work order," and that 31, 1986 by Order of Minister Ople's successor, Augusto
"they were dismissed for their alleged failure to comply with the Sanchez. The Order —
reportorial requirement under the Sales and Administrative
Practices in effect since 1981 but which for the present is the 1) pointed out "that the issue central to the labor dispute
subject of negotiations between the parties." The Order then — revolves around compliance with existing company policies,
rules and regulations specifically the sales evaluation and
1) adverted to the "general rule (that) promulgations of company production policy which was amended by the October 12, 1984
policies and regulations are basic management prerogatives memorandum and the grid schedule;"
although the principle of collective bargaining encompasses
almost all relations between the employer and its employees
2) declared that because fourteen (14) sales representatives — 3) GTE's so-called "bottom-third" policy, as well as all sales and
who after reinstatement pursuant to the order of January 20, administrative practices related thereto, should have been held
1986 had been placed "on forced leave with pay —"were illegal; and
actually dismissed for failure to comply with the reporting
requirements under the "Sales Administration Practices" which 4) GTE should have been commanded: (a) to pay all striking
was (sic) then the subject of negotiations between the parties at employees their usual salaries, allowances, commission and
the Bureau of Labor Relations," it was only fair that they 'be other emoluments corresponding to the period of their strike; (b)
reinstated . . .with back wages since they were terminated from to release to its employees the 8-days pay increase unlawfully
employment based on a policy . . . still being negotiated to avoid withheld from them; (c) to lift the suspension imposed on Brian
precisely a labor-management dispute from arising" therefrom;" Pineda and restore to him the pay withheld corresponding to the
suspension period; (d) to pay the sales representatives all their
3) pronounced the union's action relative to the allegedly illegal lost income corresponding to the period of their suspensions,
dismissal of one Brian Pineda to be "barred by extinctive and dismissal, including commissions that they might have
prescription" in accordance with the CBA then in force; and earned corresponding to their one-week forced leave.

4) on the foregoing premises adjudicated the dispute as follows: GTE for its part, argued that the termination of the employment
of its fourteen (14) premise sales representatives prior to the
1. The union and management of G.T.E. Directories strike should have been upheld. It also filed an opposition to the
Corporation are directed to negotiate and effect a union's motion for reconsideration.
voluntary settlement on the questioned Grid schedule,
the Sales Evaluation and Production Policy; The motions were resolved in a "Decision" handed down by
Minister Sanchez on June 6, 1986. The Minister stated that he
2. Management is ordered to reinstate the fourteen (14) saw no need to change his rulings as regards Pineda's
employees with full back wages from the time they were suspension, the question on GTE's sales and administrative
dismissed up to the time that they were on forced leave policies, and the matter of back wages. However, as regards
with pay." "the other issues raised by the union," the Minister agreed "with
the company that these were not adequately threshed out in the
Both the Union and GTE moved for reconsideration of the earlier proceedings . . . (for) (w)hile it is true that the union had
Order. already presented evidence to support its contention, the
company should be given the opportunity to present its own
The Union contended that: evidence." Accordingly, he directed the Bureau of Labor
Relations to hear said "other issues raised by the union and to
1) GTE should have been adjudged guilty of unfair labor submit its findings and recommendations thereon within 20 days
practice and other unlawful acts; from submission of the case for decision."

2) its strike should have been declared lawful; Again GTE moved for reconsideration; again it was rebuffed.
The Labor Minister denied its motion by Order dated October 1,
1986. In that order, the Minister, among other things—
1) invoked Section 6, Rule XIII of the Rules and Regulations are being used to bust the union; thus precipitating a
Implementing the Labor Code, pertinently reading as follows: lawful strike on the part of the latter. A strike is legal if it
was provoked by the employer's failure to abide by the
During the proceedings, the parties shall not do any act terms and conditions of its collective bargaining
which may disrupt or impede the early settlement of the agreement with the union, by the discrimination
dispute. They are obliged, as part of their duty to bargain employed by it with regard to the hire and tenure of
collectively in good faith, to participate fully and promptly employment, and the dismissal of employees due to
in the conciliation proceedings called by the Bureau or union activities as well as the company's refusal to
the Regional Office. bargain collectively in good faith (Cromwell Commercial
Co., Inc. vs. Cromwell Employees and Laborers Union,
and pointed out that "in dismissing 14 salesmen . . . for alleged 19 SCRA 398). The same rule applies if employer was
violations of the reportorial requirements of its sales policies guilty of bad faith delay in reinstating them to their
which was then the subject of conciliation proceedings between position (RCPI vs. Phil. Communications Electronics &
them, (GTE) acted evidently in bad faith; hence the status Electricity Workers Federation, 58 SCRA 762).
quo prior to their dismissal must be restored . . . (and) their
reinstatement with backwages is in order up to the time they While as a rule strikers are not entitled to backpay for the
were on forced leave. . . ;" strike period (J.P. Heilbronn Co. vs. NLU, 92 Phil. 575)
strikers may be properly awarded backwages where the
2) declared that because he had "ordered the parties to strike was precipitated by union busting activities of the
negotiate and effect a voluntary settlement of the questioned employer (Davao Free Workers, Front, et al. vs, CIR, 60
Grid Schedule, the Sales Evaluation and Productions Policy, it SCRA 408), as in the case at bar. . . .
would be unripe and premature for us to rule on the legality or
illegality on the company's sales policies at this instance;" The Minister accordingly annulled and set aside his order for the
Bureau of Labor Relations to conduct hearings on said issues
3) opted, however, to himself resolve "the so-called 'other since he had already resolved them, and affirmed his Order of
issues"' which he had earlier directed the Bureau of Labor March 31, 1986—"directing Union and Management to
Relations to first hear and resolve (in the Decision of June 6, negotiate a voluntary settlement on the company sales policies
1986, supra), i.e., GTE's liability for unfair labor practice, the and reinstating the fourteen employees with full backwages from
legality of the strike and the strikers' right to be paid their wages the time they were dismissed up to the time they were on forced
while on strike, his ruling thereon being as follows: leave with pay" — "but with the modification that management .
. . (was) directed to give the striking workers strike duration pay
While the company, in merely implementing its for the whole period of the strike less earnings."
challenged sales policies did not ipso facto commit an
unfair labor practice, it did so when it in mala GTE thereupon instituted the special civil action of certiorari at
fide dismissed the fourteen salesmen, all union bar praying for invalidation, because rendered with grave abuse
members, while conciliation proceedings were being of discretion, of the Labor Minister's orders—
conducted on disputes on its very same policies,
especially at that time when a strike notice was filed on 1) commanding "reinstatement of the fourteen dismissed
the complaint of the union alleging that said sales policies employees, and
2) "finding . . . (it) guilty of unfair labor practice and directing (it) 1) a letter by their Union to GTE's Sales Manager dated August
to pay strike duration pay to striking workers." 5, 1985 in which the requirement was criticized as not being the
"result of an agreement of all concerned," and as
It seems to the Court that upon the undisputed facts on record, incomprehensible, "discriminate and whimsical;"
GTE had cause to dismiss the fourteen (14) premise sales
representatives who had repeatedly and deliberately, not to say 2) a strike notice filed with the Ministry of Labor on August 6,
defiantly, refused to comply with its directive for submission of 1985; and
individual reports on specified matters. The record shows that
GTE addressed no less than (six) written official 3) an undated letter sent to GTE's Director for Marketing &
communications to said premise sales representatives Sales on August 29, 1985, drawing attention to what it deemed
embodying this requirement, to wit: contradictory directives, and reserving the right to take action
against the manager for "acts of harassment and intimidation . .
1) Memorandum of July 9, 1985 pursuant to GTE's "Sales . clearly designed to discourage our legitimate union activities in
Administrative Practices" — superseded by a memorandum protesting management's continuous unfair labor practices."
dated July 16, 198 — requiring submission of individual reports
by August 2, 1985; The basic question then is whether or not the effectivity of an
employer's regulations and policies is dependent upon the
2) Memorandum of August 5, 1985, requiring submission of the acceptance and consent of the employees thereby sought to be
reports by 2:00 P.M.; bound; or otherwise stated, whether or not the union's
objections to, or request for reconsideration of those regulations
3) Memorandum of August 6, 1985, for submission of requisite or policies automatically suspend enforcement thereof and
reports not later than 4:00 P.M. of that day, with a warning of excuse the employees' refusal to comply with the same.
"appropriate disciplinary action;"
This Court has already had occasion to rule upon a similar
4) Letter of August 9, 1985 imposing suspension without pay for issue. The issue was raised in a 1989 case, G.R. No.
five (5) working days and extending the period for submission of 53515, San Miguel Brewery Sales Force Union (PTGWO) v.
reports to August 19, 1985; Ople.3 In that case, the facts were briefly as follows:

5) Letter of August 19, 1985 suspending the sales In September 1979, the company introduced a marketing
representatives until their submission of the required reports; scheme known as the "Complementary distribution
system" (CDS) whereby its beer products were offered
6) Letter dated August 28, 1985 giving the sales representatives for sale directly to wholesalers through San Miguel's
"a last chance to comply with . . . (the) directive within 24 hours sales offices.
from receipt . . .;" with warning that failure to comply would
result in termination of employment. The labor union (herein petitioner) filed a complaint for
unfair labor practice in the Ministry of Labor, with a notice
The only response of the sales representatives to these formal of strike on the ground that the CDS was contrary to the
directives were: existing marketing scheme whereby the Route Salesmen
were assigned specific territories within which to sell their
 stocks of beer, and wholesalers had to buy beer products The Court then closed its decision with the following
from them, not from the company. It was alleged that the pronouncements:5
new marketing scheme violates . . . (a provision) of the
collective bargaining agreement because the introduction Every business enterprise endeavors to increase its
of the CDS would reduce the take-home pay of the profits. In the process, it may adopt or devise means
salesmen and their truck helpers for the company would designed towards that goal. In Abbott Laboratories vs.
be unfairly competing with them." NLRC, 154 SCRA 713, We ruled:

The Labor Minister found nothing to suggest that the employer's . . . Even as the law is solicitous of the welfare of
unilateral action of inaugurating a new sales scheme "was the employees, it must also protect the right of an
designed to discourage union organization or diminish its employer to exercise what are clearly
influence;" that on the contrary, it was "part of its overall plan to management prerogatives. The free will of
improve efficiency and economy and at the same time gain management to conduct its own business affairs to
profit to the highest;" that the union's "conjecture that the new achieve its purpose cannot be denied.
plan will sow dissatisfaction from its rank is already a
prejudgment of the plan's viability and effectiveness, . . . like So long as a company's management prerogatives are
saying that the plan will not work out to the workers' (benefit) exercised in good faith for the advancement of the
and therefore management must adopt a new system of employer's interest and not for the purpose of defeating
marketing." The Minister accordingly dismissed the strike notice, or circumventing the rights of the employees under
although he ordered a slight revision of the CDS which the special laws or under valid agreements, this Court will
employer evidently found acceptable. uphold them (LVN, Pictures Workers vs. LVN, 35 SCRA
147; Phil. American Embroideries vs. Embroidery and
This Court approved of the Minister's findings, and declared Garments Workers, 26 SCRA 634; Phil. Refining Co. vs.
correct his holding that the CDS was "a valid exercise of Garcia, 18 SCRA 110). . . .
management prerogatives,"4 viz.:
In the case at bar, it must thus be conceded that its adoption of
Except as limited by special laws, an employer is free to a new "Sales Evaluation and Production Policy" was within its
regulate, according to his own discretion and judgment, management prerogative to regulate, according to its own
all aspects of employment, including hiring, work discretion and judgment, all aspects of employment, including
assignments, working methods, time, place and manner the manner, procedure and processes by which particular work
of work, tools to be used, processes to be followed, activities should be done. There were, to be sure, objections
supervision of workers, working regulations, transfer of presented by the union, i.e., that the schedule had not been
employees, work supervision, lay-off of workers and the "drawn (up) as a result of an agreement of all concerned," that
discipline, dismissal and recall of work. . . . (NLU vs. the new policy was incomprehensible, discriminatory and
Insular La Yebana Co., 2 SCRA 924; Republic Savings whimsical, and "would result to further reduction" of the sales
Bank vs. CIR, 21 SCRA 226, 235.) (Perfecto V. representatives' compensation. There was, too, the union's
Hernandez, Labor Relations Law, 1985 ed., p. 44.) accusation that GTE had committed unfair labor practices, such
(Emphasis ours.) as—
 1. Refusal to bargain on unjust sales policies particularly proceedings for redress against the employer before the
on the failure to meet the 75% of the average sales Ministry of Labor. But until and Unless the rules or orders are
production for two consecutive years; declared to be illegal or improper by competent authority, the
employees ignore or disobey them at their peril. It is
2. Open territory of accounts; impermissible to reverse the process: suspend enforcement of
the orders or rules until their legality or propriety shall have been
3. Illegal suspension of Brian Pineda, a union officer; and subject of negotiation, conciliation, or arbitration.

4. Non-payment of eight days' suspension pay increase. These propositions were in fact adverted to in relation to the
dispute in question by then Minister Blas Ople in his Order
This Court fails to see, however, how these objections and dated January 21, 1986, to the effect among others, that
accusations justify the deliberate and obdurate refusal of the "promulgations of company policies and regulations are basic
sales representatives to obey the management's simple management prerogatives" and that it is a "recognized principle
requirement for submission by all Premise Sales of law that company policies and regulations are, unless shown
Representatives (PSRs) of individual reports or memoranda to be grossly oppressive or contrary to law, generally binding
requiring reflecting target revenues—which is all that GTE (and) valid on the parties and must be complied with until finally
basically required — and which it addressed to the employees revised or amended unilaterally or preferably through
concerned no less than six (6) times. The Court fails to see how negotiations or by competent authorities."
the existence of objections made by the union justify the studied
disregard, or wilful disobedience by the sales representatives of Minister Sanchez however found GTE to have "acted evidently
direct orders of their superior officers to submit reports. Surely, in bad faith" in firing its 14 salespersons "for alleged violations of
compliance with their superiors' directives could not have the reportorial requirements of its sales policies which was then
foreclosed their demands for the revocation or revision of the the subject of conciliation proceedings between them;"6 and that
new sales policies or rules; there was nothing to prevent them "(w)hile the company, in merely implementing its challenged
from submitting the requisite reports with the reservation to seek sales policies did not ipso facto commit an unfair labor practice,
such revocation or revision. it did so when it in mala fidedismissed the fourteen salesmen, all
union members, while conciliation proceedings were being
To sanction disregard or disobedience by employees of a rule or conducted on disputes on its very same policies, especially at
order laid down by management, on the pleaded theory that the that time when a strike notice was filed on the complaint of the
rule or order is unreasonable, illegal, or otherwise irregular for union alleging that said sales policies are being used to bust the
one reason or another, would be disastrous to the discipline and union; thus precipitating a lawful strike on the part of the latter."
order that it is in the interest of both the employer and his No other facts appear on record relevant to the issue of GTE's
employees to preserve and maintain in the working dismissal of the 14 sales representatives. There is no proof on
establishment and without which no meaningful operation and record to demonstrate any underhanded motive on the part of
progress is possible. Deliberate disregard or disobedience of GTE in formulating and imposing the sales policies in question,
rules, defiance of management authority cannot be or requiring the submission of reports in line therewith. What, in
countenanced. This is not to say that the employees have no fine, appears to be the Minister's thesis is that an employer has
remedy against rules or orders they regard as unjust or illegal. the prerogative to lay down basic policies and rules applicable
They may object thereto, ask to negotiate thereon, bring to its employees, but may not exact compliance therewith, much
less impose sanctions on employees shown to have violated intolerable. For common sense teaches, as Mr. Justice Gregorio
them, the moment the propriety or feasibility of those policies Perfecto once had occasion to stress7 that:
and rules, or their motivation, is challenged by the employees
and the latter file a strike notice with the Labor Department — Success of industries and public services is the
which is the situation in the case at bar. foundation upon which just wages may be paid. There
cannot be success without efficiency. There cannot be
When the strike notice was filed by the union, the chain of efficiency without discipline. Consequently, when
events which culminated in the termination of the 14 sales employees and laborers violate the rules of discipline
persons' employment was already taking place, the series of they jeopardize not only the interest of the employer but
defiant refusals by said sales representatives to comply with also their own. In violating the rules of discipline they aim
GTE's requirement to submit individual reports was already in at killing the hen that lays the golden eggs. Laborers who
progress. At that time, no less than three (3) of the ultimate six trample down the rules set for an efficient service are, in
(6) direct orders of the employer for the submission of the effect, parties to a conspiracy, not only against capital but
reports had already been disobeyed. The filing of the strike also against labor. The high interest of society and of the
notice, and the commencement of conciliation activities by the individuals demand that we should require everybody to
Bureau of Labor Relations did not operate to make GTE's do his duty. That demand is addressed not only to
orders illegal or unenforceable so as to excuse continued non- employer but also to employees.
compliance therewith. It does not follow that just because the
employees or their union are unable to realize or appreciate the Minister Sanchez decided the dispute in the exercise of the
desirability of their employers' policies or rules, the latter were jurisdiction assumed by his predecessor in accordance with
laid down to oppress the former and subvert legitimate union Article 263 (g) of the Labor Code,8 providing in part as follows:
activities. Indeed, the overt, direct, deliberate and continued
defiance and disregard by the employees of the authority of (g) When in his opinion there exists a labor dispute
their employer left the latter with no alternative except to impose causing or likely to cause strikes or lockouts adversely
sanctions. The sanction of suspension having proved futile, affecting the national interest, such as may occur in but
termination of employment was the only option left to the not limited to public utilities, companies engaged in the
employer. generation or distribution of energy, banks, hospitals, and
export-oriented industries, including those within export
To repeat, it would be dangerous doctrine indeed to allow processing zones, the Minister of Labor and Employment
employees to refuse to comply with rules and regulations, shall assume jurisdiction over the dispute and decide it or
policies and procedures laid down by their employer by the certify the same to the Commission for compulsory
simple expedient of formally challenging their reasonableness or arbitration. . . .
the motives which inspired them, or filing a strike notice with the
Department of Labor and Employment, or, what amounts to the Even that assumption of jurisdiction is open to question.
same thing, to give the employees the power to suspend
compliance with company rules or policies by requesting that The production and publication of telephone directories, which is
they be first subject of collective bargaining, It would be well the principal activity of GTE, can scarcely be described as an
nigh impossible under these circumstances for any employer to industry affecting the national interest. GTE is a publishing firm
maintain discipline in its establishment. This is, of course, chiefly dependent on the marketing and sale of advertising
space for its not inconsiderable revenues. Its services, while of
value, cannot be deemed to be in the same category of such
essential activities as "the generation or distribution of energy"
or those undertaken by "banks, hospitals, and export-oriented
industries." It cannot be regarded as playing as vital a role in
communication as other mass media. The small number of
employees involved in the dispute, the employer's payment of
"P10 million in income tax alone to the Philippine government,"
and the fact that the "top officers of the union were dismissed
during the conciliation process," obviously do not suffice to
make the dispute in the case at bar one "adversely affecting the
national interest."

WHEREFORE, the petition is GRANTED, and as prayed for, the

Order dated October 1, 1986 of the public respondent is
NULLIFIED and SET ASIDE.
REGINA S. BIBOSO, NENITA B. BISO, FE CUBIN, (complainants) were not going to be rehired for the school year
MAGELENDE H. DEMEGILLDO, EMERITA O. PANALIGAN, 1973-74.äüsl•älFº The necessary report for such action was
NILDA P. TAYO, NELDA TORMON, ARDE M. VALENCIANO, filed by respondent with the Department of Labor on May 28,
MA. LINDA E. VILLA and the VICMICO SUPERVISORY 1973, informing that complainants' services were thus
EMPLOYEES ASSOCIATION (VICSEA), petitioners, terminated after the business hours on June 30, 1973. 2 He then
vs. pointed out that petitioners were quite successful with the
VICTORIAS MILLING COMPANY, INC. and the OFFICE OF Arbitrator, the former National Labor Relations Commission
THE PRESIDENT OF THE PHILIPPINES, respondents. under Presidential Decree No. 21, and the Secretary of Labor. It
was private respondent that appealed to the Office of the
President. After which, his order went into the basic issue thus:
"This Office had examined and analyzed the various contracts
Identified during the hearing below and admitted by the
FERNANDO, J.:têñ.£îhqw⣠complainants to have been signed by them which clearly show
that the complainants were hired as teachers of the school on a
The present Constitution of expanding the mandate of year-to-year basis and that they reapplied before the expiration
protection to labor specifically casts on the State the obligation of the contracts and/or signed new ones, as the case may be, if
to assure workers security of tenure. 1 The decisive question in the school decided to renew the same. None of the
the controversy now before this Court is wether the mantle of complainants who testified disputed the fact that they all signed
such guarantee covers the case of the nine petitioners, whose Identical contracts of employment which provided for a definite
employment admittedly were on a basis. It was the rulling of the period of employment which provided for a definite period of
respondent Presidential Executive Assistant Jacobo C. Clave employment expiring June 30 of the particular school year.
that its benificent effects could not be invoked by them that is Thus, under 'Status of Employment' of said contracts, the
assailed before this Court. While they are pleading by captioned complainants were hired as 'temporary as and when required
petition for review, this Court considered it as a cetiorari until June 30, 1973,' or whatever year the contract is supposed
proceeding in view on his part, the issue of an alleged unfair to terminate. To he specific, Exhs. '4', '5' and '6' signed by
labor pratice indulged in by private respondent public official, complainant Arde Valenciano show that she was hired on a
who acted serious accusation against respondent public, who yearly basis for school year 1970-71, and 1971-72. The same is
acted on behalf of the Office of the President. The petition is not true with Exhs. '13' and '14' signed by Linda Villa; Exhs. '16',
impressed with the merit. '17','18' and '19', signed by Emerita 0. Panaligan; and Exhs.'22'
and '23', signed by Magelinde Demegillo all showing that they
The order of respondent Jacobo C. Clave, who asss were hired on a year-to-year basis. 3 Reference was then made
Presidential Executive Assistant acted on an appeal by private to "the official stand of the Department of Labor respecting
respondent from a decision of the Secretary of Labor dismissed recognition by the Labor Code of the policy of the Bureau of
the complaint of petitioners for reinstatement. He noted at the Private Schools settling the maximum probationary period for
outset of such challenged order: "Individual complainants herein teachers at three years. Of pertinence hereto is the official letter
were employed by respondent as academic teachers in dated March 12, 1975, of Undersecretary of Labor Amado G.
respondent's school, the St. Mary Mazzarello School, which is Inciong to the President of the Coordinating Council of Private
operated by respondent. On or about April 14, 1973, Educational Associations touching on the probationary period
complainants were notified by the school Directress that they for teachers at three years, to wit: ... This refers to your letter of
5 March 1975 in connection with the probationary period for also secundum caritatem. " 10 That is a doctrine to which this
teachers. The Labor Code does not set the maximum case is whether it applies to the case of petitioner. The Office of
probationary period at six months. Under the Labor Code, the the President answered in the negative. Thus it exercised its
probationary period is the period required to learn a skill, trade. discretion. It cannot be said that an abuse could rightfully be
occupation or profession. In other words, the Labor Code imputed by it, much less one that is of such gravity that calls fir
recognizes the policy of the Bureau of Private Schools settling judicial correction. What is decisive is that petitioners were well
the maximum probationary period for teachers at three aware all the time that their tenure was for a limited duration.
years. 4 It was likewise made plain therein that as regards the Upon its termination, both parties to the employment
allegation of unfair labor practice, the Office of the President relationship were free to renew it or to let it lapse. It was the
"finds the same untenable. 5 decision of private respondent that it should cease. The Office
of the President could find nothing objectionable when it
The petition, as noted at the outset, cannot proper. determined that the will of the parties as to the limited duration
thereof should be respected. That was all that was decided.
1. It is to be noted that in Philippine Air Lines, Inc. v. Philippine
Air Lines Employees Association, 6 after reference was made to 2. This is by no means to assert that the security of tenure
the specific provision in the present Constitution not found in the protection of the constitution does not apply t probationary
1935 Charter requiring the State to assure workers security of employees. The Labor code has wisely provided for such a case
tenure, it was stressed that there should be fealty to [such] thus: "The termination of employment of probationary
constitutional command. 7 Such a mandate was construed in the employees and those employed with a fixed period shall be
subsequent case of Almira v. B. F. Goodrich Philippines, subject to such regulations as the Secretary of labor may
Inc., 8 that even in cases affording justification for disciplinary priscribe to prevent the circum\vention of the right of the
action to be taken by management against an employee, "where employees to be secured in their employment as provided
a penalty less punitive [than dismissal] would suffice, whatever herein." 11 There is no question here, as noted in the assailed
missteps may be committed by [the latter ought not to be visited order of Presidential Executive Assistant Clave, that petitioners
with a consequence so severe." 9 The opinion then went on to did not enjoy a permanent status. During such period they could
state: "It is not only because of the law's concern for the remian in their positions and any circumvention of their of the
workingman. There is, in addition, his family to consider. rights, in accordance with the statutory statutory scheme,
Unemployment brings untold hardships and sorrows on those subject to inquirey and therafter correction by the Department of
dependent on the wage-earner. The misery and pain attendant Labor. Thus there was the safeguard as to the duration of their
on the loss of jobs then could be avoided if there be acceptance employment being respected. To that extent, their tenure was
of the view that under all the circumstance of this case, secure. The moment, however, the period expired in
petitioners should not be deprived of their means of livelihood. accordance with contracts freely entered into, they could no
Nor is this to condone what had been paid. From the strictly longer invoke the constitutional protection. To repeat, that was
juridical standpoint, it cannot be too strongly stressed, to follow what transpired in this case.äüsl•älFº The ruling of the Office of
Davis in his masterly work, Discretionary Justice, that were a the President, now assailed, is not without support in law.
decision may be made to rest on informed judgment rather than
rigid rules, all the equities of the case must be accorded their 3. It would be a different matter of course had the failure to
due weight. Finally, labor law determinations, to quote from renew the contracts of petitioners been justly attributable to their
Bultmann, should be not secundum rationem but joining petitioner labor union, Vicmico Supervisoyr Employees
Association. That would be a clear case of an unfair labor school run by respondent VICMICO, is manned by teachers
practice. 12 There was such an allegation by them. The Office of who are members of petitioner union VICSEA ... Considering
the President found "the same untenable." 13 Nor did it stop "he foregoing circumstances, it is difficult to believe the
there. It explained why: "The records disclose, and it is a fact submission of individual petitioners that they were terminated
admitted by the union, that the teachers of Don Bosco Technical from employment because they joined petitioner union VICSEA
Institute, also run and operated by respondent, are all members It would appear that it was the other way around. Knowing that
of the VICSEA. The allegation that the Company refused re- their contracts were about to expire and that they would
employment of complainants simply because they joined the probably not be extended new ones, petitioners sought
VICSEA isnegated by the fact that in a much bigger school, the membership in petitioner union VICSEA to render it more
Don bosco Technical Institute, respondent has allowed the difficult for respondent VICMICO to remove them from their
members of the faculty to join the CIVSEA without any serious teaching positions. This is indicated by the fact that petitioners
objection or reprisal. If at all the respondent had objected to the became members of petitioner union VICSEA only in January,
teachers of the St. Mary Mazzarello school being considered 1973. Before this date, individual petitioners were already being
within the same bargaining unit as the otgher employees of the closely observed to gauge their performance for purposes of
company, it was for the reason that the exemption from determining who shall be accorded permanent status. Thus,
coverage of employes hired for a definite period of employment, individual petitioners knew that they would either be made
like the complainants herein, who were indisputably shown that permanent or will be dropped from the faculty roster at the end
the term of their contract of employment prior to the time that of the school year 1972-73. So they joined the union. That the
they become permanent under the Manual of the Bureau of purpose of individual petitioners in joining the union is to avert
Private Schools, was temporary in nature or for a definite their forthcoming removal from the faculty roster was impliedly
period." 14 admitted by one of the individual petitioners in her testimony: 'Q
— But according to you, precisely, the reason why you joined
In the comment submitted on behalf of respondent public the union was because it would be very hard for the school
official, reference was made to the admission by individual toterminate you if you are already a member of the union, did
petitioners that before they joined such labor union, "they had you not say that? A — I said it!" 16 The memorandum for
serious differences with the school officials respecting their petitioners did stress testimony coming from the Directress of
methods of teaching and conduct in school." 15 That was the school in question to show that the refusal to retain them in
followed by a recital of what was testified to by some of the employment was due to their membership in the union.
petitioners. Then came this portion of the comment: "The above- Certainly, it cannot be assumed that the Office of the President
quoted testimonies of individual petitioners clearly show that in the evaluation of the conflicting evidence did not take it into
their competence, efficiency, loyalty and integrity were in consideration. The conclusion it reached was adverse to
question long before they became members of petitioner union petitioners. It is now well-settled that the certiorari jurisdiction of
VICSEA and it was because of these failings on their part that this Tribunal extends only to a grave abuse of discretion. There
their contracts to teach were not renewed. This also shown by must be the element of arbitrariness or caprice. In the light of
Exhibit 39, ... (3) Some of the teachers retained to teach in the what appears of record, the conclusion that the decision
school were also members of petitioner union VICSEA.... If reached by it is tainted by such infirmity is unwarranted.
respondent VICMICO was against individual petitioners joining
the union, why did it not terminate the employment of these two WHEREFORE, the petition for certiorari is dismissed.
teachers as well? (4) Don Bosco of Bacolod City, another
CANADIAN OPPORTUNITIES UNLIMITED, Llamanzares Abad. His tasks involved principally the review of the
INC.,- versus -
BART Q. DALANGIN, JR., clients applications for immigration to Canada to ensure that they are
in accordance with Canadian and Philippine laws.

Through a memorandum[4] dated October 27, 2001, signed by Abad,

DECISION
the company terminated Dalangins employment, declaring him unfit
BRION, J.: and unqualified to continue as Immigration and Legal Manager, for the
following reasons:

a) Obstinacy and utter disregard of company

policies. Propensity to take prolonged and
extended lunch breaks, shows no interest in
For resolution is the petition for review on certiorari[1] to nullify the
familiarizing oneself with the policies and
decision dated December 19, 2005[2] and the resolution dated March objectives.
30, 2006[3] of the Court of Appeals (CA) rendered in CA-G.R. SP No.
b) Lack of concern for the companys interest
84907.
despite having just been employed in the
company. (Declined to attend company
The Antecedents sponsored activities, seminars intended to
familiarize company employees with
Management objectives and enhancement of
On November 20, 2001, respondent Bart Q. Dalangin, Jr. filed a company interest and objectives.)
complaint for illegal dismissal, with prayer for reinstatement and
backwages, as well as damages (moral and exemplary) and attorneys c) Showed lack of enthusiasm toward work.
fees, against petitioner Canadian Opportunities Unlimited, Inc. d) Showed lack of interest in fostering
(company). The company, based in Pasong Tamo, Makati City, relationship with his co-employees.[5]
provides assistance and related services to applicants for permanent
residence in Canada.

Dalangin was hired by the company only in the previous month, or in The Compulsory Arbitration Proceedings
October 2001, as Immigration and Legal Manager, with a monthly
salary of P15,000.00. He was placed on probation for six months. He Dalangins submission
was to report directly to the Chief Operations Officer, Annie
 that Mr. Yadi N. Sichani, the companys Managing Director, wanted to
[6]
Dalangin alleged, in his Position Paper, that the company issued a meet with him regarding the matter. He alleged that at the meeting, he
memorandum requiring its employees to attend a Values Formation was devastated to hear from Sichani that his services were being
Seminar scheduled for October 27, 2001 (a Saturday) at 2:00 p.m. terminated because Sichani could not keep in his company people who
onwards. He inquired from Abad about the subject and purpose of the are hard-headed and who refuse to follow orders from
seminar and when he learned that it bore no relation to his duties, he management.[9] Sichani also told him that since he was a probationary
told Abad that he would not attend the seminar. He said that he would employee, his employment could be terminated at any time and at will.
have to leave at 2:00 p.m. in order to be with his family in the Sichani refused to accept his letter-reply to the company memorandum
province. Dalangin claimed that Abad insisted that he attend the dated October 26, 2001 and instead told him to just hand it over to
seminar so that the other employees would also attend. He replied that Abad.
he should not be treated similarly with the other employees as there are
marked differences between their respective positions and The companys defense
duties. Nonetheless, he signified his willingness to attend the seminar,
but requested Abad to have it conducted within office hours to enable Through their position paper,[10] the company and its principal officers
everybody to attend. alleged that at the time of Dalangins engagement, he was advised that
he was under probation for six months and his employment could be
Dalangin further alleged that Abad refused his request and stressed terminated should he fail to meet the standards to qualify him as a
that all company employees may be required to stay beyond 2:00 regular employee. He was informed that he would be evaluated on the
p.m. on Saturdays which she considered still part of office hours. basis of the results of his work; on his attitude towards the company,
Under his employment contract,[7] his work schedule was from 9:00 his work and his co-employees, as spelled out in his job
a.m. to 6:00 p.m., Monday to Friday, and 9:00 a.m. to 2:00 p.m. on description;[11] and on the basis of Abads affidavit.[12]
Saturdays. Dalangin argued that it has been an established company
practice that on Saturdays, office hours end at 2:00 p.m.; and that an They further alleged that during his brief employment in the company,
employee cannot be made to stay in the office beyond office hours, Dalangin showed lack of enthusiasm towards his work and was
except under circumstances provided in Article 89 of the Labor Code. indifferent towards his co-employees and the company
clients. Dalangin refused to comply with the companys policies and
On October 26, 2001, Dalangin claimed that Abad issued a procedures, routinely taking long lunch breaks, exceeding the one hour
memorandum[8] requiring him to explain why he could not attend the allotted to employees, and leaving the company premises without
seminar scheduled for October 27, 2001 and the other forthcoming informing his immediate superior, only to call the office later and say
seminars. The following day, October 27, 2001, Abad informed him that he would be unable to return because he had some personal
matters to attend to. He also showed lack of interpersonal skills and employment.Dalangin moved for reconsideration, but the NLRC
initiative which he manifested when the immigration application of a denied the motion, prompting him to go to the CA on a petition
company client, Mrs. Jennifer Tecson, was denied by the Canadian for certiorari under Rule 65 of the Rules of Court.
Embassy. Dalangin failed to provide counsel to Tecson; he also should
have found a way to appeal her denied application, but he did not. As The CA Decision
it turned out, the explanation he gave to Tecson led her to believe that
the company did not handle her application well. Dalangins lack of In its now assailed decision,[15] the CA held that the NLRC erred when
interest in the company was further manifested when he refused to it ruled that Dalangin was not illegally dismissed. As the labor arbiter
attend company-sponsored seminars designed to acquaint or update the did, the CA found that the company failed to support, with substantial
employees with the companys policies and objectives. evidence, its claim that Dalangin failed to meet the standards to qualify
as a regular employee.
The company argued that since Dalangin failed to qualify for the
position of Immigration and Legal Manager, the company decided to Citing a ruling of the Court in an earlier case,[16] the CA pointed out
terminate his services, after duly notifying him of the companys that the company did not allow Dalangin to prove that he possessed the
decision and the reason for his separation. qualifications to meet the reasonable standards for his regular
employment; instead, it dismissed Dalangin peremptorily from the
The Compulsory Arbitration Rulings service. It opined that it was quite improbable that the company could
fully determine Dalangins performance barely one month into his
In his decision dated April 23, 2003,[13] Labor Arbiter Eduardo G. employment.[17]
Magno declared Dalangins dismissal illegal, and awarded him
backwages of P75,000.00, moral damages of P50,000.00 and The CA denied the companys subsequent motion for reconsideration
exemplary damages of P50,000.00, plus 10% attorneys fees. The labor in its resolution of March 30, 2006.[18] Hence, this appeal.
arbiter found that the charges against Dalangin, which led to his
dismissal, were not established by clear and substantial proof. The Companys Case

On appeal by the company, the National Labor Relations Commission Through its submissions the Petition,[19] the Reply[20] and the
(NLRC) rendered a decision on March 26, 2004[14] granting the appeal, Memorandum[21] the company seeks a reversal of the CA rulings,
thereby reversing the labor arbiters ruling. It found Dalangins raising the following issues: (1) whether the requirements of notice
dismissal to be a valid exercise of the companys management and hearing in employee dismissals are applicable to Dalangins case;
prerogative because Dalangin failed to meet the standards for regular
and (2) whether Dalangin is entitled to moral and exemplary damages,
and attorneys fees. Through his Comment[24] and Memorandum,[25] Dalangin asks the
Court to deny the petition. He argues that (1) probationary employees,
On the first issue, the company argues that the notice and hearing under existing laws and jurisprudence, are entitled to notice and
requirements are to be observed only in termination of employment hearing prior to the termination of their employment; and (2) he is
based on just causes as defined in Article 282 of the Labor entitled to moral and exemplary damages, and attorneys fees.
Code. Dalangins dismissal, it maintains, was not based on a just cause
under Article 282, but was due to his failure to meet the companys Dalangin disputes the companys submission that under the Labor
standards for regular employment. It contends that under the Labor Codes implementing rules, only a written notice is required for the
Codes Implementing Rules and Regulations, [i]f the termination is dismissal of probationary employees. He argues that the rules cited by
brought about x x x by failure of an employee to meet the standards of the company clearly mandate the employer to (1) serve the employee a
the employer in the case of probationary employment, it shall be written notice and (2) within a reasonable time before effecting the
sufficient that a written notice is served the employee within a dismissal. He stresses that for the dismissal to be valid, these
reasonable time from the effective date of termination.[22] It points out requirements must go hand in hand.
that it properly observed the notice requirement when it notified
Dalangin of his dismissal on October 27, 2001,[23] after it asked him to He explains that in the present case, the company did not observe the
explain (memorandum of October 26, 2001) why he could not attend above two requirements as he was dismissed the day after he was
the seminar scheduled for October 27, 2001; Dalangin failed to submit asked, by way of a memorandum dated October 26, 2001,[26] to explain
his explanation. It posits that contrary to the CAs conclusion, the within twenty-four hours why he could not attend the October 27,
companys finding that Dalangin failed to meet its standards for regular 2001 seminar. He adds that on the assumption that the termination
employment was supported by substantial evidence. letter dated October 27, 2001 refers to the written notice contemplated
With respect to the second issue, the company submits that Dalangin is under the rules, still the company did not observe the second
not entitled to moral and exemplary damages, and attorneys fees. It requirement of providing him a reasonable time before he was
maintains that Dalangin failed to present convincing evidence dismissed. He posits that the company disregarded the security of
establishing bad faith or ill-motive on its part. It insists that it tenure guarantee under the Constitution which makes no distinction
dismissed Dalangin in good faith with the belief that he would not between regular and probationary employees.
contribute any good to the company, as manifested by his behavior
towards his work and co-employees. On the companys claim that he failed to perform in accordance with its
standards, Dalangin argues that a perusal of the grounds in support of
The Case for Dalangin his dismissal reveals that none of the charges leveled against him is
supported by concrete and tangible evidence. He maintains that the two conflicting memos on the same day; neither did Sichani or Abad
company miserably failed to cite a single company policy which he investigate the surrounding circumstances on the matter nor did they
allegedly violated and defied. He refutes the companys claim that his give him the opportunity to explain his side.
job description and his employment contract apprise him of the
company policy that he is to observe for the duration of his The Courts Ruling
employment. He, thus, maintains that he had not been previously
informed of the company standards he was supposed to satisfy. He As a rule, the Court is not a trier of facts, the resolution of factual
stresses that the CA did not err in holding that the companys general issues being the function of lower courts whose findings are received
averments regarding his failure to meet its standards for regular with respect and are binding on the Court subject to certain
employment were not corroborated by any other evidence and, exceptions.[30] A recognized exception to the rule is the circumstance
therefore, are insufficient to justify his dismissal. in which there are conflicting findings of fact by the CA, on the one
hand, and the trial court or government agency concerned, on the
Dalangin insists that he is entitled to backwages, moral and exemplary other, as in the present case. The factual findings of the NLRC on the
damages, as well as attorneys fees, claiming that his dismissal was dispute between Dalangin and the company are at variance with those
unjust, oppressive, tainted with bad faith, and contrary to existing of the CA, thus necessitating our review of the case, especially the
morals, good customs and public policy. There was bad faith, he evidence on record.[31]
argues, because he was dismissed without the requisite notice and
hearing required under the law; and merely on the basis of the We now resolve the core issue of whether Dalangin, a
companys bare, sweeping and general allegations that he is difficult to probationary employee, was validly dismissed.
deal with and that he might cause problems to the companys future
business operations. He is entitled to attorneys fees, he submits, In International Catholic Migration Commission v. NLRC,[32] the
because he was forced to litigate and vindicate his rights. Court explained that a probationary employee, as understood under
Article 281 of the Labor Code, is one who is on trial by an employer,
He bewails what he considers as a pre-conceived plan and determined during which, the latter determines whether or not he is qualified for
design[27] on the part of Sichani and Abad to immediately terminate his permanent employment. A probationary appointment gives the
employment. Elaborating, he points out that the company, through employer an opportunity to observe the fitness of a probationer while
Abad, prepared two memoranda, both dated October 26, 2001, one is at work, and to ascertain whether he would be a proper and efficient
the memo to him requiring his written explanation[28] and the other, employee.
addressed to Sichani, recommending his dismissal.[29] He was
surprised that Sichani did not bother to ask Abad why she gave him
Dalangin was barely a month on the job when the company terminated covered by an apprenticeship agreement stipulating a longer period.
his employment. He was found wanting in qualities that would make Article 281 provides:
him a proper and efficient employee or, as the company put it, he was
unfit and unqualified to continue as its Immigration and Legal Probationary employment. Probationary employment
shall not exceed six (6) months from the date the
Manager. employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer
Dalangins dismissal was viewed differently by the NLRC and the CA. period. The services of an employee who has been
engaged on a probationary basis may be terminated for
The NLRC upheld the dismissal as it was, it declared, in the exercise
a just cause or when he fails to qualify as a regular
of the companys management prerogative. On the other hand, the CA employee in accordance with reasonable standards
found that the dismissal was not supported by substantial evidence and made known by the employer to the employee at the
time of his engagement. An employee who is allowed
that the company did not allow Dalangin to prove that he had the
to work after a probationary period shall be considered
qualifications to meet the companys standards for his regular a regular employee.
employment. The CA did not believe that the company could fully
assess Dalangins performance within a month. It viewed Dalangins
dismissal as arbitrary, considering that the company had very little As the Court explained in International Catholic Migration
time to determine his fitness for the job. Commission, the word probationary, as used to describe the period of
employment, implies the purpose of the term or period, but not its
We disagree. length.[34] Thus, the fact that Dalangin was separated from the service
after only about four weeks does not necessarily mean that his
The essence of a probationary period of employment fundamentally separation from the service is without basis.
lies in the purpose or objective of both the employer and the employee
during the period. While the employer observes the fitness, propriety Contrary to the CAs conclusions, we find substantial evidence
and efficiency of a probationer to ascertain whether he is qualified for indicating that the company was justified in terminating Dalangins
permanent employment, the latter seeks to prove to the former that he employment, however brief it had been.Time and again, we have
has the qualifications to meet the reasonable standards for permanent emphasized that substantial evidence is such relevant evidence as a
employment.[33] reasonable mind might accept as adequate to support a conclusion.[35]

The trial period or the length of time the probationary employee Dalangin overlooks the fact, wittingly or unwittingly, that he
remains on probation depends on the parties agreement, but it shall not offered glimpses of his own behavior and actuations during his four-
exceed six (6) months under Article 281 of the Labor Code, unless it is
week stay with the company; he betrayed his negative attitude and to be followed in handling the clients applications. No wonder the
regard for the company, his co-employees and his work. company charged him with obstinacy.

Dalangin admitted in compulsory arbitration that the proximate The incident also reveals Dalangins lack of interest in
cause for his dismissal was his refusal to attend the companys Values establishing good working relationship with his co-employees,
Formation Seminar scheduled for October 27, 2001, a Saturday. He especially the rank and file; he did not want to join them because of his
refused to attend the seminar after he learned that it had no relation to view that the seminar was not relevant to his position and duties. It
his duties, as he claimed, and that he had to leave at 2:00 p.m. because also betrays an arrogant and condescending attitude on his part
he wanted to be with his family in the province. When Abad insisted towards his co-employees, and a lack of support for the company
that he attend the seminar to encourage his co-employees to attend, he objective that company managers be examples to the rank and file
stood pat on not attending, arguing that marked differences exist employees.
between their positions and duties, and insinuating that he did not want
to join the other employees. He also questioned the scheduled 2:00 Additionally, very early in his employment, Dalangin exhibited
p.m. seminars on Saturdays as they were not supposed to be doing a negative working habits, particularly with respect to the one hour
company activity beyond 2:00 p.m. He considers 2:00 p.m. as the lunch break policy of the company and the observance of the
close of working hours on Saturdays; thus, holding them beyond 2:00 companys working hours. Thus, Abad stated that Dalangin would take
p.m. would be in violation of the law. prolonged lunch breaks or would go out of the office without leave of
the company only to call the personnel manager later to inform the
The Values Formation Seminar incident is an eye-opener on latter that he would be unable to return as he had to attend to personal
the kind of person and employee Dalangin was. His refusal to attend matters. Without expressly countering or denying Abads statement,
the seminar brings into focus and validates what was wrong with him, Dalangin dismissed the charge for the companys failure to produce his
as Abad narrated in her affidavit[36] and as reflected in the termination daily time record.[38]
of employment memorandum.[37] It highlights his lack of interest in
familiarizing himself with the companys objectives and policies. The same thing is true with Dalangins handling of Tecsons
Significantly, the seminar involved acquainting and updating the application for immigration to Canada, especially his failure to find
employees with the companys policies and objectives. Had he attended ways to appeal the denial of Tecsons application, as Abad stated in her
the seminar, Dalangin could have broadened his awareness of the affidavit. Again, without expressly denying Abads statement or
companys policies, in addition to Abads briefing him about the explaining exactly what he did with Tecsons application, Dalangin
companys policies on punctuality and attendance, and the procedures brushes aside Abads insinuation that he was not doing his job well,
with the ready argument that the company did not even bother to Section 2, Rule I, Book VI of the Labor Codes Implementing Rules
present Tecsons testimony. and Regulations provides:

In the face of Abads direct statements, as well as those of his If the termination is brought about by the completion of
a contract or phase thereof, or by failure of an employee
co-employees, it is puzzling that Dalangin chose to be silent about the to meet the standards of the employer in the case of
charges, other than saying that the company could not cite any policy probationary employment, it shall be sufficient that a
he violated. All along, he had been complaining that he was not able to written notice is served the employee within a
reasonable time from the effective date of termination.
explain his side, yet from the labor arbiters level, all the way to this
Court, he offered no satisfactory explanation of the charges. In this
light, coupled with Dalangins adamant refusal to attend the companys The company contends that it complied with the above rule when it
Values Formation Seminar and a similar program scheduled earlier, asked Dalangin, through Abads Memorandum dated October 26,
we find credence in the companys submission that Dalangin was unfit 2001,[39] to explain why he could not attend the seminar scheduled for
to continue as its Immigration and Legal Manager. As we stressed October 27, 2001. When he failed to submit his explanation, the
earlier, we are convinced that the company had seen enough from company, again through Abad, served him a notice the following day,
Dalangins actuations, behavior and deportment during a four-week October 27, 2001, terminating his employment. Dalangin takes strong
period to realize that Dalangin would be a liability rather than an asset exception to the companys submission. He insists that the company
to its operations. failed to comply with the rules as he was not afforded a reasonable
time to defend himself before he was dismissed.
We, therefore, disagree with the CA that the company could
not have fully determined Dalangins performance barely one month The records support Dalangins contention. The notice served on him
into his employment. As we said in International Catholic Migration did not give him a reasonable time, from the effective date of his
Commission, the probationary term or period denotes its purpose but separation, as required by the rules. He was dismissed on the very day
not its length. To our mind, four weeks was enough for the company to the notice was given to him, or, on October 27, 2001. Although we
assess Dalangins fitness for the job and he was found wanting. In cannot invalidate his dismissal in light of the valid cause for his
separating Dalangin from the service before the situation got separation, the companys non-compliance with the notice requirement
worse, we find the company not liable for illegal dismissal. entitles Dalangin to indemnity, in the form of nominal damages in an
amount subject to our discretion.[40] Under the circumstances, we
The procedural due process issue consider appropriate an award of nominal damages of P10,000.00 to
Dalangin.
Damages and attorneys fees

Finally, given the valid reason for Dalangins dismissal, the claim for
moral and exemplary damages, as well as attorneys fees, must
necessarily fail.

WHEREFORE, premises considered, the petition is

hereby GRANTED. The assailed decision and resolution of the Court
of Appeals are hereby SET ASIDE. The complaint
is DISMISSED for lack of merit.
ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and Among others, the "Employment Contract (On Probationary
MA. MERCEDES P. INTENGAN, petitioners, Status)" included the following common provisions:
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy l. The company hereby employs the employee as
Minister of the Ministry of Labor & Employment, and telephone representative on a probationary status
GENERAL TELEPHONE DIRECTORY, CO., respondents. for a period of eighteen (18) months, i.e. from May
1980 to October 1981, inclusive. It is understood
Jimenez, Apolo & Leynes Law Office for petitioners. that darung the probationary period of
employment, the Employee may be terminated at
The Solicitor General for respondent Deputy Minister. the pleasure of the company without the necessity
of giving notice of termination or the payment of
Abad, Legayada & Associates for private respondent. 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
GUERRERO, J.: true character, conduct and selling capabilities
only after the publication of the directory, and that
This is a petition for certiorari seeking to set aside the Order of it takes about eighteen (18) months before his
the Deputy Minister of Labor and Employment, affirming the worth as a telephone saw representative can be
Order of the Regional Director, National Capital Region, in Case fully evaluated inasmuch as the advertisement
No. NCR-STF-5-2851-81, which dismissed the petitioners' solicited by him for a particular year are published
complainant for alleged illegal dismissal and unpaid in the directory only the following year.
commission.
Corollary to this, the private respondent prescribed sales quotas
Petitioners were employed by the private respondent GENERAL to be accomplished or met by the petitioners. Failing to meet
TELEPHONE DIRECTORY COMPANY as sales their respective sales quotas, the petitioners were dismissed
representatives and charged with the duty of soliciting from the service by the private respondent. The records show
advertisements for inclusion in a telephone directory. that the private respondent terminated the services of
petitioners Iluminada Ver Buiser and Cecilia Rillo-Acuna on May
The records show that petitioners Iluminada Ver Buiser and Ma. 14, 1981 and petitioner Ma. Mercedes P. Intengan on May 18,
Mercedes P. Intengan entered into an "Employment Contract 1981 for their failure to meet their sales quotas.
(on Probationary Status)" on May 26, 1980 with private
respondent, a corporation engaged in the business of Thus, on May 27, 1981, petitioners filed with the National
publication and circulation of the directory of the Philippine Long Capital Region, Ministry of Labor and Employment, a complaint
Distance Telephone Company. Petitioner Ma. Cecilia Rillo- for illegal dismissal with claims for backwages, earned
Acuna entered into the same employment contract on June 11, commissions and other benefits, docketed as Case No. NCR-
1980 with the private respondent. STF-5-2851-81.
The Regional Director of said ministry, in an Order dated commissions they have earned and accrued during their period
September 21, 1982, dismissed the complaints of the of employment.
petitioners, except the claim for allowances which private
respondent was ordered to pay. A reconsideration of the Order Petitioners contend that under Articles 281-282 of the Labor
was sought by the petitioners in a motion filed on September 30, Code, having served the respondent company continuously for
1982. This motion, however, was treated as an appeal to the over six (6) months, they have become automatically regular
Minister of Labor. employees notwithstanding an agreement to the contrary.
Articles 281-282 read thus:
On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry
of Labor issued an Order dated January 7, 1983, affirming the Art. 282. Probationary Employment. —
Regional Director's Order dated September 21, 1982, wherein it Probationary employment shall not exceed six (6)
ruled that the petitioners have not attained permanent status months from the date the employee started
since private respondent was justified in requiring a longer working, unless it iscCovered by an apprenticeship
period of probation, and that the termination of petitioners' agreement stipulating a longer period. The
services was valid since the latter failed to meet their sales services of an employee who has been engaged
quotas. on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular
Hence, this petition for certiorari on the alleged ground that employee in accordance with reasonable
public respondent committed grave abuse of discretion standards made known by the employer to the
amounting to lack of jurisdiction. Specifically, petitioners submit employee at the time of his engagement. An
that: employee who is allowed to work after a
probationary period shall be considered a regular
1. The Hon. Regional Director and the Hon. Deputy Minister employee. (As amended by PD 850).
committed grave abuse of discretion amounting to lack of
jurisdiction in ruling that the probationary employment of Art. 281. Regular and Casual Employment. — The
petitioners herein is eighteen (18) months instead of the provisions of written agreement to the contrary
mandated six (6) months under the Labor Code, and in notwithstanding and regardless of the oral
consequently further ruling that petitioners are not entitled to agreements of the parties, an employment shall be
security of tenure while under said probation for 18 months. deemed to be regular where the employee has
been engaged to perform activities which are
2. The Hon. Regional Director and the Hon. Deputy Minister usually necessary or desirable in the usual
committed grave abuse of discretion amounting to lack of business or trade of the employer, except where
jurisdiction in ruling that petitioners were dismissed for a just the employment has been fixed for a specific
and valid cause. project or undertaking the completion or
termination of which has been determined at the
3. The Hon. Regional Director and the Hon. Deputy Minister time of the engagement of the employee or where
committed grave abuse of discretion amounting to lack of the work or services to be performed is seasonal
jurisdiction in ruling that petitioners are not entitled to the in nature and the employment is for the duration of
the season.
 An employment shall be deemed to be casual if it when the job requires certain qualifications, skills, experience or
is not covered by the preceeding paragraph. training.
Provided, That, any employee who has rendered
at least one year of service, whether such service Policy Instruction No. 11 of the Minister of Labor and
is continuous or broken, shall be considered a Employment has clarified any and all doubts on the period of
regular employee with respect to the activity in probationary employment. It states as follows:
which he is employed and his employment shall
continue while such actually exists. (As amended Probationary Employment has been the subject of
by PD 850). misunderstanding in some quarter. Some people
believe six (6) months is the probationary period in
It is petitioners' submission that probationary employment all cases. On the other hand employs who have
cannot exceed six (6) months, the only exception being already served the probationary period are
apprenticeship and learnership agreements as provided in the sometimes required to serve again on probation.
Labor Code; that the Policy Instruction of the Minister of Labor
and Employment nor any agreement of the parties could prevail Under the Labor Code, six (6) months is the
over this mandatory requirement of the law; that this six months general probationary period ' but the probationary
prescription of the Labor Code was mandated to give further period is actually the period needed to determine
efficacy to the constitutionally-guaranteed security of tenure of fitness for the job. This period, for lack of a better
workers; and that the law does not allow any discretion on the measurement is deemed to be the period needed
part of the Minister of Labor and Employment to extend the to learn the job.
probationary period for a longer period except in the aforecited
instances. Finally, petitioners maintain that since they are The purpose of this policy is to protect the worker
regular employees, they can only be removed or dismissed for at the same time enable the employer to make a
any of the just and valid causes enumerated under Article 283 meaningful employee selection. This purpose
of the Labor Code. should be kept in mind in enforcing this provision
of the Code. This issuance shall take effect
We reject petitioners' contentions. They have no basis in law. immediately.

Generally, the probationary period of employment is limited to In the case at bar, it is shown that private respondent Company
six (6) months. The exception to this general rule is When the needs at least eighteen (18) months to determine the character
parties to an employment contract may agree otherwise, such and selling capabilities of the petitioners as sales
as when the same is established by company policy or when the representatives. The Company is engaged in advertisement and
same is required by the nature of work to be performed by the publication in the Yellow Pages of the PLDT Telephone
employee. In the latter case, there is recognition of the exercise Directories. Publication of solicited ads are only made a year
of managerial prerogatives in requiring a longer period of after the sale has been made and only then win the company be
probationary employment, such as in the present case where able to evaluate the efficiency, conduct, and selling ability of its
the probationary period was set for eighteen (18) months, i.e. sales representatives, the evaluation being based on the
from May, 1980 to October, 1981 inclusive, especially where the published ads. Moreover, an eighteen month probationary
employee must learn a particular kind of work such as selling, or period is recognized by the Labor Union in the private
respondent company, which is Article V of the Collective of them constitute a just cause of their dismissal, regardless of
Bargaining Agreement, ... thus: the permanent or probationary status of their employment.
Failure to observe prescribed standards of work, or to fulfill
Probationary Period — New employees hired for reasonable work assignments due to inefficiency may constitute
regular or permanent shall undergo a probationary just cause for dismissal. Such inefficiency is understood to
or trial period of six (6) months, except in the mean failure to attain work goals or work quotas, either by
cases of telephone or sales representatives where failing to complete the same within the alloted reasonable
the probationary period shall be eighteen (I 8) period, or by producing unsatisfactory results. This management
months. prerogative of requiring standards availed of so long as they are
exercised in good faith for the advancement of the employer's
And as indicated earlier, the very contracts of employment interest.
signed and acquiesced to by the petitioners specifically indicate
that "the company hereby employs the employee as telephone Petitioners anchor their claim for commission pay on the
sales representative on a probationary status for a period of Collective Bargaining Agreement (CBA) of September 1981, in
eighteen (18) months, i.e. from May 1980 to October 1981, support of their third assignment of error. Petitioners cannot
inclusive. This stipulation is not contrary to law, morals and avail of this agreement since their services had been terminated
public policy. in May, 1981, at a time when the CBA of September, 1981 was
not yet in existence.
We, therefore, hold and rule that the probationary employment
of petitioners set to eighteen (18) months is legal and valid and In fine, there is nothing in the records to show any abuse or
that the Regional Director and the Deputy Minister of Labor and misuse of power properly vested in the respondent Deputy
Employment committed no abuse of discretion in ruling Minister of Labor and Employment. For certiorari to lie, "there
accordingly. must be capricious, arbitrary and whimsical exercise of power,
the very antithesis of the judicial prerogative inaccordance with
On the second assignment of error that public respondent centuries of both civil and common law traditions." (Panaligan
committed grave abuse of discretion in ruling that petitioners vs. Adolfo, 67 SCRA 176, 180). The "abuse of discretion must
were dismissed for a just and valid cause, this is not the first be grave and patent, and it must be shown that the discretion
time that this issue has been raised before this Court. Earlier, in was exercised arbitrarily or despotically." (Palma and Ignacio vs.
the case of "Arthur Golez vs. The National Labor Relations Q. & S., Inc., et al., 17 SCRA 97, 100; Philippine Virginia
Commission and General Telephone Directory Co. "G.R. No. L- Tobacco Administration vs. Lucero, 125 SCRA 337, 343).
64459, July 25, 1983, the petition for certiorari which raised the
same issue against the herein private respondent was WHEREFORE, the petition is DISMISSED for lack of merit.
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
MARIWASA MANUFACTURING, INC., and ANGEL T. Dazo, a complaint for illegal dismissal and violation of
DAZO, petitioners, Presidential Decrees Nos. 928 and 1389.2 His complaint was
vs. dismissed after hearing by Director Francisco L. Estrella,
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Director of the Ministry's National Capital Region, who ruled that
Minister of Ministry of Labor and Employment judgment, the termination of Dequila's employment was in the
and JOAQUIN A. DEQUILA, respondents. circumstances justified and rejected his money claims for
insufficiency of evidence. 3 On appeal to the Office of the
Cruz, Agabin, Atienza & Alday for petitioners. Minister, however, said disposition was reversed. Respondent
Deputy Minister Vicente Leogardo, Jr. held that Dequila was
The Solicitor General of public respondent. already a regular employee at the time of his dismissal,
therefore, could not have been lawfully dismissed for failure to
Norberto M. Alensuela, Sr. for private respondent. meet company standards as a probationary worker. He was
ordered reinstated to his former position without loss of seniority
and with full back wages from the date of his dismissal until
actually reinstated. 4 This last order appears later to have been
NARVASA, J.: amended so as to direct payment of Dequila's back wages from
the date of his dismissal to December 20, 1982 only. 5
There is no dispute about the facts in this case, and the only
question for the Court is whether or not, Article 282 of the Labor Mariwasa and Dazo, now petitioners, thereafter be sought this
Code notwithstanding, probationary employment may validly be Court to review Hon. Leogardo's decision on certiorari and
extended beyond the prescribed six-month period by agreement prohibition, urging its reversal for having been rendered with
of the employer and the employee. grave abuse of discretion and/or without or in excess of
jurisdiction. 6
Private respondent Joaquin A. Dequila (or Dequilla) was hired
on probation by petitioner Mariwasa Manufacturing, Inc. The petition, as well as the parties' comments subsequently
(hereafter, Mariwasa only) as a general utility worker on January submitted all underscore the fact that the threshold issue here
10, 1979. Upon the expiration of the probationary period of six is, as first above stated, the legal one of whether employer and
months, Dequila was informed by his employer that his work employee may by agreement extend the probationary period of
had proved unsatisfactory and had failed to meet the required employment beyond the six months prescribed in Art. 282 of the
standards. To give him a chance to improve his performance Labor Code, which provides that:
and qualify for regular employment, instead of dispensing with
his service then and there, with his written consent Mariwasa Art. 282. Probationary Employment. —
extended his probation period for another three months from Probationary employment shall not exceed six (6)
July 10 to October 9, 1979. His performance, however, did not months from the date the employee started
improve and on that account Mariwasa terminated his working, unless it is covered by an apprenticeship
employment at the end of the extended period. 1 agreement stipulating a longer period. The
services of an employee who has been engaged
Dequila thereupon filed with the Ministry of Labor against on a probationary basis may be terminated for a
Mariwasa and its Vice-President for Administration, Angel T. just cause or when he fails to qualify as a regular
 employee in accordance with reasonable We reject petitioners' contentions. They have no
standards made known by the employer to the basis in law.
employee at the time of his engagement. An
employee who is allowed to work after Generally, the probationary period of employment
probationary period shall be considered a regular is limited to six (6) months. The exception to this
employee.' general rule is when the parties to an employment
contract may agree otherwise, such as when the
The Court agrees with the Solicitor General, who takes the same is established by company policy or when
same position as the petitioners, that such an extension may the same is required by the nature of work to be
lawfully be covenanted, notwithstanding the seemingly performed by the employee. In the latter case,
restrictive language of the cited provision. Buiser vs. Leogardo, there is recognition of the exercise of managerial
Jr . 7 recognized agreements stipulating longer probationary prerogatives in requiring a longer period of
periods as constituting lawful exceptions to the statutory probationary employment, such as in the present
prescription limiting such periods to six months, when it upheld case where the probationary period was set for
as valid an employment contract between an employer and two eighteen (18) months, i.e. from May, 1980 to
of its employees that provided for an eigthteen-month probation October, 1981 inclusive, especially where the
period. This Court there held: employee must learn a particular kind of work
such as selling, or when the job requires certain
'It is petitioners' submission that probationary qualifications, skills experience or training.
employment cannot exceed six (6) months, the
only exception being apprenticeship and xxx
learnership agreements as provided in the Labor
Code; that the Policy Instruction of the Minister of We therefore, hold and rule that the probationary
Labor and Employment nor any agreement of the employment of petitioners set to eighteen (18)
parties could prevail over this mandatory months is legal and valid and that the Regional
requirement of the law; that this six months Director and the Deputy Minister of Labor and
prescription of the Labor Code was mandated to Employment committed no abuse of discretion in
give further efficacy to the constitutionally- ruling accordingly.
guaranteed security of tenure of workers; and that
the law does not allow any discretion on the part of The single difference between Buiser and the present case: that
the Minister of Labor and Employment to extend in the former involved an eighteen-month probationary period
the probationary period for a longer period except stipulated in the original contract of employment, whereas the
in the aforecited instances. Finally, petitioners latter refers to an extension agreed upon at or prior to the
maintain that since they are regular employees, expiration of the statutory six-month period, is hardly such as to
they can only be removed or dismissed for any of warrant or even suggest a different ruling here. In both cases
the just and valid causes enumerated under Article the parties' agreements in fact resulted in extensions of the
283. of the Labor Code. period prescribed by law. That in this case the inability of the
probationer to make the grade became apparent only at or
about the end of the six-month period, hence an extension could
not have been pre-arranged as was done in Buiser assumes no
adverse significance, given the lack, as pointed out by the
Solicitor General, of any indication that the extension to which
Dequila gave his agreement was a mere stratagem of
petitioners to avoid the legal consequences of a probationary
period satisfactorily completed.

For aught that appears of record, the extension of Dequila's

probation was ex gratia, an act of liberality on the part of his
employer affording him a second chance to make good after
having initially failed to prove his worth as an employee. Such
an act cannot now unjustly be turned against said employer's
account to compel it to keep on its payroll one who could not
perform according to its work standards. The law, surely, was
never meant to produce such an inequitable result.

By voluntarily agreeing to an extension of the probationary

period, Dequila in effect waived any benefit attaching to the
completion of said period if he still failed to make the grade
during the period of extension. The Court finds nothing in the
law which by any fair interpretation prohibits such a waiver. And
no public policy protecting the employee and the security of his
tenure is served by prescribing voluntary agreements which, by
reasonably extending the period of probation, actually improve
and further a probationary employee's prospects of
demonstrating his fitness for regular employment.

Having reached the foregoing conclusions, the Court finds it

unnecessary to consider and pass upon the additional issue
raised in the Supplemental Petition 8 that the back wages
adjudged in favor of private respondent Dequila were
erroneously computed.

WHEREFORE, the petition is granted. The orders of the public

respondent complained of are reversed and set aside. Private
respondent's complaint against petitioners for illegal dismissal
and violation of Presidential Decrees 928 and 1389 is dismissed
for lack of merit, without pronouncement as to costs.
HOLIDAY INN MANILA and/or HUBERT LINER and BABY her superiors; or (c) to perform her duties according to hotel
DISQUITADO, petitioners, standards.
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second On November 8, 1991, four days before the expiration of the
Division) and ELENA HONASAN, respondents. stipulated deadline, Holiday Inn notified her of her dismissal, on
the ground that her performance had not come up to the
Inocentes, De Leon, Leogardo, Atienza, Manaye & Azucena standards of the Hotel.4
Law Office for petitioners.
Through counsel, Honasan filed a complaint for illegal dismissal,
Florante M. Yambot for private respondent. claiming that she was already a regular employee at the time of
her separation and so was entitled to full security of tenure.5 The
complaint was dismissed on April 22, 1992 by the Labor
Arbiter, 6 who held that her separation was justified under Article
281 of the Labor Code providing as follows:
CRUZ, J.:
Probationary employment shall not exceed six (6)
The employer has absolute discretion in hiring his employees in months from the date the employee started
accordance with his standards of competence and probity. This working, unless it is covered by an apprenticeship
is his prerogative. Once hired, however, the employees are agreement stipulating a longer period. The
entitled to the protection of the law even during the probation services of an employee who has been engaged
period and more so after they have become members of the on a probationary basis may be terminated for a
regular force. The employer does not have the same freedom in just cause or when he fails to qualify as a regular
the hiring of his employees as in their dismissal. employee in accordance with reasonable
standards made known by the employer to the
Elena Honasan applied for employment with the Holiday Inn and employee at the time of his engagement. An
was on April 15, 1991, accepted for "on-the-job training" as a employee who is allowed to work after a
telephone operator for a period of three weeks.1 For her probationary period shall be considered a regular
services, she received food and transportation allowance.2 On employee.
May 13, 1992, after completing her training, she was employed
on a "probationary basis" for a period of six months ending On appeal, this decision was reversed by the NLRC, which held
November 12, that Honasan had become a regular employee and so could not
1991.3 be dismissed as a probationer.7 In its own decision dated
November 27, 1992, the NLRC ordered the petitioners to
Her employment contract stipulated that the Hotel could reinstate Honasan "to her former position without loss of
terminate her probationary employment at any time prior to the seniority rights and other privileges with backwages without
expiration of the six-month period in the event of her failure (a) deduction and qualification." Reconsideration was denied in a
to learn or progress in her job; (b) to faithfully observe and resolution dated January 26, 1993.8
comply with the hotel rules and the instructions and orders of
The petitioners now fault the NLRC for having entertained she was not. On the contrary, her services were continued,
Honasan's appeal although it was filed out of time and for presumably because they were acceptable, although she was
holding that Honasan was already a regular employee at the formally placed this time on probation.
time of her dismissal, which was made 4 days days before the
expiration of the probation period. Even if it be supposed that the probation did not end with the
three-week period of on-the-job training, there is still no reason
The petition has no merit. why that period should not be included in the stipulated six-
month period of probation. Honasan was accepted for on-the-
On the timeliness of the appeal, it is well-settled that all notices job training on April 15, 1991. Assuming that her probation could
which a party is entitled to receive must be coursed through his be extended beyond that date, it nevertheless could continue
counsel of record. Consequently, the running of the only up to October 15, 1991, after the end of six months from
reglementary period is reckoned from the date of receipt of the the earlier date. Under this more lenient approach, she had
judgment by the counsel of the appellant.9 Notice to the become a regular employee of Holiday Inn and acquired full
appellant himself is not sufficient notice. 10 Honasan's counsel security of tenure as of October 15, 1991.
received the decision of the Labor Arbiter on May 18,
1992. 11Before that, however, the appeal had already been filed The consequence is that she could no longer be summarily
by Honasan herself, on May 8, 1992. 12 The petitioners claim separated on the ground invoked by the petitioners. As a regular
that she filed it on the thirteenth but this is irrelevant. Even if the employee, she had acquired the protection of Article 279 of the
latter date was accepted, the appeal was nevertheless still filed Labor Code stating as follows:
on time, in fact even before the start of the reglementary period.
Art. 279. Security of Tenure — In cases of regular
On the issue of illegal dismissal, we find that Honasan was employment, the employer shall not terminate the
placed by the petitioner on probation twice, first during her on- services of an employee except for a just cause or
the-job training for three weeks, and next during another period when authorized by this Title. An employee who is
of six months, ostensibly in accordance with Article 281. Her unjustly dismissed from work shall be entitled to
probation clearly exceeded the period of six months prescribed reinstatement without loss of seniority rights and
by this article. other privileges and to his full backwages,
inclusive of allowances, and to his other benefits
Probation is the period during which the employer may or their monetary equivalent computed from the
determine if the employee is qualified for possible inclusion in time his compensation was withheld from him up
the regular force. In the case at bar, the period was for three to the time of his actual reinstatement.
weeks, during Honasan's on-the-job training. When her services
were continued after this training, the petitioners in effect The grounds for the removal of a regular employee are
recognized that she had passed probation and was qualified to enumerated in Articles 282, 283 and 284 of the Labor Code.
be a regular employee. The procedure for such removal is prescribed in Rule XIV, Book
V of the Omnibus Rules Implementing the Labor Code. These
Honasan was certainly under observation during her three-week rules were not observed in the case at bar as Honasan was
on-the-job training. If her services proved unsatisfactory then, simply told that her services were being terminated because
she could have been dropped as early as during that period. But they were found to be unsatisfactory. No administrative
investigation of any kind was undertaken to justify this ground.
She was not even accorded prior notice, let alone a chance to
be heard.

We find in the Hotel's system of double probation a transparent

scheme to circumvent the plain mandate of the law and make it
easier for it to dismiss its employees even after they shall have
already passed probation. The petitioners had ample time to
summarily terminate Honasan's services during her period of
probation if they were deemed unsatisfactory. Not having done
so, they may dismiss her now only upon proof of any of the legal
grounds for the separation of regular employees, to be
established according to the prescribed procedure.

The policy of the Constitution is to give the utmost protection to

the working class when subjected to such maneuvers as the
one attempted by the petitioners. This Court is fully committed
to that policy and has always been quick to rise in defense of
the rights of labor, as in this case.

WHEREFORE, the petition is DISMISSED, with costs against

petitioners. It is so ordered.
SAMEER OVERSEAS PLACEMENT AGENCY, INC., petitioner, Immediately upon her return, she confronted petitioner agency
vs. NATIONAL LABOR RELATIONS COMMISSION, and Rose Mahinay of said agency told her that she was just unlucky
Third Division, Q.C. and PRISCILA and that she would be refunded the amount of P50,000.00.
ENDOZO, respondents.
On June 20, 1995, private respondent filed with the Philippine
Overseas Employment Administration a complaint against petitioner
DECISION
for illegal dismissal, payment of salary corresponding to the unexpired
PARDO, J.: portion of her contract, illegal exaction, violation of the Labor Code,
falsification of contract of employment, attorneys fees and costs.
The case before the Court is a special civil action Meantime, on June 7, 1995, Congress enacted Republic Act No.
for certiorari with application for a temporary restraining order 8042, vesting jurisdiction over claims of overseas workers with the
seeking to set aside the resolution of the National Labor Relations National Labor Relations Commission (hereafter
Commission affirming in toto the decision of Labor Arbiter Andres C. NLRC).Consequently, respondents claim was transferred to the
Zaballa finding the termination of employment of respondent Priscila National Labor Relations Commission, Arbitration Branch, in San
Endozo as domestic helper in Taiwan as unwarranted and ordering Pablo City.
petitioner to pay her salary for the unexpired portion of her contract of
employment of eleven (11) months and (19) nineteen days amounting After position papers were filed, on May 28, 1997, Labor Arbiter
to NT$151,996.60, plus ten percent (10%) thereof as attorney's fees. Andres C. Zavalla rendered a decision finding that private respondent
was illegally dismissed and ordering petitioner to pay her salary
The facts are as follows: corresponding to the unexpired portion of her contract of employment
In June 1993, respondent Priscila Endozo applied to petitioner of eleven (11) months and nineteen (19) days equivalent to
Sameer Overseas Employment Agency, a local recruitment placement NT$151,996.80, plus ten percent (10%) of the award equivalent to
agency, for overseas employment in Taiwan as a domestic helper. As NT$15,199.68 as attorney's fees.[1]
she was initially found to have a "minimal spot" she was advised to In time, petitioner appealed the decision to the National Labor
rest for at least two (2) months. Relations Commission, Third Division, Quezon City.
On April 6, 1994, petitioner told respondent Endozo that she On November 28, 1997, the NLRC rendered decision affirming in
would be finally deployed to Taiwan and required her to pay the toto the decision of the Labor Arbiter.[2]
amount of P30,000.00, which she did, but petitioner did not issue any
receipt. On December 23, 1997, petitioner filed with the NLRC a motion
for reconsideration;[3] however, on January 28, 1998, the NLRC denied
On April 8, 1994, respondent Endozo left for Taiwan. She was to the motion.[4]
be employed as a housemaid of Sung Kui Mei with a monthly salary
of NT$13,380.00 for a period of one year. Hence, this recourse.[5]
However, she stayed in Taiwan only for eleven (11) days as her On May 14, 1998, we required respondents to comment on the
employer terminated her services, and sent her home on April 19, 1994 petition within ten (10) days from notice.[6] On July 13, 1998, the
for alleged incompetence. Solicitor General filed his comment, submitting the proposition that
private respondent had been illegally dismissed by her foreign
employer entitling her to payment of her salaries corresponding to the
unexpired portion of her contract.[7] However, private respondent must be no unlawful discrimination in the dismissal.[12] In termination
failed to submit her comment, and on February 1, 1999, we required cases, the burden of proving just or valid cause for dismissing an
her counsel to show cause why she should not be disciplinarily dealt employee rests on the employer.[13] In this case, petitioner was not able
with or held in contempt for such failure.[8] to present convincing proof establishing respondent Endozos alleged
incompetence. Due process dictates that an employee be apprised
We now resolve to give due course to the petition. We consider
beforehand of the conditions of his employment and of the terms of
private respondent to have waived the filing of her comment and set
advancement therein.[14] Precisely, implicit in Article 281 of the Code
aside the resolution of February 1, 1999.
is the requirement that reasonable standards be previously made
The issue presented is whether the employer in Taiwan could known by the employer to the probationary employee at the time of his
lawfully terminate private respondent's employment as domestic engagement.[15] Thus, the termination of respondent Endozos
helper for incompetence during the probationary period of her employment was not justified[16] and hence, illegal.[17] Consequently,
employment. private respondent is entitled to payment of her salaries corresponding
to the unexpired portion of her contract of employment for a period of
Petitioner recruited private respondent for employment in Taiwan, one year.[18]
and she executed a contract of employment with her Taiwanese
employer under which she was to serve as domestic helper for a period WHEREFORE, the Court hereby DISMISSES the petition and
of one year, with six months probationary period. After only eleven AFFIRMS the resolution of the National Labor Relations Commission
days of work, the Taiwanese employer terminated private respondent's adopted on November 28, 1997, in NLRC NCR CA No. 013114-97.
employment for alleged incompetence.
It is an elementary rule in the law on labor relations that even a
probationary employee is entitled to security of tenure.[9] A
probationary employee can not be terminated, except for cause.[10]
In this case, the employment contract was for a definite period of
one (1) year, with six (6) months probationary period. After only
eleven days of work, the employer dismissed private respondent
without just cause.
Under Article 281 of the Labor Code, a probationary employee
may be terminated on two grounds: (a) for just cause or (b) 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.[11] Under the contract of employment, the employer
may terminate the services of private respondent during the
probationary period for "being found losing ability to work." However,
the power of the employer to terminate a probationary employment
contract is subject to limitations. First, it must be exercised in
accordance with the specific requirements of the contract. Secondly,
the dissatisfaction of the employer must be real and in good faith, not
feigned so as to circumvent the contract or the law; and thirdly, there
FLORENCIO M. DE LA CRUZ, JR., petitioner, vs. NATIONAL Ernesto U. Dacay, Jr., but was told that the decision of the
LABOR RELATIONS COMMISSION (4th Division) management was final. His request to be furnished a 30-day
SHEMBERG MARKETING CORPORATION and written notice was also denied by the management. Hence,
ERNESTO U. DACAY, JR., respondents. petitioner filed a complaint for illegal dismissal, non-payment of
salary, backwages, 13th month pay and damages against
DECISION Shemberg, Ernesto Dacay, Jr. and Lilybeth Llanto.
CORONA, J.: Respondents answered that petitioners dismissal was
premised on the following: (1) his poor performance as
Before us is a petition for review on certiorari seeking to set evidenced by the steady and substantial drop in company sales
aside the decision[1] of the Court of Appeals dated July 11, since his assumption as senior sales manager; (2) the
2000, affirming with modification the two resolutions of the dissatisfaction of his subordinates over his management style
National Labor Relations Commission (NLRC) dated July 9, and dealings with the companys distributors which resulted in
1999[2] and November 19, 1999,[3] which awarded to petitioner the low morale of Shembergs sales force, as evidenced by the
Florencio de la Cruz, Jr., the amount of P23,900 representing joint affidavit[4] of two of his subordinates, Ruel O. Salgado and
his unpaid wages and indemnity. Joel D. Sol; (3) his unauthorized use of company cellular phone
for overseas personal calls[5] and (4) the unauthorized
The facts follow. reimbursement of the plane tickets of his wife and child.[6] In
On May 27, 1996, petitioner Florencio M. de la Cruz, Jr. was short, petitioner was terminated for his failure to meet the
hired by private respondent Shemberg Marketing Corporation required company standards and for loss of trust and
(Shemberg) as senior sales manager with a monthly salary confidence.
of P40,500. Shemberg was engaged in the business of In a decision dated August 25, 1997, labor arbiter Ernesto
manufacturing, trading, distributing and importing various F. Carreon ruled that petitioner Florencio de la Cruz was illegally
consumer products. The position of senior sales manager was dismissed and granted his claim for separation pay, backwages
then newly created in line with Shembergs objective of product and unpaid wages:
positioning in the consumer market. Its duties included, among
others, the supervision and control of the sales force of the
WHEREFORE, premises considered, judgment is
company.The senior sales manager was also vested with some
discretion to decide on matters within the scope of his functions, hereby rendered ordering the respondent Shemberg
including the appointment of district sales representatives and Marketing Corp. to pay the complainant Florencio
the reshuffling of salesmen to achieve sales targets. de la Cruz the following:
However, on September 14, 1996, Shembergs human
resource department manager, Ms. Lilybeth Y. Llanto, 1. Separation pay P40,500.00
summoned petitioner and informed him of the managements
decision to terminate his services. Petitioner asked Llanto for 2. Backwages 379,350.00
the reason but the latter merely informed him that it had
something to do with the drop in the companys sales. Petitioner 3. Unpaid wages 18,900.00
then requested a meeting with Shembergs vice president,
TOTAL P438,750.00 Ordering respondent Shemberg Marketing
Corporation to pay complainant Florencio dela
The other claims and the cases against Cruz, Jr., the amount of Twenty Three Thousand
respondents Ernesto Dacay, Jr. and Lilybeth Llanto Nine Hundred Pesos (P23,900.00), broken down as
are dismissed for lack of merit. follows:

So ordered. Unpaid Wages P18,900.00

Indemnity 5,000.00
On appeal by respondents, the NLRC dismissed the appeal
in a decision dated May 13, 1998.[7]
TOTAL P23,900.00
Respondents moved for reconsideration, presenting
additional evidence to support its claim: (1) an affidavit executed So ordered. [14]
on July 11, 1998[8] by Ms. Lily Joy M. Sembrano,
Shembergs vicepresident for operations; (2) petitioners letter of Petitioner filed a motion for reconsideration of the above
appointment dated July 8, 1996 as senior sales manager; [9] (3) resolution but the same was denied by the NLRC on November
petitioners job description;[10] (4) memorandum dated July 30, 19, 1999.[15]
1996 addressed to petitioner, sternly warning him about the
huge drop in company sales[11] and (5) an undated Petitioner elevated the case to the Court of Appeals on a
memorandum requiring petitioner to explain why he was petition for certiorari but it was dismissed for lack of merit.[16] His
claiming reimbursement for his wifes and childs plane tickets.[12] subsequent motion for reconsideration was likewise denied
on September 8, 2000.[17]
Petitioner opposed the motion for reconsideration and
questioned the authenticity of the additional evidence submitted Hence, this petition.
by the respondents.[13]
Petitioner raises the following assignments of error:[18]
On July 9, 1999, the NLRC partially granted the motion for
I
reconsideration and modified its previous resolution:
THE COURT OF APPEALS COMMITTED REVERSIBLE
WHEREFORE, premises considered, the Motion for
ERROR WHEN IT REFUSED TO AWARD BACKWAGES
Reconsideration filed by the respondents-
NOTWITHSTANDING ITS FACTUAL FINDING THAT
appellants is PARTIALLY GRANTED. The decision of
RESPONDENTS FAILED TO COMPLY WITH THE
this Commission promulgated on 13 May 1998 is
TWO-NOTICE REQUIREMENT, CONTRARY TO THE
ABANDONED. The decision of Labor Arbiter Ernesto
NEW DOCTRINE IN SERRANO VS. NLRC AND
F. Carreon dated 25 August 1997 is MODIFIED and a
ISETANN DEPT. STORE, G.R. NO. 117040, 27
new one is entered, to wit:
JANUARY 2000 WHEREBY THE HONORABLE
SUPREME COURT EN BANC RULED THAT AN on appeal and not in the original position papers submitted to
EMPLOYEE WHO WAS NOT GIVEN NOTICE MUST the labor arbiter.
BE PAID BACKWAGES FROM HIS TERMINATION Petitioner was holding a managerial position in which he
UNTIL IT IS FINALLY DETERMINED THAT IT WAS was tasked to perform key functions in accordance with an
exacting work ethic. His position required the full trust and
FOR A JUST CAUSE.
confidence of his employer. While petitioner could exercise
some discretion, this obviously did not cover acts for his own
II personal benefit. As found by the court a quo, he committed a
transgression that betrayed the trust and confidence of his
THE COURT OF APPEALS COMMITTED GRAVE employer ― reimbursing his familys personal travel expenses
ABUSE OF DISCRETION WHEN IT RULED THAT THE out of company funds. Petitioner failed to present any
SUBMISSION BY PETITIONER OF PLANE TICKETS persuasive evidence or argument to prove otherwise. His act
amounted to fraud or deceit which led to the loss of trust and
FOR REFUND CONSTITUTED UNAUTHORIZED USE
confidence of his employer.
OF COMPANY FUNDS, DESPITE ABSENCE OF
EVIDENCE ON A SPECIFIC PROHIBITION We reiterate the well-established rule that findings of fact of
the Court of Appeals are conclusive on the parties and are not
REGARDING SUCH REQUEST, AND CONSIDERING generally reviewable by this Court when supported by
THAT THE SAME WAS RESPONDENTS substantial evidence.[19] The rationale is that this Court, not
AFTERTHOUGHT FOR NOT BEING RAISED IN THE being a trier of facts, relies in good part on the assessment and
ORIGINAL POSITION PAPER BEFORE THE LABOR evaluation of evidence by the lower courts. We thus subscribe
to the following findings of the Court of Appeals in affirming the
ARBITER.
NLRC decision, that petitioners dismissal was for a just cause:
III
With respect to the unauthorized use of company
THE COURT OF APPEALS COMMITTED GRAVE funds, there appears to be substantial evidence to
ABUSE OF DISCRETION WHEN IT FAILED TO show that petitioner indeed is guilty of the same
AWARD DAMAGES AS WELL AS ATTORNEYS FEES. but only with respect to the reimbursement of
plane ticket fares.
The petition is without merit.
Although the cellular phone bill statement with the
Petitioner insists that the Court of Appeals committed grave
abuse of discretion in ruling that the submission of his familys alleged unauthorized overseas calls were reflected
plane tickets for reimbursement was tantamount to fraud and was submitted in evidence, it does not prove that
deceit which justified the employers loss of trust and confidence petitioner was the one who made those
in him. He contends that private respondents attempt to impute calls. Petitioner claimed that the said mobile unit
fraud and deceit to him was a mere afterthought, considering
that it was only raised by private respondents for the first time was not at all times used by him. This was not
controverted by respondents. Furthermore, there corporation could have gotten hold of the
was no evidence presented to prove that the same. Petitioner opted not to explain why these
recipient of the overseas call was not at all plane tickets were in the possession of respondent
connected with the company as the calls could corporation. His denials without accompanying
actually be official business calls. Mere proof coupled with his silence on this matter
presentation of a cellular phone bill statement cannot but be taken against him.
would not suffice to charge petitioner with
unauthorized use of company phone especially in We reject petitioners contention that the matter of
reimbursement of the plane tickets of his family was a mere
the light of the memorandum sent by the cellular afterthought, not having been raised by respondent in the
phone company warning its subscribers of illegal original position papers before the labor arbiter. The NLRC
activities perpetuated by unauthorized individuals acted correctly since technical rules of evidence are not binding
posing as their employees. in labor cases. Article 221 of the Labor Code provides:

But this cannot be true insofar as the prosecution In any proceeding before the Commission or any of
of the plane tickets of petitioners family is the Labor Arbiters, the rules of evidence prevailing
concerned. Respondents insist that petitioner in courts of law or equity shall not be controlling
submitted these tickets and reimbursed the cost of and it is the spirit and intention of this Code that
the same from the respondent corporation without the Commission and its members and the Labor
authority or permission from management. On the Arbiter shall use every and all reasonable means to
other hand, petitioner merely denied having ascertain the facts in each case speedily and
reimbursed the costs of the tickets or of using objectively and without regard to technicalities of
company funds to buy them. We find that law or procedure, all in the interest of due process.
petitioners denial cannot prevail over the actual xxx
presentation of the plane ticket in the name of
Thus, in Bristol Laboratories Employees Association vs.
petitioner and his family and terminal fee stubs NLRC,[20] this Court upheld the NLRC when it considered
bearing three (3) different serial numbers but additional documentary evidence submitted by the parties on
similarly dated. The possession by respondent appeal to prove breach of trust and loss of confidence as basis
corporation of the plane tickets of petitioners wife for the dismissal of the petitioner therein. Likewise, in Lopez vs.
NLRC,[21] we held that, under Article 221 of the Labor Code, the
and child clearly shows that the same were NLRC could validly admit certain documents proving the re-
submitted to management for reimbursement along employment of the private respondent although they were
with the other transportation expenses of presented only on appeal. Technicalities should not be
petitioner. Otherwise, there is no way respondent
permitted to stand in the way of equitably and completely Date : July 8, 1996
resolving the rights and obligations of the parties.[22]
Petitioner was hired by respondent Shemberg Marketing We are happy to inform you that you have been
Corporation on May 27, 1996 and was terminated hired as Senior Sales Manager VISMIN
on September 14, 1996. Article 281 of the Labor Code provides: effective May 27, 1996. As a matter of company
policy your performance shall be periodically
Probationary employment Probationary employment
evaluated in accordance with performance
shall not exceed six (6) months from the date the
standards set by the company.
employee started working, unless it is covered by
an apprenticeship agreement stipulating a longer You will be reporting directly to the President and
period. The services of an employee who has been shall maintain coordinating relationship with the
engaged on a probationary basis may be terminated AVPs for TRADING, F & B Division, CUPCO &
for a just cause or when he fails to qualify as a SHALDAN and their respective Plant Managers.
regular employee in accordance with reasonable
standards, made known by the employer to the LILIBETH Y. LLANTO
employee at the time of his engagement. An HRD Manager
employee who is allowed to work after a
probationary period shall be considered a regular Noted by:
employee.
ERNESTO U. DACAY, JR.
Petitioner vigorously contends that he was not a President
probationary employee since Shemberg failed to disclose to him
the reasonable standards for qualifying as a regular employee. Attached to his appointment paper was the job description
This Court notes, however, the evidence on record clearly of sales manager which read:
showing that petitioner was well informed of the standards to be
met before he could qualify as a regular employee. This was JOB DESCRIPTION
stated in his appointment paper: Senior Sales Manager
Visayas Mindanao Areas
To : Florencio dela Cruz Shemberg Marketing Corporation

From : HRD General Functions:

Re : Appointment
Responsible in (sic) organizing, planning, qualifications to meet the reasonable standards for permanent
establishing, and implementing sales policies and employment. The length of time is immaterial in determining the
correlative rights of both the employer and the employee in
procedures for the purpose of attaining sales dealing with each other during said period. [23]
targets.
There is no dispute that petitioner, as a probationary
employee, enjoyed only temporary employment status. In
Specific Functions:
general terms, this meant that he was terminable anytime,
permanent employment not having been attained in the
1. Responsible in (sic) the proper marketing, meantime. The employer could well decide he no longer needed
sales and distribution of products in the the probationary employees services or his performance fell
assigned area. short of expectations, etc. As long as the termination was made
before the expiration of the six-month probationary period, the
employer was well within his rights to sever the employer-
2. Handles the monitoring of sales and sees
employee relationship. A contrary interpretation would defect
to it that the monthly sales targets are the clear meaning of the term probationary. In this case,
attained. respondent Shemberg had good reason to terminate petitioners
employment and that was his dishonesty.
3. Submits monthly report of sales and WHEREFORE, the instant petition is
collection showing comparison against hereby DISMISSED for lack of merit and the decision dated July
the budgeted sales targets for 11, 2000 of the Court of Appeals is hereby AFFIRMED.
evaluation purposes.

4. Does such other functions as may be

directed by the President from time to
time.

5. Performance subject to evaluation and

trial period for six (6) months or
more. (Italics supplied)

A probationary employee is one who, for a given period of

time, is under observation and evaluation to determine whether
or not he is qualified for permanent employment. During the
probationary period, the employer is given the opportunity to
observe the skill, competence and attitude of the employee
while the latter seeks to prove to the employer that he has the
CENTRAL NEGROS ELECTRIC COOPERATIVE, INC. start July 1, 1987 to
(CENECO), petitioner, March 31, 1988.
vs.
NATIONAL LABOR RELATIONS COMMISSION, FOURTH 2. Differentials of :
DIVISION, CEBU CITY, JOSE HICETA, REGINA ILON,
GILDERBRANDO GISON, EPIFANIO MUYCO, EMILIANO a.
OQUINA, ET AL., respondents. P350.00,
for the
Allan L. Zamora for petitioner. period
covering
Edmundo G. Manlapao for private respondents. April 1,
1987 to
June 30,
1987 plus
and/or
PUNO, J.: the
additional
Private respondents are employees of petitioner, an electric of
cooperative company. They have worked for petitioner from a
high of four and one half b.
(4 1/2) years to a low of ten (10) months. Their work forms an P150.00
integral part of the business of petitioner. Despite the length of for the
their service, they were extended permanent appointments only period
on July 13, 1988, retroactive to June 16, 1988. covering
July 1,
Petitioner has a collective bargaining agreement with its 1987 to
employees' union for a duration of three (3) years from April 1, March 31,
1987 up to March 31, 1990. Article VII of the agreement 1988
provides for the following wage increase: shall be
paid in
Sec. 1. — The Electric Cooperative hereby agrees three
to grant all employees covered by this agreement successiv
across the board increase on the basic monthly e monthly
salary of P350.00 for the first year, effective April installme
1, 1987, in the following manner: nts
starting
1. Partial payment of April
P200.00 monthly to 1988.
The collective bargaining agreement covers the following As called for by the parties' collective bargaining agreement, the
employees: demand was treated as a grievance. The grievance remained
unsettled until their collective bargaining agreement expired on
ARTICLE I COVERAGE April 1, 1990. Private respondents then filed their complaint with
the Labor Arbiter on May 18, 1990. Labor Arbiter Cesar D.
All the permanent employees and workers of the Sideno of the Regional Arbitration Branch No. VI, Bacolod City
Central Negros Electric Cooperative, Inc. dismissed the complaint for lack of merit on March 12, 1991. His
(CENECO), hereinafter referred to as the Electric Decision was, however, reversed by the NLRC, 4th Division,
Cooperative, as covered, except the following: Cebu City, on September 18, 1991. 1 It held that: (1) private
respondents became regular employees six (6) months after
1. Those performing hiring, and hence, entitled to the across-the-board wage
managerial functions, increase for the first year of the collective bargaining agreement
confidential employees starting from April 1, 1987 to March 1988; and (2) private
regardless of status respondents' complaint has not prescribed.
and those whom the
Electric Cooperative In this petition for certiorari, petitioner raises the following
and the Union may issues:
individually agree upon
to be excluded. 1. WHETHER OR NOT
THE PRIVATE
2. Temporary and RESPONDENTS
probationary WERE COVERED BY
employees or those THE WAGE
whose period of INCREASES OF
employment is fixed P350.00 A MONTH
and/or who are DURING THE FIRST
employed on a trial YEAR OF THE
basis for a definite COLLECTIVE
period; and those who BARGAINING
are under special AGREEMENT;
contract.
2. WHETHER OR NOT
Though they were made permanent in 1988, private ARTICLES 280 AND
respondents demanded payment of the three hundred fifty 281 OF THE LABOR
pesos (P350.00) wage increase for the year 1987 as provided CODE WILL APPLY;
by the above collective bargaining agreement. Petitioner denied
their demand. 3. WHETHER OR NOT
THE CAUSE OF
ACTION OF
 THE PRIVATE the work or services to be performed is seasonal
RESPONDENTS HAS in nature and the employment is for the duration of
ALREADY the season.
PRESCRIBED;
An employment shall be deemed to be casual if it
4. WHETHER OR NOT is not covered by the preceding
THE PRIVATE paragraph: Provided, that, any employee who has
RESPONDENTS rendered at least one year of service, whether
FAILED TO EXHAUST such service is continuous or broken, shall be
THE REQUIRED considered a regular employee with respect to the
REMEDIES activity in which he is employed and his
AVAILABLE TO THEM employment shall continue while such actually
PURSUANT TO THE exists. (Emphasis supplied)
GRIEVANCE
PROCEDURE AS Art. 281. Probationary employment —
STIPULATED IN THE Probationary employment shall not exceed six (6)
COLLECTIVE months from the date the employee started
BARGAINING working, unless it is covered by an apprenticeship
AGREEMENT. agreement stipulating a longer period. The
services of an employee who has been engaged
Petitioner contends that its collective bargaining agreement on a probationary basis may be terminated for a
clearly excludes "temporary or probationary employees . . ." It just cause or when he fails to qualify as a regular
stresses that private respondents were extended appointments employee in accordance with reasonable
as permanent workers only on July 13, 1988 retroactive to June standards made known by the employer to the
16, 1988. The contention overlooks Articles 280 and 281 of the employee at the time of his engagement. An
Labor Code, viz.: employee who is allowed to work after a
probationary period shall be considered a regular
Art. 280. Regular and Casual Employment — The employee.
provisions of written agreement to the contrary
notwithstanding and regardless of the oral It cannot be denied that private respondents attained the status
agreement of the parties, an employment shall be of regular employees even before 1988. Firstly, they perform
deemed to be regular where the employee has activities which are necessary or desirable in the usual business
been engaged to perform activities which are of the petitioner as an electric cooperative. They are meter
usually necessary or desirable in the usual inspectors, PABX operators, utility men, disconnectors, linemen,
business or trade of the employer, except where messengers, secretaries, clerks, typists, plumbers, mechanics,
the employment has been fixed for a specific draftsmen, HRD personnel, collectors and electricians. Indeed,
project or undertaking the completion or their appointments would not have been regularized if their jobs
termination of which has been determined at the were not indispensable in the daily operation of the petitioner's
time of the engagement of the employee or where business. Secondly, they had worked for petitioner for more
than six (6) months before they were given regular collective bargaining agreement excludes only three
appointments. They had been hired on various dates starting classes, viz.:
from 1984.
1. Those performing managerial
Petitioner's insistence that private respondents became regular functions, confidential employees
employees only when they were extended appointments on July regardless of status and those whom
13, 1988 is deplorable. Articles 280 and 281 of our Labor the ELECTRIC COOPERATIVE and
Code, supra, put an end to the pernicious practice of making the UNION may individually agree
permanent casuals of our lowly employees by the simple upon to be excluded.
expedient of extending to them probationary appointments, ad
infinitum. Thus, Article 281, supra, placed a ceiling on 2. Temporary or probationary
probationary employment, i.e., not to exceed six (6) months employees or those whose period of
from the date the employee started working. On the other hand, employment is fixed and/or who are
Article 280, supra, defined when an employment shall be employed on a trial basis for a
regular notwithstanding any written agreement to the contrary. definite period; and those who are
In other words, the graduation of an employee from casual or under special contract.
probationary to regular does not depend on the arbitrary will of
his employer. Rightly so, for if there is any group of employees 3. Casuals and Extra Laborers.
that needs robust protection from the exploitation of employers,
it is the casuals and probationaries. Usually the lowliest of the Private respondents do not belong to the excluded
lowly, they are most vulnerable to abuses of management for categories. Their employments had been regularized.
they would rather suffer in silence than risk losing their jobs. The There is no reason to deny them the benefits granted by
Labor Code has come to their succor by stopping schemes to their collective bargaining agreement when they
eternalize their temporary status. contributed to the profits of management through their
labors.
Petitioner's too niggard a regard to the rights of its employees
becomes more evident with its contention that even if private Petitioner also clings to the contention that the claim of private
respondents were to be considered regular employees under respondents has already prescribed. It is alleged that the cause
Article 280 of the Labor Code, still, they can only claim security of action of private respondents accrued on April 1, 1987, the
of tenure but not the benefits of the said collective bargaining date of the effectivity of the collective bargaining agreement
agreement. Petitioner's contention does not convince for it will while their complaint was filed only on May 18, 1990. Our
result in an anomalous situation where we have to categorize attention is called to Article 291 of the Labor Code which
regular employees into two (2) kinds — one entitled to security provides that all money claims arising from employer-employee
of tenure plus the benefits of the parties' collective bargaining relationship shall be filed within three (3) years from the time the
agreement, and the other, entitled to security of tenure alone. cause of action accrued.
Such a classification finds no sanction under the Labor Code for
it distinguishes where there is no difference. Not even the We hold that the claim has not prescribed. Within the three-year
collective bargaining agreement of the parties justifies the prescriptive period, private respondents submitted their claim to
submission. For reasonably read and interpreted, the parties the grievance committee as provided for in their collective
bargaining agreement and as called for by our laws. Thus article, gross violations of Collective Bargaining
Articles 260 and 261 of the Labor Code provide, to wit: Agreement shall mean flagrant and/or malicious
refusal to comply with the economic provisions of
Art. 260. Grievance Machinery and Voluntary such agreement.
Arbitration. — The parties to a Collective
Bargaining Agreement shall include therein The Commission, its Regional Offices and the
provisions that will ensure the mutual observance Regional Directors of the Department of Labor and
of its terms and conditions. They shall establish a Employment shall not entertain disputes,
machinery for the adjustment and resolution of grievances or matters under the exclusive and
grievances arising from the interpretation or original jurisdiction of the Voluntary Arbitrator or
implementation of their Collective Bargaining panel of Voluntary Arbitrators and shall
Agreement and those arising from the immediately dispose and refer the same to the
interpretation or enforcement of company Grievance Machinery or Voluntary Arbitration
personnel policies. provided in the Collective Bargaining Agreement.

All grievances submitted to the grievance Likewise, Rule XI, Omnibus Rules Implementing the Labor
machinery which are not settled within seven (7) Code, provides:
calendar days from the date of its submission shall
automatically be referred to voluntary arbitration Sec. 1. Jurisdiction of voluntary arbitrator or panel
prescribed in the Collective Bargaining of voluntary arbitrators. — The voluntary arbitrator
Agreement. or panel of voluntary arbitrators named in the
collective bargaining agreement shall have
xxx xxx xxx exclusive and original jurisdiction to hear and
decide all grievances arising from the
Art. 261. Jurisdiction of Voluntary Arbitrators or implementation or interpretation of the collective
panel of Voluntary Arbitrators. — The Voluntary bargaining agreement and those arising from the
Arbitrator or panel of Voluntary Arbitrators shall interpretation or enforcement of company
have original and exclusive jurisdiction to hear and personnel policies which remain unresolved after
decide all unresolved grievances arising from the exhaustion of the grievance procedure.
interpretation or implementation of the Collective
Bargaining Agreement and those arising from the The voluntary arbitrator or panel of voluntary
interpretation or enforcement of company arbitrators, upon agreement of the parties, shall
personnel policies referred to in the immediately also hear and decide all other labor disputes
preceding article. Accordingly, violations of including unfair labor practice and bargaining
Collective Bargaining Agreement, except those deadlocks.
which are gross in character, shall no longer be
treated as unfair labor practice and shall be Sec. 2. Referral of cases to voluntary arbitration.
resolved as grievances under the Collective — All grievances unsettled or unresolved within
Bargaining Agreement. For purposes of this seven (7) calendar days from the date of its
 submission for resolution to the last step of the IN VIEW WHEREOF, the petition is dismissed there being no
grievance machinery shall automatically be grave abuse of discretion on the part of public respondent in its
referred to voluntary arbitration prescribed in the Decision of September 18, 1991. Costs against petitioner.
collective bargaining agreement.

The Commission, its regional branches and the

Regional Directors of the Department of Labor and
Employment shall not entertain disputes,
grievances or matters under the exclusive and
original jurisdiction of the voluntary arbitrator or
panel of voluntary arbitrators and shall
immediately dispose and refer the same to the
appropriate grievance machinery or voluntary
arbitration provided in the collective bargaining
agreement.

In case issues arising from the interpretation or

implementing of the collective bargaining
agreement or those arising from the interpretation
or enforcement of company personnel policies are
raised in notices of strikes or lockouts or requests
for preventive mediation, the regional branch of
the Board shall advise the parties to submit the
issue/s to voluntary arbitration.

As noted by public respondent, the grievance of private

respondents remained unsettled until the parties'
collective bargaining agreement expired on April 1, 1990.
With the expiration of their collective bargaining
agreement, its provision requiring the parties to resort to
voluntary arbitration ceased to have any effect at all.
Consequently, private respondents lost no time in filing
their complaint with the labor arbiter on May 18, 1990. It
is obvious that private respondents did not sleep on their
right for more than three years as alleged by the
petitioner and, hence, prescription will not lie against
them.
MOISES DE LEON, petitioner, backwages before the Office of the Labor Arbiter of the then
vs. Ministry now Department of Labor and Employment.
NATIONAL LABOR RELATIONS COMMISSION and LA
TONDEÑ;A INC., respondents. Petitioner alleged that he was dismissed following his request to
be treated as a regular employee; that his work consisted of
Amorito V. Canete for petitioner. painting company buildings and maintenance chores like
cleaning and operating company equipment, assisting Emiliano
Pablo R. Cruz for private respondent. Tanque Jr., a regular maintenance man; and that weeks after
his dismissal, he was re-hired by the respondent company
indirectly through the Vitas-Magsaysay Village Livelihood
Council, a labor agency of respondent company, and was made
FERNAN, C.J.: to perform the tasks which he used to do. Emiliano Tanque Jr.
corroborated these averments of petitioner in his affidavit. 2
This petition for certiorari seeks to annul and set aside: (1) the
majority decision dated January 28, 1985 of the National Labor On the other hand, private respondent claimed that petitioner
Relations Commission First Division in Case No. NCR- 83566- was not a regular employee but only a casual worker hired
83, which reversed the Order dated April 6,1984 of Labor Arbiter allegedly only to paint a certain building in the company
Bienvenido S. Hernandez directing the reinstatement of premises, and that his work as a painter terminated upon the
petitioner Moises de Leon by private respondent La Tondeñ;a completion of the painting job.
Inc. with payment of backwages and other benefits due a
regular employee; and, (2) the Resolution dated March 21, 1985 On April 6, 1984, Labor Arbiter Bienvenido S. Hernandez
denying petitioner's motion for reconsideration. rendered a decision 3 finding the complaint meritorious and the
dismissal illegal; and ordering the respondent company to
It appears that petitioner was employed by private respondent reinstate petitioner with full backwages and other benefits.
La Tondeñ;a Inc. on December 11, 1981, at the Maintenance Labor Arbiter Hernandez ruled that petitioner was not a mere
Section of its Engineering Department in Tondo, Manila. 1 His casual employee as asserted by private respondent but a
work consisted mainly of painting company building and regular employee. He concluded that the dismissal of petitioner
equipment, and other odd jobs relating to maintenance. He was from the service was prompted by his request to be included in
paid on a daily basis through petty cash vouchers. the list of regular employees and to be paid through the payroll
and is, therefore, an attempt to circumvent the legal obligations
In the early part of January, 1983, after a service of more than of an employer towards a regular employee.
one (1) year, petitioner requested from respondent company
that lie be included in the payroll of regular workers, instead of Labor Arbiter Hernandez found as follows:
being paid through petty cash vouchers. Private respondent's
response to this request was to dismiss petitioner from his After a thorough examination of the records of the
employment on January 16, 1983. Having been refused case and evaluation of the evidence and versions
reinstatement despite repeated demands, petitioner filed a of the parties, this Office finds and so holds that
complaint for illegal dismissal, reinstatement and payment of the dismissal of complainant is illegal. Despite the
impressive attempt of respondents to show that
the complainant was hired as casual and for the On appeal, however, the above decision of the Labor Arbiter
work on particular project, that is the repainting of was reversed by the First Division of the National Labor
Mama Rosa Building, which particular work of Relations Commission by virtue of the votes of two
painting and repainting is not pursuant to the members 5 which constituted a majority. Commissioner
regular business of the company, according to its Geronimo Q. Quadra dissented, voting "for the affirmation of the
theory, we find differently. Complainant's being well-reasoned decision of the Labor Arbiter below." 6 The motion
hired on casual basis did not dissuade from the for reconsideration was denied. Hence, this recourse.
cold fact that such painting of the building and the
painting and repainting of the equipment and tools Petitioner asserts that the respondent Commission erred and
and other things belonging to the company and gravely abuse its discretion in reversing the Order of the Labor
the odd jobs assigned to him to be performed Arbiter in view of the uncontroverted fact that the tasks he
when he had no painting and repainting works performed included not only painting but also other maintenance
related to maintenance as a maintenance man are work which are usually necessary or desirable in the usual
necessary and desirable to the better operation of business of private respondent: hence, the reversal violates the
the business company. Respondent did not even Constitutional and statutory provisions for the protection of
attempt to deny and refute the corroborating labor.
statements of Emiliano Tanque Jr., who was
regularly employed by it as a maintenance man The private respondent, as expected, maintains the opposite
doing same jobs not only of painting and view and argues that petitioner was hired only as a painter to
repainting of building, equipment and tools and repaint specifically the Mama Rosa building at its Tondo
machineries or machines if the company but also compound, which painting work is not part of their main
other odd jobs in the Engineering and business; that at the time of his engagement, it was made clear
Maintenance Department that complainant Moises to him that he would be so engaged on a casual basis, so much
de Leon did perform the same odd jobs and so that he was not required to accomplish an application form or
assignments as were assigned to him during the to comply with the usual requisites for employment; and that, in
period de Leon was employed for more than one fact, petitioner was never paid his salary through the regular
year continuously by Id respondent company. We payroll but always through petty cash vouchers. 7
find no reason not to give credit and weight to the
affidavit and statement made therein by Emiliano The Solicitor General, in his Comment, recommends that the
Tanque Jr. This strongly confirms that complainant petition be given due course in view of the evidence on record
did the work pertaining to the regular business in supporting petitioner's contention that his work was regular in
which the company had been organized. nature. In his view, the dismissal of petitioner after he
Respondent cannot be permitted to circumvent the demanded to be regularized was a subterfuge to circumvent the
law on security of tenure by considering law on regular employment. He further recommends that the
complainant as a casual worker on daily rate basis questioned decision and resolution of respondent Commission
and after working for a period that has entitled him be annulled and the Order of the Labor Arbiter directing the
to be regularized that he would be automatically reinstatement of petitioner with payment of backwages and
terminated. ... . 4 other benefits be upheld. 8
After a careful review of the records of this case, the Court finds status for as long as convenient. Thus, contrary agreements
merit in the petition as We sustain the position of the Solicitor notwithstanding, an employment is deemed regular when the
General that the reversal of the decision of the Labor Arbiter by activities performed by the employee are usually necessary or
the respondent Commission was erroneous. desirable in the usual business or trade of the employer. Not
considered regular are the so-called "project employment" the
The law on the matter is Article 281 of the Labor Code which completion or termination of which is more or less determinable
defines regular and casual employment as follows: at the time of employment, such as those employed in
connection with a particular construction project 9 and seasonal
Art. 281. Regular and casual employment. The employment which by its nature is only desirable for a limited
provisions of a written agreement to the contrary period of time. However, any employee who has rendered at
notwithstanding and regardless of the oral least one year of service, whether continuous or intermittent, is
agreements of the parties, an employment shall be deemed regular with respect to the activity he performed and
deemed to be regular where the employee has while such activity actually exists.
been engaged to perform activities which are
usually necessary or desirable in the usual The primary standard, therefore, of determining a regular
business or trade of the employer, except where employment is the reasonable connection between the
the employment has been fixed for a specific particular activity performed by the employee in relation to the
project or undertaking the completion or usual business or trade of the employer. The test is whether the
termination of which has been determined at the former is usually necessary or desirable in the usual business or
time of the engagement of the employee or where trade of the employer. The connection can be determined by
the work or services to be performed is seasonal considering the nature of the work performed and its relation to
in nature and the employment is for the duration of the scheme of the particular business or trade in its entirety.
the season. Also, if the employee has been performing the job for at least
one year, even if the performance is not continuous or merely
An employment shall be deemed to be casual if it intermittent, the law deems the repeated and continuing need
is not covered by the preceding paragraph: for its performance as sufficient evidence of the necessity if not
Provided, That any employee who has rendered at indispensability of that activity to the business. Hence, the
least one year of service, whether such service is employment is also considered regular, but only with respect to
continuous or broken, shall be considered a such activity and while such activity exists.
regular employee with respect to the activity in
which he is employed and his employment shall In the case at bar, the respondent company, which is engaged
continue while such actually exists. in the business of manufacture and distillery of wines and
liquors, claims that petitioner was contracted on a casual basis
This provision reinforces the Constitutional mandate to protect specifically to paint a certain company building and that its
the interest of labor. Its language evidently manifests the intent completion rendered petitioner's employment terminated. This
to safeguard the tenurial interest of the worker who may be may have been true at the beginning, and had it been shown
denied the rights and benefits due a regular employee by virtue that petitioner's activity was exclusively limited to painting that
of lopsided agreements with the economically powerful certain building, respondent company's theory of casual
employer who can maneuver to keep an employee on a casual employment would have been worthy of consideration.
However, during petitioner's period of employment, the records maintenance work besides painting company building and
reveal that the tasks assigned to him included not only painting equipment.
of company buildings, equipment and tools but also cleaning
and oiling machines, even operating a drilling machine, and It is self-serving, to say the least, to isolate petitioner's painting
other odd jobs assigned to him when he had no painting job. A job to justify the proposition of casual employment and
regular employee of respondent company, Emiliano Tanque Jr., conveniently disregard the other maintenance activities of
attested in his affidavit that petitioner worked with him as a petitioner which were assigned by the respondent company
maintenance man when there was no painting job. when he was not painting. The law demands that the nature and
entirety of the activities performed by the employee be
It is noteworthy that, as wisely observed by the Labor Arbiter, considered. In the case of petitioner, the painting and
the respondent company did not even attempt to negate the maintenance work given him manifest a treatment consistent
above averments of petitioner and his co- employee. Indeed, with a maintenance man and not just a painter, for if his job was
the respondent company did not only fail to dispute this vital truly only to paint a building there would have been no basis for
point, it even went further and confirmed its veracity when it giving him other work assignments In between painting
expressly admitted in its comment that, "The main bulk of work activities.
and/or activities assigned to petitioner was painting and other
related activities. Occasionally, he was instructed to do other It is not tenable to argue that the painting and maintenance work
odd things in connection with maintenance while he was waiting of petitioner are not necessary in respondent's business of
for materials he would need in his job or when he had finished manufacturing liquors and wines, just as it cannot be said that
early one assigned to him. 10 only those who are directly involved in the process of producing
wines and liquors may be considered as necessary employees.
The respondent Commission, in reversing the findings of the Otherwise, there would have been no need for the regular
Labor Arbiter reasoned that petitioner's job cannot be Maintenance Section of respondent company's Engineering
considered as necessary or desirable in the usual business or Department, manned by regular employees like Emiliano
trade of the employer because, "Painting the business or factory Tanque Jr., whom petitioner often worked with.
building is not a part of the respondent's manufacturing or
distilling process of wines and liquors. 11 Furthermore, the petitioner performed his work of painting and
maintenance activities during his employment in respondent's
The fallacy of the reasoning is readily apparent in view of the business which lasted for more than one year, until early
admitted fact that petitioner's activities included not only painting January, 1983 when he demanded to be regularized and was
but other maintenance work as well, a fact which even the subsequently dismissed. Certainly, by this fact alone he is
respondent Commission, like the private respondent, also entitled by law to be considered a regular employee. And
expressly recognized when it stated in its decision that, considering further that weeks after his dismissal, petitioner was
'Although complainant's (petitioner) work was mainly painting, rehired by the company through a labor agency and was
he was occasionally asked to do other odd jobs in connection returned to his post in the Maintenance Section and made to
with maintenance work. 12 It misleadingly assumed that all the perform the same activities that he used to do, it cannot be
petitioner did during his more than one year of employment was denied that as activities as a regular painter and maintenance
to paint a certain building of the respondent company, whereas man still exist.
it is admitted that he was given other assignments relating to
It is of no moment that petitioner was told when he was hired with the Aluminum Wage Orders in effect for the period covered,
that his employment would only be casual, that he was paid 2) ECOLA 3) 13th Month Pay, 4) and other benefits under
through cash vouchers, and that he did not comply with regular pertinent Collective Bargaining Agreements, if any.
employment procedure. Precisely, the law overrides such
conditions which are prejudicial to the interest of the worker SO ORDERED.
whose weak bargaining position needs the support of the State.
That determines whether a certain employment is regular or
casual is not the will and word of the employer, to which the
desperate worker often accedes, much less the procedure of
hiring the employee or the manner of paying his salary. It is the
nature of the activities performed in relation to the particular
business or trade considering all circumstances, and in some
cases the length of time of its performance and its continued
existence.

Finally, considering its task to give life and spirit to the

Constitutional mandate for the protection of labor, to enforce
and uphold our labor laws which must be interpreted liberally in
favor of the worker in case of doubt, the Court cannot
understand the failure of the respondent Commission to
perceive the obvious attempt on the part of the respondent
company to evade its obligations to petitioner by dismissing the
latter days after he asked to be treated as a regular worker on
the flimsy pretext that his painting work was suddenly finished
only to rehire him indirectly weeks after his dismissal and assign
him to perform the same tasks he used to perform. The devious
dismissal is too obvious to escape notice. The inexplicable
disregard of established and decisive facts which the
Commission itself admitted to be so, in justifying a conclusion
adverse to the aggrieved laborer clearly spells a grave abuse of
discretion amounting to lack of jurisdiction.

WHEREFORE, the petition is GRANTED. The assailed Decision

and Resolution of the National Labor Relations Commission are
hereby annulled and set aside. The Order of Labor arbiter
Bienvenido S. Hernandez dated April 6, 1984 is reinstated.
Private respondent is ordered to reinstate petitioner as a regular
maintenance man and to pay petitioner 1) backwages
equivalent to three years from January 16,1983, in accordance
KIMBERLY INDEPENDENT LABOR UNION FOR Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity)
SOLIDARITY, ACTIVISM AND NATIONALISM-ORGANIZED executed a three-year collective bargaining agreement (CBA)
LABOR ASSOCIATION IN LINE INDUSTRIES AND with United Kimberly-Clark Employees Union-Philippine
AGRICULTURE (KILUSAN-OLALIA), ROQUE JIMENEZ, Transport and General Workers' Organization (UKCEU-
MARIO C. RONGALEROS and OTHERS, petitioners, PTGWO) which expired on June 30, 1986.
vs.
HON. FRANKLIN M. DRILON, KIMBERLY-CLARK Within the 60-day freedom period prior to the expiration of and
PHILIPPINES, INC., RODOLFO POLOTAN, doing business during the negotiations for the renewal of the aforementioned
under the firm name "Rank Manpower Co." and UNITED CBA, some members of the bargaining unit formed another
KIMBERLY-CLARK EMPLOYEES UNION-PHILLIPPINE union called "Kimberly Independent Labor Union for Solidarity,
TRANSPORT AND GENERAL WORKERS ORGANIZATION Activism and Nationalism-Organized Labor Association in Line
(UKCEU-PTGWO), respondents. Industries and Agriculture (KILUSAN-OLALIA)."

KIMBERLY INDEPENDENT LABOR UNION FOR On April 21, 1986, KILUSAN-OLALIA filed a petition for
SOLIDARITY, ACTIVITISM AND NATIONALISM-OLALIA certification election in Regional Office No. IV, Ministry of Labor
(KILUSAN-OLALIA), petitioner, and Employment (MOLE), docketed as Case No. RO4-OD-M-
vs. 415-86. 5 KIMBERLY and (UKCEU-PTGWO) did not object to
NATIONAL LABOR RELATIONS COMMISSION, MANUEL the holding of a certification election but objected to the
AGUILAR, MA. ESTRELLA ALDA, CAPT. REY L. LANADA, inclusion of the so-called contractual workers whose
COL. VIVENCIO MANAIG and KIMBERLY-CLARK employment with KIMBERLY was coursed through an
PHILIPPINES, INC., respondents. independent contractor, Rank Manpower Company (RANK for
short), as among the qualified voters.

Pending resolution of the petition for certification election by the

med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7,
REGALADO, J.: 1986 with the Bureau of Labor Relations, docketed as BLR
Case No. NS-5-164-86, 6charging KIMBERLY with unfair labor
Before us are two consolidated petitions for certiorari filed by the practices based on the following alleged acts: (1) dismissal of
above-named petitioner union (hereinafter referred to as union members (KILUSAN-OLALIA); (2) non-regularization of
KILUSAN-OLALIA, for conciseness) and individual casuals/contractuals with over six months service; (3) non-
complainants therein, to wit (a) G.R. 77629, which seeks to implementation of appreciation bonus for 1982 and 1983; (4)
reverse and set aside the decision, dated November 13, non-payment of minimum wages; (5) coercion of employees;
1986, 1 and the resolution, dated January 9, 1987, 2 respectively and (6) engaging in CBA negotiations despite the pendency of a
handed down by the two former Ministers of Labor, both petition for certification election. This was later amended to
rendered in BLR Case No. NS-5-164-86; and (b) G.R. No. withdraw the charge of coercion but to add, as new charges, the
78791, which prays for the reversal of the resolutions of the dismissal of Roque Jimenez and the non-payment of
National Labor Relations Commission, dated May 25, backwages of the reinstated Emerito Fuentes .7
1987 3 and June 19,1987 4 issued in Injunction Case No. 1442
thereof.
Conciliation proceedings conducted by the bureau proved futile, May 14, 1986 should be considered qualified to
and KILUSAN-OLALIA declared a strike at KIMBERLY's vote;
premises in San Pedro, Laguna on May 23, 1986.
2. Those casuals who have worked at least six (6)
On May 26, 1986, KIMBERLY petitioned MOLE to assume months as appearing in the payroll months prior to
jurisdiction over the labor dispute. On May 30, 1986, finding that the filing of the instant petition on April 21, 1986;
the labor dispute would adversely affect national interest, then and
Minister Augusto S. Sanchez issued an assumption order, the
dispositive portion whereof reads: 3. Those contractual employees who are allegedly
in the employ of an independent contractor and
Wherefore, premises considered, immediately who have also worked for at least six (6) months
upon receipt of this order, the striking union and its as appearing in the payroll month prior to the filing
members are hereby enjoined to lift the picket and of the instant petition on April 21, 1986.
remove all obstacles to the free ingress to and
egress from the company premises and to return During the pre-election conference, 64 casual workers were
to work, including the 28 contractual workers who challenged by KIMBERLY and (UKCEU-PTGWO) on the ground
were dismissed; likewise, the company is directed that they are not employees, of KIMBERLY but of RANK. It was
to resume its operations immediately thereafter agreed by all the parties that the 64 voters shall be allowed to
and to accept all the employees back under the cast their votes but that their ballots shall be segregated and
same terms and conditions of employment subject to challenge proceedings. The certification election was
prevailing prior to the industrial action. Further, all conducted on July I., 1986, with the following results: 11
issues in the notice of strike, as amended, are
hereby assumed in this assumption order, except 1. KILUSAN-OLALIA = 246 votes
for the representation issue pending in Region IV
in which the Med-Arbiter is also enjoined to decide 2. (UKCEU-PTGWO) = 266 votes
the same the soonest possible time. 8
3. NO UNION = 1 vote
In obedience to said assumption order, KILUSAN-OLALIA
terminated its strike and picketing activities effective June 1, 4. SPOILED BALLOTS = 4 votes
1986 after a compliance agreement was entered into by it with
KIMBERLY. 9 5. CHALLENGED BALLOTS = 64 votes

On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was ————

handling the certification election case (RO4-OD-M-4-1586),
issued an order 10 declaring the following as eligible to vote in TOTAL 581 votes
the certification election, thus:
On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a
1. The regular rank-and-file laborers/employees of "Protest and Motion to Open and Count Challenged Votes" 12 on
the respondent company consisting of 537 as of
the ground that the 64 workers are employees of KIMBERLY 6. The decision of the voluntary arbitrator ordering
within the meaning of Article 212(e) of the Labor Code. On July the reinstatement of Ermilo Fuentes with
7, 1986, KIMBERLY filed an opposition to the protest and backwages was declared as already final and
motion, asserting that there is no employer-employee unappealable; and
relationship between the casual workers and the company, and
that the med-arbiter has no jurisdiction to rule on the issue of 7. KIMBERLY was ordered to pay appreciation
the status of the challenged workers which is one of the issues bonus for 1982 and 1983.
covered by the assumption order. The med-arbiter opted not to
rule on the protest until the issue of regularization has been On November 25, 1986, KIMBERLY flied a motion for
resolved by reconsideration with respect to the regularization of contractual
MOLE. 13 workers, the appreciation bonus and the reinstatement of Roque
Jimenez. 15 In a letter dated November 24, 1986, counsel for
On November 13, 1986, then Minister Sanchez rendered a KILUSAN-OLALIA demanded from KIMBERLY the
decision in BLR Case No. NS-5-164-86, 14 the disposition implementation of the November 13, 1986 decision but only with
wherein is summarized as follows: respect to the regularization of the casual workers. 16

1. The service contract for janitorial and yard On December 11, 1986, KILUSAN-OLALIA filed a motion for
maintenance service between KIMBERLY and reconsideration questioning the authority of the Minister of
RANK was declared legal; Labor to assume jurisdiction over the representation issue. In
the meantime, KIMBERLY and UKCEU-PTGWO continued with
2. The other casual employees not performing the negotiations on the new collective bargaining agreement
janitorial and yard maintenance services were (CBA), no restraining order or junctive writ having been issued,
deemed labor-only contractual and since labor- and on December 18, 1986, a new CBA was concluded and
only contracting is prohibited, such employees ratified by 440 out of 517 members of the bargaining unit. 17
were held to have attained the status of regular
employees, the regularization being effective as of In an order dated January 9, 1987, former Labor Minister
the date of the decision; Franklin Drilon denied both motions for reconsideration filed by
KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the
3. UKCEU-PTGWO having garnered more votes new CBA executed between KIMBERLY and UKCEU-PTGWO
than KILUSAN-OLALIA was certified as the was signed.
exclusive bargaining representative of
KIMBERLY's employees; On March 16, 1987, KILUSAN-OLALIA filed a petition
for certiorari in this Court docketed as G.R. No. 77629, seeking
4. The reinstatement of 28 dismissed KILUSAN- to set aside the aforesaid decision, dated November 13, 1986,
OLALIA members was ordered; and the order, dated January 9, 1987, rendered by the aforesaid
labor ministers.
5. Roque Jimenez was ordered reinstated without
backwages, the period when he was out of work On March 25, 1987, this Court issued in G.R. No. 77629 a
being considered as penalty for his misdemeanor; temporary restraining order, enjoining respondents from
enforcing and/or carrying out the decision and order above and are not engaged in janitorial and yard
stated, particularly that portion (1) recognizing respondent maintenance work, are concerned
UKCEU-PTGWO as the exclusive bargaining representative of
all regular rank-and-file employees in the establishment of 5. Rank Manpower Company had already pulled
respondent company, (2) enforcing and/or implementing the out, reassigned or replaced the contractual
alleged CBA which is detrimental to the interests of the employees engaged in janitorial and yard
members of the petitioner union, and (3) stopping respondent maintenance work, as well as those with less than
company from deducting monthly dues and other union one year service; and
assessments from the wages of all regular rank-and-file
employees of respondent company and from remitting the said 6. The company has reinstated Roque Jimenez as
collection to respondent UKCEU-PTGWO issued in BLR Case of January 11, 1987.
No. NS-5-164-86, entitled, "In Re: Labor Dispute at Kimberly-
Clark Philippines, Inc.," of the Department of Labor and In G.R. No. 78791, the records 21 disclose that on May 4, 1987,
Employment, Manila, 19 KILUSAN-OLALIA filed another notice of strike with the Bureau
of Labor Relations charging respondent company with unfair
In its comment, 20 respondent company pointed out certain labor practices. On May 8, 1987, the bureau dismissed and
events which took place prior to the filing of the petition in G.R. considered the said notice as not filed by reason of the
No. 77629, to wit: pendency of the representation issue before this Court in G.R.
No. 77629. KILUSAN-OLALIA moved to reconsider said order,
1. The company and UKCEU-PTGWO have but before the bureau could act on said motion, KILUSAN-
concluded a new collective bargaining agreement OLALIA declared a strike and established a picket on
which had been ratified by 440 out of 517 respondent company's premises in San Pedro, Laguna on May
members of the bargaining unit; 17, 1987.

2. The company has already granted the new On May 18, 1987, KIMBERLY filed a petition for injunction with
benefits under the new CBA to all its regular the National Labor Relations Commission (NLRC), docketed as
employees, including members of petitioner union Injunction Case No. 1442. A supplement to said petition was
who, while refusing to ratify the CBA nevertheless filed on May 19, 1987. On May 26, 1987, the commission en
readily accepted the benefits arising therefrom; banc issued a temporary restraining order (TRO) on the basis of
the ocular inspection report submitted by the commission's
3. The company has been complying with the agent, the testimonies of KIMBERLY's witnesses, and pictures
check-off provision of the CBA and has been of the barricade. KILUSAN-OLALIA moved to dissolve the TRO
remitting the union dues to UKCEU-PTGWO on the ground of lack of jurisdiction.

4. The company has already implement the Immediately after the expiration of the first TRO on June 9,
decision of November 13, 1986 insofar as the 1987, the striking employees returned to their picket lines and
regularization of contractual employees who have reestablished their barricades at the gate. On June 19, 1987,
rendered more than one (1) year of service as of the commission en banc issued a second TRO.
the filing of the Notice of Strike on May 7, 1986
On June 25, 1987, KILUSAN-OLALIA filed another petition entitled to vote in the certification election; (3) considering the
for certiorari and prohibition with this Court, docketed as G.R. regularization of petitioners (who are not janitors and
No. 78791, questioning the validity of the temporary restraining maintenance employees) to be effective only on the date of the
orders issued by the NLRC on May 26, 1987 and June 19, disputed decision; (4) declaring petitioners who are assigned
1987. On June 29, 1987, KILUSAN-OLALIA filed in said case an janitorial and yard maintenance work to be employees of
urgent motion for a TRO to restrain NLRC from implementing respondent RANK and not entitled to be regularized; (5) not
the questioned orders. An opposition, as well as a reply thereto, awarding to petitioners differential pay arising out of such illegal
were filed by the parties. work scheme; and (6) ordering the mere reinstatement of
petitioner Jimenez.
Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an
urgent motion for the issuance of a writ of preliminary injunction The issue of jurisdiction actually involves a question of whether
when the strikers returned to the strike area after the second or not former Minister Sanchez committed a grave abuse of
TRO expired. After due hearing, the commission issued a writ of discretion amounting to lack of jurisdiction in declaring
preliminary injunction on July 14, 1987, after requiring respondent UKCEU-PTGWO as the certified bargaining
KIMBERLY to post a bond in the amount of P20,000.00. representative of the regular employees of KIMBERLY, after
ruling that the 64 casual workers, whose votes are being
Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. challenged, were not entitled to vote in the certification election.
No. 78791 a second urgent motion for the issuance of a TRO by
reason of the issuance of said writ of preliminary injunction, KILUSAN-OLALIA contends that after finding that the 64
which motion was opposed by KIMBERLY. workers are regular employees of KIMBERLY, Minister Sanchez
should have remanded the representation case to the med-
Thereafter, in its memorandum 22 filed on December 28, 1989 arbiter instead of declaring UKCEU-PTGWO as the winner in
and in its motion for early resolution 23 filed on February 28, the certification election and setting aside the med-arbiter's
1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it order which allowed the 64 casual workers to cast their votes.
had terminated its strike and picketing activities and that the
striking employees had unconditionally offered to return to work, Respondents argue that since the issues of regularization and
although they were refused admission by KIMBERLY. By representation are closely interrelated and that a resolution of
reason of this supervening development, the petition in G.R. No. the former inevitably affects the latter, it was necessary for the
78791, questioning the propriety of the issuance of the two former labor minister to take cognizance of the representation
temporary restraining orders and the writ of injunction therein, issue; that no timely motion for reconsideration or appeal was
has been rendered moot and academic. made from his decision of November 13, 1986 which has
become final and executory; and that the aforesaid decision was
In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that impliedly accepted by KILUSAN-OLALIA when it demanded
the respondent Secretary of Labor and/or the former Minister of from KIMBERLY the issuance of regular appointments to its
Labor have acted with grave abuse of discretion and/or without affected members in compliance with said decision, hence
jurisdiction in (1) ruling on the issue of bargaining representation petitioner employees are now stopped from questioning the
and declaring respondent UKCEU-PTGWO as the collective legality thereof.
bargaining representative of all regular rank-and-file employees
of the respondent company; (2) holding that petitioners are not
We uphold the authority of former Minister Sanchez to assume The pivotal issue, therefore, is when said workers, not
jurisdiction over the issue of the regularization of the 64 casual performing janitorial or yard maintenance service, became
workers, which fact is not even disputed by KILUSAN-OLALIA regular employees of KIMBERLY.
as may be gleaned from its request for an interim order in the
notice of strike case (BLR-NS-5-164-86), asking that the We find and so hold that the former labor minister gravely
regularization issue be immediately resolved. Furthermore, even abused his discretion in holding that those workers not engaged
the med-arbiter who ordered the holding of the certification in janitorial or yard maintenance service attained the status of
election refused to resolve the protest on the ground that the regular employees only on November 13, 1986, which thus
issue raised therein correctly pertains to the jurisdiction of the deprived them of their constitutionally protected right to vote in
then labor minister. No opposition was offered by KILUSAN- the certification election and choose their rightful bargaining
OLALIA. We hold that the issue of regularization was properly representative.
addressed to the discretion of said former minister.
The Labor Code defines who are regular employees, as follows:
However, the matter of the controverted pronouncement by
former Minister Sanchez, as reaffirmed by respondent Art. 280. Regular and Casual Employment. — The
secretary, regarding the winner in the certification election provisions of written agreement to the contrary not
presents a different situation. withstanding and regardless of the oral
agreements of the parties, an employment shall be
It will be recalled that in the certification election, UKCEU- deemed to be regular where the employee has
PTGWO came out as the winner, by garnering a majority of the been engaged to perform activities which are
votes cast therein with the exception of 64 ballots which were usually necessary or desirable in the usual
subject to challenge. In the protest filed for the opening and business or trade of the employer, except where
counting of the challenged ballots, KILUSAN-OLALIA raised the the employment has been fixed for a specific
main and sole question of regularization of the 64 casual project or under the completion or termination of
workers. The med-arbiter refused to act on the protest on the which has been determined at the time of the
ground that the issue involved is within the jurisdiction of the engagement of the employee or where the work or
then Minister of Labor. KILUSAN-OLALIA then sought an services to be performed is seasonal in nature and
interim order for an early resolution on the employment status of the employment is for the duration of the season.
the casual workers, which was one of the issues included in the
notice of strike filed by KILUSAN-OLALIA in BLR Case No. NS- An employment shall be deemed to be casual if it
5-164-86. Consequently, Minister Sanchez rendered the is not covered by the preceding
questioned decision finding that the workers not engaged in paragraph: Provided, That any employee who has
janitorial and yard maintenance service are regular employees rendered at least one year of service, whether
but that they became regular only on the date of his decision, such service is continuous or broken, shall be
that is, on November 13, 1986, and, therefore, they were not considered a regular employee with respect to the
entitled to vote in the certification election. On the basis of the activity in which he is employed and his
results obtained in the certification election, Minister Sanchez employment shall continue while such activity
declared UKCEU-PTGWO as the winner. exists.
The law thus provides for two. kinds of regular employees, status. Obviously, where the law does not distinguish, no
namely: (1) those who are engaged to perform activities which distinction should be drawn.
are usually necessary or desirable in the usual business or
trade of the employer; and (2) those who have rendered at least The submission that the decision of November 13, 1986 has
one year of service, whether continuous or broken, with respect become final and executory, on the grounds that no timely
to the activity in which they are employed. The individual appeal has been made therefrom and that KILUSAN-OLALIA
petitioners herein who have been adjudged to be regular has impliedly acceded thereto, is untenable.
employees fall under the second category. These are the
mechanics, electricians, machinists machine shop helpers, Rule 65 of the Rules of Court allows original petitions
warehouse helpers, painters, carpenters, pipefitters and masons for certiorari from decisions or orders of public respondents
It is not disputed that these workers have been in the employ of provided they are filed within a reasonable time. We believe that
KIMBERLY for more than one year at the time of the filing of the the period from January 9, 1987, when the motions for
Petition for certification election by KILUSAN-OLALIA. reconsideration separately filed by KILUSAN-OLALIA and
KIMBERLY were denied, to March 16, 1987, when the petition
Owing to their length of service with the company, these in G.R. No. 77629 was filed, constitutes a reasonable time for
workers became regular employees, by operation of law, one availing of such recourse.
year after they were employed by KIMBERLY through RANK.
While the actual regularization of these employees entails the We likewise do not subscribe to the claim of respondents that
mechanical act of issuing regular appointment papers and KILUSAN-OLALIA has impliedly accepted the questioned
compliance with such other operating procedures as may be decision by demanding compliance therewith. In the letter of
adopted by the employer, it is more in keeping with the intent KILUSAN-OLALIA dated November 24, 1986 24 addressed to
and spirit of the law to rule that the status of regular employment the legal counsel of KIMBERLY, it is there expressly and
attaches to the casual worker on the day immediately after the specifically pointed out that KILUSAN-OLALIA intends to file a
end of his first year of service. To rule otherwise, and to instead motion for reconsideration of the questioned decision but that, in
make their regularization dependent on the happening of some the meantime, it was demanding the issuance of regular
contingency or the fulfillment of certain requirements, is to appointments to the casual workers who had been declared to
impose a burden on the employee which is not sanctioned by be regular employees. The filing of said motion for
law. reconsideration of the questioned decision by KILUSAN-
OLALIA, which was later denied, sustains our position on this
That the first stated position is the situation contemplated and issue and denies the theory of estoppel postulated by
sanctioned by law is further enhanced by the absence of a respondents.
statutory limitation before regular status can be acquired by a
casual employee. The law is explicit. As long as the employee On the basis of the foregoing circumstances, and as a
has rendered at least one year of service, he becomes a regular consequence of their status as regular employees, those
employee with respect to the activity in which he is employed. workers not perforce janitorial and yard maintenance service
The law does not provide the qualification that the employee were performance entitled to the payment of salary differential,
must first be issued a regular appointment or must first be cost of living allowance, 13th month pay, and such other
formally declared as such before he can acquire a regular benefits extended to regular employees under the CBA, from
the day immediately following their first year of service in the
company. These regular employees are likewise entitled to vote 2. Ordering KIMBERLY to pay the workers who have been
in the certification election held in July 1, 1986. Consequently, regularized their differential pay with respect to minimum wage,
the votes cast by those employees not performing janitorial and cost of living allowance, 13th month pay, and benefits provided
yard maintenance service, which form part of the 64 challenged for under the applicable collective bargaining agreement from
votes, should be opened, counted and considered for the the time they became regular employees.
purpose of determining the certified bargaining representative.
All other aspects of the decision appealed from, which are not
We do not find it necessary to disturb the finding of then Minister so modified or affected thereby, are hereby AFFIRMED. The
Sanchez holding as legal the service contract executed between temporary restraining order issued in G.R. No. 77629 is hereby
KIMBERLY and RANK, with respect to the workers performing made permanent.
janitorial and yard maintenance service, which is supported by
substantial and convincing evidence. Besides, we take judicial The petition filed in G.R. No. 78791 is hereby DISMISSED.
notice of the general practice adopted in several government
and private institutions and industries of hiring a janitorial
service on an independent contractor basis. Furthermore, the
occasional directives and suggestions of KIMBERLY are
insufficient to erode primary and continuous control over the
employees of the independent contractor. 25 Lastly, the duties
performed by these workers are not independent and integral
steps in or aspects of the essential operations of KIMBERLY
which is engaged in the manufacture of consumer paper
products and cigarette paper, hence said workers cannot be
considered regular employees.

The reinstatement of Roque Jimenez without backwages

involves a question of fact best addressed to the discretion of
respondent secretary whose finding thereon is binding and
conclusive upon this Court, absent a showing that he committed
a grave abuse in the exercise thereof.

WHEREFORE, judgment is hereby rendered in G.R. No. 77629:

1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to

open and count the 64 challenged votes, and that the union with
the highest number of votes be thereafter declared as the duly
elected certified bargaining representative of the regular
employees of KIMBERLY;
SINGER SEWING MACHINE COMPANY, petitioner On appeal, Secretary of Labor Franklin M. Drilon affirmed it. The
vs. motion for reconsideration of the Secretary's resolution was
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. denied. Hence, this petition in which the Company alleges that
CHAGUILE, JR., and SINGER MACHINE COLLECTORS public respondents acted in excess of jurisdiction and/or
UNION-BAGUIO (SIMACUB), respondents. committed grave abuse of discretion in that:

Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for a) the Department of Labor and Employment (DOLE) has
petitioner. no jurisdiction over the case since the existence of
Domogan, Lockey, Orate & Dao-ayan Law Office for private employer-employee relationship is at issue;
respondent.
b) the right of petitioner to due process was denied when
the evidence of the union members' being commission
agents was disregarded by the Labor Secretary;

GUTIERREZ, JR., J.: c) the public respondents patently erred in finding that
there exists an employer-employee relationship;
This is a petition for certiorari assailing the order of Med-Arbiter
Designate Felix B. Chaguile, Jr., the resolution of then Labor d) the public respondents whimsically disregarded the
Secretary Franklin M. Drilon affirming said order on appeal and well-settled rule that commission agents are not
the order denying the motion for reconsideration in the case employees but are independent contractors.
entitled "In Re: Petition for Direct Certification as the Sole and
Exclusive Collective Bargaining Agent of Collectors of Singer The respondents, on the other hand, insist that the provisions of
Sewing Machine Company-Singer Machine Collectors Union- the Collection Agency Agreement belie the Company's position
Baguio (SIMACUB)" docketed as OS-MA-A-7-119-89 (IRD Case that the union members are independent contractors. To prove
No. 02-89 MED). that union members are employees, it is asserted that they
"perform the most desirable and necessary activities for the
On February 15, 1989, the respondent union filed a petition for continuous and effective operations of the business of the
direct certification as the sole and exclusive bargaining agent of petitioner Company" (citing Article 280 of the Labor Code). They
all collectors of the Singer Sewing Machine Company, Baguio add that the termination of the agreement by the petitioner
City branch (hereinafter referred to as "the Company"). pending the resolution of the case before the DOLE "only shows
the weakness of petitioner's stand" and was "for the purpose of
The Company opposed the petition mainly on the ground that frustrating the constitutionally mandated rights of the members
the union members are actually not employees but are of private respondent union to self-organization and collective
independent contractors as evidenced by the collection agency organization." They also contend that under Section 8, Rule 8,
agreement which they signed. Book No. III of the Omnibus Rules Implementing the Labor
Code, which defines job-contracting, they cannot legally qualify
The respondent Med-Arbiter, finding that there exists an as independent contractors who must be free from control of the
employer-employee relationship between the union members alleged employer, who carry independent businesses and who
and the Company, granted the petition for certification election.
have substantial capital or investment in the form of equipment, bond, or cancellation of the agreement at the instance of either
tools, and the like necessary in the conduct of the business. party unless the agent has a pending obligation or indebtedness
in favor of the Company.
The present case mainly calls for the application of the control
test, which if not satisfied, would lead us to conclude that no Meanwhile, the respondents rely on other features to strengthen
employer-employee relationship exists. Hence, if the union their position that the collectors are employees. They quote
members are not employees, no right to organize for purposes paragraph 2 which states that an agent shall utilize only receipt
of bargaining, nor to be certified as such bargaining agent can forms authorized and issued by the Company. They also note
ever be recognized. The following elements are generally paragraph 3 which states that an agent has to submit and
considered in the determination of the employer-employee deliver at least once a week or as often as required a report of
relationship; "(1) the selection and engagement of the all collections made using report forms furnished by the
employee; (2) the payment of wages; (3) the power of dismissal; Company. Paragraph 4 on the monthly collection quota required
and (4) the power to control the employee's conduct — although by the Company is deemed by respondents as a control
the latter is the most important element" (Mafinco Trading measure over the means by which an agent is to perform his
Corporation v. Ople, 70 SCRA 139 [1976]; Development Bank services.
of the Philippines v. National Labor Relations Commission, 175
SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 The nature of the relationship between a company and its
[1984]; Broadway Motors Inc. v. NLRC, 156 SCRA 522 [1987]; collecting agents depends on the circumstances of each
Brotherhood Labor Unity Movement in the Philippines v. particular relationship. Not all collecting agents are employees
Zamora, 147 SCRA 49 [1986]). and neither are all collecting agents independent contractors.
The collectors could fall under either category depending on the
The Collection Agency Agreement defines the relationship facts of each case.
between the Company and each of the union members who
signed a contract. The petitioner relies on the following The Agreement confirms the status of the collecting agent in this
stipulations in the agreements: (a) a collector is designated as a case as an independent contractor not only because he is
collecting agent" who is to be considered at all times as an explicitly described as such but also because the provisions
independent contractor and not employee of the Company; (b) permit him to perform collection services for the company
collection of all payments on installment accounts are to be without being subject to the control of the latter except only as to
made monthly or oftener; (c) an agent is paid his compensation the result of his work. After a careful analysis of the contents of
for service in the form of a commission of 6% of all collections the agreement, we rule in favor of the petitioner.
made and turned over plus a bonus on said collections; (d) an
agent is required to post a cash bond of three thousand pesos The requirement that collection agents utilize only receipt forms
(P3,000.00) to assure the faithful performance and observance and report forms issued by the Company and that reports shall
of the terms and conditions under the agreement; (e) he is be submitted at least once a week is not necessarily an
subject to all the terms and conditions in the agreement; (f) the indication of control over the means by which the job of
agreement is effective for one year from the date of its collection is to be performed. The agreement itself specifically
execution and renewable on a yearly basis; and (g) his services explains that receipt forms shall be used for the purpose of
shall be terminated in case of failure to satisfy the minimum avoiding a co-mingling of personal funds of the agent with the
monthly collection performance required, failure to post a cash money collected on behalf of the Company. Likewise, the use of
standard report forms as well as the regular time within which to 3. The manner and method of effecting collections are
submit a report of collection are intended to facilitate order in left solely to the discretion of the collection agents without
office procedures. Even if the report requirements are to be any interference on the part of Singer.
called control measures, any control is only with respect to the
end result of the collection since the requirements regulate the 4. The collection agents shoulder their transportation
things to be done after the performance of the collection job or expenses incurred in the collections of the accounts
the rendition of the service. assigned to them.

The monthly collection quota is a normal requirement found in 5. The collection agents are paid strictly on commission
similar contractual agreements and is so stipulated to basis. The amounts paid to them are based solely on the
encourage a collecting agent to report at least the minimum amounts of collection each of them make. They do not
amount of proceeds. In fact, paragraph 5, section b gives a receive any commission if they do not effect any
bonus, aside from the regular commission every time the quota collection even if they put a lot of effort in collecting. They
is reached. As a requirement for the fulfillment of the contract, it are paid commission on the basis of actual collections.
is subject to agreement by both parties. Hence, if the other
contracting party does not accede to it, he can choose not to 6. The commissions earned by the collection agents are
sign it. From the records, it is clear that the Company and each directly deducted by them from the amount of collections
collecting agent intended that the former take control only over they are able to effect. The net amount is what is then
the amount of collection, which is a result of the job performed. remitted to Singer." (Rollo, pp. 7-8)

The respondents' contention that the union members are If indeed the union members are controlled as to the manner by
employees of the Company is based on selected provisions of which they are supposed to perform their collections, they
the Agreement but ignores the following circumstances which should have explicitly said so in detail by specifically denying
respondents never refuted either in the trial proceedings before each of the facts asserted by the petitioner. As there seems to
the labor officials nor in its pleadings filed before this Court. be no objections on the part of the respondents, the Court finds
that they miserably failed to defend their position.
1. The collection agents are not required to observe
office hours or report to Singer's office everyday except, A thorough examination of the facts of the case leads us to the
naturally and necessarily, for the purpose of remitting conclusion that the existence of an employer-employee
their collections. relationship between the Company and the collection agents
cannot be sustained.
2. The collection agents do not have to devote their time
exclusively for SINGER. There is no prohibition on the The plain language of the agreement reveals that the
part of the collection agents from working elsewhere. Nor designation as collection agent does not create an employment
are these agents required to account for their time and relationship and that the applicant is to be considered at all
submit a record of their activity. times as an independent contractor. This is consistent with the
first rule of interpretation that the literal meaning of the
stipulations in the contract controls (Article 1370, Civil Code; La
Suerte Cigar and Cigarette Factory v. Director of Bureau of
Labor, Relations, 123 SCRA 679 [1983]). No such words as "to The last and most important element of the control test is not
hire and employ" are present. Moreover, the agreement did not satisfied by the terms and conditions of the contracts. There is
fix an amount for wages nor the required working hours. nothing in the agreement which implies control by the Company
Compensation is earned only on the basis of the tangible results not only over the end to be achieved but also over the means
produced, i.e., total collections made (Sarra v. Agarrado, 166 and methods in achieving the end (LVN Pictures, Inc. v.
SCRA 625 [1988]). In Investment Planning Corp. of the Philippine Musicians Guild, 1 SCRA 132 [1961]).
Philippines v. Social Security System, 21 SCRA 924 [1967]
which involved commission agents, this Court had the occasion The Court finds the contention of the respondents that the union
to rule, thus: members are employees under Article 280 of the Labor Code to
have no basis. The definition that regular employees are those
We are convinced from the facts that the work of who perform activities which are desirable and necessary for the
petitioner's agents or registered representatives more business of the employer is not determinative in this case. Any
nearly approximates that of an independent contractor agreement may provide that one party shall render services for
than that of an employee. The latter is paid for the labor and in behalf of another for a consideration (no matter how
he performs, that is, for the acts of which such labor necessary for the latter's business) even without being hired as
consists the former is paid for the result thereof . . . . an employee. This is precisely true in the case of an
independent contractorship as well as in an agency agreement.
xxx xxx xxx The Court agrees with the petitioner's argument that Article 280
is not the yardstick for determining the existence of an
Even if an agent of petitioner should devote all of his time employment relationship because it merely distinguishes
and effort trying to sell its investment plans he would not between two kinds of employees, i.e., regular employees and
necessarily be entitled to compensation therefor. His right casual employees, for purposes of determining the right of an
to compensation depends upon and is measured by the employee to certain benefits, to join or form a union, or to
tangible results he produces." security of tenure. Article 280 does not apply where the
existence of an employment relationship is in dispute.
Moreover, the collection agent does his work "more or less at
his own pleasure" without a regular daily time frame imposed on Even Section 8, Rule 8, Book III of the Omnibus Rules
him (Investment Planning Corporation of the Philippines v. Implementing the Labor Code does not apply to this
Social Security System, supra; See also Social Security System case.1âwphi1 Respondents assert that the said provision on job
v. Court of Appeals, 30 SCRA 210 [1969]). contracting requires that for one to be considered an
independent contractor, he must have "substantial capital or
The grounds specified in the contract for termination of the investment in the form of tools, equipment, machineries, work
relationship do not support the view that control exists "for the premises, and other materials which are necessary in the
causes of termination thus specified have no relation to the conduct of his business." There is no showing that a collection
means and methods of work that are ordinarily required of or agent needs tools and machineries. Moreover, the provision
imposed upon employees." (Investment Planning Corp. of the must be viewed in relation to Article 106 of the Labor Code
Phil. v. Social Security System, supra) which provides:
 Art. 106. Contractor or subcontractor. — Whenever an employees. Hence, the petitioner submitted itself as well as the
employer enters into a contract with another person for issue of existence of an employment relationship to the
the performance of the former's work, the employees of jurisdiction of the DOLE which was faced with a dispute on an
the contractor and of the latter's subcontractor, if any, application for certification election.
shall be paid in accordance with the provisions of this
Code. The Court finds that since private respondents are not
employees of the Company, they are not entitled to the
In the event that the contractor or subcontractor fails to constitutional right to join or form a labor organization for
pay the wages of his employees in accordance with this purposes of collective bargaining. Accordingly, there is no
Code, the employer shall be jointly and severally liable constitutional and legal basis for their "union" to be granted their
with his contractor or subcontractor to such employees to petition for direct certification. This Court made this
the extent of the work performed under the contract, in pronouncement in La Suerte Cigar and Cigarette Factory v.
the same manner and extent that he is liable to Director of Bureau of Labor Relations, supra:
employees directly employed by him.
. . . The question of whether employer-employee
xxx xxx xxx relationship exists is a primordial consideration before
extending labor benefits under the workmen's
There is "labor-only" contracting where the person compensation, social security, medicare, termination pay
supplying workers to an employer does not have and labor relations law. It is important in the
substantial capital or investment in the form of tools, determination of who shall be included in a proposed
equipment, machineries, work premises, among others, bargaining unit because, it is the sine qua non, the
and the workers recruited and placed by such persons fundamental and essential condition that a bargaining
are performing activities which are directly related to the unit be composed of employees. Failure to establish this
principal business of such employer. In such cases, the juridical relationship between the union members and the
person or intermediary shall be considered merely as an employer affects the legality of the union itself. It means
agent of the employer who shall be responsible to the the ineligibility of the union members to present a petition
workers in the same manner and extent as if the latter for certification election as well as to vote therein . . . . (At
were directly employed by him." (p. 20) p. 689)

It can readily be seen that Section 8, Rule 8, Book Ill and Article WHEREFORE, the Order dated June 14,1989 of Med-Arbiter
106 are relevant in determining whether the employer is Designate Felix B. Chaguile, Jr., the Resolution and Order of
solidarily liable to the employees of an alleged contractor and/or Secretary Franklin M. Drilon dated November 2, 1989 and
sub-contractor for unpaid wages in case it is proven that there is December 14, 1989, respectively are hereby REVERSED and
a job-contracting situation. SET ASIDE. The petition for certification election is ordered
dismissed and the temporary restraining order issued by the
The assumption of jurisdiction by the DOLE over the case is Court on December 21, 1989 is made permanent.
justified as the case was brought on appeal by the petitioner
itself which prayed for the reversal of the Order of the Med-
Arbiter on the ground that the union members are not its
BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS for the workers to wait every morning outside the gates of the
PHILS., INC., petitioners, sales office of petitioner company. If thus hired, the workers
vs. would then be paid their wages at the end of the day.
NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M.),
RODOLFO MELGAR, ARNEL DELOS SANTOS, SILVERIO Ultimately, respondent workers asked petitioner company to
MINDAJAO, RUBEN NAVALES, BOBBY AUSTERO, extend to them regular appointments. Petitioner company
RAYMUNDO GAUDICOS, CHRISTOPHER PERALTA, refused. On 07 November 1997, twenty-three (23) of the
GIOVANI DELA CRUZ, JOSELITO OCCIDENTAL, AMADO "temporary" workers (herein respondents) filed with the National
BODASAN, FREDERIK MAGALINO, CHITO OCCIDENTAL, Labor Relations Commission (NLRC) a complaint for the
ALEXANDER DELOS SANTOS, DEONIL MESA, OLIVER regularization of their employment with petitioner company. The
VILLAFLOR, ROBERTO TUMONBA, RODRIGO ANGELES, complaint was amended a number of times to include other
ROMMEL ABAD, FELIX AVENIDO, ARMANDO AMOR, complainants that ultimately totaled fifty-eight (58) workers.
FREDERICK DE GUZMAN, CEA CARMELO, MARIANO Claiming that petitioner company meanwhile terminated their
CAÑETE, ALBERTO ANTONES, ROMEO BASQUINAS, services, respondent workers filed a notice of strike and a
ROGELIO MALINIS, EDMUNDO BAYOS, RAMIL REVADO, complaint for illegal dismissal and unfair labor practice with the
JOEL PIATA, OSCAR MALINAY, ROBERT REYES, JIMMY NLRC.
REYES, RETCHEL HAUTEA, VICTORINO TORRALBA, NOEL
RUBAI, RENATO DE OCAMPO, JESUS NOZON, JOEL On 01 April 1998, the parties agreed to submit the controversy,
MALINIS, REYNALDO GREGORY, MICHAEL RUBIA, including the issue raised in the complaint for regularization of
JOSELITO VILLANUEVA, LEONARDO MONDINA, employment, for voluntary arbitration. On 18 May 1998, the
EDUARDO BELLA, WILFREDO BELLA, ALBERTO voluntary arbitrator rendered a decision dismissing the
MAGTIBAY, MIGUEL CUESTA, JOSE MARCOS RODRIGUEZ complaint on the thesis that respondents (then complainants)
III, HERMINIO ROFLO, ERNIE CHAVEZ, NELSON were not regular employees of petitioner company.
LOGRONIO, LEONILO GALAPIN, REY PANGILINAN, LARRY
JAVIER, MATIAS ARBUES, RONILO AUSTERO, ADEMAR Respondent workers filed with the Court of Appeals a petition
ESTUITA, EDWIN DE LEON, RANDY DE for review under Rule 43 of the Rules of Civil Procedure
CHAVEZ, respondents. assailing the decision of the voluntary arbitrator, therein
contending that -
VITUG, J.:
"1. The Voluntary Arbitrator committed errors in finding
Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the that petitioners voluntarily and knowingly agreed to be
services of respondent workers as "sales route helpers" for a employed on a day-to-day basis; and
limited period of five months. After five months, respondent
workers were employed by petitioner company on a day-to-day "2. The Voluntary Arbitrator committed errors in finding
basis. According to petitioner company, respondent workers that petitioners' dismissal was valid."1
were hired to substitute for regular sales route helpers
whenever the latter would be unavailable or when there would In its decision of 11 August 2000, the Court of Appeals reversed
be an unexpected shortage of manpower in any of its work and set aside the ruling of the voluntary arbitrator, it concluded -
places or an unusually high volume of work. The practice was
 "WHEREFORE, the assailed decision of the Voluntary the engagement of the employee or where the work or
Arbitrator is hereby REVERSED and SET ASIDE and services to be performed is seasonal in nature and the
anew one is entered: employment is for the duration of the season.

"1. Declaring petitioners as regular employees of "An employment shall be deemed to be casual if it is not
Coca-Cola Bottlers Phils., Inc. and their dismissal covered by the preceding paragraph: Provided, That, any
from employment as illegal; employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
"2. Ordering respondent Coca-Cola Bottlers Phils., considered a regular employee with respect to the activity
Inc. to reinstate petitioners to their former positions in which he is employed and his employment shall
with full backwages, inclusive of allowances that continue while such activity exists."
petitioners had been receiving during their
employment and 13th month pay, computed from Coca-Cola Bottlers Phils., Inc., is one of the leading and largest
the date of their termination up to the time of their manufacturers of softdrinks in the country. Respondent workers
actual reinstatement (Paramount Vinyl Product have long been in the service of petitioner company.
Corp. vs. NLRC, 190 SCRA 526)."2 Respondent workers, when hired, would go with route salesmen
on board delivery trucks and undertake the laborious task of
Petitioner company's motion for reconsideration was denied in a loading and unloading softdrink products of petitioner company
resolution, dated 21 May 2001, of the appellate court. to its various delivery points.

The focal issues revolve around the matter of whether or not the Even while the language of law might have been more
nature of work of respondents in the company is of such nature definitive, the clarity of its spirit and intent, i.e., to ensure a
as to be deemed necessary and desirable in the usual business "regular" worker's security of tenure, however, can hardly be
or trade of petitioner that could qualify them to be regular doubted. In determining whether an employment should be
employees. considered regular or non-regular, the applicable test is the
reasonable connection between the particular activity performed
The basic law on the case is Article 280 of the Labor Code. Its by the employee in relation to the usual business or trade of the
pertinent provisions read: employer. The standard, supplied by the law itself, is whether
the work undertaken is necessary or desirable in the usual
"Art. 280. Regular and Casual Employment. – The business or trade of the employer, a fact that can be assessed
provisions of written agreement to the contrary by looking into the nature of the services rendered and its
notwithstanding and regardless of the oral agreement of relation to the general scheme under which the business or
the parties, an employment shall be deemed to be trade is pursued in the usual course. It is distinguished from a
regular where the employee has been engaged to specific undertaking that is divorced from the normal activities
perform activities which are usually necessary or required in carrying on the particular business or trade. But,
desirable in the usual business or trade of the employer, although the work to be performed is only for a specific project
except where the employment has been fixed for a or seasonal, where a person thus engaged has been performing
specific project or undertaking the completion or the job for at least one year, even if the performance is not
termination of which has been determined at the time of continuous or is merely intermittent, the law deems the repeated
and continuing need for its performance as being sufficient to serious problem of impoverishment of so many of our people
indicate the necessity or desirability of that activity to the and the resulting unevenness between labor and capital. A
business or trade of the employer. The employment of such contract of employment is impressed with public interest. The
person is also then deemed to be regular with respect to such provisions of applicable statutes are deemed written into the
activity and while such activity exists.3 contract, and "the parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws
The argument of petitioner that its usual business or trade is and regulations by simply contracting with each other."6
softdrink manufacturing and that the work assigned to
respondent workers as sales route helpers so involves merely With respect to the "Release, Waiver and Quitclaim" executed
"postproduction activities," one which is not indispensable in the by thirty-six (36) of the original complainants, namely, Rommel
manufacture of its products, scarcely can be persuasive. If, as Abad, Armando Amor, Bobby Austero, Felix Avenido, Amado
so argued by petitioner company, only those whose work are Badasan, Edmundo Bayos, Eduardo Bella, Jr., Mariano Cañete,
directly involved in the production of softdrinks may be held Carmelo Cea, Ernie Chavez, Randy Dechaves, Frederick De
performing functions necessary and desirable in its usual Guzman, Renato De Ocampo, Ademar Estuita, Leonilo Galapin,
business or trade, there would have then been no need for it to Raymund Gaudicos, Retchel Hautea, Larry Javier, Nelson
even maintain regular truck sales route helpers. The nature of Logrinio, Alberto Magtibay, Frederick Magallano, Rogelio
the work performed must be viewed from a perspective of the Malinis, Rodolfo Melgar, Silverio Mindajao, Leonardo Mondina,
business or trade in its entirety4 and not on a confined scope. Ruben Navales, Rey Pangilinan, Christopher Peralta, Jimmy
Reyes, Herminio Roflo, Michael Rubia, Noel Rubia, Roberto
The repeated rehiring of respondent workers and the continuing Tumomba, Oliver Villaflor, and Joselito Villanueva, this Court
need for their services clearly attest to the necessity or finds the execution of the same to be in order. During the
desirability of their services in the regular conduct of the pendency of the appeal with the Court of Appeals, these thirty-
business or trade of petitioner company. The Court of Appeals six (36) complainants individually executed voluntarily a release,
has found each of respondents to have worked for at least one waiver and quitclaim and received from petitioner company the
year with petitioner company. While this Court, in Brent School, amount of fifteen thousand (P15,000.00) pesos each. The
Inc. vs. Zamora,5 has upheld the legality of a fixed-term amount accords with the disposition of the case by the voluntary
employment, it has done so, however, with a stern admonition arbitrator thusly:
that where from the circumstances it is apparent that the period
has been imposed to preclude the acquisition of tenurial security "WHEREFORE, above premises considered, the herein
by the employee, then it should be struck down as being complaint is hereby DISMISSED for lack of merit.
contrary to law, morals, good customs, public order and public
policy. The pernicious practice of having employees, workers "However, we cannot completely negate the fact that
and laborers, engaged for a fixed period of few months, short of complainants did and do actually render services to the
the normal six-month probationary period of employment, and, Company. It is with this in mind and considering the
thereafter, to be hired on a day-to-day basis, mocks the law. difficulty the complainants may face in looking for another
Any obvious circumvention of the law cannot be countenanced. job in case they are no longer re-engaged that we direct
The fact that respondent workers have agreed to be employed the company to pay complainants Fifteen Thousand
on such basis and to forego the protection given to them on Pesos each (P15,000.00) as financial assistance. It is
their security of tenure, demonstrate nothing more than the however understood that the financial assistance
 previously extended by the Company to some of the
complainants shall be deducted from the financial
assistance herein awarded."7

The receipt of the amount awarded by the voluntary arbitrator,

as well as the execution of a release, waiver and quitclaim, is, in
effect, an acceptance of said decision. There is nothing on
record which could indicate that the execution thereof by thirty-
six (36) of the respondent workers has been attended by fraud
or deceit. While quitclaims executed by employees are
commonly frowned upon as being contrary to public policy and
are ineffective to bar claims for the full measure of their legal
rights, there are, however, legitimate waivers that represent a
voluntary and reasonable settlement of laborers' claims which
should be so respected by the Court as the law between the
parties.8 Where the person making the waiver has done so
voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as being a valid and binding
undertaking. "Dire necessity" is not an acceptable ground for
annulling the release, when it is not shown that the employee
has been forced to execute it.9

WHEREFORE, the questioned decision of the Court of Appeals,

in CA-G.R. SP No. 47872 is hereby AFFIRMED with
MODIFICATION in that the "Release, Waiver and Quitclaim"
executed by the thirty-six (36) individual respondents are hereby
declared VALID and LEGAL.