G.R. No.
195466 July 2, 2014 In the April 30, 2009 decision,15 the LA dismissed Macasios complaint for lack of merit. The
ARIEL L. DAVID, doing business under the name and style "YIELS HOG
DEALER," Petitioner,
vs.
JOHN G. MACASIO, Respondent.
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the November 22, 2010
decision2 and the January 31, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP
No. 116003. The CA decision annulled and set aside the May 26, 2010 decision4 of the
National Labor Relations Commission (NLRC)5 which, in turn, affirmed the April 30, 2009
Decision6 of the Labor Arbiter (LA). The LA's decision dismissed respondent John G.
Macasio's monetary claims.
The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint7 against petitioner Ariel L. David,
doing business under the name and style "Yiels Hog Dealer," for non-payment of overtime pay,
holiday pay and 13th month pay. He also claimed payment for moral and exemplary damages
and attorneys fees. Macasio also claimed payment for service incentive leave (SIL).8
Macasio alleged9 before the LA that he had been working as a butcher for David since January
6, 1995. Macasio claimed that David exercised effective control and supervision over his work,
pointing out that David: (1) set the work day, reporting time and hogs to be chopped, as well
as the manner by which he was to perform his work; (2) daily paid his salary of P700.00, which
was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved
and disapproved his leaves. Macasio added that David owned the hogs delivered for chopping,
as well as the work tools and implements; the latter also rented the workplace. Macasio further
claimed that David employs about twenty-five (25) butchers and delivery drivers.
In his defense,10 David claimed that he started his hog dealer business in 2005 and that he
only has ten employees. He alleged that he hired Macasio as a butcher or chopper on "pakyaw"
or task basis who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay
pursuant to the provisions of the Implementing Rules and Regulations (IRR) of the Labor Code.
David pointed out that Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m.
of the following day or earlier, depending on the volume of the delivered hogs; (2) received the
fixed amount of P700.00 per engagement, regardless of the actual number of hours that he
spent chopping the delivered hogs; and (3) was not engaged to report for work and,
accordingly, did not receive any fee when no hogs were delivered.
Macasio disputed Davids allegations.11 He argued that, first, David did not start his business
only in 2005. He pointed to the Certificate of Employment12 that David issued in his favor
which placed the date of his employment, albeit erroneously, in January 2000. Second, he
reported for work every day which the payroll or time record could have easily proved had
David submitted them in evidence.
Refuting Macasios submissions,13 David claims that Macasio was not his employee as he
hired the latter on "pakyaw" or task basis. He also claimed that he issued the Certificate of
Employment, upon Macasios request, only for overseas employment purposes. He pointed to
the "Pinagsamang Sinumpaang Salaysay,"14 executed by Presbitero Solano and Christopher
(Antonio Macasios co-butchers), to corroborate his claims.
LA gave credence to Davids claim that he engaged Macasio on "pakyaw" or task basis. The
LA noted the following facts to support this finding: (1) Macasio received the fixed amount
of P700.00 for every work done, regardless of the number of hours that he spent in completing
the task and of the volume or number of hogs that he had to chop per engagement; (2)
Macasio usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m. of the
following day; and (3) the P700.00 fixed wage far exceeds the then prevailing daily minimum
wage of P382.00. The LA added that the nature of Davids business as hog dealer supports
this "pakyaw" or task basis arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled
to overtime, holiday, SIL and 13th month pay.
The NLRCs Ruling
In its May 26, 2010 decision,16 the NLRC affirmed the LA ruling.17 The NLRC observed that
David did not require Macasio to observe an eight hour work schedule to earn the
fixed P700.00 wage; and that Macasio had been performing a non-time work, pointing out that
Macasio was paid a fixed amount for the completion of the assigned task, irrespective of the
time consumed in its performance. Since Macasio was paid by result and not in terms of the
time that he spent in the workplace, Macasio is not covered by the Labor Standards laws on
overtime, SIL and holiday pay, and 13th month pay under the Rules and Regulations
Implementing the 13th month pay law.18
Macasio moved for reconsideration19 but the NLRC denied his motion in its August 11, 2010
resolution,20prompting Macasio to elevate his case to the CA via a petition for certiorari.21
The CAs Ruling
In its November 22, 2010 decision,22 the CA partly granted Macasios certiorari petition and
reversed the NLRCs ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LAand the NLRC that Macasio was a task basis employee, it
nevertheless found Macasio entitled to his monetary claims following the doctrine laid down
in Serrano v. Severino Santos Transit.23The CA explained that as a task basis employee,
Macasio is excluded from the coverage of holiday, SIL and 13th month pay only if he is
likewise a "field personnel." As defined by the Labor Code, a "field personnel" is one who
performs the work away from the office or place of work and whose regular work hours cannot
be determined with reasonable certainty. In Macasios case, the elements that characterize a
"field personnel" are evidently lacking as he had been working as a butcher at Davids "Yiels
Hog Dealer" business in Sta. Mesa, Manila under Davids supervision and control, and for a
fixed working schedule that starts at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday, SIL and 13th month pay for three
years, with 10% attorneys fees on the total monetary award. The CA, however, denied
Macasios claim for moral and exemplary damages for lack of basis.
David filed the present petition after the CA denied his motion for reconsideration24 in the
CAs January 31, 2011 resolution.25
The Petition
In this petition,26 David maintains that Macasios engagement was on a "pakyaw" or task
basis. Hence, the latter is excluded from the coverage of holiday, SIL and 13th month pay.
David reiterates his submissions before the lower tribunals27 and adds that he never had any
control over the manner by which Macasio performed his work and he simply looked on to the
"end-result." He also contends that he never compelled Macasio to report for work and that
under their arrangement, Macasio was at liberty to choose whether to report for work or not as
other butchers could carry out his tasks. He points out that Solano and Antonio had, in fact,
attested to their (David and Macasios) established "pakyawan" arrangement that rendered a
written contract unnecessary. In as much as Macasio is a task basis employee who is paid
the fixed amount of P700.00 per engagement regardless of the time consumed in the
performance David argues that Macasio is not entitled to the benefits he claims. Also, he
posits that because he engaged Macasio on "pakyaw" or task basis then no employer-
employee relationship exists between them.
Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality
especially when, as in this case, they are supported by substantial evidence. Hence, David
posits that the CA erred in reversing the labor tribunals findings and granting the prayed
monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a "field personnel" as David would
have this Court believe.28 He reiterates his arguments before the lower tribunals and adds
that, contrary to Davids position, the P700.00 fee that he was paid for each day that he
reported for work does not indicate a "pakyaw" or task basis employment as this amount was
paid daily, regardless of the number or pieces of hogs that he had to chop. Rather, it indicates
a daily-wage method of payment and affirms his regular employment status. He points out that
David did not allege or present any evidence as regards the quota or number of hogs that he
had to chop as basis for the "pakyaw" or task basis payment; neither did David present the
time record or payroll to prove that he worked for less than eight hours each day. Moreover,
David did not present any contract to prove that his employment was on task basis. As David
failed to prove the alleged task basis or "pakyawan" agreement, Macasio concludes that he
was Davids employee. Procedurally, Macasio points out that Davids submissions in the
present petition raise purely factual issues that are not proper for a petition for review on
certiorari. These issues whether he (Macasio) was paid by result or on "pakyaw" basis;
whether he was a "field personnel"; whether an employer-employee relationship existed
between him and David; and whether David exercised control and supervision over his work
are all factual in nature and are, therefore, proscribed in a Rule 45 petition. He argues that the
CAs factual findings bind this Court, absent a showing that such findings are not supported by
the evidence or the CAs judgment was based on a misapprehension of facts. He adds that
the issue of whether an employer-employee relationship existed between him and David had
already been settled by the LA29 and the NLRC30 (as well as by the CA per Macasios
manifestation before this Court dated November 15, 2012),31 in his favor, in the separate
illegal case that he filed against David.
The Issue
The issue revolves around the proper application and interpretation of the labor law provisions
on holiday, SIL and 13th month pay to a worker engaged on "pakyaw" or task basis. In the
context of the Rule 65 petition before the CA, the issue is whether the CA correctly found the
NLRC in grave abuse of discretion in ruling that Macasio is entitled to these labor standards
benefits.
The Courts Ruling
We partially grant the petition.
Preliminary considerations: the Montoya ruling and the factual-issue-bar rule
In this Rule 45 petition for review on certiorari of the CAs decision rendered under a Rule 65
proceeding, this Courts power of review is limited to resolving matters pertaining to any
perceived legal errors that the CA may have committed in issuing the assailed decision. This
is in contrast with the review for jurisdictional errors, which we undertake in an original
certiorari action. In reviewing the legal correctness of the CA decision, we examine the CA
decision based on how it determined the presence or absence of grave abuse of discretion in
the NLRC decision before it and not on the basis of whether the NLRC decision on the merits
of the case was correct.32 In other words, we have to be keenly aware that the CA undertook
a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it.33
Moreover, the Courts power in a Rule 45 petition limits us to a review of questions of law
raised against the assailed CA decision.34
In this petition, David essentially asks the question whether Macasio is entitled to holiday,
SIL and 13th month pay. This one is a question of law. The determination of this question of
law however is intertwined with the largely factual issue of whether Macasio falls within the
rule on entitlement to these claims or within the exception. In either case, the resolution of this
factual issue presupposes another factual matter, that is, the presence of an employer-
employee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee, David argues that he
engaged the latter on "pakyaw" or task basis. Very noticeably, David confuses engagement
on "pakyaw" or task basis with the lack of employment relationship. Impliedly, David asserts
that their "pakyawan" or task basis arrangement negates the existence of employment
relationship.
At the outset, we reject this assertion of the petitioner. Engagement on "pakyaw" or task basis
does not characterize the relationship that may exist between the parties, i.e., whether one of
employment or independent contractorship. Article 97(6) of the Labor Code defines wages as
"xxx the remuneration or earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered[.]"35 In relation to Article 97(6), Article 10136 of the Labor Code
speaks of workers paid by results or those whose pay is calculated in terms of the quantity or
quality of their work output which includes "pakyaw" work and other non-time work.
More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or task
basis negates employer-employee relationship, David would want the Court to engage on a
factual appellate review of the entire case to determine the presence or existence of that
relationship. This approach however is not authorized under a Rule 45 petition for review of
the CA decision rendered under a Rule 65 proceeding.
First, the LA and the NLRC denied Macasios claim not because of the absence of an
employer-employee but because of its finding that since Macasio is paid on pakyaw or task
basis, then he is not entitled to SIL, holiday and 13th month pay. Second, we consider it
crucial, that in the separate illegal dismissal case Macasio filed with the LA, the LA, the NLRC
and the CA uniformly found the existence of an employer-employee relationship.37
In other words, aside from being factual in nature, the existence of an employer-employee
relationship is in fact a non-issue in this case. To reiterate, in deciding a Rule 45 petition for
review of a labor decision rendered by the CA under 65, the narrow scope of inquiry is whether
the CA correctly determined the presence or absence of grave abuse of discretion on the part
of the NLRC. In concrete question form, "did the NLRC gravely abuse its discretion in denying
Macasios claims simply because he is paid on a non-time basis?"
At any rate, even if we indulge the petitioner, we find his claim that no employer-employee
relationship exists baseless. Employing the control test,38 we find that such a relationship exist
in the present case.
Even a factual review shows that Macasio is Davids employee
To determine the existence of an employer-employee relationship, four elements generally
need to be considered, namely: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees
conduct. These elements or indicators comprise the so-called "four-fold" test of employment
relationship. Macasios relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of "selection and
engagement of the employee." David categorically confirmed this fact when, in his
"Sinumpaang Salaysay," he stated that "nag apply po siya sa akin at kinuha ko siya na
chopper[.]"39 Also, Solano and Antonio stated in their "Pinagsamang Sinumpaang
Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang
butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama namin
siya sa aming trabaho."
Second, David paid Macasios wages.Both David and Macasio categorically stated in their
respective pleadings before the lower tribunals and even before this Court that the former had
been paying the latter P700.00 each day after the latter had finished the days task. Solano
and Antonio also confirmed this fact of wage payment in their "Pinagsamang Sinumpaang
Salaysay."41 This satisfies the element of "payment of wages."
Third, David had been setting the day and time when Macasio should report for work. This
power to determine the work schedule obviously implies power of control. By having the power
to control Macasios work schedule, David could regulate Macasios work and could even
refuse to give him any assignment, thereby effectively dismissing him.
And fourth, David had the right and power to control and supervise Macasios work as to the
means and methods of performing it. In addition to setting the day and time when Macasio
should report for work, the established facts show that David rents the place where Macasio
had been performing his tasks. Moreover, Macasio would leave the workplace only after he
had finished chopping all of the hog meats given to him for the days task. Also, David would
still engage Macasios services and have him report for work even during the days when only
few hogs were delivered for butchering.
Under this overall setup, all those working for David, including Macasio, could naturally be
expected to observe certain rules and requirements and David would necessarily exercise
some degree of control as the chopping of the hog meats would be subject to his specifications.
Also, since Macasio performed his tasks at Davids workplace, David could easily exercise
control and supervision over the former. Accordingly, whether or not David actually exercised
this right or power to control is beside the point as the law simply requires the existence of this
power to control 4243 or, as in this case, the existence of the right and opportunity to control
and supervise Macasio.44
In sum, the totality of the surrounding circumstances of the present case sufficiently points to
an employer-employee relationship existing between David and Macasio.
Macasio is engaged on "pakyaw" or task basis
At this point, we note that all three tribunals the LA, the NLRC and the CA found that
Macasio was engaged or paid on "pakyaw" or task basis. This factual finding binds the Court
under the rule that factual findings of labor tribunals when supported by the established facts
and in accord with the laws, especially when affirmed by the CA, is binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-
hour wage payment, is the non-consideration of the time spent in working. In a task-basis
work, the emphasis is on the task itself, in the sense that payment is reckoned in terms of
completion of the work, not in terms of the number of time spent in the completion of
work.45 Once the work or task is completed, the worker receives a fixed amount as wage,
without regard to the standard measurements of time generally used in pay computation.
In Macasios case, the established facts show that he would usually start his work at 10:00
p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total
number of the hogs assigned to him for chopping, Macasio would receive the fixed amount
of P700.00 once he had completed his task. Clearly, these circumstances show a "pakyaw"
or task basis engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by
applying the "four-fold" test; engagement on "pakyaw" or task basis does not determine the
parties relationship as it is simply a method of pay computation. Accordingly, Macasio is
Davids employee, albeit engaged on "pakyaw" or task basis.
As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether
Macasio is entitled to holiday, 13th month, and SIL pay.
On the issue of Macasios entitlement to holiday, SIL and 13th month pay
The LA dismissed Macasios claims pursuant to Article 94 of the Labor Code in relation to
Section 1, Rule IV of the IRR of the Labor Code, and Article 95 of the Labor Code, as well as
Presidential Decree (PD) No. 851. The NLRC, on the other hand, relied on Article 82 of the
Labor Code and the Rules and Regulations Implementing PD No. 851. Uniformly, these
provisions exempt workers paid on "pakyaw" or task basis from the coverage of holiday, SIL
and 13th month pay.
In reversing the labor tribunals rulings, the CA similarly relied on these provisions, as well as
on Section 1, Rule V of the IRR of the Labor Code and the Courts ruling in Serrano v. Severino
Santos Transit.46 These labor law provisions, when read together with the Serrano ruling,
exempt those engaged on "pakyaw" or task basis only if they qualify as "field personnel."
In other words, what we have before us is largely a question of law regarding the correct
interpretation of these labor code provisions and the implementing rules; although, to
conclude that the worker is exempted or covered depends on the facts and in this sense, is a
question of fact: first, whether Macasio is a "field personnel"; and second, whether those
engaged on "pakyaw" or task basis, but who are not "field personnel," are exempted from the
coverage of holiday, SIL and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition for review of a CA decision
rendered under Rule 65 and framed in question form, the legal question is whether the CA
correctly ruled that it was grave abuse of discretion on the part of the NLRC to deny Macasios
monetary claims simply because he is paid on a non-time basis without determining whether
he is a field personnel or not.
To resolve these issues, we need tore-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of
the Labor Code - provisions governing working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and workers who
are paid by results as determined by the Secretary of Labor in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. [emphases and
underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor
Code) and SIL pay (under Article 95 of the Labor Code). Under Article 82,"field personnel" on
one hand and "workers who are paid by results" on the other hand, are not covered by the Title
I provisions. The wordings of Article82 of the Labor Code additionally categorize workers "paid
by results" and "field personnel" as separate and distinct types of employees who are
exempted from the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the
IRR47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than (10)
workers[.] [emphasis ours]
xxxx
SECTION 1. Coverage. This Rule shall apply to all employees except:
xxxx
(e)Field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis,
or those who are paid a fixed amount for performing work irrespective of the time consumed
in the performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the
IRR48 pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein
provided, those enjoying vacation leave with pay of at least five days and those employed in
establishments regularly employing less than ten employees or in establishments exempted
from granting this benefit by the Secretary of Labor and Employment after considering the
viability or financial condition of such establishment. [emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all
employees. To be excluded from their coverage, an employee must be one of those that these
provisions expressly exempt, strictly in accordance with the exemption. Under the IRR,
exemption from the coverage of holiday and SIL pay refer to "field personnel and other
employees whose time and performance is unsupervised by the employer including those
who are engaged on task or contract basis[.]" Note that unlike Article 82 of the Labor Code,
the IRR on holiday and SIL pay do not exclude employees "engaged on task basis" as a
separate and distinct category from employees classified as "field personnel." Rather, these
employees are altogether merged into one classification of exempted employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to mean
that those who are engaged on task basis, per se, are excluded from the SIL and holiday
payment since this is what the Labor Code provisions, in contrast with the IRR, strongly
suggest. The arguable interpretation of this rule may be conceded to be within the discretion
granted to the LA and NLRC as the quasi-judicial bodies with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. Ople49 the phrase
"those who are engaged on task or contract basis" in the rule has already been interpreted to
mean as follows:
[the phrase] should however, be related with "field personnel" applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that
they follow xxx Clearly, petitioner's teaching personnel cannot be deemed field personnel
which refers "to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work
in the field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of
the Philippines]. Petitioner's claim that private respondents are not entitled to the service
incentive leave benefit cannot therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude
one from the coverage of SIL and holiday pay. They are exempted from the coverage of Title
I (including the holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore
validly qualifies and limits the general exclusion of "workers paid by results" found in Article
82 from the coverage of holiday and SIL pay. This is the only reasonable interpretation since
the determination of excluded workers who are paid by results from the coverage of Title I is
"determined by the Secretary of Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems,
Inc., v. Bautista:
A careful perusal of said provisions of law will result in the conclusion that the grant of service
incentive leave has been delimited by the Implementing Rules and Regulations of the Labor
Code to apply only to those employees not explicitly excluded by Section 1 of Rule V.
According to the Implementing Rules, Service Incentive Leave shall not apply to employees
classified as "field personnel." The phrase "other employees whose performance is
unsupervised by the employer" must not be understood as a separate classification of
employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as
those "whose actual hours of work in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis,
purely commission basis." Said phrase should be related with "field personnel," applying the
rule on ejusdem generis that general and unlimited terms are restrained and limited by the
particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in
support of granting Macasios petition.
In Serrano, the Court, applying the rule on ejusdem generis50 declared that "employees
engaged on task or contract basis xxx are not automatically exempted from the grant of service
incentive leave, unless, they fall under the classification of field personnel."51 The Court
explained that the phrase "including those who are engaged on task or contract basis, purely
commission basis" found in Section 1(d), Rule V of Book III of the IRR should not be understood
as a separate classification of employees to which SIL shall not be granted. Rather, as with its
preceding phrase - "other employees whose performance is unsupervised by the employer" -
the phrase "including those who are engaged on task or contract basis" serves to amplify the
interpretation of the Labor Code definition of "field personnel" as those "whose actual hours of
work in the field cannot be determined with reasonable certainty."
In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted
the Labor Code provisions and the IRR as exempting an employee from the coverage of Title
I of the Labor Code based simply and solely on the mode of payment of an employee. The
NLRCs utter disregard of this consistent jurisprudential ruling is a clear act of grave abuse of
discretion.52 In other words, by dismissing Macasios complaint without considering whether
Macasio was a "field personnel" or not, the NLRC proceeded based on a significantly
incomplete consideration of the case. This action clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had
only taken counsel from Serrano and earlier cases, they would have correctly reached a similar
conclusion regarding the payment of holiday pay since the rule exempting "field personnel"
from the grant of holiday pay is identically worded with the rule exempting "field personnel"
from the grant of SIL pay. To be clear, the phrase "employees engaged on task or contract
basis "found in the IRR on both SIL pay and holiday pay should be read together with the
exemption of "field personnel."
In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to
holiday and SIL pay, the presence (or absence) of employer supervision as regards the
workers time and performance is the key: if the worker is simply engaged on pakyaw or task
basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless exempted
from the exceptions specifically provided under Article 94 (holiday pay) and Article95 (SIL
pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls
within the meaning of "field personnel" under the law, then he is not entitled to these monetary
benefits.
Macasio does not fall under the classification of "field personnel"
Based on the definition of field personnel under Article 82, we agree with the CA that Macasio
does not fall under the definition of "field personnel." The CAs finding in this regard is
supported by the established facts of this case: first, Macasio regularly performed his duties
at Davids principal place of business; second, his actual hours of work could be determined
with reasonable certainty; and, third, David supervised his time and performance of duties.
Since Macasio cannot be considered a "field personnel," then he is not exempted from the
grant of holiday, SIL pay even as he was engaged on "pakyaw" or task basis.
Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRCs
ruling dismissing Macasios complaint for holiday and SIL pay for having been rendered with
grave abuse of discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find that the CA legally erred in
finding that the NLRC gravely abused its discretion in denying this benefit to Macasio.1wphi1
The governing law on 13th month pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an
employee must be one of those expressly enumerated to be exempted. Section 3 of the Rules
and Regulations Implementing P.D. No. 85154 enumerates the exemptions from the
coverage of 13th month pay benefits. Under Section 3(e), "employers of those who are paid
on xxx task basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules
and Regulations Implementing PD No. 851 exempts employees "paid on task basis" without
any reference to "field personnel." This could only mean that insofar as payment of the 13th
month pay is concerned, the law did not intend to qualify the exemption from its coverage with
the requirement that the task worker be a "field personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition
insofar as the payment of 13th month pay to respondent is concerned. In all other aspects,
we AFFIRM the decision dated November 22, 2010 and the resolution dated January 31, 2011
of the Court of Appeals in CA-G.R. SP No. 116003. SO ORDERED.
G.R. No. 207253 August 20, 2014
CRISPIN B. LOPEZ, Petitioner,
vs.
IRVINE CONSTRUCTION CORP. and TOMAS SY SANTOS, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated September 14, 2012 and
the Resolution3dated April 12, 2013 of the Court of Appeals (CA) in CA-GR. SP No. 108385-MIN
which annulled and set aside the Resolutions dated October 31, 20084 and February 12, 20095 of
the National Labor Relations Commission (NLRC) in NLRC LAC No. 01-000428-2008, and thereby
dismissed petitioner Crispin B. Lopez's (Lopez) complaint for illegal dismissal.
The Facts
Respondent Irvine Construction Corp. (Irvine) is a construction firm with office address at San Juan,
Manila.6 It initially hired Lopez as laborer in November 1994 and, thereafter, designated him as a
guard at its warehouse in Dasmarifias, Cavite in the year 2000, with a salary of P238.00 per day
and working hours from 7 o'clock in the morning until 4 o'clock in the afternoon, without any rest
day.7 On December 18, 2005, Lopez was purportedly terminated from his employment, whereupon
he was told "Jkaw ay lay-off muna."8 Thus, on January 10, 2006, he filed a complaint9 for illegal
dismissal with prayer for the payment of separation benefits against Irvine before the NLRC Sub-
Regional Arbitration Branch No. IV in San Pablo City, Laguna, docketed as NLRC Case No. SRAB-
IV 1-8693-06-Q.
For its part, Irvine denied Lopez's claims, alleging that he was employed only as a laborer who,
however, sometimes doubled as a guard. As laborer, Lopez's duty was to bring construction
materials from the suppliers' vehicles to the company warehouse when there is a construction
project in Cavite.10 As evidenced by an Establishment Termination Report11 dated December 28,
2005 which Irvine previously submitted before the Department of Labor and Employment (DOLE),
Lopez was, however, temporarily laid-off on December 27, 2005 after the Cavite project was
finished.12 Eventually, Lopez was asked to return to work through a letter13 dated June 5, 2006
(return to work order), allegedly sent to him within the six ( 6) month period under Article 286 of the
Labor Code which pertinently provides that "[t]he bona-fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months x x x shall not terminate
employment." As such, Irvine argued that Lopez's filing of the complaint for illegal dismissal was
premature.14
The LA Ruling
On December 6, 2007, the Labor Arbiter (LA) rendered a Decision15 ruling that Lopez was illegally
dismissed. The LA did not give credence to Irvine's argument that the lack of its project in Cavite
resulted in the interruption of Lopez's employment in view of Irvine's contradictory averment that
Lopez was merely employed on temporary detail and that he only doubled as a guard. Granting that
Lopez's work as a laborer or as a guard was really affected by the suspension of the operations of
Irvine in Cavite, the LA still discredited Irvine's lay-off claims considering that the return to work order
Irvine supposedly sent to Lopez was not even attached to its pleadings. Hence, without any proof
that Lopez was asked to return to work, the LA concluded that the dismissal of Lopez went beyond
the six-month period fixed by Article 286 of the Labor Code and was therefore deemed to be a
permanent one effectuated without a valid cause and due process.16 Accordingly, Irvine was
ordered to pay Lopez the sum of P272,222.l 7, consisting of Pl 76,905.70 as backwages and other
statutory benefits, and P95,316.00 as separation pay.17
At odds with the LA's ruling, Irvine elevated the matter on appeal18 to the NLRC.
The NLRC Ruling
On October 31, 2008, the NLRC rendered a Resolution19 upholding the LA's ruling.
It debunked Irvine's contention that Lopez was not illegally dismissed since he was merely placed
on temporary lay-off due to the lack of project in Cavite for the reason that there was no indication,
much less substantial evidence, that Lopez was a project employee who was assigned to carry out
a specific project or undertaking, with the duration and scope specified at the time of the
engagement. In this relation, it observed that Lopez worked with Irvine since 1994 and therefore
earned the disputable presumption that he was a regular employee entitled to security of
tenure.20 Thus, since Lopez was not relieved for any just or authorized cause under Articles 282
and 283 of the Labor Code, the NLRC upheld the LA's finding that he was illegally dismissed.21
Dissatisfied, Irvine filed a motion for reconsideration22 which was, however, denied in a
Resolution23 dated February 12, 2009; hence, it filed a petition for certiorari24 before the CA.
The CA Ruling
The CA granted Irvine's certiorari petition in a Decision25 dated September 14, 2012, thereby
reversing the NLRC.
It held that Lopez's complaint for illegal dismissal was prematurely filed since there was no indicia
that Lopez was actually prevented by Irvine from returning to work or was deprived of any work
assignments or duties.26 On the contrary, the CA found that Lopez was asked to return to work
within the six-month period under Article 286 of the Labor Code. Accordingly, it concluded that
Lopez was merely temporarily laid off, and, thus, he could not have been dismissed.27
Aggrieved, Lopez sought reconsideration28 but the same was denied in a Resolution29 dated April
12, 2013, hence, this petition.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the CA erred in finding that the NLRC
gravely abused its discretion in affirming the LA's ruling that Lopez was illegally dismissed.
The Court's Ruling
The petition is meritorious.
Ruling on the propriety of Irvine's course of action in this case preliminarily calls for a determination
of Lopez's employment status - that is, whether Lopez was a project or a regular employee.
Case law states that the principal test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular employees," is whether or not
the "project employees" were assigned to carry out a "specific project or undertaking," the duration
and scope of which were specified at the time the employees were engaged for that project. The
project could either be (1) a particular job or undertaking that is within the regular or usual business
of the employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company; or (2) a particular job or undertaking that is not within the
regular business of the corporation. In order to safeguard the rights of workers against the arbitrary
use of the word "project" to prevent employees from attaining the status of regular employees,
employers claiming that their workers are project employees should not only prove that the duration
and scope of the employment was specified at the time they were engaged, but also that there was
indeed a project.30
In this case, the NLRC found that no substantial evidence had been presented by Irvine to show
that Lopez had been assigned to carry out a "specific project or undertaking," with its duration and
scope specified at the time of engagement. In view of the weight accorded by the courts to factual
findings of labor tribunals such as the NLRC, the Court, absent any cogent reason to hold
otherwise, concurs with its ruling that Lopez was not a project but a regular employee.31 This
conclusion is bolstered by the undisputed fact that Lopez had been employed by Irvine since
November 1994,32 or more than 10 years from the time he was laid off on December 27,
2005.33 Article 280 of the Labor Code provides that any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a regular
employee:
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee x x x. (Emphasis supplied)
As a regular employee, Lopez is entitled to security of tenure, and, hence, dismissible only if a just
or authorized cause exists therefor. Article 279 of the Labor Code states this fundamental rule:
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. (Emphasis supplied)
Among the authorized causes for termination under Article 283 of the Labor Code is retrenchment,
or what is sometimes referred to as a "lay-off':
Art. 283. Closure of Establishment and Reduction of Personnel. The employer may also terminate
the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year. (Emphases supplied)
It is defined as the severance of employment, through no fault of and without prejudice to the
employee, resorted to by management during the periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage of materials,
conversion of the plant to a new production program or the introduction of new methods or more
efficient machinery, or of automation.34 Elsewise stated, lay-off is an act of the employer of
dismissing employees because of losses in the operation, lack of work, and considerable reduction
on the volume of its business, a right recognized and affirmed by the Court.35 However, a lay-off
would be tantamount to a dismissal only if it is permanent. When a lay-off is only temporary, the
employment status of the employee is not deemed terminated, but merely suspended.36
Pursuant to Article 286 of the Labor Code, the suspension of the operation of business or
undertaking in a temporary lay-off situation must not exceed six (6) months:37
ART. 286. When Employment not Deemed Terminated. The bona-fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In all such cases, the employer
shall reinstate the employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the resumption of operations of his
employer or from his relief from the military or civic duty. (Emphasis supplied)
Within this six-month period, the employee should either be recalled or permanently retrenched.
Otherwise, the employee would be deemed to have been dismissed, and the employee held liable
therefor. As pronounced in the case of PT & T Corp. v. NLRC:38
[Article 283 of the Labor Code as above-cited] x x x speaks of a permanent retrenchment as
opposed to a temporary lay-off as is the case here. There is no specific provision of law which
treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period
or duration therefor. These employees cannot forever be temporarily laid-off. To remedy this
situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period
that employees may remain temporarily laid-off or in floating status. Six months is the period set
by law that the operation of a business or undertaking may be suspended thereby suspending the
employment of the employees concerned. The temporary lay-off wherein the employees likewise
cease to work should also not last longer than six months. After six months, the employees should
either be recalled to work or permanently retrenched following the requirements of the law, and
that failing to comply with this would be tantamount to dismissing the employees and the employer
would thus be liable for such dismissal.39 (Emphasis supplied)
Notably, in both a permanent and temporary lay-off, jurisprudence dictates that the one-month
notice rule to both the DOLE and the employee under Article 283 of the Labor Code, as above
cited, is .mandatory.40 Also, in both cases, the lay-off, being an exercise of the employer's
management prerogative, must be exercised in good faith - that is, one which is intended for the
advancement of employers' interest and not for the purpose of defeating or circumventing the rights
of the employees under special laws or under valid agreements.41 Instructive on the nature of a
lay-off as a management prerogative is the following excerpt from the case of Industrial Timber
Corporation v. NLRC:42
Closure or [suspension] of operations for economic reasons is, therefore, recognized as a valid
exercise of management prerogative. The determination to cease [or suspend] operations is a
prerogative of management, which the State does not usually interfere with, as no business or
undertaking [is] required to continue operating at a loss simply because it has to maintain its
workers in employment. Such an act would be tantamount to a taking of property without due
process of law. 43
In the case at bar, Irvine asserts that it only temporarily laid-off Lopez from work on December 27,
2005 for the reason that its project in Cavite had already been finished. To support its claim, it
submitted the following pieces of evidence: (a) a copy of an Establishment Termination
Report44 evidencing Lopez's lay-off; (b) a copy of the return to work order dated June 5,
2006;45 and (c) an affidavit46 from Irvine's personnel manager, Aguinaldo Santos, which purports
that said return to work order was sent to Lopez by ordinary mail on June 5, 2006. The CA gave
credence to the foregoing and thus granted Irvine's certiorari petition against the NLRC ruling which
affirmed the LA's finding of illegal dismissal.
The CA is mistaken.
As the NLRC correctly ruled in this case, Lopez, who, as earlier discussed was a regular employee
of Irvine, was not merely temporarily laid off from work but was terminated from his employment
without any valid cause therefor; thus, the proper disposition is to affirm the LA's ruling that Lopez
had been illegally dismissed.
Although the NLRC did not expound on the matter, it is readily apparent that the supposed lay-off
of Lopez was hardly justified considering the absence of any causal relation between the cessation
of Irvine's project in Cavite with the suspension of Lopez's work. To repeat, Lopez is a regular and
not a project employee. Hence, the continuation of his engagement with Irvine, either in Cavite, or
possibly, in any of its business locations, should not have been affected by the culmination of the
Cavite project alone. In light of the well-entrenched rule that the burden to prove the validity and
legality of the termination of employment falls on the employer,47 Irvine should have established
the bona fide suspension of its business operations or undertaking that would have resulted in the
temporary lay-off of its employees for a period not exceeding six (6) months in accordance with
Article 286 of the Labor Code. As enunciated in Nasipit Lumber Co. v. National Organization of
Workingmen (NOWM),48 citing Somerville Stainless Steel Corporation v. NLRC:49
[T]he burden of proving, with sufficient and convincing evidence, that such closure or suspension is
bona fide falls upon the employer. As we ruled in Somerville Stainless Steel Corporation v. NLRC:
Considering the severe consequences occasioned by retrenchment on the livelihood of the
employee(s) to be dismissed, and the avowed policy of the State - under Sec. 3, Art. XIII of the
Constitution, and Art. 3 of the Labor Code - to afford full protection to labor and to assure the
employee's right to enjoy security of tenure, the Court reiterates that "not every loss incurred or
expected to be incurred by a company will justify retrenchment. The losses must be substantial and
the retrenchment must be reasonably necessary to avert such losses. Settled is the rule that the
employer bears the burden of proving this allegation of the existence or imminence of substantial
losses, which by its nature is an affirmative defense. It is the duty of the employer to prove with
Clear and satisfactory evidence that legitimate business reasons exist to justify retrenchment.
Failure to do so "inevitably results in a finding that the dismissal is. unjustified." And the
determination of whether an employer has sufficiently and successfully discharged this burden of
proof "is essentially a question of fact for the Labor Arbiter and the NLRC to determine."
Otherwise, such ground for termination would be susceptible to abuse by scheming employers who
might be merely feigning business losses or reverses in their business ventures to ease out
employees.50 (Emphasis supplied; citations omitted)
In this case, Irvine failed to prove compliance with the parameters of Article 286 of the Labor Code.
As the records would show, it merely completed one of its numerous construction projects which
does not, by and of itself, amount to a bona .fide suspension of business operations or undertaking.
In invoking Article 286 of the Labor Code, the paramount consideration should be the dire exigency
of the business of the employer that compels it to put some of its employees temporarily out of
work.51 This means that the employer should be able to prove that it is faced with a clear and
compelling economic reason which reasonably forces it to temporarily shut down its business
operations or a particular undertaking, incidentally resulting to the temporary lay-off of its
employees.
Due to the grim economic consequences to the employee, case law states that the employer should
also bear the burden of proving that there are no posts available to which the employee temporarily
out of work can be assigned.52 Thus, in the case of Mobile Protective & Detective Agency v.
Ompad,53 the Court found that the security guards therein were constructively dismissed
considering that their employer was not able to show any dire exigency justifying the latter's failure
to give said employees any further assignment, viz.:
[Article 286 of the Labor Code] has been applied by analogy to security guards in a security agency
who are placed "off detail" or on "floating" status. In security agency parlance, to be placed "off
detail" or on "floating" status means "waiting to be posted." Pursuant to Article 286 of the Labor
Code, to be put off detail or in floating status requires no less than the dire exigency of the employer's
bona fide suspension of operation, business or undertaking. In security services, this happens when
there is a surplus of security guards over available assignments as when the clients that do not
renew their contracts with the security agency are more than those clients that do and the new ones
that the agency gets.
Again, petitioners only alleged that respondent's last assignment was with VVCC for the period of
September 29 to October 31, 1997.1wphi1 He was not given further assignment as he allegedly
went on AWOL and lost interest to work. As explained, these claims are unconvincing. Worse still,
they are inadequate under the law. The records do not show that there was a lack of available post
after October 1997. It appears that petitioners simply stopped giving respondent any assignment.
Absent any dire exigency justifying their failure to give respondent further assignment, the only
logical conclusion is that respondent was constructively dismissed.54 (Emphases supplied)
The same can be said of the employee in this case as no evidence was submitted by Irvine to show
any dire exigency which rendered it incapable of assigning Lopez to any of its projects. Add to this
the fact that Irvine did not proffer any sufficient justification for singling out Lopez for lay-off among
its other three hundred employees, thereby casting a cloud of doubt on Irvine's good faith in
pursuing this course of action. Verily, Irvine cannot conveniently suspend the work of any of its
employees in the guise of a temporary lay-off when it has not shown compliance with the legal
parameters under Article 286 of the Labor Code. With Irvine failing to prove such compliance, the
resulting legal conclusion is that Lopez had been constructively dismissed; and since the same
was effected without any valid cause and due process, the NLRC properly affirmed the LA's ruling
that Lopez's dismissal was illegal.
In light of the foregoing, the CA therefore erred in granting Irvine's certiorari petition. Indeed, a
petition for certiorari should only be granted when grave abuse of discretion exists - that. is, when
a court or tribunal acts in a capricious or whimsical exercise of judgment as is equivalent to lack of
jurisdiction.55 These qualities of capriciousness and whimsicality the Court finds wanting in any of
the NLRC's actions in this case; as such, the reversal of the CA's Decision is hereby warranted.
WHEREFORE, the petition is GRANTED. The Decision dated September 14, 2012 and the
Resolution dated April 12, 2013 of the Court of Appeals in CA-G.R. SP No. 108385-MIN are hereby
REVERSED and SET ASIDE. The Resolutions dated October 31, 2008 and February 12, 2009 of
the National Labor Relations Commission in NLRC LAC No. 01-000428-2008 are REINSTATED.
SO ORDERED.
G.R. No. 193756 April 10, 2013
VENANCIO S. REYES, EDGARDO C. DABBAY, WALTER A. VIGILIA, NEMECIO M.
CALANNO, ROGELIO A. SUPE, JR., ROLAND R. TRINIDAD, and AURELIO A.
DULDULAO, Petitioners,
vs.
RP GUARDIANS SECURITY AGENCY, INC., Respondent.
DECISION
MENDOZA, J.:
Before the Court is a petition for review under Rule 45 of the Rules of Court, assailing
the May 18, 2010 Amended Decision1 and the September 13, 2010 Resolution2 of the
Court of Appeals (CA), in C.A.-GR. SP No. 106643, which modified the April 9, 2008
Decision3 of the National Labor Relations Commission (NLRC) in NLRC LAC Case No.
11-002990-07, insofar as the award of backwages, the computation of separation pay,
and the refund for the trust fund contributions are concerned.
The Facts:
Petitioners Venancio S. Reyes, Edgardo C. Dabbay, Walter A. Vigilia, Nemesio M.
Calanno, Rogelio A. Supe, Jr., Roland R. Trinidad, and Aurelio A. Duldulao (petitioners)
were hired by respondent RP Guardians Security Agency, Inc. (respondent) as security
guards. They were deployed to various clients of respondent, the last of which were the
different branches of Banco Filipino Savings and Mortgage Bank (Banco Filipino).
In September 2006, respondents security contract with Banco Filipino was terminated. In
separate letters,4petitioners were individually informed of the termination of the security
contract with Banco de Oro. In two (2) memoranda, dated September 21, 20065 and
September 29, 2006,6 petitioners were directed to turnover their duties and
responsibilities to the incoming security agency and were advised that they would be
placed on floating status while waiting for available post. Petitioners waited for their next
assignment, but several months lapsed and they were not given new assignments.
Consequently, on April 10, 2007, petitioners filed a complaint7 for constructive dismissal.
In its position paper,8 respondent claimed that there was no dismissal, of petitioners,
constructive or otherwise, and asserted that their termination was due to the expiration of
the service contract which was coterminus with their contract of employment.
On August 20, 2007, the Labor Arbiter (LA) rendered a decision9 in favor of petitioners
ordering respondent to pay petitioners separation pay, backwages, refund of trust fund,
moral and exemplary damages, and attorneys fees.
Aggrieved, respondent appealed to the NLRC.
On April 9, 2008, the NLRC promulgated its decision10 sustaining the finding of
constructive dismissal by the LA, and the awards she made in the decision. The award of
moral and exemplary damages, however, were deleted.
Upon denial of its motion for reconsideration,11 respondent filed a petition for certiorari
before the CA.
On February 26, 2010, the CA rendered a decision12 dismissing the petition and affirming
the assailed NLRC decision and resolution.
On motion for reconsideration, the CA issued the Amended Decision13 dated May 18,
2010, modifying its earlier decision. Citing Section 6.5 (4) of Department Order No. 14 of
the Department of Labor and Employment (DOLE D.O. No. 14), otherwise known as
Guidelines Governing the Employment and Working Conditions of Security Guards and
Similar Personnel in the Private Security Industry, the CA reduced the computation of the
separation pay from one month pay per year of service to one-half month pay for every
year of service; reduced the refund of trust fund contribution from Sixty (P60.00) Pesos to
Thirty (P30.00)Pesos; and deleted the award of backwages and attorneys fees.
Hence, this petition anchored on the following:
GROUNDS FOR THE PETITION
8.0 The Court of Appeals has decided a question of substance in a way that is not in
accord with law and with applicable decisions of the Supreme Court concerning the
Petitioners basic right to fair play, justice and due process, with more reason that a
conclusion of law cannot be made in the motion for reconsideration.
8.1 The first decision promulgated by the Court of Appeals on February 26, 2010 affirming
the decision of the NLRC awarding both backwages and separation pay of one month
pay for every year of service can only be set aside upon proof of grave abuse of
discretion, fraud or error of law.
8.2 Petitioners are entitled to backwages for the period covered from the time the Labor
Arbiter rendered the decision in their favor on August 20, 2007 until said decision was
reversed by the Court of Appeals in its Amended Decision promulgated on May 18,
2010.14
There is no doubt that petitioners were constructively dismissed. The LA, the NLRC and
the CA were one in their conclusion that respondent was guilty of illegal dismissal when
it placed petitioners on floating status beyond the reasonable six-month period after the
termination of their service contract with Banco de Oro. Temporary displacement or
temporary off-detail of security guard is, generally, allowed in a situation where a security
agencys client decided not to renew their service contract with the agency and no post
is available for the relieved security guard.15 Such situation does not normally result in
a constructive dismissal. Nonetheless, when the floating status lasts for more than six (6)
months, the employee may be considered to have been constructively dismissed.16 No
less than the Constitution17 guarantees the right of workers to security of tenure, thus,
employees can only be dismissed for just or authorized causes and after they have been
afforded the due process of law.18
Settled is the rule that that an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges, and to his
full backwages, inclusive of allowances and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld up to the time of actual
reinstatement.19 If reinstatement is not possible, however, the award of separation pay
is proper.20
Backwages and reinstatement are separate and distinct reliefs given to an illegally
dismissed employee in order to alleviate the economic damage brought about by the
employees dismissal.21 "Reinstatement is a restoration to a state from which one has
been removed or separated" while "the payment of backwages is a form of relief that
restores the income that was lost by reason of the unlawful dismissal." Therefore, the
award of one does not bar the other.22
In the case of Aliling v. Feliciano,23 citing Golden Ace Builders v. Talde,24 the Court
explained:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations between the employee
and the employer, separation pay is granted. In effect, an illegally dismissed employee
is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement
without loss of seniority rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual reinstatement. Where reinstatement
is no longer viable as an option, separation pay equivalent to one (1) month salary for WHEREFORE, the pet1t10n is GRANTED. The May 18, 2010 Amended Decision and
every year of service should be awarded as an alternative. The payment of separation the September 13, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 106643
pay is in addition to payment of backwages. [Emphasis Supplied] are REVERSED and SET ASIDE. The April 9, 2008 Decision of the National Labor
Furthermore, the entitlement of the dismissed employee to separation pay of one month Relations Commission, modifying the August 20, 2007 Decision of the Labor Arbiter, is
for every year of service should not be confused with Section 6.5 (4) of DOLE D.O. No. REINSTATED.
14 which grants a separation pay of one-half month for every year service, to wit: The case is REMANDED to the Labor Arbiter for further proceedings to make a detailed
6.5 Other Mandatory Benefits. In appropriate cases, security guards/similar personnel are computation of the exact amount of monetary benefits due petitioners.
entitled to the mandatory benefits as listed below, although the same may not be included SO ORDERED.
in the monthly cost distribution in the contracts, except the required premiums for their
coverage:
a. Maternity benefit as provided under the SSS Law;
b. Separation pay if the termination of employment is for authorized cause as provided by
law and as enumerated below:
Half-Month Pay Per Year of Service, but in no case less than One Month Pay, if separation
is due to:
1. Retrenchment or reduction of personnel effected by management to prevent serious
losses;
2. Closure or cessation of operation of an establishment not due to serious losses or
financial reverses;
3. Illness or disease not curable within a period of 6 months and continued employment
is prohibited by law or prejudicial to the employee's health or that of co-employees; or
4. Lack of service assignment for a continuous period of 6 months.The said provision
contemplates a situation where a security guard is removed for authorized causes such
as when the security agency experiences a surplus of security guards brought about by
lack of clients. In such a case, the security agency has the option to resort to retrenchment
upon compliance with the procedural requirements of "two-notice rule" set forth in the G.R. No. 164582 March 28, 2007
Labor Code and to pay separation pay of one-half month for every year of service.
PILAR ESPINA, ELEANOR G. AQUINO, LORENE C. BARNUEVO, MARICRIS S.
In this case, respondent would have been liable for reinstatement and payment of vs.
backwages. Reinstatement, however, was no longer feasible because, as found by the HON. COURT OF APPEALS
LA, respondent had already ceased operation of its business.25 Thus, backwages and
DECISION
separation pay, in the amount of one month for every year of service, should be paid in
lieu of reinstatement. CHICO-NAZARIO, J.:
As to their claim of attorney's fees, petitioners were compelled to file an action for the This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to reverse
recovery of their lawful wages and other benefits and, in the process, incurred expenses. the following Resolutions of the Court of Appeals in CA-G.R. SP No. 78797 entitled, "Pilar
Espina, et al. v. National Labor Relations Commission, et al.": (a) Resolution1 dated 23
Hence, petitioners are entitled to attorney's fees equivalent to ten percent (10%) of the
September 2003 which dismissed petitioners appeal for failure of all of the petitioners to sign
monetary award.26
the certification of non-forum shopping; (b) Resolution2 dated 3 March 2004, denying
Finally, as to the refund of the trust fund contribution, a perusal of the records shows that petitioners motion to drop the names of their co-workers who failed to sign the certification of
the amount deducted for the trust fund contribution from each petitioner varies. Some non-forum shopping; and (c) Resolution3 dated 23 June 2004, denying petitioners Motion for
petitioners were deducted the amount of P15.00 every payday while others were Reconsideration.
deducted P30.00 every payday. Thus, the Court deems it proper to refer the computation The factual antecedents of the case are as follows:
of the same to the LA.
Respondent M.Y. San Biscuits, Inc. (M.Y. San) was previously engaged in the business of
manufacturing biscuits and other related products.
On 27 December 2000, in a conciliation proceeding before the Department of Labor and
Employment (DOLE) NCMB-NCR Director Leopoldo de Jesus, the duly authorized
representative of M.Y. San Workers Union-PTGWO and M.Y. San Sales Force Union-PTGWO
was informed of the closure or cessation of business operations of respondent M.Y. San as a
result of the intended sale of the business and all the assets of respondent M.Y. San to
respondent Monde M.Y. San Corporation (Monde) and was notified of their termination,
effective 31 January 2001. It was agreed that:
In the interest of industrial peace, the union and management have agreed as follows:
1. In consideration of the length of service of the employees, the management will pay
separation package in accordance with their existing Collective Bargaining
Agreement. In addition the company will likewise grant nine (9) days per year of
service on top of what is provided for in the CBA.
2. The computation of separation package shall be based on employees present basic
daily rate for year 2000 plus the increase of P15.00 per day for all employees.
3. The cut-off date of the length of service is on January 31, 2001.
4. The Company shall extend to all affected employees the cash equivalent of their
vacation and sick leaves, as follows:
Vacation leaves
1-5 years ----------- 17 days
5-10 years ----------- 17 days
10-20 years ----------- 17 days
20-30 years ----------- 30 days
30-35 years ----------- 32 days
Sick leaves
1-5 years ---------- 17 days
5-10 years ---------- 17 days
10-20 years ---------- 17 days
20-30 years ---------- 30 days
30-up ---------- 32 days
5. The Company will pay one-half of the total union dues for year 2001.
6. The existing local unions affiliated with PTGWO is directly and voluntarily
recognized as the sole and exclusive bargaining agent of the employees at Monde
M.Y. San Corporation, the new owner/name of M.Y. San Biscuits Inc. The company
promises to give PTGWO a written confirmation of recognition from the new
owner/company.
7. That the separation pay is Tax-Free.
8. That the SSS and PAG-IBIG loans shall be directly remitted by the employees
concerned.
9. The company will submit list of all employees to the new owner for purposes of
rehiring, subject to the new qualifications that may be imposed by the new
owner/company. The said employees, however, shall be given hiring preference.
10. As requested, the company furnished the union with a copy of the list of affected
employees and announcement letter from the President of M.Y. San Biscuit.
11. The Company agrees to start the giving of separation pay by the second week of
January 2001 but shall in no case beyond the third week of the said month.
12. The agreement of the parties in this proceeding shall be contained in the
Memorandum of Agreement that will be immediately prepared by the parties.
13. In view of this Agreement, the notices of strike filed with this Office are deemed
settled and withdrawn. The rights of the parties are, however, not waived should any
of the terms of this agreement are violated by any of the parties.
27 December 2001.4
On 28 December 2000, the written notice of the sale and purchase of the assets of respondent
M.Y San to respondent Monde and of the termination of all the employees of respondent M.Y.
San were filed before the DOLE Regional Office No. IV.5
On 22 January 2001, respondent M.Y. San and the Union signed a Memorandum of
Agreement (MOA) embodying the agreements set forth in the Minutes/Agreement, dated 27
December 2000. Embodied in the MOA is an agreement that the existing Collective
Bargaining Agreement shall cease to be effective on 31 January 2001 and shall in no way be
binding upon the buyer, respondent Monde, and that respondent M.Y. San shall provide
respondent Monde a list of all its present employees who shall be given preference in
employment by the latter. Pertinent provisions of the Agreement:
9. The Company agrees to submit the list of all its present employees to the new corporation
for purposes of rehiring if said employee applies and qualifies, subject to such criteria as the
new corporation may impose. In the rehiring, the covered employees shall be given hiring
preference, if qualified. The corresponding Notice as to whom of the covered employees have
been hired by the new corporation shall be issued immediately after January 31, 2001. During
the entire rehiring process and until the election and qualification of the new officers, the
PTGWO, through its National President, or his authorized representative, shall act as the
TRUSTEE of the UNION.
10. All employees hired by MONDE M.Y. SAN CORPORATION and/or the new owner of the
COMPANY, shall upon hiring, subject to the terms and conditions of their probationary
employment, become members of the UNION. The continued existence of the UNION in the
company and/or MONDE M.Y. SAN CORPORATION shall not be interrupted by the payment
of the Companys employees of their separation package or the temporary closure of the
Companys operations.6
On 31 January 2001, all the employees of respondent M.Y. San received their separation pay
and the cash equivalent of their vacation and sick leaves. Thereafter, they signed their
respective Quitclaims.
On 1 February 2001, an Asset Purchase Agreement was executed between respondents M.Y.
San and Monde.
On 2 February 2001, respondent Monde commenced its operations. All the former employees 6. Joey Cerbito
of respondent M.Y. San who were terminated upon its closure and who applied and qualified Complainants Barnuevo and Ollorsa refused to be transferred from the mixing department to
for probationary employment, including petitioners herein, started working for respondent the packing department and consequently tendered their resignation letters and likewise
Monde on a contractual basis for a period of six months. signed their respective release, waiver and quitclaims. x x x.
Subsequently, petitioners were terminated on various dates. Seven (7) complainants opted not to report for work either on 02 May 2001 and the succeeding
Thus, petitioners filed a Complaint for illegal dismissal and underpayment, damages and days thereafter or even before the expiration of their probationary employment. After notice
attorneys fees and litigation cost with the National Labor Relations Commission (NLRC), to explain was duly served upon them, they deliberately failed/refused to explain their
Regional Arbitration Branch No. IV. absences. Accordingly, individual notices informing them of their dismissal due to
Petitioners alleged that respondent My San stopped its operations on 31 January 2001, but AWOL/gross and habitual neglect of duties were personally delivered to their respective
three days after, resumed its operation with the same top management running the business; addresses or by registered mail.
the union officers, in exchange for being re-hired, acceded to bust the union; and the sale of 1. Pilar Espina;
respondent M.Y. San to respondent Monde was merely a ploy to circumvent the provisions of 2. Eleanor G. Aquino;
the Labor Code.
3. Maricris S.J. Bandino;
Respondent M.Y. San insisted that its employer-employee relationship with petitioners had
ceased to exist, thus, the complaint for illegal dismissal against it could no longer prosper. It 4. Julio M. Petalio, Jr.;
further contended that the power to hire and fire employees is now lodged in the new business 5. Emiliano A. Ebreo;
owner, respondent Monde. 6. Benjamin Paz; and
On the other hand, respondent Monde alleged that petitioners had no cause of action against 7. Leonora Paz
it, stating thus:
Copies of the notices to explain and the notice of dismissal of the foregoing employees are
A few days before 02 May 2001, the respective supervisors of Monde conducted an evaluation hereto attached x x x. In view of complainants Espino, Aquino and Bandinos refusal to receive
of the performance of all its probationary employees, including herein complainants, to copies of the notice of dismissal personally delivered to them, Monde likewise submitted
determine their fitness to qualify as regular employees therein. copies of the same to he Rizal Province Labor and Employment Office, DOLE Region 4 on
On 02 May 2001, the probationary employees of Monde who passed the performance 29 June 2001.
appraisal and who qualified as regular employees thereof were accordingly appointed as such. The following complainants failed to qualify as regular employees in accordance with the
Out of the one hundred sixteen (116) probationary employees engaged by respondent Monde, terms and conditions of their probationary employment with Monde and were duly informed
a total of seventy-four employees qualified for regular employment on 02 May 2001. x x x. of their failure to qualify as regular employees by letter dated 23 June 2001 terminating their
For those who did not qualify for regular employment on 02 May 2001, including herein probationary employment effective at the close of business hours on 02 July 2001:
complainants [petitioners], respondent Monde gave complainants the remainder of their 1. Leandro F. Celis;
probationary period, or until 02 July 2001, within which to prove their qualification for regular
employment therewith. 2. Paterno Fernandez;
Notwithstanding the opportunity given to herein complainants [petitioners] to improve their 3. Aniceto M. Rodriguez;
performance to qualify for regular employment with Monde, complainants [petitioners] either: 4. Donato M. Punzalan;
(a) resigned from their employment with Monde; (b) refused to report for work on 02 May 2001 5. George Quinquilleria;
and on the days following; or (c) failed to qualify for regular employment at the expiration of
the period of their probationary employment. 6. Lourdes Alfonso;
More specifically, the following complainants [petitioners] resigned from their employment with 7. Allan Palilio;
Monde and for which they signed their respective release, waiver and quitclaims: 8. Daisy V. Arceo;
1. Lorene C. Barnuevo; 9. Mario Ramos;
2. Lina P. Asugao; 10. Alejandro Pascual;
3. Noel T. de Borja; 11. Ma. Corazon Bajo;
4. Claudio delos Reyes; 12. Arnold M. Blanco;
5. Eddie Ollorsa; and 13. Cristito Abela;
 14. Dioscoro Fajanilag; and
15. Agustin Wong.
Representative copies of the letter dated 23 June 2001 terminating the probationary
employment of the foregoing employees effective at the close of business hours on 02 July
2001 are hereto attached x x x.
Anent complainant Remegio Basco, on 10 May 2001, Mr. Sandy B. Brillantes, the Employee
Relation Officer of Monde, chanced upon the former while serving the Notice of Termination of
complainants Julio Petallo and Emiliano Ebreo. Complainant Basco, in response to the query
as to why he has not been reporting for work, informed Mr. Brillantes that he had decided to
stay home instead of reporting for work.
With respect to complainant Mateo Deocareza, he has been absent without official leave
(AWOL) since 02 May 2001 and respondent Monde has yet to receive any information on him
and/or his whereabouts.
Complainant Arlene Laguerta last reported for work on 26 May 2001 and has not reported back
for work since then.7
After evaluation of their respective pleadings, Labor Arbiter Vicente R. Layawen rendered a
Decision8 dismissing the case for lack of merit. It ruled that respondent M.Y. Sans Decision
to shut down its operations by selling its assets is its sole prerogative which must be respected,
and that it had faithfully complied with the requirements of the law, i.e., the notice and payment
of separation pay. As to respondent Monde, the Labor Arbiter ruled that the former satisfactorily
discharged the burden of establishing a just and authorized cause for terminating the services
of petitioners.
On appeal, NLRC affirmed the Decision of the Labor Arbiter in a Resolution9 dated 30 August
2002.
Aggrieved, petitioners went to the Court of Appeals via a Petition for Certiorari10 under Rule
65 of the Rules of Court. However, the appellate court dismissed11 the petition on the ground
that the Special Power of Attorney (SPA) executed by petitioners did not bear the signatures
of their three other co-petitioners therein. A perusal of the said SPA would reveal the apparent
absence therein of the signatures of Eddie Ollorsa, Joey Cerbito and George Quinquillera.
Subsequently, petitioners filed a motion12 to drop the names of their three co-petitioners who
failed to sign the SPA and prayed for the reconsideration of the dismissal of their petition. The
Motion was denied13 by the Court of Appeals on 3 March 2004, on the ground that subsequent
compliance does not warrant a reconsideration of the Order of dismissal. The appellate court
further stated that there was no prima facie error committed by the NLRC in affirming the
Decision of the Labor Arbiter.
Petitioners again filed a Motion for Reconsideration14 of the 3 March 2004 Resolution, but the
same was denied by the Court of Appeals in a Resolution15 dated 23 June 2004. According
to the appellate court, the said motion for reconsideration was actually a second motion for
reconsideration, which is a prohibited pleading under Sec. 2, Rule 5216 of the Rules of Court.
Petitioners are now before us imputing to the Court of Appeals the following errors, to wit17:
I.
THE HONORABLE COURT OF APPEALS (FORMER FIFTEENTH DIVISION) SERIOUSLY
ERRED IN DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE OF ALL THE
PETITIONERS TO SIGN THE VERIFICATION AND CERTIFICATION OF NON-FORUM
SHOPPING.
II.
THE HONORABLE COURT OF APPEALS (FORMER FIFTEENTH DIVISION) SERIOUSLY
ERRED IN DENYING PETITIONERS MOTION TO DROP EDDIE OLLORSA, JOEY
CERBITO AND GEORGE QUINQUILLERA AS PETITIONERS.
III.
THE HONORABLE COURT OF APPEALS (FORMER FIFTEENTH DIVISION) SERIOUSLY
ERRED IN DENYING PETITIONERS MOTION FOR RECONSIDERATION.
IV.
THE HONORABLE COURT OF APPEALS (FORMER FIFTEENTH DIVISION) SERIOUSLY
ERRED IN NOT DECLARING THE ALLEGED SALE OF M.Y. SAN TO MONDE AS MERE
PLOY TO CIRCUMVENT THE PROVISIONS OF THE LABOR CODE AND THUS,
VIOLATED THE TENURIAL SECURITY OF THE PETITIONERS.
V.
THE HONORABLE COURT OF APPEALS (FORMER FIFTEENTH DIVISION) SERIOUSLY
ERRED IN NOT PIERCING THE VEIL OF THE CORPORATE PERSONALITIES OF M.Y.
SAN AND/OR MONDE.
VI.
THE HONORABLE COURT OF APPEALS (FORMER FIFTEENTH DIVISION) SERIOUSLY
ERRED IN NOT DECLARING THAT THE PETITIONERS WERE ILLEGALY DISMISSED.18
Before resolving the substantive issues raised by petitioners, the Court will first address the
procedural infirmities. Petitioners assail the correctness and propriety of the dismissal by the
Court of Appeals of their Petition on the ground that the SPA executed by petitioners does not
bear the signatures of their three other co-petitioners therein.
While the general rule is that the certificate of non-forum shopping must be signed by all the
plaintiffs or petitioners in a case and the signature of only one of them is insufficient, this Court
has stressed that the rules on forum shopping, which were designed to promote and facilitate
the orderly administration of justice, should not be interpreted with such absolute literalness
as to subvert its own ultimate and legitimate objective.19 Strict compliance with the provision
regarding the certificate of non-forum shopping underscores its mandatory nature in that the
certification cannot be altogether dispensed with or its requirements completely
disregarded.20 It does not, however, thereby interdict substantial compliance with its
provisions under justifiable circumstances.21
In the case of San Miguel Corporation v. Aballa,22 the dismissed employees filed with the
NLRC a complaint for declaration as regular employees of San Miguel Corporation (SMC)
and for an illegal dismissal case, following SMCs closure of its Bacolod Shrimp Processing
Plant. After an unfavorable ruling from the NLRC, the dismissed employees filed a petition for
certiorari with the Court of Appeals. Only three out of the 97 named petitioners signed the
verification and certification of non-forum shopping. This Court ruled that given the collective
nature of the petition filed before the appellate court, which raised only one common cause of
action against SMC, the execution by the three petitioners, in behalf of all the other petitioners,
of the certificate of non-forum shopping constitutes substantial compliance with the Rules.
In the case at bar, the signatures of 25 out of the 28 employees who filed the Petition for
Certiorari in the appellate court, likewise, constitute substantial compliance with the Rules.
Petitioners raised one common cause of action against respondents M.Y. San and Monde, i.e.,
the illegal closure of respondent M.Y. San and its subsequent sale to respondent Monde, which
resulted in the termination of their services. They share a common interest and common
defense in the Complaint for illegal dismissal, which they filed with the NLRC. Thus, when they
appealed their case to the appellate court, they pursued the same as a collective body, raising
only one argument in support of their rights against the illegal dismissal allegedly committed
by respondents M.Y. San and Monde. There is sufficient basis, therefore, for the 25 petitioners,
to speak for and in behalf of their co-petitioners, to file the Petition in the appellate court.
Ordinarily, we would have remanded this case to the Court of Appeals for disposition on the
merits. However, so as not to needlessly prolong the resolution of a comparatively simple
controversy, we deem it just and equitable to decide the same on the merits.23
Based on the merits, the petition must, just the same, fail.
The substantive issue being presented by petitioners for resolution is whether they were
illegally terminated from work by respondents M.Y. San and Monde. Corollary to the above
issue is whether the closure of business by respondent M.Y. San was valid.
We shall first discuss the validity of the closure of business by respondent M.Y. San before
tackling the alleged illegal dismissal of petitioners by respondent M.Y. San.
Work is a necessity that has economic significance deserving legal protection. The provisions
on social justice and protection to labor in the Constitution24 dictate so.
However, employers are also accorded rights and privileges to assure their self-determination
and independence and reasonable return of capital. This mass of privileges comprises the so-
called management prerogatives. Although they may be broad and unlimited in scope, the
State has the right to determine whether an employers privilege is exercised in a manner that
complies with the legal requirements and does not offend the protected rights of labor. One of
the rights accorded an employer is the right to close an establishment or undertaking.25Just
as no law forces anyone to go into business, no law can compel anybody to continue the
same.26
The right to close the operations of an establishment or undertaking is explicitly recognized
under the Labor Code as one of the authorized causes in terminating employment of workers,
the only limitation being that the closure must not be for the purpose of circumventing the
provisions on terminations of employment embodied in the Labor Code. Article 283 of the
Labor Code reads:
ART. 283. Closure of establishment and reduction of personnel.The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. x x x. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered as one (1) whole year. (Emphasis supplied.)
The phrase "closure or cessation of operations of establishment or undertaking" includes a
partial or total closure or cessation.
x x x Ordinarily, the closing of a warehouse facility and the termination of the services of
employees there assigned is a matter that is left to the determination of the employer in the
good faith exercise of its management prerogatives. The applicable law in such a case is
Article 283 of the Labor Code which permits "closure or cessation of operation of an
establishment or undertaking not due to serious business losses or financial reverses," which,
in our reading includes both the complete cessation of operations and the cessation of only
part of a companys business.27
And the phrase "closure or cessation not due to serious business losses or financial reverses"
recognizes the right of the employer to close or cease its business operations or undertaking
even in the absence of serious business losses or financial reverses, as long as he pays his
employees their termination pay in the amount corresponding to their length of service.
It would indeed be stretching the intent and spirit of the law if a court were to unjustly interfere
in managements prerogative to close or cease its business operations just because said
business operation or undertaking is not suffering from any loss.28 The determination to
cease operations is a prerogative of management which the State does not usually interfere
with, as no business or undertaking must be required to continue operating simply because it
has to maintain its workers in employment, and such act would be tantamount to a taking of
property without due process of law.29 As long as the companys exercise of the same is in
good faith to advance its interest and not for the purpose of circumventing the rights of
employees under the law or a valid agreement, such exercise will be upheld.30
Clearly then, the right to close an establishment or undertaking may be justified on grounds
other than business losses but it cannot be an unbridled prerogative to suit the whims of the
employer.31
Under Article 283 of the Labor Code, three requirements are necessary for a valid cessation
of business operations, namely:
(1) service of a written notice to the employees and to the DOLE at least one (1)
month before the intended date thereof;
(2) the cessation must be bona fide in character; and
(3) payment to the employees of termination pay amounting to at least one half (1/2)
month pay for every year of service, or one (1) month pay, whichever is higher.
The records reveal that private respondent M.Y. San complied with the aforecited
requirements. M.Y. San employees were adequately informed of the intended business
closure and a written notice to the Regional Director of DOLE was filed by respondent M.Y.
San, informing the DOLE that M.Y. San will be closed effective 31 January 2001.
The ultimate test of the validity of closure or cessation of establishment or undertaking is that
it must be bona fide in character.32 And the burden of proving such falls upon the employer.33
Respondent M.Y. San in good faith complied with the requirements for closure; sold and
conveyed all its assets to respondent Monde for valuable consideration; and there were no
previous labor problems. It has been ruled that an employer may adopt policies or changes
or adjustments in the operations to insure profit to itself or protect the investments of its
stockholders, and in the exercise of such management prerogative, the employer may merge
or consolidate its business with another, or sell or dispose all or substantially all of its assets
and properties which may bring about the dismissal or termination of its employees in the
process.34
Lastly, the petitioners received their termination pay which was even beyond the amount
required by law. The computation of their separation pay was 15 days for every year of service
plus an additional nine days for every year of service, and cash equivalent of their vacation
and sick leaves.35 Petitioners received their separation pay and accordingly signed their
quitclaims.
The closure, therefore, of the business operation of respondent M.Y. San was not tainted with
bad faith or other circumstance that would give rise to suspicions of malicious intent. Other
than their mere allegations, petitioners failed to present independent evidence that would
otherwise show that the closure of M.Y. San was without factual basis and done in utter bad
faith. Mere allegation is not evidence. It is a basic rule in evidence that each party must prove
his affirmative allegation.36
Thus, since private respondent M.Y. Sans closure and cessation of business was lawful, there
was no illegal dismissal of petitioners to speak of.
We shall now proceed to discuss the validity of the termination of the employment of petitioners
by respondent Monde.
There is no dispute that petitioners were probationary employees as stated in their individual
contracts of employment with respondent Monde.
Article 281 of the Labor Code governs probationary employment:
Art. 281. Probationary employment. Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged
on a probationary basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to
the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
While petitioners were only probationary employees who do not enjoy permanent status,
nonetheless, they were still entitled to the constitutional protection of security of tenure. As
may be gleaned in the abovequoted provision, their employment may only be terminated for a
valid and just cause or for failing to qualify as a regular employee in accordance with the
reasonable standards made known to him by the employer at the time of engagement and
after being accorded due process.37
Procedural due process requires that the employee be given two written notices before he is
terminated, consisting of a notice which apprises the employee of the particular acts/omissions
for which the dismissal is sought and the subsequent notice which informs the employee of the
employers decision to dismiss him.38
In the case at bar, petitioners were notified of the standards they have to meet to qualify as
regular employees of respondent Monde when the latter apprised them, at the start of their
employment, that:
1. You shall be under probation for a maximum period of six (6) months or until Jul.
03, 2001. During this period, you are expected to learn your job, perform your duties
and responsibilities to the best of your ability, and observe all company rules and
regulations; if during this period, you fail to meet company standards, your
appointment may be terminated earlier or at the expiration of your probationary period
at the discretion of the company.
xxxx
5. To determine your fitness to assume your position on a permanent status, when
considered due, your supervisor shall rate your performance during your probationary
period.39
Significantly, petitioners Lorene C. Barnuevo, Claudio delos Reyes, Eddie Ollorsa, and Joey
Cerbito voluntarily resigned from respondent Monde and signed their respective release,
waiver and quitclaims.
Respondent Monde exercised its management prerogative in good faith when it dismissed
petitioners Pilar Espina, Eleanor G. Aquino, Maricris S.J. Bandino, Julio M. Petalio, Jr.,
Emiliano A. Ebreo, Benjamin Paz, and Leonora Paz, due to absence without leave (AWOL),
gross and habitual neglect of duties, and only after the personal delivery of the notices to their
respective addresses or by registered mail. With respect to petitioner Mateo Deocareza, he
has been AWOL since 2 May 2001 and respondent Monde has yet to receive any information
on him and/or his whereabouts. There were two notices sent to petitioners individually a
notice apprising them of the particular acts or omissions for which their dismissal was sought
and a memorandum informing them that they were terminated from work.
In the case of petitioners Leandro R. Celis, Paterno Fernandez, Aniceto M. Rodriguez, Donato
M. Punzalan, Lourdes Alfonso Q., Allan Panlilio, Daisy V. Arceo, Alejandro Pascual, Ma.
Corazon Bajo, Arnold M. Blanco, Cristito Abela, Dioscoro Fajanilag, and Agustin Wong, they
failed to qualify as regular employees in accordance with the terms and conditions of their
probationary employment with respondent Monde and were duly informed of their failure to
qualify as regular employees by letter dated 23 June 2001 terminating their probationary
employment effective at the close of the business on 2 July 2001. Again, there were two
notices sent to petitioners individually a notice apprising them of the particular acts or
omissions for which their dismissal was sought and a memorandum informing them that they
were terminated from work.
It must be noted that petitioners were terminated prior to the expiration of their probationary
contracts on 3 July 2001. As probationary employees, they enjoyed only temporary
employment status. In general terms, this meant that they were terminable anytime,
permanent employment not having been attained in the meantime. The employer could well
decide if he no longer needed the probationarys service or his performance fell short of
expectations, as 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 to determine if he has the qualification to
meet the reasonable standards for permanent employment. The length of time is immaterial
in determining the correlative rights of both the employer and the employee in dealing with
each other during said period. Thus, 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-employee relationship. A contrary interpretation would defeat the clear
meaning of the term "probationary."40
Terminating employment is one of respondent Mondes prerogatives. As an employer,
respondent Monde has the right to regulate, according to its discretion and best judgment,
including work assignment, working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of workers. Management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and regulations.41
This Court has upheld a companys management prerogatives so long as they are exercised
in good faith for the advancement of the employers interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws and valid
agreements.42
The law imposes many obligations on the employer such as providing just compensation to
workers, observance of the procedural requirements of notice and hearing in the termination
of employment. On the other hand, the law recognizes the right of the employer to expect from
its workers not only good performance, adequate work and diligence, but also good conduct
and loyalty. The employer may not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interest. 43
Thus, respondent Monde exercised in good faith its management prerogative as there is no
dispute that petitioners had been habitually absent, neglectful of their work, and rendered
unsatisfactory service, to the damage and prejudice of the company.
Anent the validity of quitclaims signed by petitioners.
To be sure, the law looks with disfavor upon quitclaims and releases by employees who are
inveigled or pressured into signing them by unscrupulous employers seeking to evade their
legal responsibilities. But quitclaims and releases are not per se invalid.
We have clarified the standards for determining the validity of quitclaim or waiver in the case
of Periquet v. National Labor Relations Commission,44 to wit:
If the agreement was voluntarily entered into and represents a reasonable settlement, it is
binding on the parties and may not later be disowned simply because of a change of mind. It
is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible
person, or the terms of settlement are unconscionable on its face, that the law will step in to
annul the questionable transaction. But where it is shown that the person making the waiver
did so voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking. x x x.
In the case at bar, there is no showing that petitioners were coerced into signing the quitclaims.
In their sworn quitclaims, they freely declared that they received to their satisfaction all that are
due them by reason of their employment and that they were voluntarily releasing respondents
M.Y. San and Monde, for any liability in relation to their employment. Nothing on the face of
their quitclaims would show that they were unconscionable. Further, petitioners did not present
evidence that they had been forced or intimidated in signing the same.
Finally, it is significant to note that both the Labor Arbiter and the NLRC were unanimous in
their findings that the closure of respondent M.Y. San is valid and that the employees of
respondents M.Y. San and Monde were not illegally dismissed. The issue as to whether there
was a valid ground for petitioners dismissal is factual in nature.45 We have always held that
factual findings of the NLRC affirming those of the Labor Arbiter, who are deemed to have
acquired expertise in matters within their jurisdiction, when sufficiently supported by evidence
on record, are accorded respect if not finality, and are considered binding on this Court. As
long as their Decisions are devoid of any unfairness or arbitrariness in the process of their
deduction from the evidence proffered by the parties before them, all that is left is the Courts
stamp of finality by affirming the factual findings made by the NLRC and the Labor
Arbiter.46 We find no reason to depart from this Rule.
WHEREFORE, this Court grants the instant Petition insofar as it REVERSES the Resolutions
of the Court of Appeals dated 23 September 2003, 3 March 2004, and 23 June 2004 and
DECLARES the signing of the certification of non-forum shopping by 25 of the 28 named
petitioners substantial compliance with the Rules. This Court though finds it unnecessary to
remand the case to the Court of Appeals and proceeds to RESOLVE the same based on the
merits. This Court thus AFFIRMS the Decision dated 30 August 2002 of the National Labor
Relations Commission affirming the Decision dated 25 April 2002 of the Labor Arbiter finding
that the closure of respondent M.Y. San was valid and bona fide and in accordance with
statutory requirements, and that petitioners were not illegally dismissed by either respondent
M.Y. San or Monde. No costs.
SO ORDERED.
G.R. No. L-13778 April 29, 1960
PHILIPPINE EDUCATION CO., INC., petitioner,
vs.
UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU) and THE COURT OF
INDUSTRIAL RELATIONS, respondents.
Marcial Esposo for petitioner.
Eulogio R. Lerum for respondent Union. Jose B. Bolisay for respondent CIR.
MONTEMAYOR, J.:
The Philippine Education Company, Inc. is appealing the order of the Court of Industrial
Relations, dated February 7, 1958, directing it to reinstate its former employee, Ernesto
Carpio, to his former or equivalent position, without backpay, and from the resolution of
the same court in banc, dated March 22, 1958, denying the company's motion for
reconsideration.
Ernesto Carpio and other employees of the company, members of the Union of Philippine
Education Employees (NLU) joined a strike staged on January 16, 1953. After the labor
dispute was settled, the Industrial Court ordered the reinstatement of the strikers,
including Carpio. The company, however, opposed the reinstatement of Carpio for the
reason that a criminal complaint had been filed against him in the Municipal Court of
Manila for theft of magazines allegedly belonging to the company. He was convicted and
sentenced to two months and one day of arresto mayor. On appeal to the Court of First
Instance, Carpio was acquitted on the ground of reasonable doubt.
The question of Carpio's reinstatement was heard by the Industrial Court where the
parties submitted as evidence the transcript of the stenographic notes taken during the
hearing in the criminal case before the Court of First Instance of Manila, the exhibits
presented in said case, as well as the decisions of the Municipal Court convicting him,
and that of the Court of First Instance acquitting him, or rather dismissing the case against
him on reasonable doubt. After said hearing, the Industrial Court agreed with the finding
of the Court of First Instance that the offense had not been proven beyond reasonable
doubt and held that Carpio's acquittal entitled him to reinstatement, though without
backpay.
We have examined the aforementioned evidence, and we are inclined to agree with the
Municipal Court that Carpio's guilt had been duly established. At least, the preponderance
of evidence was against his innocence. The question for determination is whether the
whether the acquittal of an employee, specially on the ground of reasonable doubt, in a
criminal case for theft involving articles and merchandise belonging to his employer,
entitles said employee to reinstatement.
In the case of National Labor Organization of Employees and Laborers vs. Court of
Industrial Relations, 95 Phil., 727; Off. Gaz. (9) 4219, we said:
. . . the acquittal of a employee in a criminal case is no bar to the Court of Industrial
Relations, after proper hearing, finding the same employee guilty of facts inimical
to the interests of his employer and justifying loss of confidence in him by said
employer, thereby warranting his dismissal or the refusal of the Company to
reinstate him. The reason for this is not difficult to see. The evidence required by
law to establish guilt and to warrant conviction in a criminal case substantially
differs from the evidence necessary to establish responsibility or liability in a civil
or non-criminal case. The difference is in the amount and weight of evidence and
also in degree. In a criminal case, the evidence or proof must be beyond
reasonable doubt while in a civil or non criminal case it is merely preponderance
of evidence. In further support of this principle we may refer to Art. 29 of the New
Civil Code (Rep. Act 386) which provides that when the accused in a criminal case
is acquitted on the ground of reasonable doubt a civil action for damages for the
same act or omission may be instituted where only a preponderance of evidence
is necessary to establish liability. From all this it is clear that the Court of Industrial
Relations was justified in denying the petition of Rivas and Tolentino for
reinstatement in the cement company, because of their illegal possession of hand
grenades intended by them for purposes of sabotage in connection with the strike
on March 16, 1952.
Then in the case of National Labor Union vs. Standard Vacuum Oil Company, 73 Phil.,
279, the City Fiscal refused to prosecute two employees charged with theft for lack of
evidence and yet this Tribunal upheld their dismissal from the employer company on the
ground that their employer had ample reason to distrust them.
The relation of employer and employee, specially where the employee has access to the
employer's property in the form of articles and merchandise for sale, necessarily involves
trust and confidence. If said merchandise are lost and said loss is reasonably attributed
to said employee, and he is charged with theft, even if he is acquitted of the form of articles
and merchandise for sale, necessarily involves trust and confidence. If said merchandise
are lost and said loss is reasonably attributed to said employee, and he is charged with
theft, even if he is acquitted of the charge on reasonable doubt, when the employer has
lost its confidence in him, it would be highly unfair to require said employer to continue
employing him or to reinstate him, for in that case the former might find it necessary for
its protection to employ another person to watch and keep an eye on him. In the present
case, Carpio was refused reinstatement not because of any union affiliation or activity or
because the company has been guilty of any unfair labor practice. As already stated,
Carpio was convicted in the Municipal Court and although he was acquitted on
reasonable doubt in the Court of First Instance, the company had ample reason to distrust
him. Under the circumstances, we cannot in conscience require the company to reemploy
or reinstate him.
In view of the foregoing, the appealed orders of the Industrial Court of February 7, 1958
and March 22, 1958 are hereby reversed. No costs.
G.R. No. L-15171 April 29, 1961
LEPANTO CONSOLIDATED MINING COMPANY and CHARLES B.
FOSTER, petitioners,
vs.
THE COURT OF APPEALS, and LEONARDO ARCA, respondents.
LABRADOR, J.:
Leonardo Arca instituted this action on October 22, 1954, alleging that on July 22, 1953,
he was employed by the defendants as clerk-typist at P6.25 a day; that on August 22,
1954, the defendants terminated his (plaintiff's) services, on the alleged ground that they
were no longer needed; that his employment was made under an existing agreement
between the employees and the defendants company on March 27, 1953 under which it
was to continue until the work assigned to him was to be finished; that the termination of
his employment constituted a breach of the agreement entered into upon his
employment; that defendants must have been irked by act of plaintiff in organizing a labor
union; that he suffered actual damages consisting of loss of wages, attorney's fees and
costs; and that because of the acute employment problem, he has suffered mental
anguish and serious anxiety. He prays for actual, and moral damages and costs.
After a denial of a motion to dismiss, defendants presented their respective answers.
Defendant Charles B. Foster denied the claim of the plaintiff that his work was to continue
until the completion of the work or project assigned to him, and alleged that under the
agreement between the Lepanto Consolidated Mining Company and its employees dated
March 27, 1953, he as the general superintendent has the power to determine when a
particular work in the mine is deemed completed or what work should be curtailed, as well
as the power and authority to lay-off and discharge an employee when his services are
no longer necessary or when such lay-off or discharge was required in the conduct and
furtherance of the company's business; that the defendant was discharged because his
services were no longer needed; that plaintiff accepted the separation slip without any
protest; and that the defendants have the exclusive right to lay-off employees whose
services are no longer required in the furtherance of the business. Practically to the same
effect is the defendant Lepanto Consolidated Mining Company's answer.
Issues having been joined, trial was held on January 7, 1956 and Judge Jesus de Veyra
rendered a judgment finding that plaintiff's separation was justified and so dismissing the
complaint. Pertinent portion of the decision of the trial judge reads as follows:
. . . Obviously there is no such 'completion or curtailment' involved here.
Defendant Company presented evidence, without objection on the part of plaintiff,
to the effect that Plaintiff had been caught snooping among the papers of Mr.
Foster, General Superintendent of the Company; that he was guilty of dishonesty
in that despite the fact that in the labor management meeting the question of the
alleged high prices of the Lepanto Store were under discussion, he still wrote a
letter to the President of the Philippines; that he instigated unfounded charges in
connection with the Lepanto High School; that he organized his own rival union
while working for the company. This rival labor union was organized in August,
1954 although only formally further proved that the ostensible reason for Plaintiff's
separation which was "services no longer needed" was placed there for Plaintiff's
protection and that at his urging so that he would be able to find work elsewhere
although the real reason for Plaintiff's discharge was loss of confidence and
dishonesty.
Plaintiff relies for his cause of action on Art. VIII (a) of the labor contract Exhibit
"A" and admittedly his discharge can not be laid to any supposed "completion of
any particular project or curtailment of any phase of the operation." If this Court
were to rely on the separation slip (Exhibit "B") alone, then clearly Plaintiff should
be reinstated. But Defendant Company was able to introduce evidence, without
objection on the part of counsel for the Plaintiff, to the effect that Plaintiff had been
guilty of dishonesty as well as there was loss of confidence in him. This Court
finds that the discharge of Plaintiff was justified under Art. VIII, sec. (b), subsec
(2), as plaintiff was guilty of dishonesty not only in embarrasing the labor-
management conference on the alleged high prices in the Lepanto Store by going
over the heads to the President of the Philippines; not only by instigating trouble
at the Lepanto High School; not only by snooping among the papers of Mr. Foster;
but principally for organizing a rival labor union while he was still secretary of the
Lepanto Civic Welfare Union this last act would have led to real unrest in the
Company, had Plaintiff remained in its employ. As it is Plaintiff could have been
discharged summarily without any 30-day notice or 30-day pay. The Company in
giving Plaintiff 30 days pay was generous. There is one more aspect of this case.
As Plaintiff admitted organizing a rival labor union as early as August, 1954, and
this union already had legal personality even before registration, Plaintiff can be
deemed to have forfeited his membership in the Lepanto Civic Welfare Union. If
this is so, he would not have been entitled to invoke the protection of the labor
contract of this union, and Plaintiff's standing would be that of any ordinary
employee who may be discharged by giving him one month notice or one month
pay (Republic Act 1052). (pp. 52-55, ROA)
The lower court therefore dismissed the complaint. Appeal having been made to the
Court of Appeals, this Court reversed the judgment, ordering the reinstatement of the
plaintiff, the payment of his back wages from October 1, 1954 at P6.25 a day until
reinstated and the payment of costs. The Court of Appeals reversed the finding of the
lower court that the different acts committed by the appellant were acts of dishonesty. It
held that the act of appellant in writing the President of the Philippines requesting for a
commercial or price control agent to investigate the prices in the store of defendants is
not an act of dishonesty, as it is an exercise of the constitutional right of the citizen to
petition the Government for redress of his and his co-employees' grievances; that the act
of the plaintiff in preparing a complaint against the principal of the Lepanto High School
was also in accord with a civic duty to help the students; that his act of snooping among
the papers of the defendant Foster is only a conclusion, not justified by the premises, for
he is supposed to be entrusted with the duty of reorganizing the confidential files and one
cannot reorganize the confidential files of an office without reshuffling or reading of the
same; that the organization of a rival labor union is neither a dishonest act prejudicial to
defendants unless it is admitted that the Lepanto Civic Welfare Union to which he belongs
is company controlled, and the curtailment of his right to organize would constitute an
unfair labor practice on the part of the employer.
It is to be noted that in the course of the trial no objection was raised against evidence
tending to prove that plaintiff had been caught in the act of shuffling papers in the desk
of Mr. Foster, papers which had no connection with his work, as a result of which
defendant Foster had lost confidence in plaintiff. It was also proved without objection that
defendant Foster had intended to assign plaintiff to organize or reorganize the
confidential files of the company, but in the meanwhile had assigned him to work as
assistant of his secretary; that the secretary had reported that plaintiff's work was not
very satisfactory because plaintiff was inattentive; that desiring to terminate his services,
defendant Foster gave him his separation slip because he had lost confidence in him;
that no mention was made about the dishonest acts committed by him in order that he
be given opportunity to find other employment.
The Court of Appeals reasoned that since plaintiff was assigned to confidential work the
shuffling of the papers of defendant Foster was within said work. The above conclusion
is not justified first, because Foster testified that plaintiff had actually not been working
as yet on the confidential files and hence plaintiff was not yet authorized to work on the
confidential papers; and second because the private papers of Foster are not the
confidential files of the company.
The acts committed by the respondent in sending petition to authorities regarding the
activities of his employer, while in themselves, legitimate acts of an individual protected
by law, by such acts plaintiff has shown conduct which would render him unsuitable for
the work for which the employer intended him that is, confidential work. Certainly this
is what Foster must have meant when he declared in court that he had lost confidence in
plaintiff.
If, as already indicated above, the understanding in respondent's employment was for him
to be assigned to the arrangement of the confidential files of the defendant company, and
the defendants had lost confidence in the respondent. Would it be proper to order the
reinstatement of the latter?
The consensus of opinion among the members of the Court is that it would be unfair and
unjust to the employer to require it to continue employing the services of the person in
whom the manager has lost confidence. But if loss of confidence may not justify
reinstatement, neither should the employer be relieved from damages that his refusal to
continue the employment may cause to the employee. The employer has committed a
breach of the contract of employment; if it made a mistake in choosing the right person it
may be relieved from continuing the employment, but it should not and would not be
relieved from liability for the damages arising from the breach of the contract of
employment.
The Court believes that the respondent-employee should be granted an award of such
damages as he may have suffered by reason of the breach of the contract of employment,
but his reinstatement should not be ordered, as it is not appropriate to the peculiar
circumstances of the case. The case should be remanded to the Court of First Instance
for the determination of the amount of damages which may be awarded to the respondent-
employee.
WHEREFORE, the decision of the Court of Appeals appealed from is hereby set aside,
but the case is hereby remanded to the Court of First Instance for further trial as above
indicated. Without costs. So ordered.