DIGEST OF LABOR CASES

JD – II ICYQ

G.R. No. 181146               January 26, 2011

THE UNIVERSITY OF THE IMMACULATE CONCEPTION and MO. MARIA ASSUMPTA

DAVID, RVM, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and TEODORA AXALAN, Respondents.

Things to Note:
CONSTRUCTIVE DISMISSAL
Jurisdiction of Labor Disputes
Facts:
 Respondent Teodora Axalan is a regular faculty member of UIC who, on separate
occasions, attended two seminars without filing an official leave.
 Dean Maria Rosa Celestial asked her to explain in writing why she should not be
dismissed for having been AWOL. In her stand, she conducted online classes during the
seminar and under the impression that even if not physically present in the classroom
she would not be marked absent so long as she held classes.
 Axalan was told that no admin charge would be filed if she admits having been AWOL
and writes a letter of apology. However, Axalan did not do as told.
 An ad hoc grievance committee was then created to investigate the AWOL charge and
after conducting hearings, the committee found Axalan to be guilty of incurring AWOL
and recommended her suspension without pay for six mos for each AWOL.
 Axalan filed a complaint for ILLEGAL SUSPENSION, CONSTRUCTIVE DISMISSAL,
reinstatement with backwages, and ULP with prayer for damages and atty. Fees.
 UIC moved to dismiss the complaint on the ground that LA had no jurisdiction over the
issue, that it lays within the Voluntary Arbitrator.

LA: Held that since there exists no CBA, no grievance machinery exists which bars resort to
VA.
SUPENSION OF AXALAN AMOUNTED TO CONSTRUCTIVE DISMISSAL.

UIC appealed to NLRC. Aside from asserting that it is the VA that has jurisdiction over the
case, UIC also pointed out that the upon decision of the LA, Axalan had already returned to
work upon expiration of her suspension.
NLRC: Held that it is the LA that has jurisdiction over the labor dispute and not the VA.
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UIC filed a petition for certiorari with the CA.

CA: Affirmed the decision of the LA and NLRC.
Hence this petition for review on certiorari.

ISSUE/S:
1. WON VA had jurisdiction over the case.
2. WON there was a constructive dismissal
The university points out that for constructive dismissal to exist, there must be severance of
employment by the employee because of unbearable act of discrimination, insensibility, or
disdain on the part of the employer leaving the employee with no choice but to forego
continued employment.
RULING:
1. YES.
Based on the notes from the hearing held by the Ad Hoc Grievance Committee, the
parties agreed that the VA would have jurisdiction over the labor dispute.
While under Art 217 of the LCP, ULP cases and termination disputes fall under the
original and exclusive jurisdiction of the Labor Arbiter the law allows for an
exception which is found in Art. 262 of the LCP: The VA or panel of VA, UPON
AGREEMENT OF THE PARTIES, shall also hear and decide ALL OTHER LABOR
DISPUTES including ULP and bargaining deadlocks.
Therefore, it should have been referred by the LA to the VA as there was already an
agreement between the parties to submit the dispute to a voluntary arbitrator.

2. NO.
Constructive dismissal occurs when there is cessation of work because continued
employment is rendered impossible, unreasonable, or unlikely as when there is a
demotion in rank or diminution in pay or when a clear discrimination, insensibility,
or disdain by ER becomes unbearable to the EE leaving him no other choice but
to forgo continued employment.
In the instant case, there is no cessation of employment. In fact, Axalan resumed his
teaching after the suspension expired, which meant that Axalan never quit his job.
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G.R. No. 186614               February 23, 2011

NATIONWIDE SECURITY AND ALLIED SERVICES, INC., Petitioner,

vs.
RONALD P. VALDERAMA, Respondent.

RULES TO CONSIDER:

1. Filing of complaint for illegal dismissal is inconsistent with the charge of abandonment or
voluntary resignation.

2. Temporary “off-detail” does not constitute constructive dismissal so long as it does not
continue for more than six months.

3. Resignation is the voluntary act of the employee where he finds himself in a situation
where personal reasons cannot be sacrificed in favor of the exigency of the service and
has no other choice but to disassociate himself from his employment.

4. To constitute abandonment, the following must be present: (1) failure to report to work or
absence without valid reason, and (2) clear intent to sever the er-ee relationship.

Facts of the case:

 Ronald Valderama was hired as a security guard on April 2002 by Nationwide Security
and Allied Services (NSAS) assigned at Philippine Heart Center until his relief on
January 30, 2006. Valderama was not given any assignment thereafter which prompted
him, on August 2006, to file a complaint for constructive dismissal and nonpayment of 13
month pay.
 According to NSAS, Valderama was not constructively or illegally dismissed but had
voluntarily resigned. NSAS also said that there have been many occasions where
Valderama committed serious violations of the security rules in the workplace. As such,
it was recommended by one of his superiors that he be relieved from his post at the
PHC.

LA: Valderama was constructively dismissed. NSAS failed to show proof that Valderama had
indeed voluntarily resigned. As a general rule, the filing of complaint for illegal dismissal is
inconsistent with resignation. In fact, it was alleged that Valderama “resigned” on February 10,
2006 but was required by NSAS to undergo Re-Training Course on February 20, 2006 to March
1, 2006.
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NLRC: Modified the decision of the LA, declaring that Valderama was neither dismissed nor did
he resign. As such, he remained an employee and was ordered to report back to work and
assume duty.

CA: Set aside the decision of NLRC and reinstated the decision of LA. It pointed out that
Valderama remained on floating status for more than six months and NSAS did not offer any
explanation why they failed to provide for a new assignment after being relieved from PHC.

Thus, this petition for review on certiorari.

ISSUE/S:
1. WON Valderama was constructively dismissed.

RULING:
1. Yes.
In cases involving security guard, a relief and transfer order in itself does not sever the
employment relationship. Temporary “off-detail” or the period of time Security Guards
are made to wait until they are transferred or assigned to a new post or client does not
constitute constructive dismissal, so long as such status does not continue beyond
six months.

There is no doubt that Valderama was on “floating status” for more than six months. As
such, the failure of NSAS to give Valderama a work assignment within the reasonable
six month period makes it liable for constructive dismissal.

Additional notes:
NSAS asserts that Valderama refused to report to his new assignment and as such has
“abandoned” his job.
To constitute abandonment, the ff. elements must concur:
1. Failure to report for work or absence without valid reason;
2. Clear intent, manifested through overt act to sever the Er-Ee relationship.

Nor can they substantiate that Valderama voluntarily resigned, as they were unable to
show as little as much as a resignation letter.
DIGEST OF LABOR CASES
JD – II ICYQ
DIGEST OF LABOR CASES
JD – II ICYQ

G.R. No. 177816               August 3, 2011

NIPPON HOUSING PHIL. INC., and/or TADASHI OTA, HOROSHI TAKADA, YUSUHIRO
KAWATA, MR. NOBOYUSHI and JOEL REYES Petitioners,
vs.
MAIAH ANGELA LEYNES, Respondent.

RULES TO CONSIDER:
1. "off-detailing" is not equivalent to dismissal, so long as such status does not continue
beyond a reasonable time and that it is only when such a "floating status" lasts for more
than six months that the employee may be considered to have been constructively
dismissed.
2. There is said to be constructive dismissal when an act of clear discrimination,
insensitivity or disdain on the part of the employer has become so unbearable as to
leave an employee with no choice but to forego continued employment.
3. Where dismissal, however, is for an authorized cause like redundancy, the employer is,
instead, required to serve a written notice of termination on the worker concerned and
the DOLE, at least one month from the intended date thereof.

Facts of the case:

 Nippon Housing Philippines Inc. (NHPI) hired Maiah Angela Leynes as Property
Manager in the for the Bay Gardens Condominium Project.
 Leynes had a misunderstanding with the building engineer (Enrg. Cantuba) assigned at
the project, Cantuba was barred by the former to enter the premises of the Project. A
memorandum was then issued by the vice president of NHPI, Mr. Hiroshi Takada,
attributing the incident as “simple personal differences” and directing Leynes to allow
Cantuba to report to work.
 Disappointed by such, Leynes asked for an emergency leave and signified that she was
planning on resigning. As a consequence of such, NHPI offered the position of Property
Manager to Engr. Carlos Jose which on the same time, the HR Head Reyes, received by
telefax a letter from Leynes that she will be reporting back to work. After reporting back
to work, she sent out a written protest with regard to substitute hired in her stead. A
memorandum relieving her from her position and directing her to report to NHPI’s main
office while she was on floating status.
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 This prompted her to filed for a complaint of ILLEGAL DISMISSAL, unpaid salaries,
benefits, damages and atty.’s fees.
 During pendency of the case, Reyes served DOLE and Leynes with notice terminating
her services by reason of redundancy.

LA: act of NHPI putting Leynes on floating status was equivalent to termination without just
cause.
NLRC: Reversed the decision of the LA. NHPI’s placement of Leynes on floating status was
necessitated by the client’s contractually guaranteed right to request for her relief.
CA: Reversed the decision of the NLRC. (1) Leynes relief from position was tantamount to
constructive dismissal. (2) bad faith of NHPI and its officers is evident from hiring Engr. Jose
as replacement on Feb 13, 2002 or prior to her being relieved from position on Feb 22,
2002. (3) failure of NHPI and officers to prove just cause for Leynes’ termination,
redundancy of services and compliance of due process.
Hence, this petition for review on certiorari.

ISSUE/S:
1. WON Floating status, in this case, is tantamount to Constructive Dismissal.
2. WON dismissal on ground of redundancy was correct.

RULING:
1. No.
Art. 286 of the LCP provides that: the bona fide suspension of the operation of a
business undertaking for a period not exceeding six months xxx shall not terminate
employment.
NHPI’s immediate hiring of Engr. Jose was brought about by Leyne’s rash
announcement of her intention to resign. NHPI simply placed her on floating status “until
such time that another project could be secured” for her. In the case at bar, NHPI only
recently ventured in building management and had only one client (BGCC), hence no
other position available.

Settled rule is that "off-detailing" is not equivalent to dismissal, so long as such status
does not continue beyond a reasonable time and that it is only when such a "floating
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status" lasts for more than six months that the employee may be considered to have
been constructively dismissed
Leynes, who filed her complaint the same day she was placed on floating status, could
not be contemplated as already beyond the six month period. Hence, it was prematurely
filed.

Additional Notes:
There is said to be constructive dismissal when an act of clear discrimination,
insensitivity or disdain on the part of the employer has become so unbearable as to
leave an employee with no choice but to forego continued employment.

2. Yes.
One of the recognized authorized causes for the termination of employment is
redundancy, redundancy exists when the service capability of the workforce is in excess
of what is reasonably needed to meet the demands of the business enterprise.
With no other client aside from BGCC for the building management side of its business,
we find that NHPI was acting well within its prerogatives when it eventually terminated
Leynes’ services on the ground of redundancy.

However, NHPI should be liable for damages since they failed to give written notice at
least ONE MONTH from the date of effectivity of the termination.
DIGEST OF LABOR CASES
JD – II ICYQ

G.R. No. 177937               January 19, 2011

ROBINSONS GALLERIA/ROBINSONS SUPERMARKET CORPORATION and/or JESS

MANUEL, Petitioners,
vs.
IRENE R. RANCHEZ, Respondent.

RULES TO CONSIDER:

Facts of the case:

 Irene Ranchez was hired as Cashier by Robinsons Galleria. Two weeks after being
hired, she reported the loss of 20, 299.00 Php she placed inside the company locker.
 A strip-search on her was conducted by the company guards but found nothing on her.
 Even though she acknowledge responsibility and that she requested she be allowed to
pay the amount lost, Jess Manuel, Operations Manager reported the matter to the police
and filed an information for Qualified Theft with the Quezon City Regional Trial Court.
After she failed to post bail amounting to 40,000.00 Php, she was constrained to spend
two week in jail.
 On November 25, 1997, she filed a complaint for illegal dismissal and damages.
 On March 12, 1998, Robinsons Galleria sent a notice of termination and/or expiration of
probationary employment dated March 9, 1998.

LA: Dismissed the petition for lack of merit. At the time she filed the complaint, she was “not
yet dismissed by Robinsons.”

NLRC: Reversed the decision of the La. Ordering the reinstatement of Ranchez. She was
denied due process by petitioners and that the strip-searching and sending her to jail
amounted to constructive dismissal as continued employment is rendered impossible,
unreasonable, or unlikely.

CA: Affirmed and modified the decision of NLRC. Reinstatement is no longer possible in
view of the strained relationship hence Robinsons is ordered to pay Ranchez separation
pay.

Hence, this petition for review on certiorari.

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Issue/s:
1. WON Ranchez was illegally terminated.

Ruling:
1. Yes.
There is probationary employment when the employee upon his engagement is made to
undergo a trial period during which the employer determines his fitness to qualify for regular
employment based on reasonable standards made known to him at the time of engagement.

The services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (1) a just or (2) an authorized cause; and (3) when he
fails to qualify as a regular employee in accordance with reasonable standards prescribed by
the employer.

Article 277(b) of the Labor Code mandates that subject to the constitutional right of
workers to security of tenure and their right to be protected against dismissal, except
for just and authorized cause and without prejudice to the requirement of notice under
Article 283 of the same Code, the employer shall furnish the worker, whose
employment is sought to be terminated, a written notice containing a statement of the
causes of termination, and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of a representative if he so desires, in accordance
with company rules and regulations pursuant to the guidelines set by the Department
of Labor and Employment.

In the instant case, Robinsons failed to follow the substantive and procedural due
process. No administrative investigation was conducted and was left to the police
authorities and Prosecutor’s Office. She was also prejudged guilty without prior
investigation.

Respondent was constructively dismissed by petitioner Supermarket effective October 30,

1997. After being jailed, it would be absurd to think that she would report to work
immediately. In fact, continued employment had become unreasonable, impossible or
unlikely, considering the treatment that was accorded to her by Robinsons Galleria.
DIGEST OF LABOR CASES
JD – II ICYQ

G.R. No. L-2028             April 28, 1949

PHILIPPINE SHEET METAL WORKERS' UNION (CLO), petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS, PHILIPPINE CAN COMPANY, and LIBERAL
LABOR UNION, respondents.

Lazatin & Caballero for petitioners.

Juan R. Maralit for respondent Court of Industrial Relations.

Facts of the case:

 Fifteen laborers belonging to the Phil. Sheet Metal Workers’ Union were laid off by
Philippine Can Company pending the decision of the Court of Industrial Relations (CIR) with
regard to the issue of the 11 laborer who were laid off by reason of their union activities.
 The reason why the company laid off the laborers was due to the company’s installation of
labor-saving machines.
 The selection committee was not guided by the affiliation of the workers to either of the two
working unions existing within the factory, and only took into account when verifying the
selection these (a) Abandonment of work, without notice or just cause; (b) Frequent
unjustified absences in the service; (c) Departures often during working hours, without
reasonable cause; and (d)inefficiency, negligence or lack of interest in the performance of
duty.
 The case filed in the CIR was merited and the court ordered that the 11 laborers be retained
until occurrence of events which may give rise to just cause of dismissal or sufficient to
convince the Court their conduct is unsatisfactory. The reason for the decision was: there
was discrimination in the selection of which laborers to lay off by reason of the “lack of
materials”. The right to reduce personnel must not be abused and must not be taken
advantage of to dismiss laborers with whom the management is displeased due to
their union activities.
 The petitioner contends that the order complained of (LAYING OFF OF 15 Laborers) was
made with grave abuse of discretion and in excess of jurisdiction.

ISSUE: WON there was proper dismissal of the laborers.

RULING: YES.
The company has a right to make use of new labor-saving devices to affect more economy
and efficiency in its method of production. The right to reduce personnel should, of course, not
be abused. It should not be made a pretext for easing out laborers on account of their union
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activities. But neither should it be denied when it is shows that they are not discharging their duties
in a manner consistent with good discipline and the efficient operation of an industrial enterprise.
In the present case, there was real justification for reducing the number of workers in respondent
company's factory, such a measure having been made necessary by the introduction of machinery in
the manufacture of its products, and that the company cannot be charged with discrimination in
recommending the dismissal of the fifteen laborers named in the above list since the selection was
made by a committee composed of both officers and employees who took no account of the
laborers' affiliation to the unions and only considered their proven record.
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G.R. No. 172628               February 13, 2009

COATS MANILA BAY, INC., Petitioner,

vs.
PURITA M. ORTEGA (represented by Alejandro San Pedro, Jr.) and MARINA A.
MONTERO, Respondents.

Facts of the Case:

 On April 27, 2000, Coats Manila Bay (company) issued a Memorandum implementing a
Redundancy program. The program was created to prevent further losses to the company.
As a result, 135 employees were dismissed, including Ortega and Montero (petitioners).
 After giving prior notice of the dismissal to the employees and the DOLE, company and its
workers’ union had a meeting to discuss the outcome of the employees who were dismissed.
 Later on, Ortega and Montero received their separation pay and executed release waivers
and quitclaims in favor of the company. Meanwhile, 11 of the terminated employees were
rehired to different positions with lower salaries.
 June 8, 2000, respondents filed a complaint for illegal dismissal, backwages, reinstatement,
vacation/sick leave, 13th month pay, moral and exemplary damages, atty.’s fees, litigation
expenses and CBA benefits with the NLRC. According to respondents, even after dismissal
due to redundancy, their positions were given to other workers and that their signing
quitclaims was forced for dire need of the separation pay.
 Company and its CEO, Arsenio Tanco asserted that it was an exercise of management
prerogative to implement a redundancy program.
 LA: respondents were indeed illegally dismissed and should be reinstated.
 Appeal to NLRC: Reversed the decision of the LA and that dismissal was valid due to
redundancy.
 Respondents filed a petition for certiorari with the CA: who reversed the decision of the
NLRC and reinstated the LA’s decision. CA: there is no sufficient evidence showing that in
selection, fair and reasonable criteria was used.
 Respondents assert that redundancy cannot be invoked as there is no showing that their
positions/functions are duplicitous. Nor did the company show it was suffering a downturn
which would warrant redundancy as was showed in the termination letter sent to
respondents.
 Hence the present petition.

ISSUE/S:
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1. WON the redundancy program was appropriate

2. WON there was an illegal dismissal of the respondents

RULING:
1. YES
As far as Labor Code is concerned, Redundancy exists where services of an employee are
in excess of what is reasonably demanded by the actual requirements of the enterprise. A
position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as over hiring of workers,
decreased volume of business, or dropping of a particular product line or service
activity previously manufactured or undertaken by the enterprise. A review of the
records shows that respondents’ positions were abolished because there was
duplicity of functions of clerk analysts in the Industrial Engineering Section and
finishing production clerks in the Operations Department.
Additional Info nalang:
And out of all statutory grounds provided under Article 283 of the Labor Code, it is only
retrenchment that requires the showing of proof of losses or possible losses as justification
for termination of employment.
It is well settled that the characterization of an employee’s services as no longer necessary
or sustainable, and, therefore, properly terminable, is an exercise of business judgment on
the part of the employer. Petitioner employed reasonable criteria in the selection of
employees to terminated.
In its memorandum, the criteria will be based on performance, absenteeism, record of
disciplinary action, efficiency, and work attitude. All other things being equal, basis will be
seniority.
Also, prior to its full implementation, a labor-management meeting was held, discussing
mainly the placement of those employees who would be displaced, their wage rate and work
hours.

2. No.
Since the redundancy program was appropriate, the reason for the dismissal was
valid and therefore, legal.
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G.R. No. 157611. August 9, 2005

ALABANG COUNTRY CLUB INC., ROBERTO ANONAS, CATALINO SANTOS, ERNESTO

CAYETANO and ROGELIO MANALO, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ALABANG COUNTRY CLUB INDEPENDENT
EMPLOYEES UNION, MARILOU ABADIANO, ERNESTO BANAL, BENEDICTO CATALAN,
ABNER CAVESTANY, ROMULO DALAYGON, ELENA DELA CRUZ, RONALDO IBARRA, MA.
ISABELITA PIZARRO, FELIX ARISME, EDILBERTO BANTILLES, BERNARDO DE CHAVEZ,
MEDARDO ENRIQUEZ, ERNESTO DEREZA, DOMINGO IBALLAR, GINA DUMALAON, JOSE
MASAGCA, MARIO FRANCHE, SHARON DANTES-PLATERO, ANNALISSA GARCIA, JULIET
TENORIO, ROLANDO GANNABAN, EMERSON ARGOSO, ANICETO GLEAN, FELIPE CADENA,
PERLITA HENARES, JOSEPH TAYONG, JAIME HIDALGO, ROSANNA ROSARIAL,
LEODEGARIO HUMIRANG, EFREN ABIADA, FILIPINO DIZON, ELPIDIO IBUOS, JR., ROBERTO
LANON, ARNOLD LAYUG, JOEL LINAOGO, EDUARDO LLENAS, JOSELITO LORINO,
FERDINAND MABITASAN, GEORGE MARASIGAN, PERLA MARGES, CYNTHIA MATHAY,
WERLITO NAVARRO, CRISTINA OLEGARIO, CRISTINA OMAYAO, NENEN ORTIGOZA,
ELEONOR PALIMA, MARIA PANTALITA, EDUARDO PERALTA, RICHARD PEREZ, JOVITO
PIDLAOAN, PACITA PILONGO, BENJAMIN PINTOR, NARCISO QUIZANA, AGRIFINO REYES,
DENNIS REYES, EDUARDO RUBINA, ARISTEO SANTOS, ROBERTO SOLANTE, ARMANDO
SUAREZ, DOLORES VALIENTE, REMEDIOS UMALI, INGERSOL POMIDA, and FLORO
MACABIT, Respondents.

Facts of the Case:

 The Internal Auditor of Alabang Country Club Inc., or ACCI, had was requested to conduct a
study on the profitability of ACCI’s Food and Beverage Dept. Using the financial statements
audited by SGV & Co. for the years 1989-199, it was discovered that the dept had been
experiencing substantial losses.
 Thus, the management decided to no longer keep the company’s own F&B Dept and instead
open it to a concessionaire who is willing to operate.
 The Labor Committee Chairman of the company together with the Union Officers and
members discussed the financial standing of F&B Dept.
 Afterwhich the company was able to come to agreement with La Tasca Restaurant which
would operate the F&B Dept within the club.
 As a consequence, the company sent letters to the employees under the F&B Dept. that their
services are being terminated as a result of the closure of its own F&B Dept. The affected
employees will also be absorbed by La Tasca as its regular employees and to receive the
same salary from ACCI at time of termination.
 However, on December 11, 1994, the Union filed before the NLRC complaint for illegal
dismissal, ULP, regularization and damages with prayer for issuance of write of preliminary
injunction against ACCI.
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 As scheduled, ACCI ceased operating its F&B Dept and La Tasca began its operation on
January 1, 1995.
 However, in the proceedings before the LA, it was showed by respondents that the F&B dept
was actually gaining profits as per Statement of Income and Deficit by SGV&Co. Considering
this, the retrenchment was not justified.
 Accdg to ACCI: Company had every right to exercise its management prerogative to adopt
cost-saving programs to improve the efficiency in its business operation, prevent losses, and
concentrate on core businesses, and to lay off workers and contract out their jobs.
 LA: Dismissed the complaint on ground that business entity has the right to reduce its work
force if necessitated by compelling economic forces. (47 employees were terminated
pending the decision. They accepted the separation benefits given)
 NLRC: Also dismissed the appeal. Acknowledging the right of company to regulate according
to its own judgment and discretion, all aspects of employment including laying off of workers
by reason of losses from the operation of business.
 CA: Reversed the decision of NLRC and LA. ACCI failed to sufficiently prove its alleged
losses were substantial hence the retrenchment appeared as doubtful. It should have been
fs audited by independent external auditors and not a mere report of the company’s internal
auditor which should have been used as basis. (Pending CA’s decision, additional 15
employees were terminated an accepted their separation pay.
 Hence this present petition.

ISSUE/S:
1. WON retrenchment on the ground of business losses is allowed.
2. WON employees in the F&B Dept had been illegally dismissed.

RULING:
1. YES.
Retrenchment on the ground of serious business losses is allowed subject to the conditions
that:
(1) the losses expected should be substantial and not merely de minimis in extent;
(2) the substantial losses apprehended must be reasonably imminent as such imminence
can be perceived objectively in good faith by the employer;
(3) retrenchment must be reasonably necessary and likely to effectively prevent the expected
losses; and
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(4) the alleged losses, if already realized and the expected imminent losses sought to be
forestalled, must be proven by sufficient and convincing evidence.

2. NO.
The dismissal is justified. However, the Court views that the instant case involves a
closure of business undertaking and NOT RETRENCHMENT.

Retrenchment is the reduction of personnel for the purpose of cutting down on costs of

operations in terms of salaries and wages resorted to by an employer because of losses in
45 

operation of a business occasioned by lack of work and considerable reduction in the volume
of business.
Closure of a business or undertaking due to business losses is the reversal of fortune of
the employer whereby there is a complete cessation of business operations to prevent
further financial drain upon an employer who cannot pay anymore his employees since
business has already stopped.

As in the case of retrenchment, however, for the closure of a business or a department

due to serious business losses to be regarded as an authorized cause for terminating
employees, it must be proven:
a. that the losses incurred are substantial and actual or reasonably imminent;
b. that the same increased through a period of time; and
c. that the condition of the company is not likely to improve in the near future.

Petitioner’s failure to prove that the closure of its F & B Department was due to substantial
losses notwithstanding, this Court finds that individual respondents were dismissed on the
ground of closure or cessation of an undertaking not due to serious business losses or
financial reverses.

In fine, management’s exercise of its prerogative to close a section, branch,

department, plant or shop, will be upheld as long as it is done in good faith to advance
the employer’s interest and not for the purpose of defeating or circumventing the
rights of employees under the law or a valid agreement.
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G.R. Nos. 75700-01 August 30, 1990

LOPEZ SUGAR CORPORATION, petitioner,

vs.
FEDERATION OF FREE WORKERS, PHILIPPINE LABOR UNION ASSOCIATION (PLUA-
NACUSIP) and NATIONAL LABOR RELATIONS COMMISSION, respondents.

Sicangco, Diaz, Ortiz and Lapak for petitioner.

Reynaldo J. Gulmatico for private respondents.

Principles:

Requirements for Valid Retrenchment as Authorized Cause of Termination:

(1) the losses expected should be substantial and not merely de minimis in extent;
(2) the substantial losses apprehended must be reasonably imminent as such imminence
can be perceived objectively in good faith by the employer;
(3) retrenchment must be reasonably necessary and likely to effectively prevent the expected
losses; and
(4) the alleged losses, if already realized and the expected imminent losses sought to be
forestalled, must be proven by sufficient and convincing evidence.

Facts of the Case:

 Lopez Sugar Corporation alleged that the company is facing major economic problems
(stoppage of railway operation and spiraling costs of production), hence they decided to
retrench and retire a number of its employees.
 Federation of Free Workers, the bargaining agent of the rank-and-file employees of the
company, filed a complaint for ULP and recovery of union dues.
 FFW argued that the retrenchment was violative of their right to security of tenure and that in
order to justify retrenchment, serious business losses must be “actual, real and amply
supported by sufficient and convincing evidence.”
 In Sept 30, 1983, the LA denied the application for clearance to retrench on the ground
that the losses of the ER must be serious, actual and real and must be amply
supported by sufficient and convincing evidence.
 Dissatisfied, they appealed to the NLRC, which decided to affirm the decision of the
LA
DIGEST OF LABOR CASES
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 The petitioner contends that under the law, the management has a right to reduce its
workforce if made necessary by economic factors and for retrenchment to be valid, losses
NEED NOT BE ACTUALLY SUSTAINED.

ISSUE: WON there has been illegal dismissal.

RULING:
No, there was no illegal dismissal.
The Court shows that in order to be valid, retrenchment must show:

Firstly, the losses expected should be substantial and not merely de minimis in extent. If the
loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and
inconsequential in character, the bona fide nature of the retrenchment would appear to be seriously
in question.

Secondly, the substantial loss apprehended must be reasonably imminent, as such

imminence can be perceived objectively and in good faith by the employer. There should, in
other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse
with serious consequences for the livelihood of the employees retired or otherwise laid-off.

Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary

and likely to effectively prevent the expected losses. The employer should have taken other
measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs.
An employer who, for instance, lays off substantial numbers of workers while continuing to dispense
fat executive bonuses and perquisites or so-called "golden parachutes", can scarcely claim to be
retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy
of providing "full protection" to labor, the employer's prerogative to bring down labor costs by
retrenching must be exercised essentially as a measure of last resort, after less drastic means —
e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time,
improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. — have been
tried and found wanting.

Lastly, but certainly not the least important, alleged if already realized, and the expected
imminent losses sought to be forestalled, must be proved by sufficient and convincing
evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting
standard of proof would render too easy the abuse of this ground for termination of services of
employees.

Although it is not essential that such losses have been ACTUALLY SUSTAINED, it must be
PROVEN.

In the instant case, lopez sugar copr failed to show proof of actual declining gross and net revenues.
DIGEST OF LABOR CASES
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G.R. No. 148340               January 26, 2004

J.A.T. GENERAL SERVICES and JESUSA ADLAWAN TOROBU, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSE F. MASCARINAS, Respondents.

PRINCIPLES:
1. Closure of business, on one hand, is the reversal of fortune of the employer whereby there
is a complete cessation of business operations and/or an actual locking-up of the doors of
establishment, usually due to financial losses. Closure of business as an authorized
cause for termination of employment aims to prevent further financial drain upon an
employer who cannot pay anymore his employees since business has already stopped.
2. Retrenchment is reduction of personnel usually due to poor financial returns so as to cut
down on costs of operations in terms of salaries and wages to prevent bankruptcy of the
company. The purpose of retrenchment is to save a financially ailing business
establishment from eventually collapsing.
3. In the event, under Article 283 of the Labor Code, three requirements are necessary for
a valid cessation of business operations, namely: (a) service of a written notice to the
employees and to the DOLE at least one (1) month before the intended date thereof; (b) the
cessation of business must be bona fide in character; and (c) 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.

Facts of the Case:

 Jesusa Adlawan Trading and General Services (JAT) hired Jose Mascarinas as a helper to
coordinate with the cleaning and delivery of heavy equipment which JAT sells to its
customers.
 Due to the Asian Currency Crisis at that time, sales of heavy equipment declined. The
company was forced to suspend its operation and employees were told not to report for work
starting March 1, 1998. Eventually, JAT closed indefinitely starting May 1998.
 Mascarinas filed a complaint with the NLRC for illegal dismissal and underpayment of wages
against JAT.
 JAT then subsequently filed an Establishment Termination Report with the DOLE
 On March 29, 1999, the LA rendered a decision stating that the dismissal of Mascarinas was
unjustified and ordered JAT to pay Mascarinas him separation pay and backwages.
 On appeal, the NLRC affirmed the decision of the labor arbiter.
DIGEST OF LABOR CASES
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 CA: Upon filing a petition for certiorari, the CA affirmed the decision of the NLRC
 Hence present petition.

ISSUE:
1. WON there was a closure of business.
2. WON the dismissal was illegal.

RULING:
1. YES.
In the present case, we find the issues and contentions more centered on closure of
business operation rather than retrenchment. Closure or cessation of operation of the
establishment is an authorized cause for terminating an employee under Article 283 of the
Labor Code, to wit:

ART. 283. Closure of establishment and reduction of personnel. – The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Department of
Labor and Employment at least one (1) month before the intended date thereof. … 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 to 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.

While business reverses or losses are recognized by law as an authorized cause for
terminating employment, it is an essential requirement that alleged losses in business
operations must be proven convincingly.

In this case, the financial statements were not only belatedly submitted but were also bereft
of necessary details on the extent of the alleged losses incurred, if any. The income
statements only indicated a decline in sales in 1998 as compared to 1997. These fell short of
the stringent requirement of the law that the employer prove sufficiently and convincingly its
allegation of substantial losses.

2. No.
In the present case, while petitioners did not sufficiently establish substantial losses to justify
closure of the business, its income statement shows declining sales in 1998, prompting the
petitioners to suspend its business operations sometime in March 1998, eventually leading
to its permanent closure in December 1998.

In the event, under Article 283 of the Labor Code, three requirements are necessary
for a valid cessation of business operations, namely:
(a) service of a written notice to the employees and to the DOLE at least one (1) month
before the intended date thereof;
DIGEST OF LABOR CASES
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(b) the cessation of business must be bona fide in character; and

(c) 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 closure of business operation by petitioners, in our view, is not tainted with bad faith or
other circumstance that arouses undue suspicion of malicious intent.

The decision to permanently close business operations was arrived at after a suspension of
operation for several months precipitated by a slowdown in sales without any prospects of
improving. Further, contrary to the findings of the Labor Arbiter, petitioners had notified
private respondent and all other workers through written letters dated November 25,
1998 of its decision to permanently close its business and had submitted a
termination report to the DOLE.

Hence, dismissal by JAT of the employees is not unjustified.

DIGEST OF LABOR CASES
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G.R. No. 178903               May 30, 2011

JULIET G. APACIBLE, Petitioner,
vs.
MULTIMED INDUSTRIES INCORPORATED and THE BOARD OF DIRECTORS OF MULTIMED
INDUSTRIES, The President MR. JOSELITO TAMBUNTING, Managers MARLENE L. OROZCO,
VERONICA C. TIMOG, OLGA F. MARINO and MA. LUZ B. YAN, Respondents.

PRINCIPLES:

1. Wilful disobedience of the employer’s lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee’s assailed
conduct must have been wilful, that is, characterized by a wrongful and perverse attitude;
and (2) the order violated must have been reasonable, lawful, made known to the employee
and must pertain to the duties which he had been engaged to discharge.

Facts of the Case:

 Juliet Apacible was hired first as Hospital Sales Representative to Assistant Area Sales
Manager for Cebu Operations by Multimed Industries Inc.
 Due to the company undergoing reorganization, Apacible was given notice by her immediate
superior that she will be transferred to their Pasig Office (Main office)
 When the date of her transfer was finalized to be on August 18, 2003, she delayed in the
release of the BCRs or the Cash Budget for Customer Representation. When the delay was
being investigated, she admitted that the delay was indeed a violation of the company’s
policies however, this was only due to her thinking about her impending transfer and not that
there was any money she appropriated.
 Apacible was then given the option to resign as the company found the delay of the release
amounted as a loss of trust and confidence.
 A meeting with her immediate superior and the company’s human resources manager
occurred and Apacible was given four options:
1. Resignation
2. Termination
3. Early retirement; or
4. Transfer to Pasig
Instead of choosing, she filed a leave of absence from August 28, 29 and September 1
 On September 1, 2003, petitioner, through her counsel Atty. Leo Montenegro, sent
letters2 to respondent Olga Mariño (Olga) and Jig denouncing their August 23 meeting
as "illegal," "insensitive," "inhumane" and petitioner’s dismissals a "unilateral
arrangement and ruthless display of power." In the same letter, Atty. Montenegro
demanded payment of separation pay and stated that he had advised petitioner to
remain in her current position in Cebu.
 On October 6, 2003, petitioner requested that she be given her daily work assignment
in Cebu, which request was later to be denied by Olga by letter 5 dated October 8, 2003.
On October 7, 2003, petitioner was given a show cause notice 6 for her to explain in
writing why she should not be sanctioned for insubordination for failure to comply
with the transfer order.
DIGEST OF LABOR CASES
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 Again, petitioner, through Atty. Montenegro, wrote7 respondent company, maintaining that

she was "not transferring to Manila" and that if the company "want[ed] petitioner out of the
company," separation pay must be paid.
 By letter8 of October 14, 2003 to Atty. Montenegro, respondent company denied having
pressured petitioner as it stressed that the transfer was based on business demands and did
not entail a demotion in rank nor diminution of benefits.
 LA: ruling that she was dismissed for just cause, i.e., fraud or loss or trust and confidence
under Article 282 (a) and (c) of the Labor Code.
 NLRC: affirmed LA decision, on the ground that petitioner’s refusal to obey the transfer
orders which amounted to insubordination. The NLRC, however, granted petitioner
separation pay by way of financial assistance amounting to ₱282,370, 13th month pay
of ₱23,530.833, and ₱5,430.1925 representing salary for five unpaid days in November.
DIGEST OF LABOR CASES
JD – II ICYQ

G.R. No. 166111 August 25, 2005

STANDARD ELECTRIC MANUFACTURING CORPORATION, Petitioners,

vs.
STANDARD ELECTRIC EMPLOYEES UNION-NAFLU- KMU and ROGELIO
JAVIER, Respondents.

PRINCIPLES:

1. DISMISSAL WITHOUT CAUSE IS DIFFERENT FROM DISMISSAL ON FALSE/NON-

EXISTENT CAUSE
2. DISMISSAL TO BE VALIDLY EFFECTED MUST FOLLOW THE TWIN REQUIREMENT OF
DUE PROCESS – NOTICE AND HEARING

Facts of the Case:

 Rogelio Javier was employed by Standard Electric Manufacturing Corporation (SEMC) as a

radial spot machine operator in its Production Department.
 One time he was absent and he failed to notify the company the reason for his absences.
Later on, Javier was arrested and detained for the charge of rape filed by his neighbor.
 On January 13, 1996, the company received a letter from Javier which informed them that he
was detained for the charge of rape hence he was unable to report for work. In the same
letter, Javier requested that the intention of the company to dismiss him be deferred.
 SEMC denied Javier’s request and dismissed him on the following grounds:
1. He was absent without leave for more than 15 days; and
2. He committed rape.
 The union and Javier filed a complaint for illegal dismissal against SEMC before the NLRC.
According to Javier, the ground for which he was being dismissed (committed rape) is non-
existent, the termination of his employment was illegal.
 While SEMC averred that its decision was justified considering that they could not afford to
wait on Javier’s return and he was absent for more than fifteen days.
 LA: Dismissed the complaint and ruled that the labor dispute in question was within the
EXCLUSIVE JURISDICTION OF THE VOLUNTARY ARBITRATORS.
 NLRC: Reversed the LA’s decision, which ordered that the case be remanded to the LA.
 LA: dismissed the complaint but ordered that the company pay Javier financial
assistance/separation pay.
 NLRC: Affirmed the LA’s decision.
 CA: Petition for certiorari: CA ordered the decision of NLRC be annulled and set aside. IT
ORDERED THAT JAVIER BE REINSTATED without loss of seniority rights with full
backwages from time of dismissal up to day he is reinstated or separation pay if
reinstatement is no longer feasible.
 CA: It was not Javier’s INTENTION TO ABANDON HIS WORK. Since Javier was
acquitted of the charge of rape, the ground of commission of rape was without factual
basis.
 Hence present petition.

ISSUE/S:
DIGEST OF LABOR CASES
JD – II ICYQ

1. WON Javier was illegally dismissed.

RULING:

YES.

Javier was dismissed effective Feb. 5, 1996 for:

a. Being AWOL from July 31, 1995 up to January 30, 1996

b. Committing rape

However, on demurrer to evidence, Javier was acquitted. Hence, his cause of dismissal became
non-existent.

There is difference between dismissal without cause and dismissal for false or non-existent cause. In
former, intention is to dismiss the employee for no cause whatsoever, in which case Termination Pay
law would apply.

In the latter case, there is no intention to dismiss the employee but for a specific cause which turns
out to be false/non-existent. Hence, absent the reason that gave rise to dismissal. Consequently,
reinstatement is in order.

In the case at bar, SEMC had prejudged Javier for a charge he was yet to be tried. Second, Javier
was not given opportunity to be heard of his explanation on his absence from July 31, 1995. They
also cannot use the excuse that a grievance machinery conference was held since it took place after
his dismissal had already taken place.

Additional info:

1. It bears stressing that for a dismissal to be validly effected, the twin requirements of due
process – notice and hearing – must be observed.
2.  In dismissing an employee, an employer has the burden of proving that the
former worker has been served two notices: (1) one to apprise him of the particular acts or
omissions for which his dismissal is sought; and (2) the other to inform him of his employer’s
decision to dismiss him.
3. As to the requirement of a hearing, the essence of due process lies in an opportunity to be
heard, and not always and indispensably in an actual hearing.
DIGEST OF LABOR CASES
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G.R. No. 75510 October 27, 1987

RUFINA SORIANO, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and KINGLY COMMODITIES TRADERS
AND MULTI-RESOURCES, INC., respondents.

PRINCIPLES:

a. Preventive suspension does not in itself prove that the company had prejudged that
petitioner was guilty of the charges she was asked to answer and explain. Preventive
suspension may be necessary for the protection of the company, its operations and
assets, pending investigation of the alleged malfeasance or misfeasance on the part of
officers or employees of the company and pending a decision on the part of the company

Facts of the Case:

 Rufina Soriano was investment counselor of Kingly Commodities Traders and Multi-
resources Inc. who was later on promoted to Vice President of Marketing.
 On Sept. 18, 1984, Soriano was charged with allowing or failing to supervise and monitor
certain activities of investment counselors in her department. As a consequence, she was
preventively suspended and required to explain her side.
 Finding her explanation unsatisfactory, company notified her that they had lost confidence in
her ability carry out the functions assigned to her and accordingly terminated her services.
 Soriano filed a complaint for illegal suspension and dismissal. She asked for reinstatement
and full backwages as well as damages, medical expenses, atty.’s fees and litigation
expenses
 LA: Required company to pay the following: separation pay 10,500, backwages 120,000,
moral damages 500,000, exemplary damages 100,000, and atty.’s fees.
 NLRC: DISMISSAL WAS DONE IN GF. Ordered company to pay separation pay 21,000,
backwages amounting to 9,000 and atty.’s fees.
 Both LA and NLRC found that reinstatement is no longer feasible because of strained
relations.
 Soriano avers that company violated her right to due process being suspended without being
heard first. That the preventive suspension was already concluding she was guilty of the
charges.
 Soriano also avers that Kingly Commodities misinterpreted the extent or the scope of her
duties in respect of unauthorized acts and transactions of her subordinates in the marketing
department.

ISSUE:

1. WON Preventive Suspension proves that company has prejudged the employee as guilty of
the charges placed against him/her.

RULING:

No.
DIGEST OF LABOR CASES
JD – II ICYQ

Preventive suspension does not in itself prove that the company had prejudged that petitioner was
guilty of the charges she was asked to answer and explain. Preventive suspension may be
necessary for protection of the company, its operations and assets, pending investigation of the
alleged malfeasance or misfeasance on the part of the officers or employees of the company and
pending a decision on the part of the company.

Considering that the petitioner in this case is a department head, it required utmost responsibility on
her part to monitor and supervise the actions of her employees. and that the unauthorized
transactions by the employees under her supervision were just belatedly discovered, it cannot be
said that the preventive suspension was arbitrary and done in bad faith by company.

Additional info:

 As head of one of the company's sales department (sic) and a managerial employee at that,
complainant is expected to monitor the daily activities of the investment counselors and the
transactions of clients in her department. As a matter of practice and procedure,
complainant, as vice-president marketing, is always informed of new clients for her to be
personally acquainted with the client.
DIGEST OF LABOR CASES
JD – II ICYQ

G.R. No. 142293             February 27, 2003

VICENTE SY, TRINIDAD PAULINO, 6B’S TRUCKING CORPORATION, and SBT TRUCKING 1 

CORPORATION, petitioners,
vs.
HON. COURT OF APPEALS and JAIME SAHOT, respondents.

PRINCIPLES:

Facts of the Case:

 Jaime Sahot worked as a truck helper for the Trucking Corporation owned by Vicente Sy. He
started working in 1958 and as years passed by, the company’s name changed from,
Vicente Sy Trucking, to T. Paulino Trucking Service, to 6B’s Trucking Corp and thereafter as
SBT Trucking since 1994. For 36 years, Sahot continuously served in the same corporation.
 Sometime in 1994, he suffered a great pain in his left thigh which greatly affected his task as
a driver. He inquired about his medical and retirement benefits from SSS and discovered that
his premium payments had not been remitted by the company.
 So he asked for a week long leave for medical check up. After filing for an extension of his
leave, he was threatened by the company that his employment would be terminated if he
refuses to report back to work.
 He was faced with the dilemma that if he refused to work, he would be dismissed. And he
could not retire as he was not sure to receive his pension as the payment had not been
remitted.
 Instead, petitioners ended his dilemma after he was dismissed by them from work effective
June 30, 1994.
 As a result, Sahot filed a complaint for illegal dismissal with the NLRC.
 The company denied that they hired helpers and drivers. On their part, Sahot was not
illegally dismissed as a driver as he was an industrial partner. And that it was only on year
1994 that Sahot became an employee.
 Also, Sahot’s refusal to work after expiration of his authorized absence is equivalent to
voluntarily resigning.
