122. JAKA FOOD PROCESSING CORPORATION, petitioner, vs.

while in the present case, respondent were dismissed due to retrenchment, which
DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON is one of the authorized causes under Art. 283 of the Labor Code. 
DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB,
respondents A dismissal for just cause implies that the employee has committed, or is guilty
of some violation against the employer. On the other hand, authorized cause not
DOCTRINE: necessarily imply delinquency or culpability on the part of the employee.
Instead, the dismissal process is initiated by the employer’s exercise of his
A dismissal for just cause under Article 282 implies that the employee concerned management prerogatives. Dismissal for authorized cause as a rule, does not
has committed, or is guilty of, some violation against the employer, i.e. the require the payment of separation pay while dismissal for just cause require
employee has committed some serious misconduct, is guilty of some fraud payment of separation pay. 
against the employer, or, as in Agabon, he has neglected his duties. Thus, it can
be said that the employee himself initiated the dismissal process. On another
breath, a dismissal for an authorized cause under Article 283 does not necessarily 123. Standard Electric Manufacturing Corporation vs. Standard Electric
imply delinquency or culpability on the part of the employee. Instead, the Employees Union-NAFLU-KMU (G.R. No. 166111. August 25, 2005: Callejo
dismissal process is initiated by the employer’s exercise of his management J.)
prerogative, i.e. when the employer opts to install labor saving devices, when he
decides to cease business operations or when, as in this case, he undertakes to Doctrine
implement a retrenchment program. The clear-cut distinction between a
dismissal for just cause under Article 282 and a dismissal for authorized cause Illegal Dismissal; Abandonment; Requisites; Abandonment is a matter of
under Article 283 is further reinforced by the fact that in the first, payment of intention and cannot lightly be inferred or legally presumed from certain
separation pay, as a rule, is not required, while in the second, the law requires equivocal acts. To constitute as such, two requisites must concur: first, the
payment of separa tion pay. employee must have failed to report for work or must have been absent without
valid or justifiable reason; and second, there must have been a clear intention
FACTS : Respondents were earlier hired by JAKA until the latter terminated
on the part of the employee to sever the employer-employee relationship as
their employment because the corporation was in dire financial straits. It is not
manifested by some overt acts, with the second element being the more
disputed however, that the termination was effected without JAKA complying
determinative factor. 
with the requirement under Art. 283 of the Labor Code regarding the service of a
written notice upon the employees and the DOLE at least 1 month before the
Grievance Machinery; Due Process; Meetings held pursuant to the grievance
intended date of termination. Respondent separately filed with the NLRC
machinery of the collective bargaining agreement done only after the dismissal
complaints for illegal dismissal, underpayment of wages and nonpayment of
of the employee cannot cure an otherwise unlawful termination; The essence of
service incentive leave and 13 month pay against JAKA. LA rendered a decision
due process lies in the opportunity to be heard and not always and indispensably
declaring the termination illegal and ordering the reinstatement of the
in actual hearing. 
respondents. NLRC affirmed in toto the decision of the LA however, upon
motion for reconsideration, modified its decision. CA reversed the decision of
Backwages; While an employee who was imprisoned is not entitled to any salary
NLRC. 
during the period of his detention, he is however entitled to full backwages from
ISSUE: Whether respondents were illegally dismissed.  the time his employer refused his reinstatement. 

RULING : No, in one case the court held that the employees committed gave Facts:
offense such as abandonment which is a form of neglect of duty which, in turn, is
one of the just causes enumerated under 282 of the Labor Code. Thus it held the Rogelio Javier, a member of the Standard Electric Employees Union-NAFLU
validity of the dismissal despite non-compliance with the notice requirement of and works as a radial spot machine operator in the Production Department of the
the Labor Code. However, it required the employer to pay the dismissed nominal Standard Electric Manufacturing Corporation (SEMC) was charge with rape.
damages for non-compliance with statutory due process. The difference in this During his arrest, SEMC denied Javier’s request and issued a Memorandum
case is that, in this case, in the former, the dismissal was based on a just cause terminating his employment for (a) having been absent without leave (AWOL)
for more than fifteen days; and (b) for committing rape. After Javier was release siblings, his Union and his counsel. The meetings held pursuant to the grievance
from jail because of lack of evidence, SEMC refused to re-admit Javier. machinery provisions of the collective bargaining agreement were only done
after his dismissal had already taken effect on February 5, 1996. Clearly, well-
The Union and Javier filed a Complaint for illegal dismissal against the SEMC meaning these conferences might be, they can not cure an otherwise unlawful
before NLRC. Labor Arbiter, which was affirmed by the NLRC, rendered termination. 
judgment ordering the dismissal of the complaint, but orders SEMC to pay
separation pay to the complainant for Php71,670.00. CA also decided that there In dismissing an employee, an employer has the burden of proving that the
was no just or authorized cause for the dismissal. 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
Issue:  inform him of his employer’s decision to dismiss him. 

Whether or not the dismissal from employment was proper because of In the instant case, when respondent Javier was freed on May 24, 1996 by virtue
abandonment of work? of the judgment of acquittal dated May 17, 1996, he immediately proceeded to
the petitioner but was not accepted back to work; hence, the reckoning point for
Ruling:  the grant of backwages started therefrom. 

No, because Javier’s absence from August 9, 1995 cannot be deemed as an Decision of the Court of Appeals is AFFIRMED WITH MODIFICATION.
abandonment of his work.  Petitioner is hereby ORDERED to reinstate respondent Rogelio Javier to his
former position or, if no longer possible, a substantially equivalent position
Abandonment is a matter of intention and cannot lightly be inferred or  legally without loss of seniority rights and other privileges appurtenant thereto, with full
presumed from certain equivocal acts. To constitute as such, two requisites must backwages from the time it refused to allow his reinstatement on May 24, 1996
concur: first, the employee must have failed to report for work or must have been until actually reinstated; or, if reinstatement is no longer feasible, to pay him
absent without valid or justifiable reason; and second, there must have been a separation pay equivalent to one (1) month salary for every year of service. 
clear intention on the part of the employee to sever the employer-employee
relationship as manifested by some overt acts, with the second element being the
more determinative factor. Abandonment as a just ground for dismissal requires 124. MANEBO VS. NLRC 
clear, willful, deliberate, and unjustified refusal of the employee to resume his
employment. Mere absence or failure to report for work, even after notice to Doctrine: TERMINATION OF EMPLOYMENT; WILLFUL DISOBEDIENCE OF
return, is not tantamount to abandonment. THE EMPLOYER’S LAWFUL ORDERS AS A GROUND; REQUISITES. — The
directive for the petitioner to go to Caloocan City to see the company president is
In this case SEMC acted with precipitate haste in terminating respondent Javier's neither a reasonable order nor one connected with his duties. Even a wilful
employment on January 30, 1996, on the ground that he had raped the disobedience thereof cannot be a valid ground for dismissal as provided in Article
complainant therein. Respondent Javier had yet to be tried for the said charge. In 282 of the Labor Code. 
fine, the petitioner prejudged him, and preempted the ruling of the RTC. The
petitioner had, in effect, adjudged respondent Javier guilty without due process "Wilful disobedience of the employer’s lawful orders, as a just cause for the
of law. While it may be true that after the preliminary investigation of the dismissal of an employer, envisages the concurrence of at least two (2) requisites:
complaint, probable cause for rape was found and respondent Javier had to be the employee’s assailed conduct must have been wilful or intentional, the wilfulness
detained, these cannot be made as legal bases for the immediate termination of being characterized by a `wrongful and perverse attitude;’ and the order violated
his employment. The Supreme cannot subscribe to the petitioner SEMC’s must have been reasonable, lawful, made known to the employee and must pertain to
contention that the due process requirement relative to the dismissal of the duties which he has been engaged to discharge.
respondent Javier was duly complied with when he was allowed to explain his
side during the grievance machinery conferences. Indeed, in the case at bar, the Facts:
petitioner did not conduct any investigation whatsoever prior to his termination, Petitioner Mañebo was a comptroller of RJM Bus Co (later became
despite being informed of respondent Javier’s predicament by the latter’s TRITRAN Bus Co.)  He was active in union activities, representing union members
in the grievance machinery committee hearings. In 1990, he was served a notice
dismissing him from service for serious misconduct committed against the firm’s petitioner’s failure to abide by the Personnel Manager’s instructions to see the
operation manager. Petitioner appealed the matter to the grievance machinery company president was not by reason of any ill or perverse intention to defy his
committee. superior. Uncontradicted is the fact that at the time the petitioner received the
instruction to go to the company’s president’s office at Caloocan City, he was
The Grievance Committee resolved to remove from petitioner’s file the attending as Chief Steward in a scheduled grievance committee hearing. Surely, if
record of termination. It directed petitioner to report to the Personnel Office the petitioner was to leave for Caloocan City to see the company president, the union
following day for reassignment. He was then reinstated to his former work. workers would have lost their voice in the hearing.
However, the company president was dissatisfied with the grievance committee’s
resolution  reinstating Mañebo to his former position.
125. AGUILAR v. NLRC
One day during a Grievance Committee Hearing, petitioner was advised by
the Personnel Manager to see the company president at his Caloocan office on that 126. GOLDEN THREAD KNITTING INDUSTRIES, INC., GEORGE
same day. Petitioner failed to follow instructions considering that he was then NG and WILFREDO BICO vs. NATIONAL LABOR RELATIONS
attending, as representative of the union workers, a grievance machinery committee COMMISSION, GEORGE MACASPAC, MARY ANN MACASPAC,
hearing. The lack of a written order from the President and the unreasonableness of ROMULO ALBASIN, MELCHOR CACHUCHA, GILBERT RIVERA
the demand considering that it required him to travel a far distance, and further, it and FLORA BALBINO
would prevent him from attending the grievance committee hearing was the reason G. R. No. 119157 March 11, 1999, BELLOSILLO, J.)
petitioner failed to obey the order. Subsequently, respondent bus company dismissed  
petitioner on the ground of willful disobedience. 
DOCTRINE: The characterization of an employee's services as no longer
necessary or sustainable, and therefore properly terminable, is an exercise of
Issue: Whether petitioner’s disobedience from the order was valid ground for his business judgment on the part of the employer.
dismissal
 
FACTS:
Ruling: 4 separate complaints which include unfair labor practice and illegal dismissal
No. The directive for the petitioner to go to Caloocan City to see the were filed against petitioners Golden Thread Knitting Industries, Inc., George Ng
company president is neither a reasonable order nor one connected with his duties.
and Wilfredo Bico by their employees. 
Even a willful disobedience thereof cannot be a valid ground for dismissal. “Willful
disobedience of the employer’s lawful orders, as a just cause for the dismissal of an  
employee, envisages the concurrence of at least two (2) requisites: the employee’s The complainants alleged that they organized a labor union; that the petitioners
assailed conduct must have been willful or intentional, the willfulness being shortened the number of working days of the union officers and members from 6
characterized by a ‘wrongful and perverse attitude;’ and the order violated must have to 3 days a week.
been reasonable, lawful, made known to the employee and must pertain to the duties  
which he has been engaged to discharge." (Gold City vs. NLRC) The union filed a petition for certification election. Union members who worked
as printers, were barred from entering the company premises;  another employee
In this case, respondents have not even endeavored to show that the was terminated from her job as sewer. The union Vice Chairman Gilbert Rivera,
directive or order pertained to the regular duties of the petitioner as a comptroller. as artist, was dismissed from employment together with union Secretary Mary
The purpose therefor was not revealed to the petitioner. It is highly plausible that the Ann Macaspac. The complainants thus considered the foregoing acts as
president wanted to extract from the petitioner, as a condition to the "final approval", retaliatory measures of petitioners on account of the former having established a
an apology for his past misdeeds. The primary aim then of the directive was wholly union.
unrelated to the petitioner’s duties. It was to extract a whimsical and oppressive  
condition. It was, as well, unreasonable and extremely difficult to comply with since Petitioners contended that they resorted to rotation of work, which affected
the petitioner was attending a conference of the Grievance Committee held fifty
practically all employees, because of the low demand for their towels and shirts;
kilometers away from where he was ordered to go. It was clearly a peremptory
that Romulo Albasin and George Macaspac slashed several bundles of towels.
summons meant to put the petitioner "in his proper place." Disobedience thereof,
even if willful, cannot be a ground for the dismissal of the petitioner. Further,  
The Labor Arbiter ruled in favor of the complainants. On the issue of unfair Furthermore, we have laid down the principle that in selecting the employees to
labor practice, he opined that the reduction of working days and suspension or be dismissed, a fair and reasonable criteria must be used, such as but not limited
dismissal of union officers or members were not shown to have been done in to: (a) less preferred status (e.g., temporary employee), (b) efficiency, and (c)
retaliation to the complainants' act of organizing a union. He noted that those seniority. The records disclose that no criterion whatsoever was adopted by
events transpired before petitioner came to know about the existence of the petitioners in dismissing Rivera and Macaspac. Another procedural lapse
union, when they received the notice of hearing on the petition for certification committed by petitioners is the lack of written notice to the DOLE required
election. Moreover, he was convinced that the reduction of working days which under Art. 283 of the Labor Code. The purpose of such notice is to ascertain the
was company wide was brought about by the low demand for the company's verity of the cause of termination of employment. 
products.
  Quite related to the alleged drastic reduction of their volume of work, petitioners
The National Labor Relations Commission evaluated the evidence in a different further contended in the proceedings below that they resorted to rotation of
manner. Except for the dismissal of the charge of unfair labor practice.  employees due to the low demand for their products. But respondent NLRC was
  not persuaded since other than petitioners' bare contention, they miserably failed
Petitioners maintain that valid causes exist for the termination of the 5 to support it with concrete evidence.
complainants: Romulo Albasin and George Macaspac were caught by security
guards M. Abelgas and E. Antonio slashing with razor blades several bundles of 127. JARDINE DAVIES, INC., vs. NLRC
towels in the warehouse at about 12:30 o'clock in the afternoon of 3 July 1992. GR. No. 106915(1993), J. Vitug
The inicident, which constituted serious miscoduct, was witnessed by another Doctrine:
employee, Jose Arnel Mejia. Gilbert Rivera and Mary Ann Macaspac were  For abandonment to constitute a valid cause for termination of
terminated on 14 August 1992 due to redundancy, i.e., the Design Section where employment, there must be a deliberate unjustified refusal of the employee to
they worked as artists became overmanned when the volume of work was resume his employment. This refusal must be clearly shown. Mere absence is not
drastically reduced. Flora Balbino was guilty of serious misconduct by hurling sufficient; it must be accompanied by overt acts pointing to the fact that the
invectives at petitioner Bico and threatening him in front of several workers, and employee simply does not want to work anymore.
taking her time card off the rack on 5 August 1992.
  The order of immediate reinstatement pending appeal, in cases of illegal
ISSUE: dismissal is an ancillary relief under R.A. 6715 granted to a dismissed employee
Is the dismissal valid? to cushion him and his family against the impact of economic dislocation or
abrupt loss of earnings. If the employee chooses not to report for work pending
HELD: resolution of the case appeal, he foregoes such a temporary relief and is not paid
No. The dismissal is invalid. The characterization of an employee's services as of his salary.
no longer necessary or sustainable, and therefore properly terminable, is an
exercise of business judgment on the part of the employer. The wisdom or Facts:
soundness of such characterization or decision is not subject to discretionary Respondent Salvador Salutin ("Salutin") was employed by petitioner
review on the part of the Labor Arbiter nor the NLRC provided, of course, that Jardine Davies, Inc. ("JDI"), on 15 July 1985, as a demonstrator/agronomist to
violation of law or arbitrary or malicious action is not shown. In the instant case, provide services relating to, and to give advice on, the promotion and use of
we question petitioners' exercise of management prerogative because it was not JDI's pesticides and other products.
shown that Rivera and Macaspac's positions were indeed unnecessary, much less
was petitioners' claim supported by any evidence. It is not enough for a company The controversy that spawned two (2) special Civil actions
to merely declare that it has become overmanned. It must produce adequate for certiorari (this instance included) with this Court, began when respondent
proof that such is the actual situation in order to justify the dismissal of the Salutin filed a complaint against petitioner JDI for illegal dismissal, with prayer
affected employees for redundancy. for reinstatement and backwages or, in the alternative, separation pay plus wage
differential, service incentive leave pay, thirteenth (13th) month pay, holiday
pay, moral and exemplary damages, and attorney's fees. The complaint was
decided by the Labor Arbiter in favor of respondent Salutin in a decision, dated Issue: 
08 August 1991, where the respondent Jardine Davies, Inc./Jardine Agchem is W/N the Commission committed a grave abuse of discretion when it did
hereby ordered to be reinstated to his former position, without loss of seniority not take into consideration such other employment.
and other rights, with backwages (P56,700.00) without deduction and
qualification, 13 month pay (P 8,100), holiday pay (P13,000),Service incentive
th
Held: 
pay (P1,557.60). No.The records show that at the time JDI filed its Manifestation and
Motion, dated 17 October 1991, the sole basis of its prayer for a declaration that
JDI appealed the case to NLRC and was dismissed for lack of merit but modified Salutin abandoned his work was his alleged unauthorized absences from the date
the decision by eliminating the awards given for holiday pay, service incentive he was notified to report for work.  A shift to a new focus took place when, on
leave pay, moral and exemplary damages. MR was denied.  30 January 1992, JDI, at its request, received a letter-certification issued by the
Officer-in-Charge of King's Enterprises of Iloilo City that Salutin was employed
JDI filed its first petition for certiorari with but was dismissed for by Monsato Philippines, Inc., from 01 September to 31 December 1991, as
forum-shopping. Its subsequent motion for reconsideration was itself denied. The Aggressive Crop Technician, for which he was paid P5,146.00 per month.  Thus,
resolution of 26 February 1992 became final and executory on 19 June 1992, and this was the reason given by JDI in its ex parte motion, dated 16 June 1992, to
an entry of judgment was accordingly made on 20 August 1992. set for hearing the Manifestation and Motion of 17 October 1991. NLRC denied
At the time when the above narrated events were still unfolding, some the said ex parte motion in the now assailed resolution of 22 July 1992.
material facts occured beginning with JDI's appeal to the NLRC on the 08
August 1991 decision of the Labor Arbiter. Shortly after the reinstatement of When JDI filed its first petition for certiorari (in G.R. No. 103720) with
Salutin "on payroll only", JDI sent a letter, dated 21 September 1991, to Salutin this Court on 14 February 1992, assailing the 17 October 1991 decision of
directing him to report for work to their Bacolod Branch Manager. Salutin, as NLRC, it also raised, as an added argument on the alleged abandonment of work
directed reported on the 24th of September 1991 at around 9:20 a.m. He did not by Salutin, the fact that he was gainfully employed elsewhere. Considering that
stay long, however, since after fifteen minutes or so, he left and was reported not this matter was thus already taken up by the petitioner in its first petition
to have thereafter returned for work. JDI forthwith stopped further payment of for certiorari, which this Court dismissed with finality, the petitioner should
salary to Salutin. really now be barred from invoking anew that issue in this present (second)
petition.
On 17 October 1991, JDI filed a "Manisfestation and Motion" with the
respondent Commission stating, inter alia, Salutin opposed the motion, claiming Be that as it may, the same fate of dismissal is still inevitable. Although
that he was forced to leave in haste because he was then suffering from a serious the Court is not a trier of facts, it may still wade through the records of a case if
ailment. He submitted a medical certificate to support his claim. only to prevent any possible misgiving in its ultimate disposition.The petitioner's
  evidence to establish Salutin's supposed abandonment of work is the certification
On 13 January 1992, respondent Commission denied JDI's "Manifestation & of employment issued by King's Enterprises at the request of herein petitioner to
Motion" the effect that Salutin had indeed been employed by Monsato Philippines, Inc.,
Prescinding from its receipt of an information that Salutin was employed during the period from 01 September to 31 December 1991. 
elsewhere, JDI filed an ex parte motion, dated 16 June 1992, to set for hearing
the aforestated "Manifestation and Motion."  Salutin, on his part, also filed a Abandonment of position is a matter of intention expressed in clearly
motion praying that JDI be ordered to release his withheld salary, claiming that certain and unequivocal acts. In this instance, however, certain uncontroverted
he had reported for work when he recovered from his ailment on 11 December facts show just exactly the opposite. Hence, Salutin did report, as directed, on 24
1991.   September 1991, but that he could not stay long because he was ailing at that
time; he, although perhaps belatedly made, did seek medical consultation on 7
Commission denied the appeal and the MR. Hence the Petition. November 1991, at the Corazon Locsin Montelibano Memorial Regional
Hospital, for "peptic ulcer"; and on 11 December 1991, he did, in fact, manifest
his desire to assume his work with the petitioner.
 This Court's resolution of 26 February 1992, denying the petition in  
G.R. No. 103720, became final and executory on 19 June 1992. Respondent ISSUES: (1) Whether or not private respondent abandoned his work – NO
Salutin's interim employment, stressed by the petitioner, did not stain the picture (2) Whether petitioners are liable for the payment of private respondent's back
at all. The order of immediate reinstatement pending appeal, in cases of illegal wages, differential pay, thirteenth-month pay and service-incentive leave pay for
dismissal is an ancillary relief under R.A. 6715 granted to a dismissed employee 1991 – YES
to cushion him and his family against the impact of economic dislocation or  
abrupt loss of earnings. If the employee chooses not to report for work pending RULING: (1) For abandonment to be a valid ground for dismissal, two
resolution of the case appeal, he foregoes such a temporary relief and is not paid requisites must be compresent: (1) the intention by an employee to abandon
of his salary. The final determination of the rights and obligations respectively of coupled with (2) an overt act from which it may be inferred that the employee
the parties is the ultimate and final resolution of this Commission. had no more intention to resume his work.
 
128. JACKSON BUILDING CONDOMINIUM CORPORATION vs. NLRC In the instant case, the said requisites are not present. As found by the Labor
G.R. No. 111515 July 14, 1995 Arbiter, private respondent's physician advised him to rest for 30 days before
  reporting back for work in order to recuperate. Private respondent heeded this
DOCTRINE: For abandonment to be a valid ground for dismissal, two advise and even exceeded the number of days recommended by his doctor for his
requisites must be compresent: (1) the intention by an employee to abandon recuperation. In fact, he reported back for work 50 days after his operation. This
coupled with (2) an overt act from which it may be inferred that the employee would clearly show that private respondent was ready to assume his
had no more intention to resume his work. responsibilities considering that he had fully recovered from the operation.
Furthermore, the filing of a complaint for illegal dismissal by private respondent
Presidential Decree No. 851, as amended by Memorandum Order No. 28, is inconsistent with the allegation of petitioners that he had abandoned his job.
provides that employees are entitled to the thirteenth-month pay benefit Surely, an employee's posture will be illogical if he abandons his work and then
regardless of their designation and irrespective of the method by which their immediately files an action for his reinstatement.
wages are paid.
  (2) Section 31 of R.A. No. 6715 which amended Article 279 of the Labor Code
FACTS: Private respondent Ferdinand Gumogda was employed as a janitor by of the Philippines provides that "an employee who is unjustly dismissed from
petitioner with a monthly salary of P2,340.00 or a daily wage of P90.00. Private work shall be entitled to reinstatement without loss of seniority rights and other
respondent filed a 45-day leave of absence from November 15, 1991 to privileges without loss of seniority rights and other privileges and to his full
December 29, 1991 to undergo an appendectomy, which would necessitate back wages, inclusive of allowances, and to his other benefits or their monetary
complete bed rest for about thirty days from the date of operation as shown by equivalent computed from the time his compensation was withheld from him up
his medical certificate. This was granted by petitioner. to the time of his actual reinstatement."
   
On January 3, 1992, private respondent informed petitioner Razul Requesto, The award of back wages by NLRC to private respondent was predicated on the
president of petitioner corporation, that he was physically fit to assume his work. ground that he was illegally dismissed and not on his failure to report for work.
However, petitioners refused to accept him back contending that he had Private respondent is likewise entitled to the thirteenth-month pay. Presidential
abandoned his work. Thus, private respondent filed with the Labor Arbiter a Decree No. 851, as amended by Memorandum Order No. 28, provides that
complaint against petitioners for illegal dismissal, underpayment of wages and employees are entitled to the thirteenth-month pay benefit regardless of their
non-payment of thirteenth-month pay and service-incentive leave pay. designation and irrespective of the method by which their wages are paid.
 
Petitioners alleged that private respondent was not dismissed but was merely 129. ARC-MED FOOD v. NLRC
advised to rest for health reasons until he could procure a medical certificate
attesting that he was fit to work. They further alleged that private respondent
failed to return to his workplace or to submit the required medical certificate. 130. PHILIPPINE COMMERCIAL INTERNATIONAL BANK vs.
Labor Arbiter rendered a decision in favor of private respondent. Petitioners then NATIONAL LABOR RELATIONS COMMISSION and EDUARDO V.
appealed to NLRC which affirmed the LA decision. MATURAN
G.R. No. 114920 August 23, 1995 To be a valid ground for dismissal, loss of trust and confidence must be based on
a willful breach of trust. And, as realistically stressed by the Solicitor General,
REGALADO, J.: unless based on a ground provided by law and supported by substantial evidence,
dismissal will be disallowed, for what is at stake is not only the employee's
Doctrine: Dismissal due to loss of trust and confidence must be based on a position, but also his means of livelihood. Considering that private respondent
willful breach of trust. Considering that private respondent was acting in good was acting in good faith, his dismissal would run counter to such established
faith, his dismissal would run counter to such established ruling. doctrinal rulings.

Facts: 131. Concorde Hotel vs. CA 362 SCRA 583 (GR No. 144089 [2001])

The instant petition involves the dismissal of private respondent Eduardo FACTS: Petitioner engaged in a mass hiring through a manpower service agency.
Maturan, a bank teller of petitioner bank's General Santos City branch, whose Respondent was one of those hired as assistant cook. Petitioner discovered some
missing and unaccounted stock so an inquiry was conducted. It was discovered that
services were terminated allegedly for incurring a cash shortage in the amount of
employees were bringing home inventory. An in house investigation was held and
P10,000.00, for failure to return the P8,000.00 cash withdrawal of a client and
they were asked to explain such. The agency was given a list of those involved. They
for extending unauthorized accommodations to clients.  were called and asked to explain in writing that same day. When nobody complied
petitioner and the agency issued separate notices of termination. 
A complaint for illegal dismissal was filed before the NLRC which thereafter
rendered a decision, declaring herein petitioner guilty of illegal dismissal. In so Later on respondent was included and also terminated sc he filed a complaint for
ruling, the labor arbiter declared that the penalty of dismissal is too harsh illegal dismissal. He argues that he was made to testify against those charged but he
considering that it had not been shown that private respondent had acted in bad refused so he was terminated for allowing the thefts to take place. He argues that it
faith and with malice.  couldn’t be true because he complained to the police that he was threatened to keep
quiet by the employees stealing. Another reason for his dismissal was his failure to
On appeal, public respondent NLRC rendered a resolution which reversed and meet minimum company standards. 
set aside the decision of the labor arbiter, declaring as valid the dismissal of
respondent and, accordingly, dismissing the complaint for lack of merit.  The LA dismissed the complaint but the NLRC and CA ruled that the dismissal was
without cause. The hotel argues that it was the agency that dismissed him and not the
Issue: Whether or not private respondent Maturan was validly dismissed hotel.

Held: No. Respondent Maturan was involved in a single incident of cash ISSUE: Was there was illegal dismissal by the hotel?
shortage in the amount of P10,000.00. As correctly found by the labor arbiter,
respondent is not a habitual violator, which undesirable category would have RULING: The SC ruled that there was illegal dismissal. 
warranted his
dismissal. In tellering, regardless of how long one has been in the trade, and how An employee may be terminated for loss of trust and confidence but this can’t be
careful one is, there is no guarantee that one can never incur cash shortage or used to justify every dismissal so the Court came up with guidelines for the
overage. No teller for that matter can testify that in his stint as such, everyday his application of the doctrine: loss of confidence should not be simulated, it should not
actual cash on hand always tallies with the figure appearing in the teller's be used as a subterfuge for causes which are improper illegal or unjustified, should
validating machine tape as the 'should be cash on hand'. Cash shortages and not be arbitrarily asserted in the face of overwhelming evidence to the contrary and
must be genuine, not a mere after thought to justify earlier or action taken in bad
overages are but ordinary and normal banking activities.  However, these
faith. 
occurrences are subject to certain limitations, depending on the amount involved
as well as the number and the gravity of the infractions. As earlier explained, we
do not find the infraction committed by private respondent to be so grave as to It applies only to employees who occupy positions of trust and confidence or to
situations where the employees are routinely charged with the care and custody of
warrant his dismissal. 
the employer’s money or property. 
 until further notice. Petitioner, however, refused to acknowledge receipt of the
It must be shown that there is reasonable ground to believe that the employee is memorandum, prompting the respondent to mail the same.
responsible for the misconduct or infraction and that the nature of his participation  
rendered him unworthy of the trust and confidence demanded by his position. Loss Petitioner was preliminarily investigated. The next day, the petitioner was
of confidence must be based on a willful breach of trust, founded in clearly replaced by Mr. Felix Almonicar as the Chief Purser of the M/V Surigao
established facts. As assistant cook, respondent is charged with the care of food Princess. As a result of his replacement, the petitioner thought he was fired from
preparation in the coffee shop and responsible for the custody of food supplies and his job.
must see to it that there is sufficient stock in the kitchen. He should not permit food
 
or other materials to be taken out without the necessary order slip or authorization, as
Pending his administrative investigation, he filed a complaint against the
there is hotel property. Thus, the nature of his position as assistant cook is one
charged with trust and confidence. In this case the burden of proof establishing the respondent for illegal dismissal with the NLRC. He alleged that the ground for
charge wasn’t overcome and there was no due process as the 2 notice requirement his dismissal, i.e., loss of trust and confidence, was ill-motivated and without
wasn’t met and he was never given an opportunity to explain his side. factual basis. He did not deny that the anomalous tickets were in his possession,
but denied that he was guilty of any wrongdoing. According to the petitioner, he
would not jeopardize his livelihood for something as miniscule as ₱88.00.
132. VICENTE C. ETCUBAN, JR. vs. SULPICIO LINES, INC.
G.R. No. 148410; January 17, 2005; CALLEJO, SR., J.:  
  Respondent terminated the petitioner’s employment for loss of trust and
confidence. A copy of the notice of termination was sent by mail to the
Doctrine: Loss of confidence as a just cause for termination of employment is
petitioner.
premised from the fact that an employee concerned holds a position of trust and
confidence. This situation holds where a person is entrusted with confidence on  
delicate matters, such as the custody, handling, or care and protection of the LA ruled that petitioner’s dismissal was illegal. According to the Labor Arbiter,
employer’s property. But, in order to constitute a just cause for dismissal, the act the anomalous entries on the unissued tickets could not be attributed entirely to
complained of must be "work-related" such as would show the employee the petitioner; thus, there was no reason for the respondent to lose its trust and
concerned to be unfit to continue working for the employer.  confidence on the petitioner. NLRC affirmed the decision and held that it has not
  been established by clear and competent evidence that the alleged irregular
condition of the tickets was attributable to the complainant or to other members
Facts: Petitioner Vicente was employed on January 30, 1978 until his dismissal
of the team of inspectors who have equal access to the tickets. 
on June 10, 1994 by the respondent by Sulpicio Lines. At the time of his
CA ruled that there was valid and just cause for the petitioner’s dismissal. It
dismissal, the petitioner was the Chief Purser of the M/V Surigao. As the Chief
ruled that there was sufficient basis for loss of trust and confidence on him as the
Purser, it was his responsibility, among other things, to issue passage tickets and
office of a purser involves a high degree of trust and confidence. 
to receive payments from the customers of the respondent, as well as to issue the
corresponding official receipts therefor.    
  ISSUE: Whether petitioner was illegally dismissed?
In May 1994, it was discovered that several yellow passenger’s duplicate original  
of yet to be sold or unissued passage tickets already contained the amount of RULING: No.
₱88.00 – the fare for adult. Acting on what appeared to be a strong evidence of Loss of confidence as a just cause for termination of employment is premised
short-changing the company, the jefe de viaje dug deeper on what he uncovered. from the fact that an employee concerned holds a position of trust and
As expected, he found inordinate amount of ticket issuances for children at half confidence. This situation holds where a person is entrusted with confidence on
the fare of ₱44.00.  delicate matters, such as the custody, handling, or care and protection of the
  employer’s property. But, in order to constitute a just cause for dismissal, the act
complained of must be "work-related" such as would show the employee
Petitioner received a memorandum instructing him to forthwith report to the
concerned to be unfit to continue working for the employer. 
main office and to explain in writing why no disciplinary action should be meted
on him or to submit himself to an investigation. He was warned that his failure to  
comply with the instructions would be construed as a waiver of his right to be The Court have distinguished the treatment of managerial employees from that
heard. It also informed the petitioner of his immediate preventive suspension of rank-and-file personnel, insofar as the application of the doctrine of loss of
trust and confidence is concerned. Thus, with respect to rank-and-file personnel, 133. WORLDWIDE PAPERMILLS v. NLRC, G.R. NO. 113081
loss of trust and confidence as ground for valid dismissal requires proof of
involvement in the alleged events in question, and that mere uncorroborated DOCTRINE:
assertions and accusations by the employer will not be sufficient. But as regards
a managerial employee, the mere existence of a basis for believing that such Same; Same; Neglect of Duties; Gross and habitual neglect of duties by the
employee has breached the trust of his employer would suffice for his dismissal. employee is a valid ground for dismissal.—Article 282 of the Labor Code
Hence, in the case of managerial employees, proof beyond reasonable doubt is provides the grounds for which an employer may validly dismiss an employee,
not required, it being sufficient that there is some basis for such loss of among which is gross and habitual neglect by the employee of his duties. 
confidence, such as when the employer has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct, and the nature Same; Same; Same.—In the case at bench, it is undisputed that respondent
of his participation therein renders him unworthy of the trust and confidence Edwin P. Sabuya had within a span of almost six (6) years been repeatedly
demanded by his position.  admonished, warned and suspended for incurring excessive unauthorized
  absences. Worse, he was not at home but was out driving a pedicab to earn extra
In the present case, the petitioner is not an ordinary rank-and-file employee. The income when the company nurse visited his residence after he filed an
petitioner’s work is of such nature as to require a substantial amount of trust and application for sick leave. Such conduct of respondent Edwin P. Sabuya
confidence on the part of the employer. Being the Chief Purser, he occupied a undoubtedly constitutes gross and habitual neglect of duties. 
highly sensitive and critical position and may thus be dismissed on the ground of
loss of trust and confidence. One of the many duties of the petitioner included Absences; Dismissal was justified where private respondent did not heed
the preparation and filling up passage tickets, and indicating the amounts therein warning on his excessive absences.—Our decision in Filipro, Inc. v. The
before being given to the passengers. More importantly, he handled the Honorable Minister Blas F. Ople, et al. does not preclude private respondent’s
personnel funds of the MV Surigao Princess. Clearly, the petitioner’s position dismissal for, unlike inFilipro, respondent Edwin P. Sabuya was given notice
involves a high degree of responsibility requiring trust and confidence. The that the next time he again exceeds his allowed vacation and sick leaves or goes
position carried with it the duty to observe proper company procedures in the on absence without official leave, he would be terminated from employment.
fulfillment of his job, as it relates closely to the financial interests of the Private respondent did not heed the warning. His dismissal from employment is,
company. therefore, justified. 
 
Petitioner was the Chief Purser who was tasked to directly supervise each and FACTS:
every purser under him. While, indeed, it was not proved that he was the one
who made the irregular entries on the tickets, the fact that he did not lift a finger Private respondent Edwin Sabuya was employed by petitioner as packer from
at all to determine who it was is a sad reflection of his job. His failure to detect 1982 to 1991. But in the years 1986 – 1991, private respondent incurred a lot of
any anomaly in the passage tickets amounts to gross negligence and absences. 'In 1986, he incurred a total of 46 days without pay including AWOL
incompetence, which are, likewise, justifiable grounds for his dismissal. Be that but excluding 30 days VL and SL given to him. The following year, 1987, he
as it may, to our mind, it is no longer necessary to prove the petitioner’s direct accumulated about 17. 5 days leave without pay including AWOL after
participation in the irregularity, for what is material is that his actuations were exhausting the 30 days VL/SL with pay. Followed by 1988, in which after
more than sufficient to sow in his employer the seed of mistrust and loss of exhausting the 30 days leave with pay, he again accumulated 60 days leave
confidence. without pay, 12 days of which AWOL. Finally, 1989 he acquired a total of 26
days leave without pay including 3 days AWOL after exhausting the 30 days
 
leave with pay. In the year 1991, private respondent again incurred absences.
There can be no doubt that the petitioner’s continuance in the extremely sensitive
After his suspension, he applied for sick leave. When the company nurse paid
fiduciary position of Chief Purser would be patently inimical to the respondent’s
him a visit, his son told the nurse that he was at the market riding a pedicab. The
interests. It would be oppressive and unjust to order the respondent to take him
company then ordered him to explain why should he have not mete a penalty.
back, for the law, in protecting the rights of the employee, authorizes neither
Unfortunately, private respondent’s services were terminated. He then filed a
oppression nor self-destruction of the employer. 
case for illegal dismissal before the Labor Arbiter which adjudged in his favor.
 
But the NLRC found that the dismissal was based on just ground, however
However, due to petitioners’ failure to observe the requirements of due process must be afforded due process, i.e., he must be given an opportunity to be heard
in dismissing private respondent, respondent NLRC ordered petitioners to and to defend himself, and; (b) the dismissal must be for a valid cause as
indemnify private respondent the amount of one thousand pesos (P1,000.00). provided in Article 282 of the Labor Code. Without the concurrence of these
Petitioners were also ordered to pay private respondent separation pay equivalent twin requirements, the termination would, in the eyes of the law, be illegal.
to one (1) month salary for every year of service, for equitable reasons. Hence,
this petition.              Article 277 (b) of the Labor Code and Section 2, Rule XXIII, Book V of
the Rules Implementing the Labor Code further require the employer to furnish
ISSUE:  the employee with two (2) written notices, to wit: (a) a written notice served on
the employee specifying the ground or grounds for termination, and giving to
Whether or not the dismissal which was grounded on habitual absence/ tardiness said employee reasonable opportunity within which to explain his side; and, (b)
is valid? a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify
RULING:  his termination.

YES. Article 282 of the Labor Code provides the grounds for which an employer  
may validly dismiss an employee, among which is gross and habitual neglect by
the employee of his duties. FACTS:

In the case at bench, it is undisputed that respondent Edwin P. Sabuya had within          Pastor Dionisio V. Austria worked with the Seventh Day Adventist for
a span of almost six (6) years been repeatedly admonished, warned and twenty eight (28) years from 1963 to 1991. On 1991, petitioner received several
suspended for incurring excessive unauthorized absences. Worse, he was not at communications the treasurer of the Negros Mission asking him to admit
home but was out driving a pedicab to earn extra income when the company accountability and responsibility for the church tithes and offerings and to remit
nurse visited his residence after he filed an application for sick leave. Such the same to the Negros Mission.
conduct of respondents Edwin P. Sabuya undoubtedly constitutes gross and
habitual neglect of duties.           Petitioner reasoned out that he should not be made accountable for the
unremitted collections since it was private respondents Pastor Gideon Buhat and
Respondent Edwin P. Sabuya was given notice that the next time he again Mr. Eufronio Ibesate who authorized his wife to collect the tithes and offerings
exceeds his allowed vacation and sick leaves or goes on absence without official since he was very sick to do the collecting at that time.
leave, he would be terminated from employment. Private respondent did not
heed the warning. His dismissal from employment is, therefore, justified.           Petitioner received a letter inviting him and his wife to attend the
Executive Committee meeting where the non-remittance of church collection and
the events that transpired on 16 October 1991 will be discussed.

         A fact-finding committee was created to investigate petitioner and

decided that the petitioner be dismissed due to misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and
134. PASTOR DIONISIO AUSTRIA v NATIONAL LABOR RELATIONS
habitual neglect of duties, and commission of an offense against the person of
COMMISSION
employer's duly authorized representative, as grounds for the termination of his
services.
G.R. No. 124382
         The Petitioner filed a case for illegal dismissal before the Labor Arbiter
DOCTRINE:
and such tribunal decided to his favor and ordered the Seventh Day Adventist to
reinstate him.
             The issue being the legality of petitioner's dismissal, the same must be
measured against the requisites for a valid dismissal, namely: (a) the employee
         For the first time on appeal, the Seventh Day Adventist contended that          The final ground alleged by private respondents in terminating
the Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to petitioner, gross and habitual neglect of duties, does not require an exhaustive
the constitutional provision on the separation of church and state since the case discussion. Suffice it to say that all private respondents had were allegations but
allegedly involved an ecclesiastical affair to which the State cannot interfere. not proof.

         The NLRC ruled in favor of the respondents.

135. FELIX v. ENERTECH SYSTEMS INDUSTRIES, INC, G.R. NO.
ISSUE: 142007

Whether or not the termination of the services of petitioner is an ecclesiastical DOCTRINE: Falsification of time cards constitutes serious misconduct and
affair, and, as such, involves the separation of church and state dishonesty or fraud, which are just causes for the termination of employment
under Art. 282(a) and (c) of the Labor Code.
HELD: NO, the termination was invalid.
FACTS: Respondent Enertech System Industries, Incorporated is engaged in the
         The principle of separation of church and state finds no application in manufacture of boilers and tanks. Petitioner Manuel C. Felix worked as a
this case. welder/fabricator in respondent company. On August 5, 1994, petitioner and
three other employees, namely, Dante Tunglapan, Hilario Lamog, and Emerson
         While the matter at hand relates to the church and its religious minister Yanos, were assigned to install a smokestack at the Big J Feedmills in Sta.
it does not ipso facto give the case a religious significance. Simply stated, what is Monica, Bulacan. During the entire period they were working at the Big J
involved here is the relationship of the church as an employer and the minister as Feedmills, petitioner and his companions accomplished daily time records
an employee. It is purely secular and has no relation whatsoever with the practice (DTRs). Petitioner wrote in his DTR that he had worked eight hours a day on the
of faith, worship or doctrines of the church. In this case, petitioner was not ex- basis of which his wages were computed.
communicated or expelled from the membership of the SDA but was terminated
from employment. Indeed, the matter of terminating an employee, which is The work was estimated to be completed within seven days, but it actually took
purely secular in nature, is different from the ecclesiastical act of expelling a the workers until August 17, 1994, or about two weeks, before it was finished.
member from the religious congregation. On that day, petitioner and his three co-employees were each given notice by
respondent, which read in part:
         Under the Labor Code, the provision which governs the dismissal of Reports came to our office that for the past few days you were reporting at [the]
employees, is comprehensive enough to include religious corporations, such as Big J jobsite at around eleven o’clock in the morning and you were leaving said
the SDA, in its coverage. Article 278 of the Labor Code on post-employment sit at two o’clock.
states that "the provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not." We would like to inform you that said act constitutes Abandonment of Work
which is [a] violation of our Company Code on Employees Discipline that
         As to the termination proper, Private respondent failed to substantially warrants a penalty of DISMISSAL. Therefore, you are hereby given 24 hours to
comply with the twin notice requirements. explain your side on the said matter. The next day, August 18, 1994, petitioner
and his co-workers were placed under preventive suspension for seven working
         A careful study of the voluminous records of the case reveals that there days.
is simply no basis for the alleged loss of confidence and breach of trust.
Finally, on November 21, 1994, respondent sent petitioner a memorandum
         With respect to the grounds of serious misconduct and commission of an terminating his employment on the following grounds:
offense against the person of the employer's duly authorized representative, we
find the same unmeritorious and, as such, do not warrant petitioner's dismissal 1. Dishonesty
from the service. 2. Falsifying timecards
3. Insubordination October 13, 1992 REGALADO, J.

4. Holding or slowing back the work DOCTRINE:

Unreasonable behavior and unpleasant deportment in dealing co-workers is
Petitioner filed a complaint for illegal dismissal against respondent before the
analogous to the other "just causes" enumerated under the Labor Code
Arbitration Branch of the NLRC.
 
Labor Arbiter: There was illegal dismissal. FACTS:
Respondent Teresita Vallejera sought admission as an aspirant to the
NLRC: Reversed the decision of LA. CA: Affirmed NLRC Congregation of the Religious of Virgin Mary (RVM). In order to observe the
life of a religious, she came to live with the sisters of the congregation and
ISSUE: WoN the dismissal was Valid. received free board and lodging at the house of the nuns. In return, she
volunteered to assist as a library aide in the library section of the Cathedral
RULING: YES. Falsification of time cards constitutes serious misconduct and
School of Technology, an educational institution run by the RVM sisters. There,
dishonesty or fraud, which are just causes for the termination of employment
she was given a monthly allowance of P200.00.
under Art. 282(a) and (c) of the Labor Code which provides:
Later on, she had a change of heart and was no longer interested in
ARTICLE 282. Termination by employer. — An employer may terminate an becoming a nun but pleaded to be allowed to continue living with the sisters for
employment for any of the following causes: she had no other place to stay in. The sisters acceded and in return, she
voluntarily continued to assist in the school library.
(a) Serious misconduct or willful disobedience by the employee of the lawful Trouble developed when she was formally appointed to the position of
orders of his employer or representative in connection with his work; x x x library aide with a monthly salary of P1,171.00. The sisters began receiving
complaints from students and employees about her difficult personality and sour
(c) Fraud or willful breach by the employee of the trust reposed in him by his disposition at work.
employer or duly authorized representative; Before the opening of classes, she was summoned to the Office of the
Directress by petitioner Sister Apolinaria Tambien, RVM, shortly after the
As to the labor arbiter’s observation that a timekeeper should have been assigne
resignation of the school's Chief Librarian, Heraclea Nebria, on account of
to the Big J Feedmills, we think the Court of Appeals correctly disposed of the
irreconcilable differences. Petitioner also informed private respondent of the
same, thus:
negative reports and reminded her about the proper attitude and behavior that
Employees are hired in order to foster the employer’s business, and company should be observed in the interest of peace and harmony in the school library.
rules and regulations are part of such goal. If we adhere to the labor arbiter’s Private respondent resented the observations about her actuations and
view that a timekeeper should have been placed by private respondent or to was completely unreceptive to the advice given by her superior. She reacted
commission the latter’s client to act as timekeeper, it would be an additional violently to petitioner's re- marks and angrily offered to resign, repeatedly
burden not only on the part of private respondent but also on its client. It would saying, "OK, I will resign. I will resign." Thereafter, without waiting to be
be contrary to every business motto that "clients should be given utmost dismissed from the meeting, she stormed out of the office in discourteous
satisfaction and convenience." Moreover, if every time an assignment is given to disregard and callous defiance of authority.
an employee, the employer will send out someone to spy, the atmosphere of On separate occasions thereafter, petitioners sent at least three persons
harmonious relationship between the employer and its employees will be to talk to and convince private respondent to settle her differences with the
beclouded, thundering forth suspicion and distrust among themselves. former. Private respondent, however, remained adamant in her refusal to submit
to authority. Petitioner sent a letter formally informing private respondent that
WHEREFORE, the decision of the Court of Appeals is AFFIRMED for lack of she had a month from said date or until July 15, 1989 to look for another job as
showing that it committed a reversible SO ORDERED. the school had decided to accept her resignation.
Private respondent then filed a complaint for illegal deduction and
underpayment of salary, overtime pay and service incentive pay. On July 19,
136. CATHEDRAL SCHOOL v. NLRC, G.R. NO. 101438 1989, she was prevented from entering the school premises by one Sister
Virginia Villamino in view of her dismissal from the service as per the
aforestated letter of June 15, 1989. Consequently, private respondent amended which accordingly are lawful impediments to her reinstatement. She is only
her complaint to include illegal dismissal. entitled to receive an indemnity.
 
ISSUE: 137. Armando G. Yrasuegui vs. Philippine Airlines, Inc. 
1. Whether or not Teresita was validly terminated – YES GR No. 168081. October 17, 2008.
2. Whether or not Petitioner complied with the procedural aspect of a valid Reyes, R.T., J.
dismissal- YES  
  DOCTRINE:
HELD: An employee may be dismissed the moment he is unable to comply with his
1.         The reason for which private respondent's services were terminated, ideal weight as prescribed by the weight standards—the dismissal would fall
namely, her unreasonable behavior and unpleasant deportment in dealing with under Article 282(e) of the Labor Code.—A reading of the weight standards of
the people she closely works with in the course of her employment, is analogous PAL would lead to no other conclusion than that they constitute a continuing
to the other "just causes" enumerated under the Labor Code, Art. 282. qualification of an employee in order to keep the job. Tersely put, an employee
Petitioners' averments on private respondent's disagreeable character — may be dismissed the moment he is unable to comply with his ideal weight as
"quarrelsome, bossy, unreasonable and very difficult to deal with" — are prescribed by the weight standards. The dismissal of the employee would thus
supported by the various testimonies of several co-employees and students of the fall under Article 282(e) of the Labor Code.
school. This also caused the chief librarian to resign.  
The conduct she exhibited on different occasions (reproachable The obesity of a cabin crew, when placed in the context of his work as flight
actuations in her meeting with petitioner and ignoring persons sent by the attendant, becomes an analogous cause under Article 282(e) of the Labor Code
petitioner) smacks of sheer disrespect and defiance of authority and assumes the that justifies his dismissal from the service—his obesity may not be unintended,
proportion of serious misconduct or insubordination, any of which constitutes but is nonetheless voluntary.
just cause for dismissal from employment. The test of reasonableness of the company policy is used because it is parallel to
As petitioner school is run by a religious order, it is but expected that Bona Fide Occupational Qualification (BFOQ)—Bona Fide Occupational
good behavior and proper deportment, especially among the ranks of its own Qualification (BFOQ) is valid “provided it reflects an inherent quality reasonably
employees, are major considerations in the fulfillment of its mission. Under the necessary for satisfactory job performance; Under the “Meiorin Test,” (1) the
circumstances, the sisters cannot be faulted for deciding to terminate private employer must show that it adopted the standard for a purpose rationally
respondent whose presence "has become more a burden rather than a joy" and connected to the performance of the job, (2) the employer must establish that the 
had proved. to be disruptive of the harmonious atmosphere of the school. standard is reasonably necessary to the accomplishment of that work- related
She offered no evidence but a general denial that the same were purpose, and, (3) the employer must establish that the standard is  reasonably
"imaginal and "fanciful" along with unsubstantiated allegations that her dismissal necessary in order to accomplish the legitimate work-related purpose.
was allegedly due to her union activities.  
  FACTS:
2.         Petitioners do not dispute the findings that private respondent was denied Petitioner Armando G. Yrasuegui was a former international flight steward of
her right to due process. As found by the labor arbiter, no hearing on the respondent Philippine Airlines, Inc. (PAL). He stands five feet and eight inches
impending dismissal was conducted as would have afforded private respondent (5’8”) with a large body frame. The proper weight for a man of his height and
an opportunity to explain her side and, if need be, to defend herself. True, body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as
petitioners notified her of the school's decision to terminate her services. But mandated by the Cabin and Crew Administration Manual of PAL. 
notice alone, without the requisite hearing does not suffice.
Respondent is not entitled to backwaters because she was dismissed for
 
The weight problem of petitioner dates back to 1984. Back then, PAL advised
a just cause. She is also not entitled to separation pay because separation pay
him to go on an extended vacation leave from December 29, 1984 to March 4,
presupposes that the illegally dismissed employee would otherwise have been
1985 to address his weight concerns. Apparently, petitioner failed to meet the
entitled to reinstatement. Where, as in this case, there is sufficient basis to
company’s weight standards, prompting another leave without pay from March
dismiss private respondent and because of her strained relations with petitioner
5, 1985 to November 1985. 
  discriminated against him because “the company has not been fair in treating the
After meeting the required weight, petitioner was allowed to return to work, but cabin crew members who are similarly situated”.
his weight problem recurred which prompted another leave without pay from
October 17, 1988 to February 1989. On April 26, 1989, petitioner weighed 209
pounds. In line with company policy, he was removed from flight duty effective
May 6, 1989 to July 3, 1989. He was formally requested to trim down to his ideal
weight and report for weight checks on several dates. He was also told that he On December 8, 1992, a clarificatory hearing was held where petitioner
may avail of the services of the company physician should he wish to do so. He manifested that he was undergoing a weight reduction program to lose at least
was advised that his case will be evaluated on July 3, 1989.  two (2) pounds per week so as to attain his ideal weight. On June 15, 1993,
  petitioner was formally informed by PAL that due to his inability to attain his
Several times during his weight checks, it was discovered that instead of losing, ideal weight, “and considering the utmost leniency” extended to him “which
he gained weight. Consequently, his off-duty status was retained. After PAL spanned a period covering a total of almost five (5) years”, his services were
Line Administrator Gloria Dizon’s visit at this residence, petitioner made a considered terminated “effective immediately”. His motion for reconsideration
commitment to reduce weight until December 31, 1989, in a letter addressed to having been denied, petitioner filed a complaint for illegal dismissal against
Cabin Crew Group Manager Augusto Barrios.  PAL. 
   
Despite the lapse of a ninety-day period given him to reach his ideal weight, On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled that petitioner
petitioner remained overweight. PAL decided for him to remain grounded until was illegally dismissed. Both parties appealed to the National Labor Relations
such time that he satisfactorily complies with the weight standards. Again, he Commission (NLRC). On October 8, 1999, the Labor Arbiter issued a writ
was directed to report every two weeks for weight checks to which petitioner directing the reinstatement of petitioner without the loss of seniority rights and
failed to adhere. Despite that, he was given one more month to comply with the other benefits. On February 1, 2000, the Labor Arbiter denied the Motion to
weight requirement. He was reminded that his grounding would continue Quash Writ of Execution of PAL. On March 6, 2000, PAL appealed the denial of
pending satisfactory compliance with the weight standards. Again, he failed to its motion to quash to the NLRC. On June 23, 2000, the NLRC affirmed the
report for weight checks, although he was seen submitting his passport for Decision of the Arbiter PAL moved for the reconsideration to no avail. 
processing at the PAL Staff Service Division.   
  Thus, PAL elevated the matter to the Court of Appeals (CA) via a petition for
On April 17, 1990, petitioner was formally warned that a repeated refusal to certiorari. The CA reversed the NLRC and opined that there was grave abuse of
report for weight check would be dealt with accordingly. Again, petitioner discretion on the part of the NLRC because it “looked at wrong and irrelevant
ignored the directive and did not report for weight checks. On June 26, 1990, considerations” in evaluating the evidence of the parties. On May 10, 2005, the
petitioner was required to explain his refusal to undergo weight checks.  CA denied petitioner’s motion for reconsideration. Hence, this petition for
  review on certiorari claiming that he was illegally dismissed. 
When petitioner tipped the scale on July 30, 1990, he was still way over his ideal  
weight of 166 pounds. From then on, nothing was heard from petitioner until he ISSUE:
followed up his case requesting for leniency on the latter part of 1992. He still Whether petitioner was illegally dismissed that (1) his dismissal does not fall
was overweight when he weighed on August 20, 1992 and November 5, 1992.  under 282(e) of the Labor Code; (2) continuing adherence to the weight
  standards of the company is not a bona fide occupational qualification; and (3)
On November 13, 1992, PAL finally served petitioner a Notice of Administrative he was discriminated against because other overweight employees were
Charge for violation of company standards on weight requirements, and he was promoted instead of being disciplined.
given ten (10) days from receipt to file his answer and submit controverting  
evidence. On December 7, 1992, petitioner submitted his answer where he did RULING:
not deny being overweight. What he claimed, instead, is that his violation, if any, No. The Court upheld the legality of his dismissal. 
had already been condoned by PAL since “no action has been taken by the  
company” regarding his case “since 1988”. He also claimed that PAL
The Court agreed with the CA that “the element of discrimination came into play Normally, a legally dismissed employee is not entitled to separation pay.
in this case as a secondary position for the private respondent in order to escape Exceptionally, separation pay is granted to a legally dismissed employee as an
the consequence of dismissal that being overweight entailed. It is a confession- act of “social justice”, or based on “equity”. In both instances, it is required that
and-avoidance position that impliedly admitted the cause of dismissal, including the dismissal (1) was not for serious misconduct; and (2) does not reflect on the
the reasonableness of the applicable standard and the private respondent’s failure moral character of the employee. The Court is not blind to the fact that he was
to comply”.  not dismissed, however, for any serious misconduct or to any act which would
  reflect on his moral character. The Court also recognize that his employment
Petitioner cannot establish discrimination by simply naming the supposed cabin with PAL lasted for more or less a decade. 
attendants who are allegedly similarly situated with him. Substantial proof must  
be shown as to how and why they are similarly situated and the differential Wherefore, the appealed Decision of the Court of Appeals is AFFIRMED but
treatment petitioner got from PAL despite the similarity of his situation with modified in that petitioner Armando G. Yrasuegi is entitled to separation pay in
other employees.  an amount equivalent to one- half (1/2) month’s pay for every years of service,
  which should include his regular allowances. 
Indeed, except for pointing out the names of the supposed overweight cabin  
attendants, petitioner miserably failed to indicate their respective ideal weights;
weights over their ideal weights; the periods they were allowed to fly despite 138. Sebuguero vs. National Labor Relations Commission 
their being overweight; the particular flights assigned to them; the discriminating G.R. No. 115394, September 27, 1995
treatment they got from PAL; and other relevant data that could have adequately DAVIDE, JR., J.:
established a case of discriminatory treatment by PAL. In the words of the CA,
“PAL really had no substantial case of discrimination to meet”.  Facts:  The petitioners were among the thirty-eight (38) regular employees of
  private respondent GTI Sportswear Corporation (hereinafter GTI ), a corporation
A reading of the weight standards of PAL would lead to no other conclusion than engaged in the manufacture and export of ready-to-wear garments, who were
that they constitute a continuing qualification of an employee in order to keep the given “temporary lay-off” notices by the latter on 22 January 1991 due to
job. Tersely put, an employee may be dismissed the moment he is unable to alleged lack of work and heavy losses caused by the cancellation of orders
comply with his ideal weight as prescribed by the weight standards. The from abroad and by the garments embargo of 1990.  Believing that their
dismissal of the employee would thus fall under Article 282(e) of the Labor “temporary lay-off” was a ploy to dismiss them, resorted to because of their
Code. union activities and was in violation of their right to security of tenure since there
  was no valid ground therefore, the 38 laid-off employees filed with the Labor
The obesity of a cabin crew, when placed in the context of his work as flight Arbiter’s office in the National Capital Region complaints for illegal dismissal,
attendant, becomes an analogous cause under Article 282(e) of the Labor Code unfair labor practice, underpayment of wages under Wage Orders Nos. 01 and
that justifies his dismissal from the service—his obesity may not be unintended, 02, and non- payment of overtime pay and 13th month pay.
but is nonetheless voluntary.
The test of reasonableness of the company policy is used because it is parallel to Private respondent GTI denied the claim of illegal dismissal and asserted that it
Bona Fide Occupational Qualification (BFOQ)—Bona Fide Occupational was its prerogative to lay-off its employees temporarily for a period not
Qualification (BFOQ) is valid “provided it reflects an inherent quality reasonably exceeding six months to prevent losses due to lack of work or job orders from
necessary for satisfactory job performance; Under the “Meiorin Test,” (1) the abroad, and that the lay-off affected both union and non-union members.  It
employer must show that it adopted the standard for a purpose rationally justified its failure to recall the 38 laid-off employees after the lapse of six
connected to the performance of the job, (2) the employer must establish that the  months because of the subsequent cancellations of job orders made by its foreign
standard is reasonably necessary to the accomplishment of that work- related principals, a fact which was communicated to the petitioners and the other
purpose, and, (3) the employer must establish that the standard is  reasonably complainants who were all offered severance pay. Twenty-two (22) of the 38
necessary in order to accomplish the legitimate work-related purpose. complainants accepted the separation pay.  The petitioners herein did not.  
 
Issue:  Whether or not there was compliance with the law regarding a valid There must be fair and reasonable criteria to be used in selecting employees to be
retrenchment at anytime within the six month-period that they were temporarily dismissed, such as: (a) less preferred status (e.g. temporary employee); (b)
laid-off. efficiency rating, and (c) seniority. 

Ruling:  No.  Retrenchment is used interchangeably with the term “lay-off.” It is FACTS:
the termination of employment initiated by the employer through no fault of the
employee’s and without prejudice to the latter, resorted to by management during Private respondent was hired by Asiaworld Publishing House, Inc., as its
periods of business recession, industrial depression, or seasonal fluctuations, or advertising sales director. To enable the private respondent to entertain
during lulls occasioned by lack of orders, shortage of materials, conversion of the advertisers in the course of her duties, she was allowed to establish a credit line
plant for a new production program or the introduction of new methods or more with Shiruko Restaurant with the petitioner agreeing to pay whatever amount
efficient machinery, or of automation.  Simply put, it is an act of the employer of was incurred by her for representation purposes. Sometimes, the private
dismissing employees because of losses in the operation of a business, lack of respondent had to entertain clients elsewhere, spending her own money and
work, and considerable reduction on the volume of his business, a right petitioner would later reimburse her for such expenses. 
consistently recognized and affirmed by this Court.
Due to the respondent's able management and hard work, Asiaworld's income
Under Article 283 of the Labor Code, there are three basic requisites for a from sales advertising increased tremendously. Sometime in 1976, Vicente
valid retrenchment: (1) the retrenchment is necessary to prevent losses and Pesayco, Jr., the corporation's president and private respondent's immediate
such losses are proven; (2) written notice to the employees and to the superior, requested Ms. Joaquin not to go on vacation leave because she was
Department of Labor and Employment at least one month prior to the needed to help direct the advertising sales campaign of Asia Forum, a magazine
intended date of retrenchment; and (3) payment of separation pay equivalent the petitioner had newly acquired. Respondent Joaquin acceded to such request.
to one month pay or at least 1/2 month pay for every year of service, whichever She did not avail of her vacation leave benefits for three times at the request of
is higher.  The requirement of notice to both the employees concerned and Pesayco. 
the Department of Labor and Employment (DOLE) is mandatory and must
be written and given at least one month before the intended date of In 1977, the private respondent was appointed VicePresident for marketing in a
retrenchment.  In this case, it is undisputed that the petitioners were given concurrent capacity and her monthly compensation was increased to P2,300.00. 
notice of the temporary lay-off. There is, however, no evidence that any written
notice to permanently retrench them was given at least one month prior to the On May 3, 1978, the petitioner advised the private respondent in writing that her
date of the intended retrenchment.  The law requires two notices—one to the services would be terminated effective May 16, 1978 because of continued losses
employee/ s concerned and another to the DOLE— not just one.  The notice to and offered to pay her one (1) month's salary for her more than three (3) years of
the DOLE is essential because the right to retrench is not an absolute prerogative service. 
of an employer but is subject to the requirement of law that retrenchment be done
to prevent losses. The DOLE is the agency that will determine whether the The private respondent filed a complaint with the Regional Director for illegal
planned retrenchment is justified and adequately supported by facts. dismissal and for recovery of unpaid earned and unused vacation leave credits
and reimbursement of representation expenses which she advanced for the
petitioner. 
139. Asiaworld Publishing House, Inc. vs. Ople and CONCEPCION M.
JOAQUIN
After several resetting of the case, the parties agreed to submit their position
papers and the Hearing Officer Demetrio Marero rendered his decision to
G.R. No. L-56398. July 23, 1987
reinstate Joaquin and to pay the cash equivalent of her vacation leave totalling
forty-five days and reimburse her representation expenses amounting to
J. Gutierrez, Jr.
P1,517.00.
DOCTRINE:
Petitioner filed an MR which was treated as an appeal and was denied for lack of
merit. Hence the petition. 
ISSUE: As regards the order of reinstatement, we have to take into account that
antagonism between the petitioner and the private respondent has been brought
Whether the Minister of Labor erred in affirming the order of the regional about by the filing of this case plus the fact that a new employee had been hired
director reinstating the respondent. NO, Minister of Labor did not commit a to take over the place of the respondent. There is no showing that an equivalent
mistake.  position is available to Ms. Joaquin. All of these militate against the propriety of
reinstating the respondent. 
HELD:
If the respondent had been a laborer, clerk, or other rank and file employee, there
Petitioner maintains that the respondent Minister should not have affirmed the would be no problem in ordering her reinstatement with facility. But she was
findings of facts of the Regional Director because the same are erroneous and not Vice President for Marketing of Asiaworld. An officer in such a key position can
supported by evidence.  work effectively only if she enjoys the full trust and confidence of top
management. 
The only justification presented by the petitioner for dismissing the private
respondent was its financial statement showing a loss of P196,087.83 for the
year 1977. Asiaworld failed to show that fair and reasonable standards were used 140. NORTH DAVAO MINING CORPORATION and ASSET
in ascertaining who would be dismissed and who would be retained among its PRIVATIZATION TRUST, Petitioners, v. NATIONAL LABOR
employees.  RELATIONS COMMISSION, LABOR ARBITER ANTONIO M.
VILLANUEVA and WILFREDO GUILLEMA, Respondents.
As the Solicitor General correctly stated, there must be fair and reasonable
criteria to be used in selecting employees to be dismissed, such as: (a) less G.R. No. 112546. March 13, 1996 PANGANIBAN, J.
preferred status (e.g. temporary employee); (b) efficiency rating, and (c)
seniority. 
Doctrine:
In the case at bar, the petitioner never denied the fact that the private respondent
was performing her job satisfactorily so much so that its income from sales TERMINATION OF EMPLOYMENT; CAUSED BY CLOSURE DUE TO
advertising increased.  LOSSES; EMPLOYER, NOT OBLIGATED TO PAY SEPARATION
BENEFITS. — Where the closure was due to business losses the Labor Code
Secondly, both the Regional Director and the respondent Minister found that does not impose any obligation upon the employer to pay separation benefits, for
after the private respondent's termination, the petitioner hired a new employee to obvious reasons. Art. 283 of the Labor Code does not obligate an employer to
take the former's position. Although the petitioner belies the fact that the person pay separation benefits when the closure is due to losses.
who assumed the private respondent's job was a new employee, it did not present
any employment contract or other proof to support its allegation.  Facts:
 
Thirdly, the petitioner never controverted the private respondent's allegation that North Davao Mining Corporation was incorporated in 1974 as a 100% privately-
in all instances when she did not go on vacation leave it was upon the request of owned company. As of December 31, 1990 the national government held 81.8%
the president of Asiaworld. Clearly, she was prevented from taking the vacation of the common stock and 100% of the preferred stock of said company.
leaves to which she was entitled.   
In May  1992, North Davao completely ceased operations due to serious business
To argue now that the private respondent should have secured the authority of reverses. When it ceased operations, its remaining employees were separated and
her superior and the approval of management to liquidate and convert into cash given the equivalent of 12.5 days’ pay for every year of service, computed on
her unused vacation leaves for 1975, 1976, and 1977, would be grossly unfair. their basic monthly pay.
The respondent Minister correctly affirmed the decision of the Regional Director  
in awarding the respondent the cash equivalent of her unused vacation leaves.  However, it appears that, during the life of the petitioner corporation, from the
beginning of its operations in 1981 until its closure in 1992, it had been giving
separation pay equivalent to 30 days’ pay for every year of service.
  payment of such separation benefits.  But when a business enterprise completely
Subsequently, a complaint was filed with respondent LA by respondent Guillema ceases operations, i.e., upon its death as a going business concern, its vital
and 271 other seperated employees for additional separation pay of 17.5 days for lifeblood -its cashflow – literally dries up.  Therefore, the fact that less separation
every year of service, among others. benefits were granted when the company finally met its business death cannot be
  characterized as discrimination.  Such action was dictated not by a
ISSUE:  discriminatory management option but by its complete inability to continue its
WON a company which is forced by huge business losses to close its business, business life due to accumulated losses.  Indeed, one cannot squeeze blood out of
legally required to pay separation benefits to its employees at the time of its a dry stone. Nor water out of parched land.
closure in an amount equivalent to the separation pay paid to those who were
separated when the company was still a going concern.
  141. ASIAN ALCOHOL CORPORATION vs. NATIONAL LABOR
HELD:  RELATIONS COMMISSION
   (G.R. No. 131108)
NO.
  Doctrine:
 “Art. 283. Closure of establishment and reduction of personnel. – The employer For the implementation of a redundancy program to be valid, the employer must
may also terminate the employment of any employee due to the installation of comply with the following requisites: (1) written notice served on both the
labor saving devices, redundancy, retrenchment to prevent losses or the closing employees and the Department of Labor and Employment at least one month
or cessation of operation of the establishment or under-taking unless the closing prior to the intended date of retrenchment; (2) payment of separation pay
is for the purpose of circumventing the provisions of this Title, by serving a equivalent to at least one month pay or at least one month pay for every year of
written notice on the workers and the Ministry of Labor and Employment at least service, whichever is higher; (3) good faith in abolishing the redundant positions;
1 month before the intended date thereof. In case of termination due to the and (4) fair and reasonable criteria in ascertaining what positions are to be
installation of labor saving devices or redundancy, the worker affected thereby declared redundant and accordingly abolished.
shall be entitled to a separation pay equivalent to at least his 1 month pay or to at
least 1 month pay for every year of service, whichever is higher.  In case of Facts: The Parsons family, who originally owned the controlling stocks in Asian
retrenchment to prevent losses and in cases of closures or cessation of operations Alcohol Corporation (AAC), was driven by mounting business losses to sell their
of establishment or undertaking not due to serious business losses or financial majority rights to Prior Holdings which took over its management and operation
reverses, the separation pay shall be equivalent to 1 month pay or at least ½ the following month. Prior Holding implemented organizational plan and other
month pay for every year of service, whichever is higher.  A fraction of at least 6 cost-saving measures. 117 employees out of a total workforce of 360 were
months shall be considered  whole year.” separated. 72 of them occupied redundant positions that were abolished. Of these
  positions, 21 held by union members and 51 by non-union members.
The underscored portion of Art. 283 governs the grant of separation benefits “in
case of closures or cessation of operation” of business establishments “NOT due
Private respondents are among those union members whose positions were
to serious business losses or financial reverses x x x”. Where, however, the
abolished due to redundancy. They received individual notices of termination;
closure was due to business losses – as in the instant case, in which the aggregate
were paid the equivalent of one month salary for every year of service as
losses amounted to over P20 billion – the Labor Code does not impose any
separation pay, the money value of their unused sick, vacation, emergency and
obligation upon the employer to pay separation benefits, for obvious reasons.
seniority leave credits, 13th month pay, medicine allowance, tax refunds, and
 
goodwill cash bonuses for those with at least 10 years of service. All of them
In the instant case, the company’s practice of giving one month’s pay for every
executed sworn releases, waivers and quitclaims. Except for Verayo and Tormo,
year of service could no longer be continued precisely because the company
they all signed sworn statements of conformity to the company retrenchment
could not afford it anymore.  It was forced to close down on account of
program. And except for Martinez, they all tendered letters of resignation.
accumulated losses of over P20 billion.  North Davao gave 30-days’ separation
pay to its employees when it was still a going concern even if it was already
losing heavily.  As a going concern, its cash flow could still have sustained the
Private respondents filed with the NLRC complaints for illegal dismissal with a prior to the intended date of retrenchment; (2) payment of separation pay
prayer for reinstatement with backwages, moral damages and attorney's fees. equivalent to at least one month pay or at least one month pay for every year of
They alleged that Asian Alcohol used the retrenchment program as a subterfuge service, whichever is higher; (3) good faith in abolishing the redundant positions;
for union busting. They claimed that they were singled out for separation by and (4) fair and reasonable criteria in ascertaining what positions are to be
reason of their active participation in the union. They also asseverated that AAC declared redundant and accordingly abolished.
was not bankrupt as it has engaged in an aggressive scheme of contractual hiring.

LA dismissed the complainants and held that the fact that respondent AAC
incurred losses in its business operations was not seriously challenged by the
complainants. Private respondents appealed to the NLRC which ruled that the 142. Balasbas vs NLRC
positions of private respondents were not redundant for the simple reason that
they were replaced by casuals. The company at the time of retrenchment was not Doctrine:
then in the state of business reverses. The financial status shown in records
submitted was before Prior Holdings took over the operation and management of Termination of Employment; Retrenchment; Employer must sufficiently prove
the corporation. This is no proof that when the termination of complainant[s] business reverses to prove valid termination of employment based on
took effect the company was experiencing losses or at least imminent losses. retrenchment.—Under Article 283 of the Labor Code, the closure of a business
Possible future losses do not authorize retrenchment. Retrenchment and/or establishment or reduction of personnel is a ground for the termination of the
redundancy not having been proved, complainants, therefore, were illegally services of any employee unless the closing or retrenching is for the purpose of
dismissed. NLRC denied the motion. circumventing the provision of the law. But while business reverses can be a just
cause for terminating employees, these must be sufficiently proved by the
Issues: W/N there was a valid redundancy program thus making the dismissal of employer. 
private respondents legal. YEAH!!! YEAH!!!
Notice of Termination; Waiver; Immediate filing of complaint for illegal
Ruling:  We find that the reorganizational plan and comprehensive cost-saving dismissal negates waiver of right to 30-day notice of termination.—The alleged
program to turn the business around were not designed to bust the union of the waiver by the petitioner of the 30-day notice of termination deserves scant
private respondents. Retrenched were 117 employees. 72 of them including consideration. Being an ordinary rank and file employee, the petitioner may not
private respondents were separated because their positions had become be expected to completely comprehend or realize the consequences of his act.
redundant. In this context, what may technically be considered as redundancy This is more than adequately shown by the fact that he immediately filed a
may verily be considered as retrenchment measure. Their positions had to be complaint for illegal dismissal on April 12, 1985, the same day he was served the
declared redundant to cut losses. notice of termination of employment. 

Redundancy exists when the service capability of the work force is in excess of Illegal Dismissal; Reinstatement; Backwages; Employee entitled to reinstatement
what is reasonably needed to meet the demands on the enterprise. A redundant with full backwages in the absence of just cause for dismissal.—There being no
position is one rendered superfluous by any number of factors, such as proof of serious business losses or financial reverses that would justify the
overhiring of workers, decreased volume of business, dropping of a particular petitioner’s dismissal and there being a failure on the part of the employer to
product line previously manufactured by the company or phasing out of a service prove that the dismissal is for a just cause, the employee is entitled to
activity priorly undertaken by the business. Under these conditions, the employer reinstatement with full backwages. 
has no legal obligation to keep in its payroll more employees than are necessary
for the operation of its business. Facts: On August 31, 1984, A security agency named Veterans Philippine Scout
Security Agency hired Balasbas as operations supervisor and assigned him in the
For the implementation of a redundancy program to be valid, the employer must security division. Eight months after his employment, the company handed him a
comply with the following requisites: (1) written notice served on both the termination notice advising him of his severance from the service effective
employees and the Department of Labor and Employment at least one month immediately pursuant to a retrenchment program that was being implemented.
The same day, he filed a case for illegal dismissal, non-payment of the 13th character, the bonafide nature of the retrenchment would appear to be seriously
month pay and underpayment of basic salary.  in question.  Secondly, the substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived objectively and in good faith by
Finding that the petitioner's dismissal was indeed unlawful, having been effected the employer. There should, in other words, be a certain degree of urgency for
without proper notice as required by law, Labor Arbiter ordered the petitioner's the retrenchment, which is after all a drastic recourse with serious consequences
reinstatement with full backwages and other benefits from the date of his for the livelihood of the employees retired or otherwise laid-off. Because of the
dismissal until actually reinstated. Additionally, he ordered the payment of far-reaching nature of the retrenchment, it must, thirdly, be reasonably necessary
petitioner's 13th month pay for 1985 (partial) as admitted by respondent and likely to effectively prevent the expected losses. Lastly, but certainly not the
company. The respondent company appealed to the NLRC. The NLRC reversed least important, the alleged losses if already incurred, and the expected imminent
and set aside the Labor Arbiter's ruling, citing in particular the petitioner's waiver losses sought to be forestalled, must be proved by sufficient and convincing
of the mandatory 30-day notice required by law to justify the reversal. evidence.

Petitioner Balasbas seeks the reversal of the NLRC Decision, for having been In the case at bar, there is a dearth of sufficient and convincing documentary
rendered with grave abuse of discretion. He specifically invokes Article 277, evidence to bolster the claim of the respondent company that it is indeed
paragraph b of the Labor Code which guarantees the constitutional right of suffering from business losses of such magnitude as to impel the retrenchment of
workers to security of tenure and their right to be protected against dismissal petitioner Balasbas. The records are bereft of evidence on any application for a
except for a just and authorized cause and without prejudice to the requirement reduction of employees or written notice to the Department of Labor. If indeed
of notice under Article 283 of the same Code. He argues that his acceptance of there were, it would have been logical for the respondent company to have
the separation pay and other benefits should not be construed as a waiver of the attached copies of the same.
30-day notice of termination. 
The records show that immediately after the petitioner's termination from work,
The defense of the respondent company is that retrenchment, being a managerial the respondent company advertised and hired another employee for the position
prerogative resorted to by any employer when confronted by economic losses, of inspector or investigator, indubitable proof that the alleged retrenchment was
respondent was within its rights in separating the petitioner. It is their position merely a cover-up to ease out herein petitioner Balasbas. This unlawful and
that the 30-day advance notice is deemed to have been waived when the unjust act of the respondent company was compounded when it dismissed the
petitioner voluntarily accepted the termination benefits. petitioner without complying with the 30-day advance notice of termination
containing a statement of the cause for his termination, thus affording him ample
Issue: Whether the NLRC gravely abused its discretion in ordering only the opportunity to be heard. There being no proof of serious business losses or
payment of the petitioner’s 13th month pay instead of reinstating him to his financial reverses that would justify the petitioner's dismissal and there being a
previous position with full backwages.  failure on the part of the employer to prove that the dismissal is for a just cause,
the employee is entitled to reinstatement with full backwages. 
Ruling: Yes. Under Article 283 of the Labor Code, the closure of a business
establishment or reduction of personnel is a ground for the termination of the
services of any employee unless the closing or retrenching is for the purpose of 143. Revidad vs. National Labor Relations Commission
circumventing the provision of the law. But while business reverses can be a just G.R. No. 111105. June 27, 1995
cause for terminating employees, these must be sufficiently proved by the
employer.  REGALADO, J.
DOCTRINE
The case of Sugar Lopez Corporation v. Federation of Free Workers,  lays down
Retrenchment; Adverse business conditions justify the exercise of management
the general standards under which an employer may retrench or reduce the
prerogative to retrench in order to avoid the not so remote possibility of the
number of his employees. Firstly, the losses expected should be substantial and
closure of the entire business.—First, it has been sufficiently and convincingly
not merely de minimis in extent. If the loss purportedly sought to be forestalled
established by AG & P before the voluntary arbitrator that it was suffering
by retrenchment is clearly shown to be insubstantial and inconsequential in
financial reverses. Even the rank and file union at AG & P did not contest the
fact that management had been undergoing financial difficulties for the past Notice to Department of Labor and Employment; Requirement of notice to the
several years. Hence, the voluntary arbitrator considered this as an admission labor department one month before retrenchment is to enable the proper
that indeed AG & P was actually experiencing adverse business conditions authorities to ascertain whether the closure of the business is being done in good
which would justify the exercise of its management prerogative to retrench in faith and not just a pretext for evading compliance with just obligations of
order to avoid the not so remote possibility of the closure of the entire business employers to employees.—Anent the mandatory written notice to be filed with
which, in the opinion of the voluntary arbitrator, would in the last analysis be the labor department one month before the date of retrenchment, we are of the
adverse to both the management and the union. considered opinion that the proceedings had before the voluntary arbitrator,
where both parties were given the opportunity to be heard and present evidence
Financial statements audited by independent external auditors constitute the
in their favor, constitute substantial compliance with the requirement of the law.
normal and reliable method of proof of the profit and loss performance of a
The purpose of this notice requirement is to enable the proper authorities to
company.—Second, the voluntary arbitrator’s conclusions were premised upon
ascertain whether the closure of the business is being done in good faith and is
and substantiated by the audited financial statements and the auditor’s reports of
not just a pretext for evading compliance with the just obligations of the
AG & P for the years 1987 to 1991. These financial statements audited by
employer to the affected employees. In fact, the voluntary arbitration
independent external auditors constitute the normal and reliable method of proof
proceedings more than satisfied the intendment of the law considering that the
of the profit and loss performance of a company.
parties were accorded the benefit of a hearing, in addition to the right to present
Retrenchment is one of the economic grounds to dismiss employees, which is their respective position papers and documentary evidence.
resorted to by an employer to avoid or minimize business losses.—Third,
contrary to petitioners’ asseverations, proof of actual financial losses incurred by
the company is not a condition sine qua non for retrenchment. Retrenchment is FACTS
one of the economic grounds to dismiss employees, which is resorted to by an Private respondent Atlantic, Gulf and Pacific Company of Manila, Inc.
employer primarily to avoid or minimize business losses. The law recognizes this (hereafter, AG & P) terminated the services of 178 employees, including herein
under Article 283 of the Labor Code. petitioners, under a redundancy program. As a consequence, a complaint for
  “To prevent losses” means that retrenchment or termination of the services of illegal dismissal was filed by herein petitioners with public respondent NLRC.
some employees is authorized to be undertaken by the employer sometime before The case was subsequently decided in favor of petitioners, as a result of which
the anticipated losses are actually sustained or realized.—In its ordinary they were reinstated and assigned to the Batangas plant of private respondent.
connotation, the phrase “to prevent losses” means that retrenchment or
termination of the services of some employees is authorized to be undertaken by However, pursuant to a presidential directive issued by the company's president
the employer sometime before the anticipated losses are actually sustained or and containing management's decision to lay off 40% of the employees due to
realized. It is not, in other words, the intention of the lawmaker to compel the financial losses incurred, AG & P implemented and effected. By reason thereof,
employer to stay his hand and keep all his employees until after losses shall have the AG & P United Rank and File Association (URFA, for facility), which was
in fact materialized. If such an intent were expressly written into the law, that the employees' union, staged a strike.
law may well be vulnerable to constitutional attack as unduly taking property This issue was eventually resolved by the voluntary arbitrator in a decision
from one man to be given to another. where it was held that AG & P had the right to exercise its management
Employer bears the burden to prove his allegation of economic or business prerogative to temporarily lay off its employees owing to the unfavorable
reverses with clear and satisfactory evidence, it being in the nature of business climate being experienced by the company consequent to the financial
affirmative defense. —On the bases of these considerations, it follows that the reverses it suffered.
employer bears the burden to prove his allegation of economic or business In the meantime, as found by public respondent in its decision, the three labor
reverses with clear and satisfactory evidence, it being in the nature of an unions then existing at AG & P met and arrived at the agreement that the
affirmative defense. As earlier discussed, we are fully persuaded that the private Company agreed to extend financial assistance to all temporarily laid off or to be
respondent has been and is besieged by a continuing downtrend in both its laid off employees the equivalent of two (2) months’ pay.
business operations and financial resources, thus amply justifying its resort to
drastic cuts in personnel and costs. Subsequently, herein petitioners were served a notice of temporary lay-off.
Thereafter, petitioners received their respective financial assistance and they resorted to by an employer primarily to avoid or minimize business losses. The
signed a  pro forma authorization in favor of AG & P to deduct from the law recognizes this under Article 283 of the Labor Code.
separation pay due them the amount of financial assistance received.
In its ordinary connotation, the phrase "to prevent losses" means that
Considering that petitioners were not being recalled by the AG & P management, retrenchment or termination of the services of some employees is authorized
they filed a complaint for illegal dismissal and unfair labor practice against AG to be undertaken by the employer sometime before the anticipated losses are
& P before respondent commission where the labor arbiter rendered judgment actually sustained or realized. It is not, in other words, the intention of the
ordering the reinstatement of petitioners on the ground that AG & P failed to lawmaker to compel the employer to stay his hand and keep all his
substantiate the alleged losses it incurred which resulted in the retrenchment of employees until after losses shall have in fact materialized. If such an intent
its operations. On appeal, public respondent NLRC reversed and set aside the were expressly written into the law, that law may well be vulnerable to
decision of the labor arbiter, and dismissed the complaint for illegal dismissal for constitutional attack as unduly taking property from one man to be given to
lack of merit. Hence, this petition which prays for the affirmance in toto of the another.
labor arbiter's decision.
At the other end of the spectrum, it seems equally clear that not every
Petitioners contend that their lay-off cannot be justified by the losses suffered by asserted possibility of loss is sufficient legal warrant for the reduction of
AG & P from 1989 to 1990 since it had not been shown that such losses personnel. In the nature of things, the possibility of incurring losses is
continued up to 1991. constantly present, in greater or lesser degree, in the carrying on of business
operations, since some, indeed many, of the factors which impact upon the
ISSUE: WON the retrenchment program of private respondent and the dismissal
profitability or viability of such operations may be substantially outside the
of petitioners were valid and legal.
control of the employer.  
On the bases of these considerations, it follows that the employer bears the
HELD burden to prove his allegation of economic or business reverses with clear and
YES. The retrenchment program of private respondent and the dismissal of satisfactory evidence, it being in the nature of an affirmative defense. As earlier
petitioners were valid and legal. discussed, we are fully persuaded that the private respondent has been and is
besieged by a continuing downtrend in both its business operations and financial
First, it has been sufficiently and convincingly established by AG & P before the resources, thus amply justifying its resort to drastic cuts in personnel and costs.
voluntary arbitrator that it was suffering financial reverses. Even the rank and
file union at AG & P did not contest the fact that management had been As a final word, let it be reiterated herein what we have heretofore said, that the
undergoing financial difficulties for the past several years. Hence, the voluntary law in protecting the rights of the laborer authorizes neither oppression nor self-
arbitrator considered this as an admission that indeed AG & P was actually destruction of the employer. While the Constitution is committed to the policy of
experiencing adverse business conditions which would justify the exercise of social justice and the protection of the working class, it should not be supposed
its management prerogative to retrench in order to avoid the not so remote that every labor dispute will be automatically decided in favor of labor.
possibility of the closure of the entire business which, in the opinion of the Management also has its own rights, which as such are entitled to respect and
voluntary arbitrator, would in the last analysis be adverse to both the enforcement in the interest of simple fair play. Out of its concern for those with
management and the union. less privileges in life, the Supreme Court has inclined more often than not toward
the worker and upheld his cause with his conflicts with the employer. Such
Second, the voluntary arbitrator's conclusions were premised upon and favoritism, however, has not blinded the Court to rule that justice is in every case
substantiated by the audited financial statements and the auditor's reports of AG for the deserving, to be dispensed in the light of the established facts and
& P for the years 1987 to 1991. These, financial statements audited by applicable law and doctrine.
independent external auditors constitute the normal and reliable method of
proof of the profit and loss performance of a company. 
144. FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE
Third, contrary to petitioners' asseverations, proof of actual financial losses
PHILIPPINES (FASAP) v. PHILIPPINE AIRLINES, INC., PATRIA
incurred by the company is not a condition  sine qua non, for retrenchment.
CHIONG and COURT OF APPEALS
Retrenchment is one of the economic grounds to dismiss employees, which is
October 2, 2009/ G.R. No. 178083
Doctrine:  There was no reason to drastically implement a permanent retrenchment scheme
There was no reason to drastically implement a permanent retrenchment scheme in response to a temporary strike, which could have ended at any time, or
in response to a temporary strike, which could have ended at any time, or remedied promptly, if management acted with alacrity. Juxtaposed with its
remedied promptly, if management acted with alacrity. Juxtaposed with its failure to implement the required cost-cutting measures, the retrenchment
failure to implement the required cost-cutting measures, the retrenchment scheme was a knee-jerk solution to a temporary problem that beset PAL at the
scheme was a knee-jerk solution to a temporary problem that beset PAL at the time.
time. PAL must still prove that it implemented cost-cutting measures to obviate
retrenchment, which under the law should be the last resort. By PAL’s own
PAL must still prove that it implemented cost-cutting measures to obviate admission, however, the cabin personnel retrenchment scheme was one of the
retrenchment, which under the law should be the last resort. By PAL’s own first remedies it resorted to, even before it could complete the proposed
admission, however, the cabin personnel retrenchment scheme was one of the downsizing of its aircraft fleet. The following elements under Article 283 of the
first remedies it resorted to, even before it could complete the proposed Labor Code must concur or be present, to wit:
downsizing of its aircraft fleet.
(1) That retrenchment is reasonably necessary and likely to prevent business
Facts:  losses which, if already incurred, are not merely de minimis, but substantial,
Cabin crew personnel were covered by the retrenchment and demotion scheme serious, actual and real, or if only expected, are reasonably imminent as
of PAL due to financial distress which is evidenced by proof of its claimed perceived objectively and in good faith by the employer;
losses in a petition for suspension of payments, as well as the Order of the (2) That the employer served written notice both to the employees and to the
Securities and Exchange Commission (SEC) approving the said petition for Department of Labor and Employment at least one month prior to the intended
suspension of payments, together with proof of summary of its debts and other date of retrenchment;
liabilities. (3) That the employer pays the retrenched employees separation pay equivalent
to one (1) month pay or at least one-half (1⁄2) month pay for every year of
Exercising its management prerogative and sound business judgment, it decided service, whichever is higher;
to cut its fleet of aircraft in order to minimize its operating losses and rescue (4) That the employer exercises its prerogative to retrench employees in good
itself from “total downfall;” which meant that a corresponding company-wide faith for the advancement of its interest and not to defeat or circumvent the
reduction in manpower necessarily had to be made. As a result, 5,000 PAL employees’ right to security of tenure; and,
employees (including the herein 1,400 cabin attendants) were retrenched. (5) That the employer uses fair and reasonable criteria in ascertaining who would
PAL, however, gave a whole different reason for retrenchment when the pilots be dismissed and who would be retained among the employees, such as status,
went on strike. Accordingly, what really brought about “the really perilous efficiency, seniority, physical fitness, age, and financial hardship for certain
situation of closure was that on June 5, 1998, the pilots went on strike, ninety workers.
(90%) per cent of the pilots went on strike, approximately six hundred (600).” In the absence of one element, the retrenchment scheme becomes an irregular
These pilots’ strike was so devastating x x x. Without any pilots no plane can fly, exercise of management prerogative.
your Honor, that is the stark reality of the situation, and without airplanes flying,
there would be no place for employment of cabin attendants. The retrenchment scheme under scrutiny was not triggered directly by any
financial difficulty PAL was experiencing at the time, nor borne of an actual
Issue:  implementation of its proposed downsizing of aircraft.
Whether the strike, which PAL used as basis to undertake the massive
retrenchment under scrutiny, is an authorized cause.
145. BUSINESSDAY v. NLRC, G.R. NO. 103575, April 5, 1993
Held: 
The strike was a temporary occurrence that did not necessitate the immediate and GRINO-AQUINO, J.: 
sweeping retrenchment of 1,400 cabin or flight attendants.
DOCTRINES: NLRC: Affirmed the decision

Employer may not pay separation benefits unequally to its lawfully retrenched ISSUE: Whether there was unlawful discrimination in the payment of separation
employees.  benefits to the employees

Grant of bonus is an exclusive prerogative of management. Employees cannot RULING: 

complain they were not given bonus while others were given bonus. 
Undoubtedly, petitioners’ right to terminate employees on account of
FACTS: retrenchment to prevent losses or closure of business operations, is recognized by
law, but it may not pay separation benefits unequally for such discrimination
BSSI was engaged in the manufacture and sale of computer forms. Due to breeds resentment and ill-will among those who have been treated less
financial reverses, its creditors, the Development Bank of the Philippines (DBP) generously than others. 
and the Asset Privatization Trust (APT), took possession of its assets, including a
manufacturing plant in Marilao, Bulacan.  Clearly, there was impermissible discrimination against the private respondents
in the payment of their separation benefits. The law requires an employer to
As a retrenchment measure, some plant employees, including the private extend equal treatment to its employees. It may not, in the guise of exercising
respondents, were laid off on May 16, 1988, after prior notice, and were paid management prerogatives, grant greater benefits to some and less to others.
separation pay equivalent to one-half (1/2) month pay for every year of service. Management prerogatives are not absolute prerogatives but are subject to legal
Upon receipt of their separation pay, the private respondents signed individual limits, collective bargaining agreements, or general principles of fair play and
releases and quitclaims in favor of BSSI.  justice (UST vs. NLRC, 190 SCRA 758). Article 283 of the Labor Code, as
amended, protects workers whose employment is terminated because of closure
BSSI retained some employees in an attempt to rehabilitate its business as a of the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA
trading company.  141, 145). 
With regard to the private respondents’ claim for the mid-year bonus, it is settled
doctrine that the grant of a bonus is a prerogative, not an obligation, of the
However, barely two and a half months later, these remaining employees were
employer (Traders Royal Bank vs. NLRC,189 SCRA 274). The matter of giving
likewise discharged because the company decided to cease business operations
a bonus over and above the worker’s lawful salaries and allowances is entirely
altogether. Unlike the private respondents, that batch of employees received
dependent on the financial capability of the employer to give it. The fact that the
separation pay equivalent to a full month’s salary for every year of service plus
company’s business was no longer profitable (it was in fact moribund) plus the
mid-year bonus. 
fact that the private respondents did not work up to the middle of the year (they
were discharged in May 1988) were valid reasons for not granting them a mid-
Protesting against the discrimination in the payment of their separation benefits, year bonus. Requiring the company to pay a mid-year bonus to them also would
the twenty-seven (27) private respondents filed three (3) separate complaints in effect penalize the company for its generosity to those workers who remained
against the BSSI and Raul Locsin. These cases were later consolidated.  with the company “till the end” of its days. (Traders Royal Bank vs. NLRG,
supra.) The award must therefore be deleted. 
At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion,
petitioners denied that there was unlawful discrimination in the payment of 146. CHENIVER DECO PRINT TECHNICS CORP v. NLRC, G.R. NO.
separation benefits to the employees. They argued that the first batch of 122876
employees was paid “retrenchment” benefits mandated by law, while the
remaining employees were granted higher “separation” benefits because their
termination was on account of the closure of the business. 
147. NATIONAL FEDERATIONS OF LABOR v. NLRC, G.R. NO. 127718
LA: Rendered a decision in favor of respondents and ordered the payment of
their separation pay differentials and mid-year bonus for the year 1988.
DOCTRINE: An employer is not liable to pay separation pay where the Subsequently, the cooperative took over the estate. Being beneficiaries of the
cessation of its operation is caused by the compulsory acquisition by the Patalon Coconut Estate pursuant to the CARP, the petitioners became part-
government of its land for purposes of agrarian reform. It is clear that owners of the land.
Article 283 of the Labor Code applies in cases of closures of establishment
and reduction of personnel. The peculiar circumstances in the case at bar, Petitioners, thereafter, filed individual complaints before the Regional
however, involves neither the closure of an establishment nor a reduction of Arbitration Branch (RAB) of the National Labor Relations Commission
personnel as contemplated under the aforesaid article.  (NLRC) in Zamboanga City, praying for their reinstatement with full
backwages on the ground that they were illegally dismissed.
The closure of establishments contemplated under Article 283 of the Labor
Code is a unilateral and voluntary act on the part of the employer to close RAB dismissed the complaints for lack of merit. However, ordered
the business establishment as may be gleaned from the use of the word respondents thru its owner-manager or its duly authorized representative to
“may”—it does not contemplate a situation where the closure of the business pay complainants’ separation pay in view of the latter’s cessation of
establishment is forced upon the employer and ultimately for the benefit of operations or forced sale, and for 13th month differential pay.
the employees.
NLRC on appeal, set aside the decision of RAB ordering respondents to pay
Where the closure of the establishment was due to the act of the government separation pay and 13th month differentials stating that, the severance of
of acquiring the land to benefit the employees by making them agrarian lot employer-employee relationship between the parties came about
beneficiaries, they are not entitled to separation pay. INVOLUNTARILY, as a result of an act of the State. MR Denied. Hence,
this petition.
FACTS:
ISSUE: Whether or not an employer that was compelled to cease its
Petitioners are bona fide members of the National Federation of Labor operation because of the compulsory acquisition by the government of its
(NFL), a legitimate labor organization duly registered with the Department of land for purposes of agrarian reform, is liable to pay separation pay to its
Labor and Employment. They were employed by private respondents Charlie affected employees?
Reith and Susie Galle Reith, general manager and owner, respectively, of the
354-hectare Patalon Coconut Estate located at Patalon, Zamboanga City. RULING: NO

In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise Petitioners contend that they are entitled to separation pay citing Article 283
known as the Comprehensive Agrarian Reform Law (CARL), which of the Labor Code.
mandated the compulsory acquisition of all covered agricultural lands for
distribution to qualified farmer beneficiaries under the so-called It is clear that Article 283 of the Labor Code applies in cases of closures of
Comprehensive Agrarian Reform Programme (CARP). establishment and reduction of personnel. The peculiar circumstances in the
case at bar, however, involves neither the closure of an establishment nor a
Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the reduction of personnel as contemplated under the aforesaid article. When the
Patalon Estate Agrarian Reform Association (PEARA), a cooperative Patalon Coconut Estate was closed because a large portion of the estate was
accredited by the Department of Agrarian Reform (DAR), of which acquired by DAR pursuant to CARP, the ownership of that large portion of
petitioners are members and co-owners. the estate was precisely transferred to PEARA and ultimately to the
petitioners as members thereof and as agrarian lot beneficiaries. Hence,
As a result of this acquisition, private respondents shut down the operation of Article 283 of the Labor Code is not applicable to the case at bench.
the Patalon Coconut Estate and the employment of the petitioners was
severed on July 31, 1994. Petitioners did not receive any separation pay. In other words, Article 283 of the Labor Code does not contemplate a
situation where the closure of the business establishment is forced upon the
employer and ultimately for the benefit of the employees.
Capital and management sectors must also be protected under a regime of
justice and the rule of law.