Labor r Mngt Prerogative Cases
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THIRD DIVISION
BISIG MANGGAGAWA SA TRYCO and/or
FRANCISCO SIQUIG, as Union President,JOSELITO LARIO, VIVENCIO B. BARTE,
SATURNINO EGERA and SIMPLICIO AYA-AY,
Petitioners,
- versus -
NATIONAL LABOR RELATIONS
COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C.
RIVERA,Respondents.
G.R. No. 151309
Present:
PUNO,C.J.,*
YNARES-SANTIAGO,J.,
Chairperson,
CHICO-NAZARIO,
NACHURA, and
REYES,JJ.
Promulgated:
October 15, 2008
x------------------------------------------------------------------------------------x
DECISION
NACHURA,J.:
This petition seeks a review of the Decision[1]of the Court of Appeals (CA) dated
July 24, 2001 and Resolution dated December 20, 2001, which affirmed the finding of
the National Labor Relations Commission (NLRC) that the petitioners transfer to
another workplace did not amount to a constructive dismissal and an unfair labor
practice.
The pertinent factual antecedents are as follows:
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Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines
and its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio
Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the
positions of helper, shipment helper and factory workers, respectively, assigned to the
Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the
exclusive bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed separate Memorand[a] of Agreement[2](MOA),
providing for a compressed workweek schedule to be implemented in the company
effective May 20, 1996. The MOA was entered into pursuant to Department of Labor
and Employment Department Order (D.O.) No. 21, Series of 1990,Guidelines on the
Implementation of Compressed Workweek.As provided in the MOA, 8:00 a.m. to 6:12
p.m., from Monday to Friday, shall be considered as the regular working hours, and no
overtime pay shall be due and payable to the employee for work rendered during those
hours. The MOA specifically stated that the employee waives the right to claim
overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday
considering that the compressed workweek schedule is adopted in lieu of the regular
workweek schedule which also consists of 46 hours. However, should an employee be
permitted or required to work beyond 6:12 p.m., such employee shall be entitled to
overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor
and Employment of the implementation of a compressed workweek in the company.[3]
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In January 1997, BMT and Tryco negotiated for the renewal of their collective
bargaining agreement (CBA) but failed to arrive at a new agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of
Animal Industry of the Department of Agriculture reminding it that its production
should be conducted in San Rafael, Bulacan, not in Caloocan City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary Drug
and Product Manufacturer is addressed at San Rafael, Bulacan, and so,
therefore, your production should be done at the above mentioned
address only. Further, production of a drug includes propagation,
processing, compounding, finishing, filling, repacking, labeling,
advertising, storage, distribution or sale of the veterinary drug product.
In no instance, therefore, should any of the above be done at your
business office at 117 M. Ponce St., EDSA, Caloocan City.
Please be guided accordingly.
Thank you.
Very truly yours,
(sgd.)
EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division[4]
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Accordingly, Tryco issued a Memorandum[5]dated April 7, 1997 which directed
petitioner Aya-ay to report to the companys plant site in Bulacan. When petitioner Aya-
ay refused to obey, Tryco reiterated the order on April 18, 1997.[6]Subsequently,
through a Memorandum[7]dated May 9, 1997, Tryco also directed petitioners Egera,
Lario and Barte to report to the companys plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending
that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26,
1997.
In August 1997, petitioners filed their separate complaints[8]for illegal dismissal,
underpayment of wages, nonpayment of overtime pay and service incentive leave, and
refusal to bargain against Tryco and its President, Wilfredo C. Rivera. In their Position
Paper,[9]petitioners alleged that the company acted in bad faith during the CBA
negotiations because it sent representatives without authority to bind the company,
and this was the reason why the negotiations failed. They added that the management
transferred petitioners Lario, Barte, Egera and Aya-ay from Caloocan to San Rafael,
Bulacan to paralyze the union. They prayed for the company to pay them their salaries
fromMay 26 to 31, 1997, service incentive leave, and overtime pay, and to implement
Wage Order No. 4.
In their defense, respondents averred that the petitioners were not dismissed
but they refused to comply with the managements directive for them to report to the
companys plant in San Rafael, Bulacan. They denied the allegation that they
negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President
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and Legal Counsel as the companys representatives to the CBA negotiations. They
claim that the failure to arrive at an agreement was due to the stubbornness of the
union panel.
Respondents further averred that, long before the start of the negotiations, the
company had already been planning to decongest the Caloocan office to comply with
the government policy to shift the concentration of manufacturing activities from the
metropolis to the countryside. The decision to transfer the companys production
activities to San Rafael, Bulacan was precipitated by the letter-reminder of the Bureau
of Animal Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit.
[10]The Labor Arbiter held that the transfer of the petitioners would not paralyze or
render the union ineffective for the following reasons: (1) complainants are not
members of the negotiating panel; and (2) the transfer was made pursuant to the
directive of the Department of Agriculture.
The Labor Arbiter also denied the money claims, ratiocinating that the
nonpayment of wages was justified because the petitioners did not render work from
May 26 to 31, 1997; overtime pay is not due because of the compressed workweek
agreement between the union and management; and service incentive leave pay cannot
be claimed by the complainants because they are already enjoying vacation leave with
pay for at least five days. As for the claim of noncompliance with Wage Order No. 4, the
Labor Arbiter held that the issue should be left to the grievance machinery or
voluntary arbitrator.
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On October 29, 1999, the NLRC affirmed the Labor Arbiters Decision,
dismissing the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is
hereby AFFIRMED and complainants appeal therefrom DISMISSED for
lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino
Egera and Simplicio Aya-ay are directed to report to work at respondents
San Rafael Plant, Bulacan but without backwages. Respondents are
directed to accept the complainants back to work.
SO ORDERED.[11]
On December 22, 1999, the NLRC denied the petitioners motion for
reconsideration for lack of merit.[12]
Left with no recourse, petitioners filed a petition forcertiorariwith the CA.
On July 24, 2001, the CA dismissed the petition forcertiorariand ruled that the
transfer order was a management prerogative not amounting to a constructive
dismissal or an unfair labor practice. The CA further sustained the enforceability of
the MOA, particularly the waiver of overtime pay in light of this Courts rulings
upholding a waiver of benefits in exchange of other valuable privileges. The dispositive
portion of the said CA decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision ofthe Labor Arbiter dated February 27, 1998 and the Decision and
Resolution of the NLRC promulgated on October 29, 1999 and December
22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-
97 and 08-05920-97, are AFFIRMED.
SO ORDERED.[13]
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The CA denied the petitioners motion for reconsideration on December 20, 2001.[14]
Dissatisfied, petitioners filed this petition for review raising the following issues:
-A-
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE
PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER AND THE
COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL
DISMISSAL, OF THE INDIVIDUAL PETITIONERS.
-B-
THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND
CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS OF
UNFAIR LABOR PRACTICE.
-C-
THE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING
THAT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS AND TO
DAMAGES, AS WELL AS LITIGATION COSTS AND ATTORNEYS FEES.[15]
The petition has no merit.
We have no reason to deviate from the well-entrenched rule that findings of
fact of labor officials, who are deemed to have acquired expertise in matters within
their respective jurisdiction, are generally accorded not only respect but even finality,
and bind us when supported by substantial evidence.[16]This is particularly true when
the findings of the Labor Arbiter, the NLRC and the CA are in absolute agreement.[17]In
this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the
petitioners were not constructively dismissed and that the transfer orders did not
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amount to an unfair labor practice. But if only to disabuse the minds of the petitioners
who have persistently pursued this case on the mistaken belief that the labor
tribunals and the appellate court committed grievous errors, this Court will go over
the issues raised in this petition.
Petitioners mainly contend that the transfer orders amount to a constructive
dismissal. They maintain that the letter of the Bureau of Animal Industry is not
credible because it is not authenticated; it is only a ploy, solicited by respondents to
give them an excuse to effect a massive transfer of employees. They point out that
the Caloocan City office is still engaged in production activities until now and
respondents even hired new employees to replace them.
We do not agree.
We refuse to accept the petitioners wild and reckless imputation that the
Bureau of Animal Industry conspired with the respondents just to effect the transfer
of the petitioners. There is not an iota of proof to support this outlandish
claim. Absent any evidence, the allegation is not only highly irresponsible but is
grossly unfair to the government agency concerned. Even as this Court has given
litigants and counsel a relatively wide latitude to present arguments in support of their
cause, we will not tolerate outright misrepresentation or baseless accusation. Let this
be fair warning to counsel for the petitioners.
Furthermore, Trycos decision to transfer its production activities to San Rafael,
Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of
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Animal Industry, was within the scope of its inherent right to control and manage its
enterprise effectively. While the law is solicitous of the welfare of employees, it must
also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.[18]
This prerogative extends to the managements right to regulate, according to its
own discretion and judgment, all aspects of employment, including the freedom to
transferand reassign employees according to the requirements of its business.
[19]Managements prerogative of transferring and reassigning employees from one area
of operation to another in order to meet the requirements of the business is, therefore,
generally not constitutive of constructive dismissal.[20]Thus, the consequent transfer of
Trycos personnel, assigned to the Production Department was well within the scope of
its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the
employee, and it does not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal.[21]However, the employer has the burden of proving that the
transfer of an employee is for valid and legitimate grounds. The employer must show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other
benefits.[22]
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Indisputably, in the instant case, the transfer orders do not entail a demotion in
rank or diminution of salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the ground that it would cause
them great inconvenience since they are all residents of Metro Manila and they would
incur additional expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not
sufficient to warrant a claim of constructive dismissal.[23]Objection to a transfer that is
grounded solely upon the personal inconvenience or hardship that will be caused to
the employee by reason of the transfer is not a valid reason to disobey an order of
transfer.[24]
Incidentally, petitioners citeEscobin v. NLRC[25]where the Court held that the transfer
of the employees therein was unreasonable. However, the distance of the workplace to
which the employees were being transferred can hardly compare to that of the present
case. In that case, the employees were being transferred from Basilan to Manila;
hence, the Court noted that the transfer would have entailed the separation of the
employees from their families who were residing in Basilan and accrual of additional
expenses for living accommodations in Manila. In contrast, the distance
from Caloocan to San Rafael, Bulacan is not considerably great so as to compel
petitioners to seek living accommodations in the area and prevent them from
commuting to Metro Manila daily to be with their families.
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Petitioners, however, went further and argued that the transfer orders
amounted to unfair labor practice because it would paralyze and render the union
ineffective.
To begin with, we cannot see how the mere transfer of its members can paralyze
the union. The union was not deprived of the membership of the petitioners whose
work assignments were only transferred to another location.
More importantly, there was no showing or any indication that the transfer
orders were motivated by an intention to interfere with the petitioners right to
organize. Unfair labor practice refers to acts that violate the workers right to organize.
With the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited
acts are related to the workers right to self-organization and to the observance of a
CBA. Without that element, the acts, no matter how unfair, are not unfair labor
practices.[26]
Finally, we do not agree with the petitioners assertion that the MOA is not
enforceable as it is contrary to law. The MOA is enforceable and binding against the
petitioners. Where it is shown that the person making the waiver did so voluntarily,
with full understanding of what he was doing, and the consideration for the quitclaim
is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking.[27]
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D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits
that the employees will derive from the adoption of a compressed workweek scheme,
thus:
The compressed workweek scheme was originally conceived for
establishments wishing to save on energy costs, promote greater work
efficiency and lower the rate of employee absenteeism, among others.
Workers favor the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1) day a week;
savings on meal and snack expenses; longer weekends, or an additional
52 off-days a year, that can be devoted to rest, leisure, family
responsibilities, studies and other personal matters, and that it will
spare them for at least another day in a week from certaininconveniences that are the normal incidents of employment, such as
commuting to and from the workplace, travel time spent, exposure to
dust and motor vehicle fumes, dressing up for work, etc. Thus, under
this scheme, the generally observed workweek of six (6) days is shortened
to five (5) days but prolonging the working hours from Monday to Friday
without the employer being obliged for pay overtime premium
compensation for work performed in excess of eight (8) hours on
weekdays, in exchange for the benefits abovecited that will accrue to the
employees.
Moreover, the adoption of a compressed workweek scheme in the company will
help temper any inconvenience that will be caused the petitioners by their transfer to a
farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE,
under D.O. No. 21, to protect the interest of the employees in the implementation of a
compressed workweek scheme:
1. The employees voluntarily agree to work more than eight (8)
hours a day the total in a week of which shall not exceed their
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normal weekly hours of work prior to adoption of the compressed
workweek arrangement;
2. There will not be any diminution whatsoever in the weekly
or monthly take-home pay and fringe benefits of the employees;
3. If an employee is permitted or required to work in excess of
his normal weekly hours of work prior to the adoption of the
compressed workweek scheme, all such excess hours shall be
considered overtime work and shall be compensated in accordance
with the provisions of the Labor Code or applicable Collective
Bargaining Agreement (CBA);
4. Appropriate waivers with respect to overtime premium pay
for work performed in excess of eight (8) hours a day may be
devised by the parties to the agreement.
5. The effectivity and implementation of the new working time
arrangement shall be by agreement of the parties.
PESALA v. NLRC,[28]cited by the petitioners,is not applicable to the present
case. In that case, an employment contract provided that the workday consists of 12
hours and the employee will be paid a fixed monthly salary rate that was above the
legal minimum wage. However, unlike the present MOA which specifically states that
the employee waives his right to claim overtime pay for work rendered beyond eight
hours, the employment contract in that case was silent on whether overtime pay was
included in the payment of the fixed monthly salary. This necessitated the
interpretation by the Court as to whether the fixed monthly rate provided under the
employment contract included overtime pay. The Court noted that if the employee is
paid only the minimum wage but with overtime pay, the amount is still greater than
the fixed monthly rate as provided in the employment contract. It, therefore, held that
overtime pay was not included in the agreed fixed monthly rate.
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Considering that the MOA clearly states that the employee waives the payment
of overtime pay in exchange of a five-day workweek, there is no room for interpretation
and its terms should be implemented as they are written.
WHEREFORE, the petition isDENIED. The Court of Appeals Decision
dated July 24, 2001 and Resolution dated December 20, 2001 areAFFIRMED.
SO ORDERED.
MANILA JOCKEY CLUB G.R. No. 167760
EMPLOYEES LABOR UNION-PTGWO,
Petitioner, Present:
PUNO,C.J.,Chairperson,
SANDOVAL-GUTIERREZ,
- versus -CORONA,
AZCUNA, and
GARCIA,JJ.
MANILA JOCKEY CLUB, INC.,Promulgated:
Respondent. March 7, 2007
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
D E C I S I O N
GARCIA,J.:
Challenged in this petition for review under Rule 45 of the Rules of Court is the
decision[1]dated December 17, 2004 of the Court of Appeals (CA), as reiterated in its
resolution[2]of April 4, 2005, dismissing the petition for review of herein petitioner
inCA-G.R. SP No. 69240,entitledManila Jockey Club Employees Labor Union- PTGWO
v. Manila Jockey Club, Inc.
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The facts:
Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila
Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and
maintain horse races, entered into a Collective Bargaining Agreement (CBA)
effective January 1, 1996 to December 31, 2000. The CBA governed the economic
rights and obligations of respondents regular monthly paid rank-and-file employees.
[3]In the CBA, the parties agreed to a 7-hour work schedule from 9:00
a.m. to 12:00 noon and from1:00 p.m. to 5:00 p.m. on a work week of Monday to
Saturday, as contained under Section 1, Article IV,[4]of the same CBA, to wit:
Section 1. Both parties to this Agreement agree to observe the seven-
hour work schedule herewith scheduled to be from 9:00
a.m. to 12:00 noon and 1:00 p.m. to 5 p.m. on work week of Monday to
Saturday. All work performed in excess of seven (7) hours work schedule
and on days not included within the work week shall be considered
overtime and paid as such. Except those monthly compensation which
includes work performed during Saturday, Sunday, and Holiday when
races are held at the Club.
xxx xxx xxx
Accordingly, overtime on an ordinary working day shall be remunerated
in an amount equivalent to the worker's regular basic wage plus twenty
five percent (25%) thereof. Where the employee is permitted or suffered
to work on legally mandated holidays or on his designated rest day
which is not a legally mandated holiday, thirty percent (30%) shall be
added to his basic wage for a seven hour work; while work rendered in
excess of seven hours on legally mandated holidays and rest days not
falling within the aforestated categories day shall be additionally
compensated for the overtime work equivalent to his rate for the first
seven hours on a legally mandated holiday or rest day plus thirtypercent (30%) thereof.
The CBA likewise reserved in respondent certain management prerogatives, including
the determination of the work schedule, as provided under Section 2, Article XI:
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Section 2. The COMPANY shall have exclusive control in the
management of the offices and direction of the employees. This shall
include, but shall not be limited to, the right to plan, direct and control
office operations, to hire, assign and transfer employees from one job to
another or from one department to another; to promote, demote,
discipline, suspend, discharge or terminate employees for proper causeand/or in accordance with law, to relieve employees from duty because
of lack of work or for other legitimate reasons; or to introduce new or
improved methods or facilities; or to change existing methods or facilities
to change the schedules of work; and to make and enforce rules and
regulations to carry out the functions of management, provided,
however, that the COMPANY will not use these rights for the purpose of
discrimination against any employee because of his membership in the
UNION. Provided, further, that the prerogatives provided for under this
Section shall be subject to, and in accordance with pertinent directives,
proclamations and their implementing rules and regulations.
On April 3, 1999, respondent issued an inter-office memorandum declaring
that, effective April 20, 1999, the hours of work of regular monthly-paid employees
shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday
and Thursday. The memorandum, however, maintained the 9:00 a.m. to 5:00
p.m. schedule for non-race days.
On October 12, 1999, petitioner and respondent entered into an Amended and
Supplemental CBA retaining Section 1 of Article IV and Section 2 of Article
XI,supra,and clarified that any conflict arising therefrom shall be referred to a
voluntary arbitrator for resolution.
Subsequently, before a panel of voluntary arbitrators of the National
Conciliation and Mediation Board (NCMB), petitioner questioned the above office
memorandum as violative of the prohibition against non-diminution of wages and
benefits guaranteed under Section 1, Article IV, of the CBA which specified the work
schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner
claimed that as a result of the memorandum, the employees are precluded from
rendering their usual overtime work from 5:00 p.m. to 9:00 p.m.
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The NCMBs panel of voluntary arbitrators, in a decision dated October 18,
2001, upheld respondent's prerogative to change the work schedule of regular
monthly-paid employees under Section 2, Article XI, of the CBA. Petitioner moved for
reconsideration but the panel denied the motion.
Dissatisfied, petitioner then appealed the panels decision to the CA inCA-G.R.
SP No. 69240.In the herein assailed decision of December 17, 2004, the CA upheld
that of the panel and denied petitioners subsequent motion for reconsiderationviaits
equally challenged resolution of April 4, 2005.
Hence, petitioners present recourse, raising the following issues:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT RESPONDENT MJCI DID NOT RELINQUISH PART OF
ITS MANAGEMENT PREROGATIVE WHEN IT STIPULATED A WORK
SCHEDULE IN THE CBA.
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT RESPONDENT MJCI DID NOT VIOLATE THE NON-
DIMINUTION PROVISION CONTAINED IN ARTICLE 100 OF THE LABOR
CODE.
WeDENY.
Respondent, as employer, cites the change in the program of horse races as
reason for the adjustment of the employees work schedule. It rationalizes that when
the CBA was signed, the horse races started at 10:00 a.m. When the races weremoved to 2:00 p.m., there was no other choice for management but to change the
employees' work schedule as there was no work to be done in the morning. Evidently,
the adjustment in the work schedule of the employees is justified.
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We are not unmindful that every business enterprise endeavors to increase
profits. As it is, the Court will not interfere with the business judgment of an employer
in the exercise of its prerogative to devise means to improve its operation, provided
that it does not violate the law, CBAs, and the general principles of justice and fair
play. We have thus held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods,time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, layoff of workers and discipline, dismissal, and recall of workers.[5]
While it is true that Section 1, Article IV of the CBA provides for a 7-hour work
schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from
Mondays to Saturdays, Section 2, Article XI, however, expressly reserves on
respondent the prerogative to change existing methods or facilities to change the
schedules of work. As aptly ruled by the CA:
x x x. Such exact language lends no other meaning but that while
respondent may have allowed the initial determination of the work
schedule to be done through collective bargaining, it expressly retained
the prerogative to change it.
Moreover, it cannot be said that in agreeing to Section 1 of Article
IV, respondent already waived that customary prerogative of
management to set the work schedule. Had that been the intention,
Section 2 of Article XI would not have made any reference at all to the
retention by respondent of that prerogative. The CBA would have instead
expressly prohibited respondent from exercising it. x x x As it were,
however, the CBA expressly recognized in respondent the prerogative to
change the work schedule. This effectively rules out any notion of waiver
on the part of respondent of its prerogative to change the work schedule.
The same provision of the CBA also grants respondent the prerogative to relieve
employees from duty because of lack of work. Petitioners argument, therefore, that the
change in work schedule violates Article 100 of the Labor Code because it resulted in
the diminution of the benefit enjoyed by regular monthly-paid employees of rendering
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overtime work with pay, is untenable. Section 1, Article IV, of the CBA does not
guarantee overtime work for all the employees but merely provides that "all work
performed in excess of seven (7) hours work schedule and on days not included within
the work week shall be considered overtime and paid as such."
Respondent was not obliged to allow all its employees to render
overtime work everyday for the whole year, but only those employees
whose services were needed after theirregular working hours and only
upon the instructions of management. The overtime pay was not
given to each employee consistently, deliberately and unconditionally,
but as acompensation for additional services rendered. Thus, overtime
pay does not fall within the definition of benefits under Article 100 of the Labor Code
on prohibition against elimination or diminution of benefits.
While the Constitution is committed to the policy of social justice and the protection
of the working class, it should not be presumed that every labor dispute will be
automatically decided in favor of labor. The partiality for labor has not in any way
diminished our belief that justice in every case is for the deserving, to be dispensed in
the light of the established facts and the applicable law and doctrine.[6]
WHEREFORE, the instant petition isDENIEDand the assailed decision and
resolution of the CA areAFFIRMED.
Costs against petitioner.
SO ORDERED.
CAPITOL MEDICAL CENTER, INC.
and DR. THELMA
NAVARETTE-CLEMENTE,
Petitioners,
G.R. No. 155098
Present:
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- versus -
DR. CESAR E. MERIS,
Respondent.
PANGANIBAN,Chairman,
SANDOVAL- GUTIERREZ,
CORONA,
CARPIO MORALES, and
GARCIA,JJ.
Promulgated:
September 16, 2005
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D E C I S I O N
CARPIO MORALES,J.:
Subject of the present appeal is the Court of Appeals Decision[1]dated February 15,
2002 reversing the NLRC Resolution[2]dated January 19, 1999 and Labor Arbiter
Decision[3]dated April 28, 1998 which both held that the closure of the Industrial
Service Unit of the
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Capitol Medical Center, Inc., resulting to the termination of the services of herein
respondent Dr. Cesar Meris as Chief thereof, was valid.
On January 16, 1974, petitioner Capitol Medical Center, Inc. (Capitol) hired Dr. Cesar
Meris (Dr. Meris),[4]one of its stockholders,[5]as in charge of its Industrial Service Unit
(ISU) at a monthly salary of P10,270.00.
Until the closure of the ISU on April 30, 1992,[6]Dr. Meris performed dual functions of
providing medical services to Capitols more than 500 employees and health workers as
well as to employees and workers of companies having retainer contracts with it.[7]
On March 31, 1992, Dr. Meris received from Capitols president and chairman of the
board, Dr. Thelma Navarette-Clemente (Dr. Clemente), a notice advising him of the
managements decision to close or abolish the ISU and the consequent termination of
his services as Chief thereof, effective April 30, 1992.[8]The notice reads as follows:
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March 31, 1992
Dr. Cesar E. Meris
Chief, Industrial Service Unit
Capitol Medical Center
Dear Dr. Meris:
Greetings!
Please be formally advised that the hospital management has decided
toabolish CMCs Industrial Service Unit as of April 30, 1992 in view
of the almost extinct demand for direct medical services by the
private and semi-government corporations in providing health care
for their employees.Such a decision was arrived at, after
considering the existing trend of industrial companies allocating
their health care requirements to Health Maintenance Organizations
(HMOs) or thru a tripartite arrangement with medical insurance
carriers and designated hospitals.
As a consequence thereof, all positions in the unit will be
decommissioned at the same time industrial services [are] deactivated. In
that event,you shall be entitled to return to your private practice as
a consultant staff of the institution and will become eligible to
receive your retirement benefits as a former hospital employee. MissJane Telan on the other hand will be transferred back to Nursing Service
for reassignment at the CSR.
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We wish to thank you for your long and faithful service to the institution
and hope that our partnership in health care delivery to our people will
continue throughout the future. Best regards.
Very truly yours,
(SGD.) DR. THELMA NAVARETTE-CLEMENTE[9](Emphasis and
underscoring supplied)
Dr. Meris, doubting the reason behind the managements decision to close the ISU and
believing that the ISU was not in fact abolished as it continued to operate and offer
services to the client companies with Dr. Clemente as its head and the notice of
closure was a mere ploy for his ouster in view of his refusal to retire despite Dr.
Clementes previous prodding for him to do so,[10]sought his reinstatement but it was
unheeded.
Dr. Meris thus filed on September 7, 1992 a complaint against Capitol and Dr.
Clemente for illegal dismissal and reinstatement with claims for backwages, moral and
exemplary damages, plus attorneys fees.[11]
Finding for Capitol and Dr. Clemente, the Labor Arbiter held that the abolition of the
ISU was a valid and lawful exercise of management prerogatives and there was
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convincing evidence to show that ISU was being operated at a loss.[12]The decretal text
of the decision reads:
WHEREFORE, judgment is hereby rendered dismissing the complaint.
Respondents are however ordered to pay complainant all sums due him
under thehospital retirement plan.
SO ORDERED.[13](Emphasis supplied)
On appeal by Dr. Meris, the National Labor Relations Commission (NLRC) modified the
Labor Arbiters decision. It held that in the exercise of Capitols management
prerogatives, it had the right to close the ISU even if it was not suffering business
losses in light of Article 283 of the Labor Code and jurisprudence.[14]
And the NLRC set aside the Labor Arbiters directive for the payment of retirement
benefits to Dr. Meris because he did not retire. Instead, it ordered the payment of
separation pay as provided under Article 283 as he was discharged due to closure of
ISU, to be charged against the retirement fund.[15]
Undaunted, Dr. Meris elevated the case to the Court of Appeals via petition for
review[16]which, in the interest of substantial justice, was treated as one for certiorari.
[17]
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Discrediting Capitols assertion that the ISU was operating at a loss as the evidence
showed a continuous trend of increase in its revenue for three years immediately
preceding Dr. Meriss dismissal on April 30, 1992,[18]and finding that the ISUs Analysis
of Income and Expenses which was prepared long after Dr. Meriss dismissal, hence,
not yet available, on or before April 1992, was tainted with irregular entries, the
appellate court held that Capitols evidence failed to meet the standard of a sufficient
and adequate proof of loss necessary to justify the abolition of the ISU.[19]
The appellate court went on to hold that the ISU was not in fact abolished, its
operation and management having merely changed hands from Dr. Meris to Dr.
Clemente; and that there was a procedural lapse in terminating the services of Dr.
Meris, no written notice to the Department of Labor and Employment (DOLE) of the
ISU abolition having been made, thereby violating the requirement embodied in Article
283.[20]
The appellate court, concluding that Capitol failed to strictly comply with both
procedural and substantive due process, a conditionsine qua nonfor the validity of a
case of termination,[21]held that Dr. Meris was illegally dismissed. It accordingly
reversed the NLRC Resolution and disposed as follows:
IN VIEW OF ALL THE FOREGOING, the assailed resolutions of the NLRC
are hereby set aside, and another one entered
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1 declaring illegal the dismissal of petitioner as Chief of the Industrial
Service Unit of respondent Medical Center;
2 ordering respondents to pay petitioner
a) backwages from the date of his separation in April 1992 until this
decision has attained finality;
b) separation pay in lieu of reinstatement computed at the rate of one (1)
month salary for every year of service with a fraction of at least six (6)
months being considered as one year;
c) other benefits due him or their money equivalent;
d) moral damages in the sum of P50,000.00;
e) exemplary damages in the sum of P50,000.00; and
f) attorneys fees of 10% of the total monetary award payable to petitioner.
SO ORDERED.[22]
Hence, the present petition for review assigning to the appellate court the following
errors:
I
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. . . IN OVERTURNING THE FACTUAL FINDINGS AND CONCLUSIONS OF
BOTH THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND
THE LABOR ARBITER.
II
. . . IN HOLDING, CONTRARY TO THE FINDINGS OF BOTH THE LABOR
ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION, THAT
THE INDUSTRIAL UNIT (ISU) WAS NOT INCURRING LOSSES AND THAT
IT WAS NOT IN FACT ABOLISHED.
III
. . . IN NOT UPHOLDING PETITIONERS MANAGEMENT PREROGATIVE
TO ABOLISH THE INDUSTRIAL SERVICE UNIT (ISU).
IV
. . . IN REQUIRING PETITIONERS TO PAY RESPONDENT BACKWAGES
AS WELL AS DAMAGES AND ATTORNEYS FEES.[23]
Capitol questions the appellate courts deciding of the petition of Dr. Meris on the
merits, instead of merely determining whether the administrative bodies acted with
grave abuse of discretion amounting to lack or excess of jurisdiction.
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The province of a special civil action for certiorari under Rule 65, no doubt the
appropriate mode of review by the Court of Appeals of the NLRC decision,[24]is limited
only to correct errors of jurisdiction or grave abuse of discretion amounting to lack or
excess of jurisdiction.[25]In light of the merits of Dr. Meris claim, however, the
relaxation by the appellate court of procedural technicality to give way to a substantive
determination of a case, as this Court has held in several cases,[26]to subserve the
interest of justice, is in order.
Capitol argues that the factual findings of the NLRC, particularly when they coincide
with those of the Labor Arbiter, as in the present case, should be accorded respect,
even finality.[27]
For factual findings of the NLRC which affirm those of the Labor Arbiter to be accorded
respect, if not finality, however, the same must be sufficiently supported by evidence
on record.[28]Where there is a showing that such findings are devoid of support, or that
the judgment is based on a misapprehension of facts,[29]the lower tribunals factual
findings will not be upheld.
As will be reflected in the following discussions, this Court finds that the Labor Arbiter
and the NLRC overlooked some material facts decisive of the instant controversy.
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Capitol further argues that the appellate courts conclusion that the ISU was not
incurring losses is arbitrary as it was based solely on the supposed increase in
revenues of the unit from 1989-1991, without taking into account the Analysis of
Income and Expenses of ISU from July 1, 1990 to July 1, 1991 which shows that the
unit operated at a loss;[30]and that the demand for the services of ISU became almost
extinct in view of the affiliation of industrial establishments with HMOs such as
Fortunecare, Maxicare, Health Maintenance, Inc. and Philamcare and of tripartite
arrangements with medical insurance carriers and designated hospitals,[31]and the
trend resulted in losses in the operation of the ISU.
Besides, Capitol stresses, the health care needs of the hospital employees had been
taken over by other units without added expense to it;[32]the appellate courts decision
is at best an undue interference with, and curtailment of, the exercise by an employer
of its management prerogatives;[33]at the time of the closure of the ISU, Dr. Meris was
already eligible for retirement under the Capitols retirement plan; and the appellate
court adverted to the alleged lack of notice to the DOLE regarding Dr. Meriss dismissal
but the latter never raised such issue in his appeal to the NLRC or even in his petition
for review before the Court of Appeals, hence, the latter did not have authority to pass
on the matter.[34]
Work is a necessity that has economic significance deserving legal protection. The
social justice and protection to labor provisions in the Constitution dictate so.
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Employers are also accorded rights and privileges to assure their self-determination
and independence and reasonable return of capital. This mass of privileges comprises
the so-called management prerogatives. Although they may be broad and unlimited in
scope, the State has the right to determine whether an employers privilege is exercised
in a manner that complies with the legal requirements and does not offend the
protected rights of labor. One of the rights accorded an employer is the right to close
an establishment or undertaking.
The right to close the operation of an establishment or undertaking is explicitly
recognized under the Labor Code as one of the authorized causes in terminating
employment of workers, the only limitation being thatthe closure must not be for the
purpose of circumventing the provisions on termination of employment embodied in the
Labor Code.
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ART. 283.Closure of establishment and reduction of personnel. The
employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses orthe closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of termination due to
the installation of labor saving devices or redundancy, the worker
affected shall be entitled to a separation pay equivalent to at least his one
(1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of atleast six (6) months shall be considered one (1) whole year. (Emphasis
and underscoring supplied)
The phrase closures or cessation of operations of establishment or undertaking
includes a partial or total closure or cessation.[35]
x x x Ordinarily, the closing of a warehouse facility and the termination
of the services of employees there assigned is a matter that is left to the
determination of the employer in the good faith exercise of its
management prerogatives. The applicable law in such a case is Article
283 of the Labor Code which permits closure or cessation of operation of
an establishment or undertaking not due to serious business losses or
financial reverses, which, in our reading includesboth the complete
cessation of operations and the cessation of only part of a companys
business.(Emphasis supplied)
And the phrase closures or cessation x x x not due to serious business losses or
financial reverses recognizes the right of the employer to close or cease his business
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operations or undertaking even if he is not suffering from serious business losses or
financial reverses, as long as he pays his employees their termination pay in the
amount corresponding to their length of service.[36]
It would indeed be stretching the intent and spirit of the law if a court were to unjustly
interfere in managements prerogative to close or cease its business operations just
because said business operation or undertaking is not suffering from any loss.[37]As
long as the companys exercise of the same isin good faith to advance its interest
and not for the purpose of defeating or circumventing the rights of employees
under the law or a valid agreement,such exercise will be upheld.[38]
Clearly then, the right to close an establishment or undertaking may be justifiedon
grounds other than business lossesbut it cannot be an unbridled prerogative to suit
the whims of the employer.
The ultimate test of the validity of closure or cessation of establishment or
undertaking is that it must bebona fidein character.[39]And the burden of proving
such falls upon the employer.[40]
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In the case at bar, Capitol failed to sufficiently prove its good faith in closing the ISU.
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From the letter of Dr. Clemente to Dr. Meris, it is gathered that the abolition of the ISU
was due to the almost extinct demand for direct medical service by the private and
semi-government corporations in providing health care for their employees;and that
such extinct demand was brought about by the existing trend of industrial companies
allocating their health care requirements to Health Maintenance Organizations (HMOs)
or thru a tripartite arrangement with medical insurance carriers and designated
hospitals.
The records of the case, however, fail to impress that there was indeed extinct demand
for the medical services rendered by the ISU. The ISUs Annual Report for the fiscal
years 1986 to 1991, submitted by Dr. Meris to Dr. Clemente, anduncontrovertedby
Capitol, shows the following:
Fiscal Year No. of Industrial No of No. of Capitol
Patients Companies Employees
1986-1987 466 11 1445
1987-1988 580 17 1707
1988-1989 676 14 1888
1989-1990 571 16 2731
1990-1991 759 18 2320[41]
If there was extinct demand for the ISU medical services as what Capitol and Dr.
Clemente purport to convey, why the number of client companies of the ISU increased
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from 11 to 18 from 1986 to 1991, as well as the number of patients from both
industrial corporations and Capitol employees, they did not explain.
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The Analysis of Income and Expenses adduced by Capitol showing that the ISU
incurred losses from July 1990 to February 1992, to wit:
July 1, 1990 to July 1, 1991 to
June 30, 1991 February 29, 1992
INCOME P16, 772.00 P35, 236.00
TOTAL EXPENSES P225, 583.70 P169,244.34
NET LOSS P(208,811.70) P(134,008.34),[42]
was prepared by its internal auditor Vicenta Fernandez,[43]a relative of Dr. Clemente,
and not by an independent external auditor, hence, not beyond doubt. It is the
financial statements audited by independent external auditors which constitute the
normal method of proof of the profit and loss performance of a company.[44]
At all events, the claimed losses are contradicted by the accounting records of Capitol
itself which show that ISU had increasing revenue from 1989 to 1991.
Year In-Patient Out-Patient Total Income
1989 P230,316.38 P 79,477.50 P309,793.88
1990 P278,438.10 P124,256.65 P402,694.75
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1991 P305,126.35 P152,920.15 P458,046.50[45]
The foregoing disquisition notwithstanding, as reflected above, the existence of
business losses is not required to justify the closure or cessation of establishment or
undertaking as a ground to terminate employment of employees. Even if the ISU were
not incurring losses, its abolition or closure could be justified on other grounds like
that proffered by Capitol extinct demand. Capitol failed, however, to present sufficient
and convincing evidence to support such claim of extinct demand. In fact, the
employees of Capitol submitted a petition[46]dated April 21, 1992 addressed to Dr.
Clemente opposing the abolition of the ISU.
The closure of ISU then surfaces to be contrary to the provisions of the Labor Code on
termination of employment.
The termination of the services of Dr. Meris not having been premised on a just or
authorized cause, he is entitled to either reinstatement or separation pay if
reinstatement is no longer viable, and to backwages.
Reinstatement, however, is not feasible in case of a strained employer-employee
relationship or when the work or position formerly held by the dismissed employee no
longer exists, as in the instant case.[47]Dr. Meris is thus entitled to payment of
separation pay at the rate of one (1) month salary for every year of his employment,
with a fraction of at least six (6) months being considered as one(1) year,[48]and full
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backwages from the time of his dismissal from April 30, 1992 until the expiration of
his term as Chief of ISU or his mandatory retirement, whichever comes first.
The award by the appellate court of moral damages,[49]however, cannot be sustained,
solely upon the premise that the employer fired his employee without just cause or due
process. Additional facts must be pleaded and proven to warrant the grant of moral
damages under the Civil Code, such as that the act of dismissal was attended by bad
faith or fraud, or was oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy; and of course, that social humiliation, wounded
feelings, grave anxiety, etc., resulted therefrom.[50]Such circumstances, however, do not
obtain in the instant case. More specifically on bad faith, lack of it is mirrored in Dr.
Clementes offer to Dr. Meris to be a consultant of Capitol, despite the abolition of the
ISU.
There being no moral damages, the award of exemplary damages does not lie.[51]
The award for attorneys fees, however, remains.[52]
WHEREFORE, the decision of the Court of Appeals dated February 15, 2002 is
herebyAFFIRMEDwithMODIFICATION. As modified, judgment is hereby rendered
ordering Capitol Medical Center, Inc. to pay Dr. Cesar Meris separation pay at the rate
of One (1) Month salary for every year of his employment, with a fraction of at least Six
(6) Months being considered as One (1) Year, full backwages from the time of his
dismissal from April 30, 1992 until the expiration of his term as Chief of the ISU or his
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mandatory retirement, whichever comes first; other benefits due him or their money
equivalent; and attorneys fees.
Costs against petitioners.
SO ORDERED.
ELEMENTS FOR A VALID EXERCISE
SAN MIGUEL CORPORATION, ANDRES
SORIANO III,
FRANCISCO C. EIZMENDI, JR., and
FAUSTINO F. GALANG,
Petitioners,
-versus-
NUMERIANO LAYOC, JR., CARLOS
APONESTO, PAULINO BALDUGO,
QUEZON BARIT, BONIFACIO BOTOR,
HERMINIO CALINA, DANILO CAMINGAL,JUAN DE MESA, REYNOLD
DESEMBRANA, BERNARDITO DEUS,
EDUARDO FILLARTA, MAXIMIANO
FRANCISCO, MARIO MARILIM,
DEMETRIO MATEO, FILOMENO
MENDOZA, CONRADO NIEVA,
FRANCISCO PALINES, FELIPE
POLINTAN, MALCOLM SATORRE, and
ALEJANDRO TORRES,
Respondents.
G.R. No. 149640
Present:
QUISUMBING,J.,Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR.,JJ.
Promulgated:
October 19, 2007
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D E C I S I O N
CARPIO,J.:
The Case
This is a petition for review[1]of the decision[2]promulgated on
29 August 2001 by the Court of Appeals (appellate court) in CA-G.R. SP No.
55838. The appellate courts decision set aside the decision[3]in NLRC NCR Case No.
00-12-08656-94 dated 23 March 1998, the decision[4]dated 27 November 1998, and
the resolution[5]dated 31 August 1999 in NLRC CA No. 015710-98. The appellate court
ordered San Miguel Corporation (SMC), Andres Soriano III, Francisco C. Eizmendi, Jr.,
and Faustino F. Galang (collectively, petitioners) to pay respondent Numeriano Layoc,
Jr. (Layoc) P125,000, representing overtime pay for services that he could have
rendered from January 1993 up to his retirement on 30 June 1997, and respondents
Carlos Aponesto,Paulino Baldugo, Quezon Barit, Bonifacio Botor, Herminio Calina, Da
nilo Camingal, Juan de Mesa, Reynold Desembrana, Bernardito Deus,
Eduardo Fillarta, MaximianoFrancisco,
Mario Marilim, Demetrio Mateo, Filomeno Mendoza, Conrado Nieva, Francisco Palines,
Felipe Polintan, Malcolm Satorre, and Alejandro Torres (collectively,
respondents) P10,000 each as nominal damages.
The Facts
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The appellate court stated the facts as follows:
[Respondents] were among the Supervisory Security Guards of the Beer
Division of the San Miguel Corporation (p. 10, Rollo), a domestic
corporation duly organized and existing under and by virtue of the laws
of the Republic of the Philippines with offices at No. 40 San Miguel
Avenue, Mandaluyong City. They started working as guards with
the petitioner San Miguel Corporationassigned to the Beer Division on
different dates until such time that they were promoted as supervising
security guards. The dates of their employment commenced as follows
(Ibid., pp. 87-89):
As guards As supervising
guards
a. Aponesto, Carlos June 1970 February 1983
b. Baldugo, Paulino November 1978 May 1984
c. Barit, Quezon January 1969 May 1984
d. Botor, Bonifacio April 1980 January 1987
e. De Mesa, Juan November 1977 May 1984
f. Calina, Herminio February 1976 May 1984
g. Desembrana, Reynold November 1976 April 1983
h. Camingal, Danilo December 1975 December 1985
i. Deus, Bernardito July 1976 May 1983
j. Fillarta, Eduardo January 1979 May 1989
k. Francisco, Maximian
o
October 1977 May 1984
l. Layoc, Numeriano June 1974 January 1982
m. Marilim, Mario December 1977 June 1984
n. Mateo, Demetrio November 1976 March 1984
o. Mendoza, Filomena March 1980 May 1983
p. Palines, Francisco May 1979 May 1985
q. Nieva, Conrado January 1977 June 1987
r. Polintan, Felipe June 1972 May 1983
s. Satorre, Malcolm September 1970May 1984
t. Torres, Alejandro January 1974 May 1984
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As supervising security guards, the private respondents were performing the
following functions (Ibid., pp. 202-204):
1. Supervises the facility security force under his shift;
2. Inspects all company-owned firearms and ammunition andpromptly submits report as regards to discrepancy and/or state of
doubtful/suspected serviceability;
3. Receives and transfers from outgoing to incoming supervising
security guard all company property, all official papers,
documents and/or cases investigated including pieces of evidence
properly labeled and secured;
4. Physically checks and accounts for all company property within
his area of responsibility immediately upon assumption of duty;
5. Updates compilation of local security rules, policies and
regulations and ensures that all his guards are posted thereon;
6. Conducts regular and irregular inspection to determine his
guards compliance with all guard force instructions, corporate
security standards and procedures;
7. Passes on all official communications, requests, applications of
leaves, etc. and makes his comments and/or recommendations to
his superior;
8. Systematically and continuously screens the good performers
from the marginal or poor among his guards; concentrates on
teaching and guiding the latter; determines further what training
and/or skills that should be learned and submits appropriate
report to superior;
9. Corrects, on the spot, all deficiencies noted and institutes
corrective measures within his authority; recommends
commendations for those guards who deserves [sic] recognition forgood work;
10. Conducts an investigation of all cases coming to his attention
and promptly submits appropriate report to his superiors;
11. Evaluates individual guard performance and renders efficiency
reports in accordance with standing instructions;
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12. Ensures that all his guards are courteous, respectful and
accommodating at all times;
13. Ensures that even those who have been found violating the
facilitys policies, rules and procedures are professionally treated
with courtesy and understanding to preclude embarrassment andhumiliation;
14. Ensures the maintenance of [a] logbook of all incidents,
communications, personnel and materials movements;
15. Responds to all calls for assistance;
16. Conducts continuing physical checks of the facilitys critical and
vulnerable areas;
17. Obtains critical security information and passes it on to his
superiors;
18. Assesses the need for extra guard service requirements;
19. Continuously monitors the personal needs and problems of his
men to his superiors;
20. Acts as Detachment Commander in the latters absence;
21. Responds to emergencies and activates the Corporate Security
Alerting System as appropriate; and
22. Performs such other duties as may be required by his
Detachment Commander/Plant Security Officer.
From the commencement of their employment, the private respondentswere required to punch their time cards for purposes of determining the
time they would come in and out of the companys work place. Corollary
[sic], the private respondents were availing the benefits for overtime,
holiday and night premium duty through time card punching (Rollo, p.
89). However, in the early 1990s, the San Miguel Corporation embarked
on a Decentralization Program aimed at enabling the separate divisions
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of the San Miguel Corporation to pursue a more efficient and effective
management of their respective operations (Ibid., p. 99).
As a result of the Decentralization Program, the Beer Division of the San
Miguel Corporation implemented on January 1, 1993 a no time card
policy whereby the Supervisory I and II composing of the supervisingsecurity guards of the Beer Division were no longer required to punch
their time cards (Ibid., p. 100). Consequently, on January 16, 1993,
without prior consultation with the private respondents, the time cards
were ordered confiscated and the latter were no longer allowed to render
overtime work (Ibid., p. 117).
However, in lieu of the overtime pay and the premium pay, the personnel
of the Beer Division of the petitioner San Miguel Corporation affected by
the No Time Card Policy were given a 10% across-the-board increase on
their basic pay while the supervisors who were assigned in the night shift(6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging
from P2,000.00 toP2,500.00 a month (Rollo, p. 12).[6]
On 1 December 1994, respondents filed a complaint for unfair labor practice, violation
of Article 100 of the Labor Code of the Philippines, and violation of the equal
protection clause and due process of law in relation to paragraphs 6 and 8 of Article
32 of the New Civil Code of the Philippines. Respondents prayed for actual damages for
two years (1993-1994), moral damages, exemplary damages, and overtime, holiday,
and night premium pay.
In their position paper dated 28 February 1995, respondents stated that the Beer
Division of SMC maliciously and fraudulently refused payment of their overtime,
holiday, and night premium pay from 1 to 15 January 1993 because of the no time
card policy. Moreover, petitioners had no written authority to stop respondents from
punching their time cards because the alleged memorandum authorizing such
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stoppage did not include supervisory security guards. Thus, the respondents suffered
a diminution of benefits, making petitioners liable for non-payment of overtime,
holiday, and night premium pay.
In their position paper dated 23 February 1995, petitioners maintained that
respondents were supervisory security guards who were exempt from the provisions of
the Labor Code on hours of work, weekly rest periods, and rest days. The no time card
policy did not just prevent respondents from punching their time cards, but it also
granted respondents an across-the-board increase of 10% of basic salary and either
a P2,000 or P2,500 night shift allowance on top of their yearly merit
increase. Petitioners further asserted that the no time card policy was a valid exercise
of management prerogative and that all supervisors in the Beer Division were covered
by the no time card policy, which classification was distinct and separate from the
other divisions within SMC.
Respondents filed their reply dated 15 March 1995 to petitioners position
paper. Petitioners, on the other hand, filed their rejoinder dated 27 March 1995 to
respondents reply.Respondents filed a request for admission dated 2 May 1995 to
which petitioners filed their reply dated 15 May 1995.
The Ruling of the Labor Arbiter
In his decision dated 23 March 1998, Labor Arbiter Potenciano S. Canizares, Jr.
(Arbiter Canizares) stated that the principal issue is whether petitioners can, in their
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no time card policy, remove the benefits that respondents have obtained through
overtime services. Arbiter Canizares then stated that the facts and the evidence are in
respondents favor.Arbiter Canizares ruled that rendering services beyond the regular
eight-hour work day has become company practice. Moreover, petitioners failed to
show good faith in the exercise of their management prerogative in altering company
practice because petitioners changed the terms and conditions of employment from
hours of work rendered to result only with respect to respondents and not with other
supervisors in other departments. The dispositive portion of Arbiter Canizares decision
reads:
WHEREFORE, the [petitioners] are hereby ordered to restore to the
[respondents] their right to earn for overtime services rendered as
enjoyed by the other employees.
The [petitioners] are further ordered to indemnify the [respondents] for
lost earnings after their terms and conditions of employment have been
unilaterally altered by the [petitioners], namely in the amount
of P500,000.00 each as computed by the [respondents], and the
[petitioners] failed to refute.
[Petitioners] are furthermore ordered to pay the
[respondents] P100,000.00 each as moral and exemplary damages.
All other claims are hereby dismissed for lack of evidence.
SO ORDERED.[7]
On 26 May 1998, petitioners filed their notice of appeal and memorandum of appeal
with the National Labor Relations Commission (NLRC).
The Ruling of the NLRC
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On 27 November 1998, the NLRC affirmed with modification the ruling of
Arbiter Canizares that respondents suffered a diminution of benefits as a result of the
adoption of the no time card policy. The NLRC cited a well-established rule that
employees have a vested right over existing benefits voluntarily granted to them by
their employer, who may not unilaterally withdraw, eliminate, or diminish such
benefits. In the present case, there was a company practice which allowed the
enjoyment of substantial additional remuneration.Furthermore, there is no rule
excluding managerial employees from the coverage of the principle of non-diminution
of benefits.
The NLRC ruled thus:
WHEREFORE, the decision appealed from is hereby AFFIRMED, with
slight modification deleting the award of moral and exemplary damages.
SO ORDERED.
[8]
Both petitioners and respondents filed their respective motions for
reconsideration. Petitioners stated that the NLRC erred in sustaining the award of
overtime pay despite its finding that respondents were managerial
personnel. Furthermore, there was no evidence that respondents rendered overtime
work and respondents admitted that they never or seldom rendered overtime
work. The award of overtime pay was thus contrary to the principle of no work, no
pay. For their part, respondents stated that the NLRC erred in deleting the award of
moral and exemplary damages. The implementation of the no time card policy, the
discrimination against them vis-a-vis the supervising security officers in other
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divisions of SMC, and the execution of quitclaims and releases during the pendency of
the case were all attended with bad faith, thus warranting the award of moral and
exemplary damages.
On 31 August 1999, the NLRC further modified Arbiter Canizares decision. The NLRC
ruled thus:
WHEREFORE, the November 27, 1998 Decision of this Commission is
hereby REITERATED with a slight modification to the effect that the
computation of the [respondents] withdrawn benefits at P125,000.00
yearly from 1993 should terminate in 1996 or the date of eachcomplainants retirement, whichever came first.
SO ORDERED.[9]
Petitioners then filed their petition for certiorari before the appellate court on 16
November 1999.
The Ruling of the Appellate Court
On 29 August 2001, the appellate court set aside the ruling of the NLRC and entered a
new judgment in favor of respondents. The appellate court stated that there is no legal
issue that respondents, being the supervisory security guards of the Beer Division of
SMC, were performing duties and responsibilities being performed by those who were
considered as officers or members of the managerial staff as defined under Section 2,
paragraph (c), Rule 1, Book III of the Implementing Rules of the Labor Code.[10]The
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appellate court ruled that while the implementation of the no time card policy was a
valid exercise of management prerogative, the rendering of overtime work by
respondents was a long-accepted practice in SMC which could not be peremptorily
withdrawn without running afoul with the principles of justice and equity. The
appellate court affirmed the deletion of the award of actual, moral, and exemplary
damages. With the exception of Layoc, respondents did not present proof of previous
earnings from overtime work and were not awarded with actual damages. Moreover,
the appellate court did not find that the implementation of the no time card policy
caused any physical suffering, moral shock, social humiliation, besmirched
reputation, and similar injury to respondents to justify the award of moral and
exemplary damages. Nonetheless, in the absence of competent proof on the specific
amounts of actual damages suffered by respondents, the appellate court awarded
them nominal damages.
The dispositive portion of the appellate courts decision reads thus:
WHEREFORE, foregoing considered, the instant petition is hereby GIVEN
DUE COURSE and is GRANTED. The Decision issued in NLRC NCR
CASE No. 00-12-08656-94 dated March 23, 1998, the Decision issued in
NLRC CA No. 015710-98 dated November 27, 1998 and the Resolution
dated August 31, 1999, are hereby ANNULLED and SET ASIDE, and a
new judgment is hereby entered ordering the petitioners to pay as
follows:
1) the private respondent Numeriano Layoc, Jr., the amount of One
Hundred Twenty-Five Thous