Imasen Philippine Manufacturing Corporation (IPMC) v. Ramonchito T.

Alcon &
Joann S. Papa
GR No. 194884, 22 October 2014

(Sexual intercourse inside company premises during working hours constitute

serious misconduct punishable by dismissal)

FACTS:

Ramonchito and Joann were hired as manual welders in 2001 by IPMC, a company
engaged in the manufacture of auto-seat recliners.

Around 12:40 A.M. of October 5, 2002, when Ramonchito and Joann were on
second-shift duty. Cyrus, a security guard on duty, patrolled and inspected the
company premises. When he reached the Tools and Die Section, he heard the
sound of an industrial fan running; intending to turn the fan off, he followed the
sound and there Cyrus discovered Ramonchito and Joann having sexual intercourse
using a piece of cartoon as mattress. Cyrus went back to the guard house and
requested his buddy Danilo, to conduct a follow-up inspection. When he went to
the Tool and Die Section, Danilo saw several employees leaving the area, including
Ramonchito and Joann, where he noticed Ramonchito picked up the cartoon they
used and put it back in its proper place. Curys then submitted a handwritten report
to the companys Finance and Administration Manager.

The company then issued separate interoffice memorandum to Ramonchito and

Joann directing them to submit their memoranda, which the two did, claiming it
was impossible for them to have sexual intercourse as there were other employees
in the area; they were merely sleeping. An administrative investigation ensued
where Cyrus and Danilo reiterated the contents of their report.

Thereafter, the company thru another memorandum terminated Ramonchito and

Joanns services, finding them guilty as charged and characterizing their act as gross
misconduct contrary to existing company policies, rules and regulations.

Ramonchito and Joann thus filed a complaint for illegal dismissal before the NLRC,
reiterating their assertions at the hearing.
The Labor Arbiter ruled their dismissal as valid, which the NLRC affirmed.

However, the Court of Appeals, upon petition for certiorari by Ramonchito and
Joann, reversed and set aside the NLRC decision holding that sexual misconduct
inside company premises not enough to warrant dismissal, but imposed on them
the penalty of three months suspension. Thus, the company elevated its case to
the Supreme Court.

ISSUE:
Whether or not sexual intercourse inside company premises during working hours
constitute serious misconduct and which punishable by dismissal.

HELD:

Yes, sexual intercourse inside company premises during working hours constitute
serious misconduct which is punishable by dismissal.

Sexual acts and intimacies between two consenting adults belong, as a principled
ideal, to the realm of purely private relations. Whether aroused by lust or inflamed
by sincere affection, sexual acts should be carried out at such place, time and
circumstance that, by the generally accepted norms of conduct, will not offend
public decency nor disturb the generally held or accepted social morals. Under
these parameters, sexual acts between two consenting adults do not have a place
in the work environment.

Indisputably, the respondents engaged in sexual intercourse inside company

premises and during work hours. These circumstances, by themselves, are already
punishable misconduct. Added to these considerations, however, is the implication
that the respondents did not only disregard company rules but flaunted their
disregard in a manner that could reflect adversely on the status of ethics and
morality in the company.

Additionally, the respondents engaged in sexual intercourse in an area where co-

employees or other company personnel have ready and available access. The
respondents likewise committed their act at a time when the employees were
expected to be and had, in fact, been at their respective posts, and when they
themselves were supposed to be, as all other employees had in fact been, working.
Under these factual premises and in the context of legal parameters we discussed,
we cannot help but consider the respondents misconduct to be of grave and
aggravated character so that the company was justified in imposing the highest
penalty available dismissal. Their infraction transgressed the bounds of socially
and morally accepted human public behavior, and at the same time showed brazen
disregard for the respect that their employer expected of them as employees. By
their misconduct, the respondents, in effect, issued an open invitation for others
to commit the same infraction, with like disregard for their employers rules, for
the respect owed to their employer, and for their co-employees sensitivities.
Taken together, these considerations reveal a depraved disposition that the Court
cannot but consider as a valid cause for dismissal.

In ruling as we do now, we considered the balancing between the respondents

tenurial rights and the petitioners interests the need to defend their
management prerogative and to maintain as well a high standard of ethics and
morality in the workplace. Unfortunately for the respondents, in this balancing
under the circumstances of the case, we have to rule against their tenurial rights
in favor of the employers management rights.

(Engaging in illicit sexual relations prohibited under a personnel policy is a ground for
termination even if does not connect to the performance of his duties.)

Co-employee complains that married employee having relationship with co-employee's sister. It
was based on "ethical grounds" i.e. disgrace to the community.

G.R. No. 173489 : February 25, 2013

ALILEM CREDIT COOPERATIVE, INC., now known as ALILEM MULTIPURPOSE

COOPERATIVE, INC., Petitioner, v .SALVADOR M. BANDIOLA, JR., Respondent.

PERALTA, J.:

FACTS:

Respondent was employed by petitioner as bookkeeper. Petitioner's Board of

Directors (the Board) received a letter from a certain Napoleon Gao-ay (Napoleon)
reporting the alleged immoral conduct and unbecoming behavior of respondent by
having an illicit relationship with Napoleon sister, Thelma G. Palma (Thelma). This
prompted the Board to conduct a preliminary investigation. During the preliminary
investigation, the Board received evidence of respondent alleged extramarital
affair.

Respondent, on the other hand, denied the accusation against him. He, instead,
claimed that the accusation was a result of the insecurity felt by some members of
the cooperative and of the Board because of his growing popularity owing to his
exemplary record as an employee. Thelma executed an affidavit likewise denying
the allegations of extra-marital affair.

Meanwhile, on June 7, 1997, the Board received a petition from about fifty
members of the cooperative asking the relief of respondent due to his illicit affair
with Thelma.

In its Summary Investigation Report, the Ad Hoc Committee of petitioner concluded

that respondent was involved in an extra-marital affair with Thelma. On July 10,
1997, the Chairman of the Board sent a letter to respondent informing him of the
existence of a prima facie case against him for "illicit marital affair, an act that
brings discredit to the cooperative organization and a cause for termination per
AMPC (Alilem Multi-Purpose Cooperative) Personnel Policy. Respondent was
directed to appear and be present at the AMPC office for a hearing. He was likewise
advised of his right to be assisted by counsel.

On the day of the hearing, respondent requested for postponement on the ground
that his lawyer was not available. The request was, however, denied and the
hearing proceeded as scheduled.

In a Memorandum dated July 16, 1997, respondent was informed of Board

Resolution No. 05, series of 1997 embodying the Board decision to terminate his
services as bookkeeper of petitioner, effective July 31, 1997, without any
compensation or benefit except the unpaid balance of his regular salary for services
actually rendered.

Aggrieved, respondent filed a Complaint for Illegal Dismissal against petitioner

before the Regional Arbitration Branch of the NLRC.

On April 30, 1998, the Labor Arbiter (LA) dismissed respondent complaint for lack
of merit. The LA concluded that respondent had been or might still be carrying on
an affair with a married woman. The LA found it unforgiving in the case of a married
employee who sleeps with or has illicit relations with another married person for
in such case, the employee sullies not only the reputation of his spouse and his
family but the reputation as well of the spouse of his paramour and the latter
family. As opposed to respondent claim that the accusation is a mere fabrication of
some of the directors or cooperative members who were allegedly envious of his
growing popularity, the LA gave more credence to the testimonies of petitioner
witnesses who were relatives of Thelma and who had no motive to falsely testify
because their family reputation was likewise at a risk of being tarnished. The LA,
thus, found respondent to have been validly dismissed from employment for
violation of the cooperative Personnel Policy. The LA also found no violation of
respondent right to due process as he was given ample opportunity to defend
himself from the accusation against him.

On appeal, the NLRC set aside the LA decision. The NLRC found petitioner Personnel
Policy to be of questionable existence and validity because it was unnumbered. It
held that even assuming that respondent had an extra-marital affair with a married
woman, the latter is not his fellow worker in petitioner business establishment. It,
thus, concluded that respondent dismissal was not founded on any of the just
causes for termination of employment under Article 282 of the Labor Code, as
amended.

Petitioner elevated the matter to the CA, but it failed to obtain a favorable decision.
Petitioner now comes before the Court in this petition for review on certiorari
insisting on the validity of respondent dismissal from employment.

ISSUE: Whether or not petitioner illegally dismissed respondent.

HELD:

No, Bandiola was not illegally dismissed.

The Court of Appeals decision is reversed and set aside.

It is undisputed that respondent was dismissed from employment for engaging in

extramarital affairs, a ground for termination of employment stated in petitioner
Personnel Policy. This basis of termination was made known to respondent as
early as the first communication made by petitioner. In its June 20, 1997 letter,
petitioner directed respondent to explain in writing or personal confrontation why
he should not be terminated for violation of Section 4.1.4 of the Personnel Policy.
Respondent merely denied the accusation against him and did not question the
basis of such termination. When the LA was called upon to decide the illegal
dismissal case, it ruled in favor of petitioner and upheld the basis of such dismissal
which is the cited Personnel Policy. The NLRC, however, refused to recognize the
existence and validity of petitioner Personnel Policy on which the ground for
termination was embodied.

The existence of the Personnel Policy containing provisions on the grounds for
termination of employees was not questioned by respondent. In his position
paper, respondent only assailed the effectivity of the policy, as for him as it was
amended on the same date as the letter-complaints against him. In other words,
he claimed that the policy was amended in order to include therein the ground
for his termination to make sure that he is removed from his position.

Contrary to respondent claim, with the amendment of the Personnel Policy,

petitioner did not create a new ground for the termination of employment to
make sure that respondent is removed from his position. The ground under the old
policy is similar to that provided for in the new policy. The enumeration containing
the specific act of "illicit marital affairs" is not an additional ground, but an
example of an act that brings discredit to the cooperative. It is merely an
interpretation of what petitioner considers as such. It is, thus, clear from the
foregoing that engaging in extra-marital affairs is a ground for termination of
employment not only under the new but even under the old Personnel Policy of
petitioner. The effectivity of the policy as to respondent cannot, therefore, be
questioned.

To be sure, an employer is free to regulate all aspects of employment. It may make

reasonable rules and regulations for the government of its employees which
become part of the contract of employment provided they are made known to the
employee. In the event of a violation, an employee may be validly terminated from
employment on the ground that an employer cannot rationally be expected to
retain the employment of a person whose lack of morals, respect and loyalty to his
employer, regard for his employer rules and application of the dignity and
responsibility, has so plainly and completely been bared.

Applying now the above-discussed ground for termination, we now determine

whether respondent was properly dismissed from employment. In other words, did
petitioner adequately prove that respondent indeed engaged in extra-marital
affairs, an act which petitioner considers as would bring discredit to the
cooperative?

We answer in the affirmative.

The employer evidence consists of sworn statements of either relatives or friends

of Thelma and respondent. They either had direct personal knowledge of the illicit
relationship or revealed circumstances indicating the existence of such
relationship.

There is also no reason to doubt the statement of Melanie Gao-ay, the wife of
Napoleon, who witnessed the embarrassing "encounter", to borrow the term she
used, between [respondent] and Thelma in her own boarding house.

While respondent act of engaging in extra--marital affairs may be considered

personal to him and does not directly affect the performance of his assigned task
as bookkeeper, aside from the fact that the act was specifically provided for by
petitioner Personnel Policy as one of the grounds for termination of employment,
said act raised concerns to petitioner as the Board received numerous complaints
and petitions from the cooperative members themselves asking for the removal
of respondent because of his immoral conduct.

The next question is whether procedural due process was observed in the
termination of respondent services. "Before the services of an employee can be
validly terminated, the employer must furnish him two written notices: (a) a
written notice served on the employee specifying the ground or grounds for
termination, and giving the employee reasonable opportunity to explain his side;
and (b) a written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been established to
justify his termination. "The employer must inform the employee of the charges
against him and to hear his defenses. A full adversarial proceeding is not necessary
as the parties may be heard through pleadings, written explanations, position
papers, memorandum or oral argument.

In this case, respondent was adequately afforded the opportunity to defend

himself and explain the accusation against him. Upon receipt of the complaint,
petitioner conducted a preliminary investigation and even created an Ad Hoc
Committee to investigate the matter. Respondent was directed to explain either in
writing or by a personal confrontation with the Board why he should not be
terminated for engaging in illicit affair. Not only did petitioner give him the
opportunity but respondent in fact informed petitioner that he opted to present
his side orally and did so as promised when he specifically denied such allegations.
Moreover, respondent was also allowed to peruse the investigation report
prepared by the Ad Hoc Committee and was advised that he was entitled to
assistance of counsel. Afterwhich, hearing was conducted. It was only after
thorough investigation and proper notice and hearing to respondent that
petitioner decided whether to dismiss the former or not. The decision to terminate
respondent from employment was embodied in Board Resolution No. 05, series of
1997 a copy of which was furnished respondent. With this resolution, respondent
was adequately notified of petitioner decision to remove him from his position.
Respondent cannot now claim that his right to due process was infringed upon.

GRANTED
Lovers' fight outside workplace - serious misconduct? NO.

Michael J. Lagrosas v. Bristol-Myers Squibb (Phil)

September 12, 2008

FACTS:

Petitioner and Ma. Dulcena Lim were lovers and also both employee Bristol-Myers Squibb.

Sometime, after a meeting, Lagrosas saw Lim rode with another guy Menquito. Due to jealousy,
petitioner approached them and hit Menquito with a metal steering wheel lock. When Lim tried
to intervene, Lagrosas accidentally hit her head.

In violation of the Code of Discipline for Territory Managers, Bristol-Myers dismissed Lagrosas.
Lagrosas then filed a complaint illegal dismissal, non-payment of vacation and sick leave benefits,
13th month pay, attorneys fees, damages and fair market value of his Team Share Stock Option
Grant.

Labor Arbiter declared the dismissal illegal.

National Labor Relations Commission (NLRC) set aside the Decision of Labor Arbiter. It held that
Lagrosas was validly dismissed for serious misconduct in hitting his co-employee and another
person with a metal steering wheel lock.

NLRC issued a Resolution reversing its earlier ruling. It ratiocinated that the incident was not
work-related since it occurred only after the district meeting of territory managers.

The appellate court considered the misconduct as having been committed in connection with
Lagrosas duty as Territory Manager since it occurred immediately after the district meeting of
territory managers. It also held that the gravity and seriousness of the misconduct cannot be
denied.

ISSUE: WON Lagrosas was illegally dismissed.

HELD:

YES, Lagrosas was illegally dismissed.

For misconduct or improper behavior to be a just cause for dismissal, it (a) must be serious; (b)
must relate to the performance of the employees duties; and (c) must show that the employee
has become unfit to continue working for the employer.

Tested against the foregoing standards, it is clear that Lagrosas was not guilty of serious
misconduct. It may be that the injury sustained by Lim was serious since it rendered her
unconscious and caused her to suffer cerebral contusion that necessitated hospitalization for
several days. But we fail to see how such misconduct could be characterized as work-related and
reflective of Lagrosas unfitness to continue working for Bristol-Myers.

Although we have recognized that fighting within company premises may constitute serious
misconduct, we have also held that not every fight within company premises in which an
employee is involved would automatically warrant dismissal from service. More so, in this case
where the incident occurred outside of company premises and office hours and not intentionally
directed against a co-employee, as hereafter explained.

First, the incident occurred outside of company premises and after office hours since the district
meeting of territory managers which Lim attended at McDonalds had long been finished.
McDonalds may be considered an extension of Bristol-Myers office and any business conducted
therein as within office hours, but the moment the district meeting was concluded, that ceased
too. When Lim dined with her friends, it was no longer part of the district meeting and considered
official time. Thus, when Lagrosas assaulted Lim and Menquito upon their return, it was no longer
within company premises and during office hours. Second, Bristol-Myers itself admitted that
Lagrosas intended to hit Menquito only. In the Memorandum dated March 23, 2000, it was stated
that You got out from your car holding an umbrella steering wheel lock and proceeded to hit Mr.
Menquito. Dulce tried to intervene, but you accidentally hit her on the head, knocking her
unconscious. Indeed, the misconduct was not directed against a co-employee who unfortunately
got hit in the process. Third, Lagrosas was not performing official work at the time of the incident.
He was not even a participant in the district meeting. Hence, we fail to see how his action could
have reflected his unfitness to continue working for Bristol-Myers.

In light of Bristol-Myers failure to adduce substantial evidence to prove that Lagrosas was guilty
of serious misconduct, it cannot use this ground to justify his dismissal. Thus, the dismissal of
Lagrosas employment was without factual and legal basis.
Chua-Qua vs. Hon. Jacobo C. Clave, et al.,
G .R . N o . L-49549, August 30, 1990

Facts:

Evelyn had been employed in an educational institution in Bacolod City as a teacher since 1963
and, in 1976 when this dispute arose, was the class adviser in the sixth grade where one Bobby
was enrolled. The teacher and the student (about half the teacher's age) fell in love and
eventually got married in accordance with the rites of their religion.

On February 4, 1976, private respondent (school) filed with the sub-regional office of the
Department of Labor at Bacolod City an application for clearance to terminate the employment
of petitioner on the ground that her "abusive and unethical conduct (is) unbecoming of a
dignified school teacher and that her continued employment is inimical to the best interest, and
would downgrade the high moral values, of the school.

ISSUES:
1. WON teacher falling in love with students are immoral.
2. WON Reinstatement is possible.

HELD:

1.
Teacher falling in love with student, not immoral.

Even the labor arbiter conceded that there was no direct evidence to show that immoral acts
were committed. Nonetheless, indulging in a patently unfair conjecture, he concluded that "it is
however enough for a sane and credible mind to imagine and conclude what transpired during
those times." In reversing his decision, the National Labor Relations Commission observed that
the assertions of immoral acts or conducts are gratuitous and that there is no direct evidence to
support such claim.

With the finding that there is no substantial evidence of the imputed immoral acts, it follows
that the alleged violation of the Code of Ethics governing school teachers would have no basis.
Private respondent (school) utterly failed to show that petitioner took advantage of her position
to court her student. If the two eventually fell in love, despite the disparity of their ages and
academic levels, this only lends substance to the truism that the heart has reasons of its own
which reason does not know. But, definitely, yielding to this gentle and universal emotion is not
to be so casually equated with immorality. The deviation of the circumstances of their marriage
from the usual societal pattern cannot be considered as a defiance of contemporary social mores.
It would seem quite obvious that the avowed policy of the school in rearing and educating
children is being unnecessarily bannered to justify the dismissal of petitioner. This policy,
however, is not at odds with and should not be capitalized on to defeat the security of tenure
granted by the Constitution to labor. In termination cases, the burden of proving just and valid
cause for dismissing an employee rests on the employer and his failure to do so would result in
a finding that the dismissal is unjustified.

2.
Reinstatement, not possible.

The charge against petitioner not having been substantiated, we declare her dismissal as
unwarranted and illegal. It being apparent, however, that the relationship between petitioner
and private respondent has been inevitably and severely strained, we believe that it would
neither be to the interest of the parties nor would any prudent purpose be served by ordering
her reinstatement.
Cheryll S. Leus v. St. Scholasticas College Westgrove
Jan 28, 2015

Dismissing an Employee on the Ground of Pregnancy Out of Wedlock Valid or Not?

(Pregnant teacher in catholic school - not immoral or disgraceful conduct; both free and
consenting adults from purely public and secular view of morality).
a.) totality of circumstances surrounding the conduct; and
b.) Assessment of the circumstances with the prevailing norms of conduct i.e. what society
considers moral and respectable.

FACTS:

Cheryll was hired by St. Scholasticas College Westgrove (SSCW) as an Assistant to SSCWs
Director of the Lay Apostolate and Community Outreach Directorate on May 2001. Sometime in
2003, the petitioner and her boyfriend conceived a child out of wedlock. When SSCW learned of
the petitioners pregnancy, Sr. Edna Quiambao (Sr. Quiambao), SSCWs Directress, advised her to
file a resignation letter effective June 1, 2003. In response, the petitioner informed Sr. Quiambao
that she would not resign from her employment just because she got pregnant without the
benefit of marriage.

On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing why she
should not be dismissed for engaging in pre-marital sexual relations and getting pregnant as a
result thereof, which amounts to serious misconduct and conduct unbecoming of an employee
of a Catholic school.

Cheryll replied stating that her pregnancy outside of wedlock does not amount to serious
misconduct. She thereafter requested a copy of SSCWs policy so that she can better respond to
the charge against her. SSCW did not a have these guidelines as the guidelines handbook was
currently pending of its promulgation. It instead stated that they follow the 1992 Manual of
Regulations for Private School (1992 MRPS), specifically, Sec.94, which cites disgraceful or
immoral conduct" as a ground for dismissal, in addition to the just causes for termination of
employment under Art.282, Labor Code.

The Labor Arbiter in Quezon City decided in favor of SSCW, stating that Cheryll being pregnant
out of wedlock is considered disgraceful and immoral conduct taking into account that she was
employed in a Catholic institution which expect its employees to live up to the Catholic values it
teaches to the students. The NLRC affirmed the decision of the Labor Arbiter.

ISSUE: WON Cherylls pregnancy out of wedlock constitutes a valid ground to terminate her
employment.
RULING:

The Supreme Court held that Cheryll was illegally dismissed by her employer. Her pregnancy out
of wedlock does not constitute a valid ground to terminate her employment.

Disgraceful conduct is viewed in two ways, the public and secular view and religious view.
Our laws concern the first view. Disgraceful conduct per se will not amount to violation of the
law the conduct must affect or poses a danger to the conditions of society, for example, the
sanctity of marriage, right to privacy and the like.

The Court cited Estrada vs. Escritur in the said case, stating the following relevant explanation;

(1) if the father of the child is himself unmarried, the woman is not ordinarily administratively
liable for disgraceful and immoral conduct. It may be a not-so-ideal situation and may cause
complications for both mother and child but it does not give cause for administrative sanction.
There is no law which penalizes an unmarried mother under those circumstances by reason of her
sexual conduct or proscribes the consensual sexual activity between two unmarried persons.
Neither does the situation contravene any fundamental state policy as expressed in the
Constitution, a document that accommodates various belief systems irrespective of dogmatic
origins.

(2) if the father of the child born out of wedlock is himself married to a woman other than the
mother, then there is a cause for administrative sanction against either the father or the mother.
In such a case, the disgraceful and immoral conduct consists of having extramarital relations
with a married person. The sanctity of marriage is constitutionally recognized and likewise
affirmed by our statutes as a special contract of permanent union. Accordingly, judicial employees
have been sanctioned for their dalliances with married persons or for their own betrayals of the
marital vow of fidelity. In this case, it was not disputed that, like respondent, the father of her
child was unmarried. Therefore, respondent cannot be held liable for disgraceful and immoral
conduct simply because she gave birth to the child Christian Jeon out of wedlock.

Furthermore, there was no substantial evidence to prove that Cherylls pregnancy out of
wedlock caused grave scandal to SSCW and its students. Mere allegation of such will not render
a judgment in favor of the one making the allegation. It is the burden of the employer to prove
by substantial evidence that the termination of the employment of the employee was made and
failure to discharge that duty would mean that the dismissal is not justified and therefore illegal.

The Court ordered SSCW to reinstate Cheryll. But because this is not possible anymore due to
constrained relations with SSCW, the Court ordered the employer to pay Cheryll separation pay,
full backwages and attorneys fees.
Christine Joy Cadiz v. Brent Hospital ( G.R. 187417, Feb. 24, 2016)

(Immorality of HR pregnant out of wedlock and deemed terminated until she

marries her boyfriend.)

SC: not immoral but reduced backwages.

FACTS:

Petitioner was the human resource officer of respondent Brent Hospital and
Colleges Inc. (Brent). She became pregnant out of wedlock. Consequently, Brent
placed her under an indefinite suspension from employment. Brent imposed on
her the condition that she subsequently contract marriage with her then
boyfriend for her to be reinstated.

According to Brent, this is in consonance with the policy against encouraging illicit
or common-law relations that would subvert the sacrament of marriage.

ISSUE: Is the condition validly imposed?

RULING:
No. Statutory law is replete with legislation protecting labor and promoting equal
opportunity in employment. No less than the 1987 Constitution mandates that the
State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment
opportunities for all.

The Labor Code of the Philippines, meanwhile, provides: Art. 136. Stipulation
against marriage. It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.

With particular regard to women, Republic Act No. 9710 or the Magna Carta of
Women protects women against discrimination in all matters relating to marriage
and family relations, including the right to choose freely a spouse and to enter into
marriage only with their free and full consent. Weighed against these safeguards,
it becomes apparent that Brents condition is coercive, oppressive and
discriminatory. There is no rhyme or reason for it. It forces Cadiz to marry for
economic reasons and deprives her of the freedom to choose her status, which is
a privilege that inheres in her as an intangible and inalienable right. While a
marriage or no-marriage qualification may be justified as a bona fide occupational
qualification, Brent must prove two factors necessitating its imposition, viz:

(1) that the employment qualification is reasonably related to the essential

operation of the job involved; and
(2) that there is a factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of the
job.

Brent has not shown the presence of neither of these factors. Perforce, the Court
cannot uphold the validity of said condition.
Duncan Assoc. of Detailman-PTGWO vs. Glaxo Wellcome Phils., Inc.
September 17, 2008

(marrying employee of competitor against company rules)

FACTS:

Tecson was hired by Glaxo as a medical representative on Oct. 24, 1995. Contract
of employment signed by Tecson stipulates, among others, that he agrees to study
and abide by the existing company rules; to disclose to management any existing
future relationship by consanguinity or affinity with co-employees or employees
with competing drug companies and should management find that such
relationship poses a possible conflict of interest, to resign from the company.
Company's Code of Employee Conduct provides the same with stipulation that
management may transfer the employee to another department in a non-
counterchecking position or preparation for employment outside of the company
after 6 months.

Tecson was initially assigned to market Glaxo's products in the Camarines Sur-
Camarines Norte area and entered into a romantic relationship with Betsy, an
employee of Astra, Glaxo's competition. Before getting married, Tecson's District
Manager reminded him several times of the conflict of interest but marriage took
place in Sept. 1998.

In Jan. 1999, Tecson's superiors informed him of conflict of intrest. Tecson asked
for time to comply with the condition (that either he or Betsy resign from their
respective positions). Unable to comply with condition, Glaxo transferred Tecson
to the Butuan-Surigao City-Agusan del Sur sales area. After his request against
transfer was denied, Tecson brought the matter to Glaxo's Grievance Committee
and while pending, he continued to act as medical representative in the Camarines
Sur-Camarines Norte sales area. On Nov. 15, 2000, the National Conciliation and
Mediation Board ruled that Glaxo's policy was valid.

ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its

employees from marrying employees of any competitor company is valid
RULING:

On Equal Protection

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies, and other confidential programs and information from competitors. The
prohibition against pesonal or marital relationships with employees of competitor
companies upon Glaxo's employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. That
Glaxo possesses the right to protect its economic interest cannot be denied.

It is the settled principle that the commands of the equal protection clause are
addressed only to the state or those acting under color of its authority. Corollarily,
it has been held in a long array of US Supreme Court decisions that the equal
protection clause erects to shield against merely privately conduct, however,
discriminatory or wrongful.

The company actually enforced the policy after repeated requests to the employee
to comply with the policy. Indeed the application of the policy was made in an
impartial and even-handed manner, with due regard for the lot of the employee.

On Constructive Dismissal

Constructive dismissal is defined as a quitting, an involuntary resignation resorted

to when continued employment becomes impossible, unreasonable or unlikely;
when there is demotion in rank, or diminution in pay; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee. None of these conditions are present in the instant case.

HELD:

The challenged policy has been implemented by Glaxo impartially and

disinterestedly for a long period of time. In the case at bar, the record shows that
Glaxo gave Tecson several chances to eliminate the conflict of interest brought
about by his relationship with Betsy, but he never availed of any of them.
DISPOSITIVE:

"WHEREFORE, the petition is DENIED for lack of merit."

Philippine Telegraph & Telephone Corp. vs. NLRC

FACTS:

PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman
specifically as Supernumerary Project Worker, for a fixed period from November
21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went on maternity
leave. She was again invited for employment as replacement of Erlina F. Dizon who
went on leave on 2 periods, from June 10, 1991 to July 1, 1991 and July 19, 1991 to
August 8, 1991.

On September 2, 1991, de Guzman was again asked to join PT&T as a probationary

employee where probationary period will cover 150 days. She indicated in the
portion of the job application form under civil status that she was single although
she had contracted marriage a few months earlier. When petitioner learned later
about the marriage, its branch supervisor, Delia M. Oficial, sent de Guzman a
memorandum requiring her to explain the discrepancy. Included in the
memorandum, was a reminder about the companys policy of not accepting
married women for employment. She was dismissed from the company effective
January 29, 1992. Labor Arbiter handed down decision on November 23, 1993
declaring that petitioner illegally dismissed De Guzman, who had already gained
the status of a regular employee. Furthermore, it was apparent that she had been
discriminated on account of her having contracted marriage in violation of
company policies.

ISSUE: Whether the alleged concealment of civil status can be grounds to terminate
the services of an employee.

HELD:

Article 136 of the Labor Code, one of the protective laws for women, explicitly
prohibits discrimination merely by reason of marriage of a female employee. It is
recognized that company is free to regulate manpower and employment from
hiring to firing, according to their discretion and best business judgment, except in
those cases of unlawful discrimination or those provided by law.
PT&Ts policy of not accepting or disqualifying from work any woman worker who
contracts marriage is afoul of the right against discrimination provided to all
women workers by our labor laws and by our Constitution. The record discloses
clearly that de Guzmans ties with PT&T were dissolved principally because of the
companys policy that married women are not qualified for employment in the
company, and not merely because of her supposed acts of dishonesty.

The government abhors any stipulation or policy in the nature adopted by PT&T. As
stated in the labor code:

ART. 136. Stipulation against marriage. It shall be unlawful for an employer to

require as a condition of employment or continuation of employment that a
woman shall not get married, or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely
by reason of marriage.

The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor
Code on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment and it likewise is contrary to good
morals and public policy, depriving a woman of her freedom to choose her status,
a privilege that is inherent in an individual as an intangible and inalienable
right. The kind of policy followed by PT&T strikes at the very essence, ideals and
purpose of marriage as an inviolable social institution and ultimately, family as
the foundation of the nation. Such policy must be prohibited in all its indirect,
disguised or dissembled forms as discriminatory conduct derogatory of the laws
of the land not only for order but also imperatively required.
Star Paper Corp. v. Simbol
April 12, 2006

(rule vs marriage with a co-employee?)

FACTS:

Respondents (complainant employees) were hired after they were found fit for the
job, but were asked to resign when they each married co-employees. They resisted
and assailed the alleged company policy.

The employer contends that its policy will apply only when one employee marries a
co-employee, but employees remain free to marry persons other than co-employees.

ISSUE: May an employee be dismissed for being married to a co-employee?

HELD: NO.

The questioned policy may not facially violate Article 136 of the Labor Code, but it
creates a disproportionate effect and under the disparate impact theory, the only way
it could pass judicial scrutiny is a showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect. The failure of [the employer] to
prove a legitimate business concern in imposing the questioned policy cannot
prejudice the employee's right to be free from arbitrary discrimination based upon
stereotypes of married persons working together in one company.

Lastly, the absence of a statute expressly prohibiting marital discrimination in our

jurisdiction cannot benefit the petitioners. The protection given to labor in our
jurisdiction is vast and extensive that we cannot prudently draw inferences from the
legislature's silence that married persons are not protected under our Constitution
and declare valid a policy based on a prejudice or stereotype. Thus, for failure of
[the employer] to present undisputed proof of a reasonable business necessity,
we rule that the questioned policy is an invalid exercise of Management prerogative.
ARMANDO G. YRASUEGUI vs. PHILIPPINE AIRLINES, INC.,
G.R. No. 168081, October 17, 2008

FACTS:

An international flight steward who was dismissed because of his failure to adhere
to the weight standards of the airline company.

The proper weight for a man of his height and body structure is from 147 to 166
pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual of PAL.

In 1984, the weight problem started, which prompted PAL to send him to an
extended vacation until November 1985. He was allowed to return to work once
he lost all the excess weight. But the problem recurred. He again went on leave
without pay from October 17, 1988 to February 1989.

Despite the lapse of a ninety-day period given him to reach his ideal weight,
petitioner remained overweight. On January 3, 1990, he was informed of the PAL
decision for him to remain grounded until such time that he satisfactorily complies
with the weight standards. Again, he was directed to report every two weeks for
weight checks, which he failed to comply with.

On April 17, 1990, petitioner was formally warned that a repeated refusal to report
for weight check would be dealt with accordingly. He was given another set of
weight check dates, which he did not report to.

On November 13, 1992, PAL finally served petitioner a Notice of Administrative

Charge for violation of company standards on weight requirements. Petitioner
insists that he is being discriminated as those similarly situated were not treated
the same.

On June 15, 1993, petitioner was formally informed by PAL that due to his inability
to attain his ideal weight, and considering the utmost leniency extended to him
which spanned a period covering a total of almost five (5) years, his services
were considered terminated effective immediately.
LABOR ARBITER: held that the weight standards of PAL are reasonable in view of
the nature of the job of petitioner. However, the weight standards need not be
complied with under pain of dismissal since his weight did not hamper the
performance of his duties.

NLRC affirmed.

CA: the weight standards of PAL are reasonable. Thus, petitioner was legally
dismissed because he repeatedly failed to meet the prescribed weight standards.
It is obvious that the issue of discrimination was only invoked by petitioner for
purposes of escaping the result of his dismissal for being overweight.

ISSUE: WON he was validly dismissed.

HELD: YES

A reading of the weight standards of PAL would lead to no other conclusion than
that they constitute a continuing qualification of an employee in order to keep the
job. The dismissal of the employee would thus fall under Article 282(e) of the Labor
Code.

In the case at bar, the evidence on record militates against petitioners claims that
obesity is a disease. That he was able to reduce his weight from 1984 to 1992 clearly
shows that it is possible for him to lose weight given the proper attitude,
determination, and self-discipline. Indeed, during the clarificatory hearing on
December 8, 1992, petitioner himself claimed that [t]he issue is could I bring my
weight down to ideal weight which is 172, then the answer is yes. I can do it now.
Petitioner has only himself to blame. He could have easily availed the assistance of
the company physician, per the advice of PAL.

In fine, We hold that the obesity of petitioner, when placed in the context of his
work as flight attendant, becomes an analogous cause under Article 282(e) of the
Labor Code that justifies his dismissal from the service. His obesity may not be
unintended, but is nonetheless voluntary. As the CA correctly puts it,
[v]oluntariness basically means that the just cause is solely attributable to the
employee without any external force influencing or controlling his actions. This
element runs through all just causes under Article 282, whether they be in the
nature of a wrongful action or omission. Gross and habitual neglect, a recognized
just cause, is considered voluntary although it lacks the element of intent found in
Article 282(a), (c), and (d).

NOTES:
The dismissal of petitioner can be predicated on the bona fide occupational
qualification defense. Employment in particular jobs may not be limited to persons
of a particular sex, religion, or national origin unless the employer can show that
sex, religion, or national origin is an actual qualification for performing the job. The
qualification is called a bona fide occupational qualification (BFOQ). In short, the
test of reasonableness of the company policy is used because it is parallel to BFOQ.
BFOQ is valid provided it reflects an inherent quality reasonably necessary for
satisfactory job performance.
The business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew who are on board the
aircraft. The weight standards of PAL should be viewed as imposing strict norms
of discipline upon its employees.
The primary objective of PAL in the imposition of the weight standards for cabin
crew is flight safety.
Separation pay, however, should be awarded in favor of the employee as an act of
social justice or based on equity. This is so because his dismissal is not for serious
misconduct. Neither is it reflective of his moral character.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 174184 January 28, 2015
G.J.T. REBUILDERS MACHINE SHOP, GODO FREDO TRILLANA, and
JULIANA TRILLANA, Petitioners,
vs.
RICARDO AMBOS, BENJAMIN PUTIAN, and RUSSELL AMBOS,
Respondents.
DECISION
LEONEN, J.:
To prove serious business losses, employers must present in evidence
financial statements showing the net losses suffered by the business within
a sufficient period of time. Generally, it cannot be based on a single financial
statement showing losses. Absent this proof, employers closing their
businesses must pay the dismissed employees separation pay equivalent to
one-month pay or to at least one-half-month pay for every year of service,
whichever is higher.
This is a Petition for Review on Certiorari 1 of the Court of Appeals' Decision,2
granting Ricardo Ambos, Russell Ambos,3 and Benjamin Putian's Petition for
Certiorari. The Court of Appeals found that G.J.T. Rebuilders Machine Shop
(G.J.T. Rebuilders) failed to prove its alleged serious business losses. Thus,
when it closed its establishment on December 15, 1997, G.J.T. Rebuilders
should have paid the affected employees separation pay.4

G.J.T. Rebuilders is a single proprietorship owned by the Spouses

Godofredo and Juliana Trillana (Trillana spouses). It was engaged in steel
works and metal fabrication, employing Ricardo Ambos (Ricardo), Russell
Ambos (Russell), and Benjamin Putian (Benjamin) as machinists.5

G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building in Shaw
Boulevard, Mandaluyong City, which served as the site of its machine shop.
On September 8, 1996, a fire partially destroyed the FEA Building.6

Due to the damage sustained by the building, its owner notified its tenants to
vacate their rented units by the end of September 1996 "to avoid any
unforeseen accidents which may arise due to the damage."7
Despite the building owners notice to vacate, G.J.T. Rebuilders continued
its business in the condemned building. When the building owner finally
refused to accommodate it, G.J.T. Rebuilders left its rented space and closed
the machine shop on December 15, 1997.8 It then filed an Affidavit of Closure
before the Department of Labor and Employment on February 16, 1998 and
a sworn application to retire its business operations before the Mandaluyong
City Treasurers Office on February 25, 1998.9

Having lost their employment without receiving separation pay, Ricardo,

Russell, and Benjamin filed a Complaint for illegal dismissal before the Labor
Arbiter. They prayed for payment of allowance, separation pay, and
attorneys fees.10

In their defense, G.J.T. Rebuilders and the Trillana spouses argued that
G.J.T. Rebuilders suffered serious business losses and financial reverses,
forcing it to close its machine shop. Therefore, Ricardo, Russell, and
Benjamin were not entitled to separation pay.11

Labor Arbiter Facundo L. Leda (Labor Arbiter Leda) decided the Complaint,
finding no convincing proof of G.J.T. Rebuilders alleged serious business
losses. Labor Arbiter Leda, in the Decision12 dated December 28, 1999, found
that Ricardo, Russell, and Benjamin were entitled to separation pay under
Article 283 of the Labor Code.13 In addition, they were awarded attorneys
fees, having been constrained to litigate their claims.14

Even assuming that G.J.T. Rebuilders closure was due to serious business
losses, Labor Arbiter Leda held that the employees affected were still entitled
to separation pay "based on social justice and equity."15

G.J.T. Rebuilders and the Trillana spouses appealed Labor Arbiter Ledas
Decision before the National Labor Relations Commission.16

In contrast with the Labor Arbiters finding, the National Labor Relations
Commission found G.J.T. Rebuilders to have suffered serious business
losses. Because of the fire that destroyed the building where G.J.T.
Rebuilders was renting space, the demand for its services allegedly declined
as "no same customer would dare to entrust machine works to be done for
them in a machine shop lying in a ruined and condemned building."17 The
National Labor Relations Commission then concluded that the fire
"proximately caused"18 G.J.T. Rebuilders serious business losses, with its
financial statement for the fiscal year 1997 showing a net loss of
316,210.00.19

In the Decision20 dated January 25, 2001, the National Labor Relations
Commission vacated and set aside Labor Arbiter Ledas Decision and
dismissed the Complaint for lack of merit. Since the Commission found
that G.J.T. Rebuilders ceased operations due to serious business losses, it
held that G.J.T. Rebuilders and the Trillana spouses need not pay Ricardo,
Russell, and Benjamin separation pay.

Ricardo, Russell, and Benjamin filed a Motion for Reconsideration, which the
National Labor Relations Commission denied in the Resolution21 dated March
5, 2001.

Because of the alleged grave abuse of discretion of the National Labor

Relations Commission, a Petition for Certiorari was filed before the Court of
Appeals.22

The Court of Appeals reversed the National Labor Relations Commissions

Decision, agreeing with Labor Arbiter Leda that G.J.T. Rebuilders failed to
prove its alleged serious business losses. The Court of Appeals conceded
that G.J.T. Rebuilders had to close the machine shop for reasons connected
with the fire that partially destroyed the building where it was renting space.
Nevertheless, G.J.T. Rebuilders continued its business for more than one
year after the fire. Thus, according to the Court of Appeals, G.J.T. Rebuilders
did not suffer from serious business losses but closed the machine
shop to prevent losses.23

With respect to G.J.T. Rebuilders financial statement showing an alleged

net loss in 1997, the Court of Appeals refused to admit it in evidence since it
was not subscribed under oath by the Certified Public Accountant who
prepared it. According to the Court of Appeals, the financial statement was
subscribed under oath only after G.J.T. Rebuilders had submitted it to Labor
Arbiter Leda as an annex to its Motion to re-open proceedings and to submit
additional evidence. Thus, the Court of Appeals gave G.J.T. Rebuilders
financial statement "scant consideration."24

In the Decision25 dated January 17, 2006, the Court of Appeals granted the
Petition for Certiorari, vacating and setting aside the National Labor
Relations Commissions Decision. It reinstated Labor Arbiter Ledas Decision
dated December 28, 1999.

G.J.T. Rebuilders and the Trillana spouses filed a Motion for

Reconsideration, which the Court of Appeals denied in the Resolution26 dated
August 11, 2006.

Petitioners G.J.T. Rebuilders and the Trillana spouses filed before this court
a Petition for Review on Certiorari.27 Respondents Ricardo, Russell, and
Benjamin commented28 on the Petition, after which petitioners filed a Reply.29
In their Petition for Review on Certiorari, petitioners maintain that G.J.T.
Rebuilders suffered serious business losses as evidenced by its financial
statement covering the years 1996 and 1997. Petitioners admit that the
financial statement was belatedly subscribed under oath.30 Nevertheless,
"the credibility or veracity of the entries"31 in the financial statement was not
affected since the Bureau of Internal Revenue received the same
unsubscribed financial statement when G.J.T. Rebuilders allegedly filed its
income tax return on April 15, 1998.32

Considering that petitioners sufficiently proved G.J.T. Rebuilders serious

business losses, petitioners argue that respondents are not entitled to
separation pay.

As for respondents, they contend that G.J.T. Rebuilders failed to prove its
alleged serious business losses. They argue that the financial statement
showing a net loss for the year 1997 was not credible, having been belatedly
subscribed under oath by the Certified Public Accountant who prepared it.33
With no credible proof of G.J.T. Rebuilders supposed serious business
losses, respondents argue that petitioners must pay them separation pay
under Article 283 of the Labor Code.34

The issue for our resolution is whether petitioners sufficiently proved that
G.J.T. Rebuilders suffered from serious business losses.

This petition should be denied.

I
G.J.T. Rebuilders must pay respondents their separation pay for failure to
prove its alleged serious business losses

Article 283 of the Labor Code allows an employer to dismiss an employee

due to the cessation of operation or closure of its establishment or
undertaking, thus:

Art. 283. Closure of establishment and reduction of personnel. The

employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to installation of labor
saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at least
one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or to at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
The decision to close ones business is a management prerogative that
courts cannot interfere with.35 Employers can "lawfully close shop at
anytime,"36 even for reasons of their own. "Just as no law forces anyone to
go into business, no law can compel anybody to continue in it." 37 In Mac
Adams Metal Engineering Workers Union-Independent v. Mac Adams Metal
Engineering,38 this court said:
It would indeed be stretching the intent and spirit of the law if [courts] were
to unjustly interfere with the managements prerogative to close or cease its
business operations just because [the] business operation or undertaking is
not suffering from any loss or simply to provide the workers continued
employment.39

However, despite this management prerogative, employers closing their

businesses must pay the affected workers separation pay equivalent to one-
month pay or to at least one-half-month pay for every year of service,
whichever is higher.40 The reason is that an employee dismissed, even for an
authorized cause, loses his or her means of livelihood.41
The only time employers are not compelled to pay separation pay is when
they closed their establishments or undertaking due to serious business
losses or financial reverses.42
Serious business losses are substantial losses, not de minimis. 43 "Losses"
means that the business must have operated at a loss for a period of time
for the employer "to [have] perceived objectively and in good faith"44 that the
business financial standing is unlikely to improve in the future.
The burden of proving serious business losses is with the employer.45 The
employer must show losses on the basis of financial statements covering a
sufficient period of time. The period covered must be sufficient for the
National Labor Relations Commission and this court to appreciate the nature
and vagaries of the business.
In North Davao Mining Corporation v. NLRC,46 North Davao Mining
Corporation presented in evidence financial statements showing a
continuing pattern of loss from 1988 until its closure in 1992. The company
suffered net losses averaging 3 billion a year, with an aggregate loss of 20
billion by the time of its closure.47 This court found that North Davao suffered
serious business losses.48
In Manatad v. Philippine Telegraph and Telephone Corporation,49 the
Philippine Telegraph and Telephone Corporation presented in evidence
financial statements showing a continuing pattern of loss from 1995 to 1999.50
By 2000, the corporation suffered an aggregate loss of 2.169 billion,
constraining it to retrench some of its employees. This court held that the
Philippine Telegraph and Telephone Corporation was "fully justified in
implementing a retrenchment program since it was undergoing business
reverses, not only for a single fiscal year, but for several years prior to and
even after the program."51
In LVN Pictures Employees and Workers Association (NLU) v. LVN Pictures,
Inc.,52 a case G.J.T. Rebuilders cited, LVN Pictures, Inc. presented in
evidence financial statements showing a continuing pattern of loss from 1957
to 1961. By the time the corporation closed its business, it had suffered an
aggregate loss of 1,560,985.14.53 This court found that LVN Pictures, Inc.
suffered serious business losses.54
Aside from the obligation to pay separation pay, employers must comply with
the notice requirement under Article 283 of the Labor Code. Employers must
serve a written notice on the affected employees and on the Department of
Labor and Employment at least one month before the intended date of
closure. Failure to comply with this requirement renders the employer liable
for nominal damages.55
We uphold G.J.T. Rebuilders decision to close its establishment as a valid
exercise of its management prerogative. G.J.T. Rebuilders closed its
machine shop, believing that its "former customers . . . seriously doubted [its]
capacity . . . to perform the same quality [of service]" 56 after the fire had
partially damaged the building where it was renting space.
Nevertheless, we find that G.J.T. Rebuilders failed to sufficiently prove its
alleged serious business losses.
The financial statement G.J.T. Rebuilders submitted in evidence covers the
fiscal years 1996 and 1997. Based on the financial statement, G.J.T.
Rebuilders earned a net income of 61,157.00 in 1996 and incurred a net loss
of 316,210.00 in 1997.57
We find the two-year period covered by the financial statement insufficient
for G.J.T. Rebuilders to have objectively perceived that the business would
not recover from the loss. Unlike in North Davao Mining Corporation,
Manatad, and LVN Pictures Employees and Workers Association (NLU), no
continuing pattern of loss within a sufficient period of time is present in this
case. In fact, in one of the two fiscal years covered by the financial statement
presented in evidence, G.J.T. Rebuilders earned a net income. We,
therefore, agree with the Labor Arbiter and the Court of Appeals that G.J.T.
Rebuilders closed its machine shop to prevent losses, not because of serious
business losses.58
Considering that G.J.T. Rebuilders failed to prove its alleged serious
business losses, it must pay respondents their separation pay equivalent to
one-month pay or at least one-half-month pay for every year of service,
whichever is higher. In computing the period of service, a fraction of at least
six months is considered a year.59
Ricardo began working as a machinist on February 9, 1978.60 Since he last
worked for G.J.T. Rebuilders on December 15, 1997, he worked a total of 19
years, 10 months, and six days. This period is rounded off to 20 years, with
the last 10 months and six days being considered a year.61
Ricardo had a daily salary of 230.00 and worked 13 days a month.62 His one-
month pay, therefore, is equal to 2,990.00. On the other hand, his one-half-
month pay for every year of service is equal to 29,250.00. The latter amount
being higher, Ricardo must receive 29,250.00 as separation pay.
With respect to Russell, he began his employment on September 1, 1992.63
Since he last worked for G.J.T. Rebuilders on December 15, 1997, he
worked a total of five years, three months, and 14 days. This period is
rounded off to five years, not six years, since the last three months and 14
days are less than the six months required to be considered a year.64
Russell had a daily salary of 225.00 and worked 13 days a month.65 His one-
month pay, therefore, is equal to 2,925.00. On the other hand, his one-half-
month pay for every year of service is equal to 7,312.50. The latter amount
being higher, Russell must receive 7,312.50 as separation pay.
As for Benjamin, he began working as a machinist on February 1, 1994.66
Since he last worked for G.J.T. Rebuilders on December 15, 1997, he
worked a total of three years, 10 months, and 14 days. This period is rounded
off to four years, with the last 10 months and 14 days being considered a
year.67
Benjamin had a daily salary of 225.00 and worked 13 days a month.68 His
one-month pay, therefore, is equal to 2,925.00. On the other hand, his one-
half-month pay for every year of service is equal to 5,850.00. The latter
amount being higher, Benjamin must receive 5,850.00 as separation pay.
II
G.J.T. Rebuilders must pay respondents
nominal damages for failure to comply
with the procedural requirements for
closing its business
In addition to separation pay, G.J.T. Rebuilders must pay each of the
respondents nominal damages for failure to comply with the notice
requirement under Article 283 of the Labor Code.
Notice of the eventual closure of establishment is a "personal right of the
employee to be personally informed of his [or her] proposed dismissal as well
as the reasons therefor."69 The reason for this requirement is to "give the
employee some time to prepare for the eventual loss of his [or her] job."70
The requirement "is not a mere technicality or formality which the employer
may dispense with."71 Should employers fail to properly notify their
employees, they shall be liable for nominal damages even if they validly
closed their businesses.72
Generally, employers that validly closed their businesses but failed to comply
with the notice requirement are liable in the amount of 50,000.00.73 This
amount of nominal damages, however, may be reduced depending on "the
sound discretion of the court."74 In Sangwoo Philippines, Inc. v. Sangwoo
Philippines, Inc. Employees Union-OLALIA,75 we said that:
[i]n the determination of the amount of nominal damages which is addressed
to the sound discretion of the court, several factors are taken into account:
(1) the authorized cause invoked . . .; (2) the number of employees to be
awarded; (3) the capacity of the employers to satisfy the awards, taking into
account their prevailing financial status as borne by the records; (4) the
employers grant of other termination benefits in favor of the employees; and
(5) whether there was bona fide attempt to comply with the notice
requirements as opposed to giving no notice at all.76
G.J.T. Rebuilders allegedly "conferred with all [of its employees] of [its]
intention to cease business operations"77 one month before closing its
business. It allegedly submitted an Affidavit of Closure to the Department of
Labor and Employment on February 16, 1998.78
"Conferring with employees" is not the notice required under Article 283 of
the Labor Code. The law requires a written notice of closure served on the
1wphi1

affected employees. As to when the written notice should be served on the

Department of Labor and Employment, the law requires that it be served at
least one month before the intended date of closure. G.J.T. Rebuilders
served the written notice on the Department of Labor and Employment on
February 16, 1998, two months after it had closed its business on December
15, 1997.
With G.J.T. Rebuilders failing to comply with the notice requirement under
Article 283 of the Labor Code, we find that it deprived respondents of due
process. However, considering that G.J.T. Rebuilders attempted to comply
with the notice requirement, we find the nominal damages of 10,000.00 for
each of the respondents sufficient.79
III
Respondents are not entitled to attorneys fees
Attorneys fees "represent the reasonable compensation [a client pays his or
her lawyer] [for legal service rendered]."80 The award of attorneys fees is the
exception rather than the rule.81 Specifically in labor cases, attorneys fees
are awarded only when there is unlawful withholding of wages82 or when the
attorneys fees arise from collective bargaining negotiations that may be
charged against union funds in an amount to be agreed upon by the parties.83
For courts and tribunals to properly award attorneys fees, they must make
"an express finding of fact and [citation] of applicable law"84 in their decisions.
In the present case, there is no unlawful withholding of wages or an award
of attorneys fees arising from collective bargaining negotiations. Neither did
the Labor Arbiter nor the Court of Appeals make findings of fact or cite the
applicable law in awarding attorneys fees. That respondents were
"constrained to engage the services of counsel to prosecute their claims"85 is
not enough justification since "no premium should be placed on the right to
litigate."86
For these reasons, we delete the award of attorneys fees.
All told, G.J.T. Rebuilders failed to prove that it closed its machine shop due
to serious business losses. Moreover, it failed to comply with Article 283 of
the Labor Code on the notice requirement. Therefore, petitioners must pay
respondents Ricardo Ambos, Russell Ambos, and Benjamin Putian
separation pay and nominal damages.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court
of Appeals Decision dated January 17, 2006 is AFFIRMED with
MODIFICATION.
Petitioners are ordered to PAY respondents their separation pay with 6%
legal interest87 from the finality of this Decision until full payment:
Ricardo Ambos P29,250.00
Russell Ambos P7,312.50
Benjamin Putian P5,850.00.
Furthermore, petitioners shall PAY each of the respondents P10,000.00 as
nominal damages with 6% legal interest88 from the finality of this Decision
until full payment.
The award of attorney's fees is DELETED.
SO ORDERED.
MARVIC M.V.F. LEONEN
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
PRESBITERO J. VELASCO JR.* MARIANO C. DEL CASTILLO
Associate Justice Associate Justice
JOSE CATRAL MENDOZA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer
of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
* Designated acting member per S. 0. No. 1910 dated January 12, 2015.

1 Rollo, pp. 315.

2 Id. at 1824. The Decision dated January 17, 2006 was penned by

Associate Justice Roberto A. Barrios and concurred in by Associate Justices

Mario L. Guaria and Santiago Javier Ranada of the Fifth Division.
3 Russell Ambos was also referred to as "Ruzell Ambos." See rollo, pp. 18,

36, and 44.

4 Rollo, pp. 2122.

5 Id. at 19.

6 Id. at 29.

7 Id.

8 Id. at 8 and 19.

9 Id. at 56 and 20.

10 Id. at 19.

11
Id. at 1920.
12 Id. at 3643.

13 Id. at 3940. This Article was renumbered to Article 297 by Rep. Act No.

10151, otherwise known as An Act Allowing the Employment of Night

Workers, Thereby Repealing Articles 130 and 131 of Presidential Decree
Number Four Hundred Forty-Two, as amended, Otherwise Known as the
Labor Code of the Philippines; Sangwoo Philippines, Inc. v. Sangwoo
Philippines, Inc. Employees Union Olalia, G.R. No. 173154, December 9,
2013, 711 SCRA 618, 624 [Per J. Perlas-Bernabe, Second Division].
14 Id. at 4142.

15 Id. at 40, citing Banco Filipino Savings and Mortgage Bank v. National

Labor Relations Commission, 266 Phil. 770, 780 (1990) [Per J. Medialdea,
First Division] and International Hardware, Inc. v. National Labor Relations
Commission (Third Division), 257 Phil. 261 (1989) [Per J. Gancayco, First
Division].
16 Id. at 44.

17 Id. at 50.

18 Id.

19 Id. at 72.

20 Id. at 4153.

21 Id. at 5455.

22 Id. at 18 and 21.

23 Id. at 2122.

24 Id. at 22.

25 Id. at 1824.

26 Id. at 2628.

27 Id. at 316.

28 Id. at 6066.

29 Id. at 7076.

30 Id. at 9.
31 Id.
32 Id. at 910.
33 Id. at 6364.

34 Id. at 63.

35 Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc., Labor Union-Super,

et al., 585 Phil. 88, 101 (2008) [Per J. Austria-Martinez, Third Division].
36 Mac Adams Metal Engineering Workers Union-Independent v. Mac Adams

Metal Engineering, 460 Phil. 583, 590 (2003) [Per J. Corona, Third Division].
37 Id.

38 460 Phil. 583 (2003) [Per J. Corona, Third Division].

39
Id. at 590.
40 LABOR CODE, art. 283, now renumbered to art. 297 by Rep. Act No.

10151.
41 Indino v. NLRC (Second Division), 258 Phil. 792, 800 (1989) [Per J.

Sarmiento, Second Division].

42 Lopez Sugar Corporation v. Federation of Free Workers, G.R. Nos. 75700

01, August 30, 1990, 189 SCRA 179, 186 [Per J. Feliciano, Third Division].
43 Philippine Tobacco Flue-Curing & Redrying Corp. v. NLRC, 360 Phil. 218,

236 (1998) [Per J. Panganiban, First Division], citing Somerville Stainless

Steel Corporation v. NLRC, 350 Phil. 859, 869 (1998) [Per J. Panganiban,
First Division].
44 Id. at 236237, citing Somerville Stainless Steel Corporation v. NLRC, 350

Phil. 859, 870 (1998) [Per J. Panganiban, First Division].

45 Reahs Corporation v. NLRC, 337 Phil. 698, 705 (1997) [Per J. Padilla, First

Division].
46 325 Phil. 202 (1996) [Per J. Panganiban, En Banc].

47 Id. at 205.

48 Id. at 212.

49 571 Phil. 494 (2008) [Per J. Chico-Nazario, Third Division].

50 Id. at 501.

51 Id. at 509.

52 146 Phil. 153 (1970) [Per J. Ruiz Castro, En Banc].

53 Id. at 157.

54 Id. at 157 and 166.

55 Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc. Employees Union-

Olalia, G.R. No. 173154, December 9, 2013, 711 SCRA 618, 627629 [Per
J. Perlas-Bernabe, Second Division].
56 Rollo, p. 13.

57 Id. at 35.

58 Id. at 2122 and 40.

59 LABOR CODE, art. 283, now renumbered to art. 297 by Rep. Act No.
10151.
60 Rollo, p. 42.

61 Id.

62 Id.

63 Id.

64 Id.

65 Id.

66 Id.

67 Id.

68
Id.
69 Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc. Employees Union-

Olalia, G.R. No. 173154, December 9, 2013, 711 SCRA 618, 627 [Per J.
Perlas-Bernabe, Second Division].
70 Id.

71 Id.

72 Id. at 628.

73 Id. at 629, citing Abbott Laboratories, Philippines v. Alcaraz, G.R. No.

192571, July 23, 2013, 701 SCRA 682, 715 [Per J. Perlas-Bernabe, En
Banc].
74 Id.

75 G.R. No. 173154, December 9, 2013, 711 SCRA 618 [Per J. Perlas-

Bernabe, Second Division].

76 Id. at 629, citing Industrial Timber Corporation v. Ababon, 520 Phil. 522,

527528 [Per J. Ynares-Santiago, First Division].

77 Rollo, p. 5.

78 Id. at 5 and 30.

79 Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc. Employees Union-

Olalia, G.R. No. 173154, December 9, 2013, 711 SCRA 618, 630 [Per J.
Perlas-Bernabe, Second Division].
80 Lui Enterprises, Inc. v. Zuellig Pharma Corporation, G.R. No. 193494,

March 12, 2014,

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/ma
rch2014/193494.pdf> 26 [Per J. Leonen, Third Division].
81 Id.

82 LABOR CODE, art. 111(1) provides: Art. 111. Attorneys fees. (1) In

cases of unlawful withholding of wages, the culpable party may be assessed

attorneys fees equivalent to ten percent (10%) of the amount of wages
recovered; Reahs Corporation v. NLRC, 337 Phil. 698, 709 (1997) [Per J.
Padilla, First Division].
83 LABOR CODE, art. 222(2) provides: Art. 222. Appearances and Fees. - . .
. . (2) No attorneys fees, negotiation fees or similar charges of any kind
arising from any collective bargaining agreement shall be imposed on any
individual member of the contracting union: Provided, however, That
attorneys fees may be charged against union funds in an amount to be
agreed upon by the parties. Any contract, agreement or arrangement of any
sort to the contrary shall be null and void; Reahs Corporation v. NLRC, 337
Phil. 698, 709 (1997) [Per J. Padilla, First Division].
84 Reahs Corporation v. NLRC, 337 Phil. 698, 709 (1997) [Per J. Padilla, First

Division].
85
Rollo, p. 42.
86 Lui Enterprises, Inc. v. Zuellig Pharma Corporation, G.R. No. 193494,

March 12, 2014,

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/ma
rch2014/193494.pdf> 27 [Per J. Leonen, Third Division].
87 Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA

439, 458 [Per J. Peralta, En Banc].

88 Id.