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.27Respondents 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.

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 affected employees. As to
1w phi 1

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 29,250.00

Russell Ambos 7,312.50

Benjamin Putian 5,850.00.

Furthermore, petitioners shall PAY each of the respondents 10,000.00 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.

2Id. 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.

3Russell 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.

13Id. 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.

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

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.

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

585 Phil. 88, 101 (2008) [Per J. Austria-Martinez, Third Division].

Mac Adams Metal Engineering Workers Union-Independent v. Mac Adams Metal

36

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.

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

Second Division].

Lopez Sugar Corporation v. Federation of Free Workers, G.R. Nos. 7570001,

42

August 30, 1990, 189 SCRA 179, 186 [Per J. Feliciano, Third Division].

43Philippine 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].

Id. at 236237, citing Somerville Stainless Steel Corporation v. NLRC, 350 Phil.
44

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

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

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.

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

55

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.

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

69

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.

Id. at 629, citing Abbott Laboratories, Philippines v. Alcaraz, G.R. No. 192571, July
73

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

74 Id.

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

Second Division].

76Id. 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.

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

79

G.R. No. 173154, December 9, 2013, 711 SCRA 618, 630 [Per J. Perlas-Bernabe,
Second Division].

Lui Enterprises, Inc. v. Zuellig Pharma Corporation, G.R. No. 193494, March 12,
80

2014,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/march2014/
193494.pdf> 26 [Per J. Leonen, Third Division].

81 Id.

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

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].

83LABOR 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].

Reahs Corporation v. NLRC, 337 Phil. 698, 709 (1997) [Per J. Padilla, First
84

Division].

85 Rollo, p. 42.
 Lui Enterprises, Inc. v. Zuellig Pharma Corporation, G.R. No. 193494, March 12,
86

2014,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/march2014/
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.
ithout clearly defining what amounts to an "unjustified refusal."

Thus, We find that the recommended four (4) working weeks suspension without pay as the
reasonable penalty to be imposed on [respondent] for his disobedience. x x x51 (Additional
emphasis supplied.)

To be sure, the unreasonableness of the penalty of termination as imposed in this case is

further highlighted by a fact admitted by petitioner corporation itself: that for the ten-year
period that respondent had been employed by petitioner corporation, he did not have any
record of a violation of its company policies.

As to the other issue relentlessly being raised by petitioner corporation that respondents
petition for certiorari before the CA should have been considered moot as respondent had
already previously executed a quitclaim discharging petitioner corporation from all his
monetary claims, we cannot agree. Quitclaims executed by laborers are ineffective to bar
claims for the full measure of their legal rights,52 especially in this case where the evidence
on record shows that the amount stated in the quitclaim exactly corresponds to the amount
claimed as unpaid wages by respondent under Annex A53 of his Reply54 filed with the Labor
Arbiter. Prima facie, this creates a false impression that respondents claims have already
been settled by petitioner corporation discharging the latter from all of respondents
monetary claims. In truth and in fact, however, the amount paid under the subject quitclaim
represented the salaries of respondent that remained unpaid at the time of his termination
not the amounts being claimed in the case at bar.

We believe that this issue was extensively discussed by both the Labor Arbiter and the CA
and we find no reversible error on the disposition of this issue, viz.:

A review of the records show that the alluded quitclaim, which was undated and not even
notarized although signed by the petitioner, was for the amount of 59,630.05. The said
quitclaim was attached as Annex 26 in the [petitioners] Position Paper filed before the
Labor Arbiter. As fully explained by [respondent] in his Reply filed with the Labor Arbiter, the
amount stated therein was his last pay due to him when he was terminated, not the amount
representing his legitimate claims in this labor suit x x x. To bolster his defense,
[respondent] submitted the pay form issued to him by the [petitioner corporation], showing
his net pay at 59,630.05 exactly the amount stated in the quitclaim x x x. Then, too, as
stated on the quitclaim itself, the intention of the waiver executed by the [respondent] was to
release [petitioner corporation] from any liability only on the said amount representing
[respondents] "full and final payment of [his] last salary/separation pay" x x x. It did not in
any way waive [respondents] right to pursue his legitimate claims regarding his dismissal in
a labor suit. Thus, We gave no credence to [petitioners] private defense that alleged
quitclaim rendered the instant petition moot.55

Finally, the petition avers that petitioner Bautista should not be held personally liable for
respondents dismissal as he acted in good faith and within the scope of his official
functions as then president of petitioner corporation. We agree with petitioners. Both
1wphi1

decisions of the Labor Arbiter and the CA did not discuss the basis of the personal liability
of petitioner Bautista, and yet the dispositive portion of the decision of the Labor Arbiter -
which was affirmed by the appellate court - held him jointly and severally liable with
petitioner corporation, viz.:

WHEREFORE, premises considered, this Office finds respondents GUILTY of illegal

dismissal, and hereby ordered to jointly and severally reinstate complainant back to his
former position without loss on seniority rights and benefits and to pay him his backwages
and other benefits from the date he was illegally dismissed up to the time he is actually
reinstated, partially computed as of this date in the amount of 258,797.50 (39,815.00 x
6.5 mos.) plus his 13th and 14th month pay in the amount of 43,132.91 or in the total
amount of 301,930.41. Respondents are also ordered to pay complainant the amount of
3,000,000.00 as and by way of moral and exemplary damages, and to pay complainant
the amount equivalent to ten percent (10%) of the total awards as and by way of attorney's
fees.

SO ORDERED.56 (Emphasis supplied.)

A corporation has a personality separate and distinct from its officers and board of directors
who may only be held personally liable for damages if it is proven that they acted with
malice or bad faith in the dismissal of an employee.57 Absent any evidence on record that
petitioner Bautista acted maliciously or in bad faith in effecting the termination of
respondent, plus the apparent lack of allegation in the pleadings of respondent that
petitioner Bautista acted in such manner, the doctrine of corporate fiction dictates that only
petitioner corporation should be held liable for the illegal dismissal of respondent.

WHEREFORE, the petition for review on certiorari is DENIED. The assailed Decision dated
June 26, 2007 and the Resolution dated January 11, 2008 in CA-G.R. SP No. 96153 are
AFFIRMED with the MODIFICATION that only petitioner corporation is found GUILTY of the
illegal dismissal of respondent Joselito A. Caro. Petitioner Edgardo A. Bautista is not held
personally liable as then President of petitioner corporation at the time of the illegal
dismissal.

No pronouncement as to costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

MARIA LOURDES P. A. SERENO

Chief Justice
Chairperson

TERESITA J. LEONARDO-DE
LUCAS P. BERSAMIN
CASTRO
Associate Justice
Associate Justice
 BIENVENIDO L. REYES
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 Constitution, 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

1 Rollo, pp. 13-80.

2
Id. at 145-159. Penned by Associate Justice Conrado M. Vasquez, Jr. with
Associate Justices Edgardo F. Sundiam and Monina Arevalo-Zenarosa concurring.

3 Id. at 162-164.

4
Id. at 165-181.

5 Id. at 434-444.

6
Id. at 434-435, 438.

7 Id. at 15.

8 Id.

9 Id. at 434-435.

10 Id. at 231.

11 Records (Vol. I), pp. 7-15.

12 Id. at 16.

13 Id. at 17.

14 Id. at 18.

15 CA rollo, p. 273.
16 Rollo, p. 245.

17 Id. at 244.

18 Id. at 246-252.

19 Id. at 253-254.

20 Records (Vol. I), p. 142.

21 Rollo, pp. 255-257.

22
Records (Vol. I), pp. 91-92.

23 CA rollo, p. 260.

24
Supra note 15.

25 Supra note 16.

26 CA rollo, p. 275.

27 Supra note 18.

28 Supra note 20.

29
Id. at 55.

30 Rollo, pp. 443-444.

31 Id. at 443.

32 Id. at 174-177.

33 Id. at 178-179.

34 Records (Vol. I), p. 120.

35 Rollo, p. 179.

36
Id. at 180.

37
CA rollo, pp. 18-24.

38
Id. at 419-429.

39 Id. at 16-17.
40 Id. at 5-6.

41 Id. at 7-12.

42 Rollo, pp. 155-157. Citations omitted.

43 Id. at 158.

44 Id. at 33-35.

45Bunagan v. Sentinel Watchman & Protective Agency, Inc., 533 Phil. 283, 291
(2006), citing Santos v. Velarde, 450 Phil. 381, 390-391 (2003).

46
Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme
Independent Union (NMS-IND-APL), G.R. No. 185556, March 28, 2011, 646 SCRA
501, 525, citing DOLE Philippines, Inc. v. Pawis ng Makabayang Obrero (PAMAO-
NFL), 443 Phil. 143, 149 (2003).

The Coca-Cola Export Corporation v. Gacayan, G.R. No. 149433, December 15,
47

2010, 638 SCRA 377, 399, citing St. Michaels Institute v. Santos, 422 Phil. 723,
732-733 (2001).

48 Rollo, p. 252.

Id. at 443, citing Philippine National Construction Corporation v. NLRC, 342 Phil.
49

769, 782 (1997).

Id. at 157, citing Cosep v. NLRC, G.R. No. 124966, June 16, 1998, 290 SCRA 704,
50

714.

51
Id. at 157-158.

52 Id. at 442.

53 Id. at 398.

54
Id. at 393-397.

55 Id. at 163-164. Citations omitted.

56 Supra note 30.

57 See Sunio v. NLRC, 212 Phil. 355, 362-363 (1984).

G.R. No. 198783 April 15, 2013

ROYAL PLANT WORKERS UNION, Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.

DECISION

MENDOZA, J.:

Assailed in this petition is the May 24, 2011 Decision1 and the September 2, 2011
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 05200, entitled Coca-Cola
Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant Workers Union, which nullified and set
aside the June 11, 2010 Decision3 of the Voluntary Arbitration Panel (Arbitration Committee)
in a case involving the removal of chairs in the bottling plant of Coca-Cola Bottlers
Philippines, Inc. (CCBPI).

The Factual and Procedural

Antecedents

The factual and procedural antecedents have been accurately recited in the May 24, 2011
CA decision as follows:

Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged

in the manufacture, sale and distribution of softdrink products. It has several bottling plants
all over the country, one of which is located in Cebu City. Under the employ of each bottling
plant are bottling operators. In the case of the plant in Cebu City, there are 20 bottling
operators who work for its Bottling Line 1 while there are 12-14 bottling operators who man
its Bottling Line 2. All of them are male and they are members of herein respondent Royal
Plant Workers Union (ROPWU).

The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the
second shift is from 5 p.m. up to the time production operations is finished. Thus, the
second shift varies and may end beyond eight (8) hours. However, the bottling operators
are compensated with overtime pay if the shift extends beyond eight (8) hours. For Bottling
Line 1, 10 bottling operators work for each shift while 6 to 7 bottling operators work for each
shift for Bottling Line 2.

Each shift has rotations of work time and break time. Prior to September 2008, the rotation
is this: after two and a half (2 ) hours of work, the bottling operators are given a 30-minute
break and this goes on until the shift ends. In September 2008 and up to the present, the
rotation has changed and bottling operators are now given a 30-minute break after one and
one half (1 ) hours of work.

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their
request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be
provided also with chairs. Their request was likewise granted. Sometime in September
2008, the chairs provided for the operators were removed pursuant to a national directive of
petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of
petitioner for bottling operators, wherein every bottling operator is given the responsibility to
keep the machinery and equipment assigned to him clean and safe. The program reinforces
the task of bottling operators to constantly move about in the performance of their duties
and responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to
him, a bottling operator does not need a chair anymore, hence, petitioners directive to
remove them. Furthermore, CCBPI rationalized that the removal of the chairs is
implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to their
persons. As bottling operators are working with machines which consist of moving parts, it
is imperative that they should not fall asleep as to do so would expose them to hazards and
injuries. In addition, sleeping will hamper the efficient flow of operations as the bottling
operators would be unable to perform their duties competently.

The bottling operators took issue with the removal of the chairs. Through the representation
of herein respondent, they initiated the grievance machinery of the Collective Bargaining
Agreement (CBA) in November 2008. Even after exhausting the remedies contained in the
grievance machinery, the parties were still at a deadlock with petitioner still insisting on the
removal of the chairs and respondent still against such measure. As such, respondent sent
a Notice to Arbitrate, dated 16 July 2009, to petitioner stating its position to submit the issue
on the removal of the chairs for arbitration. Nevertheless, before submitting to arbitration the
issue, both parties availed of the conciliation/mediation proceedings before the National
Conciliation and Mediation Board (NCMB) Regional Branch No. VII. They failed to arrive at
an amicable settlement.

Thus, the process of arbitration continued and the parties appointed the chairperson and
members of the Arbitration Committee as outlined in the CBA. Petitioner and respondent
respectively appointed as members to the Arbitration Committee Mr. Raul A. Kapuno, Jr.
and Mr. Luis Ruiz while they both chose Atty. Alice Morada as chairperson thereof. They
then executed a Submission Agreement which was accepted by the Arbitration Committee
on 01 October 2009. As contained in the Submission Agreement, the sole issue for
arbitration is whether the removal of chairs of the operators assigned at the
production/manufacturing line while performing their duties and responsibilities is valid or
not.

Both parties submitted their position papers and other subsequent pleadings in amplification
of their respective stands. Petitioner argued that the removal of the chairs is valid as it is a
legitimate exercise of management prerogative, it does not violate the Labor Code and it
does not violate the CBA it contracted with respondent. On the other hand, respondent
espoused the contrary view. It contended that the bottling operators have been performing
their assigned duties satisfactorily with the presence of the chairs; the removal of the chairs
constitutes a violation of the Occupational Health and Safety Standards, the policy of the
State to assure the right of workers to just and humane conditions of work as stated in
Article 3 of the Labor Code and the Global Workplace Rights Policy.

Ruling of the Arbtration Committee

On June 11, 2010, the Arbitration Committee rendered a decision in favor of the Royal Plant
Workers Union (the Union) and against CCBPI, the dispositive portion of which reads, as
follows:

Wherefore, the undersigned rules in favor of ROPWU declaring that the removal of the
operators chairs is not valid. CCBPI is hereby ordered to restore the same for the use of the
operators as before their removal in 2008.4

The Arbitration Committee ruled, among others, that the use of chairs by the operators had
been a company practice for 34 years in Bottling Line 2, from 1974 to 2008, and 20 years in
Bottling Line 1, from 1988 to 2008; that the use of the chairs by the operators constituted a
company practice favorable to the Union; that it ripened into a benefit after it had been
enjoyed by it; that any benefit being enjoyed by the employees could not be reduced,
diminished, discontinued, or eliminated by the employer in accordance with Article 100 of
the Labor Code, which prohibited the diminution or elimination by the employer of the
employees benefit; and that jurisprudence had not laid down any rule requiring a specific
minimum number of years before a benefit would constitute a voluntary company practice
which could not be unilaterally withdrawn by the employer.

The Arbitration Committee further stated that, although the removal of the chairs was done
in good faith, CCBPI failed to present evidence regarding instances of sleeping while on
duty. There were no specific details as to the number of incidents of sleeping on duty, who
were involved, when these incidents happened, and what actions were taken. There was no
evidence either of any accident or injury in the many years that the bottling operators used
chairs. To the Arbitration Committee, it was puzzling why it took 34 and 20 years for CCBPI
to be so solicitous of the bottling operators safety that it removed their chairs so that they
would not fall asleep and injure themselves.

Finally, the Arbitration Committee was of the view that, contrary to CCBPIs position, line
efficiency was the result of many factors and it could not be attributed solely to one such as
the removal of the chairs.

Not contented with the Arbitration Committees decision, CCBPI filed a petition for review
under Rule 43 before the CA.

Ruling of the CA

On May 24, 2011, the CA rendered a contrasting decision which nullified and set aside the
decision of the Arbitration Committee. The dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the petition is hereby GRANTED and the Decision,
dated 11 June 2010, of the Arbitration Committee in AC389-VII-09-10-2009D is NULLIFIED
and SET ASIDE. A new one is entered in its stead SUSTAINING the removal of the chairs
of the bottling operators from the manufacturing/production line.5

The CA held, among others, that the removal of the chairs from the
manufacturing/production lines by CCBPI is within the province of management
prerogatives; that it was part of its inherent right to control and manage its enterprise
effectively; and that since it was the employers discretion to constantly develop measures
or means to optimize the efficiency of its employees and to keep its machineries and
equipment in the best of conditions, it was only appropriate that it should be given wide
latitude in exercising it.

The CA stated that CCBPI complied with the conditions of a valid exercise of a
management prerogative when it decided to remove the chairs used by the bottling
operators in the manufacturing/production lines. The removal of the chairs was solely
motivated by the best intentions for both the Union and CCBPI, in line with the "I Operate, I
Maintain, I Clean" program for bottling operators, wherein every bottling operator was given
the responsibility to keep the machinery and equipment assigned to him clean and safe.
The program would reinforce the task of bottling operators to constantly move about in the
performance of their duties and responsibilities. Without the chairs, the bottling operators
could efficiently supervise these machineries operations and maintenance. It would also be
beneficial for them because the working time before the break in each rotation for each shift
was substantially reduced from two and a half hours (2 ) to one and a half hours (1 )
before the 30-minute break. This scheme was clearly advantageous to the bottling
operators as the number of resting periods was increased. CCBPI had the best intentions in
removing the chairs because some bottling operators had the propensity to fall asleep while
on the job and sleeping on the job ran the risk of injury exposure and removing them
reduced the risk.

The CA added that the decision of CCBPI to remove the chairs was not done for the
purpose of defeating or circumventing the rights of its employees under the special laws,
the Collective Bargaining Agreement (CBA) or the general principles of justice and fair play.
It opined that the principles of justice and fair play were not violated because, when the
chairs were removed, there was a commensurate reduction of the working time for each
rotation in each shift. The provision of chairs for the bottling operators was never part of the
CBAs contracted between the Union and CCBPI. The chairs were not provided as a benefit
because such matter was dependent upon the exigencies of the work of the bottling
operators. As such, CCBPI could withdraw this provision if it was not necessary in the
exigencies of the work, if it was not contributing to the efficiency of the bottling operators or
if it would expose them to some hazards. Lastly, the CA explained that the provision of
chairs to the bottling operators cannot be covered by Article 100 of the Labor Code on
elimination or diminution of benefits because the employees benefits referred to therein
mainly involved monetary considerations or privileges converted to their monetary
equivalent.

Disgruntled with the adverse CA decision, the Union has come to this Court praying for its
reversal on the following GROUNDS

THAT WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN HOLDING THAT A PETITION FOR REVIEW UNDER RULE 43 OF THE
RULES OF COURT IS THE PROPER REMEDY OF CHALLENGING BEFORE SAID
COURT THE DECISION OF THE VOLUNTARY ARBITRATOR OR PANEL OF
VOLUNTARY ARBITRATORS UNDER THE LABOR CODE.
II

THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN NULLIFYING AND SETTING ASIDE THE DECISION OF THE PANEL OF
VOLUNTARY ARBITRATORS WHICH DECLARED AS NOT VALID THE REMOVAL OF
THE CHAIRS OF THE OPERATORS IN THE MANUFACTURING AND/OR PRODUCTION
LINE.

In advocacy of its positions, the Union argues that the proper remedy in challenging the
decision of the Arbitration Committee before the CA is a petition for certiorari under Rule 65.
The petition for review under Rule 43 resorted to by CCBPI should have been dismissed for
being an improper remedy. The Union points out that the parties agreed to submit the
unresolved grievance involving the removal of chairs to voluntary arbitration pursuant to the
provisions of Article V of the existing CBA. Hence, the assailed decision of the Arbitration
Committee is a judgment or final order issued under the Labor Code of the Philippines.
Section 2, Rule 43 of the 1997 Rules of Civil Procedure, expressly states that the said rule
does not cover cases under the Labor Code of the Philippines. The judgments or final
orders of the Voluntary Arbitrator or Panel of Voluntary Arbitrators are governed by the
provisions of Articles 260, 261, 262, 262-A, and 262-B of the Labor Code of the Philippines.

On the substantive aspect, the Union argues that there is no connection between CCBPIs
"I Operate, I Maintain, I Clean" program and the removal of the chairs because the
implementation of the program was in 2006 and the removal of the chairs was done in
2008. The 30-minute break is part of an operators working hours and does not make any
difference. The frequency of the break period is not advantageous to the operators because
it cannot compensate for the time they are made to stand throughout their working time.
The bottling operators get tired and exhausted after their tour of duty even with chairs
around. How much more if the chairs are removed?

The Union further claims that management prerogatives are not absolute but subject to
certain limitations found in law, a collective bargaining agreement, or general principles of
fair play and justice. The operators have been performing their assigned duties and
responsibilities satisfactorily for thirty (30) years using chairs. There is no record of poor
performance because the operators are sitting all the time. There is no single incident when
the attention of an operator was called for failure to carry out his assigned tasks. CCBPI has
not submitted any evidence to prove that the performance of the operators was poor before
the removal of the chairs and that it has improved after the chairs were removed. The
presence of chairs for more than 30 years made the operators awake and alert as they
could relax from time to time. There are sanctions for those caught sleeping while on duty.
Before the removal of the chairs, the efficiency of the operators was much better and there
was no recorded accident. After the removal of the chairs, the efficiency of the operators
diminished considerably, resulting in the drastic decline of line efficiency.

Finally, the Union asserts that the removal of the chairs constitutes violation of the
Occupational Health and Safety Standards, which provide that every company shall keep
and maintain its workplace free from hazards that are likely to cause physical harm to the
workers or damage to property. The removal of the chairs constitutes a violation of the State
policy to assure the right of workers to a just and humane condition of work pursuant to
Article 3 of the Labor Code and of CCBPIs Global Workplace Rights Policy. Hence, the
unilateral withdrawal, elimination or removal of the chairs, which have been in existence for
more than 30 years, constitutes a violation of existing practice.

The respondents position

CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of the Rules of
Court was the proper remedy to question the decision of the Arbitration Committee. It
likewise echoes the ruling of the CA that the removal of the chairs was a legitimate exercise
of management prerogative; that it was done not to harm the bottling operators but for the
purpose of optimizing their efficiency and CCBPIs machineries and equipment; and that the
exercise of its management prerogative was done in good faith and not for the purpose of
circumventing the rights of the employees under the special laws, the CBA or the general
principles of justice and fair play.

The Courts Ruling

The decision in this case rests on the resolution of two basic questions. First, is an appeal
to the CA via a petition for review under Rule 43 of the 1997 Rules of Civil Procedure a
proper remedy to question the decision of the Arbitration Committee? Second, was the
removal of the bottling operators chairs from CCBPIs production/manufacturing lines a
valid exercise of a management prerogative?

The Court sustains the ruling of the CA on both issues.

Regarding the first issue, the Union insists that the CA erred in ruling that the recourse
taken by CCBPI in appealing the decision of the Arbitration Committee was proper. It
argues that the proper remedy in challenging the decision of the Voluntary Arbitrator before
the CA is by filing a petition for certiorari under Rule 65 of the Rules of Court, not a petition
for review under Rule 43.

CCBPI counters that the CA was correct in ruling that the recourse it took in appealing the
decision of the Arbitration Committee to the CA via a petition for review under Rule 43 of the
Rules of Court was proper and in conformity with the rules and prevailing jurisprudence.

A Petition for Review

under Rule 43 is the

proper remedy

CCBPI is correct. This procedural issue being debated upon is not novel. The Court has
already ruled in a number of cases that a decision or award of a voluntary arbitrator is
appealable to the CA via a petition for review under Rule 43. The recent case of Samahan
Ng Mga Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon. Voluntary Arbitrator
Buenaventura C. Magsalin and Hotel Enterprises of the Philippines6 reiterated the well-
settled doctrine on this issue, to wit:
In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,7 we
repeated the well-settled rule that a decision or award of a voluntary arbitrator is appealable
to the CA via petition for review under Rule 43. We held that:

"The question on the proper recourse to assail a decision of a voluntary arbitrator has
already been settled in Luzon Development Bank v. Association of Luzon Development
Bank Employees, where the Court held that the decision or award of the voluntary arbitrator
or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the
procedure outlined in Revised Administrative Circular No. 1-95 (now embodied in Rule 43 of
the 1997 Rules of Civil Procedure), just like those of the quasi-judicial agencies, boards and
commissions enumerated therein, and consistent with the original purpose to provide a
uniform procedure for the appellate review of adjudications of all quasi-judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-
Olalia v. Court of Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the
Court held that notwithstanding Section 2 of Rule 43, the ruling in Luzon Development Bank
still stands. The Court explained, thus:

The provisions may be new to the Rules of Court but it is far from being a new law. Section
2, Rules 42 of the 1997 Rules of Civil Procedure, as presently worded, is nothing more but
a reiteration of the exception to the exclusive appellate jurisdiction of the Court of Appeals,
as provided for in Section 9, Batas Pambansa Blg. 129, as amended by Republic Act No.
7902:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Employees
Compensation Commission and the Civil Service Commission, except those falling within
the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act and of subparagraph (1) of the third paragraph and subparagraph (4)
of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court took into account this exception in Luzon Development Bank but, nevertheless,
held that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not
come within its ambit x x x."

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as

amended, provide:

"SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the
Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among
these agencies are the x x x, and voluntary arbitrators authorized by law.

xxxx
SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals
within the period and in the manner therein provided, whether the appeal involves questions
of fact, of law, or mixed questions of fact and law.

SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of
the award, judgment, final order or resolution, or from the date of its last publication, if
publication is required by law for its effectivity, or of the denial of petitioners motion for new
trial or reconsideration duly filed in accordance with the governing law of the court or
agency a quo. x x x. (Emphasis supplied.)

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution denying
petitioners motion for reconsideration, petitioner should have filed with the CA, within the
fifteen (15)-day reglementary period, a petition for review, not a petition for certiorari.

On the second issue, the Union basically claims that the CCBPIs decision to unilaterally
remove the operators chairs from the production/manufacturing lines of its bottling plants is
not valid because it violates some fundamental labor policies. According to the Union, such
removal constitutes a violation of the 1) Occupational Health and Safety Standards which
provide that every worker is entitled to be provided by the employer with appropriate seats,
among others; 2) policy of the State to assure the right of workers to a just and humane
condition of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights
Policy of CCBPI which provides for a safe and healthy workplace by maintaining a
productive workplace and by minimizing the risk of accident, injury and exposure to health
risks; and 4) diminution of benefits provided in Article 100 of the Labor Code. 9

Opposing the Unions argument, CCBPI mainly contends that the removal of the subject
chairs is a valid exercise of management prerogative. The management decision to remove
the subject chairs was made in good faith and did not intend to defeat or circumvent the
rights of the Union under the special laws, the CBA and the general principles of justice and
fair play.

Again, the Court agrees with CCBPI on the matter.

A Valid Exercise of

Management Prerogative

The Court has 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, lay-off of workers, and discipline,
dismissal and recall of workers. The exercise of management prerogative, however, is not
absolute as it must be exercised in good faith and with due regard to the rights of labor.10

In the present controversy, it cannot be denied that CCBPI removed the operators chairs
pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program,
launched to enable the Union to perform their duties and responsibilities more efficiently.
The chairs were not removed indiscriminately. They were carefully studied with due regard
to the welfare of the members of the Union. The removal of the chairs was compensated by:
a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2
)-hour rotation period to a one-and-a-half (1 ) hour rotation period; and b) an increase of
the break period from 15 to 30 minutes between rotations.

Apparently, the decision to remove the chairs was done with good intentions as CCBPI
wanted to avoid instances of operators sleeping on the job while in the performance of their
duties and responsibilities and because of the fact that the chairs were not necessary
considering that the operators constantly move about while working. In short, the removal of
the chairs was designed to increase work efficiency. Hence, CCBPIs exercise of its
management prerogative was made in good faith without doing any harm to the workers
rights.

The fact that there is no proof of any operator sleeping on the job is of no moment. There is
no guarantee that such incident would never happen as sitting on a chair is relaxing.
Besides, the operators constantly move about while doing their job. The ultimate purpose is
to promote work efficiency.

No Violation of Labor Laws

The rights of the Union under any labor law were not violated. There is no law that requires
employers to provide chairs for bottling operators. The CA correctly ruled that the Labor
Code, specifically Article 13211 thereof, only requires employers to provide seats for women.
No similar requirement is mandated for men or male workers. It must be stressed that all
concerned bottling operators in this case are men.

There was no violation either of the Health, Safety and Social Welfare Benefit provisions
under Book IV of the Labor Code of the Philippines. As shown in the foregoing, the removal
of the chairs was compensated by the reduction of the working hours and increase in the
rest period. The directive did not expose the bottling operators to safety and health hazards.

The Union should not complain too much about standing and moving about for one and
one-half (1 ) hours because studies show that sitting in workplaces for a long time is
hazardous to ones health. The report of VicHealth, Australia,12 disclosed that "prolonged
workplace sitting is an emerging public health and occupational health issue with serious
implications for the health of our working population. Importantly, prolonged sitting is a risk
factor for poor health and early death, even among those who meet, or exceed,
national13 activity guidelines." In another report,14 it was written:

Workers needing to spend long periods in a seated position on the job such as taxi drivers,
call centre and office workers, are at risk for injury and a variety of adverse health effects.

The most common injuries occur in the muscles, bones, tendons and ligaments, affecting
the neck and lower back regions. Prolonged sitting:

reduces body movement making muscles more likely to pull, cramp or strain when
stretched suddenly, causes fatigue in the back and neck muscles by slowing the blood
supply and puts high tension on the spine, especially in the low back or neck, and
 causes a steady compression on the spinal discs that hinders their nutrition and can
contribute to their premature degeneration.

Sedentary employees may also face a gradual deterioration in health if they do not exercise
or do not lead an otherwise physically active life. The most common health problems that
these employees experience are disorders in blood circulation and injuries affecting their
ability to move. Deep Vein Thrombosis (DVT), where a clot forms in a large vein after
prolonged sitting (eg after a long flight) has also been shown to be a risk.

Workers who spend most of their working time seated may also experience other, less
specific adverse health effects. Common effects include decreased fitness, reduced heart
and lung efficiency, and digestive problems. Recent research has identified too much sitting
as an important part of the physical activity and health equation, and suggests we should
focus on the harm caused by daily inactivity such as prolonged sitting.
Associate professor David Dunstan leads a team at the Baker IDI in Melbourne which is
specifically researching sitting and physical activity. He has found that people who spend
long periods of time seated (more than four hours per day) were at risk of:

higher blood levels of sugar and fats,

larger waistlines, and

higher risk of metabolic syndrome

regardless of how much moderate to vigorous exercise they had.

In addition, people who interrupted their sitting time more often just by standing or with light
activities such as housework, shopping, and moving about the office had healthier blood
sugar and fat levels, and smaller waistlines than those whose sitting time was not broken
up.

Of course, in this case, if the chairs would be returned, no risks would be involved because
of the shorter period of working time. The study was cited just to show that there is a health
risk in prolonged sitting.

No Violation of the CBA

The CBA15 between the Union and CCBPI contains no provision whatsoever requiring the
management to provide chairs for the operators in the production/manufacturing line while
performing their duties and responsibilities. On the contrary, Section 2 of Article 1 of the
CBA expressly provides as follows:

Article I

SCOPE

SECTION 2. Scope of the Agreement. All the terms and conditions of employment of
employees and workers within the appropriate bargaining unit (as defined in Section 1
hereof) are embodied in this Agreement and the same shall govern the relationship
between the COMPANY and such employees and/or workers. On the other hand, all such
benefits and/or privileges as are not expressly provided for in this Agreement but which are
now being accorded, may in the future be accorded, or might have previously been
accorded, to the employees and/or workers, shall be deemed as purely voluntary acts on
the part of the COMPANY in each case, and the continuance and repetition thereof now or
in the future, no matter how long or how often, shall not be construed as establishing an
obligation on the part of the COMPANY. It is however understood that any benefits that are
agreed upon by and between the COMPANY and the UNION in the Labor-Management
Committee Meetings regarding the terms and conditions of employment outside the CBA
that have general application to employees who are similarly situated in a Department or in
the Plant shall be implemented. [emphasis and underscoring supplied]

As can be gleaned from the aforecited provision, the CBA expressly provides that benefits
and/or privileges, not expressly given therein but which are presently being granted by the
company and enjoyed by the employees, shall be considered as purely voluntary acts by
the management and that the continuance of such benefits and/or privileges, no matter how
long or how often, shall not be understood as establishing an obligation on the companys
part. Since the matter of the chairs is not expressly stated in the CBA, it is understood that it
was a purely voluntary act on the part of CCBPI and the long practice did not convert it into
an obligation or a vested right in favor of the Union.

No Violation of the general principles

of justice and fair play

The Court completely agrees with the CA ruling that the removal of the chairs did not violate
the general principles of justice and fair play because the bottling operators working time
was considerably reduced from two and a half (2 ) hours to just one and a half (1 ) hours
and the break period, when they could sit down, was increased to 30 minutes between
rotations. The bottling operators new work schedule is certainly advantageous to them
because it greatly increases their rest period and significantly decreases their working time.
A break time of thirty (30) minutes after working for only one and a half (1 ) hours is a just
and fair work schedule.

No Violation of Article 100

of the Labor Code

The operators chairs cannot be considered as one of the employee benefits covered in
Article 10016 of the Labor Code. In the Courts view, the term "benefits" mentioned in the
non-diminution rule refers to monetary benefits or privileges given to the employee with
monetary equivalents.

Such benefits or privileges form part of the employees wage, salary or compensation
making them enforceable obligations.
This Court has already decided several cases regarding the non-diminution rule where the
benefits or privileges involved in those cases mainly concern monetary considerations or
privileges with monetary equivalents. Some of these cases are: Eastern Telecommunication
Phils. Inc. v. Eastern Telecoms Employees Union,17 where the case involves the payment of
14th, 15th and 16th month bonuses; Central Azucarera De Tarlac v. Central Azucarera De
Tarlac Labor Union-NLU,18 regarding the 13th month pay, legal/special holiday pay, night
premium pay and vacation and sick leaves; TSPIC Corp. v. TSPIC Employees
Union,19 regarding salary wage increases; and American Wire and Cable Daily Employees
Union vs. American Wire and Cable Company, Inc.,20 involving service awards with cash
incentives, premium pay, Christmas party with incidental benefits and promotional increase.

In this regard, the Court agrees with the CA when it resolved the matter and wrote:

Let it be stressed that the aforequoted article speaks of non-diminution of supplements and
other employee benefits. Supplements arc privileges given to an employee which constitute
as extra remuneration besides his or her basic ordinary earnings and wages. From this
definition, We can only deduce that the other employee benefits spoken of by Article 100
pertain only to those which are susceptible of monetary considerations. Indeed, this could
only be the most plausible conclusion because the cases tackling Article 100 involve mainly
with monetary considerations or privileges converted to their monetary equivalents.

xxxx

Without a doubt, equating the provision of chairs to the bottling operators Ds something
within the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly
stretching the coverage of the law. The interpretations of Article 100 of the Labor Code do
not show even with the slightest hint that such provision of chairs for the bottling operators
may be sheltered under its mantle.21

Jurisprudence recognizes the exercise of management prerogatives. Labor Jaws also

discourage interference with an employer's judgment in the conduct of its business. For this
reason, the Court often declines to interfere in legitimate business decisions of employers.
The law must protect not only the welfare of the employees, but also the right of the
employers.22

WHEREFORE, the petition is DENIED.

SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson
 DIOSDADO M. PERALTA ROBERTO A. ABAD
Associate Justice Associate Justice

MARVIC MARIO VICTOR F. LEONEN

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 Courts Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third 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

1 Rollo, pp. 23-35 (Penned by Associate Justice Pampio A. Abarintos and concurred
in by Associate Justices Eduardo B. Peralta, Jr. and Gabriel T. Ingles).

2 Id. at 36-37.

3 Voluntary Arbitration Panel Decision, id. at 227-238.

4 Id. at 227-238.

5 Id. at 23-35.

6 G.R. No. 164939, June 6, 2011, 650 SCRA 445, 454-456.

7G.R. No. 149050, March 25, 2009, 582 SCRA 369, 374-375, citing Luzon
Development Bank v. Association of Luzon Development Bank Employees, 319 Phil.
262 (1995); Alcantara, Jr. v. Court of Appeals, 435 Phil. 395 (2002); and Nippon
Paint Employees Union-Olalia v. Court of Appeals, G.R. No. 159010, November 19,
2004, 443 SCRA 286.

8 Article 3. Declaration of basic policy. The State shall afford protection to labor,
promote full employment, ensure equal work opportunities regardless of sex, race or
creed and regulate the relations between workers and employers. The State shall
assure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work.

9ART. 100. Prohibition against elimination or diminution of benefits. Nothing in this

Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code.

10Julies Bakeshop v. Arnaiz,, G.R. No. 173882, February 15, 2012, 666 SCRA 101,
115.

11Art. 132. Facilities for Women. The Secretary of Labor shall establish standards
that will insure the safety and health of women employees. In appropriate cases, he
shall by regulations, require employers to:

(a) Provide seats proper for women and permit them to use such seats when they
are free from work and during working hours, provided they can perform their duties
in this position without detriment to efficiency.

12 http://www.vichealth.vic.gov.au/About-VicHealth.aspx. Last visited March 28, 2013.

13 Australian.

14http://www.ohsrep.org.au/hazards/workplace-conditions/sedentary-work/index.cfm.
Last visited March 28, 2013.

15 Rollo, pp. 127-148.

Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this

16

Book shall be construed to eliminate or in any way diminish supplements, or other

employee benefits being enjoyed at the time of promulgation of this Code.

17 G.R. No. 185665, February 8, 2012, 665 SCRA 516.

18 G.R. No. 188949, July 26, 2010, 625 SCRA 622.

19 G.R. 163419, February 13, 2008, 545 SCRA 215.

20 497 Phil. 213 (2005).

21 Rollo, pp. 23-35.

22Arnulfo O. Endico v. Quantum Foods Distribution Center, G.R. No. 161615,
January 30, 2009, 577 SCRA 299, 309.