Bacani v. Fiber Textile Manufacturing Corp. (2025)

See: Original Decision

Bacani et al. v. Fiber Textile Manufacturing Corp. et al., En Banc, G.R. No. 271518, September 30, 2025, Per Lazaro-Javier, J.:

1. Background

• FMC, a corporation duly organized and existing under Philippine laws, is engaged in textile manufacturing. Its factory is located at Meycauayan, Bulacan while its administrative office and warehouse used to be located at Valenzuela City. Sherly is the president while Judy and Jason are the human resource manager and plant manager, respectively, of FMC.

• On June 16, 2017, petitioners were employed by FMC as folding operator, chemical mixer, color man, receiver, dyeing operator, and folding operator with a salary of PHP 380.00 per day. They initially had a six-day workweek. This was, however, subsequently reduced to two to three days per week, prompting them to seek the assistance of the Department of Labor and Employment (DOLE), Malolos.

• On July 27, 2018, petitioners went to FMC’s premises but Judy angrily told Bacani, Delara, Arguel, and Rivero to look for another job, while she told the others to resign (“Huwag na babalik. Layas layas“). During a mediation conference, a certain Sammy Chua (Chua) admitted that he advised petitioners to look for another job.

• Petitioners thus filed a complaint for constructive illegal dismissal, reduction of workweek, and nonremittance of SSS, PhilHealth, and Pag-IBIG contributions against FMC, Sherly, Judy, and Jason before the DOLE Regional Arbitration Branch III. The parties did not arrive at an amicable settlement despite conciliation. In their position paper, petitioners averred that they were dismissed from employment due to the complaint they filed before DOLE.

• On the other hand, FMC and its officers riposted that on July 9, 2018, the management and employees of FMC were unexpectedly prevented from entering its compound in Valenzuela City, which became the subject of a pending ejectment case. FMC was prevented from removing its properties, including its inventory in the warehouse, as well as important office documents such as payrolls.

• FMC reasoned out that since the raw materials were stored in the warehouse in Valenzuela City and access thereto was denied, the production in the factory in Bulacan was gravely affected. As a remedy, FMC made an unscheduled purchase of fabrics from suppliers but there was delay in the delivery. Due to the lack of materials, the number of production workers allegedly exceeded the available work in the factory. Consequently, FMC decided to temporarily implement a work rotation schedule of production personnel in the factory until the raw materials they ordered were delivered. Management called for a meeting to inform the production supervisors and personnel of the predicament and the need to implement a work rotation schedule.

• Thus, on July 16, 2018, FMC issued Company Memo – 81, informing all personnel of the immediate implementation of the work rotation schedule. This was allegedly posted in a conspicuous place in the factory for everyone to read. The schedules prepared by the supervisor allotted each worker at least two working days in a week.

• Sometime in July 2018, Arguel allegedly filed for leave from July 23, 2018 to August 11, 2018 to take care of his child while his wife was in the province taking care of her mother. His leave application was approved. After his leave though, he no longer reported for work.

• Meanwhile, Delara was suspended for 12 days or from July 25, 2018 to August 7, 2018 for sleeping during work hours. On July 24, 2018, he received the Violations Memo, informing him of his suspension. However, he also no longer returned to work after serving his suspension.

• During the first week of August 2018, Bacani, Cabrera, Sua and Sebolino did not report for work on their scheduled work days. Since they were absent without leave, management called other employees to cover for them. FMC denied that Chua admitted telling petitioners to look for another job or that Judy told them to resign, get out, and never return. It maintained that there was no illegal dismissal that occurred, actual or constructive. FMC’s management was thus surprised to receive the summons with a copy of the complaint for illegal dismissal filed by petitioners on the second week of August 2018.

• In their reply, petitioners claimed that Company Memo – 81 should not be given consideration because FMC did not report the rotation plan to the DOLE and its claim that there was a lack of raw materials was not supported by substantial evidence.

2. SC Decision / Resolution

•  FMC is guilty of illegal reduction of workdays and rotation of work.

•  I. Kinds of Flexible Work Arrangements

• At the outset, delineation must be made between the flexible work arrangements cognizable by issuances like the DOLE Department Advisory No. 2, Series of 2009 and other flexible work arrangements. The advent of the COVID-19 pandemic, for instance, installed changes which were carried over into the “new normal.” One of these is the increasing trend of implementing flexible work arrangements such as the work-from-home (WFH) set-up and hybrid set-up in the workplace due to their benefits both to the employees and the employers.

• As astutely posited by Senior Associate Justice Marvic M.V.F. Leonen (SAJ Leonen) during our deliberations, flexible work arrangements similar to the nature of WFH set-up and remote work offer several advantages—for employees, they get to enjoy greater work-life balance, reduced commute time, and improved productivity, among others; and for employers, they benefit from cost savings, access to wider talent pool, and increased employee satisfaction and retention.[

• These innovative flexible work arrangements, however, are not the flexible work arrangements governed by DOLE Department Advisory No. 2, Series of 2009. Taking cue from the suggestion of the esteemed Chief Justice Alexander G. Gesmundo (Chief Justice Gesmundo), it is imperative that delineation be made between:

(1) flexible work arrangements that are entered into voluntarily by employers and employees as a matter of ordinary business practice, without resulting in a reduction of employee pay or benefits; and

(2) flexible work arrangements that result in a reduction in employee pay or benefits.

• For purposes of our discussion, here, we deal only with the latter kind of flexible work arrangements, as regulated by DOLE Department Advisory No. 2, Series of 2009. We do not endeavor to adjudicate here and now the wisdom, merits, or legality of flexible work arrangements that do not unduly encroach on the rights of the workers.

• II. Coverage of DOLE Department Advisory No. 2, Series of 2009

• The scope of DOLE Department Advisory No. 2, Series of 2009 covers only the following flexible work arrangements and other similar alternative schemes that mitigate the loss of income of the employees:

III. Flexible Work Arrangements

The following are the flexible work arrangements which may be considered, among others:

1. Compressed Workweek refers to one where the normal workweek is reduced to less than six (6) days but the total number of work-hours of 48 hours per week shall remain. The normal workday is increased to more than eight hours but not to exceed twelve hours, without corresponding overtime premium. The concept can be adjusted accordingly depending on the normal workweek of the company pursuant to the provisions of Department Advisory No. 02, series of 2004, dated 2 December 2004.

2. Reduction of Workdays refers to one where the normal workdays per week are reduced but should not last for more than six months.

3. Rotation of Workers refers to one where the employees are rotated or alternately provided work within the workweek.

4. Forced Leave refers to one where the employees are required to go on leave for several days or weeks utilizing their leave credits if there are any.

5. Broken-time schedule refers to one where the work schedule is not continuous but the work-hours within the day or week remain.

6. Flexi-holidays schedule refers to one where the employees agree to avail the holidays at some other days provided there is no diminution of existing benefits as a result of such arrangement.

Under these flexible work arrangements, the employers and the employees are encouraged to explore alternative schemes under any agreement and company policy or practice in order to cushion and mitigate the effect of the loss of income of the employees.

• It is readily discernible that the list provided by DOLE Department Advisory No. 2, Series of 2009 is not exclusive, and that based on the last paragraph thereof this issuance regulates only those flexible work arrangements that tend to “cushion and mitigate the effect of the loss of income of the employees” or those employed to address the economic difficulties suffered by the employer pursuant to the principle of ejusdem generis.

• Perceptibly, DOLE Department Advisory No. 2, Series of 2009 is a regulatory issuance that governs flexible work arrangements that are prejudicial to the employees but, nonetheless, are upheld as valid due to the unique circumstances suffered by the employer, i.e., national emergency and economic difficulties.

• Other flexible work arrangements which have gained traction since the COVID-19 pandemic, such as the WFH or hybrid set-up, do not fall within the ambit of flexible work arrangements regulated by the DOLE under Department Advisory No. 2, Series of 2009 because they are not remedial measures against financial difficulties that may be experienced by the employer and do not affect the economic status of the employer or result in the diminution of the pay or benefits of the employees.

• III. Requisites for the Valid Implementation of Flexible Work Arrangements under DOLE Department Advisory No. 2, Series of 2009 and similar issuances

• Per Part III of DOLE Department Advisory No. 2, Series of 2009, the normal work hours per day is eight hours, which is consistent with Book Three, Title I, Chapter I, Article 83 of the Labor Code. On the other hand, the normal number of workdays per week shall be six days, or a total of 48 hours based on the normal workday of eight hours, without prejudice to firms whose normal workweek is five days or a total of 40 hours based on the normal workday of eight hours.

• This does not mean, however, that employers are absolutely prohibited from reducing the normal eight-hour work day and six-day workweek. Management, after all, 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. But the exercise of management prerogative is not absolute as it must be exercised in good faith and with due regard to the rights of labor.

• This prerogative of employers was recognized even prior to the issuance of DOLE Department Advisory No. 2, Series of 2009. In the Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances dated July 23, 1985, the DOLE ratiocinated:

In situations where the reduction in the number of regular working days is resorted to by the employer to prevent serious losses due to causes beyond his [or her] control, such as when there is a substantial slump in the demand for his [or her] goods or services or when there is lack of raw materials, it is the view of this Bureau that such reduction is valid. Such management action appears to be more humane and in keeping with sound business operations than the outright termination of the services of the employees or the total closure of the enterprise. In this jurisdiction, it is generally recognized that an employer has the prerogative to devise and adopt necessary remedial measures to save his [or her] business from serious losses that may eventually result in its total collapse. This prerogative of an employer flows from the right of ownership of property which includes the right of an employer to manage, control and protect his [or her] property in a manner that is not contrary to law, morals and public policy. If the law recognizes the right of an employer to terminate the services of his [or her] employees and even to close his [or her] enterprise if it is suffering from serious losses for reasons beyond his [or her] control, the right to reduce the number of workdays of his [or her] employees may be conceded to him [or her], which management action is less severe in terms of its effects on the earnings of the employees than their outright lay­off or terminate [sic], or the closure of the enterprise.

Reduction of Wage/Allowances

In situations described above, this Bureau is also of the view that the employer may deduct the wages and living allowances corresponding to the days taken off from the workweek, in the absence of an agreement specifically providing that a reduction in the number of workdays will not adversely affect the remuneration of the employees. This bulletin does not cover cases where there are existing agreements or employer policy or practice providing for more liberal benefits than those that would result with the application of the opinions or guidelines set forth herein in case of reduction of workdays. It also does not contemplate of situations where the employer has unilaterally reduced the number of working days, although the business is not suffering from losses or there is available work to be done by the employees, and which reduction will alter the agreement or understanding of the parties as to the number of working days that the employees will work in a week or within a payroll period. Furthermore, the explanations herein assume that the reduction of workdays and the corresponding wage/allowance deductions are done in good faith, justified by circumstance affecting the business of the employer, and are not resorted to for the purpose of defeating or circumventing the provisions of existing laws, applicable individual or collective agreement or any existing practice or policy obtaining in the establishment.

• Echoing the same sentiment, DOLE Department Advisory No. 2, Series of 2009 affirms as valid the adoption by employers of flexible work arrangements as one of the coping mechanisms and remedial measures in times of economic difficulties and national emergencies, as it is considered a better alternative than the outright termination of the services of employees or the total closure of the establishment.

• Flexible work arrangements in the context of DOLE Department Advisory No. 2, Series of 2009 are those alternative arrangements or schedules other than the traditional or standard work hours, workdays and workweek, and includes compressed workweek, reduction of workdays, rotation of workers, forced leave, broken-time schedule, and flexi-holidays schedule.

• Here, FMC admits reducing its personnel’s six-day workweek to only two to three workdays a week and rotating the schedule of jobs among them. There is thus no question that it adopted a flexible work arrangement, as defined under DOLE Department Advisory No. 2, Series of 2009, specifically the reduction of workdays, i.e., an arrangement where the normal workdays per week are reduced but should not last for more than six months, and rotation of workers, i.e., an arrangement where the employees are rotated or alternately provided work within the workweek. Rather, the question is whether FMC did so in compliance with the requirements under the rules.

• In Alejandro, et al. v. Philippine Pizza, Inc., the Court quoted from NLRC Commissioner Nieves E. Vivar De-Castro’s dissent, referencing, among others, DOLE Department Advisory No. 2, Series of 2009, a summary of the three conditions required before a company may adopt a flexible work arrangement. Though the Court ultimately held in Alejandro that the said department advisory is inapplicable since the issue involved part-time workers who necessarily work less than eight hours a day, the Court finds that this enumeration of conditions correctly encapsulated the clear tenor of DOLE Department Advisory No. 2, Series of 2009. We, however, add another condition, i.e., it was sufficiently proven that the company was suffering from economic difficulties or national emergencies and its adoption of flexible work arrangement was done in good faith to cope with such circumstances.

• Indeed, in Linton Commercial Co, Inc. v. Hellera, et al. and Intec Cebu, Inc. v. Court of Appeals,  the Court held the employers therein guilty of illegal reduction of work hours and, consequently, of constructive dismissal for failure to prove, based on their financial reports, that they were truly suffering from financial losses which would justify the implementation of reduced workdays and rotation of work. Linton, however, notably took place before DOLE Department Advisory No. 2, Series of 2009 was issued. Under the said Advisory, flexible work arrangements may be adopted “in times of economic difficulties and national emergencies,” which does not necessarily, mean that the business is already suffering financial losses.

• Chief Justice Gesmundo further opined during the deliberations that the grounds for the adoption of flexible work arrangements under DOLE Department Advisory No. 2, Series of 2009 should not be limited to actual economic difficulties or national emergencies. It is enough that, as in the authorized cause of retrenchment, the employer shows that the measure implemented is “reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual, and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer.”

• Thus, under DOLE Department Advisory No. 2, Series of 2009, a company seeking to adopt a flexible work arrangement must meet the following requisites: first, the adoption of a different work schedule or scheme is expressly and voluntarily supported by a majority of the workers affected, i.e., there should have been a consultation with the employees before a part time work arrangement is adopted and implemented; second, the implementation of a non-traditional work arrangement should be temporary. For reduction of workdays, specifically, the same should not exceed six months; third, the DOLE Regional Office should be notified before any flexible work arrangements may be implemented; and finally, the employer is suffering from actual or reasonably imminent economic difficulties or national emergencies and its adoption of flexible work arrangement was done in good faith to cope with such circumstances.

• IV. Effect of failure to provide notice to the DOLE prior to the implementation of flexible work arrangements under DOLE Department Advisory No. 2, Series of 2009

• DOLE Department Advisory No. 2, Series of 2009, indeed visibly utilizes the word “shall” in imposing the notice requirement upon employers:

V. Notice Requirement

Prior to its implementation, the employer shall notify the Department through the Regional Office which has jurisdiction over the workplace, of the adoption of any of the above flexible work arrangements. The notice shall be in the Report Form attached to this Advisory.

The Regional Office shall conduct an ocular visit to validate whether the adoption of the flexible work arrangements is in accordance with this issuance. (Emphasis supplied)

• The connotation of the word “shall” is settled in jurisprudence, that is, its ordinary signification is that it is imperative, obligatory, or mandatory. Particularly, Diokno v. Rehabilitation Finance Corporation[60] explains that the term “shall” is a word of command, and one which has always or which must be given compulsory meaning; as denoting obligation. It has the invariable significance of operating to impose a duty which may be enforced, particularly if public policy is in favor of this meaning or when addressed to public officials, or where a public interest is involved, or where the public or persons have rights which ought to be exercised or enforced, unless a contrary intent appears. Though this general interpretation admits of exceptions, we find that the same are not applicable here.

• On this score, it must be emphasized that flexible work arrangements which result in the diminution of the benefits and pay of workers do not enjoy any presumption of validity in their favor. By their nature, these arrangements contravene the standards on work hours prescribed by law. To reiterate, the Labor Code prescribes a normal six-day workweek comprised of a total of 48 work hours per week, without prejudice to firms whose normal workweek is five days or a total of 40 hours. This labor standard serves two important purposes for the protection of labor:

First, it standardizes the amount of remuneration to be expected by workers who worked for an entire regular workweek. For example, a worker who, per employment contract, is paid PHP 1,500.00 a day for an eight-hour workday may reasonably expect PHP 9,000.00 a week or PHP 36,000.00 a month. Consequently, reducing the number of workdays from that prescribed under the law or contract would lead to reduced remuneration based on the principle of “no work, no pay,” thereby depriving the worker of a substantial amount that he or she could have earned.

Second, the prescribed number for work hours shields workers from unpaid overtime work. By setting the maximum number of work hours in a day, the Labor Code ensures that any work beyond such eight-hour maximum shall be compensated with overtime pay.

• Flexible work arrangements similar to those enumerated under DOLE Department Advisory No. 2, Series of 2009 disregard the foregoing protective measures. As such, by fault, flexible work arrangements of such nature are presumed illegal until proven otherwise. This is a view completely aligned with the intention of the Labor Code to provide adequate protection in favor of labor.

• But, these flexible work arrangements are nonetheless upheld as valid only because of the exceptional circumstances involved: for the employer, to mitigate its difficulties in business; and for the employees, because it is a more humane solution instead of retrenchment and reduction of personnel. In sum, they are band-aid solutions to an ailing business meant to alleviate the impact of ongoing economic difficulties or national emergencies until the business has regained sustainable and stable operations. This is precisely why flexible work arrangements of such nature are temporary in nature and why prompt notice to the DOLE is imperative before the implementation of flexible work arrangements.

• Since this kind of flexible work arrangements naturally violates labor standards, they must be met with scrutiny through effective monitoring and regulation by the DOLE. Again, the only means for the DOLE to fulfill this duty is when it receives notice of the employer’s intention to implement such arrangements.

• Ensuring that this mechanism enshrined in DOLE Department Advisory No. 2, Series of 2009 is operational is thus paramount and legally sanctioned in light of the State’s constitutional policy to protect labor. We must thus ensure that the necessary consequence of noncompliance with the notice requirement under DOLE Department Advisory No. 2, Series of 2009 shall serve as an effective deterrent against abuse by cunning employers who circumvent our labor standards.

• The mandatory tenor of the above notice requirements notwithstanding, the Court ruled in Agabon v. NLRC that noncompliance therewith does not serve to invalidate the dismissal but only allows the aggrieved employee, whose rights to due process was violated, to claim nominal damages.

• In such a case, the employer’s failure to notify the DOLE prior to the implementation of the flexible work arrangements does not remove the tremendous effect of the national emergency or economic difficulties on the finances and operations of the employer. Thus, the consequences relevant to the situation which, in the first place, necessitated the employment of drastic measures, like reducing the work hours of employees, remain pressing and valid. Consequently, we find no reason why the employer’s adoption of any of the flexible work arrangements under DOLE Department Advisory No. 2, Series of 2009, should not be upheld as lawful so long as the other requisites for its validity are present and proved.

• The employer, however, shall not escape unpunished for its utter disregard of the employee’s right to due process. The employer shall still be held liable, not by invalidating its adoption of a flexible work arrangement, but by being liable to indemnify the employee for the wrong caused through the payment of nominal damages.

• [SC GUIDANCE] Thus, to guide the bench, the bar, and the public, we hold that:

• In cases where flexible work arrangements under DOLE Department Advisory No. 2, Series of 2009 and similar issuances were validly implemented, but the employer failed to give prior notice to the DOLE, the adoption and implementation of the flexible work arrangements shall remain valid but the employer shall be liable for nominal damages in the amount of PHP 100,000.00 for each employee.

1. We find that PHP 100,000.00 is an amount high enough to serve (i) as an effective deterrent against employers from failing to comply with the notice requirement under DOLE Department Advisory No. 2, Series of 2009 and (ii) as sufficient compensation and indemnity to employees who were prejudiced by such non-­compliance.

2. Where, however, noncompliance with the notice requirement under DOLE Department Advisory No. 2, Series of 2009 is attended also by noncompliance with the other requisites for the valid adoption of flexible work arrangement, the adoption and implementation of such flexible work arrangement shall be declared invalid and the affected employees shall receive the proper reliefs corresponding to constructive or illegal dismissal. (Emphasis supplied)

• We now determine whether FMC’s adoption of rotation of workers’ schedule and reduction of work days under DOLE Department Advisory No. 2, Series of 2009 is valid.

• FMC averred that by January 2019, or six months after Company Memo – 81 was issued in July 2018, FMC reinstated the original work schedule of petitioners immediately after the replacement raw materials arrived. Petitioners, notably, did not dispute this claim. There is thus no dispute that the second requisite, i.e., the implementation of the flexible work arrangement is temporary, was complied with.

• We cannot say the same, however, for the first, third, and fourth requisites.

• First, the adoption of the flexible work arrangement must be expressly and voluntarily supported by a majority of the workers affected, such that there was a prior consultation with the employees. The burden to prove compliance with this requirement lies with FMC, the employer. This, FMC failed to discharge.

• Here, the facts merely indicated that FMC management called for a meeting to inform the production supervisors and personnel of the predicament involving FMC’s raw materials and the need to implement a work rotation schedule. Thereafter, Company Memo – 81 was issued, informing the workers of the adoption of flexible work arrangement.

• As SAJ Leonen and Justice Caguioa pointed out, other than this bare allegation of FMC, no proof was presented to show that the affected workers were consulted on the matter of rotation of workers’ schedule or reduction of work days during the said meeting, much less, that majority of them gave their consent to the adoption of such flexible work arrangements. Informing the workers is one thing, securing their consent is another thing.

• Part I of the DOLE Department Advisory No. 2, Series of 2009 requires that the flexible work arrangement be “anchored on [a] voluntary basis and conditions mutually acceptable to both the employer and employees.” More, in Part IV of the said Advisory, employers are required to keep and maintain, as part of their records, the documentary requirements proving that the flexible work arrangement was voluntarily accepted to facilitate the resolution of grievances. No such document, however, can be found in the records to substantiate FMC’s allegations.

• Sans any evidence to prove that a majority of the affected workers in FMC truly assented to the rotation of workers and reduction of work days, we cannot make a finding that the first requisite has been complied with.

• Next, the third requisite or the notice requirement. Albeit the labor tribunals and appellate court differed on the legal consequence of non-­compliance therewith, all are uniform in their finding that FMC failed to adduce any evidence that it sent notice to the DOLE Regional Office regarding its reduction of workdays and rotation of workers. Neither did FMC, in any of its pleadings, proffer any explanation for its noncompliance. What was consistently reiterated was that the same did not render its implementation of the flexible work arrangements illegal.

• Verily, FMC’s failure to notify the relevant DOLE Regional Office of its intention to reduce its worker’s workdays and to rotate their work prior to implementation is also beyond contention.

• Finally, FMC also failed to establish the fourth requisite, i.e., that it was suffering from actual or reasonably imminent economic difficulties or national emergencies and its adoption of flexible work arrangement was done in good faith to cope with such circumstances.

• Whether actual or imminent, FMC did not submit as evidence any relevant reports or documents to substantiate its claim. What it merely adduced were several pleadings—verified complaint, answer, and complaint-affidavit—from the ejectment case and grave coercion case involving its Valenzuela City compound, which was allegedly locked out, causing the lack of raw materials. But these are not proofs. These pleadings do not contain incontestable facts upon which the reduction of workdays can be justified, but mere allegations that still need to be proved during trial.

More, the lack of raw materials does not necessarily mean that FMC was suffering from economic difficulties of such gravity which rendered it incapable of sustaining its normal operations especially since, as the circumstances later on proved, it was able to shortly resolve its dilemma through negotiation and settlement and other remedies were available, such as ordering new supplies of materials, albeit the same were delivered late…

• Thus, while the Court commiserates with FMC, we do not agree that its misfortune sufficiently justified the drastic measure it employed to cope, especially as it was notably quick to put the brunt of the blow upon its workers.

• All told, we find that apart from its noncompliance with the notice requirement under DOLE Department Order No. 2, Series of 2009, FMC also failed to observe the other requisites for the valid adoption of flexible work arrangements, rendering FMC’s implementation of rotation of workers’ schedule and reduction of work days unlawful. Thus, consistent with our guidelines above, we ordain that FMC committed illegal reduction of workdays, which consequently reduced petitioners’ salaries, amounting to constructive dismissal.