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THIRD DIVISION

CAPITOL MEDICAL CENTER,

INC. and DR. THELMA

NAVARETTE-CLEMENTE,

Petitioners,

- versus -

DR. CESAR E. MERIS,

Respondent .

G.R. No. 155098

Present:

PANGANIBAN, Chairman,

SANDOVAL- GUTIERREZ,

CORONA,

CARPIO MORALES, an

GARCIA, JJ .

Pr!"u#$ate:

Sepe!"e# 1$, %005

%% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -%%



D E C I S I O N

CARPIO MORALES, J.&

Su&'e(t !) t*e +resent a++ea# s t*e C!urt !) A++ea#s De(s!n/ ate

0e&ruar1 2, 3443 reversn$ t*e NLRC Res!#ut!n3/ ate 5anuar1 6, 666 an

La&!r Ar&ter De(s!n7/ ate A+r# 38, 668 9*(* &!t* *e# t*at t*e (#!sure !)

t*e Inustra# Serv(e Unt !) t*e

http://sc.judiciary.gov.ph/jurisprudence/2005/sep2005/155098.htm#_ftn1








Ca+t!# Me(a# Center, In(., resu#tn$ t! t*e ter"nat!n !) t*e serv(es !) *eren

res+!nent Dr. Cesar Mers as C*e) t*ere!), 9as va#.

On 5anuar1 , 6;<, +ett!ner Ca+t!# Me(a# Center, In(. =Ca+t!#> *re

Dr. Cesar Mers =Dr. Mers>,</ !ne !) ts st!(?*!#ers,2/ as n (*ar$e !) ts

Inustra# Serv(e Unt =ISU> at a "!nt*#1 sa#ar1 !) P4,3;4.44.

Unt# t*e (#!sure !) t*e ISU !n A+r# 74, 663,/ Dr. Mers +er)!r"e ua#

)un(t!ns !) +r!vn$ "e(a# serv(es t! Ca+t!#@s "!re t*an 244 e"+#!1ees an

*ea#t* 9!r?ers as 9e## as t! e"+#!1ees an 9!r?ers !) (!"+anes *avn$ retaner

(!ntra(ts 9t* t.;/

On Mar(* 7, 663, Dr. Mers re(eve )r!" Ca+t!#@s +resent an

(*ar"an !) t*e &!ar, Dr. T*e#"a Navarette-C#e"ente =Dr. C#e"ente>, a n!t(e

avsn$ *" !) t*e "ana$e"ent@s e(s!n t! (#!se !r a&!#s* t*e ISU an t*e

(!nseuent ter"nat!n !) *s serv(es as C*e) t*ere!), e))e(tve A+r# 74, 663.

8/ T*e n!t(e reas as )!##!9s:













Mar(* 7, 663

Dr. Cesar E. Mers

C*e), Inustra# Serv(e Unt

Ca+t!# Me(a# Center

Dear Dr. Mers:

Greetn$s

P#ease &e )!r"a##1 avse t*at t*e *!s+ta# "ana$e"ent *as e(e t! a"o'()*

CMC+) Ind)#(a' Se#(e /n( a) o Ap#(' 0, 199% (n (e2 o *e a'!o)

e3(n de!and o# d(#e !ed(a' )e#(e) "4 *e p#(ae and )e!(-oe#n!en o#po#a(on) (n p#o(d(n *ea'* a#e o# *e(# e!p'o4ee). S*

a de()(on 2a) a##(ed a, ae# on)(de#(n *e e3()(n #end o (nd)#(a'

o!pan(e) a''oa(n *e(# *ea'* a#e #e6(#e!en) o Hea'* Ma(nenane

O#an(7a(on) HMO) o# *# a #(pa#(e a##ane!en 2(* !ed(a'

(n)#ane a##(e#) and de)(naed *o)p(a').

As a (!nseuen(e t*ere!), a## +!st!ns n t*e unt 9## &e e(!""ss!ne at t*e

sa"e t"e nustra# serv(es are/ ea(tvate. In t*at event, 4o )*a'' "e

en('ed o #e#n o 4o# p#(ae p#a(e a) a on)'an )a o *e

(n)((on and 2('' "eo!e e'(("'e o #ee(e 4o# #e(#e!en "ene() a) a

o#!e# *o)p(a' e!p'o4ee. Mss 5ane Te#an !n t*e !t*er *an 9## &e trans)erre &a(? t! Nursn$ Serv(e )!r reass$n"ent at t*e CSR.

e 9s* t! t*an? 1!u )!r 1!ur #!n$ an )at*)u# serv(e t! t*e nsttut!n an *!+e

t*at !ur +artners*+ n *ea#t* (are e#ver1 t! !ur +e!+#e 9## (!ntnue t*r!u$*!utt*e )uture. Best re$ars.

Ver1 tru#1 1!urs,

=SGD.> DR. TELMA NAVARETTE-CLEMENTE6/ =E"+*ass an

uners(!rn$ su++#e>

Dr. Mers, !u&tn$ t*e reas!n &e*n t*e "ana$e"ent@s e(s!n t! (#!se

t*e ISU an &e#evn$ t*at t*e ISU 9as n!t n )a(t a&!#s*e as t (!ntnue t!





!+erate an !))er serv(es t! t*e (#ent (!"+anes 9t* Dr. C#e"ente as ts *ea

an t*e n!t(e !) (#!sure 9as a "ere +#!1 )!r *s !uster n ve9 !) *s re)usa# t!

retre es+te Dr. C#e"ente@s +rev!us +r!n$ )!r *" t! ! s!,4/ s!u$*t *s

renstate"ent &ut t 9as un*eee.

Dr. Mers t*us )#e !n Se+te"&er ;, 663 a (!"+#ant a$anst Ca+t!# an

Dr. C#e"ente )!r ##e$a# s"ssa# an renstate"ent 9t* (#a"s )!r &a(?9a$es,

"!ra# an e%e"+#ar1 a"a$es, +#us att!rne1@s )ees./

0nn$ )!r Ca+t!# an Dr. C#e"ente, t*e La&!r Ar&ter *e# t*at t*e

a&!#t!n !) t*e ISU 9as a va# an #a9)u# e%er(se !) "ana$e"ent +rer!$atves

an t*ere 9as (!nvn(n$ even(e t! s*!9 t*at ISU 9as &en$ !+erate at a #!ss.

3/ T*e e(reta# te%t !) t*e e(s!n reas:

ERE0ORE, 'u$"ent s *ere&1 renere s"ssn$ t*e (!"+#ant.

Res+!nents are *!9ever !rere t! +a1 (!"+#anant a## su"s ue *" uner t*e

*o)p(a' #e(#e!en p'an.

SO ORDERED.7/ =E"+*ass su++#e>

On a++ea# &1 Dr. Mers, t*e Nat!na# La&!r Re#at!ns C!""ss!n =NLRC>

"!)e t*e La&!r Ar&ter@s e(s!n. It *e# t*at n t*e e%er(se !) Ca+t!#@s

"ana$e"ent +rer!$atves, t *a t*e r$*t t! (#!se t*e ISU even ) t 9as n!t











su))ern$ &usness #!sses n #$*t !) Art(#e 387 !) t*e La&!r C!e an

'urs+ruen(e.</

An t*e NLRC set ase t*e La&!r Ar&ter@s re(tve )!r t*e +a1"ent !)

retre"ent &ene)ts t! Dr. Mers &e(ause *e n!t retre. Instea, t !rere t*e

+a1"ent !) se+arat!n +a1 as +r!ve uner Art(#e 387 as *e 9as s(*ar$e ue

t! (#!sure !) ISU, t! &e (*ar$e a$anst t*e retre"ent )un.2/

Unaunte, Dr. Mers e#evate t*e (ase t! t*e C!urt !) A++ea#s va +ett!n

)!r reve9/ 9*(*, n t*e nterest !) su&stanta# 'ust(e, 9as treate as !ne )!r

(ert!rar.;/

Ds(retn$ Ca+t!#@s assert!n t*at t*e ISU 9as !+eratn$ at a #!ss as t*eeven(e s*!9e a (!ntnu!us tren !) n(rease n ts revenue )!r t*ree 1ears

""eate#1 +re(en$ Dr. Mers@s s"ssa# !n A+r# 74, 663,8/ an )nn$

t*at t*e ISU@s Ana#1ss !) In(!"e an E%+ensesF 9*(* 9as +re+are #!n$ a)ter

Dr. Mers@s s"ssa#, *en(e, n!t 1et ava#a&#e, !n !r &e)!re A+r# 663, 9as tante

9t* rre$u#ar entres, t*e a++e##ate (!urt *e# t*at Ca+t!#@s even(e )a#e t! "eet

t*e stanar !) a su))(ent an aeuate +r!!) !) #!ss ne(essar1 t! 'ust)1 t*e

a&!#t!n !) t*e ISU.6/















T*e a++e##ate (!urt 9ent !n t! *!# t*at t*e ISU 9as n!t n )a(t a&!#s*e, ts

!+erat!n an "ana$e"ent *avn$ "ere#1 (*an$e *ans )r!" Dr. Mers t! Dr.

C#e"ente an t*at t*ere 9as a +r!(eura# #a+se n ter"natn$ t*e serv(es !) Dr.

Mers, n! 9rtten n!t(e t! t*e De+art"ent !) La&!r an E"+#!1"ent =DOLE> !)

t*e ISU a&!#t!n *avn$ &een "ae, t*ere&1 v!#atn$ t*e reure"ent e"&!e

n Art(#e 387.34/

T*e a++e##ate (!urt, (!n(#un$ t*at Ca+t!# )a#e t! str(t#1 (!"+#1 9t*

&!t* +r!(eura# an su&stantve ue +r!(ess, a (!nt!n sine qua non )!r t*eva#t1 !) a (ase !) ter"nat!n,3/ *e# t*at Dr. Mers 9as ##e$a##1 s"sse. It

a((!rn$#1 reverse t*e NLRC Res!#ut!n an s+!se as )!##!9s:

IN VIE O0 ALL TE 0OREGOING, t*e assa#e res!#ut!ns !) t*e

NLRC are *ere&1 set ase, an an!t*er !ne entere H

H e(#arn$ ##e$a# t*e s"ssa# !) +ett!ner as C*e) !) t*e Inustra# Serv(e

Unt !) res+!nent Me(a# Center

3 H !rern$ res+!nents t! +a1 +ett!ner

a> &a(?9a$es )r!" t*e ate !) *s se+arat!n n A+r# 663 unt# t*se(s!n *as attane )na#t1

&> se+arat!n +a1 n #eu !) renstate"ent (!"+ute at t*e rate !)!ne => "!nt* sa#ar1 )!r ever1 1ear !) serv(e 9t* a )ra(t!n !) at #east s% =>

"!nt*s &en$ (!nsere as !ne 1ear

(> !t*er &ene)ts ue *" !r t*er "!ne1 euva#ent

> "!ra# a"a$es n t*e su" !) P24,444.44

e> e%e"+#ar1 a"a$es n t*e su" !) P24,444.44 an







)> att!rne1@s )ees !) 4 !) t*e t!ta# "!netar1 a9ar +a1a&#e t! +ett!ner.

SO ORDERED.33/

en(e, t*e +resent +ett!n )!r reve9 ass$nn$ t! t*e a++e##ate (!urt t*e

)!##!9n$ err!rs:

I

. . . IN OVERTURNING TE 0ACTUAL 0INDINGS AND CONCLUSIONS O0

BOT TE NATIONAL LABOR RELATIONS COMMISSION =NLRC> ANDTE LABOR ARBITER.

II

. . . IN OLDING, CONTRARJ TO TE 0INDINGS O0 BOT TE LABOR

ARBITER AND TE NATIONAL LABOR RELATIONS COMMISSION,TAT TE INDUSTRIAL UNIT =ISU> AS NOT INCURRING LOSSES AND

TAT IT AS NOT IN 0ACT ABOLISED.

III

. . . IN NOT UPOLDING PETITIONERS@ MANAGEMENT PREROGATIVE

TO ABOLIS TE INDUSTRIAL SERVICE UNIT =ISU>.

IV

. . . IN REKUIRING PETITIONERS TO PAJ RESPONDENT BACAGES

AS ELL AS DAMAGES AND ATTORNEJ@S 0EES.37/

Ca+t!# uest!ns t*e a++e##ate (!urt@s e(n$ !) t*e +ett!n !) Dr. Mers

!n t*e "erts, nstea !) "ere#1 eter"nn$ 9*et*er t*e a"nstratve &!es

a(te 9t* $rave a&use !) s(ret!n a"!untn$ t! #a(? !r e%(ess !) 'urs(t!n.







T*e +r!vn(e !) a s+e(a# (v# a(t!n )!r (ert!rar uner Ru#e 2, n! !u&t

t*e a++r!+rate "!e !) reve9 &1 t*e C!urt !) A++ea#s !) t*e NLRC e(s!n,3</

s #"te !n#1 t! (!rre(t err!rs !) 'urs(t!n !r $rave a&use !) s(ret!n

a"!untn$ t! #a(? !r e%(ess !) 'urs(t!n.32/ In #$*t !) t*e "erts !) Dr. Mers@

(#a", *!9ever, t*e re#a%at!n &1 t*e a++e##ate (!urt !) +r!(eura# te(*n(a#t1 t!

$ve 9a1 t! a su&stantve eter"nat!n !) a (ase, as t*s C!urt *as *e# n severa#

(ases,3/ t! su&serve t*e nterest !) 'ust(e, s n !rer.

Ca+t!# ar$ues t*at t*e )a(tua# )nn$s !) t*e NLRC, +art(u#ar#1 9*en t*e1

(!n(e 9t* t*!se !) t*e La&!r Ar&ter, as n t*e +resent (ase, s*!u# &e a((!re

res+e(t, even )na#t1.3;/

0!r )a(tua# )nn$s !) t*e NLRC 9*(* a))r" t*!se !) t*e La&!r Ar&ter t!

&e a((!re res+e(t, ) n!t )na#t1, *!9ever, t*e sa"e "ust &e su))(ent#1

su++!rte &1 even(e !n re(!r.38/ *ere t*ere s a s*!9n$ t*at su(* )nn$s

are ev! !) su++!rt, !r t*at t*e 'u$"ent s &ase !n a "sa++re*ens!n !) )a(ts,

36/ t*e #!9er tr&una#s@ )a(tua# )nn$s 9## n!t &e u+*e#.

As 9## &e re)#e(te n t*e )!##!9n$ s(uss!ns, t*s C!urt )ns t*at t*e

La&!r Ar&ter an t*e NLRC !ver#!!?e s!"e "atera# )a(ts e(sve !) t*e nstant

(!ntr!vers1.















Ca+t!# )urt*er ar$ues t*at t*e a++e##ate (!urt@s (!n(#us!n t*at t*e ISU 9as

n!t n(urrn$ #!sses s ar&trar1 as t 9as &ase s!#e#1 !n t*e su++!se n(rease n

revenues !) t*e unt )r!" 686-66, 9t*!ut ta?n$ nt! a((!unt t*e Ana#1ss !)

In(!"e an E%+ensesF !) ISU )r!" 5u#1 , 664 t! 5u#1 , 66 9*(* s*!9s t*at

t*e unt !+erate at a #!ss74/ an t*at t*e e"an )!r t*e serv(es !) ISU &e(a"e

a#"!st e%tn(t n ve9 !) t*e a))#at!n !) nustra# esta&#s*"ents 9t* MOs

su(* as 0!rtune(are, Ma%(are, ea#t* Mantenan(e, In(. an P*#a"(are an !)

tr+artte arran$e"ents 9t* "e(a# nsuran(e (arrers an es$nate *!s+ta#s,

7/ an t*e tren resu#te n #!sses n t*e !+erat!n !) t*e ISU.

Beses, Ca+t!# stresses, t*e *ea#t* (are nees !) t*e *!s+ta# e"+#!1ees

*a &een ta?en !ver &1 !t*er unts 9t*!ut ae e%+ense t! t73/ t*e a++e##ate

(!urt@s e(s!n s at &est an unue nter)eren(e 9t*, an (urta#"ent !), t*e

e%er(se &1 an e"+#!1er !) ts "ana$e"ent +rer!$atves77/ at t*e t"e !) t*e

(#!sure !) t*e ISU, Dr. Mers 9as a#rea1 e#$&#e )!r retre"ent uner t*e

Ca+t!#@s retre"ent +#an an t*e a++e##ate (!urt averte t! t*e a##e$e #a(? !)

n!t(e t! t*e DOLE re$arn$ Dr. Mers@s s"ssa# &ut t*e #atter never rase su(*

ssue n *s a++ea# t! t*e NLRC !r even n *s +ett!n )!r reve9 &e)!re t*e C!urt

!) A++ea#s, *en(e, t*e #atter n!t *ave aut*!rt1 t! +ass !n t*e "atter.7</

!r? s a ne(esst1 t*at *as e(!n!"( s$n)(an(e eservn$ #e$a#

+r!te(t!n. T*e s!(a# 'ust(e an +r!te(t!n t! #a&!r +r!vs!ns n t*e C!nsttut!n

(tate s!.













E"+#!1ers are a#s! a((!re r$*ts an +rv#e$es t! assure t*er se#)-

eter"nat!n an ne+enen(e an reas!na&#e return !) (a+ta#. T*s "ass !)

+rv#e$es (!"+rses t*e s!-(a##e "ana$e"ent +rer!$atves. A#t*!u$* t*e1 "a1

&e &r!a an un#"te n s(!+e, t*e State *as t*e r$*t t! eter"ne 9*et*er an

e"+#!1er@s +rv#e$e s e%er(se n a "anner t*at (!"+#es 9t* t*e #e$a#

reure"ents an !es n!t !))en t*e +r!te(te r$*ts !) #a&!r. One !) t*e r$*ts

a((!re an e"+#!1er s t*e r$*t t! (#!se an esta&#s*"ent !r unerta?n$.

T*e r$*t t! (#!se t*e !+erat!n !) an esta&#s*"ent !r unerta?n$ s

e%+#(t#1 re(!$ne uner t*e La&!r C!e as !ne !) t*e aut*!re (auses n

ter"natn$ e"+#!1"ent !) 9!r?ers, t*e !n#1 #"tat!n &en$ t*at the closure must

not be for the purpose of circumventing the provisions on termination of

employment embodied in the Labor Code.

ART. 387. Closure of establishment and reduction of personnel . H T*e

e"+#!1er "a1 a#s! ter"nate t*e e"+#!1"ent !) an1 e"+#!1ee ue t! t*e

nsta##at!n !) #a&!r savn$ ev(es, reunan(1, retren(*"ent t! +revent #!sses !r

*e 'o)(n o# e))a(on o ope#a(on o *e e)a"'()*!en o# nde#a:(n



n'e)) *e 'o)(n () o# *e p#po)e o (#!en(n *e p#o()(on) o *()

T('e, &1 servn$ a 9rtten n!t(e !n t*e 9!r?ers an t*e Mnstr1 !) La&!r an

E"+#!1"ent at #east !ne => "!nt* &e)!re t*e ntene ate t*ere!). In (ase !) ter"nat!n ue t! t*e nsta##at!n !) #a&!r savn$ ev(es !r reunan(1, t*e

9!r?er a))e(te s*a## &e entt#e t! a se+arat!n +a1 euva#ent t! at #east *s !ne

=> "!nt* +a1 !r t! at #east !ne => "!nt* +a1 )!r ever1 1ear !) serv(e,9*(*ever s *$*er. In (ase retren(*"ent t! +revent #!sses an n (ases !)

(#!sures !r (essat!n !)



!+erat!ns !) esta&#s*"ent !r unerta?n$ n!t ue t! ser!us &usness #!sses !r

)nan(a# reverses, t*e se+arat!n +a1 s*a## &e euva#ent t! !ne => "!nt* +a1 !r

at #east !ne-*a#) =3> "!nt* +a1 )!r ever1 1ear !) serv(e, 9*(*ever s *$*er. A)ra(t!n !) at #east s% => "!nt*s s*a## &e (!nsere !ne => 9*!#e 1ear.

=E"+*ass an uners(!rn$ su++#e>

T*e +*rase (#!sures !r (essat!n !) !+erat!ns !) esta&#s*"ent !r

unerta?n$F n(#ues a +arta# !r t!ta# (#!sure !r (essat!n.72/

% % % Ornar#1, t*e (#!sn$ !) a 9are*!use )a(#t1 an t*e ter"nat!n !) t*e

serv(es !) e"+#!1ees t*ere ass$ne s a "atter t*at s #e)t t! t*e eter"nat!n !) t*e e"+#!1er n t*e $!! )at* e%er(se !) ts "ana$e"ent +rer!$atves. T*e

a++#(a&#e #a9 n su(* a (ase s Art(#e 387 !) t*e La&!r C!e 9*(* +er"ts

(#!sure !r (essat!n !) !+erat!n !) an esta&#s*"ent !r unerta?n$ n!t ue t!ser!us &usness #!sses !r )nan(a# reverses,@ 9*(*, n !ur rean$ n(#ues "o*

*e o!p'ee e))a(on o ope#a(on) and *e e))a(on o on'4 pa# o a

o!pan4+) ")(ne)). =E"+*ass su++#e>

An t*e +*rase (#!sures !r (essat!n % % % n!t ue t! ser!us &usness #!sses

!r )nan(a# reversesF re(!$nes t*e r$*t !) t*e e"+#!1er t! (#!se !r (ease *s

&usness !+erat!ns !r unerta?n$ even ) *e s n!t su))ern$ )r!" ser!us &usness

#!sses !r )nan(a# reverses, as #!n$ as *e +a1s *s e"+#!1ees t*er ter"nat!n +a1

n t*e a"!unt (!rres+!nn$ t! t*er #en$t* !) serv(e.7/







It 9!u# nee &e stret(*n$ t*e ntent an s+rt !) t*e #a9 ) a (!urt 9ere

t! un'ust#1 nter)ere n "ana$e"ent@s +rer!$atve t! (#!se !r (ease ts &usness

!+erat!ns 'ust &e(ause sa &usness !+erat!n !r unerta?n$ s n!t su))ern$ )r!"

an1 #!ss.7;/ As #!n$ as t*e (!"+an1@s e%er(se !) t*e sa"e s (n ood a(* o

adane () (ne#e) and no o# *e p#po)e o deea(n o# (#!en(n *e

#(*) o e!p'o4ee) nde# *e 'a2 o# a a'(d a#ee!en, su(* e%er(se 9## &e

u+*e#.78/

C#ear#1 t*en, t*e r$*t t! (#!se an esta&#s*"ent !r unerta?n$ "a1 &e

'ust)e on grounds other than business losses &ut t (ann!t &e an un&r#e

+rer!$atve t! sut t*e 9*"s !) t*e e"+#!1er.

T*e u#t"ate test !) t*e va#t1 !) (#!sure !r (essat!n !) esta&#s*"ent !r

unerta?n$ s t*at t "ust &e bona fide n (*ara(ter.76/ An t*e &uren !) +r!vn$

su(* )a##s u+!n t*e e"+#!1er .<4/

In t*e (ase at &ar, Ca+t!# )a#e t! su))(ent#1 +r!ve ts $!! )at* n (#!sn$

t*e ISU.












0r!" t*e #etter !) Dr. C#e"ente t! Dr. Mers, t s $at*ere t*at t*e a&!#t!n

!) t*e ISU 9as ue t! t*e a#"!st e%tn(t e"an )!r



re(t "e(a# serv(e &1 t*e +rvate an se"-$!vern"ent (!r+!rat!ns n

+r!vn$ *ea#t* (are )!r t*er e"+#!1eesF an t*at su(* e%tn(t e"an 9as

&r!u$*t a&!ut &1 t*e e%stn$ tren !) nustra# (!"+anes a##!(atn$ t*er *ea#t*

(are reure"ents t! ea#t* Mantenan(e Or$anat!ns =MOs> !r t*ru a tr+artte

arran$e"ent 9t* "e(a# nsuran(e (arrers an es$nate *!s+ta#s.F

T*e re(!rs !) t*e (ase, *!9ever, )a# t! "+ress t*at t*ere 9as nee

e%tn(t e"an )!r t*e "e(a# serv(es renere &1 t*e ISU. T*e ISU@s Annua#

Re+!rt )!r t*e )s(a# 1ears 68 t! 66, su&"tte &1 Dr. Mers t! Dr. C#e"ente,

an non#oe#ed &1 Ca+t!#, s*!9s t*e )!##!9n$:

0s(a# Jear N!. !) Inustra# N! !) N!. !) Ca+t!#

Patents C!"+anes E"+#!1ees

68-68; < <<2

68;-688 284 ; ;4;

688-686 ; < 888

686-664 2; 3;7

664-66 ;26 8 3734</

I) t*ere 9as e%tn(t e"an )!r t*e ISU "e(a# serv(es as 9*at Ca+t!# an

Dr. C#e"ente +ur+!rt t! (!nve1, 9*1 t*e nu"&er !) (#ent (!"+anes !) t*e ISU





n(rease )r!" t! 8 )r!" 68 t! 66, as 9e## as t*e nu"&er !) +atents )r!"

&!t* nustra# (!r+!rat!ns an Ca+t!# e"+#!1ees, t*e1 n!t e%+#an.



T*e Ana#1ss !) In(!"e an E%+ensesF au(e &1 Ca+t!# s*!9n$ t*at t*e

ISU n(urre #!sses )r!" 5u#1 664 t! 0e&ruar1 663, t! 9t:

5u#1 , 664 t! 5u#1 , 66 t!

5une 74, 66 0e&ruar1 36, 663

INCOME P, ;;3.44 P72, 37.44

TOTAL EPENSES P332, 287.;4 P6,3<<.7<

NET LOSS P=348,8.;4> P=7<,448.7<>,<3/

9as +re+are &1 ts nterna# aut!r V(enta 0ernane,<7/ a re#atve !) Dr.

C#e"ente, an n!t &1 an ne+enent e%terna# aut!r, *en(e, n!t &e1!n !u&t. Its t*e )nan(a# state"ents aute &1 ne+enent e%terna# aut!rs 9*(*

(!nsttute t*e n!r"a# "et*! !) +r!!) !) t*e +r!)t an #!ss +er)!r"an(e !) a

(!"+an1.<</

At a## events, t*e (#a"e #!sses are (!ntra(te &1 t*e a((!untn$ re(!rs

!) Ca+t!# tse#) 9*(* s*!9 t*at ISU *a n(reasn$ revenue )r!" 686 t! 66.

Jear In-Patent Out-Patent T!ta# In(!"e









686 P374,7.78 P ;6,<;;.24 P746,;67.88

664 P3;8,<78.4 P3<,32.2 P<43,6<.;2

66 P742,3.72 P23,634.2 P<28,4<.24<2/

T*e )!re$!n$ sust!n n!t9t*stann$, as re)#e(te a&!ve, t*e e%sten(e

!) &usness #!sses s n!t reure t! 'ust)1 t*e (#!sure !r (essat!n !) esta&#s*"ent

!r unerta?n$ as a $r!un t! ter"nate e"+#!1"ent !) e"+#!1ees. Even ) t*e ISU

9ere n!t n(urrn$ #!sses, ts a&!#t!n !r (#!sure (!u# &e 'ust)e !n !t*er

$r!uns #?e t*at +r!))ere &1 Ca+t!# H e%tn(t e"an. Ca+t!# )a#e, *!9ever,

t! +resent su))(ent an (!nvn(n$ even(e t! su++!rt su(* (#a" !) e%tn(t

e"an. In )a(t, t*e e"+#!1ees !) Ca+t!# su&"tte a +ett!n</ ate A+r# 3,

663 aresse t! Dr. C#e"ente !++!sn$ t*e a&!#t!n !) t*e ISU.

T*e (#!sure !) ISU t*en sur)a(es t! &e (!ntrar1 t! t*e +r!vs!ns !) t*e

La&!r C!e !n ter"nat!n !) e"+#!1"ent.

T*e ter"nat!n !) t*e serv(es !) Dr. Mers n!t *avn$ &een +re"se !n a

'ust !r aut*!re (ause, *e s entt#e t! et*er renstate"ent !r se+arat!n +a1 )

renstate"ent s n! #!n$er va&#e, an t! &a(?9a$es.







Renstate"ent, *!9ever, s n!t )eas&#e n (ase !) a strane e"+#!1er-

e"+#!1ee re#at!ns*+ !r 9*en t*e 9!r? !r +!st!n )!r"er#1 *e# &1 t*e s"sse

e"+#!1ee n! #!n$er e%sts, as n t*e nstant (ase.<;/ Dr. Mers s t*us entt#e t!

+a1"ent !) se+arat!n +a1 at t*e rate !) !ne => "!nt* sa#ar1 )!r ever1 1ear !) *s

e"+#!1"ent, 9t* a )ra(t!n !) at #east s% => "!nt*s &en$ (!nsere as !ne=>

1ear,<8/ an )u## &a(?9a$es )r!" t*e t"e !) *s s"ssa# )r!" A+r# 74, 663

unt# t*e e%+rat!n !) *s ter" as C*e) !) ISU !r *s "anat!r1 retre"ent,

9*(*ever (!"es )rst.

T*e a9ar &1 t*e a++e##ate (!urt !) "!ra# a"a$es, <6/ *!9ever, (ann!t &e

sustane, s!#e#1 u+!n t*e +re"se t*at t*e e"+#!1er )re *s e"+#!1ee 9t*!ut

'ust (ause !r ue +r!(ess. At!na# )a(ts "ust &e +#eae an +r!ven t! 9arrant

t*e $rant !) "!ra# a"a$es uner t*e Cv# C!e, su(* as t*at t*e a(t !) s"ssa#

9as attene &1 &a )at* !r )rau, !r 9as !++ressve t! #a&!r, !r !ne n a "anner

(!ntrar1 t! "!ra#s, $!! (ust!"s, !r +u&#( +!#(1 an !) (!urse, t*at s!(a#

*u"#at!n, 9!une )ee#n$s, $rave an%et1, et(., resu#te t*ere)r!".24/ Su(*

(r(u"stan(es, *!9ever, ! n!t !&tan n t*e nstant (ase. M!re s+e()(a##1 !n &a

)at*, #a(? !) t s "rr!re n Dr. C#e"ente@s !))er t! Dr. Mers t! &e a (!nsu#tant

!) Ca+t!#, es+te t*e a&!#t!n !) t*e ISU.

T*ere &en$ n! "!ra# a"a$es, t*e a9ar !) e%e"+#ar1 a"a$es !es n!t

#e.2/

T*e a9ar )!r att!rne1@s )ees, *!9ever, re"ans.23/















;HERE<ORE, t*e e(s!n !) t*e C!urt !) A++ea#s ate 0e&ruar1 2,

3443 s *ere&1 A<<IRMED 9t* MODI<ICATION. As "!)e, 'u$"ent s

*ere&1 renere !rern$ Ca+t!# Me(a# Center, In(. t! +a1 Dr. Cesar Mers

se+arat!n +a1 at t*e rate !) One => M!nt* sa#ar1 )!r ever1 1ear !) *s

e"+#!1"ent, 9t* a )ra(t!n !) at #east S% => M!nt*s &en$ (!nsere as One =>

Jear, )u## &a(?9a$es )r!" t*e t"e !) *s s"ssa# )r!" A+r# 74, 663 unt# t*e

e%+rat!n !) *s ter" as C*e) !) t*e ISU !r *s "anat!r1 retre"ent, 9*(*ever

(!"es )rst !t*er &ene)ts ue *" !r t*er "!ne1 euva#ent an att!rne1@s )ees.

C!sts a$anst +ett!ners.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

E CONCUR:



ARTEMIO V. PANGANI=AN

Associate Justice

Chairman

ANGELINA SANDOVAL-G/TIERRE>

Associate Justice

RENATO C. CORONA

Associate Justice

CANCIO C. GARCIA

Associate Justice



ATTESTATION

I attest t*at t*e (!n(#us!ns n t*e a&!ve De(s!n 9ere rea(*e n

(!nsu#tat!n &e)!re t*e (ase 9as ass$ne t! t*e 9rter !) t*e !+n!n !) t*e C!urt@s

Dvs!n.

ARTEMIO V. PANGANI=AN

Associate Justice

Chairman



CERTI<ICATION

Pursuant t! Art(#e VIII, Se(t!n 7 !) t*e C!nsttut!n, an t*e Dvs!n

C*ar"an@s Attestat!n, t s *ere&1 (ert)e t*at t*e (!n(#us!ns n t*e a&!ve

De(s!n 9ere rea(*e n (!nsu#tat!n &e)!re t*e (ase 9as ass$ne t! t*e 9rter !)

t*e !+n!n !) t*e C!urt.

HILARIO G. DAVIDE, ?R.

Chief Justice

/ Rollo at 32-73.

3/ Id. at 23-2.

7/ Id. at ;4-;<.

http://sc.judiciary.gov.ph/jurisprudence/2005/sep2005/155098.htm#_ftnref1








</ Dr. Mers s a !(t!r !) "e(ne an a trane s+e(a#st 9*! earne *s !(t!ra# e$ree at t*e Unverst1 !)

t*e P*#++nes, Man#a. e a#s! unert!!? +!st-$rauate stues n t*e Unte States. U+!n (!"+#et!n !) *s

stues a&r!a, *e uner9ent sur$(a# resen(1 )!r t9! =3> 1ears )r!" 6;4 t! 6;3 at +ett!ner *!s+ta#.

T*erea)ter, *e en$a$e n +rvate "e(a# +ra(t(e )!r !ne => 1ear.

2/ Rollo. at 3.

/ Ibid .

;/ Id. at 7;.

8/ Id. at 3.

6/ Re(!rs at .

4/ Rollo at 3;.

/ Re(!rs at 3.

3/ Rollo at ;3.

7/ Id. at ;<.

</ Id. at 4-.

2/ Id. at 7-<. See a#s! Rollo at 84.

/ Id . at 72.

;/ Id. at 38.

8/ Id. at 36.

6/ Id. at 74.

34/ Ibid .

3/ Id. at 7.

33/ Id. at 7-73.

37/ Id. at 2-6.

3</ t. !artin "uneral #ome v. $LRC, 362 SCRA <6<, 24;-248 =668>.

32/ Land %an& of the Philippines v. Court of Appeals, <46 SCRA <22, <83 =3447>.
















































3/ 'ide( )!C* Ply+ood Corporation v. Abelgas, <3; SCRA <6, 22-2 =344<> See a#s!

)l oro ecurity Agency, Inc. v. $LRC, 32 SCRA 77, 7-7; =66> !e-ares v. Reyes,

32< SCRA <32, <7 =66> olicitor eneral v. !etropolitan !anila Authority, 34< SCRA87;, 8<3 =66> Patricio v. Leviste, ;3 SCRA ;;<, ;;6-;84 =686>.

3;/ Rollo at 2.

38/ 'ide( $/0 International 0nit+ear Corporation Philippines v. $LRC , 76; SCRA 4;, 2-

=3447> Philippine Airlines v. Pascua, <46 SCRA 62, 34< =3447>.

36/ )!C* Ply+ood Corporation v. Abelgas, supra.

74/ Rollo at -;.

7/ Su(* as 0!rtune(are, Ma%(are, ea#t* Mantenan(e, In(. an P*#a"(are.

73/ Rollo at ;.

77/ Id. at 8.

7</ Id. at 6.

72/ Philippine obacco "lue1Curing and Redrying Corporation v. $ational Labor RelationsCommission, 744 SCRA 7;, 22 =668> (tn$ Coca1Cola %ottlers 2Phils.3, Inc. v. $LRC, 6<

SCRA 263, 266 =66>.

7/ Catatista v. $ational Labor Relations Commission, 3<; SCRA <, 2< =662>. See a#s!

Industrial imber Corporation v. $ational Labor Relations Commission, 3;7 SCRA 344, 34=66;> J.A.. eneral ervices v. $ational Labor Relations Commission, <3 SCRA ;8, 88

=344<>.

7;/ Industrial imber Corporation v. $ational Labor Relations Commission, supra.

78/ J.A.. eneral ervices v. $ational Labor Relations Commission supra at 86.

76/ 'ide( !ac Adams !etal )ngineering 4or&ers 5nion1Independent v. !ac Adams !etal )ngineering. << SCRA <, < =3447> Catatista v. $LRC , supra at 2 Industrial imber

Corporation v. $LRC 26th 7ivision3, supra at 34.

<4/ J.A.. eneral ervices v. $ational Labor Relations Commission, supra at 8; Industrial

imber Corporation v. $LRC 26 th 7ivision3, supra at 34.

</ Records at 34. See a#s! at 7<-<8.

<3/ Id. at 63 E%*&t 7-A.





































T*e re(!rs, *!9ever, revea# t*at t*e )!re$!n$ n(!"e, as uns+ute &1 Ca+t!#, (a"e e%(#usve#1 )r!"

(!nsu#tat!n )ees. Dr. Mers asserts t*at t*e ISU +r!ve )ree (!nsu#tat!n an treat"ent t! e"+#!1ees an

9!r?ers !) Ca+t!# 9*#e nustra# +atents 9ere (*ar$e ver1 #!9 t! attra(t "!re nustra# (!"+anes, t*us

t*e #!9 n(!"e. T*e state n(!"e s n!t n(#usve !) +atent@s ava#"ent !) "e(a# )a(#tes !) t*e *!s+ta# asre)erre &1 Dr. Mers.

<7/ Rollo at <7.

<</ 7ela alle 5niversity v. 7ela alle 5niversity )mployees Association, 774 SCRA 77,

787 =3444> (tn$ aballa v. $LRC, 34 SCRA 6;, ;46 =66> Revidad v. $LRC , 3<2SCRA 72, 7; =662>.

<2/ Records at 84-87. T*e (!ns!#ate n(!"e n(#ues t*!se erve )r!" (!nsu#tat!n )ees

an re)erra#s "ae &1 Dr. Mers )!r -ra1 e%a"nat!n, #a&!rat!r1, u#tras!un an !t*er

)a(#tes ava#a&#e at t*e *!s+ta#. S!"e +atents 9ere re)erre )!r *!s+ta#at!n 9*#e!t*ers 9ere sent t! !t*er "e(a# s+e(a#sts. See Re+#1 !) Res+!nents at Re(!rs ;.

</ Id. at 2;;.

<;/ %ongar v. $LRC, 36< SCRA 27, 2<4-2< =668>.

<8/ Caliguia v. $LRC , 3< SCRA 4, 3< =66>.

<6/ Art(#e 3334. ##)u# n'ur1 t! +r!+ert1 "a1 &e a #e$a# $r!un )!r a9arn$ "!ra#a"a$es ) t*e (!urt s*!u# )n t*at, uner t*e (r(u"stan(es, su(* a"a$es are 'ust#1 ue.

T*e sa"e ru#e a++#es t! &rea(*es !) (!ntra(t 9*ere t*e e)enant a(te )rauu#ent#1 !r n

&a )at*.

24/ Cocoland 7evelopment Corporation v. $LRC , 326 SCRA 2, 7 =66> (tn$ Primero v. Intermediate Appellate Court , 2 SCRA <72, <<< =68;>.

2/ T*ere s n! su))(ent an (!nvn(n$ even(e t*at Ca+t!# a(te n a 9ant!n, )rauu#ent,

re(?#ess, !++ressve, !r "a#ev!#ent "anner n ter"natn$ t*e e"+#!1"ent !) Dr. Mers. See

Art(#e 3373 !) t*e Ne9 Cv# C!e.

23/ Austria v. $LRC , 74 SCRA 367, 74< =666>.





















Documents

1. capitol med v. meris.doc