FACTS:

Madeline Montecillo and Liza Trinidad were employed as goldsmiths by Niña Jewelry Manufacturing of Metal Arts, Inc. On August 13, 2004, Niña Jewelry implemented a policy requiring goldsmiths to post cash deposits or sign authorizations allowing deductions from their salaries in case of loss or damage to the gold entrusted to them. The respondents claimed that they were constructively dismissed for refusing to comply with the policy. On August 14, 2004, the respondents did not report for work and on September 7, 2004, they filed complaints for illegal dismissal and separation pay against Niña Jewelry, seeking reinstatement and backwages. The Labor Arbiter dismissed the complaints but ordered Niña Jewelry to pay the respondents their proportionate entitlements to 13th month pay for the year 2004. The respondents appealed before the National Labor Relations Commission (NLRC), which was then reversed and set aside by the Court of Appeals.

The respondents, Niña Jewelry, required the petitioners, Madeline Montecillo and Liza Montecillo, to post a cash bond or sign an authorization for deduction for gold materials received and manufactured into jewelry. The respondents argued that this policy was necessary to protect their business from theft. The petitioners refused to comply with this policy and were subsequently not given any work assignments. The petitioners filed complaints before the Labor Arbiter (LA) for the payment of their money claims, including 13th-month pay and separation pay. The LA dismissed the complaints except for the grant of proportionate 13th-month pay for the year 2004. The NLRC affirmed the dismissal of the complaints but deleted the award of 13th-month pay, stating that the petitioners had unpaid individual loans from Niña Jewelry. The NLRC found that the petitioners were the ones who refused to work and had voluntarily abandoned their positions. The Petition for Certiorari was filed with the Court of Appeals (CA), which reversed the findings of the LA and the NLRC. The CA held that the respondents' imposition of cash deposits or salary deduction was illegal and amounted to constructive dismissal. The CA found that the petitioners did not abandon their work and ordered the respondents to pay the money claims.

The respondents, goldsmiths employed by Niña Jewelry Manufacturing Corporation, filed a complaint for illegal dismissal against the petitioners. They alleged that they were required to post a cash bond as a condition for their continued employment. The Labor Arbiter (LA), the National Labor Relations Commission (NLRC), and the Court of Appeals (CA) all ruled in favor of the respondents, finding that they were illegally dismissed and entitled to reinstatement and monetary benefits. The petitioners filed a petition for review before the Supreme Court.

Niña Jewelry required its employees to post cash bonds as a new policy. The respondents, however, stopped reporting for work immediately after the policy was announced. The employers argue that the respondents' actions amounted to abandonment of work and that no deductions were actually made yet, rendering the issue of deductions academic. The employers also contend that their policy of requiring cash deposits was reasonable and intended to benefit all parties involved.

ISSUES:

1. Whether or not the Court of Appeals (CA) grossly erred in giving due course to the petition for certiorari under Rule 65 of the Rules of Court.

2. Whether or not there was constructive dismissal in the present case and whether the CA erred in ordering the respondents' reinstatement, and the payment of back wages and other monetary benefits.

RULING:

1. The CA erred in giving due course to the petition for certiorari under Rule 65. The issues raised by the respondents essentially sought a re-evaluation of facts and evidence, which is not proper in a petition for certiorari under Rule 65, unless substantial evidence to support the NLRC's findings are lacking. The findings of the Labor Arbiter (LA) and the National Labor Relations Commission (NLRC) that no dismissal occurred were supported by substantial evidence.

2. There was no constructive dismissal. The court found that the respondents stopped reporting for work; thus, there was no basis for reinstatement or back wages. However, it affirmed the CA’s ruling that the petitioners' imposition of its new policy lacked a legal basis.

PRINCIPLES:

1. Review under Rule 45 and Rule 65: Rule 45 limits the review to questions of law, while Rule 65 reviews whether there was grave abuse of discretion by the NLRC, not the correctness of its decision.

2. Certiorari Proceedings: In certiorari proceedings under Rule 65, the appellate court does not reassess sufficiency of evidence but checks for jurisdictional errors or grave abuse of discretion by the NLRC.

3. Substantial Evidence Standard: Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

4. Constructive Dismissal: It occurs when continued employment is rendered impossible, unreasonable, unlikely, or when there is demotion or diminution in pay or both, or a clear discrimination or disdain by an employer.

5. Management Prerogative: Employers can generally implement necessary policies but must comply with legal requirements, particularly those prescribed by the Labor Code with respect to deductions and cash bonds.

6. Labor Code Articles 113 and 114: These articles prohibit deductions from employees' salaries unless authorized by law or regulations issued by the Secretary of Labor, and deposits for loss or damages are generally not allowed without the required necessity or desirability determination by the Secretary of Labor.