Stare decisis means that when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same, even though the parties may be different.

The Supreme Court held in the following case:

Purisimo M. Cabaobas, et al. vs. Pepsi-Cola Products Philippines, Inc.
G.R. No. 176908, March 25, 2015


In 1999, Pepsi-Cola Products Philippines, Inc. (Pepsi) Tanauan Plant allegedly incurred business losses in the total amount of P29,167,390.00 Pesos. To avert further losses, PEPSI implemented a company-wide retrenchment program denominated as Corporate-wide Rightsizing Program (CRP) from 1999 to 2000, and retrenched forty-seven (47) employees of its Tanauan Plant on July 31, 1999.

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On September 24, 1999, twenty-seven (27) of said employees, led by Anecito Molon (Molon, et al.), filed complaints for illegal dismissal before the NLRC which were docketed as NLRC RAB Cases Nos. VIII-9-0432-99 to 9-0458-99, entitled “Molon, et al. v. Pepsi-Cola Products, Philippines, Inc.”

On January 15, 2000, Complainants, who are permanent and regular employees of the Tanauan Plant, received their respective letters, informing them of the cessation of their employment on February 15, 2000, pursuant to PEPSI’s CRP. Complainants then filed their respective complaints for illegal dismissal before the National Labor Relations Commission Regional Arbitration Branch No. VIII in Tacloban City.

Complainants alleged that PEPSI was not facing serious financial losses because after their termination, it regularized four (4) employees and hired replacements for the forty-seven (47) previously dismissed employees. They also alleged that PEPSI’s CRP was just designed to prevent their union, Leyte Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU), from becoming the certified bargaining agent of PEPSI’s rank-and-file employees.

PEPSI countered that Complainants were dismissed pursuant to its CRP to save the company from total bankruptcy and collapse; thus, it sent notices of termination to them and to the Department of Labor and Employment. In support of its argument that its CRP is a valid exercise of management prerogative, PEPSI submitted audited financial statements showing that it suffered financial reverses in 1998 in the total amount of P700,000,000.00 PESOS, P27,000,000.00 PESOS of which was allegedly incurred in the Tanauan Plant in 1999.

LA Ruling:

The Labor Arbiter rendered a Decision finding the dismissal of Complainants as illegal.

PEPSI appealed from the Decision of the Labor Arbiter to the Fourth Division of the NLRC of Tacloban City.

NLRC Ruling:

Meanwhile, the NLRC consolidated all other cases involving PEPSI and its dismissed employees.

The NLRC rendered a Consolidated Decision nullifying the Executive Labor Arbiter’s, and DISMISSING the complaints for illegal dismissal, and in its stead declaring the retrenchment program of Pepsi pursuant to its CRP, a valid exercise of management prerogatives.

The NLRC also ordered Pepsi to pay the complainants their package separation benefits of 1 & ½ months salary for every year of service, plus commutation of all vacation and sick leave credits in the respective amounts hereunder indicated opposite their names.

Complainants and PEPSI filed their respective motions for reconsideration of the consolidated decision, which the NLRC denied in a Resolution. Dissatisfied, Complainants filed a petition for certiorari with the CA.

CA Ruling:

The CA rendered a Decision, denying their petition and affirming the NLRC Decision. The CA issued a Resolution denying Complainants’ motion for reconsideration.


Whether or not the doctrine of stare decisis applies in this case as the previous case ruled on the validity of the same retrenchment program

SC Ruling:

The Supreme Court did not find merit in the petition.

The SC held that the principle of stare decisis et non quieta movere (to adhere to precedents and not to unsettle things which are established) is well entrenched in Article 8 of the New Civil Code which states that judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines.

Citing the case of Philippine Carpet Manufacturing Corporation vs. Tagyamon, the Court further held that under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same, even though the parties may be different. Where the facts are essentially different, however, stare decisis does not apply, for a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variant is introduced.

Guided by the jurisprudence on stare decisis, the SC disposed of the remaining question of whether the factual circumstances of this present case are substantially the same as the Pepsi-Cola Products Philippines, Inc. v. Molon case. The SC ruled in the affirmative.

The issues, subject matters and causes of action between the parties in Pepsi-Cola Products Philippines, Inc. v. Molon and the present case are identical, namely, the validity of PEPSI’s retrenchment program, and the legality of its employees’ termination. There is also substantial identity of parties because there is a community of interest between the parties in the first case and the parties in the second case, even if the latter was not impleaded in the first case.

The respondents in Pepsi Cola Products Philippines, Inc. v. Molon are Complainants’ former co-employees and co-union members of LEPCEU-ALU who were also terminated pursuant to the PEPSI’s retrenchment program. The only difference between the two cases is the date of the employees’ termination, i.e., Molon, et al. belong to the first batch of employees retrenched on July 31, 1999, while Complainants belong to the second batch retrenched on February 15, 2000. That the validity of the same PEPSI retrenchment program had already been passed upon and, thereafter, sustained in the related case of Pepsi-Cola Products Philippines, Inc. v. Molon, albeit involving different parties, impels the Court to accord a similar disposition and uphold the legality of same program.

While the SC acknowledged that the doctrine of stare decisis is not cast in stone, for upon a showing that circumstances attendant in a particular case override the great benefits derived by our judicial system from the doctrine of stare decisis, the Court can be justified in setting it aside, the SC did not find compelling reason to abandon the doctrine in this case.



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