[G.R. No. 153832.

March 18, 2005]

FILIPINAS PRE-FABRICATED BUILDING SYSTEMS (FILSYSTEMS), INC., and FELIPE A. CRUZ JR., petitioners, vs. ROGER D.
PUENTE,
[1]
respondent.
D E C I S I O N
PANGANIBAN, J.:
Without a valid cause, the employment of project employees cannot be terminated prior to expiration. Otherwise, they shall
be entitled to reinstatement with full back wages. However, if the project or work is completed during the pendency of the ensuing
suit for illegal dismissal, the employees shall be entitled only to full back wages from the date of the termination of their
employment until the actual completion of the project or work.
The Case
Before us is a Petition for Review
[2]
under Rule 45 of the Rules of Court, seeking to annul and reverse the April 16, 2002
Decision
[3]
and the May 30, 2002 Resolution
[4]
of the Court of Appeals (CA) in CA-GR SP No. 66756. The assailed Decision disposed as
follows:
WHEREFORE, premises considered, the petition is GRANTED and the decision dated May 18, 2001 and resolution dated June 29,
2001 of the NLRC are hereby annulled and set aside. [Petitioner] Filsystems, Inc. is hereby ordered to reinstate [respondent]
immediately to his former position without loss of seniority and privileges with full back wages from the date of his dismissal until
his actual reinstatement, plus 10% of the total monetary award as attorneys fees.
[5]

The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The factual antecedents are summarized by the CA as follows:
*Respondent+ avers that he started working with [Petitioner] Filsystems, Inc., a corporation engaged in construction business, on
June 12, 1989; that he was initially hired by *petitioner+ company as an installer; that he was later promoted to mobile crane
operator and was stationed at the company premises at No. 69 Industria Road, Bagumbayan, Quezon City; that his work was not
dependent on the completion or termination of any project; that since his work was not dependent on any project, his employment
with the [petitioner-]company was continuous and without interruption for the past ten (10) years; that on October 1, 1999, he was
dismissed from his employment allegedly because he was a project employee. He filed a pro forma complaint for illegal dismissal
against the [petitioner] company on November 18, 1999.
The *petitioner-]company however claims that complainant was hired as a project employee in the
companys various projects; that his employment contracts showed that he was a project worker with specific
project assignments; that after completion of each project assignment, his employment was likewise terminated
and the same was correspondingly reported to the DOLE.
Labor Arbiter Veneranda C. Guerrero dismissed the complaint for lack of merit, ruling thus:
WHEREFORE, premises considered, judgment is hereby rendered dismissing the complaint for illegal dismissal for lack of merit.
*Petitioner+ Filsystems, Inc. is hereby ordered to pay complainant Roger D. *F+uente the amount of FOUR THOUSAND TWO
HUNDRED TWELVE PHILIPPINE PESOS (P4,212.00) representing his pro-rata 13
th
month pay for 1999, plus ten percent (10%) thereof
as and for attorneys fees.
SO ORDERED.
*Respondent+ appealed. However, [the] National Labor Relations Commission (NLRC) dismissed the same and the subsequent
motion for reconsideration.
[6]

Ruling of the Court of Appeals
The Court of Appeals reversed the NLRC and the labor arbiter thus:
The employment contracts signed by petitioner Puente do not have the specified duration for each project contrary to the
provision of Article 280 of the Labor Code, nor did petitioner work in the project sites, but had always been assigned at the company
plant attending to the maintenance of all mobile cranes of the company, performing tasks vital and desirable in the employers usual
business for ten (10) continuous years.
[7]

The CA concluded that respondent was a regular employee of petitioners.
Hence, this Petition.
[8]

The Issues
In its Memorandum, petitioners raise the following issues for our consideration:
1. Whether or not the Court of Appeals erred and committed grave abuse of discretion in finding that:
The employment contracts signed by private respondent Puente do not have the specified duration for each project contrary to the
provision of Art. 280 of the Labor Code, nor did petitioner work in the project sites, but had always been assigned at the company
plant attending to the maintenance of all mobile cranes of the company, performing tasks vital and desirable in the companys usual
business for ten (10) continuous years.
2. Whether or not the Court a quo erred and committed grave abuse of discretion in finding that the private respondent is a
regular employee and not a project employee?
3. Whether or not the Court a quo erred and committed grave abuse of discretion in giving due course to the private
respondents petition for certiorari under Rule 65 of the 1997 Rules on Civil Procedure; and in annulling and setting aside the
Decision dated May 18, 2001 and the Resolution dated June 29, 2001 of the NLRC?
4. Whether or not the Court a quo erred and committed grave abuse of discretion in ruling that the evidence submitted by the
petitioners proving that there was retrenchment program implemented by the petitioner company, as a defense that the private
respondents services was terminated due to absence if not lack of construction project contract, where he may be redeployed or
reinstated?
5. Whether or not the Court a quo erred and committed grave abuse of discretion in ordering the reinstatement of the private
respondent, with full back wages plus payment of 10% attorneys fees?
[9]

In the main, the issues boil down to (1) whether Roger Puente is a project employee, and (2) whether he is entitled to
reinstatement with full back wages.
This Courts Ruling
The Petition is partly meritorious.
First Issue:
Project Employee
In general, the factual findings of the Court of Appeals are binding on the Supreme Court. One exception to this rule, however,
is when the factual findings of the former are contrary to those of the trial court (or the lower administrative body, as the case may
be).
[10]
The question of whether respondent is a regular or a project employee is essentially factual in nature; nonetheless, the Court
is constrained to resolve it due to the incongruent findings of the NLRC and the CA.
The Labor Code defines regular, project and casual employees as follows:
ART. 280. Regular and Casual Employment. - The provision of written agreement to the contrary notwithstanding and regardless of
the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
With particular reference to the construction industry, to which Petitioner Filsystems belongs, Department (of Labor and
Employment) Order No. 19,
[11]
Series of 1993, states:
2.1 Classification of employees. The employees in the construction industry are generally categorized as a) project employees
and b) non-project employees. Project employees are those employed in connection with a particular construction project or phase
thereof and whose employment is co-terminous with each project or phase of the project to which they are assigned.
x x x x x x x x x
2.2 Indicators of project employment. Either one or more of the following circumstances, among other, may be considered as
indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to
the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer.
(e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and
Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from
work, using the prescribed form on employees terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by
most construction companies.
The above-quoted provisions make it clear that a project employee is one whose employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee
or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. In D.M.
Consunji, Inc. v. NLRC,
[12]
this Court has ruled that the length of service of a project employee is not the controlling test of
employment tenure but whether or not the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee.
In the present case, the contracts of employment
[13]
of Puente attest to the fact that he was hired for specific projects. His
employment was coterminous with the completion of the projects for which he had been hired. Those contracts expressly provided
that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction
projects. Furthermore, petitioners regularly submitted to the labor department reports of the termination of services of project
workers. Such compliance with the reportorial requirement confirms that respondent was a project employee.
[14]

With regard specifically to the last employment contract executed by the parties, a contract that respondent accepted on
August 26, 1996, we find that he worked at the site of the World Finance Plaza project. That he did is amply proven by the Affidavit
of Eduardo Briagas,
[15]
another employee who was also stationed at the World Finance Plaza project, as well as by respondents
Travel Trip Reports.
[16]

Furthermore, respondents Complaint
[17]
specified the address of Filsystems, as 69 INDUSTRIA ROAD, B.BAYAN Q.C., but
specified his place of work as PROJECT TO PROJECT. These statements, coupled with the other pieces of evidence presented by
petitioners, convinces the Court that -- contrary to the subsequent claims of respondent -- he performed his work at the project site,
not at the companys premises.
That his employment contract does not mention particular dates that establish the specific duration of the project does not
preclude his classification as a project employee. This fact is clear from the provisions of Clause 3.3(a) of Department Order No. 19,
which states:
a) Project employees whose aggregate period of continuous employment in a construction company is at least one year shall be
considered regular employees, in the absence of a day certain agreed upon by the parties for the termination of their relationship.
Project employees who have become regular shall be entitled to separation pay.
A day as used herein, is understood to be that which must necessarily come, although is may not be known exactly when. This
means that where the final completion of a project or phase thereof is in fact determinable and the expected completion is made
known to the employee, such project employee may not be considered regular, notwithstanding the one-year duration of
employment in the project or phase thereof or the one-year duration of two or more employments in the same project or phase of
the object. (Italicization and emphasis supplied)
Respondents employment contract provides as follows:
x x x employment, under this contract is good only for the duration of the project unless employees services is terminated due to
completion of the phase of work/section of the project or piece of work to which employee is assigned:
We agree clearly that employment is on a Project to Project Basis and that upon termination of services there is no separation pay:
POSITION : Mobil Crane Operator
PROJECT NAME : World Finance Plaza
LOCATION : Meralco Ave., Ortigas Center, Pasig City
ASSIGNMENT : Lifting & Hauling of Materials
(Phase of Work/Piece of Work)
[18]

Evidently, although the employment contract did not state a particular date, it did specify that the termination of the parties
employment relationship was to be on a day certain -- the day when the phase of work termed Lifting & Hauling of Materials for
the World Finance Plaza project would be completed. Thus, respondent cannot be considered to have been a regular employee.
He was a project employee.
That he was employed with Petitioner Filsystems for ten years in various projects did not ipso facto make him a regular
employee, considering that the definition of regular employment in Article 280 of the Labor Code makes a specific exception with
respect to project employment. The mere rehiring of respondent on a project-to-project basis did not confer upon him regular
employment status.
[19]
The practice was dictated by the practical consideration that experienced construction workers are more
preferred.
[20]
It did not change his status as a project employee.
Second Issue:
Reinstatement
In termination cases, the burden of proving that an employee has been lawfully dismissed lies with the employer.
[21]
Thus,
employers who hire project employees are mandated to state and, once its veracity is challenged, to prove the actual basis for the
latters dismissal.
[22]

In the present case, petitioners claim that respondents services were terminated due to the completion of the
project.
[23]
There is no allegation or proof, however, that the World Finance Plaza project -- or the phase of work therein to which
respondent had been assigned -- was already completed by October 1, 1999, the date when he was dismissed. The inescapable
presumption is that his services were terminated for no valid cause prior to the expiration of the period of his employment; hence,
the termination was illegal. Reinstatement with full back wages, inclusive of allowances and other benefits or their monetary
equivalents -- computed from the date of his dismissal until his reinstatement -- is thus in order.
[24]

However, if indeed the World Finance Plaza project has already been completed during the pendency of this suit, then
respondent -- being a project employee -- can no longer be reinstated.
[25]
Instead, he shall entitled to the payment of his salary and
other benefits corresponding to the unexpired portion of his employment,
[26]
specifically from the time of the termination of his
employment on October 1, 1999, until the date of the completion of the World Finance Plaza project.
WHEREFORE, the Petition is PARTLY GRANTED. Respondent Roger D. Puente is DECLARED to be a project employee, whose
employment was terminated without any valid cause prior to its expiration and is thus entitled to reinstatement with full back
wages. However, if reinstatement is no longer possible due to the completion of the World Finance Plaza project during the
pendency of this case, Petitioner Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. is ORDERED to PAY respondent the
equivalent of his salaries and other employment benefits, computed from October 1, 1999, until the date of the projects actual
completion. No costs.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

[G.R. No. 149371. April 13, 2005]
ABERDEEN COURT, INC., and RICHARD NG, petitioners, vs. MATEO C. AGUSTIN JR., respondent.
D E C I S I O N
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision of the Court
of Appeals in CAG.R. SP No. 60223, entitled Mateo Agustin Jr. v. National Labor Relations Commission (First Division), Aberdeen
Court, Inc. and Ricardo Ng, dated January 31, 2001, and the Resolution of August 10, 2001 denying the motion for reconsideration
therein.
On September 16, 1996, Aberdeen Court, Inc. (Aberdeen), one of the petitioners, employed Mateo C. Agustin (Agustin), herein
respondent, for the purpose of trouble shooting the electrical problems in said petitioners establishment. Agustin was engaged on a
six-month probationary basis. The employment contract provided, inter alia, that:
Should my performance be considered unsatisfactory at any time by management during my probationary period, I understand and
agree that the management can terminate my services at any time, even before the termination of the agreed six-month period.
[1]

On January 12 and 13, 1997 the personnel of Centigrade Industries, Inc. performed a reading of the exhaust air balancing at the
fifth and sixth floors of Aberdeens premises. Petitioners claim that Agustin was placed in charge of the undertaking. On the other
hand, Agustin asserts that Engr. Abad merely requested him to accompany the aforesaid personnel to show the l ocation of the
exhaust air outlet at the fifth and sixth floors of the premises. He avers that:
The request of Engr. Abad is actually the responsibility of the companys mechanical engineers. Despite the fact that the request of
Engr. Abad is not a part of his job since he is not a mechanical engineer and there were three (3) other mechanical engineers on duty
in the company premises, petitioner [herein respondent], being a subordinate of Engr. Abad, obliged and accompanied the
aforementioned personnel to the location. There were no other specific instructions from Engr. Abad to petitioner with respect to
the conduct or actual reading to be made by the Centigrade personnel.
It must be noted that the reading of exhaust air balancing is under the category of heating, ventilating and air conditioning (HVAC)
which are within the realm of field of work of mechanical engineers. Being an electrical engineer, petitioner obviously has no
knowledge of the procedure and the equipment used by mechanical engineers in the conduct of the reading of the exhaust air
balancing.
[2]

After the Centigrade personnel finished their job, they submitted their report to Agustin. Petitioners allege that Agustin
accepted and signed the report, without verifying its correctness. Engineer Abad later checked the work of the Centigrade
employees only to find out that four rooms in the fifth floor and five rooms in the sixth floor were incorrectly done.
[3]
In contrast,
Agustin states that after the report was handed to him, he took the same to Engr. Abad, who he claims was responsible for
evaluating and confirming the said report. Allegedly, instead of signing it himself, Engr. Abad directed respondent to sign it, giving
the reason that Agustin was present when the reading was conducted. Respondent Agustin complied, but he now points out that his
signature was not accompanied by any qualification that he accepted the report on behalf of Aberdeen. He claims that he signed
merely to evidence that he received a copy of the report.
[4]

The parties also differ on the occurrences two days after the signing of the report or on January 15, 1997. According to
petitioners, Aberdeen management confronted Agustin with his failure to check the job and asked him to explain his side. Agustin
allegedly ignored management and left the company, which made it impossible for Aberdeen to transmit any further notice to
him.
[5]

However, Agustin claims that:
On January 15, 1997 or two days after the report was submitted by Centigrade Industries, petitioner [herein respondent] was
summarily dismissed. In the afternoon of that day, he received a telephone call from the personnel office of respondent company
ordering him to report to that office after his tour of duty. At about seven p.m. at the personnel office, Ms. Lani Carlos of the
Personnel Department, informed him that Aberdeen Court is terminating his services as electrical engineer. Petitioner was
flabbergasted. Ms. Carlos then informed him that he could get his two (2) weeks salary in the amount of P4,000, more or less, on
the condition that he will sign some documents which provides that the company has no more liability and that he is voluntari ly
resigning from Aberdeen Court. Aware of his rights, petitioner did not sign the offered documents. He was then hurriedly led to
the door by Ms. Carlos.
The following day or on January 16, 1997, petitioner requested assistance from the Department of Labor and Employment (DOLE). A
DOLE personnel told him to report for work since private respondents did not serve him a notice of termination. As instructed,
petitioner reported for work on the same day. Upon arriving at the company premises, petitioner asked Ms. Carlos if he could still
report for work but private respondents personnel officer told him that he cannot do so.
[6]

Within the same month of that year, respondent Agustin filed a complaint for illegal dismissal which was docketed as NLRC
NCR Case No. 00-01-00466-97.
In an undated decision, the labor arbiter rendered judgment in favor of herein respondent, declaring that Agustin was illegal ly
dismissed, thus:
WHEREFORE, judgment is hereby rendered:
1. Ordering respondent ABERDEEN COURT, INC. to reinstate to his former position without loss of seniority rights
complainant MATEO C. AGUSTIN, JR.
2. Ordering respondent to pay to complainant backwages in the sum of PHP P175,933.33.
[7]

Petitioners appealed the decision to the National Labor Relations Commission (NLRC). On February 29, 2000, the NLRC
reversed the decision of the Labor Arbiter and held that Agustin had not been illegally dismissed, disposing thus:
WHEREFORE, for and on account of the reasons above-discussed, the decision appealed from is hereby reversed and set aside and a
new one entered dismissing the complaint for lack of merit.
[8]

From the NLRC decision, Agustin filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals.
The appellate court ruled in favor of Agustin and reasoned thus:
Constructive dismissal is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving demotion in rank and a diminution in pay (Jarcia Machine Shop and Auto Supply, Inc. vs. National Labor Relations
Commission, 266 SCRA 97, 108). As there is no showing in the record of any circumstance to support the proposition that the
petitioner was constructively dismissed, the private respondents correctly point out the flaw in the first ground proffered by the
petitioner in support of his petition. Be that as it may, the petitioners erroneous choice of terminology does not, to our mind,
preclude a finding of illegal dismissal. Alongside the private respondents contention that it was the petitioner who unceremoniously
quit his employment after being confronted with his negligence, greater stock m[a]y be taken of the petitioners immediate recourse
for assistance from the Department of Labor and his subsequent filing of his complaint. The rule is settled that the immediate filing
of a complaint for illegal dismissal is inconsistent with abandonment (Pampanga Sugar Development Company, Inc. vs. National
Labor Relations Commission, 272 SCRA 737, 747) and, in such cases, the burden of proof to establish the validity of the dismissal of
an employee lies on the employer (Gonpu Services Corporation vs. National Labor Relations Commission, 266 SCRA 657, 662). Rather
than the employee who must prove its invalidity, it is the employer who should prove the validity of a dismissal. (Sanyo Travel
Corporation vs. National Labor Relations Commission, 280 SCRA 129, 138) and failure to do so will result in a finding that the
dismissal was unfounded (Reformist Union of R.B. Liner, Inc. vs. National Labor Relations Commissions, 266 SCRA 713, 726).
Our perusal of the record yielded no showing of satisfactory attempt on the part of the private respondents to prove the validity of
the petitioners dismissal. It bears emphasizing that, to be lawful, the employees dismissal must comply with the following
requirements (a) the dismissal must be for any of the causes provided in Article 292 of the Labor Code; and, (b) the employee must
be given an opportunity to be heard and defend himself (Molato vs. National Labor Relations Commission, 266 SCRA 42, 45). The
employer must first affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause (Brahm Industries,
Inc. vs. National Labor Relations Commission, 280 SCRA 828,838).
It is our considered view that the private respondents did not succeed in discharging the aforesaid onus. Against the petitioners
contention that exhaust air balancing is neither covered by his duties nor competence, there is no showing that the private
respondents even attempted to prove the extent of the petitioners technical responsibilities. Even assuming that the task properly
pertained to the petitioner, an employee where, as in the case at bench, the offense appears to be the first committed by the
employee, was devoid of malice and, more importantly, was not his sole responsibility (Tumbiga vs. National Labor Relations
Commission, 274 SCRA 338, 348).
The fact that the petitioner was still in his probationary period of employment did not lessen the burden of proof the law imposes on
the private respondents. Probationary employees are protected by the security of tenure provision of the Constitution and cannot,
likewise, be removed from their position unless for cause (Pines City Educational Center vs. National Labor Relations Commission,
227 SCRA 655, 663). Article 281 of the Labor Code of the Philippines, as amended provides:
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started
working unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been
engaged on a probationary basis may be terminated for just cause or when he fails to qualify as a regular employee in accordance
with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a regular employee.
Aside from failing to show a just cause for the termination of the petitioners services, the private respondents appear not to have
even deigned to show such reasonable standards the petitioners failure to measure up alongside which would have justified his
dismissal from employment.
Neither did the private respondents successfully show their compliance with the second requirement for the validity of the
termination of petitioners employment. Their contention that it was the latter who abandoned his job cannot be taken at face value
in view of the fact that an employee who forthwith takes steps to protest his layoff cannot, by any logic, be said to have abandoned
his work (Nazal vs. National Labor Relations Commission, 274 SCRA 350, 355). Even without the petitioners affirmative allegation
that he returned to his workplace after being so advised at the Department of Labor and Employment, we find the dearth of any
notice of termination sent to the petitioner or, at the very least, his address in the respondent corporations record derogatory of
elementary requirements of due process. A valid dismissal presupposes not only the validity of its cause, but also the validity of the
manner by which dismissal is done (Dela Cruz vs. National Labor Relations Commission, 277, SCRA 563, 573) and failure to prove the
observance of due process as in the case at bench taints the dismissal (Aquinas School vs. Magnaye, 278 SCRA 602, 612).
Having been illegally dismissed from employment, the petitioner is as initially ruled by the Labor Arbiter entitled to
reinstatement and backwages in accordance with the Labor Code of the Philippines (Magcalas vs. National Labor Relations
Commission, 269 SCRA 453, 470).
[9]

The dispositive portion of the aforesaid Decision of the Court of Appeals, dated January 31, 2001, states:
WHEREFORE, the instant petition is GRANTED and the assailed decision dated February 29, 2000 of the First Division of the National
Labor Relations Commission is REVERSED and SET ASIDE. In lieu thereof, the undated decision of Labor Arbiter Celenito N. Daing
rendered in NLRC NCR Case No. 00-01-00466-97 is REINSTATED. No costs.
[10]

Petitioners filed a motion for reconsideration dated February 20, 2001, which the Court of Appeals denied in its Resolution of
August 10, 2001.
Unsatisfied, petitioners filed the instant petition on August 29, 2001 and raised the following assignments of error:
1. THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN REVERSING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION (ANNEX E) WHOSE FINDING OF FACTS ARE BY LAW ACCORDED DUE RESPECT AND EVEN FINALITY,
AFFIRMING THAT OF THE LABOR ARBITER. SUCH REVERSAL OF THE COMMISSIONS DECISION IS BASED ON SPECULATION.
2. THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN NOT ENTERTAINING OR EVEN RESOLVING THE ISSUE
POSED BY PETITIONERS THAT IT IS NOT FOR THE COURT TO REGULARIZE THE EMPLOYMENT OF A PROBATIONARY EMPLOYEE AND
ASSUMING HIS DISMISSAL IS ILLEGAL HIS BACKWAGES SHOULD NOT GO BEYOND HIS PROBATIONARY EMPLOYMENT.
3. AND ASSUMING THE REINSTATEMENT OF RESPONDENT IS LEGAL, HIS BACKWAGES SHOULD NOT GO BEYOND ONE (1) MONTH
FROM SUBMISSION FOR DECISION (APRIL 30, 1997).
[11]

Petitioners argue, as follows:
It has been ruled that findings of fact of the NLRC, except where there is grave abuse of discretion committed by it, are conclusive
on the Supreme Court. National Union of Workers in Hotels, Restaurants and Allied Industries vs. National Labor Relations
Commissions, 287 SCRA 192.
Factual findings of the quasi-judicial agencies like the National Labor Relations Commission, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only respect but even finality. Suarez vs. National Labor
Relations Commission, 293 SCRA 496.
Findings of fact of quasi-judicial bodies, like the National Labor Relations Commission, are accorded with respect, even finality, if
supported by substantial evidence. Travelaire & Tours Corporation vs. National Labor Relations Commission, 294 SCRA 505.
[12]

Petitioners also contend that the Court of Appeals has no legal right to regularize the employment of a probationary employee
without assessing the employees performance. Petitioners claim that the Court of Appeals committed an error of law when it
ordered the reinstatement of respondent beyond March 15, 1997, which is six (6) months from the time respondent commenced
working. Petitioners contend that the reinstatement of Agustin beyond that date resulted in regularizing his employment.
[13]
Going
further, petitioners quote the stipulation in the contract of probationary employment that respondent signed, earlier adverted to.
[14]

Petitioners, finally, raise Article 281 of the Labor Code which reads, as follows:
Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis
may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary
period shall be considered a regular employee.
It can be gleaned from Article 281 of the Labor Code that there are two grounds to legally terminate a probationary employee.
It may be done either: a) for a just cause or b) when employee fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the start of the employment.
Petitioners say that Agustin was terminated because he failed to qualify as a regular employee. Petitioners, however, allegedly
did not show that respondent was apprised of these reasonable standards at the start of the employment.
In Servidad v. NLRC et al.,
[15]
where effectively the probationary period was for one year, the Court stated:
If the nature of the job did actually necessitate at least one year for the employee to acquire the requisite training and experience,
still, the same could not be a valid probationary employment as it falls short of the requirement of Article 281 of the Labor Code. It
was not brought to light that the petitioner was duly informed at the start of his employment, of the reasonable standards under
which he could qualify as a regular employee. The rudiments of due process demand that an employee should be apprised
beforehand of the conditions of his employment and the basis for his advancement.
Similarly, in Secon Philippines Ltd. v. NLRC,
[16]
the dismissal of the employee was declared illegal by the Court because the
employer did not prove that the employee was properly apprised of the standards of the job at the time of his engagement and,
naturally, the employer could not show that the employee failed to meet such standards.
The Implementing Rules of the Labor Code in Book VI, Rule I, Section 6, also provides:
Probationary employment. -- There is probationary employment where the employee, upon his engagement, is made to undergo a
trial period during which the employer determines his fitness to qualify for regular employment, based on reasonable standards
made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:
. . .
(c) The services of an employee who has been engaged on probationary basis may be terminated only for a just cause, when he
fails to qualify as a regular employee in accordance with the reasonable standards prescribed by the employer.
(d) In all cases of probationary employment, the employer shall make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he
shall be deemed a regular employee.
[17]

The above rule, however, should not be used to exculpate a probationary employee who acts in a manner contrary to basic
knowledge and common sense, in regard to which there is no need to spell out a policy or standard to be met. This is what the NLRC
found to be the fact in this case. Said the NLRC:
It bears stressing that even if technically the reading of air exhaust balancing is not within the realm of expertise of the complainant,
still it ought not to be missed that prudence and due diligence imposed upon him not to readily accept the report handed to him by
the workers of Centigrade Industries. Required of the complainant was that he himself proceed to the work area, inquire from the
workers as to any difficulties encountered, problems fixed and otherwise observe for himself the progress and/or condition/quality
of the work performed.
As it is, We find it hard to believe that complainant would just have been made to sign the report to signify his presence. By saying
so, complainant is inadvertently degrading himself from an electrical engineer to a mere watchdog. It is in this regard that We
concur with the respondents that by his omission, lack of concern and grasp of basic knowledge and common sense, complainant
has shown himself to be undeserving of continued employment from probationary employee to regular employee.
[18]

Nevertheless, it appears that petitioners violated due process in the dismissal of respondent, by not affording him the requi red
notice. As this Court held in Agabon, et al. v. NLRC, et al.,
[19]
an employer who dismisses an employee for just cause but does so
without notice, is liable for nominal damages in the amount of P30,000.
WHEREFORE, the petition is partly GRANTED and the assailed Decision and Resolution of the Court of Appeals are MODIFIED in
that respondent is declared dismissed for just cause but petitioners are ordered to pay him nominal damages in the amount
of P30,000.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Carpio, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 74246 January 26, 1989
MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry of Labor and Employment judgment, and JOAQUIN
A. DEQUILA, respondents.
Cruz, Agabin, Atienza & Alday for petitioners.
The Solicitor General of public respondent.
Norberto M. Alensuela, Sr. for private respondent.

NARVASA, J.:
There is no dispute about the facts in this case, and the only question for the Court is whether or not, Article 282 of the Labor Code
notwithstanding, probationary employment may validly be extended beyond the prescribed six-month period by agreement of the
employer and the employee.
Private respondent Joaquin A. Dequila (or Dequilla) was hired on probation by petitioner Mariwasa Manufacturing, Inc. (hereafter,
Mariwasa only) as a general utility worker on January 10, 1979. Upon the expiration of the probationary period of six months,
Dequila was informed by his employer that his work had proved unsatisfactory and had failed to meet the required standards. To
give him a chance to improve his performance and qualify for regular employment, instead of dispensing with his service then and
there, with his written consent Mariwasa extended his probation period for another three months from July 10 to October 9, 1979.
His performance, however, did not improve and on that account Mariwasa terminated his employment at the end of the extended
period.
1

Dequila thereupon filed with the Ministry of Labor against Mariwasa and its Vice-President for Administration, Angel T. Dazo, a
complaint for illegal dismissal and violation of Presidential Decrees Nos. 928 and 1389.
2
His complaint was dismissed after hearing
by Director Francisco L. Estrella, Director of the Ministry's National Capital Region, who ruled that the termination of Dequila's
employment was in the circumstances justified and rejected his money claims for insufficiency of evidence.
3
On appeal to the Office
of the Minister, however, said disposition was reversed. Respondent Deputy Minister Vicente Leogardo, Jr. held that Dequila was
already a regular employee at the time of his dismissal, therefore, could not have been lawfully dismissed for failure to meet
company standards as a probationary worker. He was ordered reinstated to his former position without loss of seniority and with
full back wages from the date of his dismissal until actually reinstated.
4
This last order appears later to have been amended so as to
direct payment of Dequila's back wages from the date of his dismissal to December 20, 1982 only.
5

Mariwasa and Dazo, now petitioners, thereafter be sought this Court to review Hon. Leogardo's decision oncertiorari and
prohibition, urging its reversal for having been rendered with grave abuse of discretion and/or without or in excess of jurisdiction.
6

The petition, as well as the parties' comments subsequently submitted all underscore the fact that the threshold issue here i s, as
first above stated, the legal one of whether employer and employee may by agreement extend the probationary period of
employment beyond the six months prescribed in Art. 282 of the Labor Code, which provides that:
Art. 282. Probationary Employment. Probationary employment shall not exceed six (6) months from the date
the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work after probationary
period shall be considered a regular employee.'
The Court agrees with the Solicitor General, who takes the same position as the petitioners, that such an extension may lawfully be
covenanted, notwithstanding the seemingly restrictive language of the cited provision.Buiser vs. Leogardo, Jr .
7
recognized
agreements stipulating longer probationary periods as constituting lawful exceptions to the statutory prescription limiting such
periods to six months, when it upheld as valid an employment contract between an employer and two of its employees that
provided for an eigthteen-month probation period. This Court there held:
'It is petitioners' submission that probationary employment cannot exceed six (6) months, the only exception being
apprenticeship and learnership agreements as provided in the Labor Code; that the Policy Instruction of the
Minister of Labor and Employment nor any agreement of the parties could prevail over this mandatory
requirement of the law; that this six months prescription of the Labor Code was mandated to give further efficacy
to the constitutionally-guaranteed security of tenure of workers; and that the law does not allow any discretion on
the part of the Minister of Labor and Employment to extend the probationary period for a longer period except in
the aforecited instances. Finally, petitioners maintain that since they are regular employees, they can only be
removed or dismissed for any of the just and valid causes enumerated under Article 283. of the Labor Code.
We reject petitioners' contentions. They have no basis in law.
Generally, the probationary period of employment is limited to six (6) months. The exception to this general rule is
when the parties to an employment contract may agree otherwise, such as when the same is established by
company policy or when the same is required by the nature of work to be performed by the employee. In the
latter case, there is recognition of the exercise of managerial prerogatives in requiring a longer period of
probationary employment, such as in the present case where the probationary period was set for eighteen (18)
months, i.e. from May, 1980 to October, 1981 inclusive, especially where the employee must learn a particular
kind of work such as selling, or when the job requires certain qualifications, skills experience or training.
x x x
We therefore, hold and rule that the probationary employment of petitioners set to eighteen (18) months is legal
and valid and that the Regional Director and the Deputy Minister of Labor and Employment committed no abuse of
discretion in ruling accordingly.
The single difference between Buiser and the present case: that in the former involved an eighteen-month probationary period
stipulated in the original contract of employment, whereas the latter refers to an extension agreed upon at or prior to the expiration
of the statutory six-month period, is hardly such as to warrant or even suggest a different ruling here. In both cases the parties'
agreements in fact resulted in extensions of the period prescribed by law. That in this case the inability of the probationer to make
the grade became apparent only at or about the end of the six-month period, hence an extension could not have been pre-arranged
as was done inBuiser assumes no adverse significance, given the lack, as pointed out by the Solicitor General, of any indication that
the extension to which Dequila gave his agreement was a mere stratagem of petitioners to avoid the legal consequences of a
probationary period satisfactorily completed.
For aught that appears of record, the extension of Dequila's probation was ex gratia, an act of liberality on the part of his employer
affording him a second chance to make good after having initially failed to prove his worth as an employee. Such an act cannot now
unjustly be turned against said employer's account to compel it to keep on its payroll one who could not perform according to its
work standards. The law, surely, was never meant to produce such an inequitable result.
By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion
of said period if he still failed to make the grade during the period of extension. The Court finds nothing in the law which by any fair
interpretation prohibits such a waiver. And no public policy protecting the employee and the security of his tenure is served by
prescribing voluntary agreements which, by reasonably extending the period of probation, actually improve and further a
probationary employee's prospects of demonstrating his fitness for regular employment.
Having reached the foregoing conclusions, the Court finds it unnecessary to consider and pass upon the additional issue raised in the
Supplemental Petition
8
that the back wages adjudged in favor of private respondent Dequila were erroneously computed.
WHEREFORE, the petition is granted. The orders of the public respondent complained of are reversed and set aside. Private
respondent's complaint against petitioners for illegal dismissal and violation of Presidential Decrees 928 and 1389 is dismissed for
lack of merit, without pronouncement as to costs.
SO ORDERED.
G.R. No. 85519 February 15, 1990
UNIVERSITY OF STO. TOMAS, FR. MAXIMO MARINA O.P. AND GILBERTO L. GAMEZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE LABOR ARBITER BIENVENIDO S. HERNANDEZ AND BASILIO E.
BORJA, respondents.
Abad, Leao & Associates for petitioners.
Antonio B. Fidelino for private respondent.

GANCAYCO, J.:
The herein private respondent Dr. Basilio E. Borja was first appointed as "affiliate faculty" in the Faculty of Medicine and Surgery at
the University of Sto. Tomas (UST for short) on September 29, 1976. In the second semester of the school year 1976-77 he was
appointed instructor with a load of twelve (12) hours a week. He was reappointed instructor for the school year 1977-78 with a load
of nine (9) hours a week in the first semester and two (2) hours a week in the second. On June 10, 1978 he was appointed as
Instructor III for the school year 1978-79. His load for the first semester was eight (8) hours a week, and for the second semester,
seven (7) hours a week.
On March 19, 1979 Dean Gilberto Gamez observed that Dr. Borja should not be reappointed based on the evaluation sheet that
shows his sub-standard and inefficient performance.
1
Nevertheless in view of the critical shortage of staff members in the
Department of Neurology and Psychiatry Dr. Gamez recommended the reappointment of Dr. Borja, after informing the latter of the
negative feedbacks regarding his teaching and his promise to improve his performance. Thus on July 27, 1979 he was extended a
reappointment as Instructor III in the school year 1979-80. He was given a load of six (6) hours a week. In all these appointments he
was a part time instructor.
At the end of the academic year, it appearing that Dr. Borja had not improved his performance in spite of his assurances of
improvement, his reappointment was not recommended.
In July, 1982 he filed a complaint in the National Labor Relations Commission (NLRC for short) for illegal dismissal against the UST.
After the submission of the pleadings and due proceedings the labor arbiter rendered a decision on July 19, 1984, the dispositive
part of which reads as follows:
WHEREFORE this Office finds in favor of the complainant. The respondents (sic) university are hereby ordered to
effect the immediate reinstatement of complainant to his former position with full backwages, rights and benefits
appertaining thereto. Respondent university is likewise ordered to pay the complainant the sum of FIVE HUNDRED
THOUSAND PESOS (P500,000.00) as and by way of moral damages and another 1 0% of the gross amount due him,
and as and by way of attorney's fees.
Respondents are hereby ordered to effect this decision immediately.
2

The UST appealed therefrom to the NLRC which in due course rendered a decision on September 30, 1988, modifying the appealed
decision as follows:
WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED with a modification limiting the
backwages to three (3) years without qualification or deduction, computed at P660.00 per month, ordering
respondents to pay complainant P100,000.00 as and for actual or compensatory damages, ordering respondents to
pay complainant P300,000.00 as and for moral damages, and further ordering them to pay complainant
P100,000.00 as and for exemplary damages.
Finally, respondents are ordered to pay to complainant the sum of ten (10%) percent of the total sum due as and
for attorney's fees.
3

Hence the instant petition for certiorari and prohibition with a prayer for the issuance of a writ of preliminary injunction and
restraining order that was filed by the UST and its officers wherein it is alleged that the public respondent NLRC committed the
following errors:
I
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED SERIOUS REVERSIBLE ERRORS OF
SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION AND/OR LACK OR EXCESS OF JURISDICTION IN
FINDING THAT BASILIO E. BORJA ACQUIRED TENURE, THE SAID FINDING BEING CLEARLY CONTRARY TO THE
EVIDENCE AT HAND AND DEVOID OF BASIS IN LAW.
II
THE HONORABLE NLRC COMMITTED A SERIOUS AND REVERSIBLE ERROR AND GRAVELY ABUSED ITS DISCRETION IN
HOLDING THAT THE SERVICES OF BASILIO E. BORJA HAD BEEN CONSTRUCTIVELY TERMINATED, HIS APPOINTMENT
HAVING MERELY LAPSED IN ACCORDANCE WITH ITS TERMS AS ACCEPTED BY THE COMPLAINANT-APPELLEE BORJA.
III
THE HONORABLE NLRC COMMITTED A SERIOUS AND GRAVE ERROR IN AFFIRMING, ALBEIT REDUCING THE AWARD
OF THE HONORABLE LABOR ARBITER A QUO OF CLEARLY EXCESSIVE, UNJUST, UNCONSCIONABLE AND SHOCKING
MORAL DAMAGES OF P300,000.00 AND IN AWARDING MOTU PROPIO EXEMPLARY DAMAGES IN THE AMOUNT OF
P100,000.00 IN GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO EXCESS OF JURISDICTION.
4

The petition is impressed with merit.
In the questioned decision of the public respondent NLRC it found that private respondent had earned to his credit eight (8)
semesters or four (4) academic years of professional duties with the UST and that he has met the requirements to become a regular
employee under the three (3) years requirement in the Manual of Regulations for Private Schools.
The appealed decision is correct insofar as it declares that it is the Manual of Regulations for Private Schools, not the Labor Code,
that determines the acquisition of regular or permanent status of faculty members in an educational institution, but the Court
disagrees with the observation that it is only the completion of three (3) years of service that is required to acquire such status.
According to Policy Instructions No. 11 issued by the Department of Labor and Employment, "the probationary employment of
professors, instructors and teachers shall be subject to standards established by the Department of Education and Culture." Said
standards are embodied in paragraph 75 of the Manual of Regulations for Private Schools, to wit:
75. Full time teachers who have rendered three consecutive years of satisfactory service shall be considered
permanent." (Emphasis supplied)
The legal requisites, therefore, for acquisition by a teacher of permanent employment, or security of tenure, are as follows:
1) the teacher is a full time teacher;
2) the teacher must have rendered three (3) consecutive years of service; and
3) such service must have been satisfactory.
Now, the Manual of Regulations also states that "a full-time teacher" is "one whose total working day is devoted to the school, has
no other regular remunerative employment and is paid on a regular monthly basis regardless of the number of teaching hours" (Par.
77); and that in college, "the nominal teaching load of a full-time instructor shall be eighteen hours a week" (par. 78).
It follows that a part-time member of the faculty cannot acquire permanence in employment under the Manual of Regulations in
relation to the Labor Code.
Hence, the crucial question is whether or not the private respondent was a full-time or part-time member of the faculty during the
three (3) years that he served in the petitioner-university's College of Medicine. Stated otherwise, the question is (1) whether or not
the said respondent's "total working day ..... (was) devoted to the school" and he had "no other regular remunerative employment"
and was "paid on a regular monthly basis regardless of the number of teaching hours;" and/or (2) whether or not his normal
teaching load was eighteen (18) hours a week.
It cannot be said that respondent's total working day was devoted to the school alone. It is clear from the record that he was
practising his profession as a doctor and maintaining a clinic in the hospital for this purpose during the time that he was given a
teaching load. In other words, he had another regular remunerative work aside from teaching. His total working day was not,
therefore, devoted to the school. Indeed, his salaries from teaching were computed by the respondent Commission itself at onl y an
average of P660.00 per month; he, therefore, had to have other sources of income, and this of course was his self-employment as a
practising psychiatrist. That the compensation for teaching had to be averaged also shows that he was not paid on a regular monthly
basis. Moreover, there is absolutely no evidence that he performed other functions for the school when not teaching. All things
considered, it would appear that teaching was only a secondary occupation or "sideline," his professional practice as a psychiatrist
being his main vocation.
The record also discloses that he never had a normal teaching load of eighteen (18) hours a week during the time that he was
connected with the university. The only evidence on this equally vital issue was presented by the petitioner through the affi davit of
Dr. Gilberts Gamez who was the dean of the medical school during the time material to the proceedings at bar. His sworn
declaration is to the effect that as "affiliate faculty" member of the Department of Neurology and Psychiatry from September
29,1976, private respondent had no teaching functions: that in fact, when he was appointed in September, 1976, classes for the first
semester were already nearing their end; that as "affiliate faculty" he was merely an observer acquainting himself with the functions
of an instructor while awaiting issuance of a formal appointment as such; that in the school year 1977-78 he had a teaching load
of nine (9) hours a week in the first semester and two (2) hours a week in the second semester; that in the school year 1978-1979 he
had a load of eight (8) hours a week in the first semester and seven (7) hours a week in the second semester; that in the school year
1979-1980 he had a load of six (6) hours a week in each semester. This evidence does not appear to have been refuted at all by the
private respondent, and has inexplicably been ignored by public respondent. No discussion of this particular point is found i n the
decisions of the Labor Arbiter or the NLRC.
The private respondent, therefore, could not be regarded as a full- time teacher in any aspect. He could not be regarded as such
because his total working day was not devoted to the school and he had other regular remunerative employment. Moreover, his
average teaching load was only 6.33 hours a week.
In view of the explicit provisions of the Manual of Regulations above-quoted, and the fact that private respondent was not a full-
time teacher, he could not have and did not become a permanent employee even after the completion of three (3) years of service.
Having found that private respondent did not become a permanent employee of petitioner UST, it correspondingly follows that
there was no duty on the part of petitioner UST to reappoint private respondent as Instructor, the temporary appointment havi ng
lapsed. Such appointment is a matter addressed to the discretion of said petitioner.
The findings, therefore, of the public respondent NLRC that private respondent was constructively terminated is without lawful
basis. By the same token, the order for reinstatement of private respondent with backwages plus an award of actual or
compensatory, moral and exemplary damages must be struck down.
WHEREFORE, the petition is hereby GRANTED. The questioned orders of public respondent NLRC dated September 13, 1988 and
public respondent labor arbiter Bienvenido S. Hernandez dated July 19,1988 are hereby SET ASIDE and another judgment is hereby
rendered DISMISSING the complaint of private respondent, without pronouncement as to costs.
SO ORDERED.
Fernan (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Cortes, Grio-Aquino, Medialdea and Regalado, JJ.,
concur.
Narvasa and Padilla, JJ., took no part.
[G.R. No. 124617. April 28, 2000]
PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION and/or FRANCIS CHUA, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and ROSALINDA C. CORTEZ, respondents.
D E C I S I O N
BELLOSILLO, J.:
This petition seeks to set aside the Decision of 15 February 1996 and the Resolution of 28 March 1996 of public respondent National
Labor Relations Commission in NLRC NCR CA No. 009753-95 (NLRC NCR Case No. 00-12-08759-94) which modified the decision of
the Labor Arbiter finding petitioners not guilty of illegal dismissal.
Petitioner Philippine Aeolus Automotive United Corporation (PAAUC) is a corporation duly organized and existing under Philippine
laws, petitioner Francis Chua is its President while private respondent Rosalinda C. Cortez was a company nurse
[1]
of petitioner
corporation until her termination on 7 November 1994. Jlexj
On 5 October 1994 a memorandum was issued by Ms. Myrna Palomares, Personnel Manager of petitioner corporation, addressed to
private respondent Rosalinda C. Cortez requiring her to explain within forty-eight (48) hours why no disciplinary action should be
taken against her (a) for throwing a stapler at Plant Manager William Chua, her superior, and uttering invectives against him on 2
August 1994; (b) for losing the amount of P1,488.00 entrusted to her by Plant Manager Chua to be given to Mr. Fang of the CLMC
Department on 23 August 1994; and, (c) for asking a co-employee to punch-in her time card thus making it appear that she was in
the office in the morning of 6 September 1994 when in fact she was not. The memorandum however was refused by private
respondent although it was read to her and discussed with her by a co-employee. She did not also submit the required explanation,
so that while her case was pending investigation the company placed her under preventive suspension for thirty (30) days effective 9
October 1994 to 7 November 1994. Lexjuris
On 20 October 1994, while Cortez was still under preventive suspension, another memorandum was issued by petitioner
corporation giving her seventy-two (72) hours to explain why no disciplinary action should be taken against her for allegedly failing
to process the ATM applications of her nine (9) co-employees with the Allied Banking Corporation. On 21 October 1994 private
respondent also refused to receive the second memorandum although it was read to her by a co-employee. A copy of the
memorandum was also sent by the Personnel Manager to private respondent at her last known address by registered mail. Jurismis
Meanwhile, private respondent submitted a written explanation with respect to the loss of the P1,488.00 and the punching-in of her
time card by a co-employee.
On 3 November 1994 a third memorandum was issued to private respondent, this time informing her of her termination from the
service effective 7 November 1994 on grounds of gross and habitual neglect of duties, serious misconduct and fraud or willful breach
of trust.
[2]

On 6 December 1994 private respondent filed with the Labor Arbiter a complaint for illegal dismissal, non-payment of annual service
incentive leave pay, 13th month pay and damages against PAAUC and its president Francis Chua.
[3]

On 10 July 1995 the Labor Arbiter rendered a decision holding the termination of Cortez as valid and legal, at the same time
dismissing her claim for damages for lack of merit.
[4]

On appeal to the NLRC, public respondent reversed on 15 February 1996 the decision of the Labor Arbiter and found petitioner
corporation guilty of illegal dismissal of private respondent Cortez. The NLRC ordered petitioner PAAUC to reinstate respondent
Cortez to her former position with back wages computed from the time of dismissal up to her actual reinstatement.
[5]

On 11 March 1996 petitioners moved for reconsideration. On 28 March 1996 the motion was denied;
[6]
hence, this petition
for certiorari challenging the NLRC Decision and Resolution.
The crux of the controversy may be narrowed down to two (2) main issues: whether the NLRC gravely abused its discretion in
holding as illegal the dismissal of private respondent, and whether she is entitled to damages in the event that the illegality of her
dismissal is sustained. Jjjuris
The Labor Code as amended provides specific grounds by which an employer may validly terminate the services of an
employee,
[7]
which grounds should be strictly construed since a persons employment constitutes "property" under the context of
the constitutional protection that "no person shall be deprived of life, liberty or property without due process of law" and, as such,
the burden of proving that there exists a valid ground for termination of employment rests upon the employer.
[8]
Likewise, in light of
the employee's right to security of tenure, where a penalty less punitive than dismissal will suffice, whatever missteps may have
been committed by labor ought not to be visited with a consequence so severe.
[9]

A perusal of the termination letter indicates that private respondent was discharged from employment for "serious misconduct,
gross and habitual neglect of duties and fraud or willful breach of trust." Specifically -justice
1. On August 2, 1994, you committed acts constituting gross disrespect to your superior Mr. William Chua, the
Plant Manager.
2. On August 23, 1994, the Plant Manager entrusted you the amount of P1,488.00 to be sent to CLMC for Mr. Fang
but the money was allegedly lost in your possession and was not recovered.
3. On September 6, 1994, you caused someone else to punch-in your time card to show that you were at work
when in fact you were doing a personal errand for Richard Tan. As per time card you were in at 8:02 A.M. but you
only arrived at 12:35 P.M.
4. On July 28, 1994, you received an amount of P900.00 from Miss Lucy Lao to open an ATM card of nine (9)
employees. On September 24, 1994, one of the employees complained by the name of Tirso Aquino about the
status of his ATM Card and upon query from the bank it was found out that no application and no deposit for said
person has been made. Likewise, it was found out that you did not open the ATM Card and deposit the P800.00 for
the 8 other employees. It turned out that said deposit was made after a month later.
[10]

As to the first charge, respondent Cortez claims that as early as her first year of employment her Plant Manager, William Chua,
already manifested a special liking for her, so much so that she was receiving special treatment from him who would oftentimes
invite her "for a date," which she would as often refuse. On many occasions, he would make sexual advances - touching her hands,
putting his arms around her shoulders, running his fingers on her arms and telling her she looked beautiful. The special treatment
and sexual advances continued during her employment for four (4) years but she never reciprocated his flirtations, until finally, she
noticed that his attitude towards her changed. He made her understand that if she would not give in to his sexual advances he
would cause her termination from the service; and he made good his threat when he started harassing her. She just found out one
day that her table which was equipped with telephone and intercom units and containing her personal belongings was transferred
without her knowledge to a place with neither telephone nor intercom, for which reason, an argument ensued when she confronted
William Chua resulting in her being charged with gross disrespect.
[11]

Respondent Cortez explains, as regards the second charge, that the money entrusted to her for transmittal was not lost; instead, she
gave it to the company personnel in-charge for proper transmittal as evidenced by a receipt duly signed by the latter.
[12]

With respect to the third imputation, private respondent admits that she asked someone to punch-in her time card because at that
time she was doing an errand for one of the company's officers, Richard Tan, and that was with the permission of William Chua. She
maintains that she did it in good faith believing that she was anyway only accommodating the request of a company executive and
done for the benefit of the company with the acquiescence of her boss, William Chua. Besides, the practice was apparently tolerated
as the employees were not getting any reprimand for doing so.
[13]

As to the fourth charge regarding her alleged failure to process the ATM cards of her co-employees, private respondent claims that
she has no knowledge thereof and therefore denies it. After all, she was employed as a company nurse and not to process ATM
cards for her co-employees. Jksm
The Supreme Court, in a litany of decisions on serious misconduct warranting dismissal of an employee, has ruled that for
misconduct or improper behavior to be a just cause for dismissal (a) it must be serious; (b) must relate to the performance of the
employees duties; and, (c) must show that the employee has become unfit to continue working for the employer.
[14]
The act of
private respondent in throwing a stapler and uttering abusive language upon the person of the plant manager may be considered,
from a lay man's perspective, as a serious misconduct. However, in order to consider it a serious misconduct that would justi fy
dismissal under the law, it must have been done in relation to the performance of her duties as would show her to be unfit to
continue working for her employer. The acts complained of, under the circumstances they were done, did not in any way pertain to
her duties as a nurse. Her employment identification card discloses the nature of her employment as a nurse and no other.
[15]
Also,
the memorandum informing her that she was being preventively suspended pending investigation of her case was addressed to her
as a nurse.
[16]

As regards the third alleged infraction, i.e., the act of private respondent in asking a co-employee to punch-in her time card,
although a violation of company rules, likewise does not constituteserious misconduct. Firstly, it was done by her in good faith
considering that she was asked by an officer to perform a task outside the office, which was for the benefit of the company, with the
consent of the plant manager. Secondly, it was her first time to commit such infraction during her five (5)-year service in the
company. Finally, the company did not lose anything by reason thereof as the offense was immediately known and corrected. Es m
On alleged infraction No. 4, as may be gleaned from and admitted in the memorandum of petitioners to private respondent dated
20 October 1994
[17]
and the notice of termination dated 3 November 1994, the money entrusted to her was in fact deposited in the
respective accounts of the employees concerned, although belatedly. We agree with the submission of the Solicitor General that -
Es msc
The mere delay/failure to open an ATM account for nine employees is not sufficient, by itself, to support a
conclusion that Rosalinda is guilty of gross and habitual neglect of duties. First, petitioner did not show that
opening an ATM is one of her primary duties as company nurse. Second, petitioner failed to show that Rosalinda
intentionally, knowingly, and purposely delayed the opening of ATM accounts for petitioners employees. It is of
common knowledge that a bank imposes upon an applicant certain requirements before an ATM account can be
opened, i.e. properly filled up application forms, identification cards, minimum deposit etc. In the instant case,
petitioner did not prove that the delay was caused by Rosalindas neglect or willful act (emphasis supplied).
[18]

Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them.
[19]
The negligence, to warrant removal from
service, should not merely be gross but also habitual. Likewise, the ground "willful breach by the employee of the trust reposed in
him by his employer" must be founded on facts established by the employer who must clearly and convincingly prove by substantial
evidence the facts and incidents upon which loss of confidence in the employee may fairly be made to rest.
[20]
All these
requirements prescribed by law and jurisprudence are wanting in the case at bar.
On the issue of moral and exemplary damages, the NLRC ruled that private respondent was not entitled to recover such damages for
her failure to prove that petitioner corporation had been motivated by malice or bad faith or that it acted in a wanton, oppressive or
malevolent manner in terminating her services. In disbelieving the explanation proffered by private respondent that the transfer of
her table was the response of a spurned lothario, public respondent quoted the Labor Arbiter -
Complainants assertion that the cause of the altercation between her and the Plant Manager where she threw a
stapler to him and uttered invectives against him was her refusal to submit to his advances to her which started
from her early days of employment and lasted for almost four years, is hardly believable. For indeed, if there was
such harassment, why was there no complaints (sic) from her during that period? Why did she stay there for so
long? Besides, it could not have taken that period for the Plant Manager to react. This assertion of the complainant
deserves no credence at all.
[21]

Public respondent in thus concluding appears baffled why it took private respondent more than four (4) years to expose William
Chua's alleged sexual harassment. It reasons out that it would have been more prepared to support her position if her act of
throwing the stapler and uttering invectives on William Chua were her immediate reaction to his amorous overtures. In that case,
according to public respondent, she would have been justified for such outburst because she would have been merely protecting her
womanhood, her person and her rights. Esmm is
We are not persuaded. The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the
abuse of power by the employer. Any employee, male or female, may rightfully cry "foul" provided the claim is well substantiated.
Strictly speaking, there is no time period within which he or she is expected to complain through the proper channels. The time to do
so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of the employee. Esmso
Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer's sexual impositions. Not
many women, especially in this country, are made of the stuff that can endure the agony and trauma of a public, even corporate,
scandal. If petitioner corporation had not issued the third memorandum that terminated the services of private respondent, we
could only speculate how much longer she would keep her silence. Moreover, few persons are privileged indeed to transfer from
one employer to another. The dearth of quality employment has become a daily "monster" roaming the streets that one may not be
expected to give up one's employment easily but to hang on to it, so to speak, by all tolerable means. Perhaps, to private
respondent's mind, for as long as she could outwit her employer's ploys she would continue on her job and consider them as mere
occupational hazards. This uneasiness in her place of work thrived in an atmosphere of tolerance for four (4) years, and one could
only imagine the prevailing anxiety and resentment, if not bitterness, that beset her all that time. But William Chua faced reality
soon enough. Since he had no place in private respondent's heart, so must she have no place in his office. So, he provoked her,
harassed her, and finally dislodged her; and for finally venting her pent-up anger for years, he "found" the perfect reason to
terminate her. Mse sm
In determining entitlement to moral and exemplary damages, we restate the bases therefor. In moral damages, it suffices to prove
that the claimant has suffered anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the act
complained of.
[22]
Exemplary damages, on the other hand, are granted in addition to, inter alia, moral damages "by way of example
or correction for the public good"
[23]
if the employer "acted in a wanton, fraudulent, reckless, oppressive or malevolent manner."
[24]

Anxiety was gradual in private respondent's five (5)-year employment. It began when her plant manager showed an obvious
partiality for her which went out of hand when he started to make it clear that he would terminate her services if she would not give
in to his sexual advances. Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an employee's
spirit in her capacity for advancement. It affects her sense of judgment; it changes her life. If for this alone private respondent
should be adequately compensated. Thus, for the anxiety, the seen and unseen hurt that she suffered, petitioners should also be
made to pay her moral damages, plus exemplary damages, for the oppressive manner with which petitioners effected her dismissal
from the service, and to serve as a forewarning to lecherous officers and employers who take undue advantage of their ascendancy
over their employees. Ex sm
All told, the penalty of dismissal is too excessive and not proportionate to the alleged infractions committed considering that it does
not appear that private respondent was an incorrigible offender or that she inflicted serious damage to the company, nor would her
continuance in the service be patently inimical to her employers interest.
[25]
Even the suspension imposed upon her while her case
was pending investigation appears to be unjustified and uncalled for.
WHEREFORE, the Decision of public respondent National Labor Relations Commssion finding the dismissal of private respondent
Rosalinda C. Cortez to be without just cause and ordering petitioners Philippine Aeolus Automotive United Corporation and/or
Francis Chua to pay her back wages computed from the time of her dismissal, which should be full back wages, is AFFIRMED.
However, in view of the strained relations between the adverse parties, instead of reinstatement ordered by public respondent,
petitioners should pay private respondent separation pay equivalent to one (1) month salary for every year of service until finality of
this judgment. In addition, petitioners are ordered to pay private respondent P25,000.00 for moral damages andP10,000.00 for
exemplary damages. Costs against petitioners. Kyle
SO ORDERED.
FIRST DIVISION


DAP CORPORATION, FELIX G.R. No. 165811
PINEDA, President, and DENSIL
PINEDA, General Manager,
Petitioners, Present:

Davide, Jr., C.J. (Chairman),
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
COURT OF APPEALS and
MAUREEN MARCIAL, Promulgated:
Respondents.
December 14, 2005
x ---------------------------------------------------------------------------------------- x

DECISION


YNARES-SANTIAGO, J.:


Before us is a petition for review on certiorari of the Decision
[1]
of the Court of Appeals in CA-G.R. SP No. 77012 dated March
19, 2004 and the Resolution
[2]
dated July 29, 2004 denying petitioners motion for reconsideration. Petitioner DAP Corporation
(DAP) is a domestic enterprise engaged in the distribution of various merchandise including wines and spirits. Petitioners Felix
Pineda and Densil Pineda are the corporations president and general manager, respectively.

It appears that on May 8, 2001, DAP received a letter from International Distributors Corporation (IDC) informing it of the
termination of their distributorship agreement. DAP alleges that by reason of this termination, it was constrained to cease its
business operations and to terminate the employment of its employees, including respondent Maureen Marcial who had been DAP's
salesperson from May 4, 2000 until July 2001.

DAP claims that it notified its employees of the termination of their employments by reason of redundancy. On July 28, 2001,
DAP paid their wages and asked them to sign the payslips. It likewise informed them that they would be paid their separation pay in
installments because of liquidity problems. The checks representing the separation pay were issued to the employees.

However, Marcial and 17 other employees refused to accept the checks and instead, filed a complaint for illegal dismissal,
money claims for non-payment of overtime pay and separation pay and damages with the National Labor Relations Commission
(NLRC) of Davao City. During the course of the proceedings before the NLRC, 16 employees withdrew their complaint. Only
respondent Marcial and Jason Diapen pursued their claims.

In the Decision
[3]
dated November 16, 2001, the Labor Arbiter ruled that while DAP may have an authorized cause to terminate
the employment of its employees because of the cancellation of the distributorship agreement, the same was implemented in
violation of the law for failure to furnish the employees formal notices one month prior to the intended date of termination. Hence,
it disposed of the case as follows:

WHEREFORE, premises considered, judgment is hereby rendered, declaring the dismissal of complainants
illegal. Respondents DAP CORPORATION/FELIX PINEDA, President-Owner, are hereby directed to jointly and
solidarily pay complainants the total amount of SIXTY-FOUR THOUSAND FIVE HUNDRED SIXTY SIX PESOS and
96/100 (P64,566.96) representing their separation pay and backwages, plus 10% of the total award as attorneys
fees.

In case of appeal, backwages shall accrue up to the finality of the decision.

The claim for damages is dismissed for lack of merit.

SO ORDERED.
[4]


Petitioners filed an appeal with the NLRC, which affirmed
[5]
the decision of the Labor Arbiter. However, the NLRC
found that respondent and Diapen were entitled only to one month separation pay on the basis of their length of service. Thus,
it ruled:

WHEREFORE, premises considered, the appealed decision of the Labor Arbiter is hereby MODIFIED to the
extent that complainants Maureen Marcial and Jason R. Diapen shall be paid one (1) month separation pay, but
the same is affirmed in all other aspects.

SO ORDERED.
[6]


The case was elevated to the Court of Appeals on a petition for certiorari. In the interim, Diapen withdrew his appeal. The
appellate court affirmed the decision of the NLRC, thus:

WHEREFORE, the petition is DENIED and the resolution of the National Labor Relations Commission is
AFFIRMED by ordering private respondents DAP CORPORATION, FELIX PINEDA, and DENSIL PINEDA, jointly and
solidarily to pay private respondent MAUREEN MARCIAL separation pay equivalent to one (1) month pay or in the
amount of SIX THOUSAND PESOS (P6,000.00) and full backwages from the time her employment was terminated
on July 28, 2001 up to the time the decision herein becomes final. This case is REMANDED to the Labor Arbiter for
computation of the award of backwages and the ten percent (10%) of the total award as attorneys fees.

SO ORDERED.
[7]


Petitioners are before us now raising the following issues:

RESPONDENT NLRC ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT CONFIRMED THE RULING OF
THE LABOR ARBITER WHERE AFTER DECLARING THAT THERE WAS VALID GROUND FOR TERMINATION DUE TO
REDUNDANCY, STILL IT RULED THAT THERE WAS ILLEGAL DISMISSAL.

RESPONDENT NLRC ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT CONFIRMED THE RULING OF
THE LABOR ARBITER THAT THERE WAS LACK OF NOTICE PRIOR TO THE SEPARATION OF PRIVATE RESPONDENT
MARCIAL AND ORDERED THE PAYMENT OF BACKWAGES.

RESPONDENT NLRC ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT FAILED TO CATEGORICALLY
RULE ON THE MAIN ISSUE WHICH IS WHETHER IT WAS LEGAL AND VALID FOR PETITIONER DAP TO PAY ON
INSTALLMENT SEPARATION PAY TO PRIVATE RESPONDENT MARCIAL AS SAID PETITIONER WAS SUFFERING FROM
SEVERE FINANCIAL LIQUIDITY.

THE SUBJECT DECISION IS CONTRARY TO LAW, CUSTOMS AND PUBLIC POLICY.
[8]


We find the petition bereft of merit.

Contrary to petitioners assertion, the issue in this case does not concern the mode of payment of separation pay. As held by
the NLRC, the validity of the installment payments of DAPs employees separation pay was rendered moot because the checks
issued for these payments have already become due and demandable. There is likewise no question regarding the cause of the
dismissal. Redundancy is one of the authorized causes provided by law for the termination of employment.
[9]
Respondent Marcial
does not dispute which the three tribunals upheld, that the cancellation of DAPs distributorship agreement with IDC gave rise to a
valid cause for the dismissal of DAPs employees.

The crux of the instant petition is respondents allegation that DAP failed to comply with the notice requirement for a valid
termination due to redundancy or retrenchment. Respondent claims that it was only on July 28, 2001, when the employees of DAP
were given their salaries and were asked to sign the payslips, that they realized that their services were being terminated.

Petitioners argue that respondent cannot complain of lack of notice because all of DAPs employees were aware of the
cancellation of the distributorship agreement and the case it filed against IDP. As such, respondent's actual knowledge of the
redundancy is equivalent to notice.

We are not persuaded. Article 283 of the Labor Code clearly provides:

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 Ministry
of Labor and Employment at least one (1) month before the intended date thereof ....

Thus, we have held that the employer must comply with the following requisites to ensure the validity of the redundancy
program: 1) a written notice served on both the employees and the Department of Labor and Employment (DOLE) at least one
month prior to the intended date of retrenchment; 2) payment of separation pay equivalent to at least one month pay or at least
one month pay for every year of service, whichever is higher; 3) good faith in abolishing the redundant positions; and 4) fai r and
reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.
[10]
As mentioned earlier,
respondent does not question the soundness of the redundancy program implemented by DAP, but the lack of notice required by
law.

The employees actual knowledge of the termination of DAPs distributorship agreement with IDP is not sufficient to
replace the formal and written notice required by the law. In the written notice, the employees are informed of the specific date of
the termination, at least a month prior to the date of effectivity, to give them sufficient time to make necessary arrangements. In
this case, notwithstanding the employees knowledge of the cancellation of the distributorship agreement, they remained uncertain
about the status of their employment when DAP failed to formally inform them about the redundancy.

Furthermore, the validity of a termination can exist independently of the procedural infirmity in the dismissal. This is not
the first time where the Court upheld the dismissal but held the employer liable for non-compliance with the procedural
requirements. In Agabon v. National Labor Relations Commission,
[11]
we found that the dismissal of the employees therein as valid
and for a just cause because abandonment was firmly established. Nonetheless, the employer was held liable because it was proven
that the twin requirements of notice and hearing were not followed.

However, in lieu of the payment of backwages, the employer was ordered to pay indemnity in the form of nominal
damages, thus:

The violation of the petitioners right to statutory due process by the private respondent warrants the
payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant circumstances. We believe this form of damages would
serve to deter employers from future violations of the statutory due process rights of employees. At the very
least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code
and its Implementing Rules.
[12]


The above ruling was qualified in the case of Jaka Food Processing Corporation v. Pacot.
[13]
In Jaka, the employees were
terminated because the corporation was financially distressed. However, the employer failed to comply with the notice
requirement under Article 283 of the Labor Code when it failed to serve a written notice to the employees and the DOLE at least one
month before the intended date of termination. Significantly, the Court distinguished the case from Agabon saying:

The difference between Agabon and the instant case is that in the former, the dismissal was based on a
just cause under Article 282 of the Labor Code while in the present case, respondents were dismissed due to
retrenchment, which is one of the authorized causes under Article 283 of the same Code.

.

A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is
guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty
of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the
employee himself initiated the dismissal process.

On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply
delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the
employers exercise of his management prerogative, i.e. when the employer opts to install labor saving devices,
when he decides to cease business operations or when, as in this case, he undertakes to implement a
retrenchment program.
[14]


Thus, we qualified the ruling in Agabon in this wise:

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the
employer failed to comply with the notice requirement, the sanction to be imposed upon him should
be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if
the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise
of his management prerogative.
[15]


In light of the aforequoted ruling, we find the amount of P50,000.00 sufficient under the circumstances as indemnity for the
violation of respondents statutory rights.

As provided in Article 283 of the Labor Code, respondent is likewise entitled to separation pay equivalent to at least her one
month pay or to at least one month pay for every year of service, whichever is higher. The records clearly show that respondents
length of service is one year and two months. She is therefore also entitled to separation pay equivalent to one month pay.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals dated March 19, 2004 and
July 29, 2004 respectively, in CA-G.R. SP No. 77012 are SET ASIDE. A new judgment is entered DECLARING the dismissal as VALID,
but ordering petitioners to PAY respondent the amount of P50,000.00, representing nominal damages for non-compliance with
statutory due process, and separation pay equivalent to one month pay.

SO ORDERED.
SECOND DIVISION

VETERANS SECURITY AGENCY, INC.
and JESUS R. VARGAS,
P e t i t i o n e r s,


- versus -


FELIPE GONZALVO, JR.,
R e s p o n d e n t.
G.R. No. 159293

Present:

PUNO,
Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.

Promulgated:

December 16, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N



CHICO-NAZARIO, J.:

In this petition for review, petitioner VETERANS SECURITY AGENCY, INC. (VSAI), represented by its Executive Vice-President
and General Manager, JESUS R. VARGAS, challenges the Decision
[1]
dated 27 January 2003 of the Court of Appeals in CA-G.R. SP No.
67043, affirming the Decision of the National Labor Relations Commission (NLRC). The NLRC reversed the Decision of the Labor
Arbiter and declared respondent to have been illegally dismissed. VSAI likewise implores this Court to take a look at the
Resolution
[2]
dated 19 June 2003 of the Court of Appeals denying their motion for reconsideration.

The evidence shows that VSAI hired respondent as a security guard, with initial assignment at Overseas Workers Welfare
Administration (OWWA) collection unit at the Philippines Overseas Employment Agency building in Ortigas, Pasig City from July 1991
to October 1992. His next tour of duty was at the Citytrust Bank from 20 November 1992 to 31 December 1992. He was then
detailed at the National Power Corporation in Plaridel, Bulacan from January 1993 to January 1994. In February 1994 to April 1995,
he was deployed at the University of Santo Tomas.

Meanwhile, on 24 April 1995, respondent brought his complaint against VSAI before the Social Security System (SSS) for
non-remittance of SSS contributions. As a result, petitioners formally remitted his contributions to the SSS.

In May 1995, respondent was transferred to the OWWAs main office in Pasig City.


On 26 August 1998, VSAI again failed to remit to the SSS his contributions and loan payments prompting respondent to file
another complaint against VSAI before the SSS for non-remittance of contributions and loan payments. As a result, the OWWA
Detachment Commander intimated to respondent that VSAI was annoyed by the fact that he had commenced the said action
against it.


Thereafter, VSAI hired three (3) additional guards for the OWWA parking lot located at San Luis Street, Pasay City. In a
meeting sometime in December 1998, OWWAs Chief of Services and Property Division announced that the lease contract for
said parking lot was to expire on 07 January 1999 and the three newly-hired guards posted there would have to report to VSAIs
office.


On 30 December 1998, respondent, who was then manning the OWWA main office, was made to swap postings with
one of these three guards manning the OWWA parking lot. This came as a surprise to respondent because such swapping
would be to his disadvantage as he would have to give up his post at the OWWA main office where he was serving for almost
three (3) years to give way to one of the newly-hired security guards who would soon be displaced from the OWWA parking lot
as a result of the expiration of the lease contract for said property. Resultantly, on 7 January 1999, upon the expiration of the
lease contract on the parking lot, the services of the guards temporarily assigned there were withdrawn, including that of
respondent.


The next day, when respondent reported for work at the OWWA Detachment Commander, he was told that he would
have to be assigned somewhere else because his spouse was also assigned as a lady guard at the OWWA. This came as an utter
surprise to the respondent who was single at that time.


VSAI informed respondent that his redeployment would be at the Department of Labor and Employment (DOLE). When
respondent reported to the DOLE Detachment Commander, he was required to renew his Barangay, police and National Bureau
of Investigation (NBI) clearances and to undergo neurological examination. Respondent requested petitioners to assign him at
either the OWWA Office in Intramuros, Manila or at the OWWA Collection Unit located in Pasig City, so he need not reapply and
renew his employment requirements, but was denied. From then on, respondent was placed on a floating status sans pay.

Consequently, on 14 April 1999, respondent filed a complaint against petitioner VSAI and its President, Alfredo Vargas,
Jr., for overtime pay, premium for holiday and rest day, holiday pay, service incentive leave pay, thirteenth (13
th
) month pay and
non-remittance of SSS contribution starting January 1999.
[3]
Respondent alleged, in his Position Paper, that he was terminated by
VSAI to hit back at him for his filing of two (2) complaints against the company for non-remittances of his contributions and loan
payments with the SSS.
[4]


On 29 September 1999, respondent filed an additional complaint for illegal dismissal with claims for separation pay and
attorneys fees.
[5]


In its Position Paper, VSAI retorted that on 07 January 1999, it received a memorandum from Rafael C. Velez, Officer-in-
Charge of the Administrative Department of OWWA, stating that OWWAs lease contract covering the parking area had expired
for which reason the services of the three (3) guards, including respondent, had to be withdrawn. On 8 January 1999,
respondent was given a posting assignment at the DOLE in lieu of his OWWA assignment, but was required to undergo an
interview as well as neurological examination before final posting. Respondent did not report to work thereafter, although VSAI
sent no less than three (3) memoranda for him to report for work. In its Position Paper, VSAI averred that it would submit copies
of the payrolls for the pertinent periods to the Labor Arbiter to show that respondent had been paid in accordance with existing
labor laws. However, these were never submitted.

On 08 February 2000, the Labor Arbiter dismissed the complaint for lack of merit. The NLRC reversed the decision of the
Labor Arbiter in a Decision dated 24 April 2001, with the following fallo:

WHEREFORE, the assailed decision is hereby REVERSED and SET ASIDE and a new one entered declaring
complainant-appellants dismissal as illegal and ordering respondent-appellee to pay him his separation pays
equivalent to one-month salary per year of service and his money claims of night shift differential pay, service
incentive leave, legal holiday pay, overtime pay, computed three years backward, as follows:

1.) Separation
P198 x 26 days x 7 yrs. P36,036.00


2.) Salary differential from Jan. 8, 1996 to Jan. 8, 1999 = 3 yrs.

- From Jan. 8, 1996 to Feb.1, 1996 = 76 mos.
P8,335.05- 4,350 (P145.00 x 30 days) = P3,985.05 x .70 mos. P 3,028.64

-From Feb.2, 1996 to Apr. 30, 1996 = 3 mos.
P9,254.76 4,830 (161.00 x 30 days) = P4,424.76 x 3 mos. 13,274.28

-May 1, 1996 to Feb. 5, 1997 = 9.2 mos
P9,484.71 4,950 (165.00 x 30 days) = P4,946.95 x 2.8 mos. 41,719.33

-Feb.6, 1997 to April 30, 1997 = 2.8 mos
P10,346.95 5,400 (180.00 x 30 days) = P4,946.95 x 2.8 mos. 13,851.46

-May 1, 1997 to Feb. 5, 1998 = 9.2 mos
P10,634.375,550 (180.00 x 30 days)= P4,946.95 x 2.8 mos. 46,776.20

-Feb. 6, 1998 to Jan. 8,1999 = 11.06 mos
P11,381.655,940 (P198.00 x 30 days)= P5,441.65 x 11.06 mos. 60,184.65

Total P178,834.56.

GRAND TOTAL P214,870.56
[6]




On 27 January 2003, the Court of Appeals affirmed the ruling of the NLRC. VSAIs motion for reconsideration was denied by
the Court of Appeals in the Resolution
[7]
of19 June 2003.

Hard done by the said ruling, petitioner now comes to this Court as a final recourse via the instant appeal assailing the
Decision

and Resolution of the Court of Appeals on the following assignment of errors:

I. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT
HELD THAT THE RESPONDENT WAS ILLEGALLY DISMISSED DESPITE A JUDICIAL ADMISSION BY
RESPONDENT THAT HE WAS OFFERED SENTINEL DUTY IMMEDIATELY AFTER HIS RECALL FROM HIS
POSTING ASSIGNMENT AT THE PREMISES OF OVERSEAS WORKERS WELFARE ADMINISTRATION, (OWWA).

II. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT
SUSTAINED THE AWARD BY THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), OF OVERTIME PAY
TO THE RESPONDENT DESPITE A FINDING BY THE NLRC THAT THERE WAS NO IOTA OF EVIDENCE TO
SATISFY THE BURDEN OF PROOF REQUIRED TO SUPPORT THE MONEY CLAIM.
[8]




The issue of whether or not respondent was constructively dismissed is the bedrock of the petition. Related to this is the
issue of whether or not respondent had abandoned his job.

VSAI ardently claims that there was no dismissal, constructive or otherwise. VSAI claims that respondent abandoned his
post and went on Absence Without Leave. The evidence, however, points to a different direction.

Constructive dismissal exist when an act of clear discrimination, insensibility or disdain on the part of the employer has
become so unbearable as to leave an employee with no choice but to forego continued employment.
[9]
On the other hand,
abandonment, as a just and valid cause for termination, requires a deliberate and unjustified refusal of an employee to resume his
work, coupled with a clear absence of any intention of returning to his or her work. Abandonment is incompatible with constructive
dismissal.
[10]


We find the absence of abandonment, in this case, as there was no deliberate intent on the part of the respondent to
abandon his employment with VSAI. A strong indication of the intention of respondent to resume work is that on several dates, after
his last assignment on January 1999, he reported to the VSAIs office regularly for reassignment, but was not given any. He then lost
no time in filing the illegal dismissal case. An employee who forthwith takes steps to protest his layoff cannot by any stretch of
imagination be said to have abandoned his work and the filing of the complaint is proof enough og his desire to return to work, thus
negating any suggestion of abandonment.
[11]
Significantly, respondent, in his position paper,
[12]
prayed for a regular assignment or in
the alternative VSAI should be ordered to pay salaries until the time he is gainfully employed. Respondents entreaty to be given a
regular posting is antithetical to a charge of abandonment.

Moreover, the burden of proving that respondent has abandoned his job rests with VSAI. However, VSAI failed miserably to
discharge the burden. VSAI adduced in evidence three memos allegedly sent via registered mail to respondent, but as the NLRC and
the Court of Appeals ruled, the evidentiary value of these documents is of dubious authenticity as the memos had not been properly
identified and were only attached belatedly to the petition.
[13]
Moreover, we note that there was no registry return card for these
memos so there is no way of telling who received these memos, if they were received at all by respondent. What is more, the three
memos appear to be exact copies of each other except for the signatories and the dates and the way the addressees were written.
The three memos commonly stated, viz:


Re: Directive To Report to VSAI
Operations Center For
Re-Assignment

Pursuant to the Standing Policy of our Agency to give priority assignment to security guards who have
been relieved from their post of assignment and who are on a floating status, you are hereby directed to report
soonest to the VSAI Personnel Office at the above address for re-assignment.

Failure to comply will be tantamount to your non-interest for re-assignment and will constitute a waiver
on your part of your rights under the circumstances.

Please acknowledge receipt hereof by affixing your signature over your printed name on the space
provided hereunder.
[14]
(Emphasis supplied.)


This similarity in form and substance of the memos engenders the impression that they were just pro-forma letters aimed
at making it appear that VSAI have not dismissed respondent and that on three occasions it had asked respondent to report for
work, but which notices the latter refused to heed. Further, it baffles the Court that the second memorandum did not mention
about the previous memorandum sent to respondent. Neither did the third memorandum mention anything about the two previous
memos.

We find it equally implausible that none of the 3 memos touched on respondents alleged refusal to accept the posts
assigned to him and the abandonment of his posts considering that such acts constitute willful disobedience and gross neglect of
duty which are valid grounds for dismissal.
[15]


VSAI capitalized on the fact that on 7 January 1999, it received a memorandum from the Officer-in-Charge of the
Administrative Department of OWWA, informing that OWWAs lease contract covering the parking area had expired for which
reason the services of the three (3) guards, including respondent, had to be withdrawn. The uncontroverted fact, however, is
that respondent was already previously regularly detailed at the OWWA main office, but he was uprooted from this assignment
and was tossed at the OWWA parking lot in Pasay City with the knowledge that the security services in that area would soon
expire, as a consequence of which he would have to be reassigned somewhere else. As the facts stand, reassignment to a new
client, in this case, necessitates a renewal of Barangay clearance, training certificate, neurological test, and ultimately passing
the interview by the client. In effect, he would reapply with the next client of VSAI, which is the DOLE, and in the process of
application, be on floating status without pay, with no assurance of acceptance despite securing the said documents as he
would still have to undergo the rigors of an interview. Indeed, respondent was then left uncertain as to when and where his
next assignment would be.

There is likewise something devious with the fact that a new recruit replaced respondent from his previous posting at
OWWA main office relegating respondent to a short-lived posting at the OWWA Pasay City parking lot that would soon fold-up.

VSAI further contends that respondent was only provisionally relieved from his last post and not dismissed from
employment. Hence, the filing of the illegal dismissal case in April 1999 was premature. If at all, it is argued that respondent should
be considered on temporary off-detail status.

In Superstar Security Agency, Inc. vs. NLRC,
[16]
we held that placing an employee on temporary off-detail is not equivalent
to dismissal provided that such temporary inactivity should continue only for a period of six (6) months. Otherwise, the security
agency concerned could be held liable for constructive dismissal under Article 286 of the Labor Code which reads:

Art. 286. When employment not deemed terminated.The bona fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military
or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his
former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1)
month from the resumption of operations of his employer or from his relief from the military or civic duty.
(Emphasis supplied.)



Article 286 applies only when there is a bona fide suspension of the employers operation of a business or undertaking for a
period not exceeding six (6) months. In security agency parlance, being placed off detail or on floating status means waiting to
be posted.
[17]
Here, prior to his tour of duty in Pasay City, respondent had a regular posting, but he was dislodged by a newly-hired
security guard and respondent had to be assigned to a client whose service contract was to end. Thus, there was no suspension of
operation, business or undertaking, bona fide or not, that would have justified placing the respondent off-detail and making him
wait for a period of more than six months.
[18]
In the same vein, the records are shorn of any indication that respondent had to be
placed on temporary off-detail for lack of available post. VSAI just stopped giving respondent his assignment after his duty at the
OWWA Parking Lot in Pasay City.

True, it is the inherent prerogative of an employer to transfer and reassign its employees to meet the requirements of its
business. Be that as it may, the prerogative of the management to transfer its employees must be exercised without grave abuse of
discretion. The exercise of the prerogative should not defeat an employee's right to security of tenure. The employers privilege to
transfer its employees to different workstations cannot be used as a subterfuge to rid itself of an undesirable worker.
[19]


Here, riled by respondents consecutive filing of complaint against it for nonpayment of SSS contributions, VSAI had been
tossing respondent to different stations thereafter. From his assignment at University of Santo Tomas for almost a year, he was
assigned at the OWWA main Office in Pasig where he served for more than three years. After three years at the OWWA main office,
he was transferred to the OWWA Pasay City parking lot knowing that the security services will end forthwith. VSAI even concocted
the reason that he had to be assigned somewhere because his spouse was already a lady guard assigned at the OWWA main office.
Inasmuch as respondent was single at that time, this was obviously a mere faade to rid of respondent who was no longer in VSAIs
good graces.

The only logical conclusion from the foregoing discussion is that the VSAI constructively dismissed the respondent. This
ruling is in rhyme with the findings of the Court of Appeals and the NLRC. Dismissal is the ultimate penalty that can be meted to an
employee. Inasmuch as petitioners failed to adduce clear and convincing evidence to support the legality of respondents dismissal,
the latter is entitled to reinstatement and back wages as a necessary consequence. However, reinstatement is no longer feasible in
this case because of the palpable strained relations, thus, separation pay is awarded in lieu of reinstatement.
[20]


Anent monetary claims, VSAI ardently argues that such demands must be denied for failure of respondent to adduce
evidence thereon. Such logic could not withstand judicial muster.

On this, the Court could not be any clearer in Mayon Hotel & Restaurant vs. Rolando Adana, et al,
[21]
when we held that
inasmuch as respondents therein have set out with particularity in their complaint, position paper, affidavits and other documents
the labor standard benefits they are entitled to, and which they alleged that petitioners therein have failed to pay them, it became
incumbent upon the employers to prove that they have paid these money claims. This is in tune with the general precept that: one
who pleads payment has the burden of proving it, and even where the employees must allege nonpayment, the general rule is that
the burden rests on the defendant to prove nonpayment, rather than on the plaintiff to prove non payment.
[22]
The reason for the
rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that
overtime, differentials, service incentive leave and other claims of workers have been paid are not in the possession of the worker
but in the custody and absolute control of the employer.
[23]


In the case at bar, VSAI failed to discharge the burden of proof by choosing not to fully and completely disclose information
and present the necessary documents to provepayment of labor standard benefits due to respondent. Despite repeated
promises, i.e., in its five-paged Position Paper
[24]
or in its two-paged Reply,
[25]
that it will proffer in evidence the payrolls which it
admitted are the best evidence to resolve the monetary claims of respondent, VSAI failed to submit the pertinent employee files,
which would show that respondent rendered work entitling him to payment for overtime work, night shift differential, service
incentive leave, and premium pay for work on holidays and rest day. Indeed, VSAIs failure to submit the necessary documents
documents which are not in respondents possession but in the custody and absolute control of VSAI in spite of its previous
undertaking to do so, gives rise to the presumption that their presentation is prejudicial to its cause.
[26]
Consequently, it failed to
discharge the onus prabandi thereby making it liable for such claims to respondent.
[27]


In sum, respondent having been illegally dismissed, he is entitled to separation pay and salary differentials as awarded by
the NLRC whose computations the Court defers to, it being a matter failing within its expertise.
[28]


One final note. The cavalier fashion by which the Labor Arbiter dealt with this case must not go unnoticed. The Decision, in
its totality, was merely two pages and the rationale for the denial of respondents claims was sketchily couched in this lone
paragraph, to wit:


This Office is inclined to uphold the position of the respondents. Indeed, payrolls of service contractors
which are performing specific work for a government office are being scrutinized by the auditors of the
Commission on Audit. These auditors will not allow the payment of the billings of the service contractors unless
there is sufficient showing that the employees of the service contractors are paid in accordance with laws.
[29]



There is absolutely no evidence on record to support the above-quoted pronouncement of the Labor Arbiter. In the
ordinary course of things, it is far-fetched that COA auditors would investigate if the employees of the service contractors of
government offices are properly paid. The vinculum that binds the government offices to the contractors is the contract of service.
Thus, the COA auditors are normally limited to ascertaining if the payments made by the government agencies are in accordance
with the service contracts and if they are properly documented with billings and receipts of payments. Ceteris paribus, other things
considered equal, COA auditors are not tasked to look into the payrolls of the service contractors to make sure that their employees
are properly compensated in allowing or disallowing the payment of service contractors.

It was, therefore, sheer whim on the part of the Labor Arbiter to dismiss the claims of respondent on the basis of a
mere presumption without stating its legal basis.

With unfading fervor, the Court again strikes a chord among the quasi-judicial agencies to shun from treating labor
cases flippantly. In the avuncular case of San Jose v. NLRC,
[30]
the Court smote hard blows on the Labor Arbiter therein for his
slapdash manner of deciding a case, viz:



Labor Arbiters should exert all efforts to cite statutory provisions and/or judicial decision to buttress their
dispositions. An Arbiter cannot rely on simplistic statements, generalizations, and assumptions. These are not
substitutes for reasoned judgment. Had the Labor Arbiter exerted more research efforts, support for the Decision
could have been found in pertinent provisions of the Labor Code, its Implementing Rules, and germane decisions
of the Supreme Court.
[31]





Indeed, not only do the claims of employees boil down to the lucre of wages, separation pay, etc., although these are
the lifeblood of a minimum wage earner such as the respondent herein. Perhaps more importantly, at stake is a workingmans
years of sweat and toil. Here, respondent had rendered nine (9) years of unsullied hard work, but his reward came in a long-
drawn-out floating status without pay to chastise him for lodging a legitimate grievance against VSAI for non-remittance of SSS
payments.

Indeed, the Court ought to deny this petition lest the wheels of justice for aggrieved workingmen grind to a halt. We ought
to abate the culture of employers bestowing security of tenure to employees, not on the basis of the latters performance on the
job, but on their ability to toe the line set by their employer and endure in silence the flagrant incursion of their rights, zealously
protected by our labor laws and by the Constitution, no less.

WHEREFORE, the present petition is hereby DENIED. Accordingly, the Decision and the Resolution dated 27 January 2003
and 19 June 2003, of the Court of Appeals in CA-G.R. SP No. 67043, are hereby AFFIRMED.

Costs against petitioners.


SO ORDERED.


Republic of the Philippines
Supreme Court
Manila

SECOND DIVISION

MANILA PAVILION HOTEL, owned and operated
by ACESITE (PHILS.) HOTEL CORPORATION,
Petitioner,



- versus -



HENRY DELADA,
Respondent.
G.R. No. 189947

Present:

CARPIO, J.,
Chairperson,
PEREZ,
SERENO,
REYES, and
PERLAS-BERNABE,
*
JJ.

Promulgated:

January 25, 2012
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
D E C I S I O N
SERENO, J.:
Before the Court is a Petition for Review on Certiorari filed under Rule 45 of the Revised Rules of Court, assailing the 27 July
2009 Decision and 12 October 2009 Resolution of the Court of Appeals (CA).
[1]

Facts
The present Petition stems from a grievance filed by respondent Henry Delada against petitioner Manila Pavilion Hotel
(MPH). Delada was the Union President of the Manila Pavilion Supervisors Association at MPH. He was originally assigned as Head
Waiter of Rotisserie, a fine-dining restaurant operated by petitioner. Pursuant to a supervisory personnel reorganization program,
MPH reassigned him as Head Waiter of Seasons Coffee Shop, another restaurant operated by petitioner at the same hotel.
Respondent declined the inter-outlet transfer and instead asked for a grievance meeting on the matter, pursuant to their Collective
Bargaining Agreement (CBA). He also requested his retention as Head Waiter of Rotisserie while the grievance procedure was
ongoing.
MPH replied and told respondent to report to his new assignment for the time being, without prejudice to the resolution of
the grievance involving the transfer. He adamantly refused to assume his new post at the Seasons Coffee Shop and instead
continued to report to his previous assignment at Rotisserie. Thus, MPH sent him several memoranda on various dates, requiring
him to explain in writing why he should not be penalized for the following offenses: serious misconduct; willful disobedience of the
lawful orders of the employer; gross insubordination; gross and habitual neglect of duties; and willful breach of trust.
Despite the notices from MPH, Delada persistently rebuffed orders for him to report to his new assignment. According to
him, since the grievance machinery under their CBA had already been initiated, his transfer must be held in abeyance. Thus, on 9
May 2007, MPH initiated administrative proceedings against him. He attended the hearings together with union representatives.
Meanwhile, the parties failed to reach a settlement during the grievance meeting concerning the validity of MPHs transfer
order. Respondent then elevated his grievance to the Peers Resources Development Director. Still, no settlement between the
parties was reached. Respondent appealed the matter to the Grievance Committee level. The committee recommended that he
proceed to the next level of the grievance procedure, as it was unable to reach a decision on the matter. Consequently, on 20 April
2007, Delada lodged a Complaint before the National Conciliation and Mediation Board. On 25 May 2007, the parties agreed to
submit the following issues for voluntary arbitration:

I. WHETHER OR NOT THE TRANSFER OF THE UNION PRESIDENT FROM HEAD WAITER AT ROTISSERIE TO
HEAD WAITER AT SEASONS RESTAURANT IS VALID AND JUSTIFIED;

II. WHETHER OR NOT THE PREVENTIVE SUSPENSION OF THE COMPLAINANT IS VALID AND JUSTIFIED;

III. WHETHER OR NOT THE PREVENTIVE SUSPENSION OF THE COMPLAINANT IS A VALID GROUND TO STRIKE;

IV. WHETHER OR NOT THE RESPONDENT MAY BE HELD LIABLE FOR MORAL AND EXEMPLARY DAMAGES AND
ATTORNEYS FEES; AND

V. WHETHER OR NOT THE COMPLAINANT MAY BE HELD LIABLE FOR MORAL AND EXEMPLARY DAMAGES
AND ATTORNEYS FEES.
[2]


While respondents Complaint concerning the validity of his transfer was pending before the Panel of Voluntary Arbitrators
(PVA), MPH continued with the disciplinary action against him for his refusal to report to his new post at Seasons Coffee Shop. Citing
security and safety reasons, petitioner also placed respondent on a 30-day preventive suspension. On 8 June 2007, MPH issued a
Decision, which found him guilty of insubordination based on his repeated and willful disobedience of the transfer order. The
Decision imposed on Delada the penalty of 90-day suspension. He opposed the Decision, arguing that MPH had lost its authority to
proceed with the disciplinary action against him, since the matter had already been included in the voluntary arbitration.
On 14 December 2007, the PVA issued a Decision and ruled that the transfer of Delada was a valid exercise of management
prerogative. According to the panel, the transfer order was done in the interest of the efficient and economic operations of MPH,
and that there was no malice, bad faith, or improper motive attendant upon the transfer of Delada to Seasons Coffee Shop. They
found that the mere fact that he was the Union President did not put color or ill motive and purpose to his transfer. On the
contrary, the PVA found that the real reason why he refused to obey the transfer order was that he asked for additional monetary
benefits as a condition for his transfer. Furthermore, the panel ruled that his transfer from Rotisserie to Seasons Coffee Shop did not
prejudice or inconvenience him. Neither did it result in diminution of salaries or demotion in rank. The PVA thus pronounced that
Delada had no valid and justifiable reason to refuse or even to delay compliance with the managements directive.
The PVA also ruled that there was no legal and factual basis to support petitioners imposition of preventive suspension on
Delada. According to the panel, the mere assertion of MPH that it is not far-fetched for Henry Delada to sabotage the food to be
prepared and served to the respondents dining guest and employees because of the hostile relationship then existing was more
imagined than real. It also found that MPH went beyond the 30-day period of preventive suspension prescribed by the Implementing
Rules of the Labor Code when petitioner proceeded to impose a separate penalty of 90-day suspension on him. Furthermore, the
PVA ruled that MPH lost its authority to continue with the administrative proceedings for insubordination and willful disobedience
of the transfer order and to impose the penalty of 90-day suspension on respondent. According to the panel, it acquired exclusive
jurisdiction over the issue when the parties submitted the aforementioned issues before it. The panel reasoned that the joint
submission to it of the issue on the validity of the transfer order encompassed, by necessary implication, the issue of respondents
insubordination and willful disobedience of the transfer order. Thus, MPH effectively relinquished its power to impose disciplinary
action on Delada.
[3]

As to the other issues, the panel found that there was no valid justification to conduct any strike or concerted action as a
result of Deladas preventive suspension. It also ruled that since the 30-day preventive suspension and the penalty of 90-day
suspension was invalid, then MPH was liable to pay back wages and other benefits.
The CA affirmed the Decision of the PVA and denied petitioners Motion for Reconsideration. Consequently, MPH filed the
instant Petition.
Issue
Despite the various issues surrounding the case, MPH limited its appeal to the following:
I. Whether MPH retained the authority to continue with the administrative case against Delada for
insubordination and willful disobedience of the transfer order.
II. Whether MPH is liable to pay back wages.
Discussion
Petitioner argues that it did not lose its authority to discipline Delada notwithstanding the joint submission to the PVA of
the issue of the validity of the transfer order. According to petitioner, the specific issue of whether respondent could be held liable
for his refusal to assume the new assignment was not raised before the PVA, and that the panels ruling was limited to the validity of
the transfer order. Thus, petitioner maintains that it cannot be deemed to have surrendered its authority to impose the penal ty of
suspension.
In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin,
[4]
we ruled that the voluntary arbitrator had plenary jurisdiction
and authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a proper
case, to the certiorari jurisdiction of this Court. In that case, the specific issue presented was the issue of performance bonus. We
then held that the arbitrator had the authority to determine not only the issue of whether or not a performance bonus was to be
granted, but also the related question of the amount of bonus, were it to be granted. We then said that there was no indicati on at
all that the parties to the arbitration agreement had regarded the issue of performance bonus as a two-tiered issue, only one
aspect of which was being submitted to arbitration; thus, we held that the failure of the parties to specifically limit the issues to that
which was stated allowed the arbitrator to assume jurisdiction over the related issue.
A more recent case is Ludo & Luym Corporation v. Saornido.
[5]
In that case, we recognized that voluntary arbitrators are
generally expected to decide only those questions expressly delineated by the submission agreement; that, nevertheless, they can
assume that they have the necessary power to make a final settlement on the related issues, since arbitration is the final resort for
the adjudication of disputes. Thus, we ruled that even if the specific issue brought before the arbitrators merely mentioned the
question of whether an employee was discharged for just cause, they could reasonably assume that their powers extended
beyond the determination thereof to include the power to reinstate the employee or to grant back wages. In the same vein, if the
specific issue brought before the arbitrators referred to the date of regularization of the employee, law and jurisprudence gave them
enough leeway as well as adequate prerogative to determine the entitlement of the employees to higher benefits in accordance
with the finding of regularization. Indeed, to require the parties to file another action for payment of those benefits would certainly
undermine labor proceedings and contravene the constitutional mandate providing full protection to labor and speedy labor justice.
Consequently, could the PVA herein view that the issue presented before it the question of the validity of the transfer order
necessarily included the question of respondent Deladas insubordination and willful disobedience of the transfer order?

Pursuant to the doctrines in Sime Darby Pilipinas and Ludo & Luym Corporation, the PVA was authorized to assume jurisdiction
over the related issue of insubordination and willful disobedience of the transfer order. Nevertheless, the doctrine in the
aforementioned cases is inapplicable to the present Petition. In those cases, the voluntary arbitrators did in fact assume j urisdiction
over the related issues and made rulings on the matter. In the present case, however, the PVA did not make a ruling on the specific
issue of insubordination and willful disobedience of the transfer order. The PVA merely said that its disagreement with the 90-
day penalty of suspension stemmed from the fact that the penalty went beyond the 30-day limit for preventive suspension:

But to us, what militates against the validity of Deladas preventive suspension is the fact that it went
beyond the 30-day period prescribed by the Implementing Rules of the Labor Code (Section 4, Rules XIV, Book V).
The preventive suspension of Delada is supposed to expire on 09 June 2007, but without notifying Delada, the
MPH proceeded to impose a separate penalty of 90-days suspension to him which took effect only on 18 June
2007, or way beyond the 30-day rule mandated by the Rules. While the intention of the MPH is to impose the 90-
day suspension as a separate penalty against Delada, the former is already proscribed from doing so because as of
05 June 2007, the dispute at hand is now under the exclusive jurisdiction of the panel of arbitrators. In fact, by its
own admission, the MPH categorically stated in its Position Paper that as of 25 May 2007, or before the suspension
order was issued, MPH and Delada had already formulated and submitted the issues for arbitration. For all legal
intents and purposes, therefore, the MPH has now relinquished its authority to suspend Delada because the issue
at this juncture is now within the Panels ambit of jurisdiction. MPHs authority to impose disciplinary action to
Delada must now give way to the jurisdiction of this panel of arbitrators to rule on the issues at hand. By necessary
implication, this Panel is thus constrained to declare both the preventive suspension and the separate suspension
of 90-days meted to Delada to be not valid and justified.
[6]


First, it must be pointed out that the basis of the 30-day preventive suspension imposed on Delada was different from that of
the 90-day penalty of suspension. The 30-daypreventive suspension was imposed by MPH on the assertion that Delada might
sabotage hotel operations if preventive suspension would not be imposed on him. On the other hand, the penalty of 90-day
suspension was imposed on respondent as a form of disciplinary action. It was the outcome of the administrative proceedings
conducted against him.Preventive suspension is a disciplinary measure resorted to by the employer pending investigation of an
alleged malfeasance or misfeasance committed by an employee.
[7]
The employer temporarily bars the employee from working if his
continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers.
[8]
On the
other hand, the penalty of suspension refers to the disciplinary action imposed on the employee after an official investigation or
administrative hearing is conducted.
[9]
The employer exercises its right to discipline erring employees pursuant to company rules and
regulations.
[10]
Thus, a finding of validity of the penalty of 90-day suspension will not embrace the issue of the validity of the 30-
day preventive suspension. In any event, petitioner no longer assails the ruling of the CA on the illegality of the 30-
day preventive suspension.
[11]

It can be seen that, unlike in Sime Darby Pilipinas and Ludo & Luym Corporation, the PVA herein did not make a definitive
ruling on the merits of the validity of the 90-day suspension. The panel only held that MPH lost its jurisdiction to impose disciplinary
action on respondent. Accordingly, we rule in this case that MPH did not lose its authority to discipline respondent for his continued
refusal to report to his new assignment. In relation to this point, we recall our Decision in Allied Banking Corporation v. Court of
Appeals.
[12]

In Allied Banking Corporation,
[13]
employer Allied Bank reassigned respondent Galanida from its Cebu City branch to its
Bacolod and Tagbilaran branches. He refused to follow the transfer order and instead filed a Complaint before the Labor Arbiter for
constructive dismissal. While the case was pending, Allied Bank insisted that he report to his new assignment. When he continued to
refuse, it directed him to explain in writing why no disciplinary action should be meted out to him. Due to his continued refusal to
report to his new assignment, Allied Bank eventually terminated his services. When the issue of whether he could validly refuse to
obey the transfer orders was brought before this Court, we ruled thus:
The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an
employer. Employees may object to, negotiate and seek redress against employers for rules or orders that they
regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by
competent authority, the employees ignore or disobey them at their peril. For Galanidas continued refusal to
obey Allied Bank's transfer orders, we hold that the bank dismissed Galanida for just cause in accordance with
Article 282(a) of the Labor Code. Galanida is thus not entitled to reinstatement or to separation pay. (Emphasis
supplied, citations omitted).
[14]

It is important to note what the PVA said on Deladas defiance of the transfer order:
In fact, Delada cannot hide under the legal cloak of the grievance machinery of the CBA or the voluntary
arbitration proceedings to disobey a valid order of transfer from the management of the hotel. While it is true that
Deladas transfer to Seasons is the subject of the grievance machinery in accordance with the provisions of their
CBA, Delada is expected to comply first with the said lawful directive while awaiting the results of the decision in
the grievance proceedings. This issue falls squarely in the case of Allied Banking Corporation vs. Court of Appeals x
x x.
[15]

Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a presumption of the validity of that order.
Since the PVA eventually ruled that the transfer order was a valid exercise of management prerogative, we hereby reverse the
Decision and the Resolution of the CA affirming the Decision of the PVA in this respect. MPH had the authority to continue with the
administrative proceedings for insubordination and willful disobedience against Delada and to impose on him the penalty of
suspension. As a consequence, petitioner is not liable to pay back wages and other benefits for the period corresponding to the
penalty of 90-day suspension.

WHEREFORE, the Petition is GRANTED. The Decision and the Resolution of the Court of Appeals are hereby MODIFIED. We rule
that petitioner Manila Pavilion Hotel had the authority to continue with the administrative proceedings for insubordination and
willful disobedience against Delada and to impose on him the penalty of suspension. Consequently, petitioner is not liable to pay
back wages and other benefits for the period corresponding to the penalty of 90-day suspension.
SO ORDERED.


FIRST DIVISION


MANLY EXPRESS INC. G.R. No. 167462
and SIU ENG T. CHING,
Petitioners, Present:

Davide, Jr., C.J. (Chairman),
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
ROMUALDO PAYONG, JR.,
Respondent. Promulgated:

October 25, 2005
x ---------------------------------------------------------------------------------------- x

DECISION


YNARES-SANTIAGO, J.:


This petition for review on certiorari under Rule 45 of the Rules of Court assails the November 22, 2004 Decision of the
Court of Appeals
[1]
in CA-G.R. SP No. 83800, as well as the February 28, 2005 Resolution
[2]
denying the motion for partial
reconsideration.

The facts as found by the Court of Appeals are as follows:

The simple relevant facts of the case show that petitioners Hercules Balena and Romualdo Payong, Jr.
were employed by Manly Express, Inc. and/or Siy Eng T. Ching on different dates, as tour coordinator (dispatcher)
and welder, respectively.

Balena alleged that during his employment, he demanded from his employer the payment of correct
employees benefits. Nevertheless, every time he made the demand, he was told not to report for work anymore
if he is not contented with the wages he was receiving. Then, herein private respondents called Balenas attention
on his tardiness in work. As a result, on May 16, 2000, Balena commenced a case for constructive dismissal,
payment of salaries, overtime pay, holiday pay, back wages, leave pay, 13
th
month pay and attorneys fees.

Petitioner Romualdo Payong, Jr. has another story to tell. Sometime in December 1999, he was
complaining of eyesight problems. Brought to an eye specialist by private respondent Ching, he was diagnosed to
be suffering from eye cataract. Despite having the cataract removed in January of 2000, he was disallowed to
return to his work by Ching. Much later, on August 1, 2000, he was given a letter of termination of employment.
[3]


The full text of the termination letter
[4]
reads:

01 August 2000

Dear Mr. Romualdo Payong Jr.,

Our company has been severely affected by the prevailing poor business climate. There is a reduced demand for
our bus services both for shuttle and city operations and this has substantially reduced our income. At the
same time, our operating costs have increased, leaving us with a difficult cash position.

In order to survive, the company has decided to check on the performance of all its employees to determine
productivity. Unfortunately, it has been noticed that due to your partial blindness, you can no longer work in the
position that you are presently employed for.

In view of the above and the fact that despite the proper medical treatment for more than six months now, the
company is constrained to terminate your employment effective immediately. In line with this, you are given a
grace period of 15 days to remove all your personal belongings from the company premises counted from this
date.

In behalf of the company, I would like to express my gratitude for the services that you have rendered our
company. Kindly see the undersigned to coordinate the payment of your financial assistance and other benefits.

Thank you.

(Sgd.)
Charles Malvin Ching
Operations Manager

Thus, a complaint for illegal dismissal with money claims was filed against Manly, which was consolidated with the complaint
of two other employees, namely Francisca Adsuara and Flor Palisoc, also for illegal dismissal.

On July 31, 2001, the Labor Arbiter rendered judgment the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing, the complaint of Hercules Balena is hereby DISMISSED for want of
cause of action. Furthermore, respondent company is hereby ordered to pay complainants Payong, Adsuara and
Palisoc the total amount of SEVENTY-FIVE THOUSAND NINE HUNDRED PESOS (P75,900.00), as discussed above.

SO ORDERED.
[5]


The National Labor Relations Commission (NLRC) modified the decision of the labor arbiter, thus:

WHEREFORE, premises considered, the Decision of July 31, 2001 is hereby MODIFIED. Respondents are
directed to pay the following:

Hercules Balena - P3,750.00 Service incentive leave pay
22, 500.00 13
th
month pay
P26,250.00

Romualdo Payong - P3,352.00 Service incentive leave pay
20,115.00 13
th
month pay
P23,467.00

Flor Palisoc 20,115.00 13
th
month pay

The other findings stand affirmed.

SO ORDERED.
[6]


With the denial of their motion for reconsideration,
[7]
Balena and Payong elevated the case before the Court of Appeals,
which rendered on November 22, 2004 a Decision, the dispositive portion of which reads:

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby DENIED, in so far as petitioner Hercules
Balena is concerned and the NLRC Decision, as to him, is AFFIRMED. However, as to petitioner Romualdo Payong,
Jr., We resolve to GRANT the petition and declare his dismissal from employment by the private respondents to be
unlawful and should therefore be entitled to reinstatement and separation pay, if reinstatement is no longer viable
and backwages. No pronouncement as to costs.

SO ORDERED.
[8]


The Court of Appeals found that Balena prematurely filed the complaint for illegal dismissal considering that at the time of its
filing, he was still gainfully employed by Manly. The appellate court noted that he failed to mention the details of the alleged
dismissal or to prove the severance of his employment. It held that the managements statement that he quit his job if he is not
contented with the salary he is receiving is not equivalent to constructive dismissal.

As regards Payong, the appellate court observed that considering that the termination was based on his alleged partial
blindness, Manly should have presented a certification by a competent public health authority that Payong was suffering from such a
disease and his continued employment is prejudicial to his health and that of his co-employees. Without the certification, the
dismissal was illegal.

Manlys motion for partial reconsideration was denied, hence, this petition.

The petition lacks merit.

Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease, thus:

Art. 284. Disease as ground for termination. An employer may terminate the services of an employee
who has been found to be suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees: .

However, in order to validly terminate employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules
Implementing the Labor Code requires:

Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer
shall not terminate his employment unless there is a certification by a competent public health authority that
the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with
proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not
terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to
his former position immediately upon the restoration of his normal health.

The rule is explicit. For a dismissal on the ground of disease to be considered valid, two requisites must concur: (a) the
employee suffers from a disease which cannot be cured within six months and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, and (b) a certification to that effect must be issued by a competent
public health authority.

In the present case, there was no proof that Payongs continued employment was prohibited by law or prejudicial to his
health and that of his co-employees. No medical certificate by a competent public health authority was submitted that Payong was
suffering from a disease that cannot be cured within a period of six months. In the absence of such certification, Payongs dismissal
must necessarily be declared illegal.

Manlys contention that the requirement for a medical certification does not apply in the instant case since it was Payong
who refused to undergo medical treatment and his resignation from work was of his own free will, is untenable. Manly has not
established Payongs refusal to undergo a medical examination or that he resigned from work on his own accord. On the contrary,
the termination letter dated August 1, 2000 showed that it was Manly who initiated the termination in view of the prevailing poor
business climate and Payongs partial blindness. Moreover, evidence shows that even before the termination letter was served on
Payong, he was no longer allowed to work which shows Manlys intent to dismiss him from work.

The burden of proving the validity of the dismissal rests on the employer. As such, the employer must prove that the
requisites for a valid dismissal due to a disease have been complied with. In the absence of the required certification by a competent
public health authority, this Court has ruled against the validity of the employees dismissal.
[9]


In Triple Eight Integrated Services, Inc. v. NLRC,
[10]
we held that:

The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with;
otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of
the employees illness and thus defeat the public policy on the protection of labor....

We also note that Manly failed to comply with the procedure for terminating an employee. In dismissing an employee, the
employer has the burden of proving that the employee has been served two notices: (1) one to apprise him of the particular acts or
omissions for which his dismissal is sought, and (2) the other to inform him of his employers decision to dismiss him. The first
notice must state that dismissal is sought for the act or omission charged against the employee, otherwise, the notice cannot be
considered sufficient compliance with the rules.
[11]


All told, Payongs dismissal did not comply with both the substantive and procedural aspects of due process. Clearly, his
dismissal is tainted with invalidity.
[12]


WHEREFORE, the petition is DENIED. The November 22, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 83800 and
its February 28, 2005 Resolution, areAFFIRMED.

SO ORDERED.

G.R. No. 199338 January 21, 2013
ELEAZAR S. PADILLO,
**
Petitioner
vs.
RURAL BANK OF NABUNTURAN, INC. and MARK S. OROPEZA, Respondents.
D E C I S I O N
PERLAS-BERNABE, J.:
Before the Court is a Petition for Review on Certiorari
1
assailing the June 28, 2011 Decision
2
and October 27, 2011 Resolution
3
of the
Cagayan de Oro City Court of Appeals (CA) in CA-G.R. SP No 03669-MIN which revoked and set aside the National Labor Relations
Commission's (NLRCs) Resolutions dated December 29, 2009
4
and March 31, 2010
5
and reinstated the Labor Arbiter's (LA's) Decision
dated March 13, 2009
6
with modification.
The Facts
On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural Bank of Nabunturan, Inc. (Bank)
as its SA Bookkeeper. Due to liquidity problems which arose sometime in 2003, the Bank took out retirement/insurance plans with
Philippine American Life and General Insurance Company (Philam Life) for all its employees in anticipation of its possible closure and
the concomitant severance of its personnel. In this regard, the Bank procured Philam Plan Certificate of Full Payment No. 88204,
Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of Padillo for a benefit amount of P100,000.00 and
which was set to mature on July 11, 2009.
7

On October 14, 2004, respondent Mark S. Oropeza (Oropeza), the President of the Bank, bought majority shares of stock in the Bank
and took over its management which brought about its gradual rehabilitation. The Banks finances improved and eventually, its
liquidity was regained.
8

During the latter part of 2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to
effectively pursue his work. In particular, he was diagnosed with Hypertension S/P CVA (Cerebrovascular Accident) with short term
memory loss, the nature of which had been classified as a total disability.
9
On September 10, 2007, he wrote a letter addressed to
respondent Oropeza expressing his intention to avail of an early retirement package. Despite several follow-ups, his request
remained unheeded.
On October 3, 2007, Padillo was separated from employment due to his poor and failing health as reflected in a Certification dated
December 4, 2007 issued by the Bank. Not having received his claimed retirement benefits, Padillo filed on September 23, 2008 with
the NLRC Regional Arbitration Branch No. XI of Davao City a complaint for the recovery of unpaid retirement benefits. He asserted,
among others, that the Bank had adopted a policy of granting its aging employees early retirement packages, pointing out that one
of his co-employees, Nenita Lusan (Lusan), was accorded retirement benefits in the amount of P348,672.72
10
when she retired at
the age of only fifty-three (53). The Bank and Oropeza (respondents) countered that the claim of Padillo for retirement benefits was
not favorably acted upon for lack of any basis to grant the same.
11

The LA Ruling
On March 13, 2009, the LA issued a Decision
12
dismissing Padillos complaint but directed the Bank to pay him the amount
of P100,000.00 as financial assistance, treated as an advance from the amounts receivable under the Philam Life Plan.
13
It found
Padillo disqualified to receive any benefits under Article 300 (formerly, Article 287) of the Labor Code of the Philippines (Labor
Code)
14
as he was only fifty-five (55) years old when he resigned, while the law specifically provides for an optional retirement age of
sixty (60) and compulsory retirement age of sixty-five (65). Dissatisfied with the LAs ruling, Padillo elevated the matter to the NLRC.
The NLRC Ruling
On December 29, 2009, the NLRCs Fifth Division reversed and set aside the LAs ruling and ordered respondents to pay Padillo the
amount of P164,903.70 as separation pay, on top of the P100,000.00 Philam Life Plan benefit.
15
Relying on the case of Abaquin
Security and Detective Agency, Inc. v. Atienza (Abaquin),
16
the NLRC applied the Labor Code provision on termination on the ground
of disease particularly, Article 297 thereof (formerly, Article 323) holding that while Padillo did resign, he did so only because of
his poor health condition.
17
Respondents moved for reconsideration but the same was denied by the NLRC in its Resolution dated
March 31, 2010.
18
Aggrieved, respondents filed a petition for certiorari with the CA.
The CA Ruling
On June 28, 2011, the CA granted respondents petition for certiorari and rendered a decision setting aside the NLRCs December 29,
2009 and March 31, 2010 Resolutions, thereby reinstating the LAs March 13, 2009 Decision but with modification. It directed the
respondents to pay Padillo the amount of P50,000.00 as financial assistance exclusive of the P100,000.00 Philam Life Plan benefit
which already matured on July 11, 2009.
The CA held that Padillo could not, absent any agreement with the Bank, receive any retirement benefits pursuant to Article 300 of
the Labor Code considering that he was only fifty-five (55) years old when he retired.
19
It likewise found the evidence insufficient to
prove that the Bank has an existing company policy of granting retirement benefits to its aging employees. Finally, citing the case of
Villaruel v. Yeo Han Guan (Villaruel),
20
it pronounced that separation pay on the ground of disease under Article 297 of the Labor
Code should not be given to Padillo because he was the one who initiated the severance of his employment and that even before
September 10, 2007, he already stopped working due to his poor and failing health.
21

Nonetheless, Padillo was still awarded the amount of P50,000.00 as financial assistance, in addition to the benefits accruing under
the Philam Life Plan, considering his twenty-nine (29) years of service with no derogatory record and that he was severed not by
reason of any infraction on his part but because of his failing physical condition.
22

Displeased with the CAs ruling, Padillo (now substituted by his legal heirs due to his death on February 24, 2012) filed the instant
petition contending that the CA erred when it: (a) deviated from the factual findings of the NLRC; (b) misapplied the case of Villaruel
vis--vis the factual antecedents of this case; (c) drastically reduced the computation of financial assistance awarded by the NLRC; (d)
failed to rule on the consequences of respondents bad faith; and (e) reversed and set aside the NLRCs December 29, 2009
Resolution.
23

The Ruling of the Court
The petition is partly meritorious.
At the outset, it must be maintained that the Labor Code provision on termination on the ground of disease under Article 297
24
does
not apply in this case, considering that it was the petitioner and not the Bank who severed the employment relations. As borne from
the records, the clear import of Padillos September 10, 2007 letter
25
and the fact that he stopped working before the foregoing date
and never reported for work even thereafter show that it was Padillo who voluntarily retired and that he was not terminated by the
Bank.
As held in Villaruel,
26
a precedent which the CA correctly applied, Article 297 of the Labor Code contemplates a situation where the
employer, and not the employee, initiates the termination of employment on the ground of the latters disease or sickness, viz:
A plain reading of the [Article 297 of the Labor Code] clearly presupposes that it is the employer who terminates the services of the
employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his
health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or
her employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code,
directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with
proper medical treatment. (Emphasis, underscoring and words in brackets supplied)
Thus, given the inapplicability of Article 297 of the Labor Code to the case at bar, it necessarily follows that petitioners claim for
separation pay anchored on such provision must be denied.
Further, it is noteworthy to point out that the NLRCs application of Abaquin
27
was gravely misplaced considering its dissimilar
factual milieu with the present case.
To elucidate, a careful reading of Abaquin shows that the Court merely awarded termination pay on the ground of disease in favor of
security guard
28
Antonio Jose because he belonged to a "special class of employees x x x deprived of the right to ventilate demands
collectively."
29
Thus, notwithstanding the fact that it was Antonio Jose who voluntarily resigned because of his sickness and it was
not the security agency which terminated his employment, the Court held that Jose "deserve*d+ the full measure of the laws
benevolence" and still granted him separation pay because of his situation, particularly, the fact that he could not have organized
with other employees belonging to the same class for the purpose of bargaining with their employer for greater benefits on account
of the prohibition under the old law.
In this case, it cannot be said that Padillo belonged to the same class of employees prohibited to self-organize which, at present,
consist of: (1) managerial employees;
30
and (2) confidential employees who assist persons who formulate, determine, and effectuate
management policies in the field of labor relations.
31
Therefore, absent this equitable peculiarity, termination pay on the ground of
disease under Article 297 of the Labor Code and the Courts ruling in Abaquin should not be applied.
What remains applicable, however, is the Labor Code provision on retirement. In particular, Article 300 of the Labor Code as
amended by Republic Act Nos. 7641
32
and 8558
33
partly provides:
Art. 300. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws
and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under
any collective bargaining and other agreements shall not be less than those provided herein.1wphi1
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as
one whole year.
Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. (Emphasis and
underscoring supplied)
Simply stated, in the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age
and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for
every year of service, with a fraction of at least six (6) months being considered as one whole year.
Notably, these age and tenure requirements are cumulative and non-compliance with one negates the employees entitlement to
the retirement benefits under Article 300 of the Labor Code altogether.
In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equivalent contract
between the parties which set out the terms and condition for the retirement of employees, with the sole exception of the Philam
Life Plan which premiums had already been paid by the Bank.
Neither was it proven that there exists an established company policy of giving early retirement packages to the Banks aging
employees. In the case of Metropolitan Bank and Trust Company v. National Labor Relations Commission, it has been pronounced
that to be considered a company practice, the giving of the benefits should have been done over a long period of time, and must be
shown to have been consistent and deliberate.
34
In this relation, petitioners bare allegation of the solitary case of Lusan cannot
assuming such fact to be true sufficiently establish that the Banks grant of an early retirement package to her (Lusan) evolved into
an established company practice precisely because of the palpable lack of the element of consistency. As such, petitioners reliance
on the Lusan incident cannot bolster their claim.
All told, in the absence of any applicable contract or any evolved company policy, Padillo should have met the age and tenure
requirements set forth under Article 300 of the Labor Code to be entitled to the retirement benefits provided therein.
Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served for twenty-nine (29) years
he, however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he
retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan, petitioners claim for retirement benefits must
be denied.
Nevertheless, the Court concurs with the CA that financial assistance should be awarded but at an increased amount. With a
veritable understanding that the award of financial assistance is usually the final refuge of the laborer, considering as well the
supervening length of time which had sadly overtaken the point of Padillos death an employee who had devoted twenty-nine (29)
years of dedicated service to the Bank the Court, in light of the dictates of social justice, holds that the CAs financial assistance
award should be increased from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 benefit receivable by the petitioners
under the Philam Life Plan which remains undisputed.1wphi1
Finally, the Court finds no bad faith in any of respondents actuations as they were within their right, absent any proof of its abuse,
to ignore Padillos misplaced claim for retirement benefits. Respondents obstinate refusal to accede to Padillos request is precisely
justified by the fact that there lies no basis under any applicable agreement or law which accords the latter the right to demand any
retirement benefits from the Bank. While the Court mindfully notes that damages may be recoverable due to an abuse of right
under Article 21
35
in conjunction with Article 19 of the Civil Code of the Philippines,
36
the following elements must, however, obtain:
( 1) there is a legal right or duty; (2) exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another.
37
Records
reveal that none of these elements exists in the case at bar and thus, no damages on account of abuse of right may he recovered.
Neither can the grant of an early retirement package to Lusan show that Padillo was unfairly discriminated upon. Records show that
the same was merely an isolated incident and petitioners have failed to show that any had faith or motive attended such disparate
treatment between Lusan and Padillo. lrrefragably also, there is no showing that other Bank employees were accorded the same
benefits as that of Lusan which thereby dilutes the soundness of petitioners' imputation of discrimination and bad faith. Verily, it is
axiomatic that held f8ith can never be presumed it must be proved by clear and convincing evidence.
38
This petitioners were
unable to prove in the case at bar.
WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the assailed Court of Appeals' Decision dated June 28, 2011 Decision
and October 27, 2011 Resolution in CA-G.R. SP No. 03669-MIN are hereby MODIFIED, increasing the 8Ward of financial assist8nce of
F50,000.00 to P75,000.00, exclusive of the P 100,000.00 benefit under the Phil am Life Plan.
SO ORDERED.
[G.R. No. 140812. August 28, 2001]
CANDIDO ALFARO, petitioner, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and STAR PAPER
CORPORATION,respondents.
D E C I S I O N
PANGANIBAN, J.:
Generally, separation pay need not be paid to an employee who voluntarily resigns. However, an employer who agrees to
expend such benefit as an incident of the resignation should not be allowed to renege in the performance of such commitment.
The Case
Before us is a Petition for Review on Certiorari
[1]
under Rule 45 of the Rules of Court, seeking to set aside the Decision
[2]
of the
Court of Appeals (CA), which affirmed the June 16, 1998 Decision of the National Labor Relations Commission (NLRC).
[3]

The Facts
The facts as related by petitioner in his Memorandum
[4]
are hereunder reproduced as follows:
Petitioner was employed as a helper/operator of private respondent since November 8, 1990. From November 23, 1993 until
December 5, 1993, he took a sick leave. When he reported back to work on December 6, 1993, he was surprised to find out that
another worker was recruited to take his place, and instead, he was transferred to [the] wrapping section where he was required to
work with overtime up to 9:30 PM, from his regular working hours of from 7:00 a.m., to 4:00 p.m., despite the fact that he had just
recovered from illness. On December 7, 1993, he was given a new assignment where the work was even more difficult[;] when he
complained o[f] what he felt was rude treatment or sort of punishment since he was being exposed to hard labor notwithstanding
his predicament of just coming from sickness, petitioner was told to look for another job because he was dismissed effective on said
date, December 7, 1993, when petitioner was seeking his 13th month pay and fifteen (15) days sick leave pay [o]n the afternoon of
the same day, he was ignored when he refused to sign documents which indicated that he was renouncing claims against private
respondent. Before Christmas of 1993, petitioner sought private respondent to pay his 13th month pay and [his] 15 days sick leave
pay, but he was told to come next year.
On January 12, 1994, petitioner came to private respondent for his aforestated money claims. During that occasion, private
respondent dangled to petitioner a check worth P3,000.00 which [would] be released to him, only if he [signed] the documents,
being forced upon him to sign on December 7, 1993. Deperate for the money to support his subsistence, and against his will,
petitioner was constrained to sign the said documents which contained no amount of money released to him. The actual sum of
money received by petitioner from private respondent amounted to P3,000.00 in the form of check, while his claims for 15 days sick
leave pay was secured by him from the Social Security System.
The documents forced upon the petitioner to sign were a resignation letter, and a Release and Quit Claim. Said resignation letter
read, thus:
To the Personal Manager
Mr. Michael Philip Elizalde
Star Paper Corporation
46 Joy St., Grace Village, Q.C.
Dear Sir,
Ako po si Candido Alfaro ay nagbibigay ng aking resignation letter dahilan po sa aking sakit. Umaasa po ako na mabigyan ng tulong.
Lubos na gumagalang
(sgd) Candido Alfaro
As submitted by private respondent in its pleadings on record, petitioner allegedly tendered said resignation letter on January 12,
1994, on the basis of which, the former maintains that the latter was not illegally dismissed, was paid [his] separation pay
of P8,455.50, and that he voluntarily resigned from his job effective January 12, 1994.
[5]

Private respondent, in its Memorandum
[6]
, adopts Labor Arbiter Donato Quintos findings of fact as follows:
Complainant alleges that he was hired by respondent corporation in November 1990 *as+ the latters machine tape
operator. Thereafter, or in the month[s] of September and October, 1993, he was suffered to do some painting work on pallets
guide using [a] spray gun. As a result, in the third week of October, 1993 he felt general body weakness coupled with constant
coughing and fever.
As a consequence of his illness, complainant alleges that he took a vacation leave from November 22, 1993 to December 5,
1993. However, upon reporting for work on December 6, 1993, complainant was surprised to find out that somebody was already
recruited to take his place. Instead, he was transferred to the wrapping section.
On December 7, 1993, complainant complained of the work being given to him for being difficult which was interpreted as some
sort of a punishment given to him by the respondent. As a result thereof, complainant alleges that he was dismissed without valid
cause and without due process of law. He further alleges that he was not paid his 13th month pay and 15 days sick leave which he
was claiming because he refused to sign a document renouncing all his claim[s] against respondent corporation.
On January 12, 1994, complainant went to the respondent corporation to claim his 13th month pay and his 15 days sick leave
pay. He received the amount of P3,000.00 but he was allegedly pressured to sign a Quitclaim and Release with no amount or
consideration written on said document. Further, complainant also alleges that he was also made to sign a prepared resignation
letter in exchange for the P3,000.00 which he received which [was] contrary to the claim of the respondent corporation that he
received P8,452.00.
On June 14, 1996, the complainant filed a case against the respondent corporation for non-payment of separation pay. Said
complaint was later amended on August 1, 1996 by claiming illegal dismissal and damages in lieu of separation pay, with a prayer for
reinstatement with backwages and attorneys fees.
On the other hand, respondent corporation maintains that complainant while still under its employ contracted PTB Minimal Active
for which reason he applied for SSS benefits on November 25, 1993. Considering his illness, complainant asked the respondent
corporation that he be allowed to resign with benefits. After getting a favorable reply, complainant submitted a resignation letter to
the respondent corporation on January 12, 1994.
Because of his request for help, separation benefits were likewise given to complainant in the amount of P8,452.50 Complainant,
upon receipt of said benefits, executed a Release and Quitclaim in favor of respondent corporation.
The CA Ruling
In denying petitioners claims, the CA ruled as follows:
It is not easy to uphold petitioners submission. For, the Labor Arbiters report to the National Labor Relations Commission shows
that petitioner resigned voluntarily. Thus, as written in the letter of resignation:
Ako po si candido Alfaro ay nagbibigay ng aking resignation dahilan po sa aking sakit.
Umaasa po ako na mabigyan ng tulong.
The same report likewise mentioned the Quitclaim and Release (Annex 2, of private respondents position paper) which further
strengthened the fact that petitioner resigned due to his ailment. If petitioners concatenation is true that he was forced to sign the
resignation letter against his better judgment, then why should he also sign the quitclaim and release[?]
We find no reason to reverse and set aside the findings and recommendation of the Labor Arbiter, and affirmed by the NLRC. As a
quasi-judicial body, the findings of the NLRC deserve respect, even finality (M. Ramirez Industries vs. Secretary of Labor, 266 SCRA
111; Bataan Shipyard and Engineering Corporation vs. NLRC, 269 SCRA 199; Naguiat vs. NLRC, 269 SCRA 564; Conti vs. NLRC, 271
SCRA 114.)
Hence, this recourse.
[7]

The Issues
Petitioner submits the following issues for the consideration of this Court:
1.) Whether or not the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack or x x
x excess of jurisdiction and/or serious reversible error in holding that petitioner was not illegally dismissed by private
respondent;
2.) Whether or not the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of or
x x x excess of jurisdiction, and/or serious reversible error in holding that petitioner voluntarily resigned from
employment
3.) Whether or not the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of or
x x x excess of jurisdiction and/or reversible error in holding that the finding of the NLRC, deserve respect and even
finality despite serious flaws in its appreciation of facts and evidence;
4.) Whether or not the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of or
x x x excess of jurisdiction, and/or serious reversible error in dismissing the petition for certiorari
[8]

The Courts Ruling
The Petition has no merit.
Main Issue: Illegal Dismissal and Separation Pay
At the outset, it bears stressing that in a petition for review on certiorari, the scope of the Supreme Courts judicial revi ew of
decisions of the Court of Appeals is generally confined only to errors of law
[9]
; questions of fact are not entertained.
[10]
Thus, only
questions of law may be brought by the parties and passed upon by this Court in the exercise of its power to review.
[11]

The Supreme Court is not a trier of facts, and this doctrine applies with greater force in labor cases.
[12]
Factual questions are for
the labor tribunals to resolve.
[13]
In this case, the factual issues have already been determined by the labor arbiter and the National
Labor Relations Commission. Their findings were affirmed by the CA. Judicial review by this Court does not extend to a reevaluation
of the sufficiency of the evidence upon which the proper labor tribunal has based its determination.
[14]

Indeed, factual findings of labor officials who are deemed to have acquired expertise in matters within their respective
jurisdictions are generally accorded not only respect, but even finality, and are binding on the Supreme Court.
[15]
Verily, their
conclusions are accorded great weight upon appeal, especially when supported by substantial evidence.
[16]
Consequently, the
Supreme Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that the same
were arbitrary and bereft of any rational basis.
[17]

The factual findings of the labor arbiter and the NLRC, as affirmed by the CA, reveal that petitioner resigned from his work due
to his illness, with the understanding that private respondent would give him separation pay. Unfortunately, it seems that private
respondent did not keep its promise to grant the separation pay, prompting petitioner to institute the present action for ill egal
dismissal. It was only for this reason that the Court gave due course to this Petition.
Generally, an employee who voluntarily resigns from employment is not entitled to separation pay.
[18]
In the present case,
however, upon the request of petitioner, private respondent agreed to a scheme whereby the former would receive separation pay
despite having resigned voluntarily. Thus, the terms and conditions they both agreed upon constituted a contract freely entered into,
which should be performed in good faith, as it constituted the law between the parties.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and
represented a reasonable settlement, it is binding on the parties and may not later be disowned, simply because of a change of
mind.
[19]
The position taken by petitioner on the alleged illegal dismissal was vacillating and indecisive, as correctly found by the
labor arbiter who provided a ratiocination on the matter as follows:
Thus, after a careful perusal of the evidence on hand, we are of the opinion that the position taken by the respondent corporation
is more credible than that of complainant. This is evident from the fact that the complaint filed by complainant on June 14, 1996, or
more than two (2) years from his alleged dismissal on December 7, 1993, was only payment of separation pay. It was only on August
1, 1996 when complainant abandoned his claim for separation pay and instead filed an amended complaint claiming that he was,
illegally dismissed.
To our mind, therefore, the foregoing coupled with the fact that there is practically no evidence on record which shows that
complainant was pressured and made to sign a resignation letter and Release and Quitclaim against his will [and] better judgment
only shows that his claim of illegal dismissal is unsubstantiated and is a mere afterthought.
Moreover, if indeed complainant was illegally dismissed, he should have pursued his claim against the respondent corporation by
immediately filing a complaint for illegal dismissal. As it is, however, complainant filed a complaint for separation pay against the
respondent corporation only after two (2) years from his alleged dismissal which complaint was amended for the purpose of
claiming illegal dismissal almost two (2) months thereafter.
[20]

Voluntary resignation is defined as the act of an employee, who finds himself in a situation in which he believes that personal
reasons cannot be sacrificed in favor of the exigency of the service; thus, he has no other choice but to disassociate himself from his
employment.
[21]
As discussed above, petitioner negotiated for a resignation with separation pay as the manner in which his
employment relations with private respondent would end. He was already suffering from a lingering illness at the time he tendered
his resignation. His continued employment would have been detrimental not only to his health, but also to his performance as an
employee of private respondent.
Hence, the termination of the employment relations of petitioner with private respondent was ultimately, if not outrightly
inevitable. Resignation with separation pay was the best option for him under the circumstances. Rightly so, this was the mode
adopted and agreed upon by the parties, as evidenced by the Release and Quitclaim petitioner executed in connection with his
resignation.
Clearly then, the claim of petitioner that he was illegally dismissed cannot be sustained, considering that his voluntary
resignation has been indubitably established as a fact by the three tribunals below. Indeed, illegal dismissal and voluntary
resignation are adversely opposed modes of terminating employment relations, in that the presence of one precludes that of the
other.
Although the Supreme Court has, more often than not, been inclined towards the workers and has upheld their cause in their
conflicts with the employers, such inclination has not blinded it to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and applicable law and doctrine.
[22]
An employee who resigns and executes a quitclaim
in favor of the employer is generally estopped from filing any further money claims against the employer arising from the
employment.
[23]

However, private respondent has not complied with its obligation to give petitioners separation pay in the amount
of P8,542.50. It was this deliberate withholding of monetary benefits that necessitated the long, litigious and lethargic proceedings
in this case. Had private respondent simply paid the measly amount of P8,452.50 as separation pay to petitioner, this legal
controversy could have been avoided and the court dockets unclogged.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision of the Court of Appeals AFFIRMED, with the modification
that private respondent is directed to pay petitioner P8,452.50 plus legal interest thereon, computed from December 7, 1993, until
fully paid, representing the unpaid separation pay benefit agreed upon by the parties.
SO ORDERED.
Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.