UY v CENTRO

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review
on certiorari under Rule 45 assailing the
Decision[1] dated April 21, 2006 and
Resolution[2]dated September 7, 2006 of the
Court of Appeals (CA) in CA-G.R. SP No.
88061. The CA annulled and set aside the
Decision[3]dated July 29, 2004 rendered by
the National Labor Relations Commission
(NLRC) in NLRC NCR CA No. 035557-03 which
reversed the Labor Arbiters ruling that
petitioner was not illegally dismissed.
Factual Antecedents
Petitioner Jhorizaldy Uy was hired by
respondent Centro Ceramica Corporation as
full-time sales executive on March 21, 1999
under probationary employment for six
months. He became a regular employee on
May 1, 2000 with monthly salary ofP7,000.00
and P1,500.00 transportation allowance, plus
commission.
On March 18, 2002, petitioner filed a
complaint for illegal dismissal against the
respondent company, its President Ramonita
Y. Sy (Sy) and Vice-President Milagros UyGarcia (Garcia).
Petitioner alleged that his predicament
began when former VP Garcia was rehired by
respondent company in the last quarter of
2001. Certain incidents involving longtime
clients led to a strained working relationship
between him and Garcia. On February 19,
2002 after their weekly sales meeting, he
was informed by his superior, Sales
Supervisor Richard Agcaoili, that he
(petitioner) was to assume a new position in
the marketing department, to which he
replied that he will think it over. His friends
had warned him to be careful saying mainit
ka kay Ms. Garcia. That same day, he was
summoned by Sy and Garcia for a closeddoor meeting during which Sy informed him
of the termination of his services due to

insubordination and advised him to turn over

his samples and files immediately. Sy even
commented that member ka pa naman ng
[S]ingles for [C]hrist pero napakatigas
naman ng ulo mo. On February 21, 2002, he
was summoned again by Sy but prior to this
he was already informed by Agcaoili that the
spouses Sy will give him all that is due to him
plus goodwill money to settle
everything. However, during his meeting
with Sy, he asked for his termination paper
and thereupon Sy told him that If thats what
you want I will give it to you. She added
that pag-isipan mo ang gagawin mo dahil
kilala mo naman kami we are powerful.[4]

Petitioner further narrated that on February

22, 2002, he turned over company samples,
accounts and receivables to
Agcaoili.Thereafter, he did not report for
work anymore. But on March 6, 2002, an
employee of respondent company presented
to him at his apartment the following
memorandum:
MEMO OF NOTICE OF CHARGES

MEMORANDUM:

TO: JHORIZALDY B. UY
FROM: RAMONITA Y. SY
RE: FAILURE TO MEET QUOTA FOR SALES
EXECUTIVE
DATE: February 21, 2002

Records show that you have failed to meet

the quota for sales executives, set for the
period from 1999 to 2001 in violation of your
contract of employment.

In view of the foregoing, please explain in

writing within twenty[-]four (24) hours from
receipt hereof, why the company should not
terminate your contract of employment.[5]

He did not receive said memo because it was

not written on the company stationery and
besides he had already been dismissed.As to
his alleged low output, he was surprised
considering that last January 2002, he was
informed by Agcaoili that management was
satisfied with his performance and he ranked
second to the top performer, Edwin I.
Hirang. By that time, all of the sales people
of the company could not meet the P1.5
Million sales quota, so respondents are
clearly zeroing in on him.
Finally, on March 13, 2002, respondents sent
him another memo, which reads:
MEMO OF NOTICE OF CHARGES

hereof, why the company should not

terminate your contract of employment for
serious violations of your employment
contract as indicated above.[6]
He referred the above letter to his counsel
who sent the following letter-reply:
MS. RAMONITA Y. SY
Centro Ceramica Corporation
225 EDSA, East Greenhills
Mandaluyong City

We are writing you in behalf of Mr. Jhorizaldy

B. Uy who used to be a Sales Executive of
your firm.

INTER-OFFICE MEMORANDUM NO. 2:

TO: JHORIZALDY B. UY
THRU: RICHARD B. AGCAOILI
FROM: RAMONITA Y. SY
RE: NOTICE OF CHARGE OF ABSENCE
WITHOUT LEAVE
DATE: March 13, 2002
Records show that since February 22, 2002,
to date, you have failed to report for work,
without informing your employer of the
reason therefor and without securing proper
leave in violation of your contract of
employment and existing company rules and
regulations.Further, you have refused to
receive any of your monetary entitlements
such as salary, commission and other
amounts due to you despite notice that the
same are available to you for payment.

On February 19, 2002, you informed him that

from Sales Executive he was to assume a
new position in the marketing department.He
refused and when he later said that pagiisipan ko pa you charged him with
insubordination. Your Ms. Nita Garcia even
lamented in this wise single (for Christ) ka pa
naman. Right then you terminated his
services and was directed to turn over
everything that he had which was company
owned and it was on February 22, 2002 that
the turn over was made.

Further, to this date, you have not submitted

any explanation in writing in response to our
Memo dated February 21, 2002, requiring
you to explain your failure to meet your
quota as Sales Executive.

On or about March 6, 2002 an employee of

your company saw him in his apartment
giving him a memorandum to explain his
alleged failure to meet the quota as Sales
Executive. He admits with c[a]ndor that he
did not receive the said memorandum
because it was written not on the company
stationary. Just the same the contents of the
said letter has bec[o]me irrelevant because
he has been already dismissed as of
February 19, 2002 and as regards the low
output he says that all of the sales people
could not meet the quota and why zero in on
him.

In view of the foregoing, please explain in

writing twenty four (24) hours from receipt

Then on Mach 13, 2002 you sent him a

memorandum to explain in writing within

twenty four (24) hours why he should not be

dismissed for his alleged absence without
leave.

You must have been advised by someone

that your dismissal of Mr. Uy on February 19,
2002 is doubly illegal, i.e., for lack of due
process and sufficient cause and the March
13, 2002 memorandum is to make up for
such lapse so that if Mr. Uy files a case of
illegal dismissal, you can conveniently say
that he violated his contract of employment
and that he was on absence without
leave. Nice move, but it may not be nice
later on.
x x x x[7]
For his illegal termination, petitioner asserted
that he is entitled to his unpaid commission,
tax refund, back wages and reinstatement.
On the other hand, respondents denied
dismissing petitioner. They countered that
petitioners poor sales performance did not
improve even after he was regularized. On
February 18, 2002, management met with
the Sales Group on a per agent basis to
discuss sales performance, possible salary
realignment and revamp of the Sales Group.
Agcaoili relayed to petitioner the poor
assessment of his sales performance and the
possibility that he will be transferred to
another department although there was yet
no official decision on the matter. Petitioner
then told Agcaoili that he was aware of the
problem and his possible termination,
prompting the latter to convince the former
to consider voluntarily resigning from the
company rather than be terminated. The
next day, February 19, 2002, petitioner
talked anew to Agcaoili and informed the
latter that he will just resign from the
company and sought an appointment with
Sy. When petitioner inquired how much he
will get if he will resign, Sy advised him that
he would get salaries and commissions to
which he is legally entitled; hence, for items
sold and already delivered, he will be
receiving the commission in full, but for
those sold but yet to be delivered, as per
company policy, he will receive the

commissions only upon delivery of the items.

Upon hearing this, petitioner suddenly got
mad and said that if that is the case, the
company president should just terminate him
and walked out. Petitioner was given a
chance, through the two memos issued to
him, to explain his failure to meet the
prescribed sales quota and his failure to
report for work without informing the
company of the reason therefor. But he never
submitted his explanations to his violations
of the contract of employment, and
abandoned his job which is another ground
for terminating his employment. While it
would appear that petitioner aimed to secure
his alleged money claims from the
respondents, this does not justify
abandonment of his work as respondents
never had the intention of terminating his
services. Respondents maintained that
petitioner voluntarily left his workplace and
refused to report for work as in fact he
indicated to his sales supervisor that he will
just resign; however, he never submitted a
letter of resignation.[8]

Respondents also denied the claims of

petitioner regarding an alleged souring of his
relations with Garcia, as in fact it was
petitioner who clearly had a personal grudge
against her and not the other way
around. The alleged incidents with client
actually showed it was petitioner who was
discourteous and abusive. There was likewise
no reason for respondent Sy to say they were
powerful because petitioner did not at all
threaten to sue or do something to their
prejudice. To refute petitioners unfounded
allegations, respondents presented the
affidavits of the following: (1) co-employee
Rommel Azarraga who admitted he was the
person who warned petitioner to be careful
and told him mainit ka kay Mrs. Garcia and
explained that he only made such statement
in order to scare petitioner and convince him
to change his attitude; the truth is that Mrs.
Garcia had not spoken to him about
harbouring any ill feelings towards petitioner
and neither does he know of any incident or
circumstance which may give rise to such ill
feeling of Mrs. Garcia towards petitioner; (2)

Richard Agcaoili who corroborated the

respondents claims, denying that petitioner
was terminated due to insubordination; he
further denied having told petitioner that
management was satisfied with his
performance, the truth being that while
petitioner may have ranked second to the
top performer, there was actually only two
remaining senior sales agents while the rest
have more or less six months experience;
considering the number of years of his
service to the company, petitioner should
have improved as against other agents most
of whom were newly-hired and still under
probation; and (3) Arnulfo Merecido,
respondent companys employee (warehouse
helper) who claimed that he had a fistfight
with petitioner sometime in June 2000 which
arose from the latters insulting remarks
regarding his family.[9]

WHEREFORE, premises considered, the

Decision dated April 8, 2003 is set aside and
reversed. A new one is entered finding
complainant to have been illegally dismissed
and thus entitled to reinstatement with
backwages. Respondent Centro Ceramica
Corporation is hereby ordered to pay
complainant his backwages reckoned from
the date of his dismissal on February 19,
2002 up to the date of the promulgation of
this decision. As reinstatement is no longer
feasible, complainant should instead be paid
separation pay equivalent to one half (1/2)
month pay for every year of service. In
addition, respondents company should pay
complainant his unpaid commission in the
amount of P16,581.00.
All other claims are dismissed for lack of
merit.
SO ORDERED.[11]

Labor Arbiters Ruling

In his decision[10] dated April 8, 2003, Labor
Arbiter Elias H. Salinas dismissed petitioners
complaint on the basis of his finding that it
was petitioner who opted not to report for
work since February 22, 2002, after offering
to resign (as told to his supervisor) because
he could not accept his possible transfer to
another department.

NLRCs Ruling
Petitioner appealed to the NLRC which
reversed the Labor Arbiters ruling. The NLRC
found that the dismissal of petitioner was
made under questionable circumstances,
thus giving weight to petitioners assertion
that he was being singled out
notwithstanding that all sales personnel
similarly could not meet the P1.5 million
monthly sales quota. Such finding is
reinforced by the fact that no sanction was
imposed on petitioner or any other employee
for the supposed failure to meet the quota,
thereby creating the impression that the
situation was tolerated by the
respondents. The NLRC thus decreed:

Court of Appeals Ruling

Respondents elevated the case to the CA
which reversed the NLRC and dismissed
petitioners complaint. According to the CA,
petitioner by his own account had admitted
that it was he who asked for his dismissal
when he narrated that during his meeting
with Sy, he had asked for his termination
paper and she threatened to do so if that
was what he wanted. It also noted the
affidavit of Agcaoili who attested that
petitioner was merely informed of the
decision to transfer him to another
department, which is not denied by the
petitioner; said witness also said that the
turnover of company documents and files
was voluntary on the part of petitioner who
expressed desire to resign from the
company. Another statement considered by
the CA is that made by witness Azarraga who
explained that he only mentioned the name
of Ms. Garcia to petitioner when he warned
the latter to be careful, simply because she
is a member of the Couples for Christ who
may have an influence over petitioner who is
a member of the Singles for Christ. As to the
memos sent by the company to petitioners
residence, this shows that it has not yet

terminated the employment of

petitioner. Thus, the CA held that the
evidence on record supports the Labor
Arbiters finding that petitioner informally
severed the employment relationship as
manifested by his voluntary transfer of his
accountabilities to his supervisor and
thereafter his act of not reporting for work
anymore.
Petitioners motion for reconsideration having
been denied, the present petition was filed in
this Court.

Issue
The sole issue to be addressed is whether
petitioner was dismissed by the respondents
or voluntarily severed his employment by
abandoning his job.

Arguments of the Parties

Petitioner assails the CAs misappreciation of
the facts, completely relying on respondents
allegations particularly on what transpired
during the meeting with respondents Sy and
Garcia, of which the appellate court made a
twisted interpretation of their
conversation. Hence, instead of decreeing
petitioners illegal termination based on Sys
verbal dismissal without just cause and due
process, the CA proceeded to conclude that
petitioner voluntarily and informally severed
his relation with the company. As to the
affidavit of Agcaoili, his statement that he
merely informed petitioner of the decision to
transfer him to another department is of no
moment because what matters is the action
of Sy who dismissed petitioner
outright. Moreover, Agcaoili, being under the
employ of respondents, would logically be
biased and he would naturally tend to
protect the company by his statements
regarding petitioners case. On the other
hand, Azarragas confusing and inconsistent
statements only confirmed that Garcia
indeed had a grudge against petitioner, as
he could not give a rational explanation for
warning petitioner to be careful with Garcia.

Petitioner further contends that his act of

turning over his accountabilities to his
supervisor cannot be considered voluntary
on his part as it was done by him knowing
that he was already terminated and upon the
specific instructions of Sy and Garcia. The CA
therefore erred in relying on the unbelievable
submission of respondents that such transfer
of company documents and samples was
indicative of petitioners desire to resign. It
failed to see that petitioners reaction to his
impending transfer to another department
(pag-iisipan ko pa) was due to his not coming
to terms with Garcia and aware of the
warning earlier given by his friends. Under
this scenario, the animosity between
petitioner and Garcia was evident such that
Garcia eventually prevailed upon Sy to
terminate petitioners services. Unfortunately,
it was on the very same day that petitioner
was verbally terminated by Sy on the ground
of insubordination and ordered to
immediately turn over his files and
samples. It was on February 21, 2002 that
Agcaoili told petitioner that the company will
give him all that is due him plus goodwill
money, and in a meeting with Sy he had
asked for his termination paper because he
was in fact already terminated on February
19, 2002 but she responded by saying that if
that was what he wanted she will give it to
him and even threatened him to think
because respondents are powerful.
In their Comment, respondents assert that
the CA committed no reversible error in
concluding that petitioner was not illegally
terminated. They stress that the evidence
clearly established that petitioner was not
dismissed but required merely to explain why
he failed to report for work after meeting the
company president. As to petitioners act of
turning over his accountabilities,
respondents argue that this cannot be
considered proof of his illegal dismissal
because it was done voluntarily in line with
his proposed resignation. Respondent
company was about to conduct its
investigation on petitioner who went AWOL
since February 19, 2002 but then he refused
to accept the memos sent to him, thus
confirming categorically that respondents
were investigating his failure to report for

work and giving him all the opportunity to

explain his absence.
The Courts Ruling
We grant the petition.
As a general rule, only questions of law may
be allowed in a petition for review
on certiorari.[12]Considering, however, that
the Labor Arbiters findings were reversed by
the NLRC, whose Decision was in turn
overturned by the CA, reinstating the Labor
Arbiters Decision, it behooves the Court to
reexamine the records and resolve the
conflicting rulings.[13]
Scrutinizing the records, we find that the
NLRCs finding of illegal dismissal is
supported by the totality of evidence and
more consistent with logic and ordinary
human experience than the common finding
of the CA and Labor Arbiter that petitioner
informally severed his employment
relationship with the company. It hardly
convinces us that after declining his
supposed transfer to another department as
per the information relayed to him by his
supervisor, petitioner would readily turn over
his files and samples unless something
critical indeed took place in his subsequent
closed-door meeting with Sy and Garcia. As
correctly pointed out by petitioner, it is
irrelevant whether or not he had earlier
inquired from his supervisor what he will
receive if he offers instead to resign upon
being told of his impending transfer, for what
matters is the action of Sy on his
employment status. If ever petitioner
momentarily contemplated resignation and
such was the impression he conveyed in his
talk with his supervisor prior to the meeting
with Sy, such is borne by circumstances
indicating Garcias antagonism towards
petitioner. In any event, whether such
perception of a strained working relationship
with Garcia was mistaken or not is beside the
point. The crucial factor is the verbal order
directly given by Sy, the company president,
for petitioner to immediately turn over his
accountabilities. Notably, Sy got irked when
petitioner asked for his termination
paper. Petitioner apparently wanted to
ascertain whether such summary dismissal

was official, and it was well within his right to

demand that he be furnished with a written
notice in order to apprise him of the real
ground for his termination.
Contrary to respondents theory that
petitioners act of turning over the company
files and samples is proof of his voluntary
informal resignation rather than of the
summary dismissal effected by
management, no other plausible explanation
can be made of such immediate turn over
except that petitioner directly confirmed
from the company president herself that he
was already being dismissed. The
subsequent memos sent to petitioners
residence after he did not anymore report for
work only reinforce the conclusion that the
belated written notice of the charge against
him his alleged failure to meet the prescribed
sales quota was an afterthought on the part
of respondents who may have realized that
they failed to observe due process in
terminating him. That respondents would still
require a written explanation for petitioners
poor sales performance after the latter
already complied with Sys directive to turn
over all his accountabilities is simply
inconsistent with their claim that petitioner
offered to resign and voluntarily relinquished
possession of company files and samples
when told of his impending transfer. In other
words, petitioner was not given any
opportunity to defend himself from whatever
charges hurled by management against him,
such as poor sales performance as relayed to
him by his supervisor, when Sy
unceremoniously terminated him which must
have shocked him considering that his
supervisor earlier advised that he would just
be transferred to another department. Under
this scenario, petitioners decision not to
report for work anymore was perfectly
understandable, as the sensible reaction of
an employee fired by no less than the
company president. It was indeed a classic
case of dismissal without just cause and due
process, which is proscribed under our labor
laws.
As to the affidavits submitted by the
respondents, these are at best self-serving
having been executed by employees

beholden to their employer and which

evidence by themselves did not refute
petitioners main cause of action -- the fact of
his summary dismissal on February 19,
2002. Respondents effort to present the case
as one of an erring employee about to be
investigated for poor sales performance
must likewise fail. The NLRC duly noted the
discriminatory treatment accorded to
petitioner when it declared that there is no
evidence at all that other sales personnel
who failed to meet the prescribed sales
quota were similarly reprimanded or
penalized. Incidentally, the question may be
asked if petitioner whose performance was
assessed by management as poor yet
admittedly ranked second to the top sales
agent of the company, why was it that no
evidence was submitted by respondents to
show the comparative sales performance of
all sales agents? Given the strained working
relationship with Garcia, or at least a
perception of such gap on the part of
petitioner, the latter could not have been
properly informed of the actual ground for
his dismissal. But more importantly,
respondents terminated petitioner first and
only belatedly sent him written notices of the
charge against him. Fairness requires that
dismissal, being the ultimate penalty that
can be meted out to an employee, must
have a clear basis. Any ambiguity in the
ground for the termination of an employee
should be interpreted against the employer,
who ordained such ground in the first place.
[14]

Resignation is defined asthe voluntary act of

employees who are compelled by personal
reasons to disassociate themselves from
their employment. It must be done with the
intention of relinquishing an office,
accompanied by the act of abandonment.
[15]
In this case, the evidence on record
suggests that petitioner did not resign; he
was orally dismissed by Sy. It is this lack of
clear, valid and legal cause, not to mention
due process, that made his dismissal illegal,
warranting reinstatement and the award of
backwages.[16] Moreover, the filing of a
complaint for illegal dismissal just three
weeks later is difficult to reconcile with
voluntary resignation. Had petitioner

intended to voluntarily relinquish his

employment after being unceremoniously
dismissed by no less than the company
president, he would not have sought redress
from the NLRC and vigorously pursued this
case against the respondents.[17]
When there is no showing of a clear, valid
and legal cause for the termination of
employment, the law considers it a case of
illegal dismissal. Furthermore, Article 4 of
the Labor Code expresses the basic principle
that all doubts in the interpretation and
implementation of the Labor Code should be
interpreted in favor of the workingman. This
principle has been extended by
jurisprudence to cover doubts in the
evidence presented by the employer and the
employee.[18] Thus we have held that if the
evidence presented by the employer and the
employee are in equipoise, the scales of
justice must be tilted in favor of the latter.
[19]
Accordingly, the NLRCs finding of illegal
dismissal must be upheld.
However, the award of back wages and
separation pay in lieu of reinstatement
should be modified. Under the doctrine of
strained relations, the payment of separation
pay has been considered an acceptable
alternative to reinstatement when the latter
option is no longer desirable or viable.
[20]
Under the facts established, petitioner is
entitled to the payment of full back wages,
inclusive of allowances, and other benefits or
their monetary equivalent, computed from
the date of his dismissal on February 19,
2002 up to the finality of this decision, and
separation pay in lieu of reinstatement
equivalent to one month salary for every
year of service, computed from the time of
his engagement by respondents on March
21, 1999 up to the finality of this decision. [21]

WHEREFORE, the petition for review on

certiorari is GRANTED. The Decision dated
April 21, 2006 and Resolution dated
September 7, 2006 of the Court of Appeals in
CA-G.R. SP No. 88061 are SET ASIDE. The
Decision dated July 29, 2004 of the National
Labor Relations Commission in NLRC NCR CA
No. 035557-03 is REINSTATED and AFFIRMED

WITH MODIFICATIONS in that in addition to

the unpaid commission of P16,581.00,
respondent Centro Ceramica Corporation is
hereby ordered to pay petitioner Jhorizaldy
Uy his full back wages, inclusive of
allowances, and other benefits or their
monetary equivalent, computed from the
date of his dismissal on February 19, 2002 up
to the finality of this decision, and separation
pay in lieu of reinstatement equivalent to
one monthsalary for every year of service,
computed from the time of his engagement
by respondent corporation on March 21,
1999 up to the finality of this decision.
No pronouncement as to costs.
SO ORDERED
De castro v. Liberty Broadcasting
BRION, J.:
The respondent, Liberty Broadcasting Network,
Inc. (LBNI), filed the present Motion for
Reconsideration with Motion to Suspend
Proceedings, asking us, first, to set aside our
Decision[1] and, second, to suspend the court
proceedings in view of the Stay Order issued on
August 19, 2005 by the Regional Trial Court (RTC)
of Makati, Branch 138, in relation to the corporate
rehabilitation proceedings that LBNI initiated.
The dispositive part of our Decision reads:
WHEREFORE, premises considered, we
hereby GRANT the petition. Accordingly,
we REVERSE and SET ASIDE the Decision and
Resolution of the CA promulgated on May 25,
2004 and August 30, 2004, respectively,
and REINSTATE in all respects the Resolution of
the National Labor Relations Commission dated
September 20, 2002. Costs against the
respondents.
SO ORDERED.[2]
The facts, as recited in our Decision, are
summarized below:
The petitioner, Carlos C. de Castro, worked as a
chief building administrator at LBNI. On May 31,
1996, LBNI dismissed de Castro on the grounds of
serious misconduct, fraud, and willful breach of
the trust reposed in him as a managerial
employee.Allegedly, de Castro committed the
following acts:

1.
Soliciting and/or receiving money for his
own benefit from suppliers/dealers/traders
[Cristino Samarita and Jose Aying], representing
commissions for job contracts involving the
repair, reconditioning and replacement of parts of
the airconditioning units at the companys
Antipolo Station, as well as the installation of fire
exits at the [LBNIs] Technology Centre;
2.
Diversion of company funds by soliciting
and receiving on different occasions a total
of P14,000.00 in commissions from Aying for a job
contract in the companys Antipolo Station;
3.
Theft of company property involving the
unauthorized removal of one gallon of Delo oil
from the company storage room;
4.
Disrespect/discourtesy towards a coemployee, for using offensive language against
[Vicente Niguidula, the companys supply
manager];
5.
Disorderly behavior, for challenging
Niguidula to a fight during working hours within
the company premises, thereby creating a
disturbance that interrupted the normal flow of
activities in the company;
6.
Threat and coercion, for threatening to
inflict bodily harm on the person of Niguidula and
for coercing [Gil Balais], a subordinate, into
soliciting money in [de Castros] behalf from
suppliers/contractors;
7.
Abuse of authority, for instructing Balais to
collect commissions from Aying and Samarita,
and for requiring Raul Pacaldo (Pacaldo) to exact
2% - 5% of the price of the contracts awarded to
suppliers; and
8.
Slander, for uttering libelous statements
against Niguidula.[3]
Aggrieved, de Castro filed a complaint for illegal
dismissal against LBNI with the National Labor
Relations Commission (NLRC) Arbitration Branch,
National Capital Region, praying for
reinstatement, payment of backwages, damages,
and attorneys fees.[4] He maintained that he could
not have solicited commissions from suppliers
considering that he was new in the company.
[5]
Moreover, the accusations were belatedly filed
as the imputed acts happened in 1995. He
explained that the one gallon of Delo oil he
allegedly took was actually found in Gil Balais
room.[6] He denied threatening Vicente Niguidula,
whom he claimed verbally assaulted him and
challenged him to a fight, an incident which he
reported to respondent Edgardo Quiogue, LBNIs
executive vice president, and to the Makati
police.[7] De Castro alleged that prior to executing
affidavits against him, Niguidula and Balais had
serious clashes with him.[8]
On April 30, 1999, the Labor Arbiter rendered a
decision[9] in de Castros favor, holding LBNI liable

for illegal dismissal.[10] The Labor Arbiter found

the affidavits of LBNIs witnesses to be devoid of
merit, noting that (1) witnesses Niguidula and
Balais had altercations with de Castro prior to the
execution of their respective affidavits; (2) the
affidavit of Cristino Samarita, one of the suppliers
from whom de Castro allegedly asked for
commissions, stated that it was not de Castro,
but Balais, who personally asked for money; and
(3) Jose Aying, another supplier, recanted his
earlier affidavit.[11]
LBNI appealed the Labor Arbiters ruling to the
NLRC. Initially, the NLRC reversed the Labor
Arbiters decision but on de Castros motion for
reconsideration, the NLRC reinstated the Labor
Arbiters decision.[12] It ruled that the charges
against de Castro were never really substantiated
other than by bare allegations in the witnesses
affidavits who were the companys employees and
who had altercations with De Castro prior to the
execution of their affidavits.[13]
LBNI again appealed the NLRCs adverse decision
to the Court of Appeals (CA). On May 25, 2004,
the CA reversed the NLRCs decision and held that
de Castros dismissal was based on valid
grounds. It ruled too that the NLRC gravely
abused its discretion when it disregarded the
affidavits of all of LBNIs witnesses.[14]
In our September 23, 2008 Decision, we found
that de Castros dismissal was based on
unsubstantiated charges. Aying, a contractor,
earlier executed an affidavit stating that de
Castro asked him for commission, but in his
second affidavit, he recanted his statement and
exonerated de Castro.[15] The other witnesses,
Niguidula and Balais, were LBNI employees who
resented de Castro.[16] We noted that de Castro
had not stayed long in the company and had not
even passed his probationary period when the
acts charged allegedly took place. We found this
situation contrary to common experience, since
new employees have a natural motivation to
make a positive first impression on the employer,
if only to ensure that they are regularized. [17]
Thus, we ruled that the grounds that LBNI
invoked for de Castros dismissal were, at best,
doubtful, based on the evidence presented. These
doubts should be interpreted in de Castros favor,
pursuant to Article 4 of the Labor Code.
[18]
Between a laborer and his employer, doubts
reasonably arising from the evidence or
interpretation of agreements and writing should
be resolved in the formers favor.[19]
The Motion for Reconsideration

LBNI now moves for a reconsideration of our

September 23, 2008 Decision based on the
following arguments: (1) LBNI had valid legal
grounds to terminate de Castros employment for
loss of trust and confidence;[20] (2) the affidavits
of LBNIs witnesses should not have been totally
disregarded;[21] and (3) LBNI is currently under
rehabilitation, hence, the proceedings in this case
must be suspended.[22] LBNI points out that it
filed, with the RTC of Makati, a petition for
Corporate Rehabilitation with Prayer for
Suspension of Payments (docketed as S.P. Proc.
Case No. M-6126), and on August 19, 2005, the
RTC issued a Stay Order directing, among others,
that the
enforcement of all claims against Liberty
Telecoms, Liberty Broadcasting and
Skyphone, whether for money or otherwise and
whether such enforcement is by Court action or
otherwise x x x be forthwith stayed.[23]
Comment on the Motion for Reconsideration
In his comment, de Castro contends that LBNIs
motion for reconsideration contains a rehash of
LBNIs earlier arguments. He avers that despite
the RTCs Stay Order, it is premature for this Court
to suspend the proceedings. If a suspension of
the proceedings is necessary, the proper venue to
file the motion is with the Office of the Labor
Arbiter. [24] De Castro further posits that LBNI
should have informed this Court of the status of
its Petition for Corporate Rehabilitation.[25]
THE COURTS RULING
Except for the prayer to suspend the execution of
our September 23, 2008 Decision, we do not find
LBNIs Motion for Reconsideration meritorious.
Although we reject, for lack of merit, LBNIs
arguments regarding the legality of de Castros
dismissal, we suspend the execution of our
Decision in deference to the Stay Order issued by
the rehabilitation court.
The issue of illegal dismissal has already been
resolved in the Courts September 23, 2008
Decision
LBNIs motion for reconsideration merely
reiterates its earlier arguments, which we have
already addressed in our September 23, 2008
Decision. LBNI has failed to offer any substantive
argument that would convince us to reverse our
earlier ruling.
LBNI argues that there is no logic for it to illegally
dismiss de Castro because being on probationary
employment a fact which this Court had stated in
its decision all that the company had to do was
not to re-hire him.[26] By this claim, LBNI has

misread the import of our ruling. The September

23, 2008 Decision declared that de Castro had
not stayed long in the company and had not even
passed his probationary period when the acts
charged allegedly took place.[27] Properly read, we
found that the acts charged against de Castro
took place when he was still under probationary
employment a finding completely different from
LBNIs claim that de Castro was dismissed during
his probationary employment. On the contrary,
de Castro was dismissed on the ninth month of
his employment with LBNI, and by then, he was
already a regular employee by operation of law.
Article 281 of the Labor Code provides that
[p]robationary employment shall not exceed six
(6) months from the date the employee started
working, x x x [a]n employee who is allowed to
work after a probationary period shall be
considered a regular employee. As a regular
employee, de Castro was entitled to security of
tenure and his illegal dismissal from LBNI justified
the awards of separation pay, backwages, and
damages.
The pendency of the rehabilitation proceedings
does not affect the Courts jurisdiction to resolve
the case, but merely suspends the execution of
the September 23, 2008 Decision
On October 18, 2005, while de Castros petition
was still pending before the Court, LBNI filed a
motion to suspend the proceedings, citing the
Stay Order, dated August 19, 2005, issued by the
RTC of Makati, Branch 138 in S.P. Case No. M6126.[28] The Stay Order read:
FOR THE REASONS GIVEN and applying Section 6
of the Interim Rules of Procedure on Corporate
Rehabilitation, x x x it is ordered that
enforcement of all claims against [LBNI] whether
for money or otherwise and whether such
enforcement is by Court action or otherwise, its
guarantors and sureties not solidarily liable with
the petitioner, be forthwith stayed.
xxxx
SO ORDERED.[29]
LBNIs motion was denied in our Resolution of
December 12, 2005 for being premature, as de
Castro then had yet to file his reply to LBNIs
comment on the petition.[30] Thereafter, nothing
was heard from LBNI regarding the Stay Order or
the rehabilitation proceedings it instituted before
the RTC of Makati, Branch 138. Even the
memorandum, dated May 4, 2006, that LBNI filed
with the Court contained no reference to the
rehabilitation proceedings.[31]
The filing of a memorandum before the Court is
not an empty requirement, devoid of legal
significance. In A.M. No. 99-2-04-SC, the Court

declared that issues raised in previous pleadings

but not included in the memorandum shall be
deemed waived or abandoned. Being a
summation of the parties previous pleadings, the
memoranda alone may be considered by the
Court in deciding or resolving the petition. Thus,
on account of LBNIs omission, only the issues
raised in the parties memoranda principally, the
validity of de Castros dismissal from LBNI were
considered by the Court in resolving the case.
The Court does not take judicial notice of
proceedings in the various courts of justice in the
Philippines.[32] At the time we decided the present
case, we were thus not bound to take note of and
consider the pendency of the rehabilitation
proceedings, as the matter had not been properly
brought to our attention. In Social Justice Society
v. Atienza,[33] we said that:
In resolving controversies, courts can only
consider facts and issues pleaded by the
parties. Courts, as well as magistrates presiding
over them are not omniscient. They can only act
on the facts and issues presented before them in
appropriate pleadings. They may not even
substitute their own personal knowledge for
evidence. Nor may they take notice of matters
except those expressly provided as subjects of
mandatory judicial notice.
xxxx
The party asking the court to take judicial notice
is obligated to supply the court with the full text
of the rules the party desires it to have notice of.
Notably, LBNIs memorandum was filed on May 4,
2006, more than 180 days from the date of the
initial hearing on October 5, 2005 (as set in the
Stay Order of August 19, 2005). Under Section
11, Rule 4 of the Interim Rules of Procedure on
Corporate Rehabilitation (Interim Rules), a
petition for rehabilitation shall be dismissed if no
rehabilitation plan is approved by the court upon
the lapse of 180 days from the date of initial
hearing. While the Interim Rules grant extension
beyond the 180-day period, no such extension
was alleged in this case; in fact, as we earlier
pointed out, no mention at all was made in LBNIs
memorandum of the rehabilitation
proceedings. With the failure of LBNI to raise
rehabilitation proceedings in its memorandum,
the Court had sufficient grounds to suppose that
the rehabilitation petition had been dismissed by
the time the case was submitted for decision.
Given these circumstances, the existence of the
Stay Order which would generally authorize the
suspension of judicial proceedings, even those
pending before the Court could not have affected
the Courts action on the present case. At any
rate, a stay order simply suspends all actions for
claims against a corporation undergoing
rehabilitation; it does not work to oust a court of

its jurisdiction over a case properly filed before it.

[34]
Our ruling on the principal issue of the case
that de Castro had been illegally dismissed from
his employment with LBNI thus stands.

rehabilitation, subject to the penalty of contempt

in case of noncompliance.

Nevertheless, with LBNIs manifestation that it is

still undergoing rehabilitation, the Court resolves
to suspend the execution of our September 23,
2008 Decision. The suspension shall last up to the
termination of the rehabilitation proceedings, as
provided in Section 11, in relation to Section 27,
Rule 4 of the Interim Rules

Republic of the Philippines

Supreme Court
Baguio City

Sec. 11. Period of the Stay Order. - The stay order

shall be effective from the date of its issuance
until the dismissal of the petition or the
termination of the rehabilitation proceedings.
The petition shall be dismissed if no rehabilitation
plan is approved by the court upon the lapse of
one hundred eighty (180) days from the date of
the initial hearing. The court may grant an
extension beyond this period only if it appears by
convincing and compelling evidence that the
debtor may successfully be rehabilitated. In no
instance, however, shall the period for approving
or disapproving a rehabilitation plan exceed
eighteen (18) months from the date of filing of
the petition.
xxxx
Sec. 27. Termination of Proceedings. In case of
the failure of the debtor to submit the
rehabilitation plan, or the disapproval thereof by
the court, or the failure of the rehabilitation of the
debtor because of failure to achieve the desired
targets or goals as set forth therein, or the failure
of the said debtor to perform its obligations under
the said plan, or a determination that the
rehabilitation plan may no longer be
implemented in accordance with its terms,
conditions, restrictions, or assumptions, the court
shall upon motion, motu proprio, or upon the
recommendation of the Rehabilitation Receiver,
terminate the proceedings. The proceedings shall
also terminate upon the successful
implementation of the rehabilitation plan.
WHEREFORE, we DENY the Motion for
Reconsideration; accordingly, our Decision dated
September 23, 2008 is herebyAFFIRMED. The
National Labor Relations Commission is, however,
directed to SUSPEND the execution of our
September 23, 2008 Decision until the Stay Order
is lifted or the corporate rehabilitation
proceedings are terminated. Respondent Liberty
Broadcasting Network, Inc. is hereby directed to
submit quarterly reports to the National Labor
Relations Commission on the status of its

SO ORDERED.

PENAFLOR v OUTDOOR
In our Decision of January 21, 2010, we granted
petitioner Manolo Peaflors (Peaflor) petition for
review on certiorari and reversed the Court of
Appeals (CA) decision of December 29, 2006 and
resolution of March 14, 2007. We found that
Peaflor had been constructively dismissed from
his employment with respondent Outdoor
Clothing Manufacturing Corporation (Outdoor
Clothing). Outdoor Clothing now seeks a
reconsideration of this ruling.
FACTUAL BACKGROUND
Peaflor was hired as probationary HRD Manager
of Outdoor Clothing on September 2, 1999. On
March 13, 2000, more than six months from the
time he was hired, Peaflor learned that Outdoor
Clothings President, Nathaniel Syfu (Syfu),
appointed Edwin Buenaobra (Buenaobra) as the
concurrent HRD and Accounting Manager. After
enduring what he claimed as discriminatory
treatment at work, Peaflor considered the
appointment of Buenaobra to his position as the
last straw, and thus filed his irrevocable
resignation from Outdoor Clothing effective at the
close of office hours on March 15, 2000. He
thereafter filed an illegal dismissal complaint with
the labor arbiter claiming that he had been
constructively dismissed. The labor arbiter agreed
with Peaflor and issued a decision in his favor
on August 15, 2001.
On appeal, the National Labor Relations
Commission (NLRC) reversed the labor arbiters
ruling in its September 24, 2002decision. When
Peaflor questioned the NLRCs decision before the
CA, the appellate court affirmed the NLRCs
decision. Hence, Peaflor filed a petition for review
on certiorari with the Court.
The Courts January 21, 2010 Decision
Our January 21, 2010 decision focused on
resolving the issue of whether Peaflors
resignation from Outdoor Clothing was voluntary
or a forced one, the latter making it a
constructive dismissal equivalent to an illegal
dismissal. We found it crucial to
determine whether Peaflor filed his resignation

letter before or after the appointment of

Buenaobra as concurrent HRD and Accounting
Manager. If the resignation was
submitted before Syfus appointment of
Buenaobra, little support would exist for Peaflors
allegation of constructive dismissal, as the
appointment would merely be intended to cover
the vacancy created by Peaflors resignation. If
however the resignation was made after the
appointment of Buenaobra, then factual basis
exists to consider Peaflor as constructively
dismissed by Outdoor Clothing, as the resignation
would be a response to the unacceptable
appointment of another person to a position he
still occupied.
Peaflor claimed that he filed
his undated resignation letter on the very same
date he made his resignation effective March 15,
2000. On the other hand, Outdoor Clothing
contended that the letter was submitted
on March 1, 2000. In support of this allegation,
Outdoor Clothing presented three memoranda:
a.
the March 1, 2000 memorandum from Syfu
to Buenaobra appointing the latter as the
concurrent HRD and Accounting Manager;
b.
the March 3, 2000 memorandum from
Buenaobra to Syfu accepting the appointment;
and
c.
the March 10, 2000 office memorandum
from Syfu informing all concerned of Buenaobras
new appointment.
Our analysis of the records led us to conclude
that Peaflor submitted his resignation on March
15, 2000 as a response to the appointment of
Buenaobra to his post.
We considered suspicious Outdoor Clothings
above memoranda because these were only
presented to the NLRC on appeal, but not before
the labor arbiter. They were not even mentioned
in Outdoor Clothings position paper filed with the
labor arbiter. The failure to present them and to
justify this failure are significant considering that
these are clinching pieces of evidence that
allowed the NLRC to justify the reversal of the
labor arbiters decision.
The surrounding circumstances of the issuance of
these memoranda also cast doubts on their
authenticity. Although the memoranda directly
concerned Peaflor, he was never informed of their
contents nor given copies. While the March 10,
2000 memorandum bore signatures of its
recipients, there were no marks on the March 1
and 3, 2000 memoranda indicating that their
intended recipients actually received them on the
date they were issued. It was likewise strange
that Peaflors resignation and Buenaobras
appointment would be kept under wraps from the

supposed filing of Peaflors resignation letter on

March 1, 2000 up to Syfus issuance of the March
10, 2000 office memorandum, since the turnover
of responsibilities and work load alone to a
successor in a small company such as Outdoor
Clothing would have prevented the resignation
from being kept a secret.
We also considered the timeliness of Peaflors
resignation. It was highly unlikely for Peaflor to
resign on March 1, 2000, as claimed by Outdoor
Corporation, considering that he would have
become a regular employee by that time. It did
not appear logical that an employee would tender
his resignation on the very same day he was
entitled by law to be considered a regular
employee, especially when downsizing was taking
place and he could have availed of its benefits if
separated from the services as a regular
employee.
Considering the above circumstances, and
applying basic labor law principles, the Court
ruled that Peaflor was constructively dismissed
from his employment with Outdoor Clothing. We
thus reversed the CAs decision and resolution and
reinstated the decision of the labor arbiter which
found the respondents (Outdoor Clothing and its
corporate officers) jointly and severally liable to
pay Peaflor backwages, illegally deducted
salaries, proportionate 13th month pay, attorneys
fees, moral and exemplary damages.
THE MOTION FOR RECONSIDERATION
Outdoor Clothing now moves for the
reconsideration of the Courts January 21, 2010
Decision. It alleges that the Court erred in
declaring that Peaflor was constructively
dismissed from his employment despite his
submission of an irrevocable resignation letter. It
also claims that the Court erred in holding all the
respondents jointly and severally liable to pay
Peaflor the salaries and damages awarded in his
favor.
Outdoor Clothing maintains that Peaflors
resignation was voluntary; Peaflor resigned
because he wanted to disassociate himself from a
company that was experiencing severe financial
difficulty and to focus on his teaching job. Indeed,
Peaflors own letter stating his decision
to irrevocably resign from his employment with
Outdoor Clothing was a clear indication that he
was not forced to leave the company.
Outdoor Clothing also relies heavily on the three
memoranda it presented before the NLRC to
support its claim of Peaflors voluntary
resignation. Although belatedly filed, Outdoor
Clothing claims there is nothing in the rules which

disallows the filing of new documents before the

NLRC. Submission of additional documents, albeit
belatedly done, should always be looked upon
with liberality especially when the same was
important for any factual determination of the
case.[1]
Since it was Peaflor who filed the resignation
letter, Outdoor Clothing posits that the burden of
proving that the resignation was involuntary rests
on Peaflor. The evidence presented by Peaflor
simply failed to overcome this burden and thus,
his resignation should be deemed voluntary and
should absolve Outdoor Clothing of any liability
for illegal dismissal.
Additionally, Outdoor Clothing asserts that the
Court erred in reinstating the labor arbiters
decision which ordered all the respondents jointly
and severally liable for the sums due to
Peaflor. There was nothing in the decision of the
Court or even those of the CA and the
administrative bodies finding Outdoor Clothings
corporate officers Syfu, Medylene Demogena
(Demogena), and Paul Lee (Lee) to have
personally acted in bad faith or with malice with
respect to Peaflors resignation. Assuming Outdoor
Clothing is indeed liable to Peaflor for illegal
dismissal, it would be legally out of line to
consider its corporate officers solidarily liable with
the company without a finding of bad faith or
malice on their part.
THE COURTS RULING
Other than the issue of solidary liability of the
respondents in the present case, Outdoor
Clothing raises no new matter that would merit a
reconsideration of the Courts January 21, 2010
Decision.
Peaflors resignation letter read:
Mr. Nathaniel Y. Syfu
Chief Corporate Officer
Outdoor Clothing Manufacturing Corporation
Sir:
Please accept my irrevocable resignation
effective at the close of office on March 15, 2000.
Thank you.
Very truly yours,
Manolo A. Peaflor[2]
While the letter states that Peaflors resignation
was irrevocable, it does not necessarily signify
that it was also voluntarily executed. Precisely

because of the attendant hostile and

discriminatory working environment, Peaflor
decided to permanently sever his ties with
Outdoor Clothing. This falls squarely within the
concept of constructive dismissal that
jurisprudence defines, among others, as
involuntarily resignation due to the harsh, hostile,
and unfavorable conditions set by the
employer. It arises when a clear discrimination,
insensibility, or disdain by an employer exists and
has become unbearable to the employee.[3] The
gauge for constructive dismissal is whether a
reasonable person in the employees position
would feel compelled to give up his employment
under the prevailing circumstances.[4] With the
appointment of Buenaobra to the position he then
still occupied, Peaflor felt that he was being
eased out and this perception made him decide
to leave the company.
The fact of filing a resignation letter alone does
not shift the burden of proving that the
employees dismissal was for a just and valid
cause from the employer to the
employee. In Mora v. Avesco,[5] we ruled that
should the employer interpose the defense of
resignation, it is still incumbent upon the
employer to prove that the employee voluntarily
resigned. To our mind, Outdoor Clothing did not
discharge this burden by belatedly presenting the
three memoranda it relied on. If these
memoranda were authentic, they would have
shown that Peaflors resignation preceded the
appointment of Buenaobra. Thus, they would be
evidence supporting the claim of voluntariness of
Peaflors resignation and should have been
presented early on in the case any lawyer or
layman by simple logic can be expected to know
this. Outdoor Clothing however raised them only
before the NLRC when they had lost the case
before the labor arbiter and now conveniently
attributes the failure to do so to its former
counsel.Outddor Clothings belated explanation as
expressed in its motion for reconsideration, to our
mind, is a submission we cannot accept for
serious consideration. We find it significant that
Peaflor attacked the belated presentation of these
memoranda in his Answer to Outdoor Clothings
Memoranda of Appeal with the NLRC, but records
do not show that Outdoor Clothing ever
satisfactorily countered Peaflors arguments. It
was not until we pointed out Outdoor Clothings
failure to explain its belated presentation of the
memoranda in our January 21, 2010 decision that
Outdoor Clothing offered a justification.
Whatever doubts that remain in our minds on the
credibility of the parties evidence should, by the
laws dictate, be settled in favor of the working
man. Our ruling that Peaflor was constructively

dismissed from his employment with Outdoor

Clothing therefore stands.
We modify, however, our ruling on the extent of
liability of Outdoor Clothing and its corespondents. A corporation, as a juridical entity,
may act only through its directors, officers and
employees. Obligations incurred as a result of the
directors and officers acts as corporate agents,
are not their personal liability but the direct
responsibility of the corporation they
represent. As a rule, they are only solidarily liable
with the corporation for the illegal termination of
services of employees if they acted with malice or
bad faith. In the present case, malice or bad faith
on the part of the Syfu, Demogena, and Lee, as
corporate officers of Outdoor Clothing, was not
sufficiently proven to justify a ruling holding them
solidarily liable with Outdoor Clothing.[6]
WHEREFORE, we PARTIALLY GRANT respondents
motion for reconsideration and MODIFY our
Decision datedJanuary 21, 2010. Respondent
Outdoor Clothing is hereby ordered to pay
petitioner the following:
a.
backwages computed from the time of
constructive dismissal up to the time of the
finality of the Courts Resolution;
b.
separation pay, due to the strained relations
between the parties, equivalent to the petitioners
one months salary;
c.
illegally deducted salary for six days, as
computed by the labor arbiter;
d.
proportionate 13th month pay;
e.
attorneys fees, moral and exemplary
damages in the amount of P100,000.00; and
f.
costs against the respondent corporation.
SO ORDERED.
Norkis Union v Norkis Trading
PANGANIBAN, J.:

Wage Order No. ROVII-06, issued by the

Regional Tripartite Wages and Productivity
Board (RTWPB), merely fixed a new minimum
wage rate for private sector employees in
Region VII; hence, respondent cannot be
compelled to grant an across-the-board increase
to its employees who, at the time of the
promulgation of the Wage Order, were already
being paid more than the existing minimum
wage.
The Case

Before us is a Petition for Review[1] under Rule 45

of the Rules of Court, seeking to set aside the July
30, 2002 Decision[2] and the January 16, 2003
Resolution[3] of the Court of Appeals (CA) in CA-GR
SP No. 54611. The disposition of the assailed
Decision reads as follows:
ACCORDINGLY, We GRANT the instant petition
for certiorari. The Decision of public respondent
Voluntary Arbitrator in VA Case No. 374-VII-09014-98E dated July 8, 1999, and Order dated
August 13, 1999, denying petitioners Motion for
Reconsideration, are hereby SET ASIDE. Petitioner
is hereby declared to have lawfully complied with
Wage Order No. ROVII-06. No pronouncement as
to costs.[4]
The Decision[5] of Voluntary Arbitrator Perfecto R.
de los Reyes III,[6] reversed by the CA, disposed as
follows:
WHEREFORE, premises considered, this Office
hereby decides in favor of Complainant.
Respondent is hereby ordered to grant its
employees the amount of increases granted
under RTWPB Wage Order ROVII-06 in an acrossthe-board manner retroactive to the dates
provided for under the said Wage Order.[7]
The January 16, 2003 Resolution denied
petitioners Motion for Reconsideration.
The Facts
The CA summarized the undisputed factual
antecedents as follows:
The instant case arose as a result of the issuance
of Wage Order No. ROVII-06 by the Regional
Tripartite Wages and Productivity Board (RTWPB)
increasing the minimum daily wage by P10.00,
effective October 1, 1998.
Prior to said issuance, herein parties entered into
a Collective Bargaining Agreement (CBA)
effective from August 1, 1994 to July 31, 1999.
Sec. 1. Salary Increase. The Company shall grant
a FIFTEEN (P15.00) PESOS per day increase to all
its regular or permanent employees effective
August 1, 1994.
Sec. 2. Minimum Wage Law Amendment. In the
event that a law is enacted increasing minimum
wage, an across-the-board increase shall be
granted by the company according to the
provisions of the law.

On January 27, 1998, a re-negotiation of the CBA

was terminated and pursuant to which a
Memorandum of Agreement was forged between
the parties. It was therein stated that petitioner
shall grant a salary increase to all regular and
permanent employees as follows:
Ten (10) pesos per day increase effective August
1, 1997; Ten (10) pesos per day increase effective
August 1, 1998.
Pursuant to said Memorandum of Agreement, the
employees received wage increases of P10.00 per
day effective August 1, 1997 and P10.00 per day
effective August 1, 1998. As a result, the
agreed P10.00 re-negotiated salary increase
effectively raised the daily wage of the
employees to P165.00 retroactive August 1,
1997; and another increase of P10.00, effective
August 1, 1998, raising the employees[] daily
wage to P175.00.
On March 10, 1998, the Regional Tripartite Wage
Productivity Board (RTWPB) of Region VII issued
Wage Order ROVII-06 which established the
minimum wage of P165.00, by mandating a wage
increase of five (P5.00) pesos per day beginning
April 1, 1998, thereby raising the daily minimum
wage to P160.00 and another increase of five
(P5.00) pesos per day beginning October 1, 1998,
thereby raising the daily minimum wage
to P165.00 per day.
In accordance with the Wage Order and Section 2,
Article XII of the CBA, [petitioner] demanded an
across-the-board increase. [Respondent],
however, refused to implement the Wage Order,
insisting that since it has been paying its workers
the new minimum wage of P165.00 even before
the issuance of the Wage Order, it cannot be
made to comply with said Wage Order.
Thus, [respondent] argued that long before the
passage of Wage Order ROVII-06 on March 10,
1998, and by virtue of the Memorandum of
Agreement it entered with herein [petitioner],
[respondent] was already paying its employees a
daily wage of P165.00 per day retroactive on
August 1, 1997, while the minimum wage at that
time was still P155.00 per day. On August 1,
1998, [respondent] again granted an increase
from P165.00 per day toP175.00, so that at the
time of the effectivity of Wage Order No. 06 on
October 1, 1998 prescribing the new minimum
wage of P165.00 per day, [respondents]
employees were already receiving P175.00 per
day.
For failure of the parties to settle this
controversy, a preventive mediation complaint
was filed by herein [petitioner] before the

National Conciliation and Mediation Board,

pursuant to which the parties selected public
respondent Voluntary Arbitrator to decide said
controversy.
Submitted for arbitral resolution is the sole issue
of whether or not [respondent] has complied with
Wage Order No. ROVII-06, in relation to the CBA
provision mandating an across-the-board increase
in case of the issuance of a Wage Order.
In his decision, public respondent arbitrator found
herein [respondent] not to have complied with
the wage order, through the following
dispositions:
The CBA provision in question (providing for an
across-the-board increase in case of a wage
order) is worded and couched in a vague and
unclear manner.
x x x In order to judge the intention of the
contracting parties, their contemporaneous and
subsequent acts shall be principally considered
(Art. 1371, New Civil Code). Thus, this Office x x x
required the parties to submit additional evidence
in order to be able to know and interpret the
parties working intent and application of Wage
Order No. 06 issued by the Regional Tripartite
Wages and Productivity Board, Regional Office VII
in relation to Section 2, Article XII provided for in
the parties[] existing CBA.
x x x Viewed from the foregoing facts and
evidence, the working intent and application of
RTWPB Wage Order ROVII-06 in relation to Section
2, Article XII of the parties[] existing CBA is
clearly established. The evidence submitted by
the parties, all point to the fact that their true
intention on how to implement existing wage
orders is to grant such wage orders in an acrossthe-board manner in relation to the provisions of
Section 2, Article XII of their existing CBA.
Respondent in this case [has] failed to comply
with its contractual obligation of implementing
the increase under RTWPB Wage Order ROVII-06
in an across-the-board manner as provided in
Section 2, Article XII of its CBA with [petitioner].
x x x x x x x x x[8]
Respondent elevated the case to the CA via a
Petition for Certiorari and Prohibition under Rule
65 of the Rules of Court.
Ruling of the Court of Appeals
The CA noted that the grant of an across-theboard increase, provided under Section 2 of
Article XII of the CBA, was qualified by the phrase

according to the provisions of the law. It thus

stressed the necessity of determining the import
of Wage Order No. ROVII-06, the law involved in
the present controversy. Taking into consideration
the opinion of the RTWPB, Region VII, the
appellate court held that respondent had
sufficiently complied with Wage Order No. ROVII06. The Board had opined that since adjustments
granted are only to raise the minimum wage or
the floor wage as a matter of policy, x x x wages
granted over the above amount set by this Board
is deemed a compliance.
The CA added that the policy and intent of the
Wage Order was to cushion the impact of the
regional economic crisis upon both the workers
and the employers, not to enrich the employees
at the expense of the employers. Further, it held
that to compel respondent to grant an across-theboard wage increase, notwithstanding that it was
already paying salaries to its employees above
the minimum wage, would be to penalize
generous employers and effectively make them
wait for the passage of a new wage order before
granting any increase. This would be counterproductive [insofar] as securing the interests of
labor is concerned.[9]
The appellate court said that the Wage Order
exempted from compliance those enterprises
already paying salaries equal to or more than the
prescribed minimum wage; thus, the Order
effectively made the previous voluntary increases
given by respondent to its employees creditable
against the law-mandated increase.
Consequently, there was no need for the
Collective Bargaining Agreement (CBA) to provide
expressly for such creditability.
Finally, the CA sustained respondents explanation
that the across-the-board increases provided in
the CBA was required only when a minimum
wage law caused a distortion in the wage
structure.
Hence, this Petition.[10]
Issues
In its Memorandum, petitioner submits the
following issues for our consideration:
I. Whether or not the Honorable Court of Appeals
gravely abused its discretion in setting aside the
decision and resolution of the honorable
voluntary arbitrator[.]
II. Whether or not the Honorable Court of Appeals
gravely abused its discretion in considering the
Supplemental Memorandum of respondent and
giving merit to evidence presented for the first
time on appeal and filed after the lapse of the
non[-]extendible period of time to file

memorandum and despite an extension granted

to respondent[.]
III.
Whether or not the Honorable Court of
Appeals gravely abused its discretion in
disregarding established jurisprudence on
statutory construction.[11]
The main issue is whether respondent violated
the CBA in its refusal to grant its employees an
across-the-board increase as a result of the
passage of Wage Order No. ROVII-06. Also raised
is the procedural issue relating to the propriety of
the admission by the CA of RTWPBs letter-opinion,
which was attached to respondents Supplemental
Memorandum submitted to that court on August
30, 2000, beyond the July 17, 2000 extended
deadline.
The Courts Ruling
The Petition lacks merit.
Main Issue:
Effect of Wage Order No. ROVII-06
on the Parties CBA
Petitioner insists that respondent should have
granted to the employees the increase stated in
Wage Order No. ROVII-06. In addition to the
increases both parties had mutually agreed upon,
the CBA supposedly imposed upon respondent
the obligation to implement the increases
mandated by law without any condition or
qualification. To support its claim, petitioner
repeatedly invokes Section 2 of Article XII of the
CBA, which reads:
SECTION 2. Minimum Wage Law Amendment. In
the event that a law is enacted increasing
minimum wage, an across-the-board increase
shall be granted by the Company according to
the provisions of the law.
Interestingly, petitioner disregards altogether in
its argument the qualifying phrase according to
the provisions of the law and merely focuses its
attention on the across-the-board increase
clause. Given the entire sentence, it is clear that
the above-quoted CBA provision does not support
the unyielding view of petitioner that the
issuance of Wage Order No. ROVII-06 entitles its
members to an across-the-board increase,
absolutely and without any condition.
Stipulations in a contract must be read together,
[12]
not in isolation from one another. When the
terms of its clauses are clear and leave no room
for doubt as to the intention of the contracting

parties, it would not be necessary to interpret

those terms, whose literal meanings should
prevail.[13]
The CA correctly observed that the import of
Wage Order No. ROVII-06 should be considered in
the implementation of the government-decreed
increase. The present Petition makes no denial or
refutation of this finding, but merely an averment
of the silence of the CBA on the creditability of
increases provided under the Agreement against
those in the minimum wage under a wage order.
It insists that the parties intended no such
creditability; otherwise, they would have
expressly stated such intent in the CBA.
We hold that the issue here is not about
creditability, but the applicability of Wage Order
No. ROVII-06 to respondents employees. The
Wage Order was intended to fix a new minimum
wage only, not to grant across-the-board wage
increases to all employees in Region VII. The
intent of the Order is indicated in its title,
Establishing New Minimum Wage Rates, as well
as in its preamble: the purpose, reason or
justification for its enactment was to adjust the
minimum wage of workers to cushion the impact
brought about by the latest economic crisis not
only in the Philippines but also in the Asian
region.
In Cagayan Sugar Milling Company v. Secretary of
Labor and Employment [14] and Manila Mandarin
Employees Union v. NLRC,[15] the Wage Orders
that were the subjects of those cases were
substantially and similarly worded as Wage Order
No. ROVII-06. In those cases, this Court construed
the Orders along the same line that it follows
now: as providing for an increase in the prevailing
statutory minimum wage rates of workers. No
across-the-board increases were granted.
Parenthetically, there are two methods of
adjusting the minimum wage. In Employers
Confederation of the Phils. v. National Wages and
Productivity Commission,[16] these were identified
as the floor wage and the salary-ceiling methods.
The floor wage method involves the fixing of a
determinate amount to be added to the
prevailing statutory minimum wage rates. On the
other hand, in the salary-ceiling method, the
wage adjustment was to be applied to employees
receiving a certain denominated salary ceiling. In
other words, workers already being paid more
than the existing minimum wage (up to a certain
amount stated in the Wage Order) are also to be
given a wage increase.
A cursory reading of the subject Wage Order
convinces us that the intention of the Regional Board
of Region VII was to prescribe a minimum or floor

wage; not to determine a salary ceiling. Had the latter

been its intention, the Board would have expressly
provided accordingly. The text of Sections 2 and 3 of
the Order states:
Section 2. AMOUNT AND MANNER OF
INCREASE. Upon the effectivity of this Order, the daily
minimum wage rates for all the workers and
employees in the private sector shall be increased by
Ten Pesos (P10.00) per day to be given in the
following manner:
i.
Five Pesos (P5.00) per day effective
April 1, 1998, and
ii. Additional Five Pesos (P5.00) per day effective
October 1, 1998.
Section 3. UNIFORM WAGE RATE PER AREA
CLASSIFICATION. To effect a uniform wage rate
pursuant to Section 1 hereof, the prescribed
minimum wage after full implementation of this Order
for each area classification shall be as follows:
Area Classification Non-Agriculture
Sector Agriculture Sector
Class A 165.00 150.00
Class B 155.00 140.00
Class C 145.00 130.00
Class D 135.00 120.00
These provisions show that the prescribed
minimum wage after full implementation of
the P10 increase in the Wage Order is P165 for
Class A private non-agriculture sectors. It would
be reasonable and logical, therefore, to infer that
those employers already paying their employees
more than P165 at the time of the issuance of the
Order are sufficiently complying with the Order.
Further supporting this construction of Wage
Order No. ROVII-06 is the opinion of its drafter,
the RTWPB Region VII. In its letteropinion[17] answering respondents queries, the
Board gave a similar interpretation of the essence
of the Wage Order: to fix a new floor wage or to
upgrade the wages of the employees receiving
lower than the minimum wage set by the Order.
Notably, the RTWPB was interpreting only
its own issuance, not a statutory provision. The
best authority to construe a rule or an issuance is
its very source,[18] in this case the RTWPB. Without
a doubt, the Board, like any other executive
agency, has the authority to interpret
its own rules and issuances; any phrase
contained in its interpretation becomes a part of
those rules or issuances themselves.[19] Therefore,
it was proper for the CA to consider the letter
dated June 13, 2000, written by the RTWPB to
explain the scope and import of the latters own
Order, as such interpretation is deemed a part of

the Order itself. That the letter was belatedly

submitted to that Court is not fatal in the
determination of this particular case.
We cannot sustain petitioner, even if we assume
that its contention is right and that the
implementation of any government-decreed
increase under the CBA is absolute. The CBA is no
ordinary contract, but one impressed with public
interest.[20] Therefore, it is subject to special
orders on wages,[21] such as those issued by the
RTWPB. Capitol Wireless v. Bate[22] is squarely in
point. The union in that case claimed that all
government-mandated increases in salaries
should be granted to all employees across-theboard without any qualification whatsoever,
pursuant to the CBA provision that any
government-mandated wage increases should be
over and above the benefits granted in the CBA.
The Court denied such claim and held that the
provisions of the Agreement should be read in
harmony with the Wage Orders. Applying that
ruling to the present case, we hold that the
implementation of a wage increase for
respondents employees should be controlled by
the stipulations of Wage Order No. ROVII-06.
At the risk of being repetitive, we stress that the
employees are not entitled to the claimed salary
increase, simply because they are not within the
coverage of the Wage Order, as they were
already receiving salaries greater than the
minimum wage fixed by the Order. Concededly,
there is an increase necessarily resulting from
raising the minimum wage level, but not acrossthe-board. Indeed, a double burden cannot be
imposed upon an employer except by clear
provision of law.[23] It would be unjust, therefore,
to interpret Wage Order No. ROVII-06 to mean
that respondent should grant an across-the-board
increase. Such interpretation of the Order is not
sustained by its text.[24]
In the resolution of labor cases, this Court has
always been guided by the State policy enshrined
in the Constitution: social justice[25] and the
protection of the working class.[26] Social justice
does not, however, mandate that every dispute
should be automatically decided in favor of labor.
In every case, justice is to be granted to the
deserving and dispensed in the light of the
established facts and the applicable law and
doctrine.[27]
WHEREFORE, the Petition is DENIED, and the
assailed Decision and Resolution AFFIRMED. Costs
against petitioner.
SO ORDERED.
G.R. No. 191740

February 11, 2013

SUSANA R. SY, Petitioner,

vs.
PHILIPPINE TRANSMARINE CARRIERS, INC.,
and/or SSC SHIP MANAGEMENT PTE.,
LTD., Respondents.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari
are the Decision1 dated September 17, 2009 and
the Resolution2dated February 26, 2010 of the
Court of Appeals issued in CA-G.R. SP No.
107379.
The antecedent facts are as follows:
On June 23, 2003, Alfonso N. Sy (Sy) was hired by
respondent Philippine Transmarine Carriers
Incorporated for and in behalf of its foreign
principal, co-respondent SSC Ship Management
Pte. Ltd. In their contract of employment Sy was
assigned to work as Able Seaman (AB) on board
the vessel M/V Chekiang for the duration of ten
months, with a basic monthly salary of
US$512.00. Considered incorporated in AB Sy's
Philippine Overseas Employment AdministrationStandard Employment Contract (POEA-SEC) is a
set of standard provisions established and
implemented by the POEA, called the Amended
Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board
Ocean-Going Vessels.
On October 1, 2005, while the vessel was at the
Port of Jakarta, Indonesia, AB Sy went on shore
leave and left the vessel at about 1300 hours. At
1925 hours, the vessel's agent from Jardine
received an advice from the local police that one
of the vessel's crew members died ashore. At
1935 hours, the agent advised the vessel's
master, Capt. Norman C. Marquez, about the
incident. At 2050 hrs., Capt. Marquez and his 3
crew members went to Cipto Mangunkusumo
Hospital where they confirmed the cadaver to be
that of AB Sy.3
Based on the initial investigation conducted by
the local police, AB Sy was riding on a motorcycle
when he stopped the driver to urinate at the
riverside of the road. Since AB Sy had not
returned after a while, the motorcycle driver went
to look for him at the riverside, but the former
was nowhere to be found.4 At 1830 hrs., AB Sy's
corpse was found.5 A forensic pathologist certified
that AB Sy's death was an accident due to

drowning, and that there was "alcohol 20mg%" in

his urine.6
AB Sy's body was repatriated to the Philippines.
On October 8, 2005, the Medico-Legal Officer of
the National Bureau of Investigation (NBI)
conducted a post-mortem examination on AB Sy's
body and certified that the cause of death was
Asphyxia by drowning.7
Petitioner Susana R. Sy, widow of AB Sy,
demanded from respondents payment of her
husband's death benefits and compensation.
Respondents denied such claim, since AB Sy's
death occurred while he was on a shore leave,
hence, his death was not work-related and,
therefore, not compensable. As her repeated
demands were denied, petitioner filed, on March
1, 2006, a complaint against respondents for
death benefits, burial assistance, moral and
exemplary damages, and attorney's fees.
On August 28, 2007, the Labor Arbiter (LA)
rendered a Decision,8 the dispositive portion of
which reads:
WHEREFORE, premises considered, respondent is
ordered to pay complainant the Philippine
Currency equivalent to Fifty Thousand US Dollars
(US$50,000.00) as death benefit and an
additional amount of Philippine Currency
equivalent to One Thousand U.S. Dollars
(US$1,000.00) as burial expenses at the
exchange rate prevailing at the time of payment.
SO ORDERED.9
The LA found that AB Sy was still under the
respondents' employ at the time he drowned
although he was on shore leave; that while on
shore leave, he was still under the control and
supervision of the master or captain of the vessel
as it was provided under Section 13 of the
Contract that the seafarer before taking a shore
leave must secure the consent of the master of
the vessel; and his leave was conditioned on
"considerations of operations and safety" of the
vessel; that another indication that a seafarer is
considered to be doing work-related functions
even when on shore leave is found in
subparagraph 4, paragraph B, Section 1 of the
Contract where the duties of the seafarer are not
limited to his stay while on board, but extend to
his stay ashore.
The LA then ruled that since AB Sy was doing
work-related functions during the term of his

contract, only a finding that his death was

selfinflicted or attributable to him would bar the
payment of death benefits. It found that
respondents evidence, which consisted of the
Indonesia Police Autopsy Report, stating that the
cause of death was drowning, did not establish
the circumstance of death which would show that
the death was the result of AB Sy's willful act on
his own life; that there were traces of alcohol in
his blood did not make him "intoxicated" as there
was no proof that he was; and granting that he
was intoxicated, such was accidental drowning
and not an intentional taking of his own life.
Respondents filed their appeal with the National
Labor Relations Commission (NLRC), reiterating
that AB Sy's death was not work-related, hence,
there was no basis for the LA's award. Petitioner
also filed her appeal claiming that she was
entitled to attorney's fees as well as moral and
exemplary damages.
On October 17, 2008, the NLRC rendered its
Resolution,10 the decretal portion of which reads:
WHEREFORE, premises considered, Respondent's
appeal is DISMISSED for lack of merit, while
Complainant's appeal is partly GRANTED. The
Labor Arbiter's assailed decision in the aboveentitled case is hereby MODIFIED.
In addition to the award of FIFTY THOUSAND U.S.
DOLLARS (US$50,000.00) as death benefits and
ONE THOUSAND U.S. DOLLARS (US$1,000.00) as
burial expenses, Respondents are jointly and
severally liable to Complainant for attorney's fees
equivalent to ten percent (10% ) of her total
monetary award, to be paid in Philippine Currency
equivalent to the exchange rate prevailing during
the time of payment.11
The NLRC affirmed the LA's finding that AB Sy's
death was compensable, saying that if not for his
employment with respondents, he would have
been in some other place and would not have
been enjoying any employment benefit of shore
leave in Jakarta, Indonesia on that fateful day;
that if not for said employment, he would not
have gone to the riverside and urinate, and would
not have accidentally fallen into the river and
drowned. It found petitioner entitled to an award
of attorney's fees, since she was constrained to
hire the services of a lawyer to protect her rights
but found no basis for the grant of moral and
exemplary damages.

Respondents filed their Motion for

Reconsideration, which the NLRC denied in a
Resolution12 dated December 8, 2008.
Respondents filed a petition for certiorari with the
CA to which petitioner was required to file her
Comment, but failed to do so.
In the meantime, petitioner moved for the
execution of the NLRC Resolution. On March 5,
2009, petitioner executed an Affidavit13 stating
that she had received from respondents the sum
of two million six hundred ninety-one thousand
one hundred seventy-three pesos and 10/100
(P2,691,173.10) as conditional payment of all her
claims against respondents; and that the
payment was made to prevent further execution
proceedings she initiated with the NLRC and
without prejudice to respondents' petition then
pending with the CA.
On September 17, 2009, the CA rendered its
assailed Decision, the dispositive portion of which
reads:
WHEREFORE, the petition is hereby GRANTED.
The NLRC's Decision dated October 17, 2008 and
Resolution dated December 8, 2008 in NLRC LAC
No. 10-000256-07 are hereby REVERSED.
Accordingly, the complaint in NLRC NCR OFW
Case No. (M) 06- 03-00821-00 is
hereby dismissed.
The application for issuance of a temporary
restraining order and/or preliminary mandatory
injunction is hereby declared moot and academic.
The private respondent, Susana R. Sy, is hereby
ordered to return to the petitioners the full
amount of Two Million Six Hundred Ninety-One
Thousand One Hundred Seventy-Three pesos and
10/100 (P2,691,173.10) pursuant to her
undertaking in the Conditional Satisfaction of
Judgment with Urgent Motion to Cancel Appeal
Bond dated March 5, 2009 and Affidavit executed
by her also on March 5, 2009.14
In reversing the NLRC, the CA found AB Sy's
death not work-related based on the following
evidence, to wit: (1) AB Sy was on a shore leave
at the time of the incident; (2) he was found dead
by the police authorities in Indonesia and upon
autopsy, the cause of death was established as
drowning; (3) he was intoxicated when he died
due to traces of alcohol in his urine; and (4) the

Philippine government authorities, namely, the

Department of Foreign Affairs and the NBI,
confirmed the cause of his death was drowning.
The CA said that under Section 20 (A) of POEA
Memorandum Circular No. 9, series of 2000, it
was not sufficient to establish that AB Sy's death
had occurred during the term of his contract, but
there must be a causal connection between his
death and the work for which he had been
contracted. In this case, when AB Sy died, he was
on a shore leave and left the vessel, and his
death neither occurred at his workplace nor while
performing an act within the scope of his
employment.
Petitioner filed her Motion for Reconsideration,
which the CA denied in a Resolution dated
February 26, 2010.
Hence, this petition where the sole issue raised is:
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN GRANTING RESPONDENTS'
PETITION FOR CERTIORARI AND DENYING
PETITIONER'S MOTION FOR RECONSIDERATION BY
REVERSING AND SETTING ASIDE THE NATIONAL
LABOR RELATIONS [COMMISSION'S] DECISION IN
AWARDING DEATH BENEFITS UNDER THE POEA
STANDARD CONTRACT 15
We find the petition devoid of merit.
The terms and conditions of a seafarer's
employment is governed by the provisions of the
contract he signs with the employer at the time
of his hiring, and deemed integrated in his
contract is a set of standard provisions set and
implemented by the POEA, called the Standard
Terms and Conditions Governing the Employment
of Filipino Seafarers on Board Ocean-Going
Vessels, which provisions are considered to be
the minimum requirements acceptable to the
government for the employment of Filipino
seafarers on board foreign ocean-going
vessels.16The issue raised of whether petitioner is
entitled to death compensation benefits from
respondents is best resolved by the provisions of
their Employment Contract which incorporated
the 2000 Standard Terms and Conditions
Governing the Employment of Filipino Seafarers
on Board Ocean-Going Vessels.17 Section 20 (A) of
the Contract provides:
SECTION 20. COMPENSATION AND BENEFITS
A. COMPENSATION AND BENEFITS FOR DEATH

1. In the case of work-related death of the

seafarer during the term of his contract, the
employer shall pay his beneficiaries the Philippine
Currency equivalent to the amount of Fifty
Thousand US dollars (US$50,000) and an
additional amount of Seven Thousand US dollars
(US$7,000) to each child under the age of twentyone (21) but not exceeding four (4) children, at
the exchange rate prevailing during the time of
payment.
x x x.
Clearly, to be entitled for death compensation
benefits from the employer, the death of the
seafarer (1) must be work-related; and (2) must
happen during the term of the employment
contract. Under the Amended POEA Contract,
work-relatedness is now an important
requirement. The qualification that death must be
work-related has made it necessary to show a
causal connection between a seafarers work and
his death to be compensable.
Under the 2000 POEA Amended Employment
Contract, work-related injury is defined as an
injury(ies) resulting in disability or death arising
out of and in the course of employment. Thus,
there is a need to show that the injury resulting to
disability or death must arise (1) out of
employment, and (2) in the course of
employment.
In Iloilo Dock & Engineering Co. v. Workmen's
Compensation Commission,18 we explained the
phrase "arising out of and in the course of
employment" in this wise:
x x x The two components of the coverage
formula "arising out of" and "in the course of
employment" are said to be separate tests
which must be independently satisfied; however,
it should not be forgotten that the basic concept
of compensation coverage is unitary, not dual,
and is best expressed in the word, "workconnection," because an uncompromising
insistence on an independent application of each
of the two portions of the test can, in certain
cases, exclude clearly work-connected injuries.
The words "arising out of" refer to the origin or
cause of the accident, and are descriptive of its
character, while the words "in the course of" refer
to the time, place and circumstances under which
the accident takes place.
As a matter of general proposition, an injury or
accident is said to arise "in the course of

employment" when it takes place within the

period of the employment, at a place where the
employee reasonably may be, and while he is
fulfilling his duties or is engaged in doing
something incidental thereto.19
AB Sy was hired as a seaman on board M/V
Chekiang on June 23, 2005 and was found dead
on October 1, 2005, with drowning as the cause
of death. Notably, at the time of the accident, AB
Sy was on shore leave and there was no showing
that he was doing an act in relation to his duty as
a seaman or engaged in the performance of any
act incidental thereto. It was not also established
that, at the time of the accident, he was doing
work which was ordered by his superior ship
officers to be done for the advancement of his
employer's interest. On the contrary, it was
established that he was on shore leave when he
drowned and because of the 20% alcohol found in
his urine upon autopsy of his body, it can be
safely presumed that he just came from a
personal social function which was not related at
all to his job as a seaman. Consequently, his
death could not be considered work-related to be
compensable.1wphi1
Petitioner argues that AB Sy's death happened in
the course of employment, because if not for his
employment he could be somewhere else and
was not on shore leave; and that he would not be
in the riverside of Jakarta, Indonesia and had not
answered the call of nature and fell into the river
and drowned.
We are not persuaded.
While AB Sy's employment relationship with
respondents did not stop but continues to be in
force even when he was on shore leave, their
contract clearly provides that it is not enough
that death occurred during the term of the
employment contract, but must be work-related
to be compensable. There is a need to show the
connection of AB Sy's death with the performance
of his duty as a seaman. As we found, AB Sy was
not in the performance of his duty as a seaman,
but was doing an act for his own personal benefit
at the time of the accident. The cause of AB Sys
death at the time he was on shore leave which
was drowning, was not brought about by a risk
which was only peculiar to his employment as a
seaman. In fact, he was in no different
circumstance with other people walking along the
riverside who might also drown if no due care to
ones safety is exercised. Petitioner failed to

establish by substantial evidence her right to the

entitlement of the benefits provided by law.
Petitioners claim that AB Sys death was by
accident, thus not willfully done which would
negate compensability, has no relevance in this
case based on our aforementioned disquisition.
While we commiserate with petitioner, we cannot
grant her claim for death compensation benefits
in the absence of substantial evidence to prove
her entitlement thereto, since to do so will cause
an injustice to the employer. Otherwise stated,
while it is true that labor contracts are impressed
with public interest and the provisions of the
POEA-SEC must be construed logically and
liberally in favor of Filipino seaman in the pursuit
of their employment on board ocean-going
vessels, still the rule is that justice is in every
case for the deserving to be dispensed with in the
light of established facts, the applicable law, and
existing jurisprudence.20
WHERFORE, the petition is DENIED. The Decision
dated September 17, 2009 and the Resolution
dated February 26, 2010 of the Court of Appeals
are hereby AFFIRMED.
SO ORDERED.
THIRD DIVISION
G.R. No. 211497, March 18, 2015
HOCHENG PHILIPPINES
CORPORATION, Petitioner, v. ANTONIO M.
FARRALES, Respondent.
DECISION
REYES, J.:
Before this Court on Petition for Review
on Certiorari1 is the Decision2 dated October 17,
2013 of the Court of Appeals (CA) in CA-G.R. SP
No. 125103, which reversed the Decision3 dated
February 29, 2012 and Resolution4 dated May 7,
2012 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 08-002249-11, and
reinstated with modifications the Decision5 dated
April 29, 2011 of the Labor Arbiter (LA) in NLRC
Case No. RAB-IV-03-00618-10-C, which found that
respondent Antonio M. Farrales (Farrales) was
illegally dismissed by Hocheng Philippines
Corporation (HPC). The fallo of the appellate
decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the Decision
of the Labor Arbiter dated April 29, 2011 in NLRC

Case No. RAB-IV-03-00618-10-C is reinstated

with modifications. Private respondent
Hocheng Philippines Corporation is liable to pay
[Farrales] the
following:chanRoblesvirtualLawlibrary
(1 Full backwages from date of dismissal on
) February 15, 2010 until date of decision
equivalent to P276,466.67;
(2 Separation pay of one (1) month salary per
) year of service for a period of twelve years
equivalent to P228,800.00;
(3 Appraisal year-end bonus in the sum of
) P11,000.00; and,
(4 Attorneys fees equivalent to 10% of the total
) award.
SO ORDERED.6
The Facts
Farrales was first employed by HPC on May 12,
1998 as Production Operator, followed by
promotions as (1) Leadman in 2004, (2) Acting
Assistant Unit Chief in 2007, and (3) Assistant
Unit Chief of Production in 2008, a supervisory
position with a monthly salary of ?17,600.00. He
was a consistent recipient of citations for
outstanding performance, as well as appraisal
and year-end
bonuses.7chanroblesvirtuallawlibrary
On December 2, 2009, a report reached HPC
management that a motorcycle helmet of an
employee, Reymar Solas (Reymar), was stolen at
the parking lot within its premises on November
27, 2009. On December 3, 2009, Security Officer
Francisco Paragas III confirmed a video sequence
recorded on closed-circuit television (CCTV)
around 3:00 p.m. on November 27, 2009 showing
Farrales taking the missing helmet from a parked
motorcycle, to wit:chanRoblesvirtualLawlibrary
a. At around 3:07:44, [Farrales] was
seen walking towards the
motorcycle parking
lot;chanrobleslaw
b. At around 3:08:47, [Farrales]
walked back towards the
pedestrian gate of the company,
passing by the motorcycle parking
lot;chanrobleslaw
c. At around 3:08:51, [Farrales]
walked back towards the
motorcycle parking lot and

returned to the pedestrian

gate;chanrobleslaw
d. At around 3:09:10, [Farrales] called
on the person of Andy Lopega and
instructed him to get the helmet he
was pointing at; [and]
e. At around 3:09:30, Andy gave the
helmet to [Farrales].8
Later that day, HPC sent Farrales a notice to
explain his involvement in the alleged theft. The
investigation was supported by the employees
union, ULO-Hocheng.9Below is Farrales
explanation, as summarized by the
CA:chanRoblesvirtualLawlibrary
On November 27, 2009, [Farrales] borrowed a
helmet from his co-worker Eric Libutan (Eric)
since they reside in the same barangay. They
agreed that Eric could get it at the house of
[Farrales] or the latter could return it the next
time that they will see each other. Eric told him
that his motorcycle was black in color. As there
were many motorcycles with helmets, he asked
another employee, Andy Lopega (Andy) who
was in the parking area where he could find Erics
helmet. Andy handed over to him the supposed
helmet which he believed to be owned by Eric,
then he went home.
On November 28, 2009, at around 6 oclock in the
morning, he saw Eric at theirbarangay and told
him to get the helmet. But Eric was in a rush to
go to work, he did not bother to get it.
In the morning of December 3, 2009, upon seeing
Eric in the workplace, [Farrales] asked him why he
did not get the helmet from his house. Eric told
him that, Hindi po sa akin yung nakuha nyong
helmet. [Farrales] was shocked and he
immediately phoned the HPCs guard to report
the situation that he mistook the helmet which he
thought belonged to Eric. After several employees
were asked as to the ownership of the helmet, he
finally found the owner thereof, which is Jun
Reyess (Jun) nephew, Reymar, who was with
him on November 27, 2009. [Farrales] promptly
apologized to Jun and undertook to return the
helmet the following day and explained that it
was an honest mistake. These all happened in the
morning of December 3, 2009; [Farrales] did not
know yet that HPC will send a letter demanding
him to explain.10
A hearing was held on December 10, 2009 at
1:00 p.m. Present were Farrales, Eric Libutan
(Eric), Andy Lopega (Andy), Jun Reyes, Antonio
Alinda, a witness, and Rolando Garciso,
representing ULO-Hocheng. From Andy it was
learned that at the time of the alleged incident,

he was already seated on his motorcycle and

about to leave the company compound when
Farrales approached and asked him to hand to
him a yellow helmet hanging from a motorcycle
parked next to him. When Andy hesitated,
Farrales explained that he owned it, and so Andy
complied. But Eric had specifically told Farrales
that his helmet was colored red and black and his
motorcycle was a black Honda XRM-125 with
plate number 8746-DI, parked near the perimeter
fence away from the walkway to the pedestrian
gate. The CCTV showed Farrales instructing Andy
to fetch a yellow helmet from a blue Rossi 110
motorcycle with plate number 3653-DN parked in
the middle of the parking lot, opposite the
location given by Eric. Farrales in his defense
claimed he could no longer remember the details
of what transpired that time, nor could he explain
why he missed Erics specific
directions.11chanroblesvirtuallawlibrary
On February 15, 2010, the HPC issued a Notice of
Termination12 to Farrales dismissing him for
violation of Article 69, Class A, Item No. 29 of the
HPC Code of Discipline, which provides that
stealing from the company, its employees and
officials, or from its contractors, visitors or
clients, is akin to serious misconduct and
fraud or willful breach by the employee of
the trust reposed in him by his employer or
duly authorized representative, which are just
causes for termination of employment under
Article 282 of the Labor Code.
On March 25, 2010, Farrales filed a complaint for
illegal dismissal, non-payment of appraisal and
mid-year bonuses, service incentive leave pay
and 13th month pay. He also prayed for
reinstatement, or in lieu thereof, separation pay
with full backwages, plus moral and exemplary
damages and attorneys fees. During the
mandatory conference, HPC paid Farrales ?
10,914.51, representing his 13th month pay for
the period of January to February 2010 and
vacation leave/sick leave conversion. Farrales
agreed to waive his claim for incentive
bonus.13chanroblesvirtuallawlibrary
On April 29, 2011, the LA ruled in favor of
Farrales,14 the fallo of which is as
follows:chanRoblesvirtualLawlibrary
WHEREFORE, PREMISES CONSIDERED, all the
respondents Hocheng Phils. Corporation, Inc. Sam
Chen[g] and Judy Geregale are found guilty of
illegal dismissal and ordered jointly and severally
to pay complainant the
following:chanRoblesvirtualLawlibrary
1. Full backwages from date of dismissal on
February 15, 2010 until date of decision
equivalent to P276,466.67.

2. Separation pay of one (1) month salary per

year of service for a period of twelve years
equivalent to P228,800.00.

1. THERE IS SUBSTANTIAL
EVIDENCE TO SHOW THAT
[FARRALES] COMMITTED
THEFT IN [HPCs] PREMISES.

3. Appraisal year-end bonus in the sum of

P11,000.00.

2. THEFT IS A JUST CAUSE

FOR TERMINATION.

4. Moral damages in the sum of P200,000.00.

3. BY COMMITTING THEFT,
[FARRALES], BEING A
SUPERVISORIAL EMPLOYEE,
FORFEITED THE TRUST
REPOSED IN HIM BY [HPC],
THUS RENDERING HIM
DISMISSIBLE FOR LOSS OF
CONFIDENCE.

5. Exemplary damages in the sum of

P100,000.00.
6. 10% of all sums owing as attorneys fees or
the amount of P81,626.67.
SO ORDERED.15
On appeal by HPC,16 the NLRC reversed the
LA,17 and denied Farrales motion for
reconsideration, finding substantial evidence of
just cause to terminate
Farrales.18chanroblesvirtuallawlibrary
On petition for certiorari to the CA,19 Farrales
sought to refute the NLRCs factual finding that
he committed theft, as well as to question NLRCs
jurisdiction over HPCs appeal for non-payment of
appeal fees. But the CA found that HPC was able
to perfect its appeal by posting a bond equivalent
to the monetary award of ?897,893.37 and
paying the appeal fees by postal money order in
the amount of ?
520.00.20chanroblesvirtuallawlibrary
Concerning the substantive issues, the appellate
court agreed with the LA that Farrales act of
taking Reymars helmet did not amount to theft,
holding that HPC failed to prove that Farrales
conduct was induced by a perverse and wrongful
intent to gain, in light of the admission of Eric
that he did let Farrales borrow one of his two
helmets, only that Farrales mistook Reymars
helmet as the one belonging to him.
Petition for Review to the Supreme Court
In this petition, HPC raises the following grounds
for this Courts
review:chanRoblesvirtualLawlibrary
A. THE HONORABLE [CA] PLAINLY
ERRED AND ACTED CONTRARY TO
EXISTING LAW AND
JURISPRUDENCE IN REVERSING THE
DECISION OF THE [NLRC] AND
DECLARING ILLEGAL THE
DISMISSAL FOR [HPCs] ALLEGED
FAILURE TO PROVE THE EXISTENCE
OF JUST CAUSE.

B. IN DECLARING ILLEGAL THE

DISMISSAL OF [FARRALES], THE
HONORABLE [CA] VIOLATED
DOCTRINES LAID DOWN BY THE
SUPREME COURT.
1. COURTS CANNOT
SUBSTITUTE THEIR
JUDGMENT FOR THAT OF THE
MANAGEMENT.
2. COURTS MUST ACCORD
DUE RESPECT TO THE
FINDINGS OF
ADMINISTRATIVE AGENCIES.21
Chiefly, HPC insists that since the complaint
below involves an administrative case, only
substantial evidence, not proof of guilt beyond
reasonable doubt, is required to prove the guilt of
Farrales;22 that what the CA has done is substitute
its judgment for that of the NLRC, which is vested
with statutory duty to make factual
determinations based on the evidence on
record.23chanroblesvirtuallawlibrary
Ruling of the Court
The Court resolves to deny the petition.
To validly dismiss an employee, the law requires
the employer to prove the existence of any of the
valid or authorized causes,24 which, as
enumerated in Article 282 of the Labor Code, are:
(a) serious misconduct or willful disobedience by
the employee of the lawful orders of his employer
or the latters representative in connection with
his work; (b) gross and habitual neglect by the
employee of his duties; (c) fraud or willful breach
by the employee of the trust reposed in him by
his employer or his duly authorized

representative; (d) commission of a crime or

offense by the employee against the person of his
employer or any immediate member of his family
or his duly authorized representative; and (e)
other causes analogous to the foregoing.25 As a
supervisorial employee, Farrales is admittedly
subject to stricter rules of trust and confidence,
and thus pursuant to its management prerogative
HPC enjoys a wider latitude of discretion to
assess his continuing trustworthiness, than if he
were an ordinary rank-and-file employee.26 HPC
therefore insists that only substantial proof of
Farrales guilt for theft is needed to establish the
just causes to dismiss him, as the NLRC lengthily
asserted in its decision.
Article 4 of the Labor Code mandates that all
doubts in the implementation and interpretation
of the provisions thereof shall be resolved in favor
of labor. Consistent with the States avowed
policy to afford protection to labor, as Article 3 of
the Labor Code and Section 3, Article XIII of the
1987 Constitution have enunciated, particularly in
relation to the workers security of tenure, the
Court held that [t]o be lawful, the cause for
termination must be a serious and grave
malfeasance to justify the deprivation of a means
of livelihood. This is merely in keeping with the
spirit of our Constitution and laws which lean over
backwards in favor of the working class, and
mandate that every doubt must be resolved in
their favor.27 Moreover, the penalty imposed on
the erring employee ought to be proportionate to
the offense, taking into account its nature and
surrounding circumstances.
The Court has always taken care, therefore, that
the employer does not invoke any baseless
justification, much less management prerogative,
as a subterfuge by which to rid himself of an
undesirable worker,28 and thus in exceptional
cases the Court has never hesitated to delve into
the NLRCs factual conclusions where evidence
was found insufficient to support them, or too
much was deduced from the bare facts submitted
by the parties, or the LA and the NLRC came up
with conflicting positions, as is true in this
case.29chanroblesvirtuallawlibrary
As aptly pointed out by the LA, while HPC has
the onus probandi that the taking of Reymars
helmet by Farrales was with intent to gain, it
failed to discharge this burden, as shown by the
following circumstances: Farrales sought and
obtained the permission of Eric, his co-employee
as well asbarangay co-resident, to borrow his
helmet; at the parking lot, Farrales asked another
employee, Andy, to fetch a yellow helmet from
one of the parked motorcycles, mistakenly
thinking it belonged to Eric (whom he knew
owned two helmets); the following day,

November 28, Farrales asked Eric why he had not

dropped by his house to get his helmet, and Eric
replied that Farrales got the wrong helmet
because he still had his other helmet with him;
Farrales immediately sought the help of the
company guards to locate the owner of the yellow
helmet, who turned out to be Reymar; Farrales
apologized to Reymar for his mistake, and his
apology was promptly accepted.30 All these
circumstances belie HPCs claim that Farrales
took Reymars helmet with intent to gain, the LA
said.
In ruling that Farrales dismissal by HPC was
attended with utmost malice and bad faith as to
justify an award of moral and exemplary damages
and attorneys fees, the LA stated that [i]t is
succinctly clear that [the] respondents [therein]
tried to blow out of proportions the indiscretion of
[Farrales] for reasons known only to them, and
moreover, [f]inding that the dismissal on the
ground of theft is unavailing, [the] respondents
[therein] immediately offered [Farrales] his
former position when he filed [his] complaint.
What does this act of [the] respondents [therein]
speak [of]?31chanroblesvirtuallawlibrary
On the other hand, the NLRC found that Farrales
lied, first, when he told Andy, then already astride
his motorbike at the parking area and about to
leave the company premises, that the yellow
helmet belonged to him,32 and second, when he
claimed that Eric was his neighbor, although they
were not. It ruled as doubtful Farrales hazy
recollection about what happened that afternoon
at the parking lot, since he could not even give a
description of the motorcycle from which he took
the yellow helmet. These circumstances, the
NLRC determined, comprise substantial proof
belying Farrales claim of good faith. As a
supervisory employee, he held a position of high
responsibility in the company making him
accountable to stricter rules of trust and
confidence than an ordinary employee, and under
Article 282 of the Labor Code, he is guilty of a
serious misconduct and a willful breach of trust.
The NLRC went on to cite a settled policy that in
trying to protect the rights of labor, the law does
not authorize the oppression or self-destruction of
the employer. Management also has its own
rights, which as such, are entitled to respect and
enforcement in the interest of simple fair
play.33chanroblesvirtuallawlibrary
But the Court agrees with the CA that Farrales
committed no serious or willful misconduct or
disobedience to warrant his dismissal. It is not
disputed that Farrales lost no time in returning
the helmet to Reymar the moment he was
apprised of his mistake by Eric, which proves,
according to the CA, that he was not possessed of

a depravity of conduct as would justify HPCs

claimed loss of trust in him. Farrales immediately
admitted his error to the company guard and
sought help to find the owner of the yellow
helmet, and this, the appellate court said, only
shows that Farrales did indeed mistakenly think
that the helmet he took belonged to Eric.

mere error in judgment. The misconduct to be

serious must be of such grave and aggravated
character and not merely trivial or unimportant.
Such misconduct, however serious, must,
nevertheless, be in connection with the
employees work to constitute just cause for his
separation.35chanroblesvirtuallawlibrary

It is not, then, difficult to surmise that when

Farrales told Andy that the yellow helmet was his,
his intent was not to put up a pretence of
ownership over it and thus betray his intent to
gain, as the NLRC held, but rather simply to
assuage Andys reluctance to heed his passing
request to reach for the helmet for him; Andy, it
will be recalled, was at that moment already
seated in his motorbike and about to drive out
when Farrales made his request. As to Farrales
claim that he and Eric were neighbors, suffice it
to say that as the CA noted, they resided in the
same barangay, and thus, loosely, were
neighbors.

But where there is no showing of a clear, valid

and legal cause for termination of employment,
the law considers the case a matter of illegal
dismissal.36 If doubts exist between the evidence
presented by the employer and that of the
employee, the scales of justice must be tilted in
favor of the latter. The employer must
affirmatively show rationally adequate evidence
that the dismissal was for a justifiable
cause.37chanroblesvirtuallawlibrary

The CA also pointed out that although the alleged

theft occurred within its premises, HPC was not
prejudiced in any way by Farrales conduct since
the helmet did not belong to it but to Reymar. In
light of Article 69, Class A, Item No. 29 of the HPC
Code of Discipline, this observation may be
irrelevant, although it may be that the LA
regarded it as proving HPCs bad faith.
Theft committed by an employee against a
person other than his employer, if proven by
substantial evidence, is a cause analogous to
serious misconduct.34 Misconduct is improper or
wrong conduct, it is the transgression of some
established and definite rule of action, a
forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not

Nonetheless, the Court agrees with the CAs

dismissal of the award of moral and exemplary
damages for lack of merit. There is no
satisfactory proof that the concerned officers of
HPC acted in bad faith or with malice in
terminating Farrales. Notwithstanding the LAs
assertion to this effect, Farrales bare allegations
of bad faith deserve no credence, and neither is
the mere fact that he was illegally dismissed
sufficient to prove bad faith on the part of HPCs
officers.38 But concerning the award of attorneys
fees, Farrales was dismissed for a flimsy charge,
and he was compelled to litigate to secure what is
due him which HPC unjustifiably withheld.
WHEREFORE, premises considered, the petition
for review is DENIED.
SO ORDERED.