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BAY HAVEN, INC., JOHNNY T. CO, G.R. No. 160859


and VIVIAN TE-FERNANDEZ,
Petitioners,

1997 commanding petitioners to pay respondents a total of P638,187.15


corresponding to the latter's claims for underpayment as petitioners' workers.[3]

- versus - Present:
FLORENTINO ABUAN, JOSELITO YNARES-SANTIAGO, J.
RAZON, JERRY ASENSE, HERCULES Chairperson
RICAFUENTE, MARIO GURAY, AUSTRIA-MARTINEZ,
ROLANDO NAELGA, JUAN VILLARUZ, CHICO-NAZARIO,
MARIO SANTIAGO, ROGELIO NACHURA, and
MOCORRO, CALPITO MENDOLES, REYES, JJ.
RENE CORALES, FRANCISCO
ABENTAJADO, BONNIE ESPAOLA,
ERNESTO DE JESUS and RODRIGO
RUZGAL, Promulgated:
Respondents. July 30, 2008
x----------------------------------------------------------x

The Regional Director based his Order on the results of the inspection conducted
on April 23, 1997 by one of its inspectors who found that petitioner New Bay Haven
Restaurant, located at the Army and Navy Club, Kalaw St., Manila, under the
ownership or management of petitioner Te, committed the following violations:
Labor Standards Law:
1.
Underpayment of minimum wage.
2.
Underpayment of thirteenth month pay.
3.
Underpayment of regular holiday pay.
4.
Underpayment of special holiday pay.
5.
Non-payment of night shift differential pay.

DECISION
AUSTRIA-MARTINEZ, J.:

Occupational Safety and Health Standards.


1. Non-registration of the firm under Rule 1020 of OSHS.[4]

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,

On December 18, 1997, New Bay-Haven Restaurant and its co-petitioner Te filed

seeking a reversal of the Decision[1] of the Court of Appeals (CA) dated July 15, 2003,

with the DOLE-NCR Regional Office a Motion for Reconsideration of the November 7,

which denied the petition for certiorari filed by Bay Haven, Inc., Johnny T. Co and

1997 order, alleging that the office had no jurisdiction over the case and that the

Vivian Te-Fernandez (Te) (petitioners) seeking the annulment of the Resolutions

order was issued in denial of petitioners' right to due process. [5] They argued that

dated April 18, 2000 and September 19, 2001, issued by Undersecretary Jose

jurisdiction over the case was lodged with the National Labor Relations Commission

M. Espaol, Jr. (DOLE Undersecretary) and Secretary Patricia Sto. Tomas (DOLE

(NLRC), and not the DOLE-NCR, due to the amount of the claims involved. They

Secretary), respectively, of the Department of Labor and Employment (DOLE), as

added that their right to due process was also denied because the order was issued

well as the Resolution[2] dated November 5, 2003 of the CA, which denied

without them being furnished copies of the complaint and the inspection report and

petitioners' motion for reconsideration.

without being notified of the hearings held in the case.[6]

The following are the antecedent facts.


On June 16, 1998, the DOLE-NCR Assistant Regional Director, acting for the Regional
Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the

Director, issued an Order granting petitioners' motion for reconsideration as he

exercise of its visitorial, inspection and enforcement powers, through its Regional

found merit in petitioners' allegation of absence of due process in the issuance of

Director for the National Capital Region (NCR), issued an Order dated November 7,

the first order.[7] The order, however, stated that the DOLE had jurisdiction over the

case, pursuant to the Labor Code, as amended by Republic Act (R.A.) No. 7730, that

documentary evidence proved that their obligations to respondents had been

intends to strengthen the visitorial and enforcement powers of the Secretary

discharged and that the DOLE had no jurisdiction over the case.[15]

of Labor and Employment.[8] Consequently, another hearing for the case was set.
Treating the motion for reconsideration as an appeal, the DOLE Undersecretary
During the hearing on September 14, 1998, petitioners submitted their Position

issued a Resolution dated April 18, 2000, denying the appeal filed by petitioners,

Paper attaching thereto payroll sheets and waivers and quitclaims allegedly signed

[16]

by the respondents to prove that petitioner properly paid respondents the amounts

upon to deny respondents' claims, and reiterating that the DOLE had jurisdiction to

due them.

decide the case.[17]

[9]

upholding the Regional Director's finding that the quitclaims could not be relied

Respondents Florentino Abuan, Francisco Abentajado, Mario Guray, Juan Villaruz,

On May 12, 2000, petitioners filed a Motion for Reconsideration [18] of the April 18,

Jerry Asense and Joselito Razon, however, outrightly denied the validity of the

2000 Resolution which was denied by DOLE Secretary Sto. Tomas in a

payroll sheets and quitclaims.In their Joint Affidavit dated October 29, 1998,

Resolution[19] dated September 19, 2001.

respondents claimed that the actual daily pay they received was much smaller than
the amounts stated in the payroll and they denied having received the cash amount

Aggrieved, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of

stated in the quitclaims.[10] They added that they were merely forced to sign the

Court with the CA, seeking to annul and set aside the April 18, 2000 Resolution and

payrolls and quitclaims in blank and in one sitting after they were accepted as

the September 19, 2001 Resolution,[20] docketed as CA-G.R. No. 68397.

applicants for their positions.[11]

On July 15, 2003, the CA rendered its Decision,[21] dismissing the petition, ruling that
the DOLE had jurisdiction over the labor standards case and that petitioners did not

On December 29, 1998, the DOLE-NCR Regional Director, giving credence to the

present enough evidence to refute the claims made by respondents.

affidavit of the respondents denying the validity of the payroll sheets and quitclaims,
issued an Order denying petitioners' motion for reconsideration of the Order

Petitioners filed a Motion for Reconsideration of the Decision which the CA denied in

dated November 7, 1997.

its Resolution[22] dated November 5, 2003.

[12]

The Order held petitioners New Bay Haven Restaurant,

Bay Haven, Inc., its President Johnny T. Co, and/or Vivian Te as the ones liable as
employers of respondents. However, the liability of petitioners was reduced
to P468,444.16.[13]

On January 18, 1999, petitioners filed a Motion for Reconsideration of the Order
dated December 29, 1998.[14] In the motion, petitioners insisted that their

Hence, herein petition assigning the following errors of the CA:


1.

THE HONORABLE COURT OF APPEALS COMMITTED


SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE
JURISDICTION OF THE REGIONAL DIRECTOR FOR THE
NATIONAL CAPITAL REGION OF THE DEPARTMENT OF LABOR
AND EMPLOYMENT IN CASE NO. NCR-00-9703-RI-048-SPL
ENTITLED FLORENTINO ABUAN, ET AL., COMPLAINANTS
VERSUS NEW BAY HAVEN RESTAURANT, ET AL.,
RESPONDENTS; AND THE APPELLATE JURISDICTION OF THE

OFFICE OF THE SECRETARY OF THE DEPARTMENT OF LABOR


AND EMPLOYMENT IN CASE NO. OS-LS-005-019-099.
2.

3.

4.

THE HONORABLE COURT OF APPEALS COMMITTED


SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED THE
RULING OF THE REGIONAL DIRECTOR OF DOLE-NCR AND
THE OFFICE OF THE SECRETARY OF THE DOLE WHICH
DECLARED THAT RESPONDENTS CALPITO MENDOLES AND
RENE CORALES ARE EMPLOYEES OF BAY HAVEN, INC.,
DESPITE LACK OF EVIDENCE TO SUPPORT THE RULING ON
THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE
MONETARY
AWARD
OF P25,952.83 TO
RESPONDENT
ROLANDO NAELGA WHO WAS NOT ONE OF THOSE WHOSE
CLAIMS WAS [sic] MADE THE SUBJECT OF THE FINDINGS OF
THE LABOR AND [sic] EMPLOYMENT AND ENFORCEMENT
OFFICER OF THE DEPARTMENT OF LABOR AND EMPLOYMENT.
THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED THE
AWARD OF OVERTIME PAY DESPITE ABSENCE OF EVIDENCE
TO SHOW THAT OVERTIME WORK HAD INDEED BEEN
RENDERED.

Respondents did not file a comment on the petition, but instead filed a
Memorandum[23] simultaneous with petitioners' filing of their Memorandum.[24]

In their Memorandum, respondents aver that the decision of the DOLE-NCR, as


upheld by the DOLE Secretary, was rendered in the exercise of its jurisdiction,
specifically its visitorial and enforcement powers as conferred by law.[25] They also
allege that petitioners were given the opportunity to present evidence to refute
respondents' claims, but failed to do so.[26]

We summarize the issues as follows: 1) whether the DOLE Secretary and her
authorized representatives have jurisdiction to impose the monetary liability against
petitioners; and 2) whether the DOLE-NCR, as upheld by the DOLE Secretary and
the CA committed an error in awarding the claims of respondents.

We deny the petition.

The DOLE Secretary and her authorized representatives such as the DOLE-NCR
Regional Director, have jurisdiction to enforce compliance with labor standards laws
under the broad visitorialand enforcement powers conferred by Article 128 of
the Labor Code, and expanded by R.A. No. 7730, to wit:
Art. 128. Visitorial and Enforcement Power. (a) The Secretary of Labor and Employment or his duly
authorized representatives, including labor regulation officers,
shall have access to employer's records and premises at any time
of the day or night whenever work is being undertaken therein,
and the right to copy therefrom, to question any employee and
investigate any fact, condition or matter which may be necessary
to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and
regulations issued pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and 217
of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based
on the findings of laboremployment and enforcement
officers or industrial safety engineers made in the course
of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases
where
the
employer
contests
the
findings
of
the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in
the course of inspection.
An order issued by the duly authorized representative of the
Secretary of Labor and Employment under this article may be
appealed to the latter. In case said order involves a monetary
award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and
Employment and Employment in the amount equivalent to the
monetary award in the order appealed from. (Emphasis supplied)

The Court has held that the visitorial and enforcement powers of the Secretary,

The records also clearly indicate that the Regional Director and the DOLE Secretary

exercised

resolved

through

his

representatives,

encompass

compliance

with

all labor standards laws and other laborlegislation, regardless of the amount of the
claims filed by workers.

[27]

the

case

based

only

on

the

following

violations

found

by

the labor inspection officer, which do not include illegal dismissal, thus:

This has been the rule since R.A. No. 7730 was enacted

1.
2.
3.
4.
5.
6.

on June 2, 1994, amending Article 128(b) of the Labor Code, to expand


the visitorial and enforcement powers of the DOLE Secretary. Under the former rule,
the DOLE Secretary had jurisdiction only in cases where the amount of the claim

Underpayment of minimum wage.


Underpayment of thirteenth month pay.
Underpayment of regular holiday pay.
Underpayment of special holiday pay.
Non-payment of night shift differential pay.
Non-registration of the firm under Rule 1020 of OSHS.

does not exceedP5,000.00.


The above-mentioned violations are within the jurisdiction of the DOLE Secretary
Petitioners argue, however, that DOLE-NCR should not have taken jurisdiction of the

and his representatives to address. The questioned Orders dated December 29,

case, because in respondent Abuan's complaint, one of the entries reads as follows:

1998, April 18, 2000 and September 19, 2001 did not mention illegal dismissal, and

Is there anything that the Department of Labor and Employment


can do to be of further assistance to you?
[Answer:] Illegal dismissal, no overtime, no holiday pay.[28]

properly so, because there was no such finding in the inspector's report.[31] Being in
the nature of compliance orders, said orders, under Art. 128(b) of the Labor Code,
are strictly based on the findings of labor employment and enforcement officers

Petitioners contend that the complaint's own allegation of illegal dismissal meant

x x x made in the course of inspection, and not on any complaint filed. Though a

that no more employer-employee relationship existed between petitioners and

complaint may initiate the case or an inspection, its allegations may not necessarily

respondents, depriving DOLE-NCR and the Secretary of Labor and Employment of

be upheld by the labor inspector or the Regional Director.

jurisdiction to entertain the complaint.[29] This allegedly is a requirement under Art.


128(b) of the Labor Code, hereinbefore quoted.

Moreover, Abuan's allegation of illegal dismissal was his personal accusation, and
did not necessarily apply to all the other employees. The records also do not

Petitioners' contentions are untenable. While it may be true that as far as

support a contrary finding. ButAbuan's other allegations of underpayment and

respondent Abuan is concerned, his allegation of illegal dismissal had deprived the

other potential violations of labor laws and regulations were within the obligation of

DOLE of jurisdiction as per Art. 217 of the Labor Code,[30] the same does not hold for

the

the rest of the respondents, who do not claim to have been illegally dismissed. For

affect Abuan's remaining co-workers. Under Art. 128, the Regional Director can

one, petitioners failed to raise this matter with the Regional Director or even the

conduct inspections and check all violations of labor laws, and enforce compliance

DOLE Secretary, thus, preventing the issue from being clarified.

measures for the benefit of allemployees, without being compelled to rely on a

Regional

Director

to

investigate,

especially

insofar

as

they

complaint that has been filed or its allegations. In fact, the article is silent on
whether the filing of a complaint is even required to initiate the exercise of the
inspection and enforcement powers.

Art. 128. Visitorial and Enforcement Power. (b) Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to
the labor standards
provisions
of
this
Code
and
other labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in
the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases
where the employer contests the findings of
the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not
considered in the course of inspection.

Petitioners also insinuate that they were effectively denied due process at the earlier
stages of the controversy, as they claim that during the inspection, the inspector did
not even bother to talk to any them. [32] Again, petitioners are raising serious, factual
allegations in this late stage of their appeal. They never mentioned this alleged
infraction in the very
Reconsideration[33] of

the

first

motion they filed

Regional

Director's

1997. Neither did they raise it in their Position Paper

or in their

Order
[34]

Motion

for

dated November

7,

dated September 14, 1998,

depriving the concerned officer, that is, the labor inspector, of the chance to deny or
refute such serious allegations.

x x x x (Emphasis supplied)
Petitioners themselves cannot deny that due process was afforded them after the
inspection. For one thing, their motion for reconsideration of the Order

Again, petitioners fail to persuade. The mere disagreement by the employer with

dated November 7, 1997 was granted, which resulted in the re-opening of the

the

proceedings and the holding of subsequent hearings. In these hearings, petitioners

presenting controverting evidence, does not automatically divest the DOLE

were given the chance to air their side. Petitioners also submitted their position

Secretary or any of his authorized representatives such as the regional directors, of

paper, in which they summarized all their arguments and presented their

jurisdiction

documentary evidence, such as a contract of lease, payroll sheets and quitclaims, to

the Labor Code.

findings

to

of

the labor officer,

exercise

or

their visitorial and

the

simple

enforcement

act

powers

of

under

refute the respondents' claims, as well as the inspector's findings. In the petition
now before us, petitioners themselves claim that they seasonably contested the
findings of the labor inspector.

[35]

Taking all these into consideration, the ineluctable

conclusion is that the demands of due process were satisfied, as petitioners had
been

given

all

the

opportunity

to

be

heard. It

has

been

held

that

where opportunity tobe heard, either through oral arguments or pleadings, is


accorded, there is no denial of due process.[36]

Under prevailing jurisprudence, the so-called exception clause in


Art. 128(b) of the Labor Code has the following elements, which must all concur to
divest the regional director of jurisdiction over workers' claims:
(a) that the employer contests the findings of
the labor regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to
examine evidentiary matters; and
(c) that such matters are not verifiable in the normal
course of inspection.[37]

Next, petitioners argue that the regional director was divested of jurisdiction
because petitioners contested the findings of the labor inspection officer. This,

Thus, in SSK Parts Corporation v. Camas,[38] in which the employer contested the

allegedly, is in accordance with Art. 128(b) of the Labor Code, which states:

Regional Director's finding of violations of labor standards, but such issue was

resolved by an examination of evidentiary matters which were verifiable in the

DOLE Secretary. For these reasons, the exclusion clause of Art.128(b) does not

ordinary course of inspection, it was held that there was no more need to indorse

apply.

the case to the arbitration branch of the NLRC. In Ex-BataanVeterans Security


Agency, Inc. v. Secretary of Labor,[39] the Court held:
The Court notes that EBVSAI did not contest the findings of
the labor regulations officer during the hearing or after receipt of
the notice of inspection results. It was only in its supplemental
motion for reconsideration before the Regional Director that
EBVSAI questioned the findings of the labor regulations officer and
presented documentary evidence to controvert the claims of
private respondents. But even if this was the case, the
Regional Director and the Secretary of Labor still looked
into and considered EBVSAIs documentary evidence and
found that such did not warrant the reversal of the
Regional Directors order. The Secretary of Labor also
doubted
the
veracity
and
authenticity
of EBVSAIs documentary evidence. Moreover, the pieces
of evidence presented by EBVSAI were verifiable in the
normal course of inspection because all employment records
of the employees should be kept and maintained in or about the
premises of the workplace, which in this case is
in Ambuklao Plant, the establishment where private respondents
were regularly assigned.[40] (Emphasis supplied)

Thus, the key requirement for the Regional Director and the DOLE Secretary to be
divested of jurisdiction is that the evidentiary matters are not verifiable in the
course of inspection. Where the evidence presented was verifiable in the normal
course of inspection, even if presented belatedly by the employer, the Regional
Director, and later the DOLE Secretary, may still examine them; and these officers
are not divested of jurisdiction to decide the case.

In the present case, petitioners' pieces of evidence of the alleged contract


of lease, payroll sheets, and quitclaims were all verifiable in the normal course of

In addition, the findings of the said officers on the invalidity or low probative value of
these documents are findings of a factual nature which this Court will accord with
great respect.[41]

As to the quitclaims, we need only to reiterate the policy laid down in AFP Mutual
Benefit Association, Inc. v. AFP-MBAI-EU,[42] which states:
In labor jurisprudence, it is well established that quitclaims and/or
complete releases executed by the employees do not estop them
from pursuing their claims arising from the unfair labor practice of
the employer.The basic reason for this is that such quitclaims
and/or complete releases are against public policy and, therefore,
null and void. The acceptance of termination pay does not divest
a laborer of the right to prosecute his employer for
unfair labor practice acts. (Cario vs. ACCFA, L-19808, September
29, 1966, 18 SCRA 163; Philippine Sugar Institute vs. CIR, L13475, September 29, 1960, 109 Phil. 452; Mercury Drug Co. vs.
CIR, L-23357, April 30, 1974, 56 SCRA 694, 704)
In the Cario case, supra, the Supreme Court, speaking thru Justice
Sanchez, said:
Acceptance of those benefits would not amount
to estoppel. The reason is plain. Employer and
employee, obviously, do not stand on the same
footing. The employer drove the employee to
the wall. The latter must have to get hold of
money. Because, out of job, he had to face the
harsh necessities of life. He thus found himself
in no position to resist money proffered. His,
then, is a case of adherence, not of choice. One
thing sure, however, is that petitioners did not
relent their claim. They pressed it. They are
deemed not to have waived any of their
rights. Renuntiatio non praesumitur.

inspection and, granting that they were not examined by the labor inspector, they
have nevertheless been thoroughly examined by the Regional Director and the

The principle enunciated above, however, should benefit only the respondents in
the present case who outrightly denied the quitclaims' validity, because it may be

supposed that those who did not protest petitioners' presentation of the quitclaims

their status,[47] but failed to do so. We can only conclude, therefore, that there is no

in evidence have admitted the same by their silence. [43] In such instance, only

substantial evidence to prove petitioners' obligations to these respondents.

respondents

Francisco Abentajado,

Mario Guray,

Juan Villaruz,

Jerry Asense and Joselito Razon are deemed to have blocked the quitclaims'

However, we do not sustain petitioners' allegation that the Regional Director and the

applicability against them.[44]

DOLE Secretary erroneously awarded overtime pay to the respondents, despite the
lack of proof that overtime work had been rendered. Suffice it to state that

Anent the second issue, petitioners contend that the Regional Director and the

petitioners' own evidence, which are the payroll sheets they submitted to the

DOLE Secretary committed error in their award of the various claims of respondents,

Regional Director,[48] show that respondents indeed rendered overtime work. This

specifically citing the award to certain respondents whom they deny having worked

amounts to an admission by petitioners, which may be used in evidence against

as their employees.

them.[49] Aptly, this then became one of the bases of the Regional Director's award
of overtime pay to respondents.

Here, there is merit in petitioners' contentions. Although the basic rule is that
questions of facts like this may not be addressed in a petition for review, there are

In summary, we hold that only the awards granted to the following respondents be

certain exceptions, such as when the judgment is based on a misapprehension of

affirmed:

facts.[45] At the earliest possible opportunity, that is, as early as the position paper

1.
2.
3.
4.
5.

filed on September 14, 1998, petitioners already denied being the employers of the
respondents Calpito Mendoles and
Reconsideration

[46]

Rene Corales. Later,

in

their

Motion

for

dated January 8, 2004, petitioners also disclaimed liability

to Rolando Naelga, who was not in the labor inspector's and Regional Director's
original list of petitioners' workers and against whom petitioners were not afforded
the chance to present countervailing evidence.Since then, petitioners have
consistently denied liability as employers of these respondents. These respondents,
however, not only failed to controvert this denial by petitioners, they also did not
participate in the proceedings of the case, as shown by the records. Thus, there was
a failure to prove the existence of an employer-employee relationship between
petitioners and these particular respondents. Respondents could have easily proven
their relationship by presenting any of the following: their appointment letters or
employment contracts, payrolls, organization charts, Social Security System
registration, personnel list, as well as the testimonies of co-employees to confirm

Juan Villaruz
Francisco Abentajado
Jerry Asense
Mario Guray
Joselito Razon

The award in favor of Florentino Abuan is deleted, as his claim for illegal dismissal
is within the original and exclusive jurisdiction of the Labor Arbiter, and outside of
the jurisdiction of the DOLE Secretary and the Regional Director. The awards
granted to the rest of the respondents are likewise deleted for lack of evidence to
prove petitioners' liability as to them.

WHEREFORE,

the

decision

appealed

from

is AFFIRMED,

with

the MODIFICATION that only respondents Juan Villaruz, Francisco Abentajado,


Jerry Asense, Mario Guray, and JoselitoRazon be GRANTED their monetary awards
while the awards given to the rest of the respondents are DELETED.

No costs.

SO ORDERED.

G.R. No. 152396

November 20, 2007

EX-BATAAN
VETERANS
SECURITY
AGENCY,
INC., petitioner,
vs.
THE SECRETARY OF LABOR BIENVENIDO E. LAGUESMA, REGIONAL
DIRECTOR BRENDA A. VILLAFUERTE, ALEXANDER POCDING, FIDEL
BALANGAY, BUAGEN CLYDE, DENNIS EPI, DAVID MENDOZA, JR.,
GABRIEL TAMULONG, ANTON PEDRO, FRANCISCO PINEDA, GASTON
DUYAO, HULLARUB, NOLI DIONEDA, ATONG CENON, JR., TOMMY
BAUCAS, WILLIAM PAPSONGAY, RICKY DORIA, GEOFREY MINO,
ORLANDO RILLASE, SIMPLICIO TELLO, M. G. NOCES, R. D. ALEJO,
and P. C. DINTAN, respondents.
DECISION
CARPIO, J.:

accidental report; (10) no safety committee; and (11) no trained first


aider.5 On the same date, the Regional Office issued a notice of
hearing6 requiring EBVSAI and private respondents to attend the hearing
on 22 March 1996. Other hearings were set for 8 May 1996, 27 May 1996
and 10 June 1996.
On 19 August 1996, the Director of the Regional Office (Regional Director)
issued an Order, the dispositive portion of which reads:
WHEREFORE, premises considered, respondent EX-BATAAN
VETERANS SECURITY AGENCY is herebyORDERED to pay the
computed deficiencies owing to the affected employees in the total
amount of SEVEN HUNDRED SIXTY THREE THOUSAND NINE
HUNDRED NINETY SEVEN PESOS and 85/PESOS within ten
(10) calendar days upon receipt hereof. Otherwise, a Writ of
Execution shall be issued to enforce compliance of this Order.

The Case
This is a petition for review 1 with prayer for the issuance of a temporary
restraining order or writ of preliminary injunction of the 29 May 2001
Decision2 and the 26 February 2002 Resolution 3 of the Court of Appeals in
CA-G.R. SP No. 57653. The 29 May 2001 Decision of the Court of Appeals
affirmed the 4 October 1999 Order of the Secretary of Labor in OS-LS-04-4097-280. The 26 February 2002 Resolution denied the motion for
reconsideration.

NAME

DEFICIENCY

1. ALEXANDER POCDING

P 36,380.85

2. FIDEL BALANGAY

36,380.85

3. BUAGEN CLYDE

36,380.85

4. DENNIS EPI

36,380.85

5. DAVID MENDOZA, JR.

36,380.85

6. GABRIEL TAMULONG

36,380.85

The Facts
Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of
providing security services while private respondents are EBVSAI's
employees assigned to the National Power Corporation at Ambuklao Hydro
Electric Plant, Bokod, Benguet (Ambuklao Plant).
On 20 February 1996, private respondents led by Alexander Pocding
(Pocding) instituted a complaint4 for underpayment of wages against
EBVSAI before the Regional Office of the Department of Labor and
Employment (DOLE).
On 7 March 1996, the Regional Office conducted a complaint inspection at
the Ambuklao Plant where the following violations were noted: (1) nonpresentation of records; (2) non-payment of holiday pay; (3) non-payment
of rest day premium; (4) underpayment of night shift differential pay; (5)
non-payment of service incentive leave; (6) underpayment of 13 th month
pay; (7) no registration; (8) no annual medical report; (9) no annual work

10

7. ANTON PEDRO

36,380.85

19. NOCES, M.G.

36,380.85

8. FRANCISCO PINEDA

36,380.85

20. ALEJO, R.D.

36,380.85

9. GASTON DUYAO

36,380.85

21. D[I]NTAN, P.C.

36,380.85

10. HULLARUB

36,380.85

TOTAL

P 763,997.85

11. NOLI D[EO]NIDA

36,380.85

xxxx
SO ORDERED.7

12. ATONG CENON, JR.

36,380.85

13. TOMMY BAUCAS

36,380.85

14. WILIAM PAPSONGAY

36,380.85

15. RICKY DORIA

36,380.85

16. GEOFREY MINO

36,380.85

17. ORLANDO R[IL]LASE

36,380.85

EBVSAI filed a motion for reconsideration 8 and alleged that the Regional
Director does not have jurisdiction over the subject matter of the case
because the money claim of each private respondent exceeded P5,000.
EBVSAI pointed out that the Regional Director should have endorsed the
case to the Labor Arbiter.
In a supplemental motion for reconsideration, 9 EBVSAI questioned the
Regional Director's basis for the computation of the deficiencies due to
each private respondent.
In an Order10 dated 16 January 1997, the Regional Director denied EBVSAI's
motion for reconsideration and supplemental motion for reconsideration.
The Regional Director stated that, pursuant to Republic Act No. 7730 (RA
7730),11 the limitations under Articles 12912 and 217(6)13 of the Labor Code
no longer apply to the Secretary of Labor's visitorial and enforcement
powers under Article 128(b). 14 The Secretary of Labor or his duly
authorized representatives are now empowered to hear and decide, in a
summary proceeding, any matter involving the recovery of any amount of
wages and other monetary claims arising out of employer-employee
relations at the time of the inspection.
EBVSAI appealed to the Secretary of Labor.

18. SIMPLICO TELLO

36,380.85

The Ruling of the Secretary of Labor

11

In an Order15 dated 4 October 1999, the Secretary of Labor affirmed with


modification the Regional Director's 19 August 1996 Order. The Secretary
of Labor ordered that the P1,000 received by private respondents Romeo
Alejo, Atong Cenon, Jr., Geofrey Mino, Dennis Epi, and Ricky Doria be
deducted from their respective claims. The Secretary of Labor ruled that,
pursuant to RA 7730, the Court's decision in the Servando16 case is no
longer controlling insofar as the restrictive effect of Article 129 on the
visitorial and enforcement power of the Secretary of Labor is concerned.
The Secretary of Labor also stated that there was no denial of due process
because EBVSAI was accorded several opportunities to present its side but
EBVSAI failed to present any evidence to controvert the findings of the
Regional Director. Moreover, the Secretary of Labor doubted the veracity
and authenticity of EBVSAI's documentary evidence. The Secretary of
Labor noted that these documents were not presented at the initial stage
of the hearing and that the payroll documents did not indicate the periods
covered by EBVSAI's alleged payments.
EVBSAI filed a motion for reconsideration which was denied by the
Secretary of Labor in his 3 January 2000 Order.17
EBVSAI filed a petition for certiorari before the Court of Appeals.
The Ruling of the Court of Appeals
In its 29 May 2001 Decision, the Court of Appeals dismissed the petition
and affirmed the Secretary of Labor's decision. The Court of Appeals
adopted the Secretary of Labor's ruling that RA 7730 repealed the
jurisdictional limitation imposed by Article 129 on Article 128 of the Labor
Code. The Court of Appeals also agreed with the Secretary of Labor's
finding that EBVSAI was accorded due process.
The Court of Appeals also denied EBVSAI's motion for reconsideration in its
26 February 2002 Resolution.
Hence, this petition.
The Issues
This case raises the following issues:
1. Whether the Secretary of Labor or his duly authorized
representatives acquired jurisdiction over EBVSAI; and

2. Whether the Secretary of Labor or his duly authorized


representatives have jurisdiction over the money claims of private
respondents which exceed P5,000.
The Ruling of the Court
The petition has no merit.
On the Regional Director's Jurisdiction over EBVSAI
EBVSAI claims that the Regional Director did not acquire jurisdiction over
EBVSAI because he failed to comply with Section 11, Rule 14 of the 1997
Rules of Civil Procedure.18 EBVSAI points out that the notice of hearing was
served at the Ambuklao Plant, not at EBVSAI's main office in Makati, and
that it was addressed to Leonardo Castro, Jr., EBVSAI's Vice-President.
The Rules on the Disposition of Labor Standards Cases in the Regional
Offices19 (rules) specifically state that notices and copies of orders shall be
served on the parties or their duly authorized representatives at their last
known address or, if they are represented by counsel, through the
latter.20 The rules shall be liberally construed 21 and only in the absence of
any applicable provision will the Rules of Court apply in a suppletory
character.22
In this case, EBVSAI does not deny having received the notices of hearing.
In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao,
detachment commander and bookkeeper of EBVSAI, respectively,
appeared before the Regional Director. They claimed that the 22 March
1996 notice of hearing was received late and manifested that the notices
should be sent to the Manila office. Thereafter, the notices of hearing were
sent to the Manila office. They were also informed of EBVSAI's violations
and were asked to present the employment records of the private
respondents for verification. They were, moreover, asked to submit, within
10 days, proof of compliance or their position paper. The Regional Director
validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question
the jurisdiction of the Regional Director after receiving the notices of
hearing and after appearing before the Regional Director.
On the Regional Director's Jurisdiction over the Money Claims
EBVSAI maintains that under Articles 129 and 217(6) of the Labor Code,
the Labor Arbiter, not the Regional Director, has exclusive and original
jurisdiction over the case because the individual monetary claim of private
respondents exceeds P5,000. EBVSAI also argues that the case falls under
the exception clause in Article 128(b) of the Labor Code. EBVSAI asserts
that the Regional Director should have certified the case to the Arbitration

12

Branch of the National Labor Relations Commission (NLRC) for a full-blown


hearing on the merits.
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:
While it is true that under Articles 129 and 217 of the Labor Code,
the Labor Arbiter has jurisdiction to hear and decide cases where
the aggregate money claims of each employee exceeds P5,000.00,
said provisions of law do not contemplate nor cover the visitorial
and enforcement powers of the Secretary of Labor or his duly
authorized representatives.
Rather, said powers are defined and set forth in Article 128 of the
Labor Code (as amended by R.A. No. 7730) thus:
Art. 128 Visitorial and enforcement power. --- x x x
(b) Notwithstanding the provisions of Article[s] 129 and
217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance
orders to give effect to [the labor standards provisions of
this Code and other] labor legislation based on the findings
of labor employment and enforcement officers or industrial
safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue
writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the
employer contests the findings of the labor employment
and enforcement officer and raises issues supported by
documentary proofs which were not considered in the
course of inspection.
xxxx
The aforequoted provision explicitly excludes from its coverage
Articles 129 and 217 of the Labor Code by the phrase
"(N)otwithstanding the provisions of Articles 129 and 217of this
Code to the contrary x x x" thereby retaining and further
strengthening the power of the Secretary of Labor or his duly
authorized representatives to issue compliance orders to give
effect to the labor standards provisions of said Code and other
labor legislation based on the findings of labor employment and
enforcement officer or industrial safety engineer made in the
course of inspection.23 (Italics in the original)

This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v.
Sensing,24 where we sustained the jurisdiction of the DOLE Regional
Director and held that "the visitorial and enforcement powers of the
DOLE Regional Director to order and enforce compliance with
labor standard laws can be exercised even where the individual
claim exceeds P5,000."
However, if the labor standards case is covered by the exception clause in
Article 128(b) of the Labor Code, then the Regional Director will have to
endorse the case to the appropriate Arbitration Branch of the NLRC. In
order to divest the Regional Director or his representatives of jurisdiction,
the following elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that
in order to resolve such issues, there is a need to examine evidentiary
matters; and (c) that such matters are not verifiable in the normal course
of inspection.25 The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the
notice of inspection results.26
In this case, the Regional Director validly assumed jurisdiction over the
money claims of private respondents even if the claims exceeded P5,000
because such jurisdiction was exercised in accordance with Article 128(b)
of the Labor Code and the case does not fall under the exception clause.
The Court notes that EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the notice of
inspection results. It was only in its supplemental motion for
reconsideration before the Regional Director that EBVSAI questioned the
findings of the labor regulations officer and presented documentary
evidence to controvert the claims of private respondents. But even if this
was the case, the Regional Director and the Secretary of Labor still looked
into and considered EBVSAI's documentary evidence and found that such
did not warrant the reversal of the Regional Director's order. The Secretary
of Labor also doubted the veracity and authenticity of EBVSAI's
documentary evidence. Moreover, the pieces of evidence presented by
EBVSAI were verifiable in the normal course of inspection because all
employment records of the employees should be kept and maintained in or
about the premises of the workplace, which in this case is in Ambuklao
Plant, the establishment where private respondents were regularly
assigned.27
WHEREFORE, we DENY the petition. We AFFIRM the 29 May 2001
Decision and the 26 February 2002 Resolution of the Court of Appeals in
CA-G.R. SP No. 57653.
SO ORDERED.

13

G.R. No. 87210 July 16, 1990


FILOMENA
BARCENAS, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), Rev. SIM
DEE the present Head Monk of the Manila Buddha Temple,
MANUEL CHUA, in his capacity as the President and Chairman of
the Board of Directors of the Poh Toh Buddhist Association of the
Philippines, Inc., and in his private capacity,respondents.
L.B. Camins for petitioner.
Lino M. Patajo and Jose J. Torrefranca for private respondents.

MEDIALDEA, J.:
This petition for review on certiorari (which We treat as a special civil
action for certiorari) seeks to annul the decision of the National Labor
Relations Commission dated November 29, 1988, which reversed the
decision of the Labor Arbiter dated February 10, 1988 in NLRC NCR Case
No. 12-4861-86 (Filomena Barcenas v. Rev. Sim See, etc., et al.) on the
ground that no employer-employee relationship exists between the parties.
Petitioner alleged in her position paper the following facts:
In 1978, Chua Se Su (Su for short) in his capacity as the Head Monk of the
Buddhist Temple of Manila and Baguio City and as President and Chairman
of the Board of Directors of the Poh Toh Buddhist Association of the Phils.
Inc. hired the petitioner who speaks the Chinese language as secretary and
interpreter. Petitioner's position required her to receive and assist Chinese
visitors to the temple, act as tourist guide for foreign Chinese visitors,
attend to the callers of the Head Monk as well as to the food for the temple
visitors, run errands for the Head Monk such as paying the Meralco, PLDT,
MWSS bills and act as liaison in some government offices. Aside from her
pay and allowances under the law, she received an amount of P500.00 per
month plus free board and lodging in the temple. In December, 1979, Su
assumed the responsibility of paying for the education of petitioner's
nephew. In 1981, Su and petitioner had amorous relations. In May, 1982, of
five months before giving birth to the alleged son of Su on October 12,
1982, petitioner was sent home to Bicol. Upon the death of Su in July,

1983, complainant remained and continued in her job. In 1985, respondent


Manuel Chua (Chua, for short) was elected President and Chairman of the
Board of the Poh Toh Buddhist Association of the Philippines, Inc. and Rev.
Sim Dee for short) was elected Head Buddhist Priest. Thereafter, Chua and
Dee discontinued payment of her monthly allowance and the additional
P500.00 effective 1983. In addition, petitioner and her son were evicted
forcibly from their quarters in the temple by six police officers. She was
brought first to the Police precinct in Tondo and then brought to Aloha
Hotel where she was compelled to sign a written undertaking not to return
to the Buddhist temple in consideration of the sum of P10,000.00.
Petitioner refused and Chua shouted threats against her and her son. Her
personal belongings including assorted jewelries were never returned by
respondent Chua.
Chua and DEE on the other hand, claimed that petitioner was never an
employee of the Poh Toh Temple but a servant who confined herself to the
temple and to the personal needs of the late Chua Se Su and thus, her
position is coterminous with that of her master.
On February 10, 1988, the Labor Arbiter rendered a decision, the
dispositive portion of which states:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the complainant Filomena Barcenas,
and the respondent corporation is hereby ordered to pay
her the following:
1. P26,575.00 backwages from August 9, 1986 up to date
hereof.,
2. P14,650.00 as separation pay;
3. P18,000.00 as unpaid wages from August, 1983 up to
August 8, 1986; and
4. P10,000.00 moral damages.
Complainant's charge of unfair labor practice is hereby
dismissed for lack of merit.
SO ORDERED.

14

Respondents appealed to the National Labor Relations Commission which,


as earlier stated, reversed the above decision of the Labor Arbiter. Hence,
this instant petition.
A painstaking review of the records compels Us to dismiss the petition.
At the outset, however, We agree with the petitioner's claim that she was a
regular employee of the Manila Buddhist Temple as secretary and
interpreter of its Head Monk, Su As Head Monk, President and Chairman of
the Board of Directors of the Poh Toh Buddhist Association of the
Philippines, Su was empowered to hire the petitioner under Article V of the
By-laws of the Association which states:
. . . (T)he President or in his absence, the Vice President
shall represent the Association in all its dealings with the
public, subject to the Board, shall have the power to enter
into any contract or agreement in the name of the
Association, shall manage the active business operation of
the Association, shall deal with the bank or banks . . . 2
Respondent NLRC represented by its Legal Offices 3 argues that since
petitioner was hired without the approval of the Board of Directors of the
Poh Toh Buddhist Association of the Philippines, Inc., she was not an
employee of respondents. This argument is specious. The required Board
approval would appear to relate to the acts of the President in representing
the association "in all its dealings with the public." And, even granting that
prior Board approval is required to confirm the hiring of the petitioner, the
same was already granted, albeit, tacitly. It must be noted that petitioner
was hired in 1978 and no whimper of protest was raised until this present
controversy.
Moreover, the work that petitioner performed in the temple could not be
categorized as mere domestic work. Thus, We find that petitioner, being
proficient in the Chinese language, attended to the visitors, mostly
Chinese, who came to pray or seek advice before Buddha for personal or
business problems; arranged meetings between these visitors and Su and
supervised the preparation of the food for the temple visitors; acted as
tourist guide of foreign visitors; acted as liaison with some goverment
offices; and made the payment for the temple's Meralco, MWSS and PLDT
bills. Indeed, these tasks may not be deemed activities of a household
helper. They were essential and important to the operation and religious
functions of the temple.

In spite of this finding, her status as a regular employee ended upon her
return to Bicol in May, 1982 to await the birth of her love-child allegedly by
Su The records do not show that petitioner filed any leave from work or
that a leave was granted her. Neither did she return to work after the birth
of her child on October 12, 1982, whom she named Robert Chua alias Chua
Sim Tiong. The NLRC found that it was only in July, 1983 after Su died that
she went back to the Manila Buddhist Temple. Petitioner's pleadings failed
to rebut this finding. Clearly, her return could not be deemed as a
resumption of her old position which she had already abandoned.
Petitioner herself supplied the reason for her return. She stated:
. . . (I)t was the death-bed instruction to her by Chua Se Su
to stay at the temple and to take care of the two boys and
to see to it that they finish their studies to become monks
and when they are monks to eventually take over the two
temples as their inheritance from their father Chua Se Su. 4
Thus, her return to the temple was no longer as an employee but rather as
Su's mistress who is bent on protecting the proprietary and hereditary
rights of her son and nephew. In her pleadings, the petitioner claims that
they were forcefully evicted from the temple, harassed and threatened by
respondents and that the Poh Toh Buddhist Association is a trustee
corporation with the children as cestui que trust. These claims are not
proper in this labor case. They should be appropriately threshed out in the
complaints already filed by the petitioner before the civil courts. Due to
these claims, We view the respondents' offer of P10,000.00 as indicative
more of their desire to evict the petitioner and her son from the temple
rather than an admission of an employer-employee relations.
Anent the petitioner's claim for unpaid wages since May, 1982 which she
filed only in 1986, We hold that the same has already prescribed. Under
Article 292 of the Labor Code, all money claims arising from employeremployee relations must be filed within three years from the time the
cause of action accrued, otherwise they shall forever be barred.
Finally, while petitioner contends that she continued to work in the temple
after Su died, there is, however, no proof that she was re-hired by the new
Head Monk. In fact, she herself manifested that respondents made it clear
to her in no uncertain terms that her services as well as her presence and
that of her son were no longer needed. 5 However, she persisted and
continued to work in the temple without receiving her salary because she
expected Chua and Dee to relent and permit the studies of the two

15

boys. 6 Consequently, under these circumstances, no employer-employee


relationship could have arisen.
ACCORDINGLY, the decision of the National Labor Relations Commission
dated November 29, 1988 is hereby AFFIRMED for the reasons aforestated.
No costs.
SO ORDERED.

16

DIOSCORO F. BACSIN, G.R. No. 146053


Petitioner,
Present:
QUISUMBING, J., Chairperson,
- versus - CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
EDUARDO O. WAHIMAN, Promulgated:
Respondent.
April 30, 2008
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:

asked her to come closer, and when she did, held her hand, then touched
and fondled her breast. She stated that he fondled her breast five times,
and that she felt afraid. [3] A classmate of hers, one Vincent B. Sorrabas,
claiming to have witnessed the incident, testified that the fondling incident
did happen just as AAA related it.[4]

Petitioner was charged with Misconduct in a Formal Charge


dated February 12, 1996 by Regional Director Vivencio N. Muego, Jr. of the
CSC.[5]

In his defense, petitioner claimed that the touching incident happened by


accident, just as he was handing AAA a lesson book. [6] He further stated

In this Petition for Review on Certiorari, petitioner Dioscoro F. Bacsin


questions the Decision[1] dated August 23, 2000 of the First Division of the

that the incident happened in about two or three seconds, and that the girl
left his office without any complaint.[7]

Court of Appeals (CA) in CA-G.R. SP No. 51900, which affirmed Resolution


No. 98-0521 dated March 11, 1998 and Resolution No. 99-0273 dated

Resolution of the CSC

January 28, 1999, both issued by the Civil Service Commission (CSC),
dismissing petitioner from the service for Grave Misconduct.

In Resolution No. 98-0521 dated March 11, 1998, the CSC found petitioner
guilty of Grave Misconduct (Acts of Sexual Harassment), and dismissed him

Facts of the Case

from the service.[8]Specifically, the CSC found the petitioner to have


committed an act constituting sexual harassment, as defined in Sec. 3 of

Petitioner is a public school teacher of Pandan Elementary School, Pandan,

Republic Act No. (RA) 7877, the Anti-Sexual Harassment Act of 1995.

Mambajao, Camiguin Province. Respondent Eduardo O. Wahiman


is the father of AAA, an elementary school student of the petitioner.

Petitioner filed a motion for reconsideration, but the same was denied in
Resolution No. 99-0273 dated January 28, 1999.

AAA claimed that on August 16, 1995, petitioner asked her to be at his
office to do an errand.[2] Once inside, she saw him get a folder from one of
the cartons on the floor near his table, and place it on his table. He then

Decision of the Court of Appeals

17

Service Commission and affirmed by the Court of


Appeals is in accord with Rule XIV, Section (23) of
the Omnibus Civil Service Rules and applicable
rulings.

Petitioner then brought the matter to the CA under Rule 43 of the 1997
Rules of Civil Procedure, the recourse docketed as CA-G.R. SP No. 51900.

Petitioner raised the following issues before the CA:


1.

2.
3.

3.

Whether or not the charge of Misconduct, a


lesser offense, includes the offense of Grave
Misconduct; a greater offense.

Whether or not there were efforts by [AAA],


her parents and the Honorable Civil Service
Commission to magnify the accidental touching
incident on August 16, 1995;

The petition is without merit.

Whether or not the guilt of the petitioner was


supported by the evidence on record; and

Petitioner argues that the CSC cannot validly adjudge him guilty

Whether or not there was irregularity in the


imposition of the penalty of removal.[9]

of an offense, such as Grave Misconduct (Acts of Sexual Harassment),

In resolving the case, the CA determined that the issue revolved

He further argues that the offense of Misconduct does not include the

around petitioners right to due process, and based on its finding that

different from that specified in the formal charge which was Misconduct.

graver offense of Grave Misconduct.

petitioner had the opportunity to be heard, found that there was no


violation of that right. The CA ruled that, even if petitioner was formally

This argument is unavailing.

charged with disgraceful and immoral conduct and misconduct, the CSC
found that the allegations and evidence sufficiently proved petitioners guilt
of grave misconduct, punishable by dismissal from the service.

The Issues Before Us

As Dadubo v. Civil Service Commission teaches:


The charge against the respondent in an
administrative case need not be drafted with the precision
of an information in a criminal prosecution. It is sufficient
that he is apprised of the substance of the charge against
him; what is controlling is the allegation of the acts
complained of, not the designation of the offense. [10]

The petitioner now raises the following issues in the present petition:
1.

2.

Whether or not the petitioner could be guilty


of acts of sexual harassment, grave misconduct,
which was different from or an offense not alleged
in the formal charge filed against him at the
inception of the administrative case.
Assuming petitioner was guilty of disgraceful
and immoral conduct and misconduct as charged
by complainant, whether or not the penalty of
dismissal from the service imposed by the Civil

It is clear that petitioner was sufficiently informed of the basis of


the charge against him, which was his act of improperly touching one of
his students. Thus informed, he defended himself from such charge. The
failure to designate the offense specifically and with precision is of no
moment in this administrative case.

18

misconduct denotes intentional wrongdoing or deliberate violation of a


The formal charge, while not specifically mentioning RA 7877, The

rule of law or standard of behavior.[13]

Anti-Sexual Harassment Act of 1995, imputes on the petitioner acts


covered and penalized by said law. Contrary to the argument of

We agree with the rulings of the CSC and the CA.

petitioner, the demand of a sexual favor need not be explicit or


stated. In Domingo v. Rayala,[11] it was held, It is true that this provision

In grave misconduct, the elements of corruption, clear intent to

calls for a demand, request or requirement of a sexual favor. But it is not

violate the law, or flagrant disregard of established rule must be manifest.

necessary that the demand, request, or requirement of a sexual favor be

[14]

articulated in a categorical oral or written statement.

It may be

7877, and is doubtless inexcusable. The particular act of petitioner cannot

discerned, with equal certitude, from the acts of the offender. The CSC

in any way be construed as a case of simple misconduct. Sexually

found, as did the CA, that even without an explicit demand from

molesting a child is, by any norm, a revolting act that it cannot but be

petitioner his act of mashing the breast of AAA was sufficient to constitute

categorized as a grave offense. Parents entrust the care and molding of

sexual harassment. Moreover, under Section 3 (b) (4) of RA 7877, sexual

their children to teachers, and expect them to be their guardians while in

harassment in an education or training environment is committed (w)hen

school. Petitioner has violated that trust. The charge of grave misconduct

the sexual advances result in an intimidating, hostile or offensive

proven against petitioner demonstrates his unfitness to remain as a

environment for the student, trainee or apprentice. AAA even testified

teacher and continue to discharge the functions of his office.

The act of petitioner of fondling one of his students is against a law, RA

that she felt fear at the time petitioner touched her. [12] It cannot then be

Petitioners second argument need not be discussed further, as he

said that the CSC lacked basis for its ruling, when it had both the facts

was rightly found guilty of grave misconduct. Under Rule IV, Section 52 of

and the law. The CSC found the evidence presented by the complainant

the CSC Uniform Rules on Administrative Cases, Grave Misconduct carries

sufficient to support a finding of grave misconduct. It is basic that factual

with it the penalty of dismissal for the first offense. Thus, the penalty

findings of administrative agencies, when supported by substantial

imposed on petitioner is in accordance with the Rules.

evidence, are binding upon the Court.


Petitioner was not denied due process of law, contrary to his
Leaving aside the discrepancy of the designation of the offense in

claims. The essence of due process is simply an opportunity to be heard,

the formal charge, it must be discussed whether or not petitioner is

or, as applied to administrative proceedings, an opportunity to explain

indeed guilty, as found by the CA and CSC, of Grave Misconduct, as

ones side or an opportunity to seek for a reconsideration of the action or

distinguished from Simple Misconduct. From the findings of fact of the

ruling complained of.[15] These elements are present in this case, where

CSC, it is clear that there is misconduct on the part of petitioner. The term

petitioner was properly informed of the charge and had a chance to refute
it, but failed.

19

A teacher who perverts his position by sexually harassing a


student should not be allowed, under any circumstance, to practice this
noble profession. So it must be here.

WHEREFORE,

in

view

of

the

foregoing,

this

petition

is

hereby DISMISSED, and the decision of the CA in CA-G.R. SP No. 51900 is


hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

20

OCEAN
BUILDERS
CONSTRUCTION
CORP., and/or DENNIS HAO,
Petitioners,

Hao gave Bladimir P1,000.00 and ordered Silangga to instead bring


G.R. No. 150898

Bladimir to the nearest hospital.

Present:
- versus SPOUSES
ANTONIO
CUBACUB,
Respondents.

and

ANICIA

CARPIO MORALES, Chairperson,


BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

Along with co-workers Narding and Tito Vergado, Silangga thus


brought Bladimir to the Caybiga Community Hospital (Caybiga Hospital), a
primary-care hospital around one kilometer away from the office of the
company.

Promulgated:
April 13, 2011
The hospital did not allow Bladimir to leave the hospital. He was
x--------------------------------------------------x
DECISION

then confined, with Narding keeping watch over him. The next day, April
13, 1995, a doctor of the hospital informed Narding that they needed to
talk to Bladimirs parents, hence, on Silanggas request, their co-workers
June Matias and Joel Edrene fetched Bladimirs parents from Tarlac.

CARPIO MORALES, J.:


Bladimir Cubacub (Bladimir) was employed as maintenance man by

At about 8 oclock in the evening of the same day, April 13, 1995,

petitioner company Ocean Builders Construction Corp. at its office in

Bladimirs parents-respondent spouses Cubacub, with their friend Dr.

Caloocan City.

Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital and transferred
Bladimir to the Quezon City General Hospital (QCGH) where he was placed

On April 9, 1995, Bladimir was afflicted with chicken pox. He was

in the intensive care unit and died the following day, April 14, 1995.

thus advised by petitioner Dennis Hao (Hao), the companys general


The death certificate issued by the QCGH recorded Bladimirs

manager, to rest for three days which he did at the companys barracks
where he lives free of charge.

immediate cause of death as cardio-respiratory arrest and the antecedent


cause as pneumonia. On the other hand, the death certificate issued by Dr.

Three days later or on April 12, 1995, Bladimir went about his usual
chores of manning the gate of the company premises and even cleaned

Frias recorded the causes of death as cardiac arrest, multiple organ system
failure, septicemia and chicken pox.

the company vehicles. Later in the afternoon, however, he asked a coworker, Ignacio Silangga (Silangga), to accompany him to his house in

Bladimirs parents-herein respondents later filed on August 17, 1995 before

Capas, Tarlac so he could rest. Informed by Silangga of Bladimirs intention,

the

Tarlac

Regional

Trial

Court

(RTC)

at

Capas

a complaint

for

damages against petitioners, alleging that Hao was guilty of negligence

21

which resulted in the deterioration of Bladimirs condition leading to his

4.

P18,107.75 as reimbursement of expenses


for the 5-day wake covered by Exhibits F to F17;

5.

P30,000.00 as funeral expenses at Prudential


Funeral Homes covered by Exhibit I;
P6,700.00 for acquisition of memorial lot at
Sto. Rosario Memorial Park covered by Exhibit J;

death.

By Decision of April 14, 1997, [1] Branch 66 of the Tarlac RTC at Capas

6.

dismissed the complaint, holding that Hao was not negligent. It ruled that
Hao was not under any obligation to bring Bladimir to better tertiary

7.

P50,000.00 as moral damages;

hospitals, and assuming that Bladimir died of chicken pox aggravated by

8.

P20,000.00 as exemplary damages;

pneumonia or some other complications due to lack of adequate facilities

9.

P15,000.00 as attorneys fees and

at the hospital, the same cannot be attributed to Hao.

10. Cost of suit.


SO ORDERED.[2]

On respondents appeal, the Court of Appeals, by Decision of June 22,


2001, reversed the trial courts decision, holding that by Haos failure to
bring Bladimir to a better-equipped hospital, he violated Article 161 of the

The motion for reconsideration was denied by Resolution [3] of November

Labor Code. It went on to state that Hao should have foreseen that

26, 2001, hence this petition.

Bladimir, an adult, could suffer complications from chicken pox and, had he
been brought to hospitals like St. Lukes, Capitol Medical Center, Philippine

Petitioners maintain that Hao exercised the diligence more than what the

General Hospital and the like, Bladimir could have been saved.

law requires, hence, they are not liable for damages.

Thus the appellate court disposed:


WHEREFORE, the decision of the Regional Trial Court of
Capas, Tarlac, Branch 66 in Civil Case No. 349 dated April
14, 1997 is hereby REVERSED and SET ASIDE and a new
one rendered holding the defendants solidarily liable to
plaintiffs-appellants for the following:

The petition is meritorious.

At the onset, the Court notes that the present case is one for damages
based

on torts,

the

employer-employee

relationship

being

merely

1.

P50,000.00 for the life of Bladimir Cubacub;

incidental. To successfully prosecute an action anchored on torts, three

2.

P584,630.00 for loss of Bladimirs earning


capacity;

elements must be present, viz: (1) duty (2) breach (3) injury and proximate

P4,834.60 as reimbursement of expenses


incurred at Quezon City General Hospital as
evidenced by Exhibits E to E-14 inclusive;

duty of petitioners to provide adequate medical assistance to the

3.

causation. The assailed decision of the appellate court held that it was the

employees under Art. 161 of the Labor Code, failing which a breach is
committed.

22

well as a dental clinic and an infirmary or


emergency hospital with one bed capacity for
every one hundred (100) employees when
the number of employees exceeds three
hundred (300). (emphasis and underscoring
supplied)

Art. 161 of the Labor Code provides:


ART. 161. Assistance of employer. It shall be the duty of any
employer to provide all the necessary assistance to
ensure the adequate and immediate medical and dental
attendance and treatment to an injured or sick employee in
case of emergency. (emphasis and underscoring supplied)
The Implementing Rules of the Code do not enlighten what the phrase
adequate and immediate medical attendance means in relation to an
emergency. It would thus appear that the determination of what it means is
left to the employer, except when a full-time registered nurse or physician
are available on-site as required, also under the Labor Code, specifically
Art. 157 which provides:
Article 157. Emergency Medical and Dental Services. It shall be
the duty of every employer to furnish his employees in any
locality with free medical and dental attendance and
facilities consisting of:
(a)

(b)

(c)

The services of a full-time registered


nurse when the number of employees
exceeds fifty (50) but not more than two
hundred (200) except when the employer
does not maintain hazardous workplaces, in
which case, the services of a graduate firstaider shall be provided for the protection of
workers, where no registered nurse is
available. The Secretary of Labor and
Employment shall provide by appropriate
regulations, the services that shall be
required where the number of employees
does not exceed fifty (50) and shall
determine by appropriate order, hazardous
workplaces for purposes of this Article;
The services of a full-time registered
nurse, a part-time physician and dentist, and
an emergency clinic, when the number of
employees exceeds two hundred (200) but
not more than three hundred (300); and
The services of a full-time physician,
dentist and a full-time registered nurse as

In the present case, there is no allegation that the company


premises are hazardous. Neither is there any allegation on the number of
employees the company has. If Haos testimony[4] would be believed, the
company had only seven regular employees and 20 contractual employees
still short of the minimum 50 workers that an establishment must have
for it to be required to have a full-time registered nurse.
The Court can thus only determine whether the actions taken by
petitioners

when

Bladimir

became

ill

amounted

to

the

necessary

assistance to ensure adequate and immediate medical . . . attendance to


Bladimir as required under Art. 161 of the Labor Code.

As found by the trial court and borne by the records, petitioner


Haos advice for Bladimir to, as he did, take a 3-day rest and to later have
him brought to the nearest hospital constituted adequate and immediate
medical attendance that he is mandated, under Art. 161, to provide to a
sick employee in an emergency.

Chicken pox is self-limiting. Hao does not appear to have a medical


background. He may not be thus expected to have known that Bladimir
needed to be brought to a hospital with better facilities than the Caybiga
Hospital, contrary to appellate courts ruling.

AT ALL EVENTS, the alleged negligence of Hao cannot be


considered as the proximate cause of the death of Bladimir. Proximate

23

cause is that which, in natural and continuous sequence, unbroken by an

QCGH, septicemia and chicken pox per Dr. Frias. In fact, Dr. Frias admitted

efficient intervening cause, produces injury, and without which, the result

that the causes of death in both certificates were the same. [8]

would not have occurred.[5] An injury or damage is proximately caused by


an act or failure to act, whenever it appears from the evidence in the case

Be that as it may, Dr. Frias could not be considered as Bladimirs

that the act or omission played a substantial part in bringing about or

attending physician, he having merely ordered Bladimirs transfer to the

actually causing the injury or damage, and that the injury or damage was

QCGH after seeing him at theCaybiga Hospital. He thereafter left Bladimir

either a direct result or a reasonably probable consequence of the act or

to the care of doctors at QCGH, returning to Capas, Tarlac at 4 oclock the

omission.

following morning or eight hours after seeing Bladimir.As he himself

[6]

testified upon cross-examination, he did not personally attend to Bladimir


Verily, the issue in this case is essentially factual in nature. The dissent,

anymore once the latter was brought to the ICU at QCGH. [9]

apart from adopting the appellate courts findings, finds that Bladimir
contracted chicken pox from a co-worker and Hao was negligent in not

It bears emphasis that a duly-registered death certificate is

bringing that co-worker to the nearest physician, or isolating him as

considered a public document and the entries therein are presumed

well. This finding is not, however, borne by the records. Nowhere in the

correct, unless the party who contests its accuracy can produce positive

appellate courts or even the trial courts decision is there any such definite

evidence establishing otherwise.[10] The QCGH death certificate was

finding that Bladimir contracted chicken pox from a co-worker. At best, the

received by the City Civil Registrar on April 17, 1995. Not only was the

only allusion to another employee being afflicted with chicken pox was

certificate shown by positive evidence to be inaccurate. Its credibility,

when Hao testified that he knew it to heal within three days as was the

more than that issued by Dr. Frias, becomes more pronounced as note is

case of another worker, without reference, however, as towhen it

taken of the fact that he was not around at the time of death.

happened.

[7]

IN FINE, petitioner company and its co-petitioner manager Dennis


On the issue of which of the two death certificates is more credible,

Hao are not guilty of negligence.

the dissent, noting that Dr. Frias attended to Bladimir during his last illness,
holds that the certificate which he issued citing chicken pox as
antecedent cause deserves more credence.

WHEREFORE, the petition is GRANTED. The challenged Decision


of

the

Court

of

hereby DISMISSED.
There appears, however, to be no conflict in the two death
certificates on the immediate cause of Bladimirs death since both cite
cardio-respiratory arrest due to complications from pneumonia per

Appeals

is REVERSED,

and

the

complaint

is

24

JEROMIE D. ESCASINAS and EVAN RIGOR


SINGCO,
Petitioners,

Agreement (MOA)[2] pursuant to Article 157 of the Labor Code, as

G.R. No. 178827

amended.

Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
NACHURA,*
BRION, and
PERALTA,** JJ.

- versus -

SHANGRI-LAS MACTAN ISLAND RESORT


and DR. JESSICA J.R. PEPITO,
Respondents.

Respondent doctor for her part claimed that petitioners were


already working for the previous retained physicians of Shangri-la before
she was retained by Shangri-la; and that she maintained petitioners
services upon their request.

Promulgated:
March 4, 2009

By Decision[3] of May 6, 2003, Labor Arbiter Ernesto F. Carreon declared


petitioners to be regular employees of Shangri-la. The Arbiter thus ordered

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

Shangri-la to grant them the wages and benefits due them as regular

DECISION

employees from the time their services were engaged.

CARPIO MORALES, J.:

In finding petitioners to be regular employees of Shangri-la, the

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco


(petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica
Joyce R. Pepito (respondent doctor) to work in her clinic at respondent
Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a
retained physician.

Arbiter noted that they usually perform work which is necessary and
desirable to Shangri-las business; that they observe clinic hours and render
services only to Shangri-las guests and employees; that payment for their
salaries were recommended to Shangri-las Human Resource Department
(HRD); that respondent doctor was Shangri-las in-house physician, hence,
also an employee; and that the MOA between Shangri-la and respondent

In late 2002, petitioners filed with the National Labor Relations


Commission (NLRC) Regional Arbitration Branch No. VII (NLRC-RAB No. VII)

doctor was an insidious mechanism in order to circumvent [the doctors]


tenurial security and that of the employees under her.

a complaint[1] for regularization, underpayment of wages, non-payment of


holiday pay, night shift differential and 13 th month pay differential against
respondents, claiming that they are regular employees of Shangri-la. The
case was docketed as RAB Case No. 07-11-2089-02.

Shangri-la and respondent doctor appealed to the NLRC. Petitioners


appealed too, but only with respect to the non-award to them of some of
the benefits they were claiming.
By Decision[4] dated March 31, 2005, the NLRC granted Shangri-las and

Shangri-la

claimed,

however,

that

petitioners

were

not

its

employees but of respondent doctor whom it retained via Memorandum of

respondent doctors appeal and dismissed petitioners complaint for lack of


merit, it finding that no employer-employee relationship exists between

25

petitioner and Shangri-la. In so deciding, the NLRC held that the Arbiter

employer-employee

relationship

erred in interpreting Article 157 in relation to Article 280 of the Labor Code,

petitioners. The

as what is required under Article 157 is that the employer should provide

employment of petitioners being under the supervision and control of

the services of medical personnel to its employees, but nowhere in said

respondent doctor and since Shangri-la is not principally engaged in the

article is a provision that nurses are required to be employed; that contrary

business of providing medical or healthcare services, petitioners could not

to the finding of the Arbiter, even if Article 280 states that if a worker

be regarded as regular employees of Shangri-la.

appellate

court

exists

between

concluded

that

all

Shangri-la

and

aspects

the

of

performs work usually necessary or desirable in the business of the


employer, he cannot be automatically deemed a regular employee; and
that the MOA amply shows that respondent doctor was in fact engaged by

Petitioners motion for reconsideration having been denied by


Resolution[6] of July 10, 2007, they interposed the present recourse.

Shangri-la on a retainer basis, under which she could hire her own nurses
and other clinic personnel.

Petitioners insist that under Article 157 of the Labor Code, Shangrila is required to hire a full-time registered nurse, apart from a physician,

Brushing aside petitioners contention that since their application

hence, their engagement should be deemed as regular employment, the

for employment was addressed to Shangri-la, it was really Shangri-la which

provisions of the MOA notwithstanding; and that the MOA is contrary to

hired them and not respondent doctor, the NLRC noted that the

public policy as it circumvents tenurial security and, therefore, should be

applications for employment were made by persons who are not parties to

struck down as being void ab initio. At most, they argue, the MOA is a mere

the case and were not shown to have been actually hired by Shangri-la.

job contract.

On the issue of payment of wages, the NLRC held that the fact

And petitioners maintain that respondent doctor is a labor-only

that, for some months, payment of petitioners wages were recommended

contractor for she has no license or business permit and no business name

by Shangri-las HRD did not prove that it was Shangri-la which pays their

registration, which is contrary to the requirements under Sec. 19 and 20 of

wages. It

the Implementing Rules and Regulations of the Labor Code on sub-

thus

credited

respondent

doctors

explanation

that

the

recommendations for payment were based on the billings she prepared for

contracting.

salaries of additional nurses during Shangri-las peak months of operation,


in accordance with the retainership agreement, the guests payments for
medical services having been paid directly to Shanrgi-la.

Petitioners add that respondent doctor cannot be a legitimate


independent contractor, lacking as she does in substantial capital, the
clinic having been set-up and already operational when she took over as

Petitioners thereupon brought the case to the Court of Appeals

retained physician; that respondent doctor has no control over how the

which, by Decision[5] of May 22, 2007, affirmed the NLRC Decision that no

clinic is being run, as shown by the different orders issued by officers of

26

Shangri-la forbidding her from receiving cash payments and several


purchase orders for medicines and supplies which were coursed thru

(a)

The services of a full-time


registered nurse when the
number of employees exceeds
fifty (50) but not more than
two hundred (200) except
when the employer does not
maintain
hazardous
workplaces, in which case the
services of a graduate first-aider
shall be provided for the protection
of the workers, where no registered
nurse is available. The Secretary of
Labor shall provide by appropriate
regulations the services that shall
be required where the number of
employees does not exceed fifty
(50) and shall determine by
appropriate
order
hazardous
workplaces for purposes of this
Article;

(b)

The
services
of
a fulltime registered nurse, a parttime physician and dentist, and
an emergency clinic, when the
number of employees exceeds
two hundred (200) but not
more than three hundred (300);
and

(c)

The services of a full-time


physician, dentist and full-time
registered nurse as well as a dental
clinic,
and
an
infirmary
or
emergency hospital with one bed
capacity for every one hundred
(100) employees when the number
of
employees
exceeds
three
hundred (300).

Shangri-las Purchasing Manager, circumstances indubitably showing that


she is not an independent contractor but a mere agent of Shangri-la.

In its Comment,[7] Shangri-la questions the Special Powers of


Attorneys (SPAs) appended to the petition for being inadequate. On the
merits, it prays for the disallowance of the petition, contending that it
raises factual issues, such as the validity of the MOA, which were never
raised during the proceedings before the Arbiter, albeit passed upon by
him in his Decision; that Article 157 of the Labor Code does not make it
mandatory for a covered establishment to employ health personnel; that
the services of nurses is not germane nor indispensable to its operations;
and that respondent doctor is a legitimate individual independent
contractor who has the power to hire, fire and supervise the work of the
nurses under her.

The resolution of the case hinges, in the main, on the correct


interpretation of Art. 157 vis a vis Art. 280 and the provisions on
permissible job contracting of the Labor Code, as amended.

The Court holds that, contrary to petitioners postulation, Art. 157


does not require the engagement of full-time nurses as regular
employees of a company employing not less than 50 workers. Thus,
the Article provides:

ART.
157. Emergency
medical
and
dental
services. It shall be the duty of every employer to
furnish his employees in any locality with free medical
and dental attendance and facilities consisting of:

In cases of hazardous workplaces, no employer


shall engage the services of a physician or dentist who
cannot stay in the premises of the establishment for at
least two (2) hours, in the case of those engaged on parttime basis, and not less than eight (8) hours in the case of
those
employed
on
full-time
basis. Where
the
undertaking is nonhazardous in nature, the

27

physician and dentist may be engaged on retained


basis, subject to such regulations as the Secretary
of Labor may prescribe to insure immediate
availability of medical and dental treatment and
attendance in case of emergency. (Emphasis and
underscoring supplied)

Under the foregoing provision, Shangri-la, which employs more


than 200 workers, is mandated to furnish its employees with the services
of

a full-time registered nurse, a part-time physician and dentist, and an

emergency

clinic

which

means

that it

should provide

or

make

shall render services for and in behalf of


another, no matter how necessary for the
latters business,even without being
hired as an employee. This set-up is
precisely true in the case of an
independent contractorship as well as in an
agency agreement. Indeed, Article 280
of the Labor Code, quoted by the
appellate court, is not the yardstick
for determining the existence of an
employment relationship. As it is, the
provision
merely
distinguishes
between
two
(2)
kinds
of
employees, i.e., regular and casual. x x
x[10] (Emphasis and underscoring supplied)

available such medical and allied services to its employees, not


necessarily to hire or employ a service provider. As held in Philippine

The phrase services of a full-time registered nurse should thus be taken to

Global Communications vs. De Vera:

refer to the kind of services that the nurse will render in the companys

[8]

x x x while it is true that the


provision
requires
employers
to
engage the services of medical
practitioners in certain establishments
depending on the number of their
employees, nothing is there in the law
which says that medical practitioners
so engaged be actually hired as
employees, adding that the law, as
written, only requires the employer to
retain, not employ, a part-time physician
who needed to stay in the premises of the
non-hazardous workplace for two (2) hours.
(Emphasis and underscoring supplied)

The term full-time in Art. 157 cannot be construed as referring to


the type of employment of the person engaged to provide the services, for
Article 157 must not be read alongside Art. 280[9] in order to vest employeremployee relationship on the employer and the person so engaged. So De

premises and to its employees, not the manner of his engagement.


As to whether respondent doctor can be considered a legitimate
independent contractor, the pertinent sections of DOLE Department Order
No. 10, series of 1997, illuminate:
Sec. 8. Job contracting. There is job contracting
permissible under the Code if the following conditions are
met:
(1) The contractor carries on an independent
business and undertakes the contract work on his own
account under his own responsibility according to his own
manner and method, free from the control and direction of
his employer or principal in all matters connected with the
performance of the work except as to the results thereof;
and
(2) The contractor has substantial capital or
investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in
the conduct of his business.

Vera teaches:
x x x For, we take it that any
agreement may provide that one party

Sec. 9. Labor-only contracting. (a) Any person who


undertakes to supply workers to an employer shall be

28

deemed to be engaged in labor-only contracting where


such person:
(1) Does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises and other materials; and
(2) The workers recruited and placed by such
persons are performing activities which are directly
related to the principal business or operations of the
employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is
hereby prohibited and the person acting as contractor shall
be considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly
employed by him.
(c) For cases not falling under this Article, the
Secretary of Labor shall determine through appropriate
orders whether or not the contracting out of labor is
permissible in the light of the circumstances of each case
and after considering the operating needs of the employer
and the rights of the workers involved. In such case, he
may prescribe conditions and restrictions to insure the
protection and welfare of the workers. (Emphasis supplied)

On

the

other

hand,

existence

employer- employee relationship is established by the presence


following

of an
of

the

determinants: (1) the selection and engagement of theworkers;

(2) power of dismissal; (3) the payment of wages by whatever means; and
(4) the power to control the worker's conduct, with the latter assuming
primacy in the overall consideration.[12]

Against the above-listed determinants, the Court holds that


respondent doctor is a legitimate independent contractor. That Shangri-la
provides the clinic premises and medical supplies for use of its employees
and guests does not necessarily prove that respondent doctor lacks
substantial capital and investment. Besides, the maintenance of a clinic
and provision of medical services to its employees is required under Art.
157,

which

are

not

directly

related

to

Shangri-las

principal

business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who


The existence of an independent and permissible contractor
relationship

is

generally

the staff[13]; group life, group personal accident insurance and life/death

determinants: whether the contractor is carrying on an independent

insurance[14] for the staff with minimum benefit payable at 12 times the

business; the nature and extent of the work; the skill required; the term

employees last drawn salary, as well as value added taxes and withholding

and duration of the relationship; the right to assign the performance of a

taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of

specified piece of work; the control and supervision of the work to another;

the service charges from Shangri-las guests who avail of the clinic

the employer's power with respect to the hiring, firing and payment of the

services. It is unlikely that respondent doctor would report petitioners as

contractor's workers; the control of the premises; the duty to supply the

workers, pay their SSS premium as well as their wages if they were not

premises, tools, appliances, materials and labor; and the mode, manner

indeed her employees.[15]

and terms of payment.

by

considering

the

underwrites the following: salaries, SSS contributions and other benefits of

following

[11]

established

29

With respect to the supervision and control of the nurses and clinic
staff, it is not disputed that a document, Clinic Policies and Employee
Manual[16] claimed to have been prepared by respondent doctor exists, to
which petitioners gave their conformity [17] and in which they acknowledged
their co-terminus employment status. It is thus presumed that said
document, and not the employee manual being followed by Shangri-las
regular workers, governs how they perform their respective tasks and
responsibilities.

Contrary to petitioners contention, the various office directives


issued

by

Shangri-las

officers

do

not

imply

that

it is

Shangri-las

management and not respondent doctor who exercises control over them
or that Shangri-la has control over how the doctor and the nurses perform
their work. The letter[18] addressed to respondent doctor dated February 7,
2003 from a certain Tata L. Reyes giving instructions regarding the
replenishment of emergency kits is, at most, administrative in nature,
related as it is to safety matters; while the letter [19] dated May 17, 2004
from Shangri-las Assistant Financial Controller, Lotlot Dagat, forbidding the
clinic from receiving cash payments from the resorts guests is a matter of
financial policy in order to ensure proper sharing of the proceeds,
considering that Shangri-la and respondent doctor share in the guests
payments for medical services rendered. In fine, as Shangri-la does not
control how the work should be performed by petitioners, it is not
petitioners employer.
WHEREFORE, the petition is hereby DENIED. The Decision of the
Court of Appeals dated May 22, 2007 and the Resolution dated July 10,
2007 are AFFIRMED.

SO ORDERED.

30

EMMANUEL BABAS, DANILO T. BANAG, ARTURO V.


VILLARIN, SR., EDWIN JAVIER, SANDI BERMEO,
REX ALLESA, MAXIMO SORIANO, JR., ARSENIO
ESTORQUE, and FELIXBERTO ANAJAO,
Petitioners,
- versus -

LORENZO SHIPPING CORPORATION,


Respondent.

G.R. No. 186091


Present:
CARPIO, J.
Chairperson,
NACHURA,
PERALTA,
DEL CASTILLO,* and
MENDOZA, JJ.
Promulgated:
December 15, 2010

(BMSI). Under the Agreement, BMSI undertook to provide maintenance and


repair services to LSCs container vans, heavy equipment, trailer chassis,
and generator sets. BMSI further undertook to provide checkers to inspect
all containers received for loading to and/or unloading from its vessels.

Simultaneous with the execution of the Agreement, LSC leased its


equipment, tools, and tractors to BMSI.[4] The period of lease was
coterminous with the Agreement.

BMSI then hired petitioners on various dates to work at LSC as checkers,


welders, utility men, clerks, forklift operators, motor pool and machine

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

shop workers, technicians, trailer drivers, and mechanics. Six years later,
or on May 1, 2003, LSC entered into another contract with BMSI, this time,

DECISION

a service contract.[5]

NACHURA, J.:
In September 2003, petitioners filed with the Labor Arbiter (LA) a
complaint for regularization against LSC and BMSI. On October 1, 2003,
Petitioners Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin

LSC terminated theAgreement, effective October 31, 2003. Consequently,

Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque,

petitioners lost their employment.

and Felixberto Anajao appeal by certiorari under Rule 45 of the Rules of

BMSI asserted that it is an independent contractor. It averred that

Court the October 10, 2008 Decision [1] of the Court of Appeals (CA) in CA-

it was willing to regularize petitioners; however, some of them lacked the

G.R. SP. No. 103804, and the January 21, 2009 Resolution, [2] denying its

requisite qualifications for the job. BMSI was willing to reassign petitioners

reconsideration.

who were willing to accept reassignment. BMSI denied petitioners claim for
underpayment of wages and non-payment of 13thmonth pay and other

Respondent Lorenzo Shipping Corporation (LSC) is a duly organized

benefits.

domestic corporation engaged in the shipping industry; it owns several


equipment necessary for its business. On September 29, 1997, LSC

LSC, on the other hand, averred that petitioners were employees of BMSI

entered into a General Equipment Maintenance Repair and Management

and were assigned to LSC by virtue of the Agreement. BMSI is an

Services Agreement[3] (Agreement) with Best Manpower Services, Inc.

independent job contractor with substantial capital or investment in the

31

form of tools, equipment, and machinery necessary in the conduct of its


business. The Agreement between LSC and BMSI constituted legitimate job
contracting. Thus, petitioners were employees of BMSI and not of LSC.

After due proceedings, the LA rendered a decision [6] dismissing petitioners


complaint. The LA found that petitioners were employees of BMSI. It was
BMSI which hired petitioners, paid their wages, and exercised control over
them.

Petitioners appealed to the National Labor Relations Commission (NLRC),


arguing that BMSI was engaged in labor-only contracting. They insisted
that their employer was LSC.

On January 16, 2008, the NLRC promulgated its decision. [7] Reversing the
LA, the NLRC held:
We find from the records of this case that respondent BMSI
is not engaged in legitimate job contracting.
First, respondent BMSI has no equipment, no office
premises, no capital and no investments as shown in the
Agreement itself which states:
xxxx
VI. RENTAL OF EQUIPMENT
[6.01.] That the CLIENT has several forklifts
and truck tractor, and has
offered to the CONTRACTOR
the use of the same by way
of lease, the monthly rental
of which shall be deducted
from the total monthly
billings of the CONTRACTOR
for the services covered by
this Agreement.

6.02. That the CONTRACTOR has agreed to


rent the CLIENTs forklifts and
truck tractor.
6.03. The parties herein have agreed
to execute a Contract of
Lease for the forklifts and
truck tractor that will be
rented
by
the
CONTRACTOR. (p.
389,
Records)
True enough, parties signed a Lease Contract (p.
392, Records) wherein respondent BMSI leased several
excess equipment of LSC to enable it to discharge its
obligation under the Agreement. So without the equipment
which respondent BMSI leased from respondent LSC, the
former would not be able to perform its commitments in
the Agreement.
In Phil. Fuji Xerox Corp. v. NLRC (254 SCRA 294) the
Supreme Court held:
x x x. The phrase substantial capital and
investment in the form of tools, equipment,
machineries, work premises, and other
materials which are necessary in the
conduct
of
his
business,
in
the
Implementing Rules clearly contemplates
tools, equipment, etc., which are directly
related to the service it is being contracted
to render. One who does not have an
independent business for undertaking the
job contracted for is just an agent of the
employer. (underscoring ours)
Second, respondent BMSI has no independent business or
activity or job to perform in respondent LSC free from the
control of respondent LSC except as to the results
thereof. In view of the absence of such independent
business or activity or job to be performed by respondent
BMSI in respondent LSC [petitioners] performed work that
was necessary and desirable to the main business of
respondent LSC. Respondents were not able to refute the
allegations of [petitioners] that they performed the same
work that the regular workers of LSC performed and they
stood side by side with regular employees of respondent
LSC performing the same work. Necessarily, the control on
the manner and method of doing the work was exercised
by respondent LSC and not by respondent BMSI since the

32

latter had no business of its own to perform in respondent


LSC.
Lastly, respondent BMSI has no other client but respondent
LSC. If respondent BMSI were a going concern, it would
have other clients to which to assign [petitioners] after its
Agreement with LSC expired. Since there is only one client,
respondent LSC, it is easy to conclude that respondent
BMSI is a mere supplier of labor.
After concluding that respondent BMSI is engaged in
prohibited labor-only contracting, respondent LSC became
the employer of [petitioners] pursuant to DO 18-02.
[Petitioners] therefore should be reinstated to their former
positions or equivalent positions in respondent LSC as
regular employees with full backwages and other benefits
without loss of seniority rights from October 31, 2003,
when they lost their jobs, until actual reinstatement
(Vinoya v. NLRC, 324 SCRA 469). If reinstatement is not
feasible, [petitioners] then should be paid separation pay
of one month pay for every year of service or a fraction of
six months to be considered as one year, in addition to full
backwages.
Concerning [petitioners] prayer to be paid wage
differentials and benefits under the CBA, We have no doubt
that [petitioners] would be entitled to them if they are
covered by the said CBA. For this purpose, [petitioners]
should first enlist themselves as union members if they so
desire, or pay agency fee. Furthermore, only [petitioners]
who signed the appeal memorandum are covered by this
Decision. As regards the other complainants who did not
sign the appeal, the Decision of the Labor Arbiter
dismissing this case became final and executory. [8]

3.
4.
5.
6.
7.
8.
9.

Edwin L. Javier
Rex Allesa
Arturo Villarin, [Sr.]
Felixberto C. Anajao
Arsenio Estorque
Maximo N. Soriano, Jr.
Sandi G. Bermeo

Consequently, respondent Lorenzo Shipping Corp. is


ordered to reinstate [petitioners] to their former positions
as regular employees and pay their wage differentials and
benefits under the CBA.
If reinstatement is not feasible, both respondents Lorenzo
Shipping Corp. and Best Manpower Services are adjudged
jointly and solidarily to pay [petitioners] separation pay of
one month for every year of service, a fraction of six
months to be considered as one year.
In addition, respondent LSC and BMSI are solidarily liable to
pay [petitioners] full backwages from October 31, 2003
until actual reinstatement or, if reinstatement is not
feasible, until finality of this Decision.
Respondent LSC and respondent BMSI are likewise
adjudged to be solidarily liable for attorneys fees
equivalent to ten (10%) of the total monetary award.
xxxx
SO ORDERED.[9]

LSC went to the CA via certiorari. On October 10, 2008, the CA rendered
the now challenged Decision,[10] reversing the NLRC. In holding that BMSI
was an independentcontractor, the CA relied on the provisions of

The NLRC disposed thus:

the Agreement, wherein BMSI warranted that it is an independent

WHEREFORE, the appeal of [petitioners] is GRANTED. The


Decision of the Labor Arbiter is hereby REVERSED, and a
NEW ONE rendered finding respondent Best Manpower
Services, Inc. is engaged in prohibited labor-onlycontracting and finding respondent Lorenzo Shipping Corp.
as the employer of the following [petitioners]:
1.
2.

Emmanuel B. Babas
Danilo Banag

contractor, with adequate capital, expertise, knowledge, equipment, and


personnel necessary for the services rendered to LSC. According to the CA,
the fact that BMSI entered into a contract of lease with LSC did not ipso
facto make BMSI a labor-only contractor; on the contrary, it proved that
BMSI had substantial capital. The CA was of the view that the law only
required substantial capital or investment. Since BMSI had substantial

33

capital, as shown by its ability to pay rents to LSC, then it qualified as an

In Toyota Motor Phils. Corp. Workers Association (TMPCWA), et al.

independent contractor. It added that even under the control test, BMSI

v. National Labor Relations Commission,[16] citing Loquias v. Office of the

would be the real employer of petitioners, since it had assumed the entire

Ombudsman,[17] we

charge and control of petitioners services. The CA further held that BMSIs

requirements only with regard to the petitioner who signed the petition,

Certificate of Registration as an independent contractor was sufficient

but not his co-petitioner who did not sign nor authorize the other petitioner

proof that it was an independent contractor. Hence, the CA absolved LSC

to sign it on his behalf. Thus, the petition can be given due course only as

from liability and instead held BMSI as employer of petitioners.

to the parties who signed it. The other petitioners who did not sign the

stated

that

the

petition

satisfies

the

formal

verification and certificate against forum shopping cannot be recognized as


The fallo of the CA Decision reads:

petitioners and have no legal standing before the Court. The petition
should

WHEREFORE, premises considered, the instant petition


is GRANTED and the assailed decision and resolution of
public
respondent
NLRC
are REVERSED and SET
ASIDE.Consequently, the decision of the Labor Arbiter
dated September 29, 2004 is REINSTATED.
SO ORDERED.[11]

dismissed

outright

with

respect

to

the

non-conforming

petitioners.

Thus, we dismiss the petition insofar as petitioners Soriano and


Anajao are concerned.

Petitioners vigorously insist that they were employees of LSC; and

Petitioners filed a motion for reconsideration, but the CA denied it


on January 21, 2009.[12]

be

that

BMSI

is

not

an

independent

contractor,

but

labor-only

contractor. LSC, on the other hand, maintains that BMSI is an independent


Hence, this appeal by petitioners, positing that:

contractor, with adequate capital and investment. LSC capitalizes on the


ratiocination made by the CA.

THE HONORABLE COURT OF APPEALS ERRED IN IGNORING


THE CLEAR EVIDENCE OF RECORD THAT RESPONDENT WAS
ENGAGED IN LABOR-ONLY CONTRACTING TO DEFEAT
PETITIONERS RIGHT TO SECURITY OF TENURE. [13]

In declaring BMSI as an independent contractor, the CA, in the


challenged Decision, heavily relied on the provisions of the Agreement,
wherein BMSI declared that it was an independent contractor, with

Before resolving the petition, we note that only seven (7) of the

substantial capital and investment.

nine petitioners signed the Verification and Certification.[14] Petitioners


Maximo Soriano, Jr. (Soriano) and Felixberto Anajao (Anajao) did not sign

De Los Santos v. NLRC[18] instructed us that the character of the

the Verification and Certification, because they could no longer be located

business, i.e., whether as labor-only contractor or as job contractor, should

by their co-petitioners.

be measured in terms of, and determined by, the criteria set by statute.

[15]

34

The parties cannot dictate by the mere expedience of a unilateral


declaration in a contract the character of their business.

On the other hand, permissible job contracting or subcontracting


refers to an arrangement whereby a principal agrees to put out or farm out
with the contractor or subcontractor the performance or completion of a

In San

Miguel

Semillano, Nelson

specific job, work, or service within a definite or predetermined period,

Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and

regardless of whether such job, work, or service is to be performed or

Merlyn N. Policarpio,

completed within or outside the premises of the principal. [21]

[19]

Corporation

v.

Vicente

B.

this Court explained:

Despite the fact that the service contracts contain


stipulations
which
are
earmarks
of
independent
contractorship, they do not make it legally so. The
language of a contract is neither determinative nor
conclusive of the relationship between the parties.
Petitioner SMC and AMPCO cannot dictate, by a declaration
in a contract, the character of AMPCO's business, that is,
whether as labor-only contractor, or job contractor.
AMPCO's character should be measured in terms of, and
determined by, the criteria set by statute.

A person is considered engaged in legitimate job contracting or


subcontracting if the following conditions concur:

(a) The contractor carries on a distinct and independent business


and undertakes the contract work on his account under his own
responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected

Thus, in distinguishing between prohibited labor-only contracting and

with the performance of his work except as to the results thereof;

permissible job contracting, the totality of the facts and the surrounding
(b) The contractor has substantial capital or investment; and

circumstances of the case are to be considered.

Labor-only contracting, a prohibited act, is an arrangement where

(c) The agreement between the principal and the contractor or

the contractor or subcontractor merely recruits, supplies, or places workers

subcontractor assures the contractual employees' entitlement to all

to perform a job, work, or service for a principal. In labor-only contracting,

labor and occupational safety and health standards, free exercise of the

the following elements are present: (a) the contractor or subcontractor

right to self-organization, security of tenure, and social welfare benefits. [22]

does not have substantial capital or investment to actually perform the job,
work, or service under its own account and responsibility; and (b) the
employees

recruited,

supplied,

or

placed

by

such

contractor

or

subcontractor perform activities which are directly related to the main


business of the principal.[20]

Given the above standards, we sustain the petitioners contention


that BMSI is engaged in labor-only contracting.
First, petitioners worked at LSCs premises, and nowhere else.
Other than the provisions of the Agreement, there was no showing that it
was BMSI which established petitioners working procedure and methods,
which supervised petitioners in their work, or which evaluated the same.

35

There was absolute lack of evidence that BMSI exercised control over them

Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada,

or their work, except for the fact that petitioners were hired by BMSI.

Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio, [24] we held


that a Certificate of Registration issued by the Department of Labor and

Second, LSC was unable to present proof that BMSI had substantial

Employment is not conclusive evidence of such status. The fact of

capital. The record before us is bereft of any proof pertaining to the

registration simply prevents the legal presumption of being a mere labor-

contractors capitalization, nor to its investment in tools, equipment, or

only contractor from arising.[25]

implements actually used in the performance or completion of the job,


work, or service that it was contracted to render. What is clear was that the
equipment used by BMSI were owned by, and merely rented from, LSC.

Indubitably,

BMSI

can

only

be

classified

as

labor-only

contractor. The CA, therefore, erred when it ruled otherwise. Consequently,


the workers that BMSI supplied to LSC became regular employees of the

In Mandaue Galleon Trade, Inc. v. Andales,[23] we held:

latter.[26] Having gained regular status, petitioners were entitled to security


of tenure and could only be dismissed for just or authorized causes and

The law casts the burden on the contractor to


prove that it has substantial capital, investment,
tools, etc. Employees, on the other hand, need not prove
that the contractor does not have substantial capital,
investment, and tools to engage in job-contracting.

after they had been accorded due process.

Petitioners
its Agreement with

lost

their

employment

BMSI. However,

when

the

LSC

terminated

termination

of

Third, petitioners performed activities which were directly related to the

LSCs Agreement with BMSI cannot be considered a just or an authorized

main business of LSC. The work of petitioners as checkers, welders, utility

cause for petitioners dismissal. In Almeda v. Asahi Glass Philippines. Inc. v.

men, drivers, and mechanics could only be characterized as part of, or at

Asahi Glass Philippines, Inc.,[27] this Court declared:

least clearly related to, and in the pursuit of, LSCs business. Logically,
when petitioners were assigned by BMSI to LSC, BMSI acted merely as a
labor-only contractor.

Lastly, as found by the NLRC, BMSI had no other client except for
LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the
NLRC finding that BMSI is a labor-only contractor.

The CA erred in considering BMSIs Certificate of Registration as


sufficient proof that it is an independent contractor. In San Miguel

The sole reason given for the dismissal of


petitioners by SSASI was the termination of its service
contract with respondent. But since SSASI was a labor-only
contractor, and petitioners were to be deemed the
employees of respondent, then the said reason would not
constitute a just or authorized cause for petitioners
dismissal. It would then appear that petitioners were
summarily dismissed based on the aforecited reason,
without compliance with the procedural due process for
notice and hearing.
Herein petitioners, having been unjustly dismissed
from work, are entitled to reinstatement without loss of
seniority rights and other privileges and to full back wages,

36

inclusive of allowances, and to other benefits or their


monetary
equivalents
computed
from
the
time
compensation was withheld up to the time of actual
reinstatement. Their earnings elsewhere during the periods
of their illegal dismissal shall not be deducted therefrom.

Accordingly, we hold that the NLRC committed no grave abuse of


discretion in its decision. Conversely, the CA committed a reversible error
when it set aside the NLRC ruling.

WHEREFORE, the petition is GRANTED. The Decision and the


Resolution

of

the

Court

of

Appeals

in

CA-G.R.

SP.

No.

103804

are REVERSED and SET ASIDE.Petitioners Emmanuel Babas, Danilo T.


Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, and
Arsenio Estorque are declared regular employees of Lorenzo Shipping
Corporation. Further, LSC is ordered to reinstate the seven petitioners to
their former position without loss of seniority rights and other privileges,
and to pay full backwages, inclusive of allowances, and other benefits or
their monetary equivalent, computed from the time compensation was
withheld up to the time of actual reinstatement.

No pronouncement as to costs.
SO ORDERED.

37

G.R. No. 199166

April 20, 2015

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN


AND
MA.
CRISTINA
SUMAYAO,Petitioners,
vs.
ABS-CBN CORPORATION (FORMERLY, ABS-CBN BROADCASTING
CORPORATION) AND AMALIA VILLAFUERTE, Respondents.
DECISION
PEREZ, J.:
The existence of an employer-employee relationship is at the heart of this
Petition for Review on Certiorari filed pursuant to Rule 45 of the Rules of
Court, primarily assailing the 29 June 2011 Decision 1 rendered by the
Fourth Division of the Court of Appeals (CA) in CA-G.R. SP No. 116928
which ruled out said relationship between the parties.
The Facts
Respondent ABS-CBN Corporation (formerly ABS-CBN Broadcasting
Corporation) is a television and radio broadcasting corporation which, for
its Regional Network Group in Naga City, employed respondent Amalia
Villafuerte (Villafuerte) as Manager. There is no dispute regarding the fact
that, thru Villafuerte, ABS-CBN engaged the services of petitioners Nelson
Begino (Begino) and Gener Del Valle (Del Valle) sometime in 1996 as
Cameramen/Editors for TV Broadcasting. Petitioners Ma. Cristina Sumayao
(Sumayao) and Monina Avila-Llorin (Llorin) were likewise similarly engaged
as reporters sometime in 1996 and 2002, respectively. With their services
engaged by respondents thru Talent Contracts which, though regularly
renewed over the years, provided terms ranging from three (3) months to
one (1) year, petitioners were given Project Assignment Forms which
detailed, among other matters, the duration of a particular project as well
as the budget and the daily technical requirements thereof. In the
aforesaid capacities, petitioners were tasked with coverage of news items
for subsequent daily airings in respondents TV Patrol Bicol Program. 2
While specifically providing that nothing therein shall be deemed or
construed to establish an employer-employee relationship between the
parties, the aforesaid Talent Contracts included, among other matters,
provisions on the following matters: (a) the Talents creation and
performance of work in accordance with the ABS-CBNs professional

standards and compliance with its policies and guidelines covering


intellectual property creators, industry codes as well as the rules and
regulations of the Kapisanan ng mga Broadcasters sa Pilipinas (KBP) and
other regulatory agencies; (b) the Talents non-engagement in similar work
for a person or entity directly or indirectly in competition with or adverse to
the interests of ABS-CBN and non-promotion of any product or service
without prior written consent; and (c) the results-oriented nature of the
talents work which did not require them to observe normal or fixed
working hours.3 Subjected to contractors tax, petitioners remunerations
were denominated as Talent Fees which, as of last renewal, were admitted
to be pegged per airing day at P273.35 for Begino, P 302.92 for Del Valle, P
323.08 for Sumayao and P 315.39 for Llorin.4
Claiming that they were regular employees of ABS-CBN, petitioners filed
against respondents the complaint5docketed as Sub-RAB 05-04- 00041-07
before the National Labor Relations Commissions (NLRC) Sub-Regional
Arbitration Branch No. 5, Naga City. In support of their claims for
regularization, underpayment of overtime pay, holiday pay, 13th month
pay, service incentive leave pay, damages and attorney's fees, petitioners
alleged that they performed functions necessary and desirable in ABSCBN's business. Mandated to wear company IDs and provided all the
equipment they needed, petitioners averred that they worked under the
direct control and supervision of Villafuerte and, at the end of each day,
were informed about the news to be covered the following day, the routes
they were to take and, whenever the subject of their news coverage is
quite distant, even the start of their workday. Due to the importance of the
news items they covered and the necessity of their completion for the
success of the program, petitioners claimed that, under pain of immediate
termination, they were bound by the companys policy on, among others,
attendance and punctuality.6
Aside from the constant evaluation of their actions, petitioners were
reportedly subjected to an annual competency assessment alongside other
ABS-CBN employees, as condition for their continued employment.
Although their work involved dealing with emergency situations at any
time of the day or night, petitioners claimed that they were not paid the
labor standard benefits the law extends to regular employees. To avoid
paying what is due them, however, respondents purportedly resorted to
the simple expedient of using said Talent Contracts and/or Project
Assignment Forms which denominated petitioners as talents, despite the
fact that they are not actors or TV hosts of special skills. As a result of this
iniquitous situation, petitioners asseverated that they merely earned an
average of P7,000.00 to P8,000.00 per month, or decidedly lower than

38

the P21,773.00 monthly salary ABS-CBN paid its regular rank-and-file


employees. Considering their repeated re-hiring by respondents for
ostensible fixed periods, this situation had gone on for years since TV
Patrol Bicol has continuously aired from 1996 onwards.7
In refutation of the foregoing assertions, on the other hand, respondents
argued that, although it occasionally engages in production and generates
programs thru various means, ABS-CBN is primarily engaged in the
business of broadcasting television and radio content. Not having the full
manpower complement to produce its own program, the company had
allegedly resorted to engaging independent contractors like actors,
directors, artists, anchormen, reporters, scriptwriters and various
production and technical staff, who offered their services in relation to a
particular program. Known in the industry as talents, such independent
contractors inform ABSCBN of their availability and were required to
accomplish Talent Information Forms to facilitate their engagement for and
appearance on designated project days. Given the unpredictability of
viewer preferences, respondents argued that the company cannot afford to
provide regular work for talents with whom it negotiates specific or
determinable professional fees on a per project, weekly or daily basis,
usually depending on the budget allocation for a project. 8
Respondents insisted that, pursuant to their Talent Contracts and/or Project
Assignment Forms, petitioners were hired as talents, to act as reporters
and/or cameramen for TV Patrol Bicol for designated periods and rates.
Fully aware that they were not considered or to consider themselves as
employees of a particular production or film outfit, petitioners were
supposedly engaged on the basis of the skills, knowledge or expertise they
already possessed and, for said reason, required no further training from
ABS-CBN. Although petitioners were inevitably subjected to some degree of
control, the same was allegedly limited to the imposition of general
guidelines on conduct and performance, simply for the purpose of
upholding the standards of the company and the strictures of the industry.
Never subjected to any control or restrictions over the means and methods
by which they performed or discharged the tasks for which their services
were engaged, petitioners were, at most, briefed whenever necessary
regarding the general requirements of the project to be executed. 9
Having been terminated during the pendency of the case, Petitioners filed
on 10 July 2007 a second complaint against respondents, for regularization,
payment of labor standard benefits, illegal dismissal and unfair labor
practice, which was docketed as Sub-RAB 05-08-00107-07. Upon
respondents motion, this complaint was dismissed for violation of the rules

against forum shopping in view of the fact that the determination of the
issues in the second case hinged on the resolution of those raised in the
first.10 On 19 December 2007, however, Labor Arbiter Jesus Orlando
Quiones (Labor Arbiter Quiones) resolved Sub-RAB 05-04-00041-07 in
favor of petitioners who, having rendered services necessary and related to
ABS-CBNs business for more than a year, were determined to be its
regular employees. With said conclusion found to be buttressed by, among
others, the exclusivity clause and prohibitions under petitioners Talent
Contracts and/or Project Assignment Forms which evinced respondents
control over them,11 Labor Arbiter Quiones disposed of the case in the
following wise:
WHEREFORE, finding merit in the causes of action set forth by the
complainants, judgment is hereby rendered declaring complainants
MONINA AVILA-LLORIN, GENER L. DEL VALLE, NELSON V. BEGINO and MA.
CRISTINA V. SUMAYAO, as regular employees of respondent company, ABSCBN BROADCASTING CORPORATION.
Accordingly, respondent ABS-CBN Broadcasting Corporation is hereby
ORDERED to pay complainants, subject to the prescriptive period provided
under Article 291 of the Labor Code, however applicable, the total amount
of Php2,440,908.36, representing salaries/wage differentials, holiday pay,
service incentive leave pay and 13th month pay, to include 10% of the
judgment award as attorneys fees of the judgment award (computation of
the monetary awards are attached hereto as integral part of this decision).
Moreover, respondents are directed to admit back complainants to work
under the same terms and conditions prevailing prior to their separation
or, at respondents' option, merely reinstated in the payroll.
Other than the above, all other claims and charges are ordered DISMISSED
for lack of merit.12
Aggrieved by the foregoing decision, respondents elevated the case on
appeal before the NLRC, during the pendency of which petitioners filed a
third complaint against the former, for illegal dismissal, regularization,
nonpayment of salaries and 13th month pay, unfair labor practice,
damages and attorneys fees. In turn docketed as NLRC Case No. Sub-RABV-05-03-00039-08, the complaint was raffled to Labor Arbiter Quiones
who issued an Order dated 30 April 2008, inhibiting himself from the case
and denying respondents motion to dismiss on the grounds of res judicata
and forum shopping.13 Finding that respondents control over petitioners
was indeed manifest from the exclusivity clause and prohibitions in the

39

Talent Contracts and/or Project Assignment Forms, on the other hand, the
NLRC rendered a Decision dated 31 March 2010, affirming said Labor
Arbiters appealed decision.14 Undeterred by the NLRCs 31 August 2010
denial of their motion for reconsideration,15 respondents filed the Rule 65
petition for certiorari docketed before the CA as CA-G.R. SP No. 116928
which, in addition to taking exceptions to the findings of the assailed
decision, faulted petitioners for violating the rule against forum shopping. 16
On 29 June 2011, the CA rendered the herein assailed decision, reversing
the findings of the Labor Arbiter and the NLRC. Ruling out the existence of
forum shopping on the ground that petitioners' second and third
complaints were primarily anchored on their termination from employment
after the filing of their first complaint, the CA nevertheless discounted the
existence of an employer-employee relation between the parties upon the
following findings and conclusions: (a) petitioners, were engaged by
respondents as talents for periods, work and the program specified in the
Talent Contracts and/or Project Assignment Forms concluded between
them; (b) instead of fixed salaries, petitioners were paid talent fees
depending on the budget allocated for the program to which they were
assigned; (c) being mainly concerned with the result, respondents did not
exercise control over the manner and method by which petitioner
accomplished their work and, at most, ensured that they complied with the
standards of the company, the KBP and the industry; and, (d) the existence
of an employer-employee relationship is not necessarily established by the
exclusivity clause and prohibitions which are but terms and conditions on
which the parties are allowed to freely stipulate. 17
Petitioners motion for reconsideration of the foregoing decision was
denied in the CA's 3 October 2011 Resolution, 18 hence, this petition.
The Issues
Petitioners seek the reversal of the CAs assailed Decision and Resolution
on the affirmative of the following issues:

1. Whether or not the CA seriously and reversibly erred in not dismissing


respondents petition for certiorari in view of the fact that they did file a
Notice of Appeal at the NLRC level and did not, by themselves or through
their duly authorized representative, verify and certify the Memorandum of
Appeal they filed thereat, in accordance with the NLRC Rules of Procedure;
and 2. Whether or not the CA seriously and reversibly erred in brushing
aside the determination made by both the Labor Arbiter and the NLRC of
the existence of an employer-employee relationship between the parties,
despite established jurisprudence supporting the same.
The Court's Ruling
The Court finds the petition impressed with merit.
Petitioners preliminarily fault the CA for not dismissing respondents Rule
65 petition for certiorari in view of the fact that the latter failed to file a
Notice of Appeal from the Labor Arbiters decision and to verify and certify
the Memorandum of Appeal they filed before the NLRC. While concededly
required under the NLRC Rules of Procedure, however, these matters
should have been properly raised during and addressed at the appellate
stage before the NLRC. Instead, the record shows that the NLRC took
cognizance of respondents appeal and proceeded to resolve the same in
favor of petitioners by affirming the Labor Arbiters decision. Not having
filed their own petition for certiorari to take exception to the liberal attitude
the NLRC appears to have adopted towards its own rules of procedure,
petitioners were hardly in the proper position to raise the same before the
CA or, for that matter, before this Court at this late stage. Aside from the
settled rule that a party who has not appealed is not entitled to affirmative
relief other than the ones granted in the decision 19 rendered, liberal
interpretation of procedural rules on appeal had, on occasion, been favored
in the interest of substantive justice.20
Although the existence of an employer-employee relationship is, on the
other hand, a question of fact 21 which is ordinarily not the proper subject of
a Rule 45 petition for review on certiorari like the one at bar, the conflicting
findings between the labor tribunals and the CA justify a further
consideration of the matter.22 To determine the existence of said relation,
case law has consistently applied the four-fold test, to wit: (a) the selection
and engagement of the employee; (b) the payment of wages;(c) the power
of dismissal; and (d) the employer's power to control the employee on the
means and methods by which the work is accomplished. 23 Of these criteria,
the so-called "control test" is generally regarded as the most crucial and
determinative indicator of the presence or absence of an employer-

40

employee relationship. Under this test, an employer-employee relationship


is said to exist where the person for whom the services are performed
reserves the right to control not only the end result but also the manner
and means utilized to achieve the same.24
In discounting the existence of said relationship between the parties, the
CA ruled that Petitioners' services were, first and foremost, engaged thru
their Talent Contracts and/or Project Assignment Forms which specified the
work to be performed by them, the project to which they were assigned,
the duration thereof and their rates of pay according to the budget therefor
allocated. Because they are imbued with public interest, it cannot be
gainsaid, however, that labor contracts are subject to the police power of
the state and are placed on a higher plane than ordinary contracts. The
recognized supremacy of the law over the nomenclature of the contract
and the stipulations contained therein is aimed at bringing life to the policy
enshrined in the Constitution to afford protection to labor. 25 Insofar as the
nature of ones employment is concerned, Article 280 of the Labor Code of
the Philippines also provides as follows:
ART. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such actually
exists.
It has been ruled that the foregoing provision contemplates four kinds of
employees, namely: (a) regular employees or those who have been
engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer; (b) project employees or those
whose employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of

the engagement of the employee; (c) seasonal employees or those who


work or perform services which are seasonal in nature, and the
employment is for the duration of the season; and (d) casual employees or
those who are not regular, project, or seasonal employees. 26 To the
foregoing classification of employee, jurisprudence has added that of
contractual or fixed term employee which, if not for the fixed term, would
fall under the category of regular employment in view of the nature of the
employees engagement, which is to perform activity usually necessary or
desirable in the employers business.27
The Court finds that, notwithstanding the nomenclature of their Talent
Contracts and/or Project Assignment Forms and the terms and condition
embodied therein, petitioners are regular employees of ABS-CBN. Time and
again, it has been ruled that the test to determine whether employment is
regular or not is the reasonable connection between the activity performed
by the employee in relation to the business or trade of the employer. 28As
cameramen/editors and reporters, petitioners were undoubtedly
performing functions necessary and essential to ABS-CBNs business of
broadcasting television and radio content. It matters little that petitioners
services were engaged for specified periods for TV Patrol Bicol and that
they were paid according to the budget allocated therefor. Aside from the
fact that said program is a regular weekday fare of the ABS-CBNs Regional
Network Group in Naga City, the record shows that, from their initial
engagement in the aforesaid capacities, petitioners were continuously rehired by respondents over the years. To the mind of the Court,
respondents repeated hiring of petitioners for its long-running news
program positively indicates that the latter were ABS-CBNs regular
employees.
If the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems
the repeated or continuing performance as sufficient evidence of the
necessity, if not indispensability of that activity in the business. 29 Indeed,
an employment stops being co-terminous with specific projects where the
employee is continuously re-hired due to the demands of the employers
business.30 When circumstances show, moreover, that contractually
stipulated periods of employment have been imposed to preclude the
acquisition of tenurial security by the employee, this Court has not
hesitated in striking down such arrangements as contrary to public policy,
morals, good customs or public order. 31 The nature of the employment
depends, after all, on the nature of the activities to be performed by the
employee, considering the nature of the employers business, the duration
and scope to be done, and, in some cases, even the length of time of the

41

performance and its continued existence. 32 In the same manner that the
practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law,
it has, consequently, been ruled that the assertion that a talent contract
exists does not necessarily prevent a regular employment status. 33
As cameramen/editors and reporters, it also appears that petitioners were
subject to the control and supervision of respondents which, first and
foremost, provided them with the equipments essential for the discharge of
their functions. Prepared at the instance of respondents, petitioners Talent
Contracts tellingly provided that ABS-CBN retained "all creative,
administrative, financial and legal control" of the program to which they
were assigned. Aside from having the right to require petitioners "to attend
and participate in all promotional or merchandising campaigns, activities or
events for the Program," ABS-CBN required the former to perform their
functions "at such locations and Performance/Exhibition Schedules" it
provided or, subject to prior notice, as it chose determine, modify or
change. Even if they were unable to comply with said schedule, petitioners
were required to give advance notice, subject to respondents
approval.34 However obliquely worded, the Court finds the foregoing terms
and conditions demonstrative of the control respondents exercised not only
over the results of petitioners work but also the means employed to
achieve the same.
In finding that petitioners were regular employees, the NLRC further ruled
that the exclusivity clause and prohibitions in their Talent Contracts and/or
Project Assignment Forms were likewise indicative of respondents control
over them. Brushing aside said finding, however, the CA applied the ruling
in Sonza v. ABS-CBN Broadcasting Corporation 35 where similar restrictions
were considered not necessarily determinative of the existence of an
employer-employee relationship. Recognizing that independent contractors
can validly provide his exclusive services to the hiring party, said case
enunciated that guidelines for the achievement of mutually desired results
are not tantamount to control. As correctly pointed out by petitioners,
however, parallels cannot be expediently drawn between this case and
that of Sonza case which involved a well-known television and radio
personality who was legitimately considered a talent and amply
compensated as such. While possessed of skills for which they were
modestly recompensed by respondents, petitioners lay no claim to fame
and/or unique talents for which talents like actors and personalities are
hired and generally compensated in the broadcast industry.

Later echoed in Dumpit-Murillo v. Court of Appeals, 36 this Court has


rejected the application of the ruling in the Sonza case to employees
similarly situated as petitioners in ABS-CBN Broadcasting Corporation v.
Nazareno.37The following distinctions were significantly observed between
employees like petitioners and television or radio personalities like Sonza,
to wit:
First. In the selection and engagement of respondents, no peculiar or
unique skill, talent or celebrity status was required from them because
they were merely hired through petitioners personnel department just like
any ordinary employee.
Second. The so-called "talent fees" of respondents correspond to wages
given
as
a
result
of
an
employer-employee
relationship.1wphi1 Respondents did not have the power to bargain for
huge talent fees, a circumstance negating independent contractual
relationship.
Third. Petitioner could always discharge respondents should it find their
work unsatisfactory, and respondents are highly dependent on the
petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that
respondents are independent contractors.
The presumption is that when the work done is an integral part of the
regular business of the employer and when the worker, relative to the
employer, does not furnish an independent business or professional
service, such work is a regular employment of such employee and not an
independent contractor. The Court will peruse beyond any such agreement
to
examine
the
facts
that
typify
the
parties
actual
relationship.38 (Emphasis omitted)
Rather than the project and/or independent contractors respondents claim
them to be, it is evident from the foregoing disquisition that petitioners are
regular employees of ABS-CBN. This conclusion is borne out by the
ineluctable showing that petitioners perform functions necessary and
essential to the business of ABS-CBN which repeatedly employed them for
a long-running news program of its Regional Network Group in Naga City. In
the course of said employment, petitioners were provided the equipments
they needed, were required to comply with the Company's policies which

42

entailed prior approval and evaluation of their performance. Viewed from


the prism of these considerations, we find and so hold that the CA
reversibly erred when it overturned the NLRC's affirmance of the Labor
Arbiter's finding that an employer-employee relationship existed between
the parties. Given the fact, however, that Sub-RAB-V-05-03-00039-08 had
not been consolidated with this case and appears, for all intents and
purposes, to be pending still, the Court finds that the reinstatement of
petitioners ordered by said labor officer and tribunal should, as a relief
provided in case of illegal dismissal, be left for determination in said case.
WHEREFORE, the Court of Appeals' assailed Decision dated 29 June 2011
and Resolution dated 3 October 2011 in CA-G.R. SP No. 116928 are
REVERSED and SET ASIDE. Except for the reinstatement of Nelson V.
Begino, Gener Del Valle, Monina Avila-Llorin and Ma. Cristina Sumayao, the
National Labor and Relations Commission's 31 March 2010 Decision is,
accordingly, REINSTATED.
SO ORDERED.

43

SAN MIGUEL CORPORATION,


Petitioner,

G.R. No. 164257


Present:

- versus -

VICENTE B. SEMILLANO, NELSON


MONDEJAR,
JOVITO
REMADA,
ALILGILAN
MULTI-PURPOSE
COOP
(AMPCO) AND MERLYN V. POLIDARIO,
Respondents.

CARPIO, J., Chairperson,


NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:
July 5, 2010

x ------------------------------------------------------------------------------------------------x
DECISION
MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of


Court assailing (i) the February 19, 2004 Decision [1] of the Court of Appeals
in CA-G.R. SP. No. 75209 which reversed and set aside the February 28,
2002 and September 27, 2002 Resolutions of the National Labor Relations
Commission in NLRC Case No. V-000588-98; and (ii) its May 28, 2004
Resolution[2] denying petitioners motion for the reconsideration thereof.

The facts of the case, as found by the Court of Appeals, [3] are as follows:

xxx It appears that AMPCO hired the services of


Vicente et al. [Vicente Semillano, Nelson Mondejar, Jovito
Remada and Alex Hawod,[4] respondents herein] on different
dates in December [of 1991 and] 1994. All of them were
assigned to work in SMCs Bottling Plant situated at Brgy.
Granada Sta. Fe, Bacolod City, in order to perform the
following tasks: segregating bottles, removing dirt
therefrom, filing them in designated places, loading and
unloading the bottles to and from the delivery trucks, and
performing other tasks as may be ordered by SMCs
officers. [They] were required to work inside the premises of
SMC using [SMCs] equipment. [They] rendered service with
SMC for more than 6 months.
Subsequently, SMC entered into a Contract of
Services[5] with AMPCO designating the latter as the
employer of Vicente, et al. As a result, Vicente et al. failed
to claim the rights and benefits ordinarily accorded a
regular employee of SMC. In fact, they were not paid their
13th month pay. On June 6, 1995, they were not allowed to
enter the premises of SMC. The project manager of AMPCO,
Merlyn Polidario, told them to wait for further instructions
from the SMCs supervisor. Vicente et al. waited for one
month, unfortunately, they never heard a word from SMC.
Consequently, Vicente et al., as complainants, filed
on July 17, 1995 a COMPLAINT FOR ILLEGAL DISMISSAL with
the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC
and Rufino I. Yatar [SMC Plant Manager], as respondents.
xxx Complainants alleged that they were fillers of SMC
Bottling Plant xxx assigned to perform activities necessary
and desirable in the usual business of SMC. xxx They claim
that they were under the control and supervision of SMC
personnel and have worked for more than 6 months in the
company. As such, they assert that they are regular
employees of SMC.
However, SMC utilized AMPCO making it appear that the
latter was their employer, so that SMC may evade the
responsibility of paying the benefits due them under the
law. Finally, complainants contend that AMPCO and SMC
failed to give their 13th month pay and that they were
prevented from entering the SMCs premises. Hence,

44

complainants contend that they were illegally dismissed


from service.
On the other hand, respondent SMC raised the
defense
that
it
is
not
the
employer
of
the
complainants. According to SMC, AMPCO is their employer
because the latter is an independent contractor xxx. Also
SMC alleged that it was AMPCO that directly paid their
salaries and remitted their contributions to the SSS. Finally,
SMC assails the jurisdiction of the Labor Arbiter contending
that the instant dispute is intra-cooperative in nature falling
within the jurisdiction of the Arbitration Committee of the
Cooperative Development Authority.

On April 30, 1998, the Labor Arbiter (LA) rendered his decision.
[6]

The dispositive portion of which reads:


Wherefore, premises considered, judgment is
hereby rendered declaring herein complainants as regular
employees of San Miguel Corporation and the latter is
ordered:
1.

2.

To reinstate complainants to their


previous
or
equivalent
positions
without loss of seniority rights with
payment of full backwages from the
time of their illegal dismissal up to the
time of their actual reinstatement; and
To
pay
complainants
counsel
attorneys fees 10% of the total award
or P36,625.76.

Per
our
computation
complainants
Vicente
Semillano, Nelson Mondejar and Jovito Remada are entitled
to the amount of P122,085.88 each as full backwages
covering the period June 6, 1995 up to April 30, 1998.

Accordingly, respondents filed a motion for partial execution of the


decision of the Labor Arbiter praying for their immediate reinstatement.
[8]

Petitioner San Miguel Corporation (SMC) filed its Opposition to the

motion.[9] The LA, however, rendered no ruling thereon.[10]

Petitioner appealed the LA Decision to the NLRC. Initially, the NLRC


Fourth Division affirmed with modifications the findings of the LA as follows:
WHEREFORE, premises considered, the appeals of
respondents AMPCO and SMC are denied for lack of merit
and the decision appealed from is affirmed with a
modification in the following:
a.

Respondent SMC to pay complainants


their backwages from June 6, 1995 up
to and until July 22, 1998;

b.

Respondent SMC to pay complainants


their accrued salaries and allowances
from July 23, 1998 up to the present;
and

c.

Respondent SMC to pay complainants


ten percent (10%) of the total award as
attorneys fees.

Complainants, to restate, are regular employees of


San Miguel Corporation and the latter is ordered to
reinstate complainants to their former position as
pilers/segregators.

Petitioner SMC moved for a reconsideration of the foregoing


decision. In a Resolution dated February 28, 2002, the NLRC acted on the

SO ORDERED.[7]
motion and reversed its earlier ruling. It absolved petitioner from liability
and instead held AMPCO, as employer of respondents, liable to pay for

45

respondents backwages, accrued salaries, allowances, and attorneys

AMPCO was a labor-only contractor since a capital of nearly one million

fees. In holding that AMPCO was an independent contractor, NLRC was of

pesos was insufficient for it to qualify as an independent contractor. Thus,

the view that the law only required substantial capital or investment. Since

the decretal portion reads:

AMPCO had substantial capital of nearly one (1) million then it qualified as
an independent contractor. The NLRC added that even under the control
test, AMPCO would be the real employer of the respondents, since it had
assumed the entire charge and control of respondents services. Hence, an
employer-employee

relationship

existed

between

AMPCO

and

the

respondents.

WHEREFORE, premises considered, the instant


petition is GRANTED. The assailed Resolutions dated
February 28, 2002 and September 27, 2002 both issued by
the public respondent National Labor Relations Commission
in the case docketed as RAB CASE NO. 06-07-10298-95 are
hereby SET ASIDE and a new one entered reinstating its
original Decision dated June 30, 2000, which affirmed with
modification the decision of the Labor Arbiter dated April
30, 1998. No pronouncement as to costs.
SO ORDERED.

Respondents timely filed their motion for reconsideration of the


NLRC resolution but it was denied.[11]

Feeling

aggrieved

over

the

SMC filed a motion for reconsideration but it was denied by the CA


in its May 28, 2004 Resolution.[12]

turnaround

by

the

NLRC,

the

Hence, this petition for review on certiorari.

respondents filed a petition for review on certiorari under Rule 65 with the
Court of Appeals (CA), which favorably acted on it.

Petitioner SMC argues that the CA wrongly assumed that it


exercised power of control over the respondents just because they

In overturning the commissions ruling, the Court of Appeals


ironically applied the same control test that the NLRC used to resolve the
issue of who the actual employer was. The CA, however, found that
petitioner SMC wielded (i) the power of control over respondent, as SMC
personnel supervised respondents performance of loading and unloading of
beer bottles, and (ii) the power of dismissal, as respondents were refused
entry by SMC to its premises and were instructed by the AMPCO manager
to wait for further instructions from the SMCs supervisor. The CA added that

performed their work within SMCs premises. In advocacy of its claim that
AMPCO is an independent contractor, petitioner relies on the provisions of
the service contract between petitioner and AMPCO, wherein the latter
undertook to provide the materials, tools and equipment to accomplish the
services contracted out by petitioner. The same contract provides that
AMPCO shall have exclusive discretion in the selection, engagement and
discharge of its employees/personnel or otherwise in the direction and

46

control thereof. Petitioner also adds that AMPCO determines the wages of

finality, when supported by ample evidence [14] and affirmed by the CA. The

its employees/personnel who shall be within its full control.

fact that the NLRC, in its subsequent resolution, reversed its original
decision does not render the foregoing inapplicable where the resolution
itself is not supported by substantial evidence.

Petitioner further argues that respondents action is essentially


one for regularization (as employees of SMC) which is nowhere

Department

of

Labor

and

Employment

(DOLE)

Department

recognized or allowed by law. Lastly, petitioner contends that the case

Order No. 10, Series of 1997, defines job contracting and labor-only

involves an intra-cooperative dispute, which is within the original and

contracting as follows:

exclusive jurisdiction of the Arbitration Committee of the Cooperative


and, thereafter, the Cooperative Development Authority.

In its Comment,[13] respondent AMPCO essentially advanced the


same arguments in support of its claim as a legitimate job contractor.

The only issue that needs to be resolved is whether or not


AMPCO is a legitimate job contractor. A claim that an action for
regularization has no legal basis and is violative of petitioners

Sec. 8. Job contracting. There is job contracting permissible


under the Code if the following conditions are met:
(1) The contractor carries on an independent
business and undertakes the contract
work on his own account under his own
responsibility according to his own
manner and method, free from the
control
and direction of his employer or principa
l in all
matters
connected
with
the
performance of the work except as to
the results thereof; and

constitutional and statutory rights is, therefore, dependent upon the


resolution of the issue posed above.

The petition fails.


Generally, the findings of fact made by the Labor Arbiter and the
NLRC, as the specialized agencies presumed to have the expertise on
matters within their respective fields, are accorded much respect and even

(2) The contractor has substantial capital or


investment in the form of tools,
equipment,
machineries,
work
premises, and other materials which are
necessary in the conduct of his
business.
Sec. 9. Labor-only contracting. (a) Any person who
undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where such
person:

47

(1) Does not have substantial capital or


investment in the form of tools,
equipment,
machineries,
work
premises and other materials; and
(2) The workers recruited and placed by
such persons are performing activities
which are directly related to the
principal business or operations of the
employer in which workers are
habitually employed.
(b) Labor-only contracting as defined herein is hereby
prohibited and the person acting as contractor shall be
considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly
employed by him.

(c) For cases not falling under this Article, the Secretary of
Labor shall determine through appropriate orders whether
or not the contracting out of labor is permissible in the light
of the circumstances of each case and after considering the
operating needs of the employer and the rights of the
workers involved. In such case, he may prescribe conditions
and restrictions to insure the protection and welfare of the
workers.

The "right to control" shall refer to the right reserved


to the person for whom the services of the contractual
workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in
reaching that end.

The test to determine the existence of independent contractorship


is whether or not the one claiming to be an independent contractor has
contracted to do the work according to his own methods and without being
subject to the control of the employer, except only as to the results of the
work.[15]

The existence of an independent and permissible contractor


relationship is generally established by the following criteria: whether or
not the contractor is carrying on an independent business; the nature and
extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of a specified piece of
work; the control and supervision of the work to another; the employer's

Section 5 of Department Order No. 18-02 (Series of 2002) of the


Rules Implementing Articles 106 to 109 of the Labor Code further provides

power with respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply the premises,
tools, appliances, materials, and labor; and the mode, manner and terms

that:
Substantial capital or investment refers to capital
stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries
and work premises, actually and directly used by the
contractor or subcontractor in the performance or
completion of the job work or service contracted
out. (emphasis supplied)

of payment.[16]

Although there may be indications of an independent contractor


arrangement between petitioner and AMPCO, the most determinant of
factors exists which indicate otherwise.

48

neither petitioner nor AMPCO has shown that the latter had clients other
Petitioners averment that AMPCO had total assets amounting
to P932,599.22 and income of P2,777,603.46 in 1994 was squarely
debunked by the LA. Thus:
Furthermore, there are no pieces of evidence that
AMPCO has substantial capital or investment. An
examination its Statement of Income and Changes in
Undivided Savings show that its income for the year 1994
was P2,777,603.46 while its operating expenses for said
year is P2,718,315.33 or a net income of P59,288.13 for the
year 1994; that its cash on hand for 1994 is P22,154.80.

In fact, the NLRC in its original decision likewise stated as follows:


In contrast, the (sic) AMPCOs main business activity
is trading, maintaining a store catering to members and the
public. Its job contracting with SMC is only a minor activity
or sideline. The component of AMPCOs substantial capital
are [sic]in fact invested and used in the trading business.
This is palpably shown in the sizable amount of its accounts
receivables amounting to more than P.6M out of its
members capital of only P.47M in 1994.

than petitioner. Therefore, AMPCO has no independent business.


In connection therewith, DOLE Department Order No. 10 also states
that an independent contractor carries on an independent business and
undertakes the contract work on his own account, under his own
responsibility, according to his own manner and method, and free from the
control and direction of his employer or principal in all matters connected
with the performance of the work except as to the results thereof. This
embodies what has long been jurisprudentially recognized as the control
test[18] to determine the existence of employer-employee relationship.

In the case at bench, petitioner faults the CA for holding that the
respondents were under the control of petitioner whenever they performed
the task of loading in the delivery trucks and unloading from them. It,
however, fails to show how AMPCO took entire charge, control and
supervision of the work and service agreed upon. AMPCOs Comment on the
Petition is likewise utterly silent on this point. Notably, both petitioner and
AMPCO chose to ignore the uniform finding of the LA, NLRC (in its original
decision) and the CA that one of the assigned jobs of respondents was to
perform other acts as may be ordered by SMCs officers. Significantly,

Neither

did

petitioner

prove

that

AMPCO

had

substantial

equipment, tools, machineries, and supplies actually and directly used by it

AMPCO, opted not to challenge the original decision of the NLRC that found
it a mere labor-only contractor.

in the performance or completion of the segregation and piling job. In fact,


as correctly pointed out by the NLRC in its original decision, there is nothing
in AMPCOs list[17] of fixed assets, machineries, tools, and equipment which it

Moreover, the Court is not convinced that AMPCO wielded exclusive

could have used, actually and directly, in the performance or completion of

discretion in the discharge[19] of respondents. As the CA correctly pointed

its contracted job, work or service with petitioner. For said reason, there can
be no other logical conclusion but that the tools and equipment utilized by
respondents are owned by petitioner SMC. It is likewise noteworthy that

out, Merlyn Polidario, AMPCOs project manager, even told respondents to


wait for further instructions from the SMCs supervisor after they were

49

prevented from entering petitioner SMCs premises. Based on the foregoing,

Petitioner also argues that among the permissible contracting

no other logical conclusion can be reached than that it was petitioner, not

arrangements include work or services not directly related or not integral to

AMPCO, who wielded power of control.

the main business or operation of the principal including work related to


manufacturing processes of manufacturing establishments. [24] The Court is

Despite the fact that the service contracts [20] contain stipulations

not persuaded. The evidence is clear that respondents performed activities

which are earmarks of independent contractorship, they do not make it

which were directly related to petitioners main line of business. Petitioner is

legally so. The language of a contract is neither determinative nor

primarily engaged in manufacturing and marketing of beer products, and

conclusive of the relationship between the parties. Petitioner SMC and

respondents work of segregating and cleaning bottles is unarguably an

AMPCO cannot dictate, by a declaration in a contract, the character of

important part of its manufacturing and marketing process.

AMPCOs business, that is, whether as labor-only contractor, or job


contractor. AMPCOs character should be measured in terms of, and

Lastly, petitioner claims that the present case is outside the jurisdiction of

determined by, the criteria set by statute.[21] At a closer look, AMPCOs

the labor tribunals because respondent Vicente Semillano is a member of

actual status and participation regarding respondents employment clearly

AMPCO, not SMC. Precisely, he has joined the others in filing this complaint

belie the contents of the written service contract.

because it is his position that petitioner SMC is his true employer and liable
for all his claims under the Labor Code.

Petitioner cannot rely either on AMPCOs Certificate of Registration


as an Independent Contractor issued by the proper Regional Office of the

Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO,


the labor-only contractor, for all the rightful claims of respondents. Under

DOLE to prove its claim. It is not conclusive evidence of such status. The

this set-up, AMPCO, as the "labor-only" contractor, is deemed an agent of

fact of registration simply prevents the legal presumption of being a mere

the principal (SMC). The law makes the principal responsible over the

labor-only contractor from arising.

employees of the "labor-only" contractor as if the principal itself directly

[22]

In distinguishing between permissible

job contracting and prohibited labor-only contracting, the totality of the

hired the employees.[25]

facts and the surrounding circumstances of the case are to be considered.


[23]

WHEREFORE, the petition is DENIED. The February 19, 2004


Decision of the Court of Appeals, reversing the decision of the National
Labor Relations Commission and reinstating the decision of the Labor
Arbiter, is AFFIRMED.

50

SO ORDERED.

51

JOSE MEL BERNARTE, G.R. No. 192084


Petitioner,
Present:

- versus - CARPIO, J., Chairperson,


BRION,
DEL
CASTILLO,*
PEREZ, and
SERENO, JJ.
PHILIPPINE BASKETBALL
ASSOCIATION (PBA), JOSE
EMMANUEL M. EALA, and Promulgated:
PERRY MARTINEZ,
Respondents. September 14, 2011
x-----------------------------------------------------------------------------------------x
DECISION
CARPIO, J.:
The Case
This is a petition for review 1 of the 17 December 2009 Decision 2 and 5 April
2010 Resolution3 of the Court of Appeals in CA-G.R. SP No. 105406. The
Court of Appeals set aside the decision of the National Labor Relations
Commission (NLRC), which affirmed the decision of the Labor Arbiter, and
held that petitioner Jose Mel Bernarte is an independent contractor, and
not an employee of respondents Philippine Basketball Association (PBA),
Jose Emmanuel M. Eala, and Perry Martinez. The Court of Appeals denied
the motion for reconsideration.
The Facts
The facts, as summarized by the NLRC and quoted by the Court of
Appeals, are as follows:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they
were invited to join the PBA as referees. During the leadership of
Commissioner Emilio Bernardino, they were made to sign contracts on a
year-to-year basis. During the term of Commissioner Eala, however,
changes were made on the terms of their employment.

Complainant Bernarte, for instance, was not made


contract during the first conference of the All-Filipino
was from February 23, 2003 to June 2003. It was only
second conference when he was made to sign a one
month contract for the period July 1 to August 5, 2003.

to sign a
Cup which
during the
and a half

On January 15, 2004, Bernarte received a letter from the Office of


the Commissioner advising him that his contract would not be
renewed citing his unsatisfactory performance on and off the court.
It was a total shock for Bernarte who was awarded Referee of the
year in 2003. He felt that the dismissal was caused by his refusal
to fix a game upon order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was
invited to join the PBA pool of referees in February 2001. On March
1, 2001, he signed a contract as trainee. Beginning 2002, he
signed a yearly contract as Regular Class C referee. On May 6,
2003,
respondent
Martinez
issued
a
memorandum
to Guevarra expressing dissatisfaction over his questioning on the
assignment of referees officiating out-of-town games. Beginning
February 2004, he was no longer made to sign a contract.
Respondents aver, on the other hand, that complainants entered
into two contracts of retainer with the PBA in the year 2003. The
first contract was for the period January 1, 2003 to July 15, 2003;
and the second was for September 1 to December 2003. After the
lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not


employees of the PBA. Their respective contracts of retainer were
simply not renewed. PBA had the prerogative of whether or not to
renew their contracts, which they knew were fixed.4
In her 31 March 2005 Decision,5 the Labor Arbiter6 declared petitioner an
employee whose dismissal by respondents was illegal. Accordingly, the
Labor Arbiter ordered the reinstatement of petitioner and the payment
of backwages, moral and exemplary damages and attorneys fees, to wit:
WHEREFORE, premises considered all respondents who are here
found to have illegally dismissed complainants are hereby ordered

52

to (a) reinstate complainants within thirty (30) days from the date
of receipt of this decision and to solidarily pay complainants:

1. backwages from January 1,


2004 up to the finality of this
Decision, which to date is
2. moral damages

SO ORDERED.10

JOSE
MELRENATO GUEVARRA
The Court of Appeals Ruling
BERNARTE
P536,250.00
100,000.00
50,000.00

P211,250.00
The Court of Appeals found petitioner an independent contractor since
respondents did not exercise any form of control over the means and
100,000.00
methods by which petitioner performed his work as a basketball referee.
50,000.00 The Court of Appeals held:

3. exemplary damages
4. 10% attorneys fees

68,625.00

36,125.00

TOTAL

P754,875.00

P397,375.00

or a total of P1,152,250.00

The rest of the claims are hereby dismissed for lack of merit or basis.

While the NLRC agreed that the PBA has no control over the
referees acts of blowing the whistle and making calls during
basketball games, it, nevertheless, theorized that the said acts
refer to the means and methods employed by the referees in
officiating basketball games for the illogical reason that said acts
refer only to the referees skills. How could a skilled referee perform
his job without blowing a whistle and making calls? Worse, how can
the PBA control the performance of work of a referee without
controlling his acts of blowing the whistle and making calls?

SO ORDERED.7
In its 28 January 2008 Decision,8 the NLRC affirmed the Labor Arbiters
judgment. The dispositive portion of the NLRCs decision reads:
WHEREFORE, the appeal is hereby DISMISSED. The Decision of
Labor Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is
AFFIRMED.

Moreover, this Court disagrees with the Labor Arbiters finding (as
affirmed by the NLRC) that the Contracts of Retainer show that
petitioners have control over private respondents.
xxxx

SO ORDERED.9
Respondents filed a petition for certiorari with the Court of Appeals, which
overturned the decisions of the NLRC and Labor Arbiter. The dispositive
portion of the Court of Appeals decision reads:

Neither do We agree with the NLRCs affirmance of the Labor


Arbiters conclusion that private respondents repeated hiring made
them regular employees by operation of law.11

The Issues
WHEREFORE,
the
petition
is
hereby GRANTED.
The
assailed Decision dated January 28, 2008 and Resolution dated
August 26, 2008 of the National Labor Relations Commission
areANNULLED and SET ASIDE. Private respondents complaint
before the Labor Arbiter is DISMISSED.

The main issue in this case is whether petitioner is an employee of


respondents, which in turn determines whether petitioner was illegally
dismissed.

53

Petitioner raises the procedural issue of whether the Labor Arbiters


decision has become final and executory for failure of respondents to
appeal with the NLRC within the reglementaryperiod.

expiration of ten (10) days after mailing, unless the court otherwise
provides. Service by registered mail is complete upon actual
receipt by the addressee, or after five (5) days from the date he
received the first notice of the postmaster, whichever date is
earlier.

The Ruling of the Court


The petition is bereft of merit.
The Court shall first resolve the procedural issue posed by petitioner.
Petitioner contends that the Labor Arbiters Decision of 31 March 2005
became final and executory for failure of respondents to appeal with the
NLRC within the prescribed period. Petitioner claims that the Labor Arbiters
decision was constructively served on respondents as early as August 2005
while respondents appealed the Arbiters decision only on 31 March 2006,
way beyond the reglementary period to appeal. Petitioner points out that
service of an unclaimed registered mail is deemed complete five days from
the date of first notice of the post master. In this case three notices were
issued by the post office, the last being on 1 August 2005. The unclaimed
registered mail was consequently returned to sender. Petitioner presents
the Postmasters Certification to prove constructive service of the Labor
Arbiters decision on respondents. The Postmaster certified:
xxx
That upon receipt of said registered mail matter, our registry in
charge, Vicente Asis, Jr., immediately issued the first registry notice
to claim on July 12, 2005 by the addressee. The second and third
notices were issued on July 21 and August 1, 2005, respectively.
That the subject registered letter was returned to the sender (RTS)
because the addressee failed to claim it after our one month
retention period elapsed. Said registered letter was dispatched
from this office to Manila CPO (RTS) under bill #6, line 7, page1,
column 1, on September 8, 2005.12
Section 10, Rule 13 of the Rules of Court provides:

SEC. 10. Completeness of service. Personal service is complete


upon actual delivery. Service by ordinary mail is complete upon the

The rule on service by registered mail contemplates two situations: (1)


actual service the completeness of which is determined upon receipt by
the addressee of the registered mail; and (2) constructive service the
completeness of which is determined upon expiration of five days from the
date the addressee received the first notice of the postmaster. 13
Insofar as constructive service is concerned, there must be conclusive
proof that a first notice was duly sent by the postmaster to the
addressee.14 Not only is it required that notice of the registered mail be
issued but that it should also be delivered to and received by the
addressee.15 Notably, the presumption that official duty has been regularly
performed is not applicable in this situation. It is incumbent upon a party
who relies on constructive service to prove that the notice was sent to, and
received by, the addressee.16
The best evidence to prove that notice was sent would be a certification
from the postmaster, who should certify not only that the notice was issued
or sent but also as to how, when and to whom the delivery and receipt was
made. The mailman may also testify that the notice was actually
delivered.17
In this case, petitioner failed to present any concrete proof as to how, when
and to whom the delivery and receipt of the three notices issued by the
post office was made. There is no conclusive evidence showing that the
post office notices were actually received by respondents, negating
petitioners claim of constructive service of the Labor Arbiters decision on
respondents. The Postmasters Certification does not sufficiently prove that
the three notices were delivered to and received by respondents; it only
indicates that the post office issued the three notices. Simply put, the
issuance of the notices by the post office is not equivalent to delivery to
and receipt by the addressee of the registered mail. Thus, there is no proof
of completed constructive service of the Labor Arbiters decision on
respondents.
At any rate, the NLRC declared the issue on the finality of the Labor
Arbiters decision moot as respondents appeal was considered in the
interest of substantial justice. We agree with the NLRC. The ends of justice
will be better served if we resolve the instant case on the merits rather

54

than allowing the substantial issue of whether petitioner is an independent


contractor or an employee linger and remain unsettled due to procedural
technicalities.
The existence of an employer-employee relationship is ultimately a
question of fact. As a general rule, factual issues are beyond the province
of this Court. However, this rule admits of exceptions, one of which is
where there are conflicting findings of fact between the Court of Appeals,
on one hand, and the NLRC and Labor Arbiter, on the other, such as in the
present case.18
To determine the existence of an employer-employee relationship, case law
has consistently applied the four-fold test, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employee on the
means and methods by which the work is accomplished. The socalledcontrol test is the most important indicator of the presence or
absence of an employer-employee relationship.19
In this case, PBA admits repeatedly engaging petitioners services, as
shown in the retainer contracts. PBA pays petitioner a retainer fee,
exclusive of per diem or allowances, as stipulated in the retainer contract.
PBA can terminate the retainer contract for petitioners violation of its
terms and conditions.
However, respondents argue that the all-important element of control is
lacking in this case, making petitioner an independent contractor and not
an employee of respondents.
Petitioner contends otherwise. Petitioner asserts that he is an employee of
respondents since the latter exercise control over the performance of his
work. Petitioner cites the following stipulations in the retainer contract
which evidence control: (1) respondents classify or rate a referee; (2)
respondents require referees to attend all basketball games organized or
authorized by the PBA, at least one hour before the start of the first game
of each day; (3) respondents assign petitioner to officiate ballgames, or to
act as alternate referee or substitute; (4) referee agrees to observe and
comply with all the requirements of the PBA governing the conduct of the
referees whether on or off the court; (5) referee agrees (a) to keep himself
in good physical, mental, and emotional condition during the life of the
contract; (b) to give always his best effort and service, and loyalty to the
PBA, and not to officiate as referee in any basketball game outside of the
PBA, without written prior consent of the Commissioner; (c) always to
conduct himself on and off the court according to the highest standards of

honesty or morality; and (6) imposition of various sanctions for violation of


the terms and conditions of the contract.
The foregoing stipulations hardly demonstrate control over the means and
methods by which petitioner performs his work as a referee officiating a
PBA basketball game. The contractual stipulations do not pertain to, much
less dictate, how and when petitioner will blow the whistle and make calls.
On the contrary, they merely serve as rules of conduct or guidelines in
order to maintain the integrity of the professional basketball league. As
correctly observed by the Court of Appeals, how could a skilled referee
perform his job without blowing a whistle and making calls?
x x x [H]ow can the PBA control the performance of work of a referee
without controlling his acts of blowing the whistle and making calls? 20
In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the
relationship between a television and radio station and one of its talents,
the Court held that not all rules imposed by the hiring party on the hired
party indicate that the latter is an employee of the former. The Court held:
We find that these general rules are merely guidelines towards the
achievement of the mutually desired result, which are top-rating
television and radio programs that comply with standards of the
industry. We have ruled that:
Further, not every form of control that a party reserves to himself
over the conduct of the other party in relation to the services being
rendered may be accorded the effect of establishing an employeremployee relationship. The facts of this case fall squarely with the
case of Insular Life Assurance Co., Ltd. v. NLRC. In said case, we
held that:
Logically, the line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address
both the result and the means used to achieve it.22
We agree with respondents that once in the playing court, the referees
exercise their own independent judgment, based on the rules of the game,
as to when and how a call or decision is to be made. The referees decide
whether an infraction was committed, and the PBA cannot overrule them
once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of

55

the PBA officers cannot and do not determine which calls to make or not to
make and cannot control the referee when he blows the whistle because
such authority exclusively belongs to the referees. The very nature of
petitioners job of officiating a professional basketball game undoubtedly
calls for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an
independent contractor: (1) the referees are required to report for work
only when PBA games are scheduled, which is three times a week spread
over an average of only 105 playing days a year, and they officiate games
at an average of two hours per game; and (2) the only deductions from the
fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work
eight hours per day for five days a week, petitioner is required to report for
work only when PBA games are scheduled or three times a week at two
hours per game. In addition, there are no deductions for contributions to
the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees salaries. These undisputed circumstances
buttress the fact that petitioner is an independent contractor, and not an
employee of respondents.
Furthermore, the applicable foreign case law declares that a referee is an
independent contractor, whose special skills and independent judgment
are required specifically for such position and cannot possibly be controlled
by the hiring party.
In Yonan v. United States Soccer Federation, Inc.,23 the United States
District Court of Illinois held that plaintiff, a soccer referee, is an
independent contractor, and not an employee of defendant which is the
statutory body that governs soccer in the United States. As such, plaintiff
was not entitled to protection by the Age Discrimination in Employment
Act. The U.S. District Court ruled:
Generally, if an employer has the right to control and direct the
work of an individual, not only as to the result to be achieved, but
also as to details by which the result is achieved, an
employer/employee relationship is likely to exist. The Court must
be careful to distinguish between control[ling] the conduct of
another party contracting party by setting out in detail his
obligations consistent with the freedom of contract, on the one
hand, and the discretionary control an employer daily exercises
over its employees conduct on the other.

Yonan asserts that the Federation closely supervised his


performance at each soccer game he officiated by giving him an
assessor, discussing his performance, and controlling what clothes
he wore while on the field and traveling. Putting aside that the
Federation did not, for the most part, control what clothes he wore,
the Federation did not supervise Yonan, but rather evaluated his
performance
after
matches. That
the
Federation
evaluated Yonan as a referee does not mean that he was an
employee. There is no question that parties retaining independent
contractors may judge the performance of those contractors to
determine if the contractual relationship should continue. x x x
It is undisputed that the Federation did not control the
way Yonan refereed his games. He had full discretion and authority,
under the Laws of the Game, to call the game as he saw fit. x x x In
a similar vein, subjecting Yonan to qualification standards and
procedures like the Federations registration and training
requirements does not create an employer/employee relationship.
xxx
A position that requires special skills and independent judgment
weights in favor of independent contractor status. x x x Unskilled
work, on the other hand, suggests an employment relationship.
x x xHere, it is undisputed that soccer refereeing, especially at the
professional and international level, requires a great deal of skill
and natural ability. Yonan asserts that it was the Federations
training that made him a top referee, and that suggests he was an
employee. Though substantial training supports an employment
inference, that inference is dulled significantly or negated when the
putative employers activity is the result of a statutory requirement,
not the employers choice. x x x

In McInturff v. Battle Ground Academy of Franklin,24 it was held


that the umpire was not an agent of the Tennessee Secondary
School Athletic Association (TSSAA), so the players vicarious
liability claim against the association should be dismissed. In
finding that the umpire is an independent contractor, the Court of
Appeals of Tennesse ruled:

The TSSAA deals with umpires to achieve a result-uniform rules for


all baseball games played between TSSAA member schools. The
TSSAA does not supervise regular season games. It does not tell an

56

official how to conduct the game beyond the framework


established by the rules. The TSSAA does not, in the vernacular of
the case law, control the means and method by which the umpires
work.
In addition, the fact that PBA repeatedly hired petitioner does not by itself
prove that petitioner is an employee of the former. For a hired party to be
considered an employee, the hiring party must have control over the
means and methods by which the hired party is to perform his work, which
is absent in this case. The continuous rehiring by PBA of petitioner simply
signifies the renewal of the contract between PBA and petitioner, and
highlights the satisfactory services rendered by petitioner warranting such
contract renewal. Conversely, if PBA decides to discontinue petitioners
services at the end of the term fixed in the contract, whether for
unsatisfactory services, or violation of the terms and conditions of the
contract, or for whatever other reason, the same merely results in the nonrenewal of the contract, as in the present case. The non-renewal of the
contract between the parties does not constitute illegal dismissal of
petitioner by respondents.
WHEREFORE, we DENY the petition and AFFIRM the assailed decision of
the Court of Appeals.
SO ORDERED.

57

G.R. No. 205300, March 18, 2015


FONTERRA BRANDS PHILS., INC., Petitioner, v. LEONARDO1 LARGADO
AND TEOTIMO ESTRELLADO, Respondents.
DECISION
VELASCO JR., J.:

were not illegally dismissed. As a matter of fact, they were the ones who
refused to renew their contract and that they voluntarily complied with the
requirements for them to claim their corresponding monetary benefits in
relation thereto; and (2) they were consecutively employed by Zytron and
A.C. Sicat, not by Fonterra. The dispositive portion of the Decision 2 reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
DISMISSING
the
instant
case
for
utter
lack
of
merit.
SO ORDERED.

The Case

This is a Petition for Review on Certiorari under Rule 45 of the Rules of


Court seeking the reversal and setting aside of the Decision of the Court of
Appeals (CA) dated September 6, 2012, as well as its January 11, 2013
Resolution denying reconsideration thereof, in CA-G.R. SP No. 114227,
entitledLeonardo Largado and Teotimo P. Estrellado v. National Labor
Relations Commission (NLRC), Fonterra Brands Phils., Inc./Carlo Mendoza,
Zytron Marketing & Promotions Corp./Francisco Valencia, A.C. Sicat
Marketing & Promotional Services/Arturo Sicat.
The Facts

The NLRC affirmed the Labor Arbiter, finding that respondents separation
from Zytron was brought about by the execution of the contract between
Fonterra and A.C. Sicat where the parties agreed to absorb Zytrons
personnel, including respondents. Too, respondents failed to present any
evidence that they protested this set-up. Furthermore, respondents failed
to refute the allegation that they voluntarily refused to renew their contract
with A.C. Sicat. Also, respondents did not assert any claim against Zytron
and A.C. Sicat. The NLRC disposed of the case in this wise:
WHEREFORE, premises
considered,
the
appeals
are
hereby
ordered DISMISSED and the Decision of the Labor Arbiter is AFFIRMED
[in]toto.
SO ORDERED.3

Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of


Zytron Marketing and Promotions Corp. (Zytron) for the marketing and
promotion of its milk and dairy products. Pursuant to the contract, Zytron
provided Fonterra with trade merchandising representatives (TMRs),
including respondents Leonardo Largado (Largado) and Teotimo Estrellado
(Estrellado). The engagement of their services began on September 15,
2003 and May 27, 2002, respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions
contract, effective June 5, 2006. Fonterra then entered into an agreement
for manpower supply with A.C. Sicat Marketing and Promotional Services
(A.C. Sicat). Desirous of continuing their work as TMRs, respondents
submitted their job applications with A.C. Sicat, which hired them for a
term of five (5) months, beginning June 7, 2006 up to November 6, 2006.
When respondents 5-month contracts with A.C. Sicat were about to expire,
they allegedly sought renewal thereof, but wereallegedly refused. This
prompted respondents to file complaints for illegal dismissal,
regularization, non-payment of service incentive leave and 13 th month pay,
and actual and moral damages, against petitioner, Zytron, and A.C. Sicat.
The Labor Arbiter dismissed the complaint and ruled that: (1) respondents

The NLRC decision was assailed in a petition under Rule 65 before the CA.
Ruling on the petition, the CA, in the questioned Decision, 4 found that A.C.
Sicat satisfies the requirements of legitimate job contracting, but Zytron
does not. According to the CA: (1) Zytrons paid-in capital of P250,000
cannot be considered as substantial capital; (2) its Certificate of
Registration was issued by the DOLE months after respondents supposed
employment ended; and (3) its claim that it has the necessary tools and
equipment for its business is unsubstantiated. Therefore, according to the
CA,
respondents
were
Fonterras
employees.
Additionally, the CA held that respondents were illegally dismissed since
Fonterra itself failed to prove that their dismissal is lawful. However, the
illegal dismissal should be reckoned from the termination of their supposed
employment with Zytron on June 6, 2006. Furthermore, respondents
transfer to A.C. Sicat is tantamount to a completely new engagement by
another employer. Lastly, the termination of their contract with A.C. Sicat
arose from the expiration of their respective contracts with the latter. The
CA, thus, ruled that Fonterra is liable to respondents and ordered the
reinstatement of respondents without loss of seniority rights, with full

58

backwages, and other benefits from the time of their illegal dismissal up to
the time of their actual reinstatement. The fallo of the Decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED. The
assailed Decision dated 20 November 2009 and Resolution dated 5 March
2010 of the National Labor Relations Commission (NLRC), Seventh Division,
are hereby ANULLED and SET ASIDE. Private respondent Fonterra Brand,
Inc. is hereby ordered to REINSTATE [respondents] without loss of seniority
rights. Private respondents Fonterra Brand, Inc. and Zytron Marketing and
Promotional Corp. are hereby further ORDERED to jointly and severally
pay petitioners their full backwages and other benefits from the time of
their illegal dismissal up to the time of their actual reinstatement; and
attorneys
fees.

II.

Succinctly, the issues in the case at bar are: (1) whether or not Zytron and
A.C. Sicat are labor-only contractors, making Fonterra the employer of
herein respondents; and (2) whether or not respondents were illegally
dismissed.
Our Ruling

We

SO ORDERED.

Respondents never claimed nor adduced evidence that they were


dismissed from employment by Zytron. In fact, Zytron denies
terminating them from work. The CA, thus, erred in finding that
respondents were illegally dismissed.

find

merit

in

the

petition.

The Issues

As regards the CAs conclusion that Zytron is not a legitimate job


contractor, We are of the view that such is immaterial to the resolution of
the illegal dismissal issue for one reason: We find that respondents
voluntarily terminated their employment with Zytron, contrary to their
allegation that their employment with Zytron was illegally terminated.

Petitioner presents the following issues for Our resolution:

We do not agree with the CA that respondents employment with Zytron


was
illegally
terminated.

Zytron and Fonterra moved for reconsideration, but to no avail. Hence, this
petition.

I.

The CA erred in ruling that Zytron was a mere labor-only contractor


to petitioner Fonterra, in that:
a.

As held by the Court, there is no absolute figure that


constitutes substantial capital for an independent
contractor, and the same should instead be measured
against the type of work it is obligated to do for the
principal. It is most respectfully submitted that, here, the
merchandising work undertaken by Zytrons paid-in capital
of P250,000 was as of 1990, the year it was incorporated;

b.

As shown in its Articles of Incorporation, Zytron had been


in business since 1990, or more than a decade before it
signed a merchandising agreement with petitioner
Fonterra;

c.

Very importantly, petitioner Fonterra never exercised the


right to control respondents and other employees of
Zytron. Indeed, respondents neither alleged that petitioner
exercised control over them nor presented proof in support
thereof in any of their previous pleadings.

As correctly held by the Labor Arbiter and the NLRC, the termination of
respondents employment with Zytron was brought about by the cessation
of their contracts with the latter. We give credence to the Labor Arbiters
conclusion that respondents were the ones who refused to renew their
contracts with Zytron, and the NLRCs finding that they themselves
acquiesced
to
their
transfer
to
A.C.
Sicat.
By refusing to renew their contracts with Zytron, respondents effectively
resigned from the latter. Resignation is the voluntary act of employees who
are compelled by personal reasons to dissociate themselves from their
employment, done with the intention of relinquishing an office,
accompanied
by
the
act
of
abandonment. 5
Here, it is obvious that respondents were no longer interested in continuing
their employment with Zytron. Their voluntary refusal to renew their
contracts was brought about by their desire to continue their assignment in
Fonterra which could not happen in view of the conclusion of Zytrons
contract with Fonterra. Hence, to be able to continue with their
assignment, they applied for work with A.C. Sicat with the hope that they
will be able to continue rendering services as TMRs at Fonterra since A.C.
Sicat is Fonterras new manpower supplier. This fact is even acknowledged
by the CA in the assailed Decision where it recognized the reason why
respondents applied for work at A.C. Sicat. The CA stated that [t]o
continuously work as merchandisers of Fonterra products, [respondents]
submitted their job applications to A.C. Sicat xxx. 6 This is further bolstered

59

by the fact that respondents voluntarily complied with the requirements for
them to claim their corresponding monetary benefits in relation to the
cessation
of
their
employment
contract
with
Zytron.
In short, respondents voluntarily terminated their employment with Zytron
by refusing to renew their employment contracts with the latter, applying
with A.C. Sicat, and working as the latters employees, thereby abandoning
their previous employment with Zytron. Too, it is well to mention that for
obvious reasons, resignation is inconsistent with illegal dismissal. This
being the case, Zytron cannot be said to have illegally dismissed
respondents,
contrary
to
the
findings
of
the
CA.
As regards respondents employment with A.C. Sicat and its termination via
non-renewal of their contracts, considering that in labor-only contracting,
the law creates an employer-employee relationship between the principal
and the labor-only contractors employee as if such employees are directly
employed by the principal employer, and considers the contractor as
merely the agent of the principal,7 it is proper to dispose of the issue on
A.C. Sicats status as a job contractor first before resolving the issue on the
legality
of
the
cessation
of
respondents
employment.
In this regard, We defer to the findings of the CA anent A.C. Sicats status
as a legitimate job contractor, seeing that it is consistent with the rules on
job contracting and is sufficiently supported by the evidence on record.
A person is considered engaged in legitimate job contracting or
subcontracting if the following conditions concur:
1.

The contractor or subcontractor carries on a distinct and


independent business and undertakes to perform the job, work or
service on its own account and under its own responsibility
according to its own manner and method, and free from the control
and direction of the principal in all matters connected with the
performance of the work except as to the results thereof;

2.

The contractor or
investment; and

subcontractor

has

substantial

capital

or

3.

The agreement between the principal and contractor or


subcontractor assures the contractual employees entitlement to all
labor and occupational safety and health standards, free exercise
of the right to self-organization, security of tenure, and social and
welfare benefits.8

On the other hand, contracting is prohibited when the contractor or


subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal and if any of the following elements are
present, thus:

1.

The contractor or subcontractor does not have substantial capital


or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; or

2.

The contractor does not exercise the right to control over the
performance of the work of the contractual employee.9

The CA correctly found that A.C. Sicat is engaged in legitimate job


contracting. It duly noted that A.C. Sicat was able to prove its status as a
legitimate job contractor for having presented the following evidence, to
wit:
1.

Certificate of Business Registration;

2.

Certificate of Registration with the Bureau of Internal Revenue;

3.

Mayors Permit;

4.

Certificate of Membership with the Social Security System;

5.

Certificate of Registration with the Department of Labor and


Employment;

6.

Company Profile; and

7.

Certifications issued by its clients.10

Furthermore, A.C. Sicat has substantial capital, having assets totaling


P5,926,155.76 as of December 31, 2006. Too, its Agreement with Fonterra
clearly sets forth that A.C. Sicat shall be liable for the wages and salaries of
its employees or workers, including benefits, premiums, and protection due
them, as well as remittance to the proper government entities of all
withholding taxes, Social Security Service, and Medicare premiums, in
accordance
with
relevant
laws.
The appellate court further correctly held that Fonterras issuance of
Merchandising Guidelines, stock monitoring and inventory forms, and
promo mechanics, for compliance and use of A.C. Sicats employees
assigned to them, does not establish that Fonterra exercises control over
A.C. Sicat. We agree with the CAs conclusion that these were imposed only
to ensure the effectiveness of the promotion services to be rendered by the
merchandisers as it would be risky, if not imprudent, for any company to
completely entrust the performance of the operations it has contracted
out.

60

hereby REINSTATED.
These sufficiently show that A.C. Sicat carries out its merchandising and
promotions business, independent of Fonterras business. Thus, having
settled that A.C. Sicat is a legitimate job contractor, We now determine
whether the termination of respondents employment with the former is
valid.
We agree with the findings of the CA that the termination of respondents
employment with the latter was simply brought about by the expiration of
their
employment
contracts.
Foremost, respondents were fixed-term employees. As previously held by
this Court, fixed-term employment contracts are not limited, as they are
under the present Labor Code, to those by nature seasonal or for specific
projects with predetermined dates of completion; they also include those
to which the parties by free choice have assigned a specific date of
termination.11 The determining factor of such contracts is not the duty of
the employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.12
In the case at bar, it is clear that respondents were employed by A.C. Sicat
as project employees. In their employment contract with the latter, it is
clearly stated that [A.C. Sicat is] temporarily employing [respondents] as
TMR[s] effective June 6[, 2006] under the following terms and conditions:
The need for your service being only for a specific project, your temporary
employment will be for the duration only of said project of our client,
namely to promote FONTERRA BRANDS products xxx which is expected to
be
finished
on
or
before
Nov.
06,
2006. 13
Respondents, by accepting the conditions of the contract with A.C. Sicat,
were well aware of and even acceded to the condition that their
employment thereat will end on said pre-determined date of termination.
They cannot now argue that they were illegally dismissed by the latter
when it refused to renew their contracts after its expiration. This is so since
the non-renewal of their contracts by A.C. Sicat is a management
prerogative, and failure of respondents to prove that such was done in bad
faith militates against their contention that they were illegally dismissed.
The expiration of their contract with A.C. Sicat simply caused the natural
cessation of their fixed-term employment there at. We, thus, see no reason
to
disturb
the
ruling
of
the
CA
in
this
respect.
With

these,

We

need

not

belabor

the

other

assigned

errors.

IN VIEW OF THE FOREGOING, the instant Petition for Review


is GRANTED. The assailed Decision of the Court of Appeals dated
September 6, 2012 and its January 11, 2013 Resolution denying
reconsideration
thereof,
in
CA-G.R.
SP
No.
114227,
are
hereby REVERSED and SET ASIDE. The Decision of the National Labor
Relations Commission dated November 20, 2009 and its Resolution dated
March 5, 2010 in NLRC Case No. RAB IV 12-23927-06-Q are

SO ORDERED.

61

G.R. No. 179654

September 22, 2014

HACIENDA
LEDDY/RICARDO
vs.
PAQUITA VILLEGAS, Respondent.

GAMBOA,

JR., Petitioner,

DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Decision 1 dated May 25, 2007 and
Resolution2 dated August 10, 2007 of the Court of Appeals in CA-G.R. SP
No. 01923,3 which granted the Petition for Certiorari under Rule 65 of the
1997 Rules of Civil Procedure filed by Villegas, and reversed the January
26, 2006 and March 31, 2006 Orders of the National Labor Relations
Commission (NLRC). These two Orders issued by the NLRC reversed the
December 3, 2003 Decision of Executive Labor Arbiter Danilo Acosta.
The facts, as culled from the records, are as follows:
Villegas is an employee at the Hacienda Leddy as early as 1960, when it
was still named Hacienda Teresa. Later on named Hacienda Leddy owned
by Ricardo Gamboa Sr., the same was succeeded by his son Ricardo
Gamboa, Jr. During his employment up to the time of his dismissal, Villegas
performed sugar farming job 8 hours a day, 6 days a week work,
continuously for not less than 302 days a year, and for which services he
was paidP45.00 per day. He likewise worked in petitioner's coconut lumber
business where he was paid P34.00 a day for 8 hours work.
On June 9, 1993, Gamboa went toVillegas' house and told him that his
services were no longer needed without prior notice or valid reason.
Hence, Villegas filed the instant complaint for illegal dismissal.
Gamboa, on the other hand, denied having dismissed Villegas but admitted
in his earlier position paper thatVillegas indeed worked with the said farm
owned by his father, doing casual and odd jobs until the latter's death in
1993.4 He was even given the benefit of occupying a small portion of the
land where his house was erected. He, however, maintained that Villegas
ceased working at the farm as early as 1992, contrary to his allegation that
he was dismissed.5

However, later, Gamboaapparently retracted and instead insisted that the


farm records reveal that the only time Villegas rendered service for the
hacienda was only in the year 1993,specifically February 9, 1993 and
February 11, 1993 when he was contracted by the farm to cut coconut
lumber which were given to regular workers for the repairs of their
houses.6 Gamboa added that they informed Villegas that they need the
property, hence, they requested that he vacateit, but he refused. Thus,
Gamboa surmised that Villegas filed the instant complaint to gain leverage
so he would not be evicted from the land he is occupying. He further
argued that during his employment, Villegas was paid in accordance with
the rate mandated by law and that his claim for illegal dismissal was
merely a fabrication as he was the one who opted not to work. The Labor
Arbiter found thatthere was illegal dismissal. 7 The dispositive portion of the
decision reads:
WHEREFORE, in view of all the foregoing, respondent Ricardo Gamboa, Jr.,
is hereby ordered to pay complainant Paquito Villegas the amount of One
Hundred Forty Thousand Three Hundred Eight Pesos and Eighty-Four/00
(P140,308.84), representing his wage differential, backwages and
separation pay, the award to be deposited with this office within ten (10)
days from receipt of this decision.
SO ORDERED.8
On appeal, on January 26, 2006, the NLRC set aside and vacated the Labor
Arbiter's decision.9 Complainant moved for reconsideration, but was
denied.10
Thus, viapetition for certiorariunder Rule 65 of the Rules of Court, raising
grave abuse of discretion as ground, Villegas appealed before the Court of
Appeals and sought the annulment of the Resolutions of the NLRC.
In the disputed Decision11 dated May 25, 2007, the Court of Appeals
granted the petition and annulled and set aside the NLRC Decision dated
January 26, 2006 and Resolution dated March 31, 2006. It further
reinstated the Labor Arbiter's Decision dated December 3, 2003.
Hence, this appeal anchored on the following grounds:
I

62

WHETHER THE COURT OFAPPEALS COMMITTED REVERSIBLE ERROR, BASED


ON SUBSTANTIAL QUESTIONS OF LAW, IN REVERSING THE DECISION OF
THE NLRC AND AFFIRMING THE DECISION OF the EXECUTIVE LABOR
ARBITER DECLARING THAT RESPONDENT IS A REGULAR WORKER, THE
FINDINGS NOT BEING IN ACCORD WITH LAW;
II
WHETHER THE COURT OFAPPEALS COMMITTED REVERSIBLE ERROR, BASED
ON SUBSTANTIAL QUESTIONS OF LAW, IN REVERSING THE DECISION OF
THE NLRC AND AFFIRMING THE DECISION OF THE EXECUTIVE LABOR
ARBITER AND FAILED TO CONSIDER THE MOTIVE OF THE RESPONDENT IN
FILING THE CASE AND THE CREDIBILITY OF HIS WITNESS;
III
THAT ASSUMING WITHOUT ADMITTING THAT RESPONDENT IS A REGULAR
WORKER, THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR, BASED ON SUBSTANTIAL QUESTIONS OF LAW, IN REVERSING THE
DECISION OF THE NLRC AND AFFIRMING THE DECISION OF THE EXECUTIVE
LABOR ARBITER IN DIRECTING A STRAIGHT COMPUTATION FOR WAGE
DIFFERENTIALS, BACKWAGES AND SEPARATION PAY, THE FINDINGS NOT
BEING INACCORD WITH LAW.
Petitioner disputed that there exists an employer-employee relationship
between him and Villegas. He claimed that respondent was paid on a
piece-rate basis without supervision. 12 Petitioner added that since his job
was not necessary or desirable in the usual business or trade of the
hacienda, he cannot be considered as a regular employee. Petitioner
insisted that it was Villegas who has stopped working in the hacienda and
that he was not dismissed.
We deny the petition.
The issue of Villegas' alleged illegal dismissal is anchored on the existence
of an employer-employee relationship between him and Gamboa; thus,
essentially a question of fact. Generally, the Court does not review errors
that raise factual questions. However, when there is conflict among the
factual findings of the antecedent deciding bodies like the LA, the NLRC
and the CA, "it is proper, in the exercise of Our equity jurisdiction, to review
and re-evaluate the factual issues and to look into the records of the case
and re-examine the questioned findings."13

A perusal of the records would show that respondent, having been


employed in the subject Hacienda while the same was still being managed
by petitioner's father until the latter's death in 1993, is undisputed as the
same was even admitted by Gamboa in his earlier pleadings. 14 While
refuting that Villegas was a regular employee, petitioner however failed to
categorically deny that Villegas was indeed employed in their hacienda
albeit he insisted that Villegas was merely a casual employee doing odd
jobs.
The rule is long and well settled that, in illegal dismissal cases like the one
at bench, the burden of proof is upon the employer to show that the
employees termination from service is for a just and valid cause. The
employers case succeeds or fails on the strength of its evidence and not
the weakness of that adduced by the employee, in keeping with the
principle that the scales of justice should be tilted in favor of the latter in
case of doubt in the evidence presented by them. Often described as more
than a mere scintilla, the quantum of proof is substantial evidence which is
understood as such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion, even if other equally reasonable
minds might conceivably opine otherwise.15
In the instant case, if we are to follow the length of time that Villegas had
worked with the Gamboas, it should be more than 20 years of service.
Even Gamboa admitted that by act of generosity and compassion, Villegas
was given a privilege of erecting his house inside the hacienda during his
employment.16 While it may indeed be an act of good will on the part of the
Gamboas, still, such act is usually done by the employer either out of
gratitude for the employees service orfor the employer's convenience as
the nature of the work calls for it. Indeed, petitioner's length of service is
an indication of the regularity of his employment. Even assuming that he
was doing odd jobs around the farm, such long period of doing said odd
jobs is indicative that the same was either necessary or desirable to
petitioner's trade or business. Owing to the length ofservice alone, he
became a regular employee, by operation of law, one year after he was
employed.
Article 280 of the Labor Code, describes a regular employee as one who is
either (1) engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which he is employed.

63

In Integrated Contractor and Plumbing Works, Inc. v. National Labor


Relations Commission,17 we held that the testto determine whether
employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer. If the employee has been performing
the job for at least one year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and continuing need for
its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business. Clearly,with more than 20
years of service, Villegas, without doubt, passed this test to attain
employment regularity.
While length of time may not be the controlling test to determine if Villegas
is indeed a regular employee, it is vital in establishing if he was hired to
perform tasks which are necessary and indispensable to the usual business
or trade of the employer. If it was true that Villegas worked in the hacienda
only in the year 1993, specifically February 9,1993 and February 11, 1993,
why would then hebe given the benefit toconstruct his house in the
hacienda? More significantly, petitioner admitted that Villegas had worked
in the hacienda until his father'sdemise. Clearly, even assuming that
Villegas' employment was only for a specific duration, the fact that he was
repeatedly re-hired over a long periodof time shows that his job is
necessary and indispensable to the usual business or trade of the
employer.
Gamboa likewise argued that Villegas was paid on a piece-rate
basis.18 However, payment on a piece-ratebasis does not negate regular
employment. "The term wage is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission
basis. Payment by the piece is just a method of compensation and does not
define the essence of the relations."19
We are likewise unconvinced thatit was Villegas who suddenly stopped
working. Considering that hewas employed with the Gamboas for more
than 20 years and was even given a place to call his home, it does not
make sense why Villegas would suddenly stop working therein for no
apparent reason. To justify a finding of abandonment of work, there must
be proof of a deliberate and unjustified refusal on the part of an employee
to resume his employment. The burden of proof is on the employer to show
an unequivocal intent on the part of the employee to discontinue
employment. Mere absence is not sufficient. It must be accompanied by

manifest acts unerringly pointing to the fact that the employee simply does
not want to work anymore.20
Petitioner failed to discharge this burden. Other than the self-serving
declarations in the affidavit of his employee, petitioner did not adduce
proof of overt acts of Villegas showing his intention to abandon his work.
Abandonment is a matter of intention;it cannot be inferred or presumed
from equivocal acts. On the contrary, the filing of the instant illegal
dismissal complaint negates any intention on his part to sever their
employment relationship. The delay of morethan 1 year infiling the instant
illegal dismissal case likewise is non-issue considering that the complaint
was filed within a reasonable period during the three-year period provided
under Article 291 of the Labor Code. 21 As aptly observed by the appellate
court, Villegas appeared tobe without educational attainment. He could not
have known that he has rights as a regular employee that is protected by
law.
The Labor Code draws a fine line between regular and casual employees to
protect the interests of labor. We ruled in Baguio Country Club Corporation
v. NLRC22 that "its language evidently manifests the intent to safeguard the
tenurial interest of the worker who may be denied the rights and benefits
due a regular employee by virtue of lopsided agreements with the
economically powerful employer who can maneuver to keep an employee
on a casual status for as long as convenient." Thus, notwithstanding any
agreements to the contrary, what determines whether a certain
employment is regular or casual is not the will and word of the employer,
to which the desperate worker often accedes, much less the procedure of
hiring the employee or the manner of paying his salary. It is the nature of
the activities performed in relation to the particular business or trades
considering all circumstances, and in some cases the length of time of its
performance and itscontinued existence.23
All these having discussed, as a regular worker, Villegas is entitled to
security of tenure under Article 279 ofthe Labor Code and can only be
removed for cause. We found no valid cause attending to his dismissal and
found also that his dismissal was without due process.
Article 277(b) of the Labor Code provides that:
x x x Subject to the constitutional right of workers to security of tenure and
their right to be protected against dismissal except for a just and
authorized cause and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose

64

employment is sought to be terminated a written notice containing a


statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of
Labor and Employment. x x x
The failure of the petitioner to comply with these procedural guidelines
renders its dismissal of Villegas illegal.1wphi1 An illegally dismissed
employee should be entitled to either reinstatement - if viable, or
separation pay if reinstatement is no longer viable, plus backwages in
either instance.24 Considering that reinstatement is no longer feasible
because of strained relations between the employee and the employer,
separation pay should be granted. The basis for computing separation pay
is usually the length of the employee's past service, while that for
backwages is the actual period when the employee was unlawfully
prevented from working.25 It should be emphasized, however, that the
finality of the illegal dismissal decision becomes the reckoning point. In
allowing separation pay, the final decision effectively declares that the
employment relationship ended so that separation pay and backwages are
to be computed up to that point. The decision also becomes a judgment for
money from which another consequence flows - the payment of interest in
case of delay.26
WHEREFORE, premises considered, the Decision dated May 25, 2007 and
Resolution dated August 10, 2007 of the Court of Appeals are hereby
AFFIRMED. The Decision dated December 3, 2003 of the Labor Arbiter in
RAB Case No. 06-08-10480-94 is hereby REINSTATED. This case is hereby
REMANDED to the Labor Arbiter for the recomputation of respondent's
separation pay and backwages with legal interest.
SO ORDERED.

65

G.R. No. 200857, October 22, 2014


FVR SKILLS AND SERVICES EXPONENTS, INC. (SKILLEX),
FULGENCIO V. RANA AND MONINA R. BURGOS, Petitioners, v. JOVERT
SEVA, JOSUEL V. VALENCERINA, JANET ALCAZAR, ANGELITO
AMPARO, BENJAMIN ANAEN, JR., JOHN HILBERT BARBA, BONIFACIO
BATANG, JR., VALERIANO BINGCO, JR., RONALD CASTRO, MARLON
CONSORTE, ROLANDO CORNELIO, EDITO CULDORA, RUEL DUNCIL,
MERV1N FLORES, LORD GALISIM, SOTERO GARCIA, JR., REY
GONZALES, DANTE ISIP, RYAN ISMEN, JOEL JUNIO, CARLITO LATOJA,
ZALDY MARRA, MICHAEL PANTANO, GLENN PILOTON, NORELDO
QUIRANTE, ROEL RANCE, RENANTE ROSARIO AND LEONARDA
TANAEL, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari the challenge to the
December 22, 2011 decision2and the March 2, 2012 resolution3 (assailed
CA rulings) of the Court of Appeals (CA) in CA-G.R. SP No. 120991. These
assailed CA rulings affirmed the April 28, 2011 decision 4 and the June 16,
2011 resolution5 (NLRC rulings) of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 08-001687-10 (NLRC NCR Case Nos. 08-11557-09
and 08-11399-09). The NLRC rulings in turn reversed and set aside the June
4, 2010 decision6 of the labor arbiter (LA).

2. Jovert R. Seva

July 29, 1999

Supervisor

3. Valeriano Bingco, Jr.

August 1, 1999

Leadman

4. Michael Pantano

January 22, 1999

Janitor

5. Marlon C. Consorte

May 6, 1999

Janitor

6. Lord Galisim

May 28, 1999

Janitor

7. Sotero A. Garcia, Jr.

April 14, 2000

Janitor

8. Joel G. Junio

May 4, 2000

Service Crew

9. ZaldyR. Marra

August 21, 2001

Janitor

10. Ryan G. Ismen

April 20, 2002

Janitor

11. Glenn Piloton

January 6, 2003

Janitor

12. Rey V. Gonzales

August 15,2003

Janitor/Sanitation Aide

Factual Antecedents

The twenty-eight (28) respondents in this case were employees of


petitioner FVR Skills and Services Exponents, Inc. (petitioner), an
independent contractor engaged in the business of providing janitorial and
other manpower services to its clients. As early as 1998, some of the
respondents had already been under the petitioner's employ.
The respondents' respective names, dates of hiring, and positions are
indicated in the table7 below.

Respondents

1. Edito Culdora

Date of Hiring

February 14, 1998

Position

Janitor

66

13.Roel P. Ranee

August 16, 2003

Janitor/Sanitation Aide

25. Carlito Latoja

February 1, 2007

Janitor/ Sanitation Aide

14. Mervin D. Flores

January 1, 2004

Janitor

26. Ruel Duncil

February 1, 2007

Janitor/Sanitation Aide

15. Renante Rosario

January 13, 2004

Janitor

27. Bonifacio P. Batang, Jr. February 1, 2007

Janitor/Sanitation Aide

16. Ronald Castro

February 2, 2004

Service Crew

28. Josuel Valencerina

Supervisor

17. John Hilbert D. Barba February 22, 2004

18. Noreldo S. Quirante

March 13, 2004

19. Benjamin C. Anaen, Jr. April 22, 2004

20. Rolando G. Cornelio

21. Angelito A. Amparo

August 5, 2004

July 28, 2005

February 1, 2007

Service Crew

Janitor

Service Crew

Halfway through the service contract, the petitioner asked the respondents
to execute individual contracts which stipulated that their respective
employments shall end on December 31, 2008, unless earlier terminated. 10

Janitor

Janitor
Aide

22. Leonarda Tanael

February 1, 2007

Janitor

23. Janet Alcazar

March 1, 2007

Janitor

24. Dante F. Isip

February 1, 2007

Janitor

On April 21, 2008, the petitioner entered into a Contract of Janitorial


Service (service contract)8 with Robinsons Land Corporation (Robinsons).
Both agreed that the petitioner shall supply janitorial, manpower and
sanitation services to Robinsons Place Ermita Mall for a period of one year
-from January 1, 2008 to December 31, 2008. 9 Pursuant to this, the
respondents
were
deployed
to
Robinsons.

Aide/Sanitation

The petitioner and Robinsons no longer extended their contract of janitorial


services. Consequently, the petitioner dismissed the respondents as they
were project employees whose duration of employment was dependent on
the
petitioner's
service
contract
with
Robinsons.
The respondents responded to the termination of their employment by
filing a complaint for illegal dismissal with the NLRC. They argued that they
were not project employees; they were regular employees who may only
be dismissed for just or authorized causes. 11 The respondents also asked
for payment of their unpaid wage differential, 13 th month pay differential,
service incentive leave pay, holiday pay and separation pay. 12
The Labor Arbitration Rulings

The LA ruled in the petitioner's favor. He held that the respondents were
not regular employees. They were project employees whose employment
was dependent on the petitioner's service contract with Robinsons. Since
this contract was not renewed, the respondents' employment contracts

67

must

also

be

terminated.13

Also, in light of the petitioner's admission during the clarificatory hearing


that the respondents were entitled to their wage differential pay,
13th month differential pay and holiday pay, the LA granted the
respondents' money claims in the amount of P103,501.01. 14
The respondents disagreed with the LA and appealed to the NLRC, which
reversed the LA's ruling, and held that they were regular employees. The
NLRC considered that the respondents had been under the petitioner's
employ for more than a year already, some of them as early as 1998.
Thus, as regular employees, the respondents may only be dismissed for
just or authorized causes, which the petitioner failed to show. The NLRC
also awarded the respondents their separation pay of one (1) month for
every year of service as well as their full backwages from February 1, 2009
the date of their illegal dismissal, until the finality of the decision. 15
The CA's Ruling

respondents in the course of asking them to sign their individual


employment contracts.18
The Petition

The petitioner now submits that the CA erred in ruling that the respondents
were regular employees and that they had been illegally dismissed. The
respondents' contracts of employments did not only provide for a fixed
term, but were also dependent on the continued existence of the
Robinsons' service contract.19 Since this main contract had not been
renewed, the respondents' respective employment contracts were properly
terminated. Based on this reasoning, no illegal dismissal took place, only
the
expiration
of
the
respondents'
fixed
term
contracts.
In the absence of any illegal dismissal, the CA also erred in affirming the
NLRC's
award
of
separation
pay
to
the
respondents.
Lastly, the petitioner asserts that Rana and Burgos should not be held
solidarily liable with the corporation for respondents' monetary claims;
they have personalities separate and distinct from the corporation.

The CA dismissed the petitioner's certiorari petition and affirmed the


NLRC's
decision.

The Case for the Respondents

The CA noted that the petitioner individually hired the respondents on


various dates from 1998 to 2007, to work as janitors, service crews and
sanitation aides. These jobs were necessary or desirable to the petitioner's
business of providing janitorial, manpower and sanitation services to its
clients. The continuing need for the respondents' services, which lasted for
more than a year, validated that the respondents were regular and not
project
employees.16

The respondents reiterate that even before the execution of the


petitioner's service contract with Robinsons, they had already been
working for the petitioner between the years 1998 to 2007. Since their
hiring, they had been performing janitorial and other manpower activities
that were necessary or desirable to the petitioner's business. 20

The CA also ruled that the fixed term employment contracts signed by the
respondents had no binding effect. The petitioner only used these
contracts to justify the respondents' illegal dismissal; the petitioner never
asked the respondents to execute any contract since their initial hiring.
Only after it became apparent that the petitioner's service contract with
Robinsons would not be renewed (after its expiration on December 31,
2008), did the petitioner ask the respondents to sign their employment
contracts.17 This circumstance, coupled with the threat that the
respondents would not be given their salaries if they would not sign the
contracts, showed the petitioner's intent to use the contracts to prevent
the
respondents
from
attaining
regular
status.
Lastly, the CA held that petitioners Fulgencio V. Rana (Rana) and Monina R.
Burgos (Burgos), the president and general manager of FVR Skills and
Services Exponents, Inc., respectively, are solidarily liable with the
corporation for the payment of the respondents' monetary awards. As
corporate officers, they acted in bad faith when they intimidated the

They further argue that the employment contracts they executed were
void since these were signed under duress; the petitioner threatened not to
release
their
salaries
if
they
would
refuse
to
sign. 21
Lastly, the respondents assert that the CA did not err in holding Rana and
Burgos solidarily liable with the corporation. These officers acted in bad
faith when they obliged the respondents to execute the employment
contracts under threat.22
The Court's Ruling
We

resolve

The
employees,
Article

280

respondents
not
(now

Article

294)23 of

to DENY the

petition.

are
project

regular
employees.

the

Labor

Code

governs

the

68

determination of whether an employee is a regular or a project employee. 24


Under this provision, there are two kinds of regular employees, namely: (1)
those who were engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer; and (2) those
casual employees who became regular after one year of service, whether
continuous or broken, but only with respect to the activity for which they
have
been
hired.
We distinguish these two types of regular employees from a project
employee, or one whose employment was fixed for a specific project or
undertaking, whose completion or termination had been determined at the
time
of
engagement.
A careful look at the factual circumstances of this case leads us to the legal
conclusion that the respondents are regular and not project employees.
The primary standard in determining regular employment is
the reasonable connection between the particular activity performed by
the employee and the employer's business or trade. This connection can
be ascertained by considering the nature of the work performed and its
relation to the scheme of the particular business, or the trade in its
entirety.25
Guided by this test, we conclude that the respondents' work as
janitors, service crews and sanitation aides, are necessary or
desirable to the petitioner's business of providing janitorial and
manpower services to its clients as an independent contractor.
Also, the respondents had already been working for the petitioner as early
as 1998. Even before the service contract with Robinsons, the
respondents were already under the petitioner's employ.26They
had been doing the same type of work and occupying the same
positions from the time they were hired and until they were
dismissed in January 2009. The petitioner did not present any evidence
to refute the respondents' claim that from the time of their hiring until the
time of their dismissal, there was no gap in between the projects where
they were assigned to. The petitioner continuously availed of their services
by
constantly
deploying
them
to
its
clients.
Lastly, under Department Order (DO) 18-02,27 the applicable labor issuance
to the petitioner's case, the contractor or subcontractor is considered as
the employer of the contractual employee for purposes of enforcing the
provisions of the Labor Code and other social legislation. 28
DO 18-02 grants contractual employees all the rights and privileges due
a regular employee, including the following: (a) safe and healthful
working conditions; (b) labor standards such as service incentive
leave, rest days, overtime pay, holiday pay, 13th month pay and
separation pay; (c) social security and welfare benefits; (d) self-

organization, collective bargaining and peaceful concerted action; and (e)


security
of
tenure.29
In this light, we thus conclude that although the respondents were
assigned as contractual employees to the petitioner's various clients,
under the law, they remain to be the petitioner's regular employees, who
are entitled to all the rights and benefits of regular employment.
The
contracts,
signed,

respondents'
which
are

were

employment
belatedly
voidable.

The records show that at the time of the respondents' dismissal, they had
already been continuously working for the petitioner for more than a year.
Despite this, they never signed any employment contracts with the
petitioner, except the contracts they belatedly signed when the petitioner's
own contract of janitorial services with Robinsons neared expiration.
As already discussed, for an employee to be validly categorized as a
project employee, it is necessary that the specific project or
undertaking had been identified and its period and completion
date determined and made known to the employee at the time of
his engagement. This provision ensures that the employee is completely
apprised of the terms of his hiring and the corresponding rights and
obligations arising from his undertaking. Notably, the petitioner's service
contract with Robinsons was from January 1 to December 31, 2008. The
respondents were only asked to sign their employment contracts for their
deployment with Robinsons halfway through 2008, when the petitioner's
service
contract
was
about
to
expire.
We find the timing of the execution of the respondents' respective
employment contracts to be indicative of the petitioner's calculated plan to
evade the respondents' right to security of tenure, to ensure their easy
dismissal as soon as the Robinsons' contract expired. The attendant
circumstances cannot but raise doubts as to the petitioner's good faith.
If the petitioner really intended the respondents to be project
employees, then the contracts should have been executed right
from the time of hiring, or when the respondents were first
assigned to Robinsons, not when the petitioner's service contract
was winding up. The terms and conditions of the respondents'
engagement should have been disclosed and explained to them from the
commencement of their employment. The petitioner's failure to do so
supports the conclusion that it had been in bad faith in evading the
respondents'
right
to
security
of
tenure.
In Glory Philippines, Inc. v. Vergara,30 the Court rejected the validity of a
fixed term contract belatedly executed, and ruled that its belated signing
was a deliberate employer ploy to evade the employees' right to security
of tenure. As the Court explained:ChanRoblesVirtualawlibrary

69

To us, the private respondent's illegal intention became clearer from such
acts. Its making the petitioners sign written employment contracts
a few days before the purported end of their employment periods
(as stated in such contracts) was a diaphanous ploy to set periods
with a view for their possible severance from employment should
the private respondent so willed it. If the term of the employment
was truly determined at the beginning of the employment, why
was there delay in the signing of the ready-made contracts that
were entirely prepared by the employer? Also, the changes in the
positions supposedly held by the petitioners in the company belied the
private respondent's adamant contention that the petitioners were hired
solely for the purpose of manning PIS during its alleged dry run period that
ended on October 20, 1998. We view such situation as a very obvious ploy
of the private respondent to evade the petitioner's eventual
regularization.31 [Emphasis ours]

Moreover, under Article 1390 of the Civil Code, contracts where the
consent of a party was vitiated by mistake, violence, intimidation, undue
influence or fraud, are voidable or annullable. The petitioner's threat of
nonpayment of the respondents' salaries clearly amounted to intimidation.
Under this situation, and the suspect timing when these contracts were
executed, we rule that these employment contracts were voidable and
were effectively questioned when the respondents filed their illegal
dismissal
complaint.
The
illegally

respondents

were
dismissed.

To be valid, an employee's dismissal must comply with the


substantive and procedural requirements of due process.
Substantively, a dismissal should be supported by a just or authorized
cause.32 Procedurally, the employer must observe the twin notice and
hearing requirements in carrying out an employee's dismissal. 33
The petitioner argues that these substantive and procedural requisites do
not apply to the respondents' case since they were employed under fixed
term contracts. According to the petitioner, the respondents' employment
contracts lapsed by operation of law as the necessary consequence of the
termination and non-renewal of its service contract with Robinsons.
Because of this, there was no illegal dismissal to speak of, only contract
expiration.
We

do

not

agree

with

the

petitioner.

Having already determined that the respondents are regular employees


and not project employees, and that the respondents' belated employment
contracts could not be given any binding effect for being signed under
duress, we hold that illegal dismissal took place when the petitioner failed

to comply with the substantive and procedural due process requirements


of
the
law.
The petitioner also asserts that the respondents' subsequent absorption by
Robinsons' new contractors - Fieldmen Janitorial Service Corporation and
Altaserv - negates their illegal dismissal. This reasoning is patently
erroneous. The charge of illegal dismissal was made only against the
petitioner which is a separate juridical entity from Robinsons' new
contractors; it cannot escape liability by riding on the goodwill of others.
By law, the petitioner must bear the legal consequences of its violation of
the respondents' right to security of tenure. The facts of this case show
that since the respondents' hiring, they had been under the petitioner's
employ as janitors, service crews and sanitation aides. Their services
had been continuously provided to the petitioner without any gap.
Notably, the petitioner never refuted this allegation of the
respondents. Further, there was no allegation that the petitioner
went out of business after the non-renewal of the Robinsons'
service contract.Thus, had it not been for the respondents' dismissal,
they would have been deployed to the petitioner's other existing clients.
In DM. Consunji, Inc. v. Jamin,34 an employee was dismissed after the
expiration of the project he was last engaged in. After ruling that the
respondent-employee was a regular and not a project employee, this Court
affirmed the grant of backwages, computed from the time of the
employee's illegal dismissal until his actual reinstatement. In these lights,
we rule that the respondents are entitled to their full backwages, inclusive
of their allowances and other benefits from the time of their dismissal up to
their
actual
reinstatement.35
With regard to the award of separation pay, we agree with the CA's finding
that this litigation resulted to strained relations between the petitioner and
the respondents. Thus, we also affirm the CA's ruling that instead of
reinstatement, the respondents should be paid their respective separation
pays equivalent to one (1) month pay for every year of service. 36
We cannot give credence to the petitioner's assertion that under Section
10 of DO 18-02,37 the respondents are not entitled to separation pay
because their employment was terminated due to the completion of the
project where they had been engaged. This provision must be construed
with
the
rest
of
DO
18-02's
other
provisions.
As earlier pointed out, Section 7 of DO 18-02 treats contractual employees
as the independent contractor's regular employees for purposes of
enforcing the Labor Code and other social legislation laws. Consequently, a
finding of regular employment entitles them to the rights granted to
regular employees, particularly the right to security of tenure and to
separation
pay.
Thus, a holistic reading of DO 18-02, 38 guides us to the conclusion that

70

Section 10 only pertains to contractual employees who are really project


employees. They are not entitled to separation pay since the end of the
project for which they had been hired necessarily results to the termination
of their employment. On the other hand, we already found that the
respondents are the petitioner's regular employees. Thus, their illegal
dismissal entitles them to backwages and reinstatement or separation pay,
in
case
reinstatement
is
no
longer
feasible.
Solidary

liability

of

the

petitioner's

officers

Finally, we modify the CA's ruling that Rana and Burgos, as the petitioner's
president and general manager, should be held solidarity liable with the
corporation for its monetary liabilities with the respondents.
A corporation is a juridical entity with legal personality separate and
distinct from those acting for and in its behalf and, in general, from the
people comprising it. The general rule is that, obligations incurred by
the corporation, acting through its directors, officers and
employees,
are
its
sole
liabilities. 39
A director or officer shall only be personally liable for the obligations of the
corporation, if the following conditions concur: (l)the complainant alleged
in the complaint that the director or officer assented to patently unlawful
acts of the corporation, or that the officer was guilty of gross negligence or
bad faith; and (2) the complainant clearly and convincingly proved such
unlawful
acts,
negligence
or
bad
faith. 40
In the present case, the respondents failed to show the existence of the
first requisite. They did not specifically allege in their complaint that Rana
and Burgos willfully and knowingly assented to the petitioner's patently
unlawful act of forcing the respondents to sign the dubious employment
contracts in exchange for their salaries. The respondents also failed to
prove that Rana and Burgos had been guilty of gross negligence or bad
faith
in
directing
the
affairs
of
the
corporation.
To hold an officer personally liable for the debts of the corporation, and
thus pierce the veil of corporate fiction, it is necessary to clearly and
convincingly establish the bad faith or wrongdoing of such officer, since
bad faith is never presumed. 41 Because the respondents were not able to
clearly show the definite participation of Burgos and Rana in their illegal
dismissal, we uphold the general rule that corporate officers are not
personally liable for the money claims of the discharged employees, unless
they acted with evident malice and bad faith in terminating their
employment.42
WHEREFORE, in light of these considerations, we hereby DENY the
petition. We AFFIRM withMODIFICATION the Court of Appeals' decision
dated December 22, 2011 and resolution dated March 2, 2012 in CA-G.R.
SP No. 120991, which also AFFIRMED the National Labor Relation
Commission's decision dated April 28, 2011 and resolution dated June 16,

2011. Petitioners Fulgencio V. Rana and Monina R. Burgos are hereby


absolved from paying the respondents' monetary awards in their personal
capacity.
No
costs.
SO ORDERED.

71

G.R. No. 208567, November 26, 2014


JEANETTE V. MANALO, VILMA P. BARRIOS, LOURDES LYNN
MICHELLE FERNANDEZ AND LEILA B. TAIO, Petitioners, v. TNS
PHILIPPINES INC., AND GARY OCAMPO, Respondents.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court
assails the January 29, 2013 Decision 1 and the August 7, 2013
Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 117637, which
set aside the July 23, 2010 Decision 3 of the National Labor Relations
Commission (NLRC) and its October 28, 2010 Resolution 4 and reinstated
the May 29, 2009 Decision 5 of the Labor Arbiters finding that petitioners
were
project
employees.
Respondent TNS Philippines Inc. (TNS), with Gary Ocampo as its president
and general manager, was engaged primarily in the business of marketing
research and information, as well as research consultancy and other valueadded services to a wide base of clients, both local and international. 6As a
market research facility, TNS conducted public surveys about consumer
goods, products, merchandise and/or services of its clients. 7 TNS hired
several field personnel on a project-to-project basis whose functions were
the following: a) to gather data on consumer goods, commodities,
merchandise, and such other products as requested by clients, through
personal interviews, telephone interviews and/or such other modes akin to
the foregoing; and b) to submit the gathered data to the company for
evaluation
and/or
analysis.8
Petitioners Jeanette V. Manalo, Vilma P. Barrios, Lourdes Lynn Michelle
Fernandez, and Leila B. Taio(petitioners) were hired by TNS as field
personnel on various dates starting 1996 for several projects. They were
made to sign a project-to-project employment contract. Thereafter, TNS
would file the corresponding termination report with the Department of
Labor
and
Employment
Regional
Office(DOLE-RO).9
Petitioners were likewise assigned office-based tasks for which they were
required to be in the office from 9:00 oclock in the morning to 6:00 oclock
in the evening, but most of the time, they worked beyond 6:00 oclock
without receiving the corresponding overtime pay. These office-based tasks
were not on a per project basis and petitioners did not sign any contract for
these jobs. These assignments were not reported to the DOLE either. 10
Later in August 2008, a meeting among the Field Interviewers (FIs) was
called by TNS field manager. They were told that all old FIs assigned in the

tracking projects would be pulled out eventually and replaced by new FIs
contracted from an agency. Old FIs would be assigned only to adhoc
projects which were seasonal. This prompted petitioners to file a
consolidated
complaint
for
regularization
before
the
LA. 11
On October 20, 2008, petitioners and TNS were required to file their
respective position papers. On October 21, 2008, petitioners were advised
by TNS not to report for work anymore because they were being pulled out
from their current assignments and that they were not being lined up for
any continuing or incoming projects because it no longer needed their
services. They were also asked to surrender their company
IDs.12 Petitioners, thereafter, filed a complaint for illegal dismissal, overtime
pay, damages, and attorneys fees against TNS. Later, the labor cases for
regularization
and
illegal
dismissal
were
consolidated.
On May 29, 2009, the LA rendered a decision, 13dismissing the complaint on
the ground that petitioners were found to be project employees who knew
the nature of their positions as such at the time of their employment and
who agreed with full understanding that the contracts would lapse upon
completion of the project stated in their respective contracts. 14 The LA
further ruled that even if petitioners were continuously rehired for several
and different projects, the determining factor was whether, at the time of
hiring, the employment was fixed for a specific project or undertaking and
its
completion
was
predetermined.15
The LA was also of the view that petitioners were not illegally dismissed
because as project employees, the employer-employee relationship was
terminated upon completion of the project or phase for which they were
hired. The term of their employment was coterminus with the duration and
until
the
accomplishment
of
the
project. 16
As to the claim for overtime pay and damages, the LA held that petitioners
were not entitled to them.Field personnel were excluded from the coverage
of the minimum requirements on hours of work and overtime pay.
Aggrieved, petitioners filed an appeal before the NLRC. Consequently, the
NLRC rendered its judgment17 in favor of petitioners and reversed the LA
ruling. Thus:
We note that, initially, complainants used to be project employees as
shown by the samples of project-to-project employment contracts, project
clearance slips, and the establishment termination reports adduced in
evidence. Case records, however, show that the last time respondent
company filed an establishment termination report was in
November 2007 indicating project completion on November 30,
2007. What is clear though is that complainants were allowed to
continue working after November 30, 2007. Respondent company did
not adduce in evidence employment contracts relating to the latest

72

employment of the complainants. In the absence of proof that the


subsequent employment of the complainants continued to be on a projectto-project basis under a contract of employment, complainants are
considered to have become regular employees after November 30,
2007. The failure to present contract of project employment means
that
the
employees
are
regular.18

EMPLOYEES

[Emphases supplied]

Petitioners assert that the factual circumstances of the case undoubtedly


show their regular employment status and that the NLRC correctly
exercised its discretion. The respondents argue otherwise insisting that the
decision of the CA was correct.

The NLRC further ruled that, being regular employees, petitioners were
illegally dismissed because TNS, who had the burden of proving legality in
dismissal cases, failed to show how and why the employment of petitioners
was terminated on October 21, 2008. 19 Thus, the NLRC set aside the LA
decision and held TNS liable for illegal dismissal, ordering the latter to pay
petitioners
their
respective
backwages
and
separation
pay. 20
TNS moved for reconsideration, but its motion was denied. Thus, it filed a
petition for certiorari with prayer for preliminary injunction and/or
temporary
restraining
order
before
the
CA.
On January 29, 2013, the CA ruled in favor of TNS and opined that the
projects assigned to petitioners were distinct and separate from the other
undertakings of TNS; that they were required to sign project-to-project
employment contracts; and that a corresponding termination report was
made to DOLE for every accomplished project.Further, it stated that the
repeated re-hiring of petitioners for at least one (1) year did not ipso
facto convert their status to regular employees. According to the CA, the
mere fact that a project employee had worked on a specific project for
more than one (1) year did not necessarily change his status from project
employee
to
regular
or
permanent
employee.21
As to the issue of grave abuse of discretion, the CA held that the NLRC
committed such abuse when it refused to consider the pieces of evidence
submitted by TNS during its determination of the merits of the latters
motion for reconsideration. It stressed that the technical rules of evidence
were not binding in labor cases, 22 that even if the evidence was not
submitted to the LA, the fact that it was duly introduced on appeal before
the
NLRC
was
enough
basis
for
it
to
admit
them. 23
Not in conformity, petitioners filed a motion for reconsideration but it was
eventually
denied.
Hence, this petition presenting the following
ARGUMENTS:
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED
IN HOLDING THAT THE PETITIONERS ARE NOT REGULAR

OF

THE

RESPONDENT

COMPANY.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED


IN RULING THAT THE HONORABLE NLRC COMMITTED GRAVE ABUSE
OF DISCRETION.24

The Courts Ruling

At the outset, it must be stressed that the Court is not a trier of facts. In
petitions for review under Rule 45, the Court only resolves pure questions
of law and is precluded from reviewing factual findings of the lower
tribunals,subject to certain exceptions.This case is an exception as this
Court may review factual conclusions of the CA when they are contrary to
those
of
the
NLRC
or
of
the
Labor
Arbiter. 25
Upon review of the records, the evidence failed to clearly, accurately,
consistently, and convincingly show that petitioners were still project
employees
of
TNS.
Article 280 of the Labor Code, as amended, clearly defined a project
employee as one whoseemployment has been fixed for a specific
project or undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season.Additionally, a
project employee is one whose termination of his employment contract is
reported to the DOLE everytime the project for which he was engaged has
been
completed.
In their Comment,26 the respondents stressed that the NLRC decision was
mainly anchored upon the supposed lack of compliance with the
termination report requirement under the applicable DOLE Department
Orders. The NLRC ruled that petitioners were regular employees for having
been allowed to continue working after the last submitted termination
report. Thus, TNS submitted, albeit belatedly, the termination reports from
November 2007 up to the last termination report filed on November 18,
2008, by attaching it to the motion for reconsideration filed before the
NLRC.27
Although TNS belatedly submitted the supposed lacking termination
reports, it failed to show the corresponding project employment contracts
of petitioners covering the period indicated in the said termination

73

reports.TNS itself stated in its motion for reconsideration 28 before the NLRC
that the project employee status of the employee could be proved by the
employment contracts signed voluntarily by the employees and by the
termination report filed with the DOLE after the completion of every
project.29Yet, no project employment contracts were shown. It is wellsettled that rules of evidence shall be liberally applied in labor cases, but
this does not detract from the principle that piecemeal presentation of
evidence is simply not in accord with orderly justice. 30The NLRC was correct
in saying that in the absence of proof that the subsequent employment of
petitioners continued to be on a project-to-project basis under a contract of
employment, petitioners were considered to have become regular
employees.31
TNS contended that the repeated and successive rehiring of project
employees does not qualify petitioners as regular employees, as length of
service is not the controlling determinant of the employment tenure of a
project employee, but whether the employment has been fixed for a
specific project or undertaking and its completion has been determined at
the time of the engagement of the employee. The repeated rehiring was
only a natural consequence of the experience gained from past service
rendered
in
other
projects.32
In Maraguinot, Jr. v. NLRC,33 the Court held that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, rehired
by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a regular employee.
Although it is true that the length of time of the employees service is not a
controlling determinant of project employment, it is vital in determining
whether he was hired for a specific undertaking or in fact tasked to perform
functions vital, necessary and indispensable to the usual business or trade
of the employer.34 Petitioners successive re-engagement in order to
perform the same kind of work firmly manifested the necessity and
desirability of their work in the usual business of TNS as a market research
facility.35 Undisputed also is the fact that the petitioners were assigned
office-based tasks from 9:00 oclock in the morning up to 6:00 oclock in
the evening, at the earliest, without any corresponding remuneration.
The project employment scheme used by TNS easily circumvented the law
and precluded its employees from attaining regular employment status in
the subtlest way possible.Petitioners were rehired not intermittently, but
continuously,contract after contract, month after month, involving the very
same tasks. They practically performed exactly the same functions over
several years. Ultimately,without a doubt, the functions they performed
were indeed vital and necessary to the very business or trade of TNS.
Granting arguendo that petitioners were rehired intermittently, a careful
review of the project employment contracts of petitioners reveals some

other vague provisions. Oddly, one of the terms and conditions in the said
contract stated that:
1.

The need for your services being determinable and for a specific
project starting ____________ your employment will be for the
duration of said project of the Company, namely Project ___________
which is expected to be finished on _____________. The Company
shall have the option of renewing or extending the period
of this agreement for such time as it may be necessary to
complete the project or because we need further time to
determine your competence on the job.

To the Court, the phrase because we need further time to determine your
competence on the job would refer to a probationary employment. Such
phrase changes the tenor of the contract and runs counter to the very
nature of a project employment. TNS can, therefore, extend the contract
which was already fixed when it deemed it necessary to determine
whether or not the employee was qualified and fit for the job. Corollarily,
TNS can likewise pre-terminate the contract not because the specific
project was completed ahead of time, but because of failure to qualify for
the job.Consistently, the terms and conditions of the contract, reads:
4. It is expressly agreed and understood that the Company may terminate
your employment after compliance with procedural requirements of law,
without benefit of termination pay and without any obligation on the part
of the Company, in the event of any breach of any conditions hereof:

a) If the project is completed or cancelled before the expected date of


completion as specified in paragraph 1 hereof;

b) If we should find that you are not qualified, competent or


efficient in the above-stated positions for which you are hired
in accordance with the company standards made known to you
at the start of your employment;

xxx

For said reason, at the outset, the supposed project employment contract
was highly doubtful. In determining the true nature of an employment, the
entirety of the contract, not merely its designation or by which it was
denominated, is controlling.Though there is a rule that conflicting

74

provisions in a contract should be harmonized to give effect to all, 36in this


case, however, harmonization is impossible because project employment
and probationary employment are distinct from one another and cannot
co-exist with each other.Hence, should there be ambiguity in the provisions
of the contract, the rule is that all doubts, uncertainties, ambiguities and
insufficiencies should be resolved in favor of labor. 37 This is in consonance
with the constitutional policy of providing full protection to labor.

Finally,nowhere in the NLRC resolution denying TNS motion for


reconsideration can it be found it outrightly denied the said motion for
belatedly submitting the lacking termination reports. In resolving the
motion, the NLRC also took into consideration the records of the case,
meaning, including those belatedly submitted, and despite review of these
records, it still found the evidence insufficient to overturn its decision
against
TNS.

In sum, petitioners are deemed to have become regular employees. As


such, the burden of proving the legality of their dismissal rests upon
TNS.Having failed to discharge such burden of proving a just or authorized
cause,
TNS
is
liable
for
illegal
dismissal.

To reiterate,the technical rules of evidence are not binding on labor


tribunals.Such a rule, however, is not a license for parties to a case to be
remiss in their duty to present every and all proofs, at the earliest
opportunity, that will best support their claim and help the courts to fully,
exhaustively
and
speedily
resolve
the
controversy.

Accordingly, as correctly ruled by the NLRC, each petitioner is entitled to


backwages from the time of their dismissal up to the finality of this
decision plus separation pay, following their prayer for such relief in lieu of
reinstatement, computed as follows as of May 29, 2009:

SO ORDERED.

a) Backwages:

October 21, 2008 to May 29, 2009 = 7.27 mos.

P382.00 x 26 days x 7.27 mos.

P72, 205.64

b) Separation Pay:

December 1, 2008 to May 29, 2009 = 5.93 mos.

P382.00 x 26 days x 5.03 mps./12

WHEREFORE, the petition is GRANTED. The January 29, 2013 Decision


and the August 7, 2013 Resolution of the Court of Appeals in CA-G.R. SP
No. 117637 are SET ASIDE. The July 23, 2010 Decision of the National
Labor
Relations
Commission
is
hereby REINSTATED.

P4,908.10

P77,113.80

75

G.R. Nos. 174365-66

February 4, 2015

ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO


DELA RAMA, JR., RICKY S. NICOLAS, CRISPULO D. DONOR, GALO
FALGUERA,
and
NATIONAL
LABOR
RELATIONS
COMMISSION,Petitioners,
vs.
COCA-COLA BOTTLERS PHILIPPINES,* Respondent.

Basan

July 13, 1996

January 31, 1997

Donor

September 16, 1995

February 13, 1997

Nicolas

May 10, 1996

January 30, 1997

Falguera

January 15, 1991

April 1996

DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to reverse and set aside the Decision 1 dated August
31, 2005 and Resolution 2 dated August 24, 2006 of the Court of Appeals
(CA) in CA-G.R. SP Nos. 80977 & 87071, which reversed the Resolutions
dated January 30, 20033 and September 24, 20034 of the National Labor
Relations Commission (NLRC) in NLRC 00-02-01419-97.
The factual antecedents are as follows.
On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L.
Tumabiao, Jr., Roberto Dela Rama,Jr., Ricky S. Nicolas, Crispulo D. Donor,
Galo Falguera filed a complaint for illegal dismissal with money claims
against respondent Coca-Cola Bottlers Philippines, alleging that respondent
dismissed them without just cause and prior written notice required by law.
In their position paper, petitioners provided for the following material
dates:5

Name of Petitioner

Date of Hiring

Date of Dismissal

Dela Rama

November 16, 1995

February 13, 1997

Dizon

October 1988

December 15, 1996

Tumabiao

February 2, 1992

February 13, 1997

Respondent corporation, however, countered that it hired petitioners as


temporary route helpers to act as substitutes for its absent regular route
helpers merely for a fixed period in anticipation of the high volume of work
in its plants or sales offices. 6 As such, petitioners claims have no basis for
they knew that their assignment as route helpers was temporary in
duration.
On August 21, 1998, the Labor Arbiter ruled in favor of petitioners and
found that since they were performing activities necessary and desirable to
the usual business of petitioner for more than the period for regularization,
petitioners are considered as regular employees, and thus, their dismissal
was done contrary to law in the absence of just cause and prior written
notice.7 Thus, it ordered respondent to reinstate petitioners with full
backwages from the time their salaries were withheld until their actual
reinstatement and to pay their lump sum increase extended to them in
their collective bargaining agreement, their accrued vacation and sick
leave benefits, as well as monetary awards and attorneys fees. 8
On January 30, 2003, the NLRC affirmed the Labor Arbiters decision and
rejected respondents contention that petitioners were merely employed
for a specific project or undertaking the completion or termination of which
has been determined at the time of their engagement. It stressed that
nowhere in the records of the case was it shown that petitioners were hired
as project or seasonal employees, respondent having failed to submit any

76

contract of project or other similar proof thereof. 9 It also noted that neither
can petitioners be considered as probationary employees for the fact that
they had performed their services for more than six (6) months. In
addition, the NLRC upheld the Labor Arbiters ruling that petitioners, as
route helpers, performed work directly connected or necessary and
desirable in respondents ordinary business of manufacturing and
distributing its softdrink products. Thus, respondent failed to overcome
petitioners assertion that they were regular employees. As such, their
employment could only be terminated with just cause and after the
observance of the required due process. Thereafter, the subsequent
motion for reconsideration filed by respondent was further denied by the
NLRC on September 24, 2003.
On December 9, 2003, respondent filed a petition for certiorari 10 with the
CA alleging grave abuse of discretion on the part of the NLRC in finding
that petitioners were regular employees. In the meantime, petitioners filed
before the Labor Arbiter a Motion for Issuance of a Writ of
Execution11 dated December 15, 2003, to which respondent filed a
Manifestation and Motion with attached Opposition.12 On March 25, 2004,
the Labor Arbiter ordered that the Writ of Execution be issued, which was
affirmed by the NLRC on June 21, 2004. Consequently, respondent filed
another petition for Certiorari 13 on October 22, 2004, claiming that the
NLRC committed grave abuse of discretion in directing the execution of a
judgment, the propriety and validity of which was still under determination
of the appellate court.
In its Decision dated August 31, 2005, the CA consolidated respondents
two (2) petitions for certiorari and reversed the rulings of the NLRC and the
Labor Arbiter in the following wise:
That the respondents "performed duties which are necessary or desirable
in the usual trade or business of Coca-Cola," is of no moment. This is not
the only standard for determining the status of ones employment. Such
fact does not prevent them from being considered as fixed term employees
of Coca-Cola whose engagement was "fixed" for a specific period. The
respondents repeated hiring for various periods (ranging from more than
six months for private respondent Basan to eight years in the case of
private respondent Dizon) would not automatically categorize them as
REGULAR EMPLOYEES.

Brent, fixed term employment continues to be allowed and enforceable in


this jurisdiction. Not being permanent regular employees, it must be held
that the respondents are not entitled to reinstatement and payment of full
backwages.14
Petitioners sought a reconsideration of the CAs Decision on procedural and
substantive grounds. On the procedural, they alleged that respondent, in
filing its appeal of the Labor Arbiters August 21, 1998 decision with the
NLRC only on December 20, 1998, rendered the Decision of the Labor
Arbiter final and executory, and thus, deprived the CA of jurisdiction to
alter the final judgment.15 They also claimed that the Resolutions of the
NLRC have become final and executory in view of the Entries of Judgment
dated December 16, 2003 and September 16, 2004 issued by the NLRC. As
to the substantial matter, petitioners assert that they are regular
employees entitled to security of tenure.
On August 24, 2006, the CA denied petitioners motion for reconsideration
in saying that it is no longer necessary to discuss whether respondent was
able to timely appeal the Labor Arbiters decision to the NLRC, in view of
the fact that the latter had already given due course to said appeal by
deciding the case on the merits and, more importantly, petitioners failure
to raise the alleged infirmity before the NLRC in opposition to respondents
appeal.
Hence, the instant petition invoking the following grounds:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY AND PATENTLY
ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO THE LACK OR EXCESS OF JURISDICTION IN RULING
THAT THE PETITIONERS WERE NOT REGULAR EMPLOYEES.
II.
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN THE CHALLENGED DECISIONS AS TO WARRANT THE
EXERCISE
OF
THE
COURTS
DISCRETIONARY
APPELLATE
JURISDICTION.

xxxx
It being supported by facts on record and there being no showing that the
employment terms were foisted on the employees through circumstances
vitiating or diminishing their consent, following Brent School, Inc. vs.
Zamora(G.R. No. 48494, Feb. 5, 1990), the respondents must be
considered as fixed term employees whose "seasonal employment" or
employment for a "period" have been "set down." After all, as conceded by

Petitioners essentially maintain that contrary to the findings of the CA, they
were continuously hired by respondent company to perform duties
necessary and desirable in the usual trade or business and are, therefore,
regular employees. They allege that if their services had really been
engaged for fixed specific periods, respondent should have at least
provided the contracts of employment evidencing the same.

77

For its part, respondent contends that the petition should be denied due
course for its verification and certification of non-forum shopping was
signed by only one of the petitioners. It alleges that even assuming the
validity of the same, it should still be dismissed for the appellate court
aptly found that petitioners were fixed-term employees who were hired
intermittently. Respondent also asserts that petitioners failed to completely
substantiate their claims, for during the hearing conducted before the
Labor Arbiter on March 11, 1998, the payslips presented by petitioners
merely established the following employment terms:

Name
of Length of Service
Petitioner

Dates

Dela Rama 5 months, 4 months

Between
November
And March 31, 1996

Dizon

4
2
9 months

Tumabiao

3 months

Basan

6.5
1 month

Donor

1 month
1 month

30,

months In
months In
In 1996

From
November
To January 31, 1997

months From
May
To
December
From
January
To January 31, 1997

1995

1993
1994

15,

15,
31,
15,

From
February
15,
To
March
15,
From
December
15,
To January 15, 1997

1996

1996
1996
1997

1996
1996
1996

Nicolas

8.5 months

In 1996 and 1997

Falguera

6 months

From
To 1997

1992

Considering that the evidence presented showed that petitioners merely


rendered their services for periods of less than a year, respondent claims
that petitioners could not have attained regular employment status. It
added that its failure to present petitioners employment contracts was
due to a fire that destroyed its Manila Plant where said contracts were
kept. Nevertheless, respondent persistently asserts that where a fixed
period of employment was agreed upon knowingly and voluntarily by the
petitioners, the duration of which was made known to them at the time of
their engagement, petitioners cannot now claim otherwise. In addition, it
disagrees with the contention that petitioners, as route helpers, were
performing functions necessary or desirable to its business.
The petition is impressed with merit.
On the procedural issue, We hold that while the general rule is that the
verification and certification of non-forum shopping must be signed by all
the petitioners in a case, the signature of only one of them, petitioner
Basan in this case, appearing thereon may be deemed substantial
compliance with the procedural requirement. Jurisprudence is replete with
rulings that the rule on verification is deemed substantially complied with
when one who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the verification, and when
matters alleged in the petition have been made in good faith or are true
and correct.16 Similarly, this Court has consistently held that when under
reasonable or justifiable circumstances, as when all the petitioners share a
common interest and invoke a common cause of action or defense, as in
this case, the signature of only one of them in the certification against
forum
shopping
substantially
complies
with
the
certification
requirement.17 Thus, the fact that the petition was signed only by petitioner
Basan does not necessarily result in its outright dismissal for it is more in
accord with substantial justice to overlook petitioners procedural
lapses.18 Indeed, the application of technical rules of procedure may be
relaxed in labor cases to serve the demand of justice. 19
As for the primordial issue in this case, it must be noted that the same has
already been resolved in Magsalin v. National Organization of Working
Men,20 wherein this Court has categorically declared that the nature of
work of route helpers hired by Coca Cola Bottlers Philippines, Inc. is

78

necessary and desirable in its usual business or trade thereby qualifying


them as regular employees, to wit:
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest
manufacturers of softdrinks in the country. Respondent workers have long
been in the service of petitioner company. Respondent workers, when
hired, would go with route salesmen on board delivery trucks and
undertake the laborious task of loading and unloading softdrink products of
petitioner company to its various delivery points.
Even while the language of law might have been more definitive, the
clarity of its spirit and intent, i.e., to ensure a "regular" worker's security of
tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity performed
by the employee in relation to the usual business or trade of the employer.
The standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a
fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business
or trade is pursued in the usual course. It is distinguished from a specific
undertaking that is divorced from the normal activities required in carrying
on the particular business or trade. But, although the work to be performed
is only for a specific projector seasonal, where a person thus engaged has
been performing the job for at least one year, even if the performance is
not continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the
necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be
regular with respect to such activity and while such activity exists.
The argument of petitioner that its usual business or trade is softdrink
manufacturing and that the work assigned to respondent workers as sales
route helpers so involves merely "postproduction activities," one which is
not indispensable in the manufacture of its products, scarcely can be
persuasive. If, as so argued by petitioner company, only those whose work
are directly involved in the production of softdrinks may be held
performing functions necessary and desirable in its usual business or
trade, there would have then been no need for it to even maintain regular
truck sales route helpers.1wphi1 The nature of the work performed must
be viewed from a perspective of the business or trade in its entirety and
not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for
their services clearly attest to the necessity or desirability of their services
in the regular conduct of the business or trade of petitioner company. The
Court of Appeals has found each of respondents to have worked for at least
one year with petitioner company. While this Court, in Brent School, Inc. vs.

Zamora, has upheld the legality of a fixed-term employment, it has done


so, however, with a stern admonition that where from the circumstances it
is apparent that the period has been imposed to preclude the acquisition of
tenurial security by the employee, then it should be struck down as being
contrary to law, morals, good customs, public order and public policy. The
pernicious practice of having employees, workers and laborers, engaged
for a fixed period of few months, short of the normal six-month
probationary period of employment, and, thereafter, to be hired on a dayto-day basis, mocks the law. Any obvious circumvention of the law cannot
be countenanced. The fact that respondent workers have agreed to be
employed on such basis and to forego the protection given to them on
their security of tenure, demonstrate nothing more than the serious
problem of impoverishment of so many of our people and the resulting
unevenness between labor and capital. A contract of employment is
impressed with public interest. The provisions of applicable statutes are
deemed written into the contract, and "the parties are not at liberty to
insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other." 21
In fact, in Pacquing, et. al. v. Coca-Cola Philippines, Inc., 22 this Court applied
the ruling cited above under the principle of stare decisis et non quieta
movere (follow past precedents and do not disturb what has been settled).
It was held therein that since petitioners, as route helpers, were performing
the same functions as the employees in Magsalin, which are necessary and
desirable in the usual business or trade of Coca Cola Philippines, Inc., they
are considered as regular employees entitled to security of tenure.
Here, respondent, in its position paper, expressly admitted that petitioners
were employed as route helpers in anticipation of the high volume of work
in its plants and sales offices. 23 As such, respondents contention that
petitioners could not have attained regular employment status for they
merely rendered services for periods of less than a year cannot be
sustained in view of the Magsalin doctrine previously cited. Indeed, the
"pernicious practice" of engaging employees for a fixed period short of the
six-month probationary period of employment, and again, on a day-to-day
basis thereafter, mocks the law.
At this point, it is worth recalling that Article 280 of the Labor Code, as
amended, provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
projector undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the

79

work or services to be performed is seasonal in nature and the


employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity
exists. Thus, pursuant to the Article quoted above, there are two kinds of
regular employees, namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those who have rendered at least one year
of service, whether continuous or broken, with respect to the activities in
which they are employed.24 Simply stated, regular employees are classified
into: (1) regular employees by nature of work; and (2) regular employees
by years of service. The former refers to those employees who perform a
particular activity which is necessary or desirable in the usual business or
trade of the employer, regardless of their length of service; while the latter
refers to those employees who have been performing the job, regardless of
the nature thereof, for at least a year.25
Petitioners, in this case, fall under the first kind of regular employee above.
As route helpers who are engaged in the service of loading and unloading
softdrink products of respondent company to its various delivery points,
which is necessary or desirable in its usual business or trade, petitioners
are considered as regular employees. That they merely rendered services
for periods of less than a year is of no moment since for as long as they
were performing activities necessary to the business of respondent, they
are deemed as regular employees under the Labor Code, irrespective of
the length of their service.
Nevertheless, respondent, as in Magsalin, also asserts that even assuming
that petitioners were performing activities which are usually necessary or
desirable in its usual business or trade, they were employed not as regular
employees but only for a fixed period, which is well within the boundaries
of the law, as ruled in Brent School, Inc. v. Zamora, 26 viz.:
There is, on the other hand, the Civil Code, which has always recognized,
and continues to recognize, the validity and propriety of contracts and
obligations with a fixed or definite period, and imposes no restraints on the
freedom of the parties to fix the duration of a contract, whatever its object,
be it specie, goods or services, except the general admonition against
stipulations contrary to law, morals, good customs, public order or public
policy. Under the Civil Code, therefore, and as a general proposition, fixedterm employment contracts are not limited, as they are under the present
Labor Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include those to which the
parties by free choice have assigned a specific date of termination.

xxxx
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary,
unjust in its effects and apt to lead to absurd and unintended
consequences.27
Thus, under the above Brent doctrine, while it was not expressly
mentioned in the Labor Code, this Court has recognized a fixed-term type
of employment embodied in a contract specifying that the services of the
employee shall be engaged only for a definite period, the termination of
which occurs upon the expiration of said period irrespective of the
existence of just cause and regardless of the activity the employee is
called upon to perform.28Considering, however, the possibility of abuse by
employers in the utilization of fixed-term employment contracts, this Court,
in Brent, laid down the following criteria to prevent the circumvention of
the employees security of tenure:
1) The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper
pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee
dealt with each other on more or less equal terms with no moral
dominance exercised by the former or the latter. 29 Unfortunately,
however, the records of this case is bereft of any proof which will
show that petitioners freely entered into agreements with
respondent to perform services for a specified length of time. In
fact, there is nothing in the records to show that there was any
agreement at all, the contracts of employment not having been
presented. While respondent company persistently asserted that
petitioners knowingly agreed upon a fixed period of employment

80

and repeatedly made reference to their contracts of employment,


the expiration thereof being made known to petitioners at the time
of their engagement, respondent failed to present the same in
spite of all the opportunities to do so. Notably, it was only at the
stage of its appeal to the CA that respondent provided an
explanation as to why it failed to submit the contracts they
repeatedly spoke of.30 Even granting that the contracts of
employment were destroyed by fire, respondent could have easily
submitted other pertinent files, records, remittances, and other
similar documents which would show the fixed period of
employment voluntarily agreed upon by the parties. They did not,
however, aid this Court with any kind of proof which might tend to
show that petitioners were truly engaged for specified periods,
seemingly content with the convenient excuse that the contracts
were destroyed by fire. Indeed, respondents failure to submit the
necessary documents, which as employers are in their possession,
gives rise to the presumption that their presentation is prejudicial
to its cause.31
While fixed term employment is not per se illegal or against public policy,
the criteria above must first be established to the satisfaction of this Court.
Yet, the records of this case reveal that for years, petitioners were
repeatedly engaged to perform functions necessary to respondents
business for fixed periods short of the six-month probationary period of
employment. If there was really no intent to circumvent security of tenure,
respondent should have made it clear to petitioners that they were being
hired only for fixed periods in an agreement freely entered into by the
parties. To this Court, respondents act of hiring and re-hiring petitioners
for periods short of the legal probationary period evidences its intent to
thwart petitioners security of tenure, especially in view of an awareness
that ordinary workers, such as petitioners herein, are never on equal terms
with their employers.32 It is rather unjustifiable to allow respondent to hire
and rehire petitioners on fixed terms, never attaining regular
status.33 Hence, in the absence of proof showing that petitioners knowingly
agreed upon a fixed term of employment, We uphold the findings of the
Labor Arbiter and the NLRC and so rule that petitioners are, indeed, regular
employees, entitled to security of tenure. Consequently, for lack of any
clear, valid, and just or authorized cause in terminating petitioners'
employment, We find respondent guilty of illegal dismissal.
WHEREFORE, premises considered, the instant petition is GRANTED. The
assailed Decision dated August 31, 2005 and Resolution dated August 24,
2006 of the Court of Appeals in CA-G.R. SP Nos. 80977 & 87071 are SET
ASIDE. The Resolutions dated January 30, 2003 and September 24, 2003 of
the NLRC in NLRC 00-02-01419-97, affirming in toto the Decision dated
August 21, 1998 of the Labor Arbiter are REINSTATED with MODIFICATION.
Taking into account petitioners' reinstatement in 199934 and petitioner
Falguera's receipt of P792,815.64 separation pay,35 respondent is hereby
ORDERED to pay petitioners the following: (1) backwages computed from

the date their salaries were withheld from them until their actual
reinstatement; (2) allowances and other benefits, or their monetary
equivalent, at the time of their dismissal; (3) attorney's fees equivalent to
ten percent ( 10%) of the monetary awards; and (4) interest at six percent
( 6%) per annum of the total monetary awards, computed from the finality
of this Decision until their full satisfaction. For this purpose, the records of
this case are hereby REMANDED to the Labor Arbiter for proper
computation of said awards, deducting amounts already received. Costs
against petitioner.
SO ORDERED.

81

G.R. No. 179640, March 18, 2015


HACIENDA CATAYWA/MANUEL VILLANUEVA, owner, JOEMARIE
VILLANUEVA,
manager,
MANCY
AND
SONS
ENTERPRISES,
INC., Petitioners, v. ROSARIO LOREZO, Respondent.
DECISION
PERALTA, J.:

Consequently, the SSC rendered its Resolution dated October 12, 2005,
thus:

Before this Court is a petition for review on certiorari dated September 28,
2007 of petitioner Hacienda Cataywa, Manuel Villanueva, et al.,
(petitioners) seeking to reverse and set aside the Resolutions, dated
October 17, 20061 and August 10, 2007,2 respectively, of the Court of
Appeals (CA) and the Resolution and Order, dated October 12, 2005 and
March 8, 2006, respectively, of the Social Security Commission, ordering
petitioners to pay jointly and severally all delinquent contributions, 3%
penalty per month of delayed payment and damages to respondent
Rosario
Lorezo.
The

Petitioners Manuel and Jose Villanueva refuted in their answer, the


allegation that not all contributions of respondent were remitted.
Petitioners alleged that all farm workers of Hda. Cataywa were reported
a^id their contributions were duly paid and remitted to SSS. It was the late
Domingo Lizares, Jr. who managed and administered the hacienda. 5 While,
Talisay Farms, Inc. filed a motion to dismiss on the ground of lack of cause
of action in the absence of an allegation that there was an employeremployee relationship between Talisay Farms and respondent. 6

antecedent

facts

follow:

On October 22, 2002, respondent Rosario Lorezo received, upon inquiry, a


letter from the Social Security System (SSS) Western Visayas Group
informing her that she cannot avail of their retirement benefits since per
their record she has only paid 16 months. Such is 104 months short of the
minimum requirement of 120 months payment to be entitle to the benefit.
She was also informed that their investigation of her alleged employment
under employer Hda. Cataywa could not be confirmed because Manuel
Villanueva was permanently residing in Manila and Joemarie Villanueva
denied having managed the farm. She was also advised of her options:
continue paying contributions as voluntary member; request for refund;
leave her contributions in-trust with the System, or file a petition before
the Social Security Commission (SSC) so that liabilities, if any, of her
employer
may
be
determined.3
Aggrieved, respondent then filed her Amended Petition dated September
30, 2003, before the SSC. She alleged that she was employed as laborer in
Hda. Cataywa managed by Jose Marie Villanueva in 1970 but was reported
to the SSS only in 1978. She alleged that SSS contributions were deducted
from her wages from 1970 to 1995, but not all were remitted to the SSS
which, subsequently, caused the rejection of her claim. She also impleaded
Talisay Farms, Inc. by virtue of its Investment Agreement with Mancy and
Sons Enterprises. She also prayed that the veil of corporate fiction be
pierced since she alleged that Mancy and Sons Enterprises and Manuel and
Jose
Marie
Villanueva
are
one
and
the
same. 4

WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds,


that Rosario M. Lorezo was a regular employee subject to compulsory
coverage of Hda. Cataywa/Manuel Villanueva/ Mancy and Sons Enterprises,
Inc. within the period of 1970 to February 25, 1990. In view thereof, the
aforenamed respondents are hereby ordered to pay jointly and severally,
within thirty (30) days from receipt hereof, all delinquent contributions
within the proven employment period computed in accordance with the
then prevailing minimum wage (at 11 months per year) in the amount of
P8,293.90, the 3% per month penalty on the delayed payment of
contributions in the amount of P59,786.10 (computed as of September 9,
2005), pursuant to Section 22 of the SS Law and the damages in the
amount of P32,356.21 for misrepresentation of the real date of
employment, pursuant to Section 24 (b) of the said statute.
The SSS, on the other hand, is ordered to pay (subject to existing rules and
regulations) petitioner Rosario M. Lorezo her retirement benefit, upon the
filing of the claim therefor, and to inform this Commission of its compliance
herewith.
SO

ORDERED.7

The SSC denied petitioners' Motion for Reconsideration. The petitioner,


then, elevated the case before the CA where the case was dismissed
outrightly due to technicalities, thus:
The Court Resolved to DISMISS the instant petition on the basis of the
following observations:
1.

Signatory to the Verification failed to attach his authority to sign


for
and
[in]
behalf
of
the
other
Petitioners.
(Violation of Section 5, Rule 43 of the Rules of Court, in relation to
Section 7, Rule 45 of the Rules of Court)

82

2.

Certified true copies of pleadings and documents relevant and


pertinent
to
the
petition
are
incomplete,
to
wit:
-Petitioner
failed
to
attach
the
following:
- Petition/Amended Petition filed before the SSS of Makati City
- Respondents' Answer filed before the SSS of Makati City
- Parties' respective position paper filed before the SSS of Makati
City
- Parties' respective memorandum of appeal filed before the
Commission

(Violation of Section 6, Rule 43 of the Rules of Court, in relation to Section


7,
Rule
43
of
the
Rules
of
Court) 8

Following the denial of petitioners' Motion for Reconsideration of the CA,


petitioner filed with this Court the present petition stating the following
grounds:
1) THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN STRICTLY AND RIGIDLY APPLYING THE TECHNICAL RULES OF PROCEDURE
AND DISMISSING THE CASE ON TECHNICALITY WITHOUT EVALUATING THE
MERITS
OF
THE
CASE;ChanRoblesVirtualawlibrary
2) THE [SSC] COMMITTED REVERSIBLE ERROR IN MAKING CONCLUSIONS
FOUNDED ON SPECULATIONS AND SURMISES NOT CONFORMING TO
EVIDENCE ON RECORD, MAKING MANIFESTLY MISTAKEN INFERENCES, AND
RENDERING JUDGMENT BASED ON MISAPPREHENSION OF FACTS AND
MISAPPLICATION OF THE LAW, RULING AND RENDERING JUDGMENT THAT:
a) RESPONDENT WORKED FROM 1970 TO FEBRUARY 25,1990
b) PETITIONERS ARE LIABLE FOR DELINQUENT CONTRIBUTIONS
c) PETITIONERS ARE LIABLE FOR 3% PER MONTH PENALTY
d) PETITIONERS ARE LIABLE FOR DAMAGES DUE TO MISREPRESENTATION
e) MANCY & SONS ENTERPRISES, INC. AND MANUEL VILLANUEVA ARE ONE
AND THE SAME.9

The

petition

is

partially

meritorious.

Petitioners argues that the CA has been too rigid in the application of the
rules of procedure in dismissing the appeal without evaluation of the
merits.
This Court has emphasized that procedural rules should be treated with

utmost respect and due regard, since they are designed to facilitate the
adjudication of cases to remedy the worsening problem of delay in the
resolution of rival claims and in the administration of justice. However, this
Court has recognized exceptions to the Rules, but only for the most
compelling reasons where stubborn obedience to the Rules would defeat
rather
than
serve
the
ends
of
justice.10
As in the case of Obut v. Court of Appeals,11 this Court held that "judicial
orders are issued to be obeyed, nonetheless a non-compliance is to be
dealt with as the circumstances attending the case may warrant. What
should guide judicial action is the principle that a party-litigant is to be
given the fullest opportunity to establish the merits of his complaint of
defense rather than for him to lose life, liberty, honor or property on
technicalities."12
When the CA dismisses a petition outright and the petitioner files a motion
for the reconsideration of such dismissal, appending thereto the requisite
pleadings, documents or order/resolution, this would constitute substantial
compliance with the Revised Rules of Court. 13 Thus, in the present case,
there was substantial compliance when in their Motion for Reconsideration,
they attached a secretary certificate giving Joemarie's authority to sign on
behalf of the corporation. Petitioners also included the necessary
attachment.14
At the outset, it is settled that this Court is not a trier of facts and will not
weigh evidence all over again. 15 However, considering the issues raised
which can be resolved on the basis of the pleadings and documents filed,
and the fact that respondent herself has asked this Court for early
resolution, this Court deems it more practical and in the greater interest of
justice not to remand the case to the CA but, instead, to resolve the
controversy
once
and
for
all.
Petitioners are of the opinion that the SSC committed reversible error in
making conclusions founded on speculations and surmises that respondent
worked from 1970 to February 25, 1990. Petitioners argue that the SSC did
not give credence nor weight at all to the existing SSS Form R-1A and farm
bookkeeper Wilfredo Ibalobor. Petitioners insist that after thirty long years,
all the records of the farm were already destroyed by termites and
elements, thus, they relied on the SSS Form R-1A as the only remaining
source of information available. Petitioners also alleged that respondent
was
a
very
casual
worker.
This

Court

disagrees.

It was settled that there is no particular form of evidence required to Drove


the existence of the employer-employee relationship. Any competent and
relevant evidence to prove such relationship may be admitted. This may
entirely be testimonial.16 If only documentary evidence would be required
to demonstrate the relationship, no scheming employer would be brought
before the bar of justice. 17 Petitioners erred in insisting that, due to

83

passage of time, SSS Form R-1A is the only remaining source of information
available to prove when respondent started working for them. However,
such form merely reflected the time in which the petitioners reported the
respondent for coverage of the SSS benefit. They failed to substantiate
their claim that it was only in 1978 that respondent reported for work.
The records are bereft of any showing that Demetria Denaga and Susano
Jugue harbored any ill will against the petitioners prompting them to
execute false affidavit. There lies no reason for this Court not to afford full
faith and credit to their testimonies. Denaga, in her Joint Affidavit with
Jugue, stated that she and respondent started working in Hda. Cataywa in
1970 and like her, she was reported to the SSS on December 19, 1978. 18 It
was also revealed in the records that the SSC found that Denaga was
employed by Manuel Villanueva at Hda. Cataywa from 1970 to December
1987.19
Jurisprudence has identified the three types of employees mentioned in the
provision20 of the Labor Code: (1) regular employees or those who have
been engaged to perform activities that are usually necessary or desirable
in the usual business or trade of the employer; (2) project employees or
those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined
at the time of their engagement, or those whose work or service is
seasonal in nature and is performed for the duration of the season; and (3)
casual employees or those who are neither regular nor project
employees.21
Farm workers generally fall under the definition of seasonal employees. 22 It
was also consistently held that seasonal employees may be considered as
regular employees when they are called to work from time to time. 23 They
are in regular employment because of the nature of the job, and not
because of the length of time they have worked. However, seasonal
workers who have worked for one season only may not be considered
regular
employees.24
The nature of the services performed and not the duration thereof, is
determinative of coverage under the law. 25 To be exempted on the basis of
casual employment, the services must not merely be irregular, temporary
or intermittent, but the same must not also be in connection with the
business or occupation of the employer. 26 Thus, it is erroneous for the
petitioners to conclude that the respondent was a very casual worker
simply because the SSS form revealed that she had 16 months of
contributions. It does not, in any way, prove that the respondent performed
a job which is not in connection with the business or occupation of the
employer
to
be
considered
as
casual
employee.
The test for regular employees to be considered as such has been
thoroughly explained in De Leon v. NLRC,27viz.:

The primary standard, therefore, of determining a regular employment is


the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer.
The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be determined
by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is also considered regular, but only with respect to such
activity
and
while
such
activity
exists.28

A reading of the records would reveal that petitioners failed to dispute the
allegation that the respondent performed hacienda work, such as planting
sugarcane point, fertilizing, weeding, replanting dead sugarcane fields and
routine miscellaneous hacienda work. 29 They merely alleged that
respondent was a very casual worker because she only rendered work for
16 months.30 Thus, respondent is considered a regular seasonal worker and
not
a
casual
worker
as
the
petitioners
alleged.
Petitioners also assert that the sugarcane cultivation covers only a period
of six months, thus, disproving the allegation of the respondent that she
worked for 11 months a year for 25 years. This Court has classified farm
workers as regular seasonal employees who are called to work from time to
time and the nature of their relationship with the employer is such that
during the off season, they are temporarily laid off; but reemployed during
the summer season or when their services may be needed.31 Respondent,
therefore, as a farm worker is only a seasonal employee. Since petitioners
provided that the cultivation of sugarcane is only for six] months,
respondent cannot be considered as regular employee during the months
when
there
is
no
cultivation.
Based on the foregoing facts and evidence on record, petitioners are liable
for delinquent contributions. It being proven by sufficient evidence that
respondent started working for the hacienda in 1970, it follows that
petitioners are liable for deficiency in the SSS contributions.
The imposition upon and payment by the delinquent employer of the three
percent (3%) penalty for the late remittance of premium contributions is
mandatory and cannot be waived by the System. The law merely gives to
the Commission the power to prescribe the manner of paying the
premiums. Thus, the power to remit or condone the penalty for late
remittance of premium contributions is not embraced therein. 32 Petitioners
erred in alleging that the imposition of penalty is not proper.

84

Petitioners also insist that the award of damages for misrepresentation is


without
basis.
This
Court
disagrees.
The law provides that should the employer misrepresent the true date of
the employment of the employee member, such employer shall pay to the
SSS damages equivalent to the difference between the amount of benefit
to which the employee member or his beneficiary is entitled had the
proper contributions been remitted to the SSS and the amount payable on
the basis of the contributions actually remitted. However, should the
employee member or his beneficiary is entitled to pension benefits, the
damages shall be equivalent to the accumulated pension due as of the
date of settlement of the claim or to the five years' pension, whichever is
higher,
including
the
dependent's
pension. 33
Lastly, petitioners aver that there is no legal basis to pierce the veil of
corporation
entity.

appeared as employer. However, this does not prove, in any way, that the
corporation is used to defeat public convenience, justify wrong, protect
fraud, or defend crime, or when it is made as a shield to confuse the
legitimate issues, warranting that its separate and distinct personality be
set aside. Also, it was not alleged nor proven that Mancy and Sons
Enterprises, Inc. functions only for the benefit of Manuel Villanueva, thus,
one
cannot
be
an
alter
ego
of
the
other.
WHEREFORE, the petition for review on certiorari dated September 28,
2007 of petitioners Hda. Cataywa, Manuel Villanueva, et al. is
hereby DENIED. Consequently, the resolution by the Social Security
Commission
is
hereby AFFIRMED with MODIFICATIONS that
the
delinquent contributions should be computed as six months per year of
service, and the case against Manuel and Jose Marie Villanueva
be DISMISSED.
SO ORDERED

It was held in Rivera v. United Laboratories, Inc.34 that While a corporation may exist for any lawful purpose, the law will regard it
as an association of persons or, in case of two corporations, merge them
into one, when its corporate legal entity is used as a cloak for fraud or
illegality. This is the doctrine of piercing the veil of corporate fiction. The
doctrine applies only when such corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, or when it is
made as a shield to confuse the legitimate issues, or where a corporation is
the mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted
as to make it merely an instrumentality, agency, conduit or adjunct of
another corporation. To disregard the separate juridical personality of a
corporation, the wrongdoing must be established clearly and convincingly.
It cannot be presumed.35

This Court has cautioned against the inordinate application of this doctrine,
reiterating the basic rule that "the corporate veil may be pierced only if it
becomes a shield for fraud, illegality or inequity committed against a third
person.36
The Court has expressed the language of piercing doctrine when applied to
alter ego cases, as follows: Where the stock of a corporation is owned by
one person whereby the corporation functions only for the benefit of such
individual owner, the corporation and the individual should be deemed the
same.37
This Court agrees with the petitioners that there is no need to pierce the
corporate veil. Respondent failed to substantiate her claim that Mancy and
Sons Enterprises, Inc. and Manuel and Jose Marie Villanueva are one and
the same. She based her claim on the SSS form wherein Manuel Villanueva

85

G.R. No. 199554, February 18, 2015


ZENAIDA PAZ, Petitioner, v. NORTHERN TOBACCO REDRYING CO.,
INC., AND/OR ANGELO ANG, Respondents.
DECISION
LEONEN, J.:
Zenaida Paz filed this Petition1 praying that the computation of Petitioners
Retirement Pay as determined by the National Labor Relations Commission
in
its
Decision
dated
08
December
2008
be
reinstated. 2
Northern Tobacco Redrying Co., Inc. (NTRCI), a flue-curing and redrying of
tobacco leaves business,3employs approximately 100 employees with
seasonal workers tasked to sort, process, store and transport tobacco
leaves during the tobacco season of March to September. 4

The Labor Arbiter in his Decision16 dated July 26, 2005 [c]onfirm[ed] that
the correct retirement pay of Zenaida M. Paz [was] ?12,487.50. 17
The National Labor Relations Commission in its Decision 18 dated December
8, 2008 modified the Labor Arbiters Decision. It likewise denied
reconsideration. The Decisions dispositive portion reads:
WHEREFORE, premises considered, the decision of the labor arbiter is
herebyMODIFIED. Complainant Appellant Zenaida Paz[s] retirement pay
should be computed pursuant to RA 7641 and that all the months she was
engaged to work for respondent for the last twenty eight (28) years should
be added and divide[d] by six (for a fraction of six months is considered as
one year) to get the number of years [for] her retirement pay[.]
Complainant Teresa Lopez is hereby entitled to her separation pay
computed at one half month pay for every year of service, a fraction of six
months shall be considered as one year, plus backwages from the time she
was illegally dismissed up to the filing of her complaint.
The

NTRCI hired Zenaida Paz (Paz) sometime in 1974 as a seasonal sorter, paid
P185.00 daily. NTRCI regularly re-hired her every tobacco season since
then. She signed a seasonal job contract at the start of her employment
and a pro-forma application letter prepared by NTRCI in order to qualify for
the
next
season.5
On May 18, 2003,6 Paz was 63 years old when NTRCI informed her that she
was considered retired under company policy.7 A year later, NTRCI told her
she
would
receive
P12,000.00
as
retirement
pay. 8

rest

of

the

decision

stays.

SO ORDERED.19

The Court of Appeals in its Decision20 dated May 25, 2011 dismissed the
Petition and modified the National Labor Relations Commissions Decision
in that financial assistance is awarded to . . . Zenaida Paz in the amount of
P60,356.25:21

Paz, with two other complainants, filed a Complaint for illegal dismissal
against NTRCI on March 4, 2004.9 She amended her Complaint on April 27,
2004 into a Complaint for payment of retirement benefits, damages, and
attorneys fees10 as P12,000.00 seemed inadequate for her 29 years of
service.11 The Complaint impleaded NTRCIs Plant Manager, Angelo Ang, as
respondent.12 The Complaint was part of the consolidated Complaints of
17
NTRCI
workers.13

WHEREFORE, the Petition is hereby DISMISSED. The Decision dated 8


December 2008 and Resolution dated 16 September 2009 of the National
Labor
Relations
Commission
in
NLRC
CA
No.
046642-05(5)
are MODIFIED in that (1) financial assistance is awarded to private
respondent Zenaida Paz in the amount of P60,356.25; and (2) the dismissal
of private respondent Teresa Lopez is declared illegal, and thus, she is
awarded backwages and separation pay, in accordance with the foregoing
discussion.

NTRCI countered that no Collective Bargaining Agreement (CBA) existed


between NTRCI and its workers. Thus, it computed the retirement pay of
its seasonal workers based on Article 287 of the Labor Code. 14

SO ORDERED.22

NTRCI raised the requirement of at least six months of service a year for
that year to be considered in the retirement pay computation. It claimed
that Paz only worked for at least six months in 1995, 1999, and 2000 out of
the 29 years she rendered service. Thus, Pazs retirement pay amounted
to P12,487.50 after multiplying her ?185.00 daily salary by 22 working
days
in
a
month,
for
three
years. 15

The Court of Appeals found that while applying the clear text of Article 287
resulted in the amount of P12,487.50 as retirement pay, this amount
[was] so meager that it could hardly support . . . Paz, now that she is weak
and old, unable to find employment.23 It discussed jurisprudence on
financial assistance and deemed it appropriate to apply the formula: Onehalf-month pay multiplied by 29 years of service divided by two yielded
P60,356.25
as
Pazs
retirement
pay. 24

86

Paz comes before this court seeking to reinstate the National Labor
Relations Commissions computation.25 NTRCI filed its Comment,26 and this
court
deemed
waived
the
filing
of
a
Reply. 27
Petitioner Paz contends that respondent NTRCI failed to prove the alleged
company policy on compulsory retirement for employees who reached 60
years of age or who rendered 30 years of service, whichever came first. 28
Consequently, Article 287, as amended by Republic Act No. 7641, 29applies
and entitles her to retirement pay . . . equivalent to [at least] one-half
month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year. 30 She adds that she was then 63
years old, and while one may opt to retire at 60 years old, the compulsory
retirement age is 65 years old under Article 287, as amended. 31
Petitioner Paz then argues respondent NTRCIs misplaced reliance
on Philippine Tobacco Flue-Curing & Redrying Corp. v. National Labor
Relations
Commission32 as
that
case
involved
separation
pay
computation.33
Lastly, petitioner Paz contends lack of legal basis that an employee should
have at least worked for six (6) months for a particular season for that
season to be included in the computation of retirement pay[.] 34 She
submits that regular seasonal employees are still considered employees
during off-season, and length of service determination should be applied in
retirees
favor.35
Respondent NTRCI counters that in retirement pay computation this court
should consider its ruling inPhilippine Tobacco on computing separation
pay of seasonal employees. It submits that the proviso a fraction of at
least six (6) months being considered as one (1) whole year appears in
both Article 287 on retirement pay and Articles 283 and 284 on separation
pay.36
Respondent NTRCI argues that unlike regular employees, seasonal workers
like petitioner Paz can offer their services to other employers during offseason. Thus, the six-month rule avoids the situation where seasonal
workers receive retirement pay twice an even more favorable position
compared
with
regular
employees.37
Both parties appear to agree on petitioner Pazs entitlement to retirement
pay. The issue before this court involves its proper computation. We also
resolve
whether
there
was
illegal
dismissal.
We

affirm

Regular

the

Court

of

Appeals
seasonal

decision

with

modification.
employees

Article 28038 of the Labor Code and jurisprudence identified three types of
employees, namely: (1) regular employees or those who have been

engaged to perform activities which are usually necessary or desirable in


the usual business or trade of the employer; (2) project employees or those
whose employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of
the season; and (3) casual employees or those who are neither regular nor
project
employees.39
Jurisprudence also recognizes the status of regular seasonal employees. 40
Mercado, Sr. v. National Labor Relations Commission 41 did not consider as
regular employees the rice and sugar farmland workers who were paid with
daily wages. This was anchored on the Labor Arbiters findings that
petitioners were required to perform phases of agricultural work for a
definite period, after which their services [were] available to any farm
owner.42
This court explained that the proviso in the second paragraph of Article
280 in that any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular
employee applies only to casual employees and not project and
regular
employees
in
the
first
paragraph
of
Article
280. 43
On the other hand, the workers of La Union Tobacco Redrying Corporation
in Abasolo v. National Labor Relations Commission 44 were considered
regular seasonal employees since they performed services necessary and
indispensable to the business for over 20 years, even if their work was only
during tobacco season.45 This court applied the test laid down in De Leon
v. National Labor Relations Commission46 for determining regular
employment status:
[T]he test of whether or not an employee is a regular employee has been
laid down inDe Leon v. NLRC, in which this Court held:
The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity, and while such activity exists.

87

Thus, the nature of ones employment does not depend solely on the will or
word of the employer. Nor on the procedure for hiring and the manner of
designating the employee, but on the nature of the activities to be
performed by the employee, considering the employer's nature of business
and
the
duration
and
scope
of
work
to
be
done.
In the case at bar, while it may appear that the work of petitioners is
seasonal, inasmuch as petitioners have served the company for
many years, some for over 20 years, performing services
necessary and indispensable to LUTORCOs business, serve as
badges of regular employment.
Moreover, the fact that
petitioners do not work continuously for one whole year but only
for the duration of the tobacco season does not detract from
considering them in regular employment since in a litany of cases this
Court has already settled that seasonal workers who are called to work
from time to time and are temporarily laid off during off-season are not
separated from service in said period, but are merely considered on leave
until
re-employed.
Private respondent's reliance on the case of Mercado v. NLRC is misplaced
considering that since in said case of Mercado, although the respondent
company therein consistently availed of the services of the petitioners
therein from year to year, it was clear that petitioners therein were not in
respondent company's regular employ. Petitioners therein performed
different phases of agricultural work in a given year. However, during that
period, they were free to contract their services to work for other farm
owners, as in fact they did. Thus, the Court ruled in that case that their
employment would naturally end upon the completion of each project or
phase of farm work for which they have been contracted. 47 (Emphasis
supplied, citations omitted)

The sugarcane workers in Hacienda Fatima v. National Federation of


Sugarcane Workers-Food and General Trade48 were also considered as
regular employees since they performed the same tasks every season for
several years:
For respondents to be excluded from those classified as regular employees,
it is not enough that they perform work or services that are seasonal in
nature. They must have also been employed only for the duration of one
season. . . . Evidently, petitioners employed respondents for more than one
season. Therefore, the general rule of regular employment is applicable.
.

The CA did not err when it ruled that Mercado v. NLRC was not applicable
to the case at bar. In the earlier case, the workers were required to
perform phases of agricultural work for a definite period of time, after
which their services would be available to any other farm owner. They

were not hired regularly and repeatedly for the same phase/s of
agricultural work, but on and off for any single phase thereof. On the other
hand, herein respondents, having performed the same tasks for
petitioners every season for several years, are considered the
latters regular employees for their respective tasks. Petitioners
eventual refusal to use their services even if they were ready, able and
willing to perform their usual duties whenever these were available and
hiring of other workers to perform the tasks originally assigned to
respondents amounted to illegal dismissal of the latter. 49 (Emphasis
supplied, citation omitted)

Respondent NTRCI engaged the services of petitioner Paz as a seasonal


sorter50 and had been regularly rehired from 1974,51 until she was informed
in 2003 that she was being retired under company policy. 52
The services petitioner Paz performed as a sorter were necessary and
indispensable to respondent NTRCIs business of flue-curing and redrying
tobacco leaves. She was also regularly rehired as a sorter during the
tobacco seasons for 29 years since 1974. These considerations taken
together allowed the conclusion that petitioner Paz was a regular seasonal
employee, entitled to rights under Article 279 53 of the Labor Code:
Art. 279. Security of Tenure. In cases of regular employment, the
employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.

Illegal

dismissal

and

backwages

Petitioner Paz initially filed a Complaint for illegal dismissal seeking


separation pay, but later amended her Complaint into one for payment of
retirement pay.54 Despite the amendment, she maintained in her
subsequent pleadings that she had been made to retire even before she
reached the compulsory retirement age of 65 under Article 287, as
amended.55
Petitioner Paz alleged that respondent NTRCI required her to report on
March 18, 2003 for the 2003 tobacco season, but she suffered a mild
stroke sometime in April. Nevertheless, respondent NTRCI extended her
employment contract until May 18, 2003 when she was informed that she
was
retired
under
company
policy. 56
Since petitioner Paz was unlearned and not knowledgeable in law, [she]

88

just accepted such fact and waited to be paid her separation/retirement


benefit as promised by . . . NTRCI. 57 Unfortunately, after a year of waiting,
respondent NTRCI only offered her around P12,000.00 for all her services
since
1974.58
The National Labor Relations Commission recognized that like the other
complainants against respondent NTRCI, petitioner Paz was at a loss in
what cause of action to take whether illegal dismissal or payment of
retirement
pay.59
Petitioner Pazs amendment of her Complaint was not fatal to her cause of
action
for
illegal
dismissal.
First, petitioner Paz never abandoned her argument that she had not
reached the compulsory retirement age of 65 pursuant to Article 287, as
amended, when respondent NTRCI made her retire on May 18, 2003.

An award of full backwages is inclusive of allowances and other benefits


or their monetary equivalent, from the time their actual compensation was
withheld.
.
.
.65
Backwages, considered as actual damages,66 requires proof of the loss
suffered. The Court of Appeals found no positive proof of the total number
of months that she actually rendered work.67 Nevertheless, petitioner
Pazs daily pay of P185.00 was established. She also alleged that her
employment
periods
ranged
from
three
to
seven
months. 68
Since the exact number of days petitioner Paz would have worked between
May 18, 2003 until she would turn 65 in 2005 could not be determined with
specificity, this court thus awards full backwages in the amount of
P22,200.00 computed by multiplying P185.00 by 20 days, then by three
months,
then
by
two
years.
Due

Second, the National Labor Relations Commission found that respondent


NTRCI failed to prove a valid company retirement policy, yet it required its
workers to retire after they had reached the age of 60. 60 The Court of
Appeals also discussed that while respondent NTRCI produced guidelines
on its retirement policy for seasonal employees, it never submitted a copy
of its Collective Bargaining Agreement and even alleged in its Position
Paper
that
none
existed.61
Petitioner Paz was only 63 years old on May 18, 2003 with two more years
remaining before she would reach the compulsory retirement age of 65.
Retirement is the result of a bilateral act of the parties,
a voluntary agreement between the employer and the employee whereby
the latter, after reaching a certain age, agrees to sever his or her
employment with the former.62 Article 287, as amended, allows for
optional retirement at the age of at least 60 years old.

process

and

nominal

damages

The Labor Code requires employers to comply with both procedural and
substantive due process in dismissing employees. Agabon v. National
Labor Relations Commission69 discussed these rules and enumerated the
four possible situations considering these rules:
Dismissals based on just causes contemplate acts or omissions attributable
to the employee while dismissals based on authorized causes involve
grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was unjust,
separation
pay
may
be
granted.

The National Labor Relations Commission considered petitioner Pazs


amendment of her Complaint on April 27, 2004 akin to an optional
retirement when it determined her as illegally dismissed from May 18,
2003 to April 27, 2004, thus being entitled to full backwages from May 19,
2003
until
April
26,
2004. 64

Procedurally, (1) if the dismissal is based on a just cause under Article 282,
the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating
the employment: a notice specifying the grounds for which dismissal is
sought a hearing or an opportunity to be heard and after hearing or
opportunity to be heard, a notice of the decision to dismiss; and (2) if the
dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and
Employment written notices 30 days prior to the effectivity of his
separation.

Again, petitioner Paz never abandoned her argument of illegal dismissal


despite the amendment of her Complaint. This implied lack of intent to
retire until she reached the compulsory age of 65. Thus, she should be
considered as illegally dismissed from May 18, 2003 until she reached the
compulsory retirement age of 65 in 2005 and should be entitled to full
backwages
for
this
period.

From the foregoing rules four possible situations may be derived: (1) the
dismissal is for a just cause under Article 282 of the Labor Code, for an
authorized cause under Article 283, or for health reasons under Article 284,
and due process was observed; (2) the dismissal is without just or
authorized cause but due process was observed; (3) the dismissal is
without just or authorized cause and there was no due process; and (4) the

Consequently, if the intent to retire is not clearly established or if the


retirement is involuntary, it is to be treated as a discharge. 63

89

dismissal is for just or authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer
will
not
suffer
any
liability.
In the second and third situations where the dismissals are illegal, Article
279 mandates that the employee is entitled to reinstatement without loss
of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time of actual
reinstatement.
In the fourth situation, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the dismissal.
However, the employer should be held liable for non-compliance with the
procedural requirements of due process.70 (Emphasis in the original)

Agabon focused on the fourth situation when dismissal was for just or
authorized cause, but due process was not observed.71 Agabon involved a
dismissal for just cause, and this court awarded P30,000.00 as nominal
damages for the employers non-compliance with statutory due
process.72 Jaka Food Processing Corporation v. Pacot73 involved a dismissal
for authorized cause, and this court awarded P50,000.00 as nominal
damages for the employers non-compliance with statutory due process. 74
The difference in amounts is based on the difference in dismissal ground. 75
Nevertheless, this court has sound discretion in determining the amount
based on the relevant circumstances.76 In De Jesus v. Aquino,77 this court
awarded P50,000.00 as nominal damages albeit the dismissal was for just
cause.78
Petitioner Pazs case does not fall under the fourth situation but under the
third situation on illegal dismissal for having no just or authorized cause
and
violation
of
due
process.
Respondent NTRCI had considered petitioner Paz retired at the age of 63
before she reached the compulsory age of 65. This does not fall under the
just causes for termination in Article 282 of the Labor Code, the authorized
causes for termination in Article 283, or disease as a ground for
termination
in
Article
284.
As regards due process, the Omnibus Rules Implementing the Labor Code
provides:
Section 2. Standard of due process: requirements of notice. In all cases of
termination of employment, the following standards of due process shall be
substantially
observed.

I. For termination of employment based on just causes as defined in Article


282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;ChanRoblesVirtualawlibrary
(b) A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given opportunity
to respond to the charge, present his evidence or rebut the evidence
presented
against
him;
and
(c) A written notice [of] termination served on the employee indicating that
upon due consideration of all the circumstance, grounds have been
established to justify his termination. . . .79

There was no showing that respondent NTRCI complied with these due
process requisites. Thus, consistent with jurisprudence, 80 petitioner Paz
should
be
awarded
P30,000.00
as
nominal
damages.
Retirement

pay

An employer may provide for retirement benefits in an agreement with its


employees such as in a Collective Bargaining Agreement. Otherwise,
Article
287
of
the
Labor
Code,
as
amended,
governs.
Since respondent NTRCI failed to present a copy of a Collective Bargaining
Agreement on the alleged retirement policy, 81 we apply Article 287 of the
Labor Code, as amended by Republic Act No. 7641. This provides for the
proper computation of retirement benefits in the absence of a retirement
plan or agreement:82
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching
the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared the compulsory retirement age, who has served
at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6)
months
being
considered
as
one
whole
year.
Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the
13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.83 (Emphasis supplied)

90

Respondent NTRCI followed the formula in Article 287 and offered


petitioner Paz the amount of P12,487.5084 as retirement pay based on the
three years she worked for at least six months in 1995, 1999, and 2000. 85
The Labor Arbiter agreed with respondent NTRCIs computation based on
these three years and reached the same amount as petitioner Pazs
retirement
pay.86

The formula that petitioner proposes, wherein a year of work is equivalent


to actual work rendered for 303 days, is both unfair and inapplicable,
considering that Articles 283 and 284 provide that in connection with
separation pay, a fraction of at least six months shall be considered one
whole year. Under these provisions, an employee who worked for only six
months in a given year which is certainly less than 303 days is
considered
to
have
worked
for
one
whole
year.

On appeal, the National Labor Relations Commission found that petitioner


Paz became a regular seasonal employee by virtue of her long years of
service and the repetitive hiring of her services by respondent NTRCI every
season.87 It then considered her as having worked for every tobacco
season from 1974 to 2003 or for a total of 29 years. 88

. . . . Finally, Manila Hotel Company v. CIR did not rule that seasonal
workers are considered at work during off-season with regard to the
computation of separation pay. Said case merely held that, in regard to
seasonal workers, the employer-employee relationship is not severed
during off-season but merely suspended.92 (Citations omitted)

The National Labor Relations Commission discussed that [i]t would be a


great injustice if [petitioner Pazs] services which did not last long for six
months be disregarded in computing her retirement pay especially so that
it is upon the sole discretion of the respondent company on how long her
services for a given season was required. 89 Thus, it explained that
Zenaida Pazs retirement pay should be computed pursuant to RA 7641
and that all the months she was engaged to work for respondent for the
last twenty eight (28) years should be added and divide[d] by six (for a
fraction of six months is considered as one year) to get the number of
years
her
retirement
pay
should
be
computed. 90
The National Labor Relations Commission also discussed that applying the
computation of separation pay in Philippine Tobacco to this case would
render nugatory the very purpose of RA 7641, which seeks to reward
employees of their long and dedicated service to their employer, as well as
its humanitarian purpose to provide for the retirees sustenance and
hopefully even comfort, when he no longer has the stamina to continue
earning
his
livelihood.91
This court in Philippine Tobacco explained its computation of separation
pay as follows:
The amount of separation pay is based on two factors: the amount of
monthly salary and the number of years of service. Although the Labor
Code provides different definitions as to what constitutes one year of
service, Book Six does not specifically define one year of service for
purposes of computing separation pay. However, Articles 283 and 284
both state in connection with separation pay that a fraction of at least six
months shall be considered one whole year. Applying this to the case at
bar, we hold that the amount of separation pay which respondent
members of the Lubat and Luris groups should receive is one-half (1/2)
their respective average monthly pay during the last season they worked
multiplied by the number of years they actually rendered service, provided
that they worked for at least six months during a given year.

Philippine Tobacco considered Articles 283 and 284 of the Labor Code on
separation pay, and these articles include the proviso a fraction of at least
six (6) months shall be considered one (1) whole year.
While the present case involves retirement pay and not separation pay,
Article 287 of the Labor Code on retirement pay similarly provides that a
fraction of at least six (6) months being considered as one whole year.
Thus, this courts reading of this proviso in the Labor Code in Philippine
Tobacco applies in this case. An employee must have rendered at least six
months in a year for said year to be considered in the computation.
Petitions for review pursuant to Rule 45 of the Rules of Court can raise only
questions of law.93 Generally, this court accords great respect for factual
findings by quasi-judicial bodies, even according such findings with finality
when
supported
by
substantial
evidence.94
The Court of Appeals found no positive proof o[n] the total number of
months [petitioner Paz] actually rendered work [for respondent NTRCI]. 95
On the other hand, both the Labor Arbiter and the Court of Appeals
established from the records that she rendered at least six months of
service
for
1995,
1999,
and
2000
only. 96
Based on these factual findings, retirement pay pursuant to Article 287 of
the Labor Code was correctly computed at P12,487.50 and was awarded to
petitioner
Paz.
Financial

assistance

In addition, this court agrees with the Court of Appeals award of financial
assistance in the amount of P60,356.25 97 by applying the following
formula: one-half-month pay98 multiplied by 29 years in service and then
divided
by
2.99

91

The amount of P12,487.50 is indeed too meager to support petitioner Paz


who has become old, weak, and unable to find employment. 100
Republic Act No. 7641 is a social legislation 101 with the purpose of
provid[ing] for the retirees sustenance and hopefully even comfort, when
he [or she] no longer has the stamina to continue earning his [or her]
livelihood.102
The Court of Appeals recognized and emphasized petitioner Pazs three
decades of hard work and service with respondent NTRCI. However, it
disagreed with the National Labor Relations Commissions retirement pay
computation for lack of factual basis:
Private respondent Paz rendered almost three decades of dedicated service
to petitioner, and to that, she gave away the prime of her life. In those
long years of hard work, not a single transgression or malfeasance of any
company rule or regulation was ever reported against her. Old age and
infirmity now weaken her chances of employment. Veritably, We can call
upon the same social and compassionate justice allowing financial
assistance in special circumstances. These circumstances indubitably
merit equitable concessions, via the principle of compassionate justice
for
the
working
class.
In awarding retirement benefits, the NLRC deemed it proper to
add all the months of service rendered by private respondent Paz,
then divide it by six to arrive at the number of years of service.
We cannot, however, subscribe to this computation because there
is no positive proof of the total number of months that she
actually rendered work.103 (Emphasis supplied, citations omitted)

At most, the Petition alleges that [p]etitioner [was] regularly hired every
season by respondents, her employment periods ranging from three (3) to
seven (7) months.104 None of the lower courts, not even the National
Labor Relations Commission that proposed the formula, made a factual
determination on the total number of months petitioner Paz rendered
actual
service.
In any event, this court has awarded financial assistance as a measure of
social justice [in] exceptional circumstances, and as an equitable
concession.105
In Eastern Shipping Lines, Inc. v. Sedan,106 Sedan was granted equitable
assistance equal to one-half-month pay for each year of his 23 years of
service with no derogatory record.107 This court discussed jurisprudence on
the grant of financial assistance:

We are not unmindful of the rule that financial assistance is allowed only in
instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Neither are
we unmindful of this Courts pronouncements in Arc-Men Food Industries
Corporation v. NLRC, and Lemery Savings and Loan Bank v. NLRC, where
the Court ruled that when there is no dismissal to speak of, an award of
financial
assistance
is
not
in
order.
But we must stress that this Court did allow, in several instances, the grant
of financial assistance. In the words of Justice Sabino de Leon, Jr., now
deceased, financial assistance may be allowed as a measure of social
justice and exceptional circumstances, and as an equitable concession.
The instant case equally calls for balancing the interests of the employer
with those of the worker, if only to approximate what Justice Laurel calls
justice
in
its
secular
sense.
In this instance, our attention has been called to the following
circumstances: that private respondent joined the company when he was a
young man of 25 years and stayed on until he was 48 years old; that he
had given to the company the best years of his youth, working on board
ship for almost 24 years; that in those years there was not a single report
of him transgressing any of the company rules and regulations; that he
applied for optional retirement under the companys non-contributory plan
when his daughter died and for his own health reasons; and that it would
appear that he had served the company well, since even the company said
that the reason it refused his application for optional retirement was that it
still needed his services; that he denies receiving the telegram asking him
to report back to work; but that considering his age and health, he
preferred to stay home rather than risk further working in a ship at sea.

In our view, with these special circumstances, we can call upon the same
social and compassionate justice cited in several cases allowing financial
assistance. These circumstances indubitably merit equitable concessions,
via the principle of compassionate justice for the working class. Thus,
we agree with the Court of Appeals to grant financial assistance to private
respondent.108
(Citations
omitted)
We agree with the Court of Appeals that petitioner Pazs circumstances
indubitably merit equitable concessions, via the principle of
compassionate
justice
for
the
working
class. 109
Petitioner Paz worked for respondent NTRCI for close to three decades. She
had no record of any malfeasance or violation of company rules in her long
years of service.110 Her advanced age has rendered her weak and lessened
her
employment
opportunities.
Eastern Shipping Lines awarded Sedan with financial assistance equal to
one-half-month pay for every year of service. Sedan was hired as a 3rd

92

marine engineer and oiler from 1973 until his last voyage in 1997. 111 On
the other hand, petitioner Paz was a seasonal employee who worked for
periods ranging from three to seven months a year. 112 This court thus finds
the following Court of Appeals formula for financial assistance as equitable:
one-half-month pay multiplied by 29 years in service and then divided by
2.
This court has discussed that labor law determinations are not
only secundum rationem but alsosecundum caritatem.113 The award of
P60,356.25 as financial assistance will serve its purpose in providing
petitioner Paz sustenance and comfort after her long years of service.
Finally, legal interest of 6% per annum shall be imposed on the award of
full backwages beginning May 18, 2003 when petitioner Paz was deemed
retired, until 2005 when she reached compulsory retirement age, in the
amount of P2,664.00114 Legal interest of 6% per annum shall also be
imposed on the award of retirement pay beginning 2005 until full
satisfaction.
WHEREFORE,
the
Court
of
Appeals
Decision
is AFFIRMED with MODIFICATION in that respondent Northern Tobacco
Redrying Co., Inc. is hereby ordered to pay petitioner Zenaida Paz the
following:
(1)

P22,200.00

as

full

backwages;ChanRoblesVirtualawlibrary

(2) P30,000.00 as nominal damages for non-compliance with due


process;ChanRoblesVirtualawlibrary
(3)
(4)

P12,487.50
P60,356.25

as

retirement
as

pay;ChanRoblesVirtualawlibrary

financial

assistance;

and

(5) P2,664.00 as legal interest for the award of full backwages, and legal
interest of 6% per annum for the award of retirement pay beginning 2005
until
full
satisfaction.
SO ORDERED

93

G.R. No. 172038


DANTE
D.
vs.
MAERSK
FILIPINAS
A.S., respondents.

April 14, 2008


DE

On June 27, 1999, petitioner was informed of his discharge through a


notice captioned "Notice according to CBA Article 1 (7)," to wit:
LA

CRUZ, petitioner,
To: 3rd engineer Dante D. de la Cruz

CREWING,

INC.

and

ELITE

SHIPPING

DECISION
CORONA, J.:
This petition for review on certiorari 1 seeks to set aside the November 26,
2004 decision2 and March 9, 2006 resolution 3 of the Court of Appeals (CA)
in CA-G.R. SP No. 74097.
Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third
engineer for the vessel M/S Arktis Morning through its local agency in the
Philippines, co-respondent Maersk Filipinas Crewing Inc. The contract of
employment was for a period of nine months, starting April 19, 1999, with
a monthly basic salary of US$1,004.00 plus other benefits.
Petitioner was deployed to Jebel Ali, United Arab Emirates and boarded M/S
Arktis Morning on May 14, 1999.
In a logbook entry dated June 18, 1999, chief engineer Normann Per
Nielsen expressed his dissatisfaction over petitioner's performance:
3rd Eng. Dante D. de la Cruz has[,] since he signed on[,] not been
able to live up to the company's SMS job describtion (sic) for
3rd Engineer[.] Today he has been informed that if he do[es] not
improve his Job/Working performance within [a] short time he will
be signed off according to CBA Article 1 (7).
Said Article 1 (7) of the collective bargaining agreement (CBA) between
respondent Elite Shipping A.S. and its employees reads:
(7) The first sixty (60) days of service is to be considered a
probationary period which entitles a shipowner or his
representative, i.e.[,] the master of the vessel[,] to terminate the
contract by giving fourteen (14) days of written notice.
This entry was followed by another one dated June 26, 1999 which was
similar in content.

Pls. be informed that you will be discharged according to CBA


article 1 (7) in first possible port. Reason for the decision is, as you
have been informed by chief engineer Per Nielsen on several
occasions, he [does] not find you qualified for the position as
3rd engineer onboard this vessel. The chief engineer has also made
2 entries in the engine logbook, regarding your insufficient
job/working, which you are well aware of.
Petitioner was then made to disembark at the port of Houston, Texas and
was repatriated to Manila on July 17, 1999.
Petitioner thereafter filed a complaint for illegal dismissal with claims for
the monetary equivalent of the unexpired portion of his contract, damages
and attorney's fees in the National Labor Relations Commission (NLRC) on
September 21, 1999.
The labor arbiter (LA) ruled that petitioner was dismissed without just
cause and due process as the logbook entry (which respondents claimed to
be the first notice to petitioner) was vague. It failed to expound on or state
the details of petitioner's shortcomings or infractions. As such, petitioner
was deprived of a real or meaningful opportunity to explain his side.
Hence, the LA ruled that petitioner was entitled to a monetary equivalent
of salaries for three months, moral and exemplary damages and attorney's
fees.
On appeal, the NLRC upheld the LA's finding of illegal dismissal but deleted
the award of moral and exemplary damages. Respondents moved for
reconsideration. It was denied.
Thereafter, respondents filed a petition for certiorari (under Rule 65) with
the CA. It granted the petition. It held that, although the findings of fact of
the LA and NLRC were entitled to great respect, this rule was inapplicable
because the NLRC committed grave abuse of discretion in upholding the
LA's decision. The findings were not only unsupported by substantial
evidence but were also based solely on the ground that the logbook entries
were vague and without concrete standards.
The CA deemed the logbook entries to be sufficient compliance with the
first notice requirement of the law. It was a written appraisal of petitioner's
poor job performance coupled with a warning that should he fail to improve
his performance, he would be signed off in accordance with the provisions

94

of the CBA. It reasoned that a probationary employee may be dismissed at


anytime during the probationary period for failure to live up to the
expectations of the employer.
Petitioner filed a motion for reconsideration of the CA decision. It was
denied. Hence, this petition.
The main issue raised before us is whether or not petitioner was illegally
dismissed by respondents.
Before addressing the merits of the controversy, we need to settle two
preliminary issues. First, respondents interposed in their comment that the
present petition should be dismissed outright as the motion for extension
of time to file this petition for review was filed late.
In his petition, petitioner indicated that he received a copy of the CA
resolution (dated March 9, 2006) denying his motion for reconsideration on
March 24, 2006. He, therefore, had until April 8, 2006 to appeal said
resolution to this Court or to file a motion for extension of time to file the
petition. However, as April 8, 2006 fell on a Saturday, petitioner deemed it
sufficient compliance to file his motion for extension on April 10, 2006, in
accordance with Section 1, Rule 22 of the Rules of Court:
SECTION 1. How to compute time. - xxx If the last day of the
period, as thus computed, falls on a Saturday, a Sunday, or a legal
holiday in the place where the court sits, the time shall not run
until the next working day.
Respondents countered that A.M. No. 00-2-14-SC dated February 29, 2000
(Re: Computation of Time When the Last Day Falls on Saturday, Sunday or
Legal Holiday and a Motion for Extension on Next Working Day is Granted)
clarified that the aforementioned rule is applicable only to the filing of
pleadings other than motions for extension of time, such that when a party
seeks an extension to file a desired pleading, the provision no longer
applies and the motion should be filed on the due date itself, regardless of
the fact that it falls on a Saturday, Sunday or legal holiday.
Respondents' contention is incorrect.
A.M. No. 00-2-14-SC provides:

case, the filing of the said pleading on the next working day is
deemed on time;
Whereas, the question has been raised if the period is
extended ipso jure to the next working day immediately following
where the last day of the period is a Saturday, Sunday or legal
holiday so that when a motion for extension of time is filed, the
period of extension is to be reckoned from the next working day
and not from the original expiration of the period.
NOW THEREFORE, the Court Resolves, for the guidance of the
Bench and the Bar, to declare that Section 1, Rule 22 speaks only
of "the last day of the period" so that when a party seeks an
extension and the same is granted, the due date ceases to be the
last day and hence, the provision no longer applies. Any
extension of time to file the required pleading should
therefore be counted from the expiration of the period
regardless of the fact that said due date is a Saturday,
Sunday or legal holiday. (emphasis supplied)
Section 1, Rule 22, as clarified by the circular, is clear. Should a party
desire to file any pleading, even a motion for extension of time to file a
pleading, and the last day falls on a Saturday, Sunday or a legal holiday, he
may do so on the next working day. This is what petitioner did in the case
at bar.
However, according to the same circular, the petition for review on
certiorari was indeed filed out of time. The provision states that in case a
motion for extension is granted, the due date for the extended period shall
be counted from the original due date, not from the next working day on
which the motion for extension was filed. In Luz v. National Amnesty
Commission,4 we had occasion to expound on the matter. In that case, we
held that the extension granted by the court should be tacked to the
original period and commences immediately after the expiration of such
period.
In the case at bar, although petitioner's filing of the motion for extension
was within the period provided by law, the filing of the petition itself was
not on time. Petitioner was granted an additional period of 30 days within
which to file the petition. Reckoned from the original period, he should
have filed it on May 8, 2006. Instead, he did so only on May 11, 2006, that
is, 3 days late.

xxx
Whereas, the aforecited provision [Section 1, Rule 22 of the Rules
of Court] applies in the matter of filing of pleadings in courts when
the due date falls on a Saturday, Sunday or legal holiday, in which

Nevertheless, we will gloss over this technicality and resolve the case on
its merits in the exercise of this Court's equity jurisdiction as we have done
in a number of cases.5

95

Well settled is the rule that litigations should, as much as possible, be


decided on their merits and not on technicalities. 6 In accordance with this
legal precept, this Court has ruled that being a few days late in the filing of
the petition for review does not automatically warrant the dismissal
thereof,7 specially where strong considerations of substantial justice are
manifest in the petition.8 Such is the case here.
The second preliminary issue we need to address is the matter of this
Court's jurisdiction in petitions for review on certiorari under Rule 45. It
should be noted that our jurisdiction in such cases is limited only to
questions of law. It does not extend to questions of fact. This doctrine
applies with greater force in labor cases. 9 As such, the findings of fact of
the CA are binding and conclusive upon this Court. However, this rule is not
absolute but admits of certain exceptions. Factual findings may be
reviewed in a case when the findings of fact of the LA and the NLRC are in
conflict with those of the CA. 10 In this case, the LA and the NLRC held that
respondents did not comply with the notice requirement; the CA found
otherwise. Thus, although the instant petition involves a question of fact,
that is, whether or not the notice requirement was met, we can still rule on
it.
Now, the merits of the instant controversy.
The CA committed an error in holding that petitioner was not illegally
dismissed. The contrary findings and conclusions made by the LA and the
NLRC were supported by jurisprudence and the evidence on record.
An employer has the burden of proving that an employee's dismissal was
for a just cause. Failure to show this necessarily means that the dismissal
was unjustified and therefore illegal. 11Furthermore, not only must the
dismissal be for a cause provided by law, it should also comply with the
rudimentary requirements of due process, that is, the opportunity to be
heard and to defend oneself.12
These requirements are of equal application to cases of Filipino seamen
recruited to work on board foreign vessels. Procedural due process requires
that a seaman must be given a written notice of the charges against him
and afforded a formal investigation where he can defend himself
personally or through a representative before he can be dismissed and
disembarked from the vessel.13 The employer is bound to furnish him two
notices: (1) the written charge and (2) the written notice of dismissal (in
case that is the penalty imposed).14 This is in accordance with the POEA
Revised Standard Employment Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA
Revised Standard Employment Terms and Conditions).

Section 17 of the POEA Revised Standard Employment Terms and


Conditions laid down the disciplinary procedures to be taken against erring
seafarers:
Section 17. DISCIPLINARY PROCEDURES
The Master shall comply with the following disciplinary procedures
against an erring seafarer:
A. The Master shall furnish the seafarer with a written notice
containing the following:
1. Grounds for the charges as listed in Section 31 of this
Contract.
2. Date, time and place for a formal investigation of the
charges against the seafarer concerned.
B. The Master or his authorized representative shall conduct the
investigation or hearing, giving the seafarer the opportunity to
explain or defend himself against the charges. An entry on the
investigation shall be entered into the ship's logbook.
C. If, after the investigation or hearing, the Master is convinced
that imposition of a penalty is justified, the Master shall issue a
written notice of penalty and the reasons for it to the seafarer, with
copies furnished to the Philippine agent.
xxx

xxx

xxx

Furthermore, the notice must state with particularity the acts or omissions
for which his dismissal is being sought.15
Contrary to respondents' claim, the logbook entries did not substantially
comply with the first notice, or the written notice of charge(s). It did not
state the particular acts or omissions for which petitioner was charged. The
statement therein that petitioner had "not been able to live up to the
company's SMS job description for 3 rd Engineer" and that he had "been
informed that if he [does] not improve his job/working performance within
[a] short time he will have to be signed off according to CBA Article 1 (7)"
was couched in terms too general for legal comfort.
The CA held that the logbook entries were sufficient to enable petitioner to
explain his side or to contest the negative assessment of his performance
and were clearly intended to inform him to improve the same. We cannot
fathom how the CA arrived at such a conclusion. The entries did not

96

contain any information at all as to why he was even being warned of


discharge in the first place. Even we were left to speculate as to what
really transpired, calling for such an extreme course of action from the
chief engineer. The entries raised more questions than answers.
How exactly was he unable to live up to the company's SMS job description
of a third engineer? Respondents should have indicated the grounds for the
threatened termination, the specific acts or omissions illustrating the
same, along with the date and the approximate time of their occurrence.
For how else could petitioner be expected to meet the charges against him
if all he was given as reason for his discharge was a vague and general
accusation such as that handed down by the chief engineer? Even if the
chief engineer verbally informed him of what his specific shortcomings
were, as insisted upon by respondents, the POEA Revised Standard
Employment Terms and Conditions and jurisprudence require that the
charges be put in writing.
The same thing may be said of the written notice of dismissal. It sorely
lacked the necessary details that should accompany it. Instead of delving
into the grounds for petitioner's discharge, it merely echoed the logbook
entries by nebulously justifying his dismissal on the ground that the chief
engineer "[did] not find [petitioner] qualified for the position as
3rd engineer." Much like the first notice, it barely made mention of the
grounds for his discharge. Again, we were left in the dark as to the nature
of the acts or omissions relied upon as basis for the termination of
petitioner's employment.
These ambiguities, attributable solely to respondents, should be resolved
against them.
Moreover, we observed that the records were devoid of any proof
indicating that petitioner was ever given an opportunity to present his side.
In their comment, respondents in fact admitted not having conducted any
formal investigation:
A formal investigation in this case was not necessary because the
findings against petitioner were not in the form of infractions that
ought to be investigated. The issue against petitioner was the
quality of his work as 3rd Engineer. Having been duly notified of his
shortcomings, it devolved upon the petitioner to improve the
quality of his work in order to pass his probationary period and be
a regular employee. But petitioner did not.
They also insisted that as petitioner was served notice of his termination,
the same constituted sufficient compliance with the requirement of notice
and due process as the notice gave him an opportunity to defend himself. 16

Clearly, respondents were unmindful of the requirements explicitly laid


down by law and jurisprudence. Anything short of complying with the same
amounts to a dismissal. Thus, no amount of justification from respondents
can move us now to declare the dismissal as being in accordance with the
procedural requirements provided for by law. It cannot be overemphasized
that sufficient notice should be given as part of due process because a
worker's employment is his property in the constitutional sense. 17
As to the substantive aspect of the requirement, suffice it to say that
respondents dismally failed to prove that petitioner's termination from
employment was for cause. As the logbook entries were too general and
vague, we cannot even reach any conclusion on whether or not
respondents had a valid cause to discharge petitioner. Not only was
petitioner's dismissal procedurally flawed, it was also without just cause.
Lastly, petitioner and respondents were at odds over the former's
employment status when he was discharged from the vessel. It was
petitioner's position that he was already a regular employee when his
services were terminated; respondents, on the other hand, insisted that he
was then still on probationary status. This, according to respondents,
entitled them to dismiss him in accordance with the provisions of Article 1
(7) of the CBA (which allows the master to terminate the contract of one
under probation by merely serving a written notice 14 days prior to the
contemplated discharge) and the requirements on the termination of a
probationary employee's employment as laid down in Manila Hotel
Corporation v. NLRC.18
It is well to remind both parties that, as early as Brent School, Inc. v.
Zamora,19 we already held that seafarers are not covered by the
term regular employment, as defined under Article 280 of the Labor Code.
This
was
reiterated
in Coyoca
v.
National
Labor
Relations
Commission.20 Instead, they are considered contractual employees whose
rights and obligations are governed primarily by the POEA Standard
Employment Contract for Filipino Seamen (POEA Standard Employment
Contract), the Rules and Regulations Governing Overseas Employment,
and, more importantly, by Republic Act No. 8042, otherwise known as The
Migrant Workers and Overseas Filipinos Act of 1995. 21 Even the POEA
Standard Employment Contract itself mandates that in no case shall a
contract of employment concerning seamen exceed 12 months.
It is an accepted maritime industry practice that the employment of
seafarers is for a fixed period only. The Court acknowledges this to be for
the mutual interest of both the seafarer and the employer. Seafarers
cannot stay for a long and indefinite period of time at sea as limited access
to shore activity during their employment has been shown to adversely
affect them. Furthermore, the diversity in nationality, culture and language
among the crew necessitates the limitation of the period of employment. 22

97

While we recognize that petitioner was a registered member of the


Associated Marine Officers and Seamen's Union of the Philippines which
had a CBA with respondent Elite Shipping A.S. providing for a probationary
period of employment, the CBA cannot override the provisions of the POEA
Standard Employment Contract. The law is read into, and forms part of,
contracts. And provisions in a contract are valid only if they are not
contrary to law, morals, good customs, public order or public policy. 23
In Millares v. NLRC,24 this Court had occasion to rule on the use of the
terms "permanent and probationary masters and employees" vis--vis
contracts of enlistment of seafarers. In that case, petitioners made much of
the fact that they were continually re-hired for 20 years by private
respondent Esso International. By such circumstances, they claimed to
have acquired regular status with all the rights and benefits appurtenant
thereto. The Court quoted with favor the NLRC's explanation that the
reference to permanent and probationary masters and employees was a
misnomer. It did not change the fact that the contract for employment was
for a definite period of time. In using the terms "probationary" and
"permanent" vis--vis seafarers, what was really meant was
"eligible for re-hire."
This is the only logical explanation possible as the parties cannot and
should not violate the POEA's directive that a contract of enlistment must
not exceed 12 months.
WHEREFORE, the petition is hereby GRANTED. The November 26, 2004
decision and March 9, 2006 resolution of the Court of Appeals in CA-G.R. SP
No. 74097 are REVERSED and SET ASIDE. The March 22, 2002 resolution
of the National Labor Relations Commission in NLRC NCR CA No. 029139-01
is REINSTATED.
SO ORDERED.

98

G.R. No. 209499, January 28, 2015


MA. CHARITO C. GADIA, ERNESTO M. PEAS, GEMMABELLE B.
REMO, LORENA S. QUESEA, MARIE JOY FRANCISCO, BEVERLY A.
CABINGAS, IVEE U. BALINGIT, ROMA ANGELICA O. BORJA, MARIE
JOAN RAMOS, KIM GUEVARRA, LYNN S. DE LOS SANTOS, CAREN C.
ENCANTO, EIDEN BALDOVINO, JACQUELINE B. CASTRENCE, MA.
ESTRELLA V. LAPUZ, JOSELITO L. LORD, RAYMOND G. SANTOS,
ABIGAIL M. VILORIA, ROMMEL C. ACOSTA, FRANCIS JAN S. BAYLON,
ERIC O. PADIERNOS, MA. LENELL P. AARON, CRISNELL P. AARON,
AND LAWRENCE CHRISTOPHER F. PAPA, Petitioners, v. SYKES ASIA,
INC./
CHUCK
SYKES/
MIKE
HINDS/
MICHAEL
HENDERSON, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated
April 29, 2013 and the Resolution 3 dated October 3, 2013 of the Court of
Appeals (CA) in CA-G.R. SP No. 120433, which annulled and set aside the
Decision4 dated November 15, 2010 and the Resolution5 dated May 10,
2011 of the National Labor Relations Commission (NLRC), in NLRC LAC No.
07-001583-10, and reinstated the Decision 6 dated June 23, 2010 of the
Labor Arbiter (LA), holding that herein petitioners Ma. Charito C.
Gadia7 (Gadia), Ernesto M. Peas, 8 Gemmabelle B. Remo (Remo), Lorena S.
Quesea (Quesea), Marie Joy Francisco, Beverly A. Cabingas, Ivee U.
Balingit9 (Balingit), Roma Angelica O. Borja, Marie Joan Ramos, Kim
Guevarra, Lynn S. De Los Santos, Caren C. Encanto, Eiden Baldovino,
Jacqueline B. Castrence (Castrence), Ma. Estrella V. Lapuz (Lapuz), Joselito
L. Lord (Lord), Raymond G. Santos, Abigail M. Viloria (Viloria), Rommel C.
Acosta10 (Acosta), Francis Jan S. Baylon, Eric O. Padiernos, Ma. Lenell P.
Aaron, Crisnell P. Aaron, and Lawrence Christopher F. Papa (petitioners) are
project employees of respondent Sykes Asia, Inc. (Sykes Asia), and thus,
were validly terminated from employment.
The Facts

Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO)


which provides support to its international clients from various sectors
(e.g., technology, telecommunications, retail services) by carrying on some
of their operations, governed by service contracts that it enters with
them.11 On September 2, 2003,12 Alltel Communications, Inc. (Alltel), a
United States-based telecommunications firm, contracted Sykes Asias
services to accommodate the needs and demands of Alltel clients for its

postpaid and prepaid services (Alltel Project). Thus, on different dates,


Sykes Asia hired petitioners as customer service representatives, team
leaders,
and
trainers
for
the
Alltel
Project. 13
Services for the said project went on smoothly until Alltel sent two (2)
letters to Sykes Asia dated August 7, 2009 14 and September 9,
200915 informing the latter that it was terminating all support services
provided by Sykes Asia related to the Alltel Project. In view of this
development, Sykes Asia sent each of the petitioners end-of-life
notices,16 informing them of their dismissal from employment due to the
termination of the Alltel Project. Aggrieved, petitioners filed separate
complaints17 for illegal dismissal against respondents Sykes Asia, Chuck
Sykes, the President and Chief Operating Officer of Sykes Enterprise, Inc.,
and Mike Hinds and Michael Henderson, the President and Operations
Director, respectively, of Sykes Asia (respondents), praying for
reinstatement, backwages, 13th month pay, service incentive leave pay,
night shift differential, moral and exemplary damages, and attorneys fees.
In their complaints, petitioners alleged that their dismissal from service
was unjust as the same was effected without substantive and procedural
due
process.18
In their defense,19 respondents averred that petitioners were not regular
employees but merely project-based employees, and as such, the
termination of the Alltel Project served as a valid ground for their
dismissal.20 In support of their position, respondents noted that it was
expressly indicated in petitioners respective employment contracts that
their positions are project-based and thus, co-terminus to the
project.21 Respondents further maintained that they complied with the
requirements of procedural due process in dismissing petitioners by
furnishing each of them their notices of termination at least thirty (30)
days prior to their respective dates of dismissal.22
The LA Ruling

In a Decision23 dated June 23, 2010 the LA ruled in favor of respondents,


and accordingly, dismissed petitioners complaints for lack of merit. 24 It
found that petitioners are merely project-based employees, as their
respective employment contracts indubitably provided for the duration and
term of their employment, as well as the specific project to which they
were assigned, i.e., the Alltel Project.25 Hence, the LA concluded that the
cessation of the Alltel Project naturally resulted in the termination of
petitioners
employment
in
Sykes
Asia. 26
Dissatisfied, petitioners appealed27 to the NLRC.
The NLRC Ruling

99

In a Decision28 dated November 15, 2010, the NLRC modified the LA


Decision, ruling that petitioners are regular employees but were validly
terminated due to redundancy.29 Accordingly, petitioners, except Viloria
and Acosta whose complaints were dismissed without prejudice for failure
to prosecute,30 were awarded their separation pay with interest of 12% per
annum reckoned from the date of their actual dismissal until full payment,
plus attorneys fees amounting to 10% of the total monetary award. In
addition, the NLRC awarded nominal damages in the amount of ?10,000.00
each to petitioners Gadia, Remo, Quesea, Balingit, Castrence, Lapuz, and
Lord for respondents failure to furnish them the required written notice of
termination
within
the
prescribed
period. 31

The primordial issue for the Courts resolution is whether or not the CA
correctly granted respondents petition for certiorari, thereby setting aside
the NLRCs decision holding that petitioners were regular employees and
reinstating the LA ruling that petitioners were merely project-based
employees, and thus, validly dismissed from service.

Contrary to the LAs finding, the NLRC found that petitioners could not be
properly characterized as project-based employees, ratiocinating that while
it was made known to petitioners that their employment would be coterminus to the Alltel Project, it was neither determined nor made known to
petitioners, at the time of hiring, when the said project would end, be
terminated, or be completed.32In this relation, the NLRC concluded that
inasmuch as petitioners had been engaged to perform activities which are
necessary or desirable in respondents usual business or trade of BPO,
petitioners should be deemed regular employees of Sykes Asia. 33 This
notwithstanding, and in view of the cessation of the Alltel Project, the NLRC
found petitioners employment with Sykes Asia to be redundant; hence,
declared that they were legally dismissed from service and were only
entitled
to
receive
their
respective
separation
pay. 34

At the outset, it must be stressed that to justify the grant of the


extraordinary remedy of certiorari, petitioners must satisfactorily show that
the court or quasi-judicial authority gravely abused the discretion conferred
upon it. Grave abuse of discretion connotes judgment exercised in a
capricious and whimsical manner that is tantamount to lack of jurisdiction.
To be considered grave, discretion must be exercised in a despotic
manner by reason of passion or personal hostility, and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined by or to act at all in contemplation of law. 45

Respondents moved for reconsideration, 35 which was, however, denied in a


Resolution36 dated May 10, 2011. Unconvinced, Sykes Asia 37 elevated the
case to the CA on certiorari.38
The CA Ruling

In a Decision39 dated April 29, 2013, the CA annulled and set aside the
ruling of the NLRC, and accordingly, reinstated that of the LA. 40 It held that
a perusal of petitioners respective employment contracts readily shows
that they were hired exclusively for the Alltel Project and that it was
specifically stated therein that their employment would be projectbased.41 The CA further held that petitioners employment contracts need
not state an actual date as to when their employment would end, opining
that
it
is
enough
that
such
date
is
determinable. 42
Petitioners moved for reconsideration, 43 which was, however, denied in a
Resolution44 dated October 3, 2013, hence, this petition.
The Issue Before the Court

The Courts Ruling

The

petition

is

without

merit.

In labor disputes, grave abuse of discretion may be ascribed to the NLRC


when, inter alia, its findings and the conclusions reached thereby are not
supported by substantial evidence. This requirement of substantial
evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court
which provides that in cases filed before administrative or quasi-judicial
bodies, a fact may be deemed established if it is supported by substantial
evidence, or that amount of relevant evidence which a reasonable mind
might
accept
as
adequate
to
justify
a
conclusion. 46
Tested against these considerations, the Court finds that the CA correctly
granted respondentscertiorari petition before it, since the NLRC gravely
abused its discretion in ruling that petitioners were regular employees of
Sykes Asia when the latter had established by substantial evidence that
they
were
merely
project-based.
Article 29447 of the Labor Code,48 as amended, distinguishes a projectbased employee from a regular employee as follows:
Art. 294. Regular and casual employment.The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a
specificproject or undertaking the completion or termination of
which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in

100

nature

and

the

employment

is

for

the

duration

of

the

season.

x x x x (Emphasis and underscoring supplied)


In Omni Hauling Services, Inc. v. Bon,49 the Court extensively discussed
how to determine whether an employee may be properly deemed projectbased or regular, to wit:
A project employee is assigned to a project which begins and ends
at determined or determinable times. Unlike regular employees who
may only be dismissed for just and/or authorized causes under the Labor
Code, the services of employees who are hired as project[-based]
employees may be lawfully terminated at the completion of the
project.
According to jurisprudence, the principal test for determining
whether particular employees are properly characterised as
project[-based] employees as distinguished from regular
employees, is whether or not the employees were assigned to
carry out a specific project or undertaking, the duration (and
scope) of which were specified at the time they were engaged for
that project. The project could either be (1) a particular job or
undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from
the other undertakings of the company; or (2) a particular job or
undertaking that is not within the regular business of the corporation. In
order to safeguard the rights of workers against the arbitrary use of the
word project to prevent employees from attaining a regular status,
employers claiming that their workers are project[-based] employees
should not only prove that the duration and scope of the employment was
specified at the time they were engaged, but also, that there was indeed a
project.50 (Emphases and underscoring supplied)
Verily, for an employee to be considered project-based, the employer must
show compliance with two (2) requisites, namely that: (a) the employee
was assigned to carry out a specific project or undertaking; and (b) the
duration and scope of which were specified at the time they were engaged
for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners
of their employment status at the time of their engagement, as evidenced
by the latters employment contracts which similarly provide that they
were hired in connection with the Alltel Project, and that their positions
were project-based and as such is co-terminus to the project. In this light,
the CA correctly ruled that petitioners were indeed project-based
employees, considering that: (a) they were hired to carry out a specific
undertaking, i.e., the Alltel Project; and (b) the duration and scope of such
project were made known to them at the time of their engagement, i.e.,
co-terminus with the project.

As regards the second requisite, the CA correctly stressed that [t]he law
and jurisprudence dictate that the duration of the undertaking begins and
ends at determined or determinable times while clarifying that [t]he
phrase determinable times simply means capable of being determined or
fixed.51 In this case, Sykes Asia substantially complied with this requisite
when it expressly indicated in petitioners employment contracts that their
positions were co-terminus with the project. To the mind of the Court,
this caveat sufficiently apprised petitioners that their security of tenure
with Sykes Asia would only last as long as the Alltel Project was subsisting.
In other words, when the Alltel Project was terminated, petitioners no
longer had any project to work on, and hence, Sykes Asia may validly
terminate them from employment.
Further, the Court likewise notes the fact that Sykes Asia duly submitted an
Establishment Employment Report52 and an Establishment Termination
Report53 to the Department of Labor and Employment Makati-Pasay Field
Office regarding the cessation of the Alltel Project and the list of employees
that would be affected by such cessation. As correctly pointed out by the
CA, case law deems such submission as an indication that the employment
was indeed project-based.54
In sum, respondents have shown by substantial evidence that petitioners
were merely project-based employees, and as such, their services were
lawfully terminated upon the cessation of the Alltel Project.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated
April 29, 2013 and the Resolution dated October 3, 2013 of the Court of
Appeals in CA-G.R. SP No. 120433 are herebyAFFIRMED. SO ORDERED.

101

WILFREDO
ARO,
RONILO
TIROL,
JOSE
PACALDO, PRIMITIVO CASQUEJO and MARCIAL
ABGO,
Petitioners,
-

versus

NATIONAL LABOR RELATIONS COMMISSION,


FOURTH DIVISIONand BENTHEL DEVELOPMENT
CORPORATION,
Respondents.

G.R. No. 174792

the NLRC Arbitration Branch No. VII in Cebu City and docketed as RAB Case
No.

Present:

07-09-1222-97/12-1609-97. Thereafter,

Labor

Arbiter

Ernesto

F.

Carreon rendered a decision finding private respondent guilty of illegal

dismissal and ordering it to pay its thirty-six (36) employees P446,940.00


VELASCO, JR., J., Chairperson
as separation pay.
PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.
The employees, including the petitioners herein, appealed from the said
Promulgated:

decision. The NLRC, in NLRC Case No. V-000399-98, affirmed the decision

March 7, 2012

of Labor Arbiter Carreon in its Decision dated January 12, 1999, with the
modification that private respondent pay backwages computed from the

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

respective dates of dismissal until finality of the decision.

Private respondent, unsatisfied with the modification made by the NLRC,

DECISION

filed a motion for reconsideration with the contention that, since it has
been found by the Labor Arbiter and affirmed in the assailed decision that

PERALTA, J.:

the employees were project employees, the computation of backwages


For resolution of this Court is the Petition for Review on Certiorari under
Rule 45 of the Rules of Court, dated October 7, 2006, of petitioners
Wilfredo Aro, Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and Marcial
Abgo, seeking to reverse and set aside the Decision [1] dated March 7, 2006,

should be limited to the date of the completion of the project and not to
the finality of the decision. The NLRC, however, denied the motion ruling
that private respondent failed to establish the date of the completion of
the project.

and Resolution[2] dated July 27, 2006, of the Court of Appeals (CA) in CAG.R. CEB-SP No. 01012 which reversed the Decision and Resolution dated
June 25, 2004 and June 30, 2005, respectively, of the National Labor

Aggrieved, private respondent filed a Petition for Certiorari with the CA,
docketed as CA-G.R. SP No. UDK 3092 assailing the January 12, 1999
decision of the NLRC and the denial of its motion for reconsideration which

Relations Commission (NLRC).

was dismissed for non-payment of docket fees and insufficiency of form. It

The facts, as culled from the records, are the following:

filed a motion for reconsideration, but the latter was also denied.
Several

employees

of

private

respondent

Benthel

Development

Corporation, including the petitioners, filed a Complaint for illegal dismissal


with various money claims and prayer for damages against the latter, in

Thus, private respondent filed with this Court, docketed as G.R. No. 144433
a Petition for Review on Certiorari. In a Resolution dated September 20,

102

2000, this Court denied the petition for having been filed out of time and

project and not until the finality of the decision. Public respondent, in its

for non-payment of docket and other lawful fees.

Decision dated June 25, 2004, affirmed the Order of Labor Arbiter Bantug,
but reduced the total amount to P4,073,858.00, inclusive of attorney's

The employees, including the petitioners, upon the finality of this Court's

fees. Thereafter, private respondent filed a motion for reconsideration of

resolution, filed a Motion for Execution before the Labor Arbiter of the

the June 25, 2004 decision which was denied by the public respondent, but

January 12, 1999 decision.Thereafter, the Labor Arbiter ordered for the

not before the admittance of the affidavits of withdrawal, release/waiver

issuance of a writ of execution directing the computation of the awards.

and quitclaim executed by another group of fourteen (14) employees,


leaving unresolved only the claims of the petitioners herein. Thus, in the

Afterwards, private respondent filed an appeal from the said Order with an

resolution of the private respondent's motion for reconsideration, the

urgent prayer for the issuance of a temporary restraining order and/or

award was reduced to the sum of P1,374,339.00, inclusive of attorney's

preliminary injunction with public respondent NLRC. The said appeal was

fees.

denied. The NLRC held that the appeal was premature, there having been
no computation yet made by the Labor Arbiter as to the exact amount to

As a recourse, private respondent filed a petition for certiorari with the CA,

be paid to the employees. Public respondent remanded the case to the

alleging that public respondent committed grave abuse of discretion in

arbitration branch for appropriate action.

promulgating

its

assailed

decision

and

denying

its

motion

for

reconsideration. The CA granted the petition, therefore, annulling and


Labor Arbiter Carreon inhibited himself from further proceedings in the

setting aside the decision and resolution of the NLRC as to the award for

case upon motion of private respondent. In the meantime, fifteen (15)

backwages and remanded the case to the same public respondent for the

employees have executed Affidavits of Full Settlement after having settled

proper computation of the backwages due to each of the petitioners

amicably with the private respondent. Labor Arbiter Violeta Ortiz-Bantug

herein. The dispositive portion of the decision reads:

issued an Order dated July 31, 2003 for the issuance of a writ of execution
only for the payment of the claims of the twenty-one (21) remaining
employees in the total amount of P4,383,225.00, which included attorney's
fees equivalent to ten (10%) percent of the sum received as settlement by
the fifteen (15) employees who had earlier settled with the private
respondent.

Private respondent appealed to public respondent NLRC contending that


the computation for backwages must be only until the completion of the

WHEREFORE, in view of the foregoing premises, judgment


is hereby rendered by us GRANTING the petition filed in
this case. The assailed Decision and Resolution dated June
04, 2004 (sic) and June 30, 2005, respectively, issued by
the public respondent in NLRC Case No. V-000586-2003
are hereby ANNULLED and SET ASIDE as to the award for
backwages granted to the seven private respondents
named in the petition at bench.
The case is hereby remanded to the public respondent for
the proper computation of the backwages due to each of

103

the said seven private respondents, computed until March


18, 1997.
SO ORDERED.[3]

First of all, this Court has to address the nature of the petition filed by
petitioners. As pointed out by private respondent, and not disputed by
petitioners, the present petition was filed out of time. Petitioners received,
on August 4, 2006, a copy of the CA Resolution dated July 27, 2006. The

Hence, the present petition.


Petitioners assigned the following errors:

period within which to file a petition for review under Rule 45 is within
fifteen (15) days from notice of the judgment or final order or resolution

GROUND/ASSIGNMENT OF ERRORS

appealed from, or from the denial of the petitioners' motion for new trial or

THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF


DISCRETION WHEN IT OVERTURNED ITS OWN DECISION
AND THAT OF THE SUPREME COURT.

reconsideration filed in due time after notice of the judgment, or in this

THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF


DISCRETION IN DECLARING THAT PETITIONERS ARE
PROJECT EMPLOYEES, CONSIDERING THAT THE NLRC 4TH
DIVISION HAD LONG RULED THAT SAID EMPLOYEES ARE IN
FACT REGULAR EMPLOYEES AND WHICH RULING WAS
LONG CONFIRMED AND AFFIRMED NOT ONLY BY THE
COURT OF APPEALS BUT BY THE SUPREME COURT ITSELF.
THE RESPONDENT COURT ACTED WITH GRAVE ABUSE OF
DISCRETION WHEN IT REFUSED TO RULE ON THE
INVALIDITY OF THE RELEASE AND QUITCLAIMS EXECUTED
BY SOME OF THE EMPLOYEES WITHOUT THE ASSISTANCE
OF COUNSEL.[4]

case, not later than August 19, 2006. Under Rule 65, a petition
for certiorari may be filed not later than sixty (60) days from notice of the
judgment, order or resolution, or in this case, not later than October 3,
2006. However, the present petition is dated October 7, 2006 and as it
appears on the records, this Court received the said petition on October
17, 2006. Thus, on its face and in reality, the present petition was filed out
of time, whether it be under Rule 45 or Rule 65 of the Rules of
Court. Nevertheless, this Court did not dismiss the present petition and
required private respondent to file its Comment. Consequently, a Reply
from petitioners and eventually, both parties' respective memorandum
were filed. In view of that premise and in the interest of justice, this Court

In its Comment[5] dated January 24, 2007, private respondent stated the
following counter-arguments:
1. The issues presented in CA-G.R. SP No. UDK
3092 and SC G.R. No. 144433 are not the same issues
recently raised in the Petition for Certiorari before the
Court of Appeals.
2. There is no final and executory ruling that
herein petitioners were regular employees and not just
project employees.[6]

shall forego the technicalities and is constrained to resolve the present


petition as a petition for certiorari under Rule 65, since the main issue
raised by petitioners is whether or not the CA committed grave abuse of
discretion which amounted to lack or excess of its jurisdiction.

Petitioners argue that the CA should have dismissed private respondent's


petition, since there was already a finality of the judgment of the NLRC. It
is not disputed that on January 31, 2000, the CA, through its 17 th Division,
issued

Resolution

dismissing

private

respondent's

petition

for certiorari (docketed as CA-G.R. SP No. UDK 3092.Subsequently, the

104

same private respondent filed a motion for reconsideration, which was

bind the Court when supported by substantial evidence. [7] Section 5, Rule

denied

2000. Not

133 of the Rules of Court, defines substantial evidence as "that amount of

contented, private respondent filed a petition with this Court, which the

relevant evidence which a reasonable mind might accept as adequate to

latter denied, through its Second Division (G.R. No. 144433), in its

justify a conclusion." Consistent therewith is the doctrine that this Court is

Resolution dated September 20, 2000. Still aggrieved, private respondent

not a trier of facts, and this is strictly adhered to in labor cases. [8] We [this

filed a second motion for reconsideration, which was dismissed by this

Court] may take cognizance of and resolve factual issues, only when the

Court. Thus, according to petitioners, there was already a finality of

findings of fact and conclusions of law of the Labor Arbiter or the NLRC are

judgment.

inconsistent with those of the CA.[9] In the present case, the NLRC and the

by

the

CA

in

its

Resolution

dated

June

8,

CA have opposing views.


On the other hand, private respondent insists that the inequitable, nay
illegal, in a decision cannot lapse into finality, referring to the computation
of the backwages which is not commensurate to the factual findings of the

According to the CA, petitioners are project employees as found by Labor

Labor Arbiter and the NLRC. Basically, according to private respondent, the

Arbiter Ernesto Carreon in his Decision dated May 28, 1998, because they

CA merely sought to correct the NLRC's and the Labor Arbiter's one-sided

were hired for the construction of the Cordova Reef Village Resort in

and blind adherence to and/or misguided application of strict technical

Cordova, Cebu, which was later on affirmed by the NLRC in its January 12,

rules, and their overzealous partiality in favor of labor. Private respondent

1999 decision. The only discrepancy is the Order of the NLRC that

further claims that the issues presented in their earlier petitions with the

petitioners are entitled to backwages up to the finality of its decision, when

CA and this Court (CA-G.R. SP No. UDK 3092 and SC G.R. No. 144433,

as project employees, private respondents are only entitled to payment of

respectively)

petition

backwages until the date of the completion of the project. In a later

for certiorari later filed with the CA and the decision of which is now the

resolution on private respondent's motion for reconsideration of its January

subject of herein petition. Private respondent clarifies that there is no final

12, 1999 decision, the NLRC changed its findings by ruling that petitioners

and executory ruling that petitioners were regular and not just project

herein were regular employees and, therefore, entitled to full backwages,

employees, hence, there was a need to file a petition with the CA.

until finality of the decision, citing that petitioners repeated rehiring over a

are

not

the

same

issues

raised

in

the

long span of time made them regular employees.


The issue as to whether petitioners were project employees or regular

Article 280 of the Labor Code distinguishes a "project employee" from a

employees is factual in nature. It is well-settled in jurisprudence that

"regular employee," thus:

factual findings of administrative or quasi-judicial bodies, which are


deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality, and

Article 280. Regular and Casual Employment The


provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular

105

where the employee has been engaged to perform


activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall continue
while such activity exists.

In Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez, [10] this Court
extensively discussed the above distinction, thus:
x x x [T]he principal test for determining whether particular
employees are properly characterized as "project
employees" as distinguished from "regular employees" is
whether or not the project employees were assigned to
carry out a "specific project or undertaking," the duration
and scope of which were specified at the time the
employees were engaged for that project.[11]
In a number of cases,[12] the Court has held that the length
of service or the re-hiring of construction workers on a
project-to-project basis does not confer upon them regular
employment status, since their re-hiring is only a natural
consequence of the fact that experienced construction
workers are preferred. Employees who are hired for
carrying out a separate job, distinct from the other
undertakings of the company, the scope and duration of
which has been determined and made known to the
employees at the time of the employment , are properly
treated as projectemployees and their services may be
lawfully terminated upon the completion of a project.
[13]
Should the terms of their employment fail to comply

with
this
standard,
considered project employees.

they

cannot

be

In Abesco Construction and Development Corporation v.


Ramirez,[14] which also involved a construction company
and its workers, this Court considered it crucial that the
employees
were
informed
of
their
status
as project employees:
The principal test for determining whether
employees are "project employees" or
"regular employees" is whether they are
assigned to carry out a specific project or
undertaking, the duration and scope of
which are specified at the time they are
engaged for that project. Such duration, as
well as the particular work/service to be
performed, is defined in an employment
agreement and is made clear to the
employees at the time of hiring.
In this case, petitioners did not have that
kind of agreement with respondents.
Neither did they inform respondents of the
nature of the latters work at the time of
hiring. Hence, for failure of petitioners to
substantiate their claim that respondents
were project employees,
we
are
constrained to declare them as regular
employees.
In Caramol v. National Labor Relations Commission,[15] and
later reiterated in Salinas, Jr. v. National Labor Relations
Commission,[16] the
Court
markedly
stressed
the
importance of the employees' knowing consent to being
engaged as project employees when it clarified that "there
is no question that stipulation on employment contract
providing for a fixed period of employment such as projectto-project contract is valid provided the period was agreed
upon knowingly and voluntarily by the parties, without any
force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstances
vitiating his consent x x x."

106

Applying the above disquisition, this Court agrees with the findings of the
CA that petitioners were project employees. It is not disputed that
petitioners were hired for the construction of the Cordova Reef Village
Resort in Cordova, Cebu. By the nature of the contract alone, it is clear
that petitioners' employment was to carry out a specific project.Hence, the
CA did not commit grave abuse of discretion when it affirmed the findings
of the Labor Arbiter. The CA correctly ruled:
A review of the facts and the evidence in this case readily
shows that a finding had been made by Labor Arbiter
Ernesto Carreon, in his decision dated May 28, 1998, that
complainants, including private respondents, are project
employees. They were hired for the construction of the
Cordova Reef Village Resort in Cordova, Cebu. We note
that no appeal had been made by the complainants,
including herein private respondents, from the said
finding. Thus, that private respondents are project
employees has already been effectively established.
Likewise, a review of the public respondent's January 12,
1999 decision shows that it affirmed the labor arbiter's
finding of the private respondents' being project
employees.
We therefore cannot fathom how the public respondent
could have ordered backwages up to the finality of its
decision when, as project employees, private respondents
are only entitled to payment of the same until the date of
the completion of the project. It is settled that, without a
valid cause, the employment of project employees cannot
be terminated prior to expiration.Otherwise, they shall be
entitled to reinstatement with full backwages. However, if
the project or work is completed during the pendency of
the ensuing suit for illegal dismissal, the employees shall
be entitled only to full backwages from the date of the
termination of their employment until the actual
completion of the work.
While it may be true that in the proceedings below the
date of completion of the project for which the private
respondents were hired had not been clearly established,

it constitutes grave abuse of discretion on the part of the


public respondent for not determining for itself the date of
said completion instead of merely ordering payment of
backwages until finality of its decision.
xxxx
The decision of the labor arbiter, as affirmed by the public
respondent in its January 12, 1999 decision, clearly
established that private respondents were project
employees. Because there was no showing then that the
project for which their services were engaged had already
been completed, the public respondent likewise found
that private respondents were illegally dismissed and thus
entitled to backwages.
However, in utter disregard of the law and prevailing
jurisprudence, the public respondents capriciously and
arbitrarily ordered that the said backwages be computed
until the finality of its decision instead of only until the
date of the project completion. In grave abuse of its
discretion, the public respondent refused to consider the
evidence presented before it as to the date of completion
of the Cordova Reef Village Resort project. The records
show that affidavits have been executed by the
petitioner's manager, corporate architect and project
engineer as to the fact of the completion of the project in
October 1996. As these evidences [sic] were already a
matter of record, the public respondent should not have
closed its eyes and should have endeavored to render a
correct and just judgment.
xxxx
Furthermore, as earlier noted, private respondents did not
appeal from the Labor Arbiter's findings that they were
indubitably project employees. However, they were
entitled to the payment of separation pay only for the
reason that the date of the completion of the project for
which they were hired had not been clearly
established. Thus, in affirming the labor arbiter's decision,
the public respondent in effect sustained the finding that
private
respondents
are
project
employees. The
statement, therefore, contained in the resolution of the
petitioner's motion for reconsideration of its January 12,

107

1999 decision that repeated rehiring makes the worker a


regular employee, is at best an obiter, especially
considering that such conclusion had not been shown to
apply to the circumstances then obtaining with the private
respondents' employment with the petitioner.[17]

LYNVIL FISHING ENTERPRISES, INC.


and/or ROSENDO S. DE BORJA,
Petitioners,

Therefore, being project employees, petitioners are only entitled to full


backwages,

computed from the date of the termination of

-versus-

their

employment until the actual completion of the work. Illegally dismissed


workers are entitled to the payment of their salaries corresponding to the
unexpired portion of their employment where the employment is for a
definite period.[18] In this case, as found by the CA, the Cordova Reef

ANDRES
G.
ARIOLA,
JESSIE
D.
ALCOVENDAS, JIMMY B. CALINAO AND
LEOPOLDO G. SEBULLEN,
Respondents.

G.R. No. 181974


Present:
CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.
Promulgated:
February 1, 2012

Village Resort project had been completed in October 1996 and private
respondent herein had signified its willingness, by way of concession to
petitioners, to set the date of completion of the project as March 18, 1997;
hence, the latter date should be considered as the date of completion of
the project for purposes of computing the full backwages of petitioners.

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

As to the issue that the CA committed grave abuse of discretion in refusing

DECISION

to rule on the invalidity of the release and quitclaims executed by some of


the employees other than the petitioners, such is inconsequential as those

PEREZ, J.:

employees are not parties in the present case.


Before the Court is a Petition for Review on Certiorari [1] of the
WHEREFORE, the

Petition

for

Review dated

October

7,

2006,

of

Decision[2] of the Fourteenth Division of the Court of Appeals in CA-G.R. SP


No. 95094 dated 10 September 2007, granting the Writ of Certiorari prayed

petitioners Wilfredo Aro, Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and

for under Rule 65 of the 1997 Revised Rules of Civil Procedure by herein

Marcial Abgo is herebyDENIED. Consequently, the Decision dated March 7,

respondents Andres G. Ariola, Jessie D. Alcovendas, Jimmy B. Calinao and

2006 and Resolution dated July 27, 2006 of the Court of Appeals are

Leopoldo Sebullen thereby reversing the Resolution of the National Labor

hereby AFFIRMED in toto.


SO ORDERED.

Relations Commission (NLRC). The dispositive portion of the assailed


decision reads:
WHEREFORE, premises considered, the Decision
dated March 31, 2004 rendered by the National Labor
Relations Commission is hereby REVERSED and SET

108

ASIDE. In lieu thereof, the Decision of the Labor Arbiter is


hereby REINSTATED, except as to the award of attorneys
fees, which is ordered DELETED.[3]

6. Lynvil, through De Borja, filed a criminal complaint against the


dismissed employees for violation of P.D. 532, or the Anti-Piracy and Anti-

The version of the petitioners follows:

Highway Robbery Law of 1974 before the Office of the City Prosecutor of
Malabon City.[8]

1. Lynvil Fishing Enterprises, Inc. (Lynvil) is a company engaged in


deep-sea fishing, operating along the shores of Palawan and other outlying
islands of the Philippines.

[4]

It is operated and managed by Rosendo S. de

Borja.

7. On 12 November 1998, First Assistant City Prosecutor Rosauro


Silverio found probable cause for the indictment of the dismissed
employees for the crime of qualified theft[9] under the Revised Penal Code.

2. On 1 August 1998, Lynvil received a report from Romanito

On the other hand, the story of the defense is:

Clarido, one of its employees, that on 31 July 1998, he witnessed that while
on board the company vessel Analyn VIII, Lynvil employees, namely:
Andres G. Ariola (Ariola), the captain; Jessie D. Alcovendas (Alcovendas),

1. The private respondents were crew members of Lynvils vessel


named Analyn VIII.[10]

Chief Mate; Jimmy B. Calinao (Calinao), Chief Engineer; Ismael G. Nubla


(Nubla), cook; Elorde Baez (Baez), oiler; and Leopoldo D. Sebullen

2. On 31 July 1998, they arrived at the Navotas Fishport on board

(Sebullen), bodegero, conspired with one another and stole eight (8) tubs

Analyn

of pampano andtangigue fish and delivered them to another vessel, to the

fishes. These baeras were delivered to a consignee named SAS and Royale.

prejudice of Lynvil.

[11]

[5]

VIII

loaded

with

1,241 baeras of

different

kinds

of

3. The said employees were engaged on a per trip basis or por

The following day, the private respondents reported back to Lynvil

viaje which terminates at the end of each trip. Ariola, Alcovendas and

office to inquire about their new job assignment but were told to wait for

Calinao were managerial field personnel while the rest of the crew were

further advice. They were not allowed to board any vessel.[12]

field personnel.[6]
3. On 5 August 1998, only Alcovendas and Baez received a
4. By reason of the report and after initial investigation, Lynvils

memorandum from De Borja ordering them to explain the incident that

General Manager Rosendo S. De Borja (De Borja) summoned respondents

happened on 31 July 1998. Upon being informed about this, Ariola, Calinao,

to explain within five (5) days why they should not be dismissed from

Nubla and Sebullen went to the Lynvil office. However, they were told that

service. However, except for Alcovendas and Baez,

their employments were already terminated.[13]

[7]

the respondents

refused to sign the receipt of the notice.


Aggrieved, the employees filed with the Arbitration Branch of the
5. Failing to explain as required, respondents employment was
terminated.

National Labor Relations Commission-National Capital Region on 25 August


1998 a complaint for illegal dismissal with claims for backwages, salary

109

Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)

differential reinstatement, service incentive leave, holiday pay and its


premium and 13th month pay from 1996 to1998. They also claimed for

Separation Pay 55,250.00

moral, exemplary damages and attorneys fees for their dismissal with bad
faith.[14]

13th Month Pay P6,500.00 P295,700.00


4) Leopoldo Sebullen
They added that the unwarranted accusation of theft stemmed
Backwages P154,440.00
(P4, 290.00 x 36 = P154,440.00)

from their oral demand of increase of salaries three months earlier and
their request that they should not be required to sign a blank payroll and

Separation Pay P44,073.00

vouchers.[15]

13th Month Pay 2,473.12


On 5 June 2002, Labor Arbiter Ramon Valentin C. Reyes found merit

Salary Differential 4,472.00


P208,455.12
5) Ismael Nubla

in complainants charge of illegal dismissal. [16] The dispositive portion reads:


WHEREFORE, premises considered, judgment is
hereby rendered finding that complainants were illegally
dismissed, ordering respondents to jointly and severally
pay complainants (a) separation pay at one half month pay
for every year of service; (b) backwages; (c) salary
differential; (d) 13th month pay; and (e) attorneys fees, as
follows:
1) Andres Ariola
Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)

Backwages P199,640.12
Separation Pay P58,149.00
13th Month Pay 2,473.12
Salary Differential P5,538.00
P265, 28.12
___________
TOTAL P 1, 341, 650.76
All other claims are dismissed for lack of merit. [17]

Separation Pay P74,650.00


13th Month Pay P6,500.00
P325,250.00

The Labor Arbiter found that there was no evidence showing that the
private respondents received the 41 baeras of pampano as alleged by De

2) Jessie Alcovendas
Backwages P195,328.00
(P5,148.00 x 36 = P195,328.00)
Separation Pay P44,304.00
13th Month Pay 5,538.00

Borja in his reply-affidavit; and that no proof was presented that the
8 baeras of pampano [and tangigue]

were

missing

at

the

place

of

destination.[18]
The Labor Arbiter disregarded the Resolution of Assistant City Prosecutor

Salary Differential 1,547.52


P246,717.52

Rosauro Silverio on the theft case. He reasoned out that the Labor Office is

3) Jimmy Calinao

dismissal of employees.[19]

governed by different rules for the determination of the validity of the

110

dismissal of the employees since there was no evidence to prove the


The Labor Arbiter also ruled that the contractual provision that the

actual quantities of the missing kinds of fish loaded to Analyn VIII. [25]It also

employment terminates upon the end of each trip does not make the

reversed the finding of the NLRC that the dismissed employees were

respondents dismissal legal. He pointed out that respondents and Lynvil

merely contractual employees and added that they were regular ones

did not negotiate on equal terms because of the moral dominance of the

performing activities which are usually necessary or desirable in the

employer.

business and trade of Lynvil. Finally, it ruled that the two-notice rule

[20]

The Labor Arbiter found that the procedural due process was not complied

provided by law and jurisprudence is mandatory and non-compliance

with and that the mere notice given to the private respondents fell short of

therewith rendered the dismissal of the employees illegal.

the requirement of ample opportunity to present the employees side.

[21]

The following are the assignment of errors presented before this


On appeal before the National Labor Relations Commission, petitioners

Court by Lynvil:

asserted that private respondents were only contractual employees; that


they were not illegally dismissed but were accorded procedural due

process and that De Borja did not commit bad faith in dismissing the
employees so as to warrant his joint liability with Lynvil.

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO


CONSIDER THE ESTABLISHED DOCTRINE LAID DOWN
IN NASIPIT LUMBER COMPANY V. NLRCHOLDING THAT THE
FILING OF A CRIMINAL CASE BEFORE THE PROSECUTORS
OFFICE CONSTITUTES SUFFICIENT BASIS FOR A VALID
TERMINATION OF EMPLOYMENT ON THE GROUNDS OF
SERIOUS MISCONDUCT AND/OR LOSS OF TRUST AND
CONFIDENCE.

[22]

On 31 March 2004, the NLRC reversed and set aside the Decision
of the Labor Arbiter. The dispositive portion reads:
WHEREFORE, judgment
is
hereby
rendered REVERSING AND SETTING ASIDE the Decision
of the Labor Arbiter a quo and a new one entered
DISMISSING the present complaints for utter lack of merit;

II
THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT THE TERMINATION OF RESPONDENTS EMPLOYMENT
WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

However as above discussed, an administrative fine


of PhP5,000.00 for each complainant, Andres Ariola, Jessie
Alcovendas, Jimmy Canilao, Leopoldo Sebullen and Ismael
Nobla or a total of PhP25,000.00 is hereby awarded.[23]
The

private respondents

except

Elorde

Baez

filed

III

Petition

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO


CONSIDER THAT THE RESPONDENTS EMPLOYMENT, IN ANY
EVENT, WERE CONTRACTUAL IN NATURE BEING ON A PER
VOYAGE BASIS. THUS, THEIR RESPECTIVE EMPLOYMENT
TERMINATED AFTER THE END OF EACH VOYAGE

for Certiorari[24] before the Court of Appeals alleging grave abuse of


discretion on the part of NLRC.
The Court of Appeals found merit in the petition and reinstated the

IV
THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT THE RESPONDENTS WERE NOT ACCORDED
PROCEDURAL DUE PROCESS.

Decision of the Labor Arbiter except as to the award of attorneys fees. The
appellate court held that the allegation of theft did not warrant the

111

THE HONORABLE COURT OF APPEALS ERRED IN RULING


THAT THE RESPONDENTS ARE ENTITLED TO THE PAYMENT
OF THEIR MONEY CLAIMS.
VI

The contrariety of the findings of the Labor Arbiter and the NLRC
prevents reliance on the principle of special administrative expertise and
provides the reason for judicial review, at first instance by the appellate
court, and on final study through the present petition.

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO


CONSIDER THAT PETITIONER ROSENDO S. DE BORJA IS NOT
JOINTLY AND SEVERALLY LIABLE FOR THE JUDGMENT WHEN
THERE WAS NO FINDING OF BAD FAITH.[26]

In the first assignment of error, Lynvil contends that the filing of a


criminal case before the Office of the Prosecutor is sufficient basis for a
valid termination of employment based on serious misconduct and/or loss

The Courts Ruling


The Supreme Court is not a trier of facts. Under Rule 45,[27] parties
may raise only questions of law. We are not duty-bound to analyze again
and weigh the evidence introduced in and considered by the tribunals
below. Generally when supported by substantial evidence, the findings of
fact of the CA are conclusive and binding on the parties and are not
reviewable by this Court, unless the case falls under any of the
following recognized exceptions:

of trust and confidence relying on Nasipit Lumber Company v. NLRC.[29]


Nasipit is about a security guard who was charged with qualified
theft which charge was dismissed by the Office of the Prosecutor. However,
despite the dismissal of the complaint, he was still terminated from his
employment on the ground of loss of confidence. We ruled that proof
beyond reasonable doubt of an employee's misconduct is not required
when loss of confidence is the ground for dismissal. It is sufficient if the
employer has "some basis" to lose confidence or that the employer has

(1) When the conclusion is a finding grounded entirely on


speculation, surmises and conjectures;
(2) When the inference made is manifestly mistaken,
absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of
facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary
to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial
court;
(8) When the findings of fact are conclusions without
citation of specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the
petitioners' main and reply briefs are not disputed by
the respondents; and
(10) When the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and
contradicted by the evidence on record. (Emphasis
supplied)[28]

reasonable ground to believe or to entertain the moral conviction that the


employee concerned is responsible for the misconduct and that the nature
of his participation therein rendered him absolutely unworthy of the trust
and confidence demanded by his position. [30] It added that the dropping of
the qualified theft charges against the respondent is not binding upon a
labor tribunal.[31]
In Nicolas v. National Labor Relations Commission,[32] we held that a
criminal conviction is not necessary to find just cause for employment
termination. Otherwise stated, an employees acquittal in a criminal case,
especially one that is grounded on the existence of reasonable doubt, will
not preclude a determination in a labor case that he is guilty of acts
inimical to the employers interests.[33] In the reverse, the finding of
probable cause is not followed by automatic adoption of such finding by
the labor tribunals.

112

In other words, whichever way the public prosecutor disposes of a

this trust is the essence of the offense for which an employee is penalized.
[36]

complaint, the finding does not bind the labor tribunal.

Breach of trust is present in this case.


Thus, Lynvil cannot argue that since the Office of the Prosecutor

We agree with the ruling of the Labor Arbiter and Court of Appeals

found probable cause for theft the Labor Arbiter must follow the finding as

that the quantity of tubs expected to be received was the same as that

a valid reason for the termination of respondents employment. The proof

which was loaded. However, what is material is the kind of fish loaded and

required for purposes that differ from one and the other are likewise
different.

We cannot close our eyes to the positive and clear narration of


facts of the three witnesses to the commission of qualified theft. Jonathan

Nonetheless, even without reliance on the prosecutors finding, we


find that there was valid cause for respondents dismissal.

that the termination was for a valid or authorized cause. [34]


cause

is

required

for

valid

dismissal. The

Distajo, a crew member of the Analyn VIII, stated in his letter addressed to
De Borja[37] dated 8 August 1998, that while the vessel was traversing San
Nicolas, Cavite, he saw a small boat approach them.When the boat was

In illegal dismissal cases, the employer bears the burden of proving

Just

then unloaded. Sameness is likewise needed.

next to their vessel, Alcovendas went inside the stockroom while Sebullen
pushed an estimated four tubs of fish away from it. Ariola, on the other
hand, served as the lookout and negotiator of the transaction. Finally, Baez

Labor

Code[35] provides that an employer may terminate an employment based


on fraud or willful breach of the trust reposed on the employee. Such
breach is considered willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based
on substantial evidence and not on the employers whims or caprices or
suspicions otherwise, the employee would eternally remain at the mercy of
the employer. Loss of confidence must not be indiscriminately used as a
shield by the employer against a claim that the dismissal of an employee
was arbitrary. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and shows that the employee
concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of responsibility,
trust and confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as the handling or care
and protection of the property and assets of the employer. The betrayal of

and Calinao helped in putting the tubs in the small boat. He further added
that he received P800.00 as his share for the transaction. Romanito
Clarido, who was also on board the vessel, corroborated the narration of
Distajo on all accounts in his 25 August 1998 affidavit. [38] He added that
Alcovendas told him to keep silent about what happened on that
day. Sealing
affidavit

[39]

tight

the

credibility

of

the

narration

of

theft

is

the

executed by Elorde Baez dated 3 May 1999. Baez was one of

the dismissed employees who actively participated in the taking of the


tubs. He clarified in the affidavit that the four tubs taken out of the
stockroom in fact contained fish taken from the eight tubs. He further
stated that Ariola told everyone in the vessel not to say anything and
instead file a labor case against the management.Clearly, we cannot fault
Lynvil and De Borja when it dismissed the employees.
The second to the fifth assignment of errors interconnect.
The nature of employment is defined in the Labor Code, thus:
Art. 280. Regular and casual employment. The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral
agreement of the parties, an employment shall be
deemed to be regular where the employee has

113

been engaged to perform activities which are


usually necessary or desirable in the usual
business or trade of the employer, except where
the employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at the
time of the engagement of the employee or where
the work or service to be performed is seasonal in
nature and the employment is for the duration of
the season.
An employment shall be deemed to be casual if it
is not covered by the preceding paragraph:
Provided, That any employee who has rendered at
least one year of service, whether such service is
continuous or broken, shall be considered a regular
employee with respect to the activity in which he is
employed and his employment shall continue while
such activity exists.

itself has singled out: agreements entered into precisely to


circumvent security of tenure. It should have no application
to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being
brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former
over the latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless
and arbitrary, unjust in its effects and apt to lead to absurd
and unintended consequences.
Contrarily, the private respondents contend that they became
regular employees by reason of their continuous hiring and performance of

Lynvil contends that it cannot be guilty of illegal dismissal because

tasks necessary and desirable in the usual trade and business of Lynvil.

the private respondents were employed under a fixed-term contract which


expired at the end of the voyage. The pertinent provisions of the contract
are:
xxxx
1.
NA ako ay sumasang-ayon na maglingkod at gumawa
ng mga gawain sang-ayon sa patakarang por viaje na
magmumula sa pagalis sa Navotas papunta sa
pangisdaan at pagbabalik sa pondohan ng lantsa sa
Navotas, Metro Manila;
xxxx
1.
NA ako ay nakipagkasundo na babayaran ang aking
paglilingkod sa paraang por viaje sa halagang
P__________ isang biyahe ng kabuuang araw xxxx. [40]

Jurisprudence,[42] laid two conditions for the validity of a fixedcontract agreement between the employer and employee:
First, the fixed period of employment was
knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper
pressure being brought to bear upon the employee
and absent any other circumstances vitiating his
consent; or
Second, it satisfactorily appears that the employer
and the employee dealt with each other on more or
less equal terms with no moral dominance
exercised by the former or the latter.[43]
Textually, the provision that: NA ako ay sumasang-ayon na maglingkod at
gumawa

Lynvil insists on the applicability of the case of Brent School,[41] to


wit:

ng

mga

gawain

sang-ayon

sa

patakarang

por

viaje

na

magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik


sa pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of

Accordingly, and since the entire purpose behind


the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in
said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of
regular employment as defined therein should be
construed to refer to the substantive evil that the Code

employment. In

the

context,

however,

of

the

facts

that: (1)

the

respondents were doing tasks necessarily to Lynvils fishing business with


positions ranging from captain of the vessel to bodegero; (2) after the end
of a trip, they will again be hired for another trip with new contracts; and
(3) this arrangement continued for more than ten years, the clear intention
is to go around the security of tenure of the respondents as regular

114

employees. And respondents are so by the express provisions of the

Upon the other hand, the requirement of hearing affords the employee an

second paragraph of Article 280, thus:

opportunity to answer his employer's charges against him and accordingly,


to defend himself therefrom before dismissal is effected. [44] Obviously, the

xxx Provided, That any employee who has rendered at


least one year of service, whether such service is
continuous or broken, shall be considered a regular
employee with respect to the activity in which he is
employed and his employment shall continue while such
activity exists.

second written notice, as indispensable as the first, is intended to ensure


the observance of due process.
Applying the rule to the facts at hand, we grant a monetary award
of P50,000.00 as nominal damages, this, pursuant to the fresh ruling of this

The same set of circumstances indicate clearly enough that it was the need
for a continued source of income that forced the employees acceptance of
the por viaje provision.

Court in Culili v. Eastern Communication Philippines, Inc. [45] Due to the


failure of Lynvil to follow the procedural requirement of two-notice rule,
nominal damages are due to respondents despite their dismissal for just
cause.

Having found that respondents are regular employees who may be,
however, dismissed for cause as we have so found in this case, there is a

Given the fact that their dismissal was for just cause, we cannot

need to look into the procedural requirement of due process in Section 2,

grant backwages and separation pay to respondents. However, following

Rule XXIII, Book V of the Rules Implementing the Labor Code. It is required

the findings of the Labor Arbiter who with the expertise presided over the

that the employer furnish the employee with two written notices: (1) a

proceedings below, which findings were affirmed by the Court of Appeals,

written notice served on the employee specifying the ground or grounds

we grant the 13th month pay and salary differential of the dismissed

for termination, and giving to said employee reasonable opportunity within

employees.

which to explain his side; and (2) a written notice of termination served on
the

employee

indicating

that

upon

due

consideration

of

all

the

Whether De Borja is jointly and severally liable with Lynvil

circumstances, grounds have been established to justify his termination.


From the records, there was only one written notice which required
respondents to explain within five (5) days why they should not be
dismissed from the service.Alcovendas was the only one who signed the
receipt of the notice. The others, as claimed by Lynvil, refused to sign. The
other employees argue that no notice was given to them.Despite the
inconsistencies, what is clear is that no final written notice or notices of

As to the last issue, this Court has ruled that in labor cases, the
corporate directors and officers are solidarily liable with the corporation for
the termination of employment of employees done with malice or in bad
faith.[46] Indeed, moral damages are recoverable when the dismissal of an
employee is attended by bad faith or fraud or constitutes an act oppressive
to labor, or is done in a manner contrary to good morals, good customs or
public policy.

termination were sent to the employees.

It has also been discussed in MAM Realty Development Corporation

The twin requirements of notice and hearing constitute the


elements of [due] process in cases of employee's dismissal.

The

requirement of notice is intended to inform the employee concerned of the


employer's intent to dismiss and the reason for the proposed dismissal.

v. NLRC

[47]

that:

x x x A corporation being a juridical entity, may act only


through its directors, officers and employees. Obligations
incurred by them, acting as such corporate agents, are not
theirs but the direct accountabilities of the corporation they

115

represent. True, solidary liabilities may at times be incurred


but only when exceptional circumstances warrant such as,
generally, in the following cases:
1. When directors and trustees or, in appropriate cases, the
officers of a corporation:
xxx
(b) act in bad faith or with gross negligence in directing the
corporate affairs;
x x x [48]
The term "bad faith" contemplates a "state of mind affirmatively operating
with furtive design or with some motive of self-interest or will or for ulterior
purpose."[49]
We agree with the ruling of both the NLRC and the Court of Appeals when
they pronounced that there was no evidence on record that indicates
commission of bad faith on the part of De Borja. He is the general manager
of Lynvil, the one tasked with the supervision by the employees and the
operation of the business. However, there is no proof that he imposed on
the respondents the por viaje provision for purpose of effecting their
summary dismissal.
WHEREFORE,

the

petition

is partially

GRANTED. The

10

September 2007 Decision of the Court of Appeals in CA-G.R. SP No. 95094


reversing the Resolution dated 31 March 2004 of the National Labor
Relations Commission is hereby MODIFIED. The Court hereby rules that
the employees were dismissed for just cause by Lynvil Fishing Enterprises,
Inc. and Rosendo S. De Borja, hence, the reversal of the award for
backwages and separation pay. However, we affirm the award for
13th month pay, salary differential and grant an additional P50,000.00 in
favor of the employees representing nominal damages for petitioners noncompliance with statutory due process. No cost.
SO ORDERED.

116

G.R. No. 192571

April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE,


EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C.
BERNARDO,
AND
ALLAN
G.
ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for
Reconsideration dated August 23, 2013 of the Court's Decision dated July
23, 2013 (Decision).1
At the outset, there appears to be no substantial argument in the said
motion sufficient for the Court to depart from the pronouncements made in
the initial ruling. But if only to address Akaraz's novel assertions, and to so
placate any doubt or misconception in the resolution of this case, the Court
proceeds to shed light on the matters indicated below.
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing
of evidence since a petition for review on certiorari under Rule 45 of the
Rules of Court (Rules) is limited to the review of questions of law. She
submits that since what was under review was a ruling of the Court of
Appeals (CA) rendered via a petition for certiorari under Rule 65 of the
Rules, the Court should only determine whether or not the CA properly
determined that the National Labor Relations Commission (NLRC)
committed a grave abuse of discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court
actually resolved the controversy under the above-stated framework of
analysis. Essentially, the Court found the CA to have committed an error in
holding that no grave abuse of discretion can be ascribed to the NLRC
since the latter arbitrarily disregarded the legal implication of the
attendant circumstances in this case which should have simply resulted in
the finding that Alcaraz was apprised of the performance standards for her

regularization and hence, was properly a probationary employee. As the


Court observed, an employees failure to perform the duties and
responsibilities which have been clearly made known to him constitutes a
justifiable basis for a probationary employees non-regularization. As
detailed in the Decision, Alcaraz was well-apprised of her duties and
responsibilities as well as the probationary status of her employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)]
caused the publication in a major broadsheet newspaper of its
need for a Regulatory Affairs Manager, indicating therein the job
description for as well as the duties and responsibilities attendant
to the aforesaid position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;
(b) In Abbotts December 7, 2004 offer sheet, it was stated that
Alcaraz was to be employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract
which specifically stated, inter alia, that she was to be placed on
probation for a period of six (6) months beginning February 15,
2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbotts employment offer,
Bernardo sent her copies of Abbotts organizational structure and
her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation
where [Allan G. Almazar] informed her that she had to implement
Abbotts Code of Conduct and office policies on human resources
and finance and that she would be reporting directly to [Kelly
Walsh];
(f) Alcaraz was also required to undergo a training program as part
of her orientation;
(g) Alcaraz received copies of Abbotts Code of Conduct and
Performance Modules from [Maria Olivia T. Yabut-Misa] who
explained to her the procedure for evaluating the performance of
probationary employees; she was further notified that Abbott had
only one evaluation system for all of its employees; and

117

(h) Moreover, Alcaraz had previously worked for another


pharmaceutical company and had admitted to have an "extensive
training and background" to acquire the necessary skills for her
job.2
Considering the foregoing incidents which were readily observable from the
records, the Court reached the conclusion that the NLRC committed grave
abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a
regular and not a probationary employee, the Court finds that the NLRC
committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise
that Alcarazs receipt of her job description and Abbotts Code of Conduct
and Performance Modules was not equivalent to being actually informed of
the performance standards upon which she should have been evaluated
on. It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein which should have warranted a contrary
finding that Alcaraz was indeed a probationary and not a regular employee
more particularly the fact that she was well-aware of her duties and
responsibilities and that her failure to adequately perform the same would
lead to her non-regularization and eventually, her termination. 3
Consequently, since the CA found that the NLRC did not commit grave
abuse of discretion and denied the certiorari petition before it, the reversal
of its ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their
nature, final and executory4 and, hence, not subject to appellate
review,5 the Court is not precluded from considering other questions of law
aside from the CAs finding on the NLRCs grave abuse of discretion. While
the focal point of analysis revolves on this issue, the Court may deal with
ancillary issues such as, in this case, the question of how a probationary
employee is deemed to have been informed of the standards of his
regularization if only to determine if the concepts and principles of labor
law were correctly applied or misapplied by the NLRC in its decision. In
other words, the Courts analysis of the NLRCs interpretation of the
environmental principles and concepts of labor law is not completely
prohibited in as it is complementary to a Rule 45 review of labor cases.

Finally, if only to put to rest Alcarazs misgivings on the manner in which


this case was reviewed, it bears pointing out that no "factual appellate
review" was conducted by the Court in the Decision. Rather, the Court
proceeded to interpret the relevant rules on probationary employment as
applied to settled factual findings. Besides, even on the assumption that a
scrutiny of facts was undertaken, the Court is not altogether barred from
conducting the same. This was explained in the case of Career Philippines
Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the
credibility of witnesses, or substitute the findings of fact of the NLRC, an
administrative body that has expertise in its specialized field. Nor do we
substitute our "own judgment for that of the tribunal in determining where
the weight of evidence lies or what evidence is credible." The factual
findings of the NLRC, when affirmed by the CA, are generally conclusive on
this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our
discretionary appellate jurisdiction may be urged to look into factual issues
raised in a Rule 45 petition. For instance, when the petitioner persuasively
alleges that there is insufficient or insubstantial evidence on record to
support the factual findings of the tribunal or court a quo, as Section 5,
Rule 133 of the Rules of Court states in express terms that in cases filed
before administrative or quasi-judicial bodies, a fact may be deemed
established only if supported by substantial evidence. 7 (Emphasis supplied)
B.
Standards
conceptual underpinnings.

for

regularization;

Alcaraz posits that, contrary to the Courts Decision, ones job description
cannot by and of itself be treated as a standard for regularization as a
standard denotes a measure of quantity or quality. By way of example,
Alcaraz cites the case of a probationary salesperson and asks how does
such employee achieve regular status if he does not know how much he
needs to sell to reach the same.
The argument is untenable.
First off, the Court must correct Alcarazs mistaken notion: it is not the
probationary employees job description but the adequate performance of
his duties and responsibilities which constitutes the inherent and implied
standard for regularization. To echo the fundamental point of the Decision,

118

if the probationary employee had been fully apprised by his employer of


these duties and responsibilities, then basic knowledge and common sense
dictate that he must adequately perform the same, else he fails to pass the
probationary trial and may therefore be subject to termination.8
The determination of "adequate performance" is not, in all cases,
measurable by quantitative specification, such as that of a sales quota in
Alcarazs example. It is also hinged on the qualitative assessment of the
employees work; by its nature, this largely rests on the reasonable
exercise of the employers management prerogative. While in some
instances the standards used in measuring the quality of work may be
conveyed such as workers who construct tangible products which follow
particular metrics, not all standards of quality measurement may be
reducible to hard figures or are readily articulable in specific preengagement descriptions. A good example would be the case of
probationary employees whose tasks involve the application of discretion
and intellect, such as to name a few lawyers, artists, and journalists. In
these kinds of occupation, the best that the employer can do at the time of
engagement is to inform the probationary employee of his duties and
responsibilities and to orient him on how to properly proceed with the
same. The employer cannot bear out in exacting detail at the beginning of
the engagement what he deems as "quality work" especially since the
probationary employee has yet to submit the required output. In the
ultimate analysis, the communication of performance standards should be
perceived within the context of the nature of the probationary employees
duties and responsibilities.
The same logic applies to a probationary managerial employee who is
tasked to supervise a particular department, as Alcaraz in this
case.1wphi1 It is hardly possible for the employer, at the time of the
employees engagement, to map into technical indicators, or convey in
precise detail the quality standards by which the latter should effectively
manage the department. Factors which gauge the ability of the managerial
employee to either deal with his subordinates (e.g., how to spur their
performance, or command respect and obedience from them), or to
organize office policies, are hardly conveyable at the outset of the
engagement since the employee has yet to be immersed into the work
itself. Given that a managerial role essentially connotes an exercise of
discretion, the quality of effective management can only be determined
through subsequent assessment. While at the time of engagement, reason
dictates that the employer can only inform the probationary managerial
employee of his duties and responsibilities as such and provide the
allowable parameters for the same. Verily, as stated in the Decision, the

adequate performance of such duties and responsibilities is, by and of


itself, an implied standard of regularization.
In this relation, it bears mentioning that the performance standard
contemplated by law should not, in all cases, be contained in a specialized
system of feedbacks or evaluation. The Court takes judicial notice of the
fact that not all employers, such as simple businesses or small-scale
enterprises, have a sophisticated form of human resource management, so
much so that the adoption of technical indicators as utilized through
"comment cards" or "appraisal" tools should not be treated as a
prerequisite for every case of probationary engagement. In fact, even if a
system of such kind is employed and the procedures for its implementation
are not followed, once an employer determines that the probationary
employee fails to meet the standards required for his regularization, the
former is not precluded from dismissing the latter. The rule is that when a
valid cause for termination exists, the procedural infirmity attending the
termination only warrants the payment of nominal damages. This was the
principle laid down in the landmark cases of Agabon v. NLRC 9 (Agabon) and
Jaka Food Processing Corporation v. Pacot 10 (Jaka). In the assailed Decision,
the Court actually extended the application of the Agabon and Jaka rulings
to breaches of company procedure, notwithstanding the employers
compliance with the statutory requirements under the Labor
Code.11 Hence, although Abbott did not comply with its own termination
procedure, its non-compliance thereof would not detract from the finding
that there subsists a valid cause to terminate Alcarazs employment.
Abbott, however, was penalized for its contractual breach and thereby
ordered to pay nominal damages.
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano 12 (Aliling)
since the same is not squarely applicable to the case at bar. The employee
in Aliling, a sales executive, was belatedly informed of his quota
requirement. Thus, considering the nature of his position, the fact that he
was not informed of his sales quota at the time of his engagement
changed the complexion of his employment. Contrarily, the nature of
Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates
the application of the foregoing. Records show that Alcaraz was terminated
because she (a) did not manage her time effectively; (b) failed to gain the
trust of her staff and to build an effective rapport with them; (c) failed to
train her staff effectively; and (d) was not able to obtain the knowledge
and ability to make sound judgments on case processing and article review
which were necessary for the proper performance of her duties. 13 Due to
the nature and variety of these managerial functions, the best that Abbott
could have done, at the time of Alcaraz's engagement, was to inform her of

119

her duties and responsibilities, the adequate performance of which, to


repeat, is an inherent and implied standard for regularization; this is unlike
the circumstance in Aliling where a quantitative regularization standard, in
the term of a sales quota, was readily articulable to the employee at the
outset. Hence, since the reasonableness of Alcaraz's assessment clearly
appears from the records, her termination was justified. Bear in mind that
the quantum of proof which the employer must discharge is only
substantial evidence which, as defined in case law, means that amount of
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise.14 To the Court's mind, this threshold of
evidence Abbott amply overcame in this case.
All told, the Court hereby denies the instant motion for reconsideration and
thereby upholds the Decision in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the
Court's Decision dated July 23, 2013 in this case is hereby DENIED.
SO ORDERED.

120

G.R. No. 183572


YOLANDA M. MERCADO,
CHARITO S. DE LEON, DIANA R. LACHICA,
Present:
MARGARITO M. ALBA, JR., and FELIX A.
TONOG,
CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,
Petitioners,
PEREZ, and
*
MENDOZA, JJ.
-

versus -

The background facts are not disputed and are summarized below.

AMACC is an educational institution engaged in computer-based


education in the country. One of AMACCs biggest schools in the country is
its branch at Paraaque City. The petitioners were faculty members who
started teaching at AMACC on May 25, 1998. The petitioner Mercado was
engaged as a Professor 3, while petitioner Tonog was engaged as an

AMA
COMPUTER
CITY, INC. ,

COLLEGE-PARAAQUE

Promulgated:

Assistant Professor 2. On the other hand, petitioners De Leon, Lachica and

April 13, 2010

Alba, Jr., were all engaged as Instructor 1. [5] The petitioners executed
individual Teachers Contracts for each of the trimesters that they were
engaged to teach, with the following common stipulation: [6]

Respondent.

1.

x-----------------------------------------------------------------------------------------x
DECISION

POSITION. The TEACHER has agreed to accept a nontenured appointment to work in the College of xxx
effective xxx to xxx or for the duration of the last
term that the TEACHER is given a teaching
load based on the assignment duly approved by the
DEAN/SAVP-COO. [Emphasis supplied]

BRION, J.:
For the school year 2000-2001, AMACC implemented new faculty
The petitioners Yolanda M. Mercado (Mercado), Charito S. De Leon
(De Leon), Diana R. Lachica (Lachica), Margarito M. Alba, Jr. (Alba, Jr.,), and
Felix A. Tonog (Tonog), all former faculty members of AMA Computer
College-Paraaque City, Inc. (AMACC) assail in this petition for review
on certiorari[1] the

Court

of

Appeals

(CA)

decision

of

November

29,2007[2] and its resolution of June 20, 2008 [3] that set aside the National
Labor Relations Commissions (NLRC) resolution dated July 18, 2005.[4]

THE FACTUAL ANTECEDENTS

screening guidelines, set forth in its Guidelines on the Implementation of


AMACC Faculty Plantilla.[7]Under the new screening guidelines, teachers
were to be hired or maintained based on extensive teaching experience,
capability,
background.

potential,
The

high

academic

qualifications

performance standards

under

and

research

the new

screening

guidelines were also used to determine the present faculty members


entitlement to salary increases.The petitioners failed to obtain a
passing rating based on the performance standards; hence AMACC
did not give them any salary increase.[8]

Because of AMACCs action on the salary increases, the petitioners


filed a complaint with the Arbitration Branch of the NLRC on July 25, 2000,

121

for underpayment of wages, non-payment of overtime and overload

three-year probationary period for teachers. Their contracts were not

compensation, 13 month pay, and for discriminatory practices.

renewed for the following term because they failed to pass the

th

[9]

Performance Appraisal System for Teachers (PAST) while others failed to


On September 7, 2000, the petitioners individually received a

comply with the other requirements for regularization, promotion, or

memorandum from AMACC, through Human Resources Supervisor Mary

increase in salary. This move, according to AMACC, was justified since the

Grace Beronia, informing them that with the expiration of their contract to

school has to maintain its high academic standards. [13]

teach,

their

contract

would

no

longer

be

renewed. [10] The

memorandum[11] entitled Notice of Non-Renewal of Contract states in full:


In view of the expiration of your contract to teach
with AMACC-Paranaque, We wish to inform you that your
contract shall no longer be renewed effective Thirty (30)
days upon receipt of this notice. We therefore would like to
thank you for your service and wish you good luck as you
pursue your career.
You are hereby instructed to report to the HRD for
further instruction. Please bear in mind that as per
company policy, you are required to accomplish your
clearance and turn-over all documents and accountabilities
to your immediate superior.

The Labor Arbiter Ruling

On March 15, 2002, Labor Arbiter (LA) Florentino R. Darlucio


declared in his decision[14] that the petitioners had been illegally dismissed,
and ordered AMACC to reinstate them to their former positions without loss
of seniority rights and to pay them full backwages, attorneys fees and
13th month pay. The LA ruled that Article 281 of the Labor Code on
probationary employment applied to the case; that AMACC allowed the
petitioners to teach for the first semester of school year 2000-200; that
AMACC did not specify who among the petitioners failed to pass the PAST

For your information and guidance

and who among them did not comply with the other requirements of
regularization, promotions or increase in salary; and that the petitioners

The petitioners amended their labor arbitration complaint to

dismissal could not be sustained on the basis of AMACCs vague and

include the charge of illegal dismissal against AMACC. In their Position

general allegations without substantial factual basis. [15] Significantly, the LA

Paper, the petitioners claimed that their dismissal was illegal because it

found no discrimination in the adjustments for the salary rate of the faculty

was made in retaliation for their complaint for monetary benefits and

members based on the performance and other qualification which is an

discriminatory practices against AMACC. The petitioners also contended

exercise of management prerogative.[16] On this basis, the LA paid no heed

that AMACC failed to give them adequate notice; hence, their dismissal

to the claims for salary increases.

was ineffectual.

[12]

The NLRC Ruling


AMACC contended in response that the petitioners worked under a
contracted term under a non-tenured appointment and were still within the

122

On appeal, the NLRC in a Resolution dated July 18, 2005 [17] denied

petitioners valid term of employment; (3) ruling that AMACC cannot apply

AMACCs appeal for lack of merit and affirmed in toto the LAs ruling. The

the performance standards generally applicable to all faculty members;

NLRC, however, observed that the applicable law is Section 92 of the

and (4) ordering the petitioners reinstatement and awarding them

Manual of Regulations for Private Schools (which mandates a probationary

backwages and attorneys fees.

period of nine consecutive trimesters of satisfactory service for academic


personnel in the tertiary level where collegiate courses are offered on a

The CA Ruling

trimester basis), not Article 281 of the Labor Code (which prescribes a
probationary period of

six months) as

the LA

ruled. Despite this

In a decision issued on November 29, 2007, [19] the CA granted

observation, the NLRC affirmed the LAs finding of illegal dismissal since the

AMACCs petition for certiorari and dismissed the petitioners complaint for

petitioners were terminated on the basis of standards that were only

illegal dismissal.

introduced near the end of their probationary period.


The CA ruled that under the Manual for Regulations for Private
The NLRC ruled that the new screening guidelines for the school

Schools, a teaching personnel in a private educational institution (1) must

year 2000-20001 cannot be imposed on the petitioners and their

be a full time teacher; (2) must have rendered three consecutive years of

employment contracts since the new guidelines were not imposed when

service; and (3) such service must be satisfactory before he or she can

the petitioners were first employed in 1998. According to the NLRC, the

acquire permanent status.

imposition of the new guidelines violates Section 6(d) of Rule I, Book VI of


the Implementing Rules of the Labor Code, which provides that in all cases

The CA noted that the petitioners had not completed three (3)

of probationary employment, the employer shall make known to the

consecutive years of service (i.e. six regular semesters or nine consecutive

employee the standards under which he will qualify as a regular employee

trimesters of satisfactory service) and were still within their probationary

at the time of his engagement. Citing our ruling in Orient Express

period; their teaching stints only covered a period of two (2) years and

Placement Philippines v. NLRC,

three (3) months when AMACC decided not to renew their contracts on

[18]

the NLRC stressed that the rudiments of

due process demand that employees should be informed beforehand of the

September 7, 2000.

conditions of their employment as well as the basis for their advancement.


The CA effectively found reasonable basis for AMACC not to renew
AMACC

elevated

the

case

to

the

CA via a

petition

the petitioners contracts. To the CA, the petitioners were not actually

for certiorari under Rule 65 of the Rules of Court. It charged that the NLRC

dismissed; their respective contracts merely expired and were no longer

committed grave abuse of discretion in: (1) ruling that the petitioners were

renewed by AMACC because they failed to satisfy the schools standards for

illegally dismissed; (2) refusing to recognize and give effect to the

the school year 2000-2001 that measured their fitness and aptitude to

123

teach as regular faculty members. The CA emphasized that in the absence

1)

of any evidence of bad faith on AMACCs part, the court would not disturb

The CA gravely erred in reversing the LA and NLRC illegal


dismissal rulings; and

or nullify its discretion to set standards and to select for regularization only

2)

the teachers who qualify, based on reasonable and non-discriminatory

The CA gravely erred in not ordering their reinstatement with


full, backwages.

guidelines.
The petitioners submit that the CA should not have disturbed the
The CA disagreed with the NLRCs ruling that the new guidelines for

findings of the LA and the NLRC that they were illegally dismissed; instead,

the school year 2000-20001 could not be imposed on the petitioners and

the CA should have accorded great respect, if not finality, to the findings of

their employment contracts.The appellate court opined that AMACC has

these specialized bodies as these findings were supported by evidence on

the inherent right to upgrade the quality of computer education it offers to

record. Citing our ruling in Soriano v. National Labor Relations Commission,

the public; part of this pursuit is the implementation of continuing

[22]

evaluation

academic

the Rules of Court, the CA does not assess and weigh the sufficiency of

excellence. The CA noted that the nature of education AMACC offers

evidence upon which the Labor Arbiter and the NLRC based their

demands that the school constantly adopt progressive performance

conclusions. They submit that the CA erred when it substituted its

standards for its faculty to ensure that they keep pace with the rapid

judgment for that of the Labor Arbiter and the NLRC who were the triers of

developments in the field of information technology.

facts who had the opportunity to review the evidence extensively.

and

screening

of

its

faculty

members

for

the petitioners contend that in certiorari proceedings under Rule 65 of

Finally, the CA found that the petitioners were hired on a non-

On the merits, the petitioners argue that the applicable law on

tenured basis and for a fixed and predetermined term based on the

probationary employment, as explained by the LA, is Article 281 of the

Teaching Contract exemplified by the contract between the petitioner

Labor Code which mandates a period of six (6) months as the maximum

Lachica and AMACC. The CA ruled that the non-renewal of the petitioners

duration of the probationary period unless there is a stipulation to the

teaching contracts is sanctioned by the doctrine laid down in Brent School,

contrary; that the CA should not have disturbed the LAs conclusion that

Inc. v. Zamora[20] where the Court recognized the validity of contracts

the AMACC failed to support its allegation that they did not qualify under

providing for fixed-period employment.

the new guidelines adopted for the school year 2000-2001; and that they

THE PETITION

The petitioners cite the following errors in the CA decision:[21]

were illegally dismissed; their employment was terminated based on


standards that were not made known to them at the time of their
engagement. On the whole, the petitioners argue that the LA and the NLRC
committed no grave abuse of discretion that the CA can validly cite.

124

THE CASE FOR THE RESPONDENT

In

their

Comment,[23] AMACC

notes

that

the

petitioners

raised

no

The CAs Review


of
Factual
Findings
under
Rule 65

substantial argument in support of their petition and that the CA correctly


found that the petitioners were hired on a non-tenured basis and for a fixed

We

agree

with

the

petitioners

that,

as

rule

or predetermined term. AMACC stresses that the CA was correct in

in certiorari proceedings under Rule 65 of the Rules of Court, the CA does

concluding that no actual dismissal transpired; it simply did not renew the

not assess and weigh each piece of evidence introduced in the case. The

petitioners respective employment contracts because of their poor

CA only examines the factual findings of the NLRC to determine whether or

performance and failure to satisfy the schools standards.

not the conclusions are supported by substantial evidence whose absence

AMACC also asserts that the petitioners knew very well that the
applicable standards would be revised and updated from time to time
given the nature of the teaching profession. The petitioners also knew at
the time of their engagement that they must comply with the schools
regularization policies as stated in the Faculty Manual. Specifically, they
must obtain a passing rating on the Performance Appraisal for
Teachers

(PAST)

the

primary

instrument

to

measure

the

performance of faculty members.

Since the petitioners were not actually dismissed, AMACC submits


that the CA correctly ruled that they are not entitled to reinstatement, full
backwages and attorneys fees.

points to grave abuse of discretion amounting to lack or excess of


jurisdiction.[24] In the recent case of Protacio v. Laya Mananghaya & Co.,
[25]

we emphasized that:
As a general rule, in certiorari proceedings under
Rule 65 of the Rules of Court, the appellate court does not
assess and weigh the sufficiency of evidence upon which
the Labor Arbiter and the NLRC based their conclusion. The
query in this proceeding is limited to the determination of
whether or not the NLRC acted without or in excess of its
jurisdiction or with grave abuse of discretion in rendering
its decision. However, as an exception, the appellate
court may examine and measure the factual findings
of the NLRC if the same are not supported by
substantial evidence. The Court has not hesitated to
affirm the appellate courts reversals of the decisions
of labor tribunals if they are not supported by
substantial evidence.[Emphasis supplied]

THE COURTS RULING


As discussed below, our review of the records and of the CA
We find the petition meritorious.

decision shows that the CA erred in recognizing that grave abuse of


discretion attended the NLRCs conclusion that the petitioners were illegally
dismissed. Consistent with this conclusion, the evidence on record show
that AMACC failed to discharge its burden of proving by substantial
evidence the just cause for the non-renewal of the petitioners contracts.

125

A reality we have to face in the consideration of employment on


In Montoya v. Transmed Manila Corporation,

we laid down our

probationary status of teaching personnel is that they are not governed

basic approach in the review of Rule 65 decisions of the CA in labor cases,

purely by the Labor Code. The Labor Code is supplemented with respect

as follows:

to the period of probation by special rules found in the Manual of

[26]

In a Rule 45 review, we consider the correctness


of the assailed CA decision, in contrast with the review
for jurisdictional error that we undertake under Rule
65. Furthermore, Rule 45 limits us to the review
of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view
the CA decision in the same context that the petition
forcertiorari it ruled upon was presented to it; we have to
examine the CA decision from the prism of whether
it correctly determined the presence or absence of
grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC
decision on the merits of the case was correct. In
other words, we have to be keenly aware that the CA
undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it. This is the approach
that should be basic in a Rule 45 review of a CA ruling in a
labor case. In question form, the question to ask is:
Did the CA correctly determine whether the NLRC
committed grave abuse of discretion in ruling on the
case?

Regulations for Private Schools.[27] On the matter of probationary period,


Section 92 of these regulations provides:
Section 92. Probationary Period. Subject in all instances
to compliance with the Department and school
requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive
years of satisfactory service for those in the elementary
and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the tertiary
level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary level
where collegiate courses are offered on a trimester
basis. [Emphasis supplied]

The CA pointed this out in its decision (as the NLRC also did), and
we confirm the correctness of this conclusion. Other than on the period,
the following quoted portion of Article 281 of the Labor Code still fully
applies:

Following this approach, our task is to determine whether the CA correctly


found that the NLRC committed grave abuse of discretion in ruling that the
petitioners were illegally dismissed.

Legal Environment in the Employment of Teachers


a. Rule on Employment on Probationary Status

x x x The services of an employee who has been engaged


on a probationary basis may be terminated for a just
cause when he fails to qualify as a regular employee in
accordance withreasonable standards made known by
the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular
employee. [Emphasis supplied]
b. Fixed-period Employment

126

The use of employment for fixed periods during the teachers

We have long settled the validity of a fixed-term contract in the case Brent

probationary period is likewise an accepted practice in the teaching

School, Inc. v. Zamora[29] that AMACC cited. Significantly, Brent happened

profession. We mentioned this in passing in Magis Young Achievers

in a school setting. Care should be taken, however, in reading Brent in the

Learning Center v. Adelaida P. Manalo,

albeit a case that involved

context of this case as Brent did not involve any probationary employment

elementary, not tertiary, education, and hence spoke of a school year

issue; it dealt purely and simply with the validity of a fixed-term

rather than a semester or a trimester. We noted in this case:

employment under the terms of the Labor Code, then newly issued and

[28]

The common practice is for the employer and


the teacher to enter into a contract, effective for
one school year. At the end of the school year, the
employer has the option not to renew the contract,
particularly considering the teachers performance. If the
contract is not renewed, the employment relationship
terminates. If the contract is renewed, usually for another
school
year,
the
probationary
employment
continues. Again, at the end of that period, the parties may
opt to renew or not to renew the contract. If renewed, this
second renewal of the contract for another school year
would then be the last year since it would be the third
school year of probationary employment. At the end of
this third year, the employer may now decide
whether to extend a permanent appointment to the
employee, primarily on the basis of the employee
having met the reasonable standards of competence
and efficiency set by the employer.For the entire
duration of this three-year period, the teacher
remains under probation. Upon the expiration of his
contract of employment, being simply on probation,
he cannot automatically claim security of tenure and
compel the employer to renew his employment
contract. It is when the yearly contract is renewed for the
third time that Section 93 of the Manual becomes
operative, and the teacher then is entitled to regular or
permanent employment status.
It is important that the contract of probationary
employment specify the period or term of its effectivity.
The failure to stipulate its precise duration could lead to
the inference that the contract is binding for the full threeyear probationary period.

which does not expressly contain a provision on fixed-term employment.


c.

Academic and Management Prerogative

Last but not the least factor in the academic world, is that a school
enjoys academic freedom a guarantee that enjoys protection from the
Constitution no less. Section 5(2) Article XIV of the Constitution guarantees
all institutions of higher learning academic freedom. [30]

The institutional academic freedom includes the right of the school


or college to decide and adopt its aims and objectives, and to determine
how these objections can best be attained, free from outside coercion or
interference, save possibly when the overriding public welfare calls for
some restraint. The essential freedoms subsumed in the term academic
freedom encompass the freedom of the school or college to determine for
itself: (1) who may teach; (2) who may be taught; (3) how lessons shall be
taught; and (4) who may be admitted to study.[31]

AMACCs right to academic freedom is particularly important in the


present case, because of the new screening guidelines for AMACC faculty
put in place for the school year 2000-2001. We agree with the CA that
AMACC has the inherent right to establish high standards of competency
and efficiency for its faculty members in order to achieve and maintain

127

academic excellence. The schools prerogative to provide standards for its

The

existence

of

the

term-to-term

contracts

covering

the

teachers and to determine whether or not these standards have been met

petitioners employment is not disputed, nor is it disputed that they were

is in accordance with academic freedom that gives the educational

on probationary status not permanent or regular status from the time they

institution the right to choose who should teach.

were employed on May 25, 1998 and until the expiration of their Teaching

[32]

In Pea v. National Labor

Relations Commission,[33] we emphasized:

Contracts on September 7, 2000. As the CA correctly found, their teaching


stints only covered a period of at least seven (7) consecutive trimesters or

It is the prerogative of the school to set high standards of


efficiency for its teachers since quality education is a
mandate of the Constitution. As long as the standards fixed
are reasonable and not arbitrary, courts are not at liberty
to set them aside. Schools cannot be required to adopt
standards which barely satisfy criteria set for government
recognition.

two (2) years and three (3) months of service. This case, however,
brings to the fore the essential question of which, between the
two factors affecting employment, should prevail given AMACCs
position that the teachers contracts expired and it had the right
not to renew them. In other words, should the teachers probationary

The same academic freedom grants the school the autonomy to

status be disregarded simply because the contracts were fixed-term?

decide for itself the terms and conditions for hiring its teacher, subject of
course to the overarching limitations under the Labor Code. Academic

The provision on employment on probationary status under the

freedom, too, is not the only legal basis for AMACCs issuance of screening

Labor Code[35] is a primary example of the fine balancing of interests

guidelines. The authority to hire is likewise covered and protected by its

between labor and management that the Code has institutionalized

management prerogative the right of an employer to regulate all aspects

pursuant to the underlying intent of the Constitution.[36]

of

employment,

such

as

hiring,

the

freedom

to

prescribe

work

regulation

On the one hand, employment on probationary status affords

regarding transfer of employees, supervision of their work, lay-off and

management the chance to fully scrutinize the true worth of hired

discipline, and dismissal and recall of workers. [34] Thus, AMACC has every

personnel before the full force of the security of tenure guarantee of the

right to determine for itself that it shall use fixed-term employment

Constitution comes into play.[37] Based on the standards set at the start of

contracts as its medium for hiring its teachers. It also acted within the

the probationary period, management is given the widest opportunity

terms of the Manual of Regulations for Private Schools when it recognized

during the probationary period to reject hirees who fail to meet its own

the petitioners to be merely on probationary status up to a maximum of

adopted but reasonable standards.[38] These standards, together with the

nine trimesters.

just[39] and authorized causes[40] for termination of employment the Labor

assignments,

working methods, process

The Conflict: Probationary Status


and Fixed-term Employment

to be followed,

Code expressly provides, are the grounds available to terminate the


employment of a teacher on probationary status. For example, the school
may impose reasonably stricter attendance or report compliance records

128

on teachers on probation, and reject a probationary teacher for failing in

When fixed-term employment is brought into play under the above

this regard, although the same attendance or compliance record may not

probationary period rules, the situation as in the present case may at first

be required for a teacher already on permanent status. At the same time,

blush look muddled as fixed-term employment is in itself a valid

the same just and authorizes causes for dismissal under the Labor Code

employment mode under Philippine law and jurisprudence. [45] The conflict,

apply to probationary teachers, so that they may be the first to be laid-off

however, is more apparent than real when the respective nature of fixed-

if the school does not have enough students for a given semester or

term employment and of employment on probationary status are closely

trimester. Termination of employment on this basis is an authorized cause

examined.

under the Labor Code.

[41]

The fixed-term character of employment essentially refers to the


Labor, for its part, is given the protection during the probationary

period agreed

upon

between

the

employer

and

the

employee;

period of knowing the company standards the new hires have to meet

employment exists only for the duration of the term and ends on its own

during the probationary period, and to be judged on the basis of these

when the term expires. In a sense, employment on probationary status also

standards, aside from the usual standards applicable to employees after

refers to a period because of the technical meaning probation carries in

they achieve permanent status. Under the terms of the Labor Code, these

Philippine labor law a maximum period of six months, or in the academe, a

standards should be made known to the teachers on probationary status at

period of three years for those engaged in teaching jobs. Their similarity

the start of their probationary period, or at the very least under the

ends there, however, because of the overriding meaning that being on

circumstances of the present case, at the start of the semester or the

probation connotes, i.e., a process of testing and observing the character

trimester during which the probationary standards are to be applied. Of

or abilities of a person who is new to a role or job. [46]

critical importance in invoking a failure to meet the probationary


standards, is that the school should show as a matter of due

Understood

the

above

sense,

probationary

status

for

the essentially

character

second notice in a dismissal situation that the law requires as a due

appreciated. But

process guarantee supporting the security of tenure provision, [42] and is in

countervailing but equally protective rule that the probationary period can

furtherance, too, of the basic rule in employee dismissal that the employer

only last for a specific maximum period and under reasonable, well-laid

carries

and properly communicated standards. Otherwise stated, within the period

justifying a dismissal. [43] These

rules ensure

the

this

probation,

same

any

protective

employer

management can

protective

process how these standards have been applied. This is effectively the

the burden of

of

in

character

on

the

rise

to

be
the

compliance with the limited security of tenure guarantee the law extends

of

to probationary employees.[44]

standards and affecting the continuity of the employment must strictly


conform to the probationary rules.

move based

gives

readily

probationary

129

Under the given facts where the school year is divided into
trimesters, the school apparently utilizes its fixed-term contracts as a

contracts are renewable unless the petitioners fail to pass the schools
standards.

convenient arrangement dictated by the trimestral system and not


because the workplace parties really intended to limit the period of their

To highlight what we mean by a fixed-term contract specifically

relationship to any fixed term and to finish this relationship at the end of

used for the fixed term it offers, a replacement teacher, for example, may

that term. If we pierce the veil, so to speak, of the parties so-called fixed-

be contracted for a period of one year to temporarily take the place of a

term employment contracts, what undeniably comes out at the core is a

permanent teacher on a one-year study leave. The expiration of the

fixed-term contract conveniently used by the school to define and regulate

replacement teachers contracted term, under the circumstances, leads to

its relations with its teachers during their probationary period.

no probationary status implications as she was never employed on


probationary basis; her employment is for a specific purpose with

To be sure, nothing is illegitimate in defining the school-teacher


relationship in this manner. The school, however, cannot forget that its

particular focus on the term and with every intent to end her teaching
relationship with the school upon expiration of this term.

system of fixed-term contract is a system that operates during the


probationary period and for this reason is subject to the terms of Article

If the school were to apply the probationary standards (as in fact it

281 of the Labor Code. Unless this reconciliation is made, the

says it did in the present case), these standards must not only be

requirements of this Article on probationary status would be fully

reasonable but must have also been communicated to the teachers at the

negated as the school may freely choose not to renew contracts

start of the probationary period, or at the very least, at the start of the

simply because their terms have expired.The inevitable effect of

period when they were to be applied. These terms, in addition to those

course is to wreck the scheme that the Constitution and the Labor

expressly provided by the Labor Code, would serve as the just cause for

Code established to balance relationships between labor and

the termination of the probationary contract. As explained above, the

management.

details of this finding of just cause must be communicated to the affected


teachers as a matter of due process.

Given the clear constitutional and statutory intents, we cannot but


conclude that in a situation where the probationary status overlaps with a

AMACC, by its submissions, admits that it did not renew the

fixed-term contract not specifically used for the fixed term it offers, Article

petitioners contracts because they failed to pass the Performance

281 should assume primacy and the fixed-period character of the contract

Appraisal System

must give way. This conclusion is immeasurably strengthened by the

regularization that the school undertakes to maintain its high academic

petitioners and the AMACCs hardly concealed expectation that the

standards.[47] The evidence is unclear on the exact terms of the standards,

employment on probation could lead to permanent status, and that the

although the school also admits that these were standards under the

for Teachers

(PAST) and other requirements

for

130

Guidelines on the Implementation of AMACC Faculty Plantilla put in place at


the start of school year 2000-2001.

WHEREFORE, premises considered, we hereby GRANT the petition,


and, consequently, REVERSE and SET ASIDE the Decision of the Court of

While we can grant that the standards were duly communicated to

Appeals dated November 29, 2007 and its Resolution dated June 20, 2008 in

the petitioners and could be applied beginning the 1 st trimester of the

CA-G.R. SP No. 96599. The Labor Arbiters decision of March 15, 2002,

school year 2000-2001, glaring and very basic gaps in the schools

subsequently affirmed as to the results by the National Labor Relations

evidence still exist. The exact terms of the standards were never

Commission,

introduced as evidence; neither does the evidence show how these

computation to take into account the date of the finality of this Decision.

stands

and

should

be

enforced

with

appropriate

re-

standards were applied to the petitioners. [48] Without these pieces of


evidence (effectively, the finding of just cause for the non-renewal of the
petitioners contracts), we have nothing to consider and pass upon as valid
or invalid for each of the petitioners. Inevitably, the non-renewal (or
effectively, the termination of employment of employees on probationary
status) lacks the supporting finding of just cause that the law requires and,
hence, is illegal.

In lieu of reinstatement, AMA Computer College-Paraaque City,


Inc. is hereby DIRECTED to pay separation pay computed on a trimestral
basis from the time of separation from service up to the end of the complete
trimester preceding the finality of this Decision. For greater certainty, the
petitioners are entitled to:
(a)

backwages and 13th month pay computed from


September 7, 2000 (the date AMA Computer CollegeParaaque City, Inc. illegally dismissed the petitioners)

In this light, the CA decision should be reversed. Thus, the LAs

up to the finality of this Decision;

decision, affirmed as to the results by the NLRC, should stand as the


decision to be enforced, appropriately re-computed to consider the period
of appeal and review of the case up to our level.

(b)

monthly honoraria (if applicable) computed


from September 7, 2000 (the time of separation from
service) up to the finality of this Decision; and

Given the period that has lapsed and the inevitable change of

(c) separation pay on a trimestral basis from September 7, 2000

circumstances that must have taken place in the interim in the academic

(the time of separation from service) up to the end of

world and at AMACC, which changes inevitably affect current school

the complete trimester preceding the finality of this

operations, we hold that - in lieu of reinstatement - the petitioners should

Decision.

be paid separation pay computed on a trimestral basis from the time of


separation from service up to the end of the complete trimester preceding
the finality of this Decision. [49] The separation pay shall be in addition to the
other awards, properly recomputed, that the LA originally decreed.

The labor arbiter is hereby ORDERED to make another recomputation according to the above directives. No costs.

131

SO ORDERED.

132

G.R. Nos. 196280 & 196286

April 2, 2014

UNIVERSIDAD
DE
STA.
vs.
MARVIN-JULIAN L. SAMBAJON, JR., Respondent.

ISABEL, Petitioner,

DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 urging this
Court to set aside the Decision 1 dated March 25, 2011 of the Court of
Appeals (CA) in CA-GR. SP Nos. 108103 and 108168 which affirmed with
modification the Decision2 dated August 1, 2008 of the National Labor
Relations Commission (NLRC). The NLRC affirmed the Decision 3 dated
August 22, 2006 of the Labor Arbiter in NLRC Sub-RAB V-05-04-00053-05)
declaring petitioner liable for illegal dismissal of respondent.
The Facts
Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious
educational institution in Naga City. Petitioner hired Marvin-Julian L.
Sambajon, Jr. (respondent) as a full-time college faculty member with the
rank of Assistant Professor on probationary status, as evidenced by an
Appointment Contract4 dated November 1, 2002, effective November 1,
2002 up to March 30, 2003.
After the aforesaid contract expired, petitioner continued to give teaching
loads to respondent who remained a full-time faculty member of the
Department of Religious Education for the two semesters of school-year
(SY) 2003-2004 (June 1, 2003 to March 31, 2004); and two semesters of SY
2004-2005 (June 2004 to March 31, 2005).5
Sometime in June 2003, after respondent completed his course in Master of
Arts in Education, major in Guidance and Counseling, he submitted the
corresponding Special Order from the Commission on Higher Education
(CHED), together with his credentials for the said masters degree, to the
Human Resources Department of petitioner for the purpose of salary
adjustment/increase. Subsequently, respondents salary was increased, as
reflected in his pay slips starting October 1-15, 2004. 6 He was likewise reranked from Assistant Professor to Associate Professor.
In a letter dated October 15, 2004 addressed to the President of petitioner,
Sr. Ma. Asuncion G. Evidente, D.C., respondent vigorously argued that his
salary increase should be made effective as of June 2003 and demanded

the payment of his salary differential. The school administration thru Sr.
Purita Gatongay, D.C., replied by explaining its policy on re-ranking of
faculty members7, viz:
xxxx
Please be informed that teachers in the Universidad are not re-ranked
during their probationary period. The Faculty Manual as revised for school
year 2002-2003 provides (page 38) "Re-ranking is done every two years,
hence the personnel hold their present rank for two years. Those
undergoing probationary period and those on part-time basis of
employment are not covered by this provision." This provision is found also
in the 2000-2001 Operations Manual.
Your personnel file shows that you were hired as a probationary teacher in
the second semester of school year 2002-2003. By October 2004, you will
be completing four (4) semesters (two school years) of service. Even
permanent teachers are re-ranked only every two years, and you are not
even a permanent teacher. I am informed that you have been told several
times and made to read the Provision in the Faculty Manual by the
personnel office that you cannot be re-ranked because you are still a
probationary teacher.
x x x x8
Respondent insisted on his demand for retroactive pay. In a letter dated
January 10, 2005, Sr. Evidente reiterated the school policy on re-ranking of
teachers, viz:
xxx
Under the Faculty Manual a permanent teacher is not entitled to re-ranking
oftener than once every two years. From this it should be obvious that,
with all the more reason, a probationary teacher would not be entitled to
"evaluation," which could result in re-ranking or "adjustment in salary"
oftener than once every two years.
Since you are a probationary teacher, the University is under no obligation
to re-rank you or adjust your salary after what you refer to as "evaluation."
Nevertheless, considering that in October 2004 you were completing two
years of service, the University adjusted your salary in the light of the
CHED Special Order you submitted showing that you had obtained the
degree of Master of Arts in Education. Instead of being grateful for the
adjustment, you insist that the adjustment be made retroactive to June
2003. Simply stated, you want your salary adjusted after one semester of
probationary service. We do not think a probationary teacher has better

133

rights than a permanent teacher in the matter of re-ranking or


"evaluation."9

On April 14, 2005, respondent filed a complaint for illegal dismissal against
the petitioner.

However, respondent found the above explanation insufficient and not


clear enough. In his letter dated January 12, 2005, he pointed out the case
of another faculty member -- whom he did not name -- also on
probationary status whose salary was supposedly adjusted by petitioner at
the start of school year (June) after he/she had completed his/her masters
degree in March. Respondent thus pleaded for the release of his salary
differential, or at the very least, that petitioner give him categorical
answers to his questions.10

In his Decision dated August 22, 2006, Labor Arbiter Jesus Orlando M.
Quinones ruled that there was no just or authorized cause in the
termination of respondents probationary employment. Consequently,
petitioner was found liable for illegal dismissal, thus:

Apparently, to resolve the issue, a dialogue was held between respondent


and Sr. Evidente. As to the outcome of this conversation, the parties gave
conflicting accounts. Respondent claimed that Sr. Evidente told him that
the school administration had decided to shorten his probationary period to
two years on the basis of his satisfactory performance. 11 This was
categorically denied by Sr. Evidente though the latter admitted having
informed respondent "that he was made Associate Professor on account of
his incessant requests for a salary increase which the Universidad de Santa
Isabel eventually accommodatedconsidering that [respondent] had
obtained a Masters Degree in June 2003." She further informed
respondent that "his appointment as Associate Professor did not affect his
status as a probationary employee" and that petitioner "was not and did
not exercise its prerogative to shorten his probationary period to only two
years." Sr. Stella O. Real, D.C., who issued a Certificate of Employment to
respondent, likewise denied that she confirmed to respondent that
petitioner has shortened his probationary employment.12

Accordingly, and consistent with Article 279 of the Labor Code, respondent
school is hereby directed to pay complainant full backwages covering the
period/duration of the 1st semester of academic year 2005-2006.
Reinstatement being rendered moot by the expiration of the probationary
period, respondent school is directed to pay complainant separation pay in
lieu of reinstatement computed at one (1) months pay for every year of
service. An award of 10% attorneys fees in favor of complainant is also
held in order.

WHEREFORE, in view of the foregoing, judgment is hereby rendered finding


respondent school UNIVERSIDAD DE SANTA ISABEL liable for the illegal
dismissal of complainant MARVIN-JULIAN L. SAMBAJON, JR.

(please see attached computation of monetary award as integral part of


this decision).
All other claims and charges are DISMISSED for lack of legal and factual
basis.
SO ORDERED.14

On February 26, 2005, respondent received his letter of termination which


stated:
Greetings of Peace in the Lord!
We regret to inform your good self that your full time probationary
appointment will not be renewed when it expires at the end of this coming
March 31, 2005.
Thank you so much for the services that you have rendered to USI and to
her clientele the past several semesters. We strongly and sincerely
encourage you to pursue your desire to complete your Post Graduate
studies in the University of your choice as soon as you are able.
God bless you in all your future endeavors.
Godspeed!13

Petitioner appealed to the NLRC raising the issue of the correct


interpretation of Section 92 of the Manual of Regulations for Private
Schools and DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, and
alleging grave abuse of discretion committed by the Labor Arbiter in ruling
on a cause of action/issue not raised by the complainant (respondent) in
his position paper.
On August 1, 2008, the NLRC rendered its Decision affirming the Labor
Arbiter and holding that respondent had acquired a permanent status
pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for
Private Schools, in relation to Article 281 of the Labor Code, as amended.
Thus:
In the instant case, the first contract (records, pp. 36; 92) executed by the
parties provides that he was hired on a probationary status effective
November 1, 2002 to March 30, 2003. While his employment continued
beyond the above-mentioned period and lasted for a total of five (5)
consecutive semesters, it appears that the only other contract he signed is

134

the one (records, p. 103) for the second semester of SY 2003-2004. A


portion of this contract reads:
"I am pleased to inform you that you are designated and commissioned to
be an Apostle of Love and Service, Unity and Peace as you dedicate and
commit yourself in the exercise of your duties and responsibilities as a:
FULL-TIME
FACULTY
MEMBER
of the Religious Education Department from November 1, 2003 to March
31, 2004.
Unless otherwise renewed in writing this designation automatically
terminates as of the date expiration above stated without further notice."
There is no showing that the complainant signed a contract for the first and
second semesters of SY 2004-2005.
Under the circumstances, it must be concluded that the complainant has
acquired permanent status. The last paragraph of Article 281 of the Labor
Code provides that "an employee who is allowed to work after a
probationary period shall be considered a regular employee." Based
thereon, the complainant required [sic] permanent status on the first day
of the first semester of SY 2003-2004.
As presently worded, Section 92 of the revised Manual of Regulations for
Private Schools merely provides for the maximum lengths of the
probationary periods of academic personnel of private schools in the three
(3) levels of education (elementary, secondary, tertiary). The periods
provided therein are not requirements for the acquisition, by them, of
permanent status.
WHEREFORE, the decision appealed from is hereby AFFIRMED.
SO ORDERED.15
Petitioner and respondent sought reconsideration of the above decision,
with the former contending that the NLRC resolved an issue not raised in
the appeal memorandum, while the latter asserted that the NLRC erred in
not awarding him full back wages so as to conform to the finding that he
had acquired a permanent status. Both motions were denied by the NLRC
which ruled that regardless of whether or not the parties were aware of the
rules for the acquisition of permanent status by private school teachers,
these rules applied to them and overrode their mistaken beliefs. As to
respondents plea for back wages, the NLRC said the award of back wages
was not done in this case because respondent did not appeal the Labor
Arbiters decision.

Both parties filed separate appeals before the CA. On motion by


respondent, the two cases were consolidated (CA-G.R. SP Nos. 108103 and
108168).16
By Decision dated March 25, 2011, the CA sustained the conclusion of the
NLRC that respondent had already acquired permanent status when he was
allowed to continue teaching after the expiration of his first appointmentcontract on March 30, 2003. However, the CA found it necessary to modify
the decision of the NLRC to include the award of back wages to
respondent. The dispositive portion of the said decision reads:
WHEREFORE, premises considered, the petition docketed as CA-G.R. SP No.
108103 is GRANTED. The challenged Decision of the NLRC dated August 1,
2008 in NLRC NCR CA No. 050481-06 (NLRC Sub-RAB V-05-04-00053-05) is
AFFIRMED with MODIFICATION in that Universidad de Sta. Isabel is directed
to reinstate Marvin-Julian L. Sambajon, Jr. to his former position without
loss of seniority rights and to pay him full backwages computed from the
time his compensation was withheld from him up to the time of his actual
reinstatement. All other aspects are AFFIRMED.
As regards CA-G.R. SP No. 108168, the petition is DENIED for lack of merit.
SO ORDERED.17
The Petition/Issues
Before this Court, petitioner ascribes grave error on the part of the CA in
sustaining the NLRC which ruled that respondent was dismissed without
just or authorized cause at the time he had already acquired permanent or
regular status since petitioner allowed him to continue teaching despite
the expiration of the first contract of probationary employment for the
second semester of SY 2002-2003. Petitioner at the outset underscores the
fact that the NLRC decided an issue which was not raised on appeal, i.e.,
whether respondent had attained regular status. It points out that the
Labor Arbiters finding that respondent was dismissed while still a
probationary employee was not appealed by him, and hence such finding
had already become final.
In fine, petitioner asks this Court to rule on the following issues: (1)
whether the NLRC correctly resolved an issue not raised in petitioners
appeal memorandum; and (2) whether respondents probationary
employment was validly terminated by petitioner.
Our Ruling
The petition is partly meritorious.

135

Issues on Appeal before the NLRC


Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC,
which was in force at the time petitioner appealed the Labor Arbiters
decision, expressly provided that, on appeal, the NLRC shall limit itself only
to the specific issues that were elevated for review, to wit:
Section 4. Requisites for perfection of appeal. x x x.

In reviewing the Labor Arbiters finding of illegal dismissal, the NLRC


concluded that respondent had already attained regular status after the
expiration of his first appointment contract as probationary employee.
Such conclusion was but a logical result of the NLRCs own interpretation of
the law. Since petitioner elevated the questions of the validity of
respondents dismissal and the applicable probationary period under the
aforesaid regulations, the NLRC did not gravely abuse its discretion in fully
resolving the said issues.
As the Court held in Roche (Phils.) v. NLRC 20:

xxxx
(d) Subject to the provisions of Article 218 of the Labor Code, once the
appeal is perfected in accordance with these Rules, the Commission shall
limit itself to reviewing and deciding only the specific issues that were
elevated on appeal.
We have clarified that the clear import of the aforementioned procedural
rule is that the NLRC shall, in cases of perfected appeals, limit itself to
reviewing those issues which are raised on appeal. As a consequence
thereof, any other issues which were not included in the appeal shall
become final and executory.18
In this case, petitioner sets forth the following issues in its appeal
memorandum:

Petitioners then suggest that the respondent Commission abused its


discretion in awarding reliefs in excess of those stated in the decision of
the labor arbiter despite the absence of an appeal by Villareal. To stress
this point, they cited Section 5(c) of the Rules of Procedure of the National
Labor Relations Commission which provides that the Commission shall, in
cases of perfected appeals, limits itself to reviewing those issues which
were raised on appeal. Consequently, those which were not raised on
appeal shall be final and executory.
There is no merit to this contention. The records show that the petitioners
elevated the issues regarding the correctness of the award of damages,
reinstatement with backpay, retirement benefits and the cost-saving bonus
to the respondent Commission in their appeal. This opened the said issues
for review and any action taken thereon by the Commission was well within
the parameters of its jurisdiction. (Emphasis supplied.)

5.01
Probationary Employment Period
WHETHER THE MARVIN JULIAN L. SAMBAJON, JR. WAS ILLEGALLY DISMISSED
FROM THE UNIVERSIDAD DE STA. ISABEL.
5.02
WHETHER THE UNIVERSIDAD DE STA. ISABEL SHORTENED
PROBATIONARY PERIOD OF MARVIN JULIAN L. SAMBAJON.

THE

A probationary employee is one who is on trial by the employer during


which the employer determines whether or not said employee is qualified
for permanent employment. A probationary appointment is made to afford
the employer an opportunity to observe the fitness of a probationary
employee while at work, and to ascertain whether he will become a proper
and efficient employee. The word probationary as used to describe the
period of employment implies the purpose of the term or period, but not its
length.21

5.03
WHETHER RESPONDENTS-APPELLANTS ARE ENTITLED TO DAMAGES. 19
Specifically, petitioner sought the correct interpretation of the Manual of
Regulations for Private School Teachers and DOLE-DECS-CHED-TESDA
Order No. 01, series of 1996, insofar as the probationary period for
teachers.

It is well settled that the employer has the right or is at liberty to choose
who will be hired and who will be denied employment. In that sense, it is
within the exercise of the right to select his employees that the employer
may set or fix a probationary period within which the latter may test and
observe the conduct of the former before hiring him permanently. 22 The
law, however, regulates the exercise of this prerogative to fix the period of
probationary employment. While there is no statutory cap on the minimum
term of probation, the law sets a maximum "trial period" during which the
employer may test the fitness and efficiency of the employee. 23

136

Article 281 of the Labor Code provides:


ART. 281. Probationary Employment.Probationary employment shall not
exceed six (6) months from the date the employee started working, unless
it is covered by an apprenticeship agreement stipulating a longer period.
The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a
regular employee.
The probationary employment of teachers in private schools is not
governed purely by the Labor Code. The Labor Code is supplemented with
respect to the period of probation by special rules found in the Manual of
Regulations for Private Schools.24 On the matter of probationary period,
Section 92 of the 1992 Manual of Regulations for Private Schools
regulations states:
Section 92. Probationary Period. Subject in all instances to compliance
with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of
satisfactory service for those in the elementary and secondary levels, six
(6) consecutive regular semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of satisfactory service for
those in the tertiary level where collegiate courses are offered on a
trimester basis. (Emphasis supplied.)
Thus, it is the Manual of Regulations for Private Schools, and not the Labor
Code, that determines whether or not a faculty member in an educational
institution has attained regular or permanent status. 25 Section 9326 of the
1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall
be considered regular or permanent.
In this case, the CA sustained the NLRCs ruling that respondent was
illegally dismissed considering that he had become a regular employee
when petitioner allowed him to work beyond the date specified in his first
probationary appointment contract which expired on March 30, 2003.
According to the CA:
As can be gleaned from Section 92 of the 1992 Manual of Regulations
for Private Schools, the probationary period applicable in this case is not
more than six (6) consecutive regular semesters of satisfactory service. In
other words, the probationary period for academic personnel in the tertiary
level runs from one (1) semester to six (6) consecutive regular semesters
of satisfactory service. In the instant case, records reveal that Sambajon, Jr.
only signed two appointment contracts. The first appointment-contract

which he signed was dated November 2002 for the period November 1,
2002 to March 30, 2003, as Assistant Professor 10 on probationary status.
x x x The second appointment-contract which Sambajon, Jr. executed was
dated February 26, 2004, for the period November 1, 2003 to March 31,
2004. x x x Compared with the first appointment-contract, it was not
indicated in the February 26, 2004 appointment-contract that Sambajon, Jr.
was hired on probationary status, which explains the NLRCs conclusion
that Sambajon, Jr. already attained permanent status. At this juncture, it is
worthy to emphasize that other than the period provided under Article 281
of the Labor Code, the following quoted portion of Article 281 of the Labor
Code still applies:
"ART. 281. PROBATIONARY EMPLOYMENT.
x x x x An employee who is allowed to work after a probationary period
shall be considered a regular employee."
Thus, We sustain the NLRCs conclusion that Sambajon, Jr. acquired
permanent status on the first day of the first semester of SY 2003-2004
when he was allowed to continue with his teaching stint after the
expiration of his first appointment-contract on March 30, 2003. 27
On record are five appointment contracts28 of respondent:
Date

Contract Period

November 1, 2002

November 1, 2002-March 30, 2003

September 28, 2003

June 1, 2003-October 31, 2003

February 26, 2004

November 1, 2003-March 31, 2004

September 30, 2004

June 1, 2004-October 31, 2004

October 28, 2004

November 3, 2004-March 31, 2005

Only the first and third contracts were signed by the respondent. However,
such lack of signature in the second contract appears not to be the crucial
element considered by the CA but the fact that the third contract dated
February 26, 2004, unlike the previous contracts, does not indicate the
nature of the appointment as probationary employment. According to the
CA, this implies, as concluded by the NLRC, that respondent was already a
regular employee.
We disagree.
The third appointment contract dated February 26, 2004 reads:

137

February 26, 2004

attainment of the Vision-Mission and the goals and objectives of the


University.

MR.
MARVIN
Religious Education Department

JULIAN

SAMBAJON
Received and Conforme:

Dear Mr. Sambajon,

(SGD.) MARVIN-JULIAN L. SAMBAJON, JR.29

I am pleased to inform you that you are designated and commissioned to


be an Apostle of Love and Service, Unity and Peace as you dedicate and
commit yourself in the exercise of your duties and responsibilities as a:

Since it was explicitly provided in the above contract that unless renewed
in writing respondents appointment automatically expires at the end of
the stipulated period of employment, the CA erred in concluding that
simply because the word "probationary" no longer appears below the
designation (Full-Time Faculty Member), respondent had already become a
permanent employee. Noteworthy is respondents admission of being still
under probationary period in his January 12, 2005 letter to Sr. Evidente
reiterating his demand for salary differential, which letter was sent almost
one year after he signed the February 26, 2004 appointment contract, to
wit:

FULL
TIME
FACULTY
MEMBER
of the Religious Education Department from November 1, 2003 to March
31, 2004.
Unless otherwise renewed in writing, this designation automatically
terminates as of the date expiration above states without further notice.
As a member of the academic/clinical community, you are expected to live
by and give your full support to the promotion and attainment of the
Vision-Mission, goals and objectives, the rules and regulations, the Core
Values which the University professes to believe and live by.
Congratulations and keep your work full in the spirit of the Lord for the
Charity of Christ urges us to live life to the fullest.
God bless
In Christ,
Sr.
Ma.
USI President

Asuncion

G.

Evidente,

D.C.

Witness:
Sr.
HR Officer

Stella

O.

Real,

The problem is that your good office has never categorically resolved
whether or not probationary teachers can also be evaluated for salary
adjustment. Nevertheless, inferring from your statement that evaluation
precedes re-ranking and in fact is the basis for re-ranking, may I
categorically ask: does it really mean that since, it precedes re-ranking,
evaluation should not take place among probationary teachers for they can
not yet be re-ranked? If so, then how pitiful are we, probationary teachers
for our credentials are never evaluated since we cannot yet be re-ranked.
Oh my goodness! Can your good office not give me a clearer and more
convincing argument shedding light on this matter?30
Respondent nonetheless claims that subsequently, the probationary period
of three years under the regulations was shortened by petitioner as
relayed to him by Sr. Evidente herself. However, the latter, together with
Sr. Real, categorically denied having informed respondent that his
probationary period was abbreviated, allegedly the reason his salary
adjustment was not made retroactive. Apart from his bare assertion,
respondent has not adduced proof of any decision of the school
administration to shorten his probationary period.

D.C.

I, ______________________ understand that unless renewed in writing, my


services as ________________ expires automatically on the specific date
above stated.
Furthermore, I fully accept this appointment to help build the Kingdom of
God here and now and to facilitate the living of the Core Values and the

In Rev. Fr. Labajo v. Alejandro,31 we held that:


The three (3)-year period of service mentioned in paragraph 75 [of the
Manual of Regulations for Private Schools] is of course the maximum
period or upper limit, so to speak, of probationary employment allowed in
the case of private school teachers. This necessarily implies that a regular
or permanent employment status may, under certain conditions, be
attained in less than three (3) years. By and large, however, whether or not

138

one has indeed attained permanent status in ones employment, before


the passage of three (3) years, is a matter of proof. (Emphasis supplied.)
There can be no dispute that the period of probation may be reduced if the
employer, convinced of the fitness and efficiency of a probationary
employee, voluntarily extends a permanent appointment even before the
three-year period ends. Conversely, if the purpose sought by the employer
is neither attained nor attainable within the said period, the law does not
preclude the employer from terminating the probationary employment on
justifiable ground; or, a shorter probationary period may be incorporated in
a collective bargaining agreement. But absent any circumstances which
unmistakably show that an abbreviated probationary period has been
agreed upon, the three-year probationary term governs.32
As to the Certificate of Employment 33 issued by Sr. Real on January 31,
2005, it simply stated that respondent "was a full time faculty member in
the Religious Education Department of this same institution" and that he
holds the rank of Associate Professor. There was no description or
qualification of respondents employment as regular or permanent. Neither
did the similar Certification34 also issued by Sr. Real on March 18, 2005
prove respondents status as a permanent faculty member of petitioner.
It bears stressing that full-time teaching primarily refers to the extent of
services rendered by the teacher to the employer school and not to the
nature of his appointment. Its significance lies in the rule that only full-time
teaching personnel can acquire regular or permanent status. The
provisions of DOLE-DECS-CHED-TESDA Order No. 01, series of 1996,
"Guidelines on Status of Employment of Teachers and of Academic
Personnel in Private Educational Institutions" are herein reproduced:
2. Subject in all instances to compliance with the concerned
agency and school requirements, the probationary period for
teaching or academic personnel shall not be more than three (3)
consecutive school years of satisfactory service for those in the
elementary and secondary levels; six (6) consecutive regular
semesters of satisfactory service for those in the tertiary and
graduate levels, and nine (9) consecutive trimesters of satisfactory
service for those in the tertiary level where collegiate courses are
offered on a trimester basis.
Unless otherwise provided by contract, school academic personnel
who are under probationary employment cannot be dismissed
during the applicable probationary period, unless dismissal is
compelled by a just cause or causes.
3. Teachers or academic personnel who have served the
probationary period as provided for in the immediately preceding
paragraph shall be made regular or permanent if allowed to work

after such probationary period. The educational institution,


however, may shorten the probationary period after taking into
account the qualifications and performance of the probationary
teachers and academic personnel.
Full-time teaching or academic personnel are those meeting all the
following requirements:
3.1. Who possess at least the minimum academic
qualifications prescribed by the Department of Education,
Culture and Sports for Basic Education, the Commission on
Higher Education for Tertiary Education, and the Technical
Education and Skills Development Authority for Technical
and Vocational Education under their respective Manual of
Regulations governing said personnel;
3.2 Who are paid monthly or hourly, based on the normal
or regular teaching loads as provided for in the policies,
rules and standards of the agency concerned;
3.3 Whose regular working day of not more than eight (8)
hours a day is devoted to the school;
3.4 Who have no other remunerative occupation elsewhere
requiring regular hours of work that will conflict with the
working hours in the school; and
3.5 Who are not teaching full-time in any other educational
institution.
All teaching or academic personnel who do not meet the foregoing
qualifications are considered part time.
4. Part-time teaching or academic personnel cannot acquire regular
or permanent employment status.
5. Teaching or academic personnel who do not meet the minimum
academic qualifications shall not acquire tenure or regular status.
The school may terminate their services when a qualified teacher
becomes available.35
In this case, petitioner applied the maximum three-year probationary
period equivalent to six consecutive semesters provided in the Manual
of Regulations. This can be gleaned from the letter dated March 24, 2004
of Sr. Grace Namocancat, D.C. addressed to respondent, informing the
latter of the result of evaluation of his performance for SY 2003-2004 and

139

stating that November 2004 marks his second year of full-time teaching,
which means he had one more year to become a permanent employee. 36
The circumstance that respondents services were hired on semester basis
did not negate the applicable probationary period, which is three school
years or six consecutive semesters. In Magis Young Achievers Learning
Center37 the Court explained the three years probationary period rule in
this wise:
The common practice is for the employer and the teacher to enter into a
contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering
the teachers performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another
school year, the probationary employment continues. Again, at the end of
that period, the parties may opt to renew or not to renew the contract. If
renewed, this second renewal of the contract for another school year would
then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may
now decide whether to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the reasonable
standards of competence and efficiency set by the employer. For the entire
duration of this three-year period, the teacher remains under probation.
Upon the expiration of his contract of employment, being simply on
probation, he cannot automatically claim security of tenure and compel the
employer to renew his employment contract. It is when the yearly contract
is renewed for the third time that Section 93 of the Manual becomes
operative, and the teacher then is entitled to regular or permanent
employment status.38 (Emphasis supplied.)
Petitioner argues that respondents probationary period expires after each
semester he was contracted to teach and hence it was not obligated to
renew his services at the end of the fifth semester (March 2005) of his
probationary employment. It asserts that the practice of issuing
appointment contracts for every semester was legal and therefore
respondent was not terminated when petitioner did not renew his contract
for another semester as his probationary contract merely expired. Plainly,
petitioner considered the subject appointment contracts as fixed-term
contracts such that it can validly dismiss respondent at the end of each
semester for the reason that his contract had expired.
The Court finds no merit in petitioners interpretation of the Manual of
Regulations, supplemented by DOLE-DECS-CHED-TESDA Order No. 01,
series of 1996. As we made clear in the afore-cited case of Magis Young
Achievers Learning Center, the teacher remains under probation for the
entire duration of the three-year period. Subsequently, in the case of
Mercado v. AMA Computer College-Paraaque City, Inc. 39 the Court,
speaking through Justice Arturo D. Brion, recognized the right of

respondent school to determine for itself that it shall use fixed-term


employment contracts as its medium for hiring its teachers. Nevertheless,
the Court held that the teachers probationary status should not be
disregarded simply because their contracts were fixed-term. Thus:
The
Conflict:
and Fixed-term Employment

Probationary

Status

The existence of the term-to-term contracts covering the petitioners


employment is not disputed, nor is it disputed that they were on
probationary status not permanent or regular status from the time they
were employed on May 25, 1998 and until the expiration of their Teaching
Contracts on September 7, 2000. As the CA correctly found, their teaching
stints only covered a period of at least seven (7) consecutive trimesters or
two (2) years and three (3) months of service. This case, however, brings
to the fore the essential question of which, between the two factors
affecting employment, should prevail given AMACCs position that the
teachers contracts expired and it had the right not to renew them. In other
words, should the teachers probationary status be disregarded simply
because the contracts were fixed-term?
The provision on employment on probationary status under the Labor Code
is a primary example of the fine balancing of interests between labor and
management that the Code has institutionalized pursuant to the
underlying intent of the Constitution.
On the one hand, employment on probationary status affords management
the chance to fully scrutinize the true worth of hired personnel before the
full force of the security of tenure guarantee of the Constitution comes into
play. Based on the standards set at the start of the probationary period,
management is given the widest opportunity during the probationary
period to reject hirees who fail to meet its own adopted but reasonable
standards. These standards, together with the just and authorized causes
for termination of employment the Labor Code expressly provides, are the
grounds available to terminate the employment of a teacher on
probationary status. For example, the school may impose reasonably
stricter attendance or report compliance records on teachers on probation,
and reject a probationary teacher for failing in this regard, although the
same attendance or compliance record may not be required for a teacher
already on permanent status. At the same time, the same just and
authorize[d] causes for dismissal under the Labor Code apply to
probationary teachers, so that they may be the first to be laid-off if the
school does not have enough students for a given semester or trimester.
Termination of employment on this basis is an authorized cause under the
Labor Code.
Labor, for its part, is given the protection during the probationary period of
knowing the company standards the new hires have to meet during the

140

probationary period, and to be judged on the basis of these standards,


aside from the usual standards applicable to employees after they achieve
permanent status. Under the terms of the Labor Code, these standards
should be made known to the teachers on probationary status at the start
of their probationary period, or at the very least under the circumstances
of the present case, at the start of the semester or the trimester during
which the probationary standards are to be applied. Of critical importance
in invoking a failure to meet the probationary standards, is that the school
should show as a matter of due process how these standards have been
applied. This is effectively the second notice in a dismissal situation that
the law requires as a due process guarantee supporting the security of
tenure provision, and is in furtherance, too, of the basic rule in employee
dismissal that the employer carries the burden of justifying a dismissal.
These rules ensure compliance with the limited security of tenure
guarantee the law extends to probationary employees.
When fixed-term employment is brought into play under the above
probationary period rules, the situation as in the present case may at
first blush look muddled as fixed-term employment is in itself a valid
employment mode under Philippine law and jurisprudence. The conflict,
however, is more apparent than real when the respective nature of fixedterm employment and of employment on probationary status are closely
examined.
The fixed-term character of employment essentially refers to the period
agreed upon between the employer and the employee; employment exists
only for the duration of the term and ends on its own when the term
expires. In a sense, employment on probationary status also refers to a
period because of the technical meaning "probation" carries in Philippine
labor law a maximum period of six months, or in the academe, a period
of three years for those engaged in teaching jobs. Their similarity ends
there, however, because of the overriding meaning that being "on
probation" connotes, i.e., a process of testing and observing the character
or abilities of a person who is new to a role or job.
Understood in the above sense, the essentially protective character of
probationary status for management can readily be appreciated. But this
same protective character gives rise to the countervailing but equally
protective rule that the probationary period can only last for a specific
maximum period and under reasonable, well-laid and properly
communicated standards. Otherwise stated, within the period of the
probation, any employer move based on the probationary standards and
affecting the continuity of the employment must strictly conform to the
probationary rules.
Under the given facts where the school year is divided into trimesters, the
school apparently utilizes its fixed-term contracts as a convenient
arrangement dictated by the trimestral system and not because the

workplace parties really intended to limit the period of their relationship to


any fixed term and to finish this relationship at the end of that term. If we
pierce the veil, so to speak, of the parties so-called fixed-term
employment contracts, what undeniably comes out at the core is a fixedterm contract conveniently used by the school to define and regulate its
relations with its teachers during their probationary period.
To be sure, nothing is illegitimate in defining the school-teacher
relationship in this manner. The school, however, cannot forget that its
system of fixed-term contract is a system that operates during the
probationary period and for this reason is subject to the terms of Article
281 of the Labor Code. Unless this reconciliation is made, the requirements
of this Article on probationary status would be fully negated as the school
may freely choose not to renew contracts simply because their terms have
expired. The inevitable effect of course is to wreck the scheme that the
Constitution and the Labor Code established to balance relationships
between labor and management.
Given the clear constitutional and statutory intents, we cannot but
conclude that in a situation where the probationary status overlaps with a
fixed-term contract not specifically used for the fixed term it offers, Article
281 should assume primacy and the fixed-period character of the contract
must give way. This conclusion is immeasurably strengthened by the
petitioners and the AMACCs hardly concealed expectation that the
employment on probation could lead to permanent status, and that the
contracts are renewable unless the petitioners fail to pass the schools
standards.40 (Additional emphasis supplied.)
Illegal Dismissal
Notwithstanding the limited engagement of probationary employees, they
are entitled to constitutional protection of security of tenure during and
before the end of the probationary period.41 The services of an employee
who has been engaged on probationary basis may be terminated for any of
the following: (a) a just or (b) an authorized cause; and (c) when he fails to
qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.42
Thus, while no vested right to a permanent appointment had as yet
accrued in favor of respondent since he had not completed the prerequisite
three-year period (six consecutive semesters) necessary for the acquisition
of permanent status as required by the Manual of Regulations for Private
Schools43 -- which has the force of law 44 -- he enjoys a limited tenure.
During the said probationary period, he cannot be terminated except for
just or authorized causes, or if he fails to qualify in accordance with
reasonable standards prescribed by petitioner for the acquisition of
permanent status of its teaching personnel.

141

In a letter dated February 26, 2005, petitioner terminated the services of


respondent stating that his probationary employment as teacher will no
longer be renewed upon its expiry on March 31, 2005, respondents fifth
semester of teaching. No just or authorized cause was given by petitioner.
Prior to this, respondent had consistently achieved above average rating
based on evaluation by petitioners officials and students. He had also
been promoted to the rank of Associate Professor after finishing his
masters degree course on his third semester of teaching. Clearly,
respondents termination after five semesters of satisfactory service was
illegal.
Respondent therefore is entitled to continue his three-year probationary
period, such that from March 31, 2005, his probationary employment is
deemed renewed for the following semester (1st semester of SY 20052006). However, given the discordant relations that had arisen from the
parties dispute, it can be inferred with certainty that petitioner had opted
not to retain respondent in its employ beyond the three-year period.
On the appropriate relief and damages, we adhere to our disposition in
Magis Young Achievers Learning Center45:
Finally,
we
rule
on
the
propriety
of
the
monetary
awards.1wphi1 Petitioner, as employer, is entitled to decide whether to
extend respondent a permanent status by renewing her contract beyond
the three-year period. Given the acrimony between the parties which must
have been generated by this controversy, it can be said unequivocally that
petitioner had opted not to extend respondent's employment beyond this
period. Therefore, the award of backwages as a consequence of the finding
of illegal dismissal in favor of respondent should be confined to the threeyear probationary period. Computing her monthly salary of F15,000.00 for
the next two school years (F15,000.00 x 10 months x 2), respondent
already having received her full salaries for the year 2002-2003, she is
entitled to a total amount of F300,000.00. Moreover, respondent is also
entitled to receive her 13th month pay correspondent to the said two
school years, computed as yearly salary, divided by 12 months in a year,
multiplied by 2, corresponding to the school years 2003-2004 and 20042005, or F150,000.00 I 12 months x 2 = F25,000.00. Thus, the NLRC was
correct in awarding respondent the amount of F325,000.00 as backwages,
inclusive of 13th month pay for the school years 2003-2004 and 20042005, and the amount of P3,750.00 as pro-rated 13th month pay.
WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The
Decision dated March 25, 2011 of the Court of Appeals in CA-G.R. SP Nos.
108103 & 108168 is hereby MODIFIED. Petitioner Universidad de Sta.
Isabel is hereby DIRECTED to PAY respondent Marvin-Julian L. Sambajon, Jr.
back wages corresponding to his full monthly salaries for one semester (1st
semester of SY 2005-2006) and pro-rated 13th month pay.

The case is REMANDED to the Labor Arbiter for a recomputation of the


amounts due to respondent in conformity with this Decision.
No pronouncement as to costs.
SO ORDERED.

142

CANDIDO ALFARO, petitioner, vs. COURT OF APPEALS, NATIONAL


LABOR
RELATIONS
COMMISSION
and
STAR
PAPER
CORPORATION, respondents.

private respondent. Before Christmas of 1993, petitioner sought private


respondent to pay his 13th month pay and [his] 15 days sick leave pay, but
he was told to come next year.

DECISION

On January 12, 1994, petitioner came to private respondent for his


aforestated money claims. During that occasion, private respondent
dangled to petitioner a check worth P3,000.00 which [would] be released
to him, only if he [signed] the documents, being forced upon him to sign on
December 7, 1993. Deperate for the money to support his subsistence, and
against his will, petitioner was constrained to sign the said documents
which contained no amount of money released to him. The actual sum of
money received by petitioner from private respondent amounted
to P3,000.00 in the form of check, while his claims for 15 days sick leave
pay was secured by him from the Social Security System.

PANGANIBAN, J.:
Generally, separation pay need not be paid to an employee who
voluntarily resigns. However, an employer who agrees to expend such
benefit as an incident of the resignation should not be allowed to renege in
the performance of such commitment.
The Case
Before us is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Court, seeking to set aside the Decision [2] of the Court of Appeals
(CA), which affirmed the June 16, 1998 Decision of the National Labor
Relations Commission (NLRC).[3]

The documents forced upon the petitioner to sign were a resignation letter,
and a Release and Quit Claim. Said resignation letter read, thus:
To the Personal Manager

The Facts

Mr. Michael Philip Elizalde

The facts as related by petitioner in his Memorandum [4] are hereunder


reproduced as follows:

Star Paper Corporation

Petitioner was employed as a helper/operator of private respondent since


November 8, 1990. From November 23, 1993 until December 5, 1993, he
took a sick leave. When he reported back to work on December 6, 1993, he
was surprised to find out that another worker was recruited to take his
place, and instead, he was transferred to [the] wrapping section where he
was required to work with overtime up to 9:30 PM, from his regular working
hours of from 7:00 a.m., to 4:00 p.m., despite the fact that he had just
recovered from illness. On December 7, 1993, he was given a new
assignment where the work was even more difficult[;] when he complained
o[f] what he felt was rude treatment or sort of punishment since he was
being exposed to hard labor notwithstanding his predicament of just
coming from sickness, petitioner was told to look for another job because
he was dismissed effective on said date, December 7, 1993, when
petitioner was seeking his 13th month pay and fifteen (15) days sick leave
pay [o]n the afternoon of the same day, he was ignored when he refused to
sign documents which indicated that he was renouncing claims against

46 Joy St., Grace Village, Q.C.


Dear Sir,
Ako po si Candido Alfaro ay nagbibigay ng aking resignation letter dahilan
po sa aking sakit. Umaasa po ako na mabigyan ng tulong.
Lubos na gumagalang
(sgd) Candido Alfaro
As submitted by private respondent in its pleadings on record, petitioner
allegedly tendered said resignation letter on January 12, 1994, on the basis
of which, the former maintains that the latter was not illegally dismissed,
was paid [his] separation pay of P8,455.50, and that he voluntarily
resigned from his job effective January 12, 1994.[5]

143

Private respondent, in its Memorandum [6], adopts Labor Arbiter Donato


Quintos findings of fact as follows:
Complainant alleges that he was hired by respondent corporation in
November 1990 [as] the latters machine tape operator. Thereafter, or in
the month[s] of September and October, 1993, he was suffered to do some
painting work on pallets guide using [a] spray gun. As a result, in the third
week of October, 1993 he felt general body weakness coupled with
constant coughing and fever.

complainant asked the respondent corporation that he be allowed to resign


with benefits. After getting a favorable reply, complainant submitted a
resignation letter to the respondent corporation on January 12, 1994.
Because of his request for help, separation benefits were likewise given to
complainant in the amount of P8,452.50 Complainant, upon receipt of said
benefits, executed a Release and Quitclaim in favor of respondent
corporation.
The CA Ruling

As a consequence of his illness, complainant alleges that he took a


vacation leave from November 22, 1993 to December 5, 1993. However,
upon reporting for work on December 6, 1993, complainant was surprised
to find out that somebody was already recruited to take his place. Instead,
he was transferred to the wrapping section.
On December 7, 1993, complainant complained of the work being given to
him for being difficult which was interpreted as some sort of a punishment
given to him by the respondent. As a result thereof, complainant alleges
that he was dismissed without valid cause and without due process of
law. He further alleges that he was not paid his 13th month pay and 15
days sick leave which he was claiming because he refused to sign a
document renouncing all his claim[s] against respondent corporation.
On January 12, 1994, complainant went to the respondent corporation to
claim his 13th month pay and his 15 days sick leave pay. He received the
amount of P3,000.00 but he was allegedly pressured to sign a Quitclaim
and Release with no amount or consideration written on said
document. Further, complainant also alleges that he was also made to sign
a prepared resignation letter in exchange for the P3,000.00 which he
received which [was] contrary to the claim of the respondent corporation
that he received P8,452.00.
On June 14, 1996, the complainant filed a case against the respondent
corporation for non-payment of separation pay. Said complaint was later
amended on August 1, 1996 by claiming illegal dismissal and damages in
lieu of separation pay, with a prayer for reinstatement with backwages and
attorneys fees.
On the other hand, respondent corporation maintains that complainant
while still under its employ contracted PTB Minimal Active for which reason
he applied for SSS benefits on November 25, 1993.Considering his illness,

In denying petitioners claims, the CA ruled as follows:


It is not easy to uphold petitioners submission. For, the Labor Arbiters
report to the National Labor Relations Commission shows that petitioner
resigned voluntarily. Thus, as written in the letter of resignation:
Ako po si candido Alfaro ay nagbibigay ng aking resignation dahilan po sa
aking sakit.
Umaasa po ako na mabigyan ng tulong.
The same report likewise mentioned the Quitclaim and Release (Annex 2,
of private respondents position paper) which further strengthened the fact
that petitioner resigned due to his ailment. If petitioners concatenation is
true that he was forced to sign the resignation letter against his better
judgment, then why should he also sign the quitclaim and release[?]
We find no reason to reverse and set aside the findings and
recommendation of the Labor Arbiter, and affirmed by the NLRC. As a
quasi-judicial body, the findings of the NLRC deserve respect, even finality
(M. Ramirez Industries vs. Secretary of Labor, 266 SCRA 111; Bataan
Shipyard and Engineering Corporation vs. NLRC, 269 SCRA 199; Naguiat vs.
NLRC, 269 SCRA 564; Conti vs. NLRC, 271 SCRA 114.)
Hence, this recourse.[7]
The Issues
Petitioner submits the following issues for the consideration of this
Court:

144

1.) Whether or not the Honorable Court of Appeals committed


grave abuse of discretion tantamount to lack or x x x excess
of jurisdiction and/or serious reversible error in holding that
petitioner was not illegally dismissed by private respondent;
2.) Whether or not the Honorable Court of Appeals committed
grave abuse of discretion tantamount to lack of or x x x
excess of jurisdiction, and/or serious reversible error in holding
that petitioner voluntarily resigned from employment
3.) Whether or not the Honorable Court of Appeals committed
grave abuse of discretion tantamount to lack of or x x x
excess of jurisdiction and/or reversible error in holding that
the finding of the NLRC, deserve respect and even finality
despite serious flaws in its appreciation of facts and evidence;
4.) Whether or not the Honorable Court of Appeals committed
grave abuse of discretion tantamount to lack of or x x x
excess of jurisdiction, and/or serious reversible error in
dismissing the petition for certiorari[8]
The Courts Ruling
The Petition has no merit.
Main Issue: Illegal Dismissal and Separation Pay
At the outset, it bears stressing that in a petition for review on
certiorari, the scope of the Supreme Courts judicial review of decisions of
the Court of Appeals is generally confined only to errors of law [9]; questions
of fact are not entertained. [10] Thus, only questions of law may be brought
by the parties and passed upon by this Court in the exercise of its power to
review.[11]
The Supreme Court is not a trier of facts, and this doctrine applies
with greater force in labor cases.[12] Factual questions are for the labor
tribunals to resolve.[13] In this case, the factual issues have already been
determined by the labor arbiter and the National Labor Relations
Commission. Their findings were affirmed by the CA. Judicial review by this
Court does not extend to a reevaluation of the sufficiency of the evidence
upon which the proper labor tribunal has based its determination. [14]

Indeed, factual findings of labor officials who are deemed to have


acquired expertise in matters within their respective jurisdictions are
generally accorded not only respect, but even finality, and are binding on
the Supreme Court.[15] Verily, their conclusions are accorded great weight
upon appeal, especially when supported by substantial evidence.
[16]
Consequently, the Supreme Court is not duty-bound to delve into the
accuracy of their factual findings, in the absence of a clear showing that
the same were arbitrary and bereft of any rational basis. [17]
The factual findings of the labor arbiter and the NLRC, as affirmed by
the CA, reveal that petitioner resigned from his work due to his illness, with
the understanding that private respondent would give him separation
pay. Unfortunately, it seems that private respondent did not keep its
promise to grant the separation pay, prompting petitioner to institute the
present action for illegal dismissal. It was only for this reason that the
Court gave due course to this Petition.
Generally, an employee who voluntarily resigns from employment is
not entitled to separation pay. [18] In the present case, however, upon the
request of petitioner, private respondent agreed to a scheme whereby the
former would receive separation pay despite having resigned
voluntarily. Thus, the terms and conditions they both agreed upon
constituted a contract freely entered into, which should be performed in
good faith, as it constituted the law between the parties.
Not all waivers and quitclaims are invalid as against public policy. If
the agreement was voluntarily entered into and represented a reasonable
settlement, it is binding on the parties and may not later be disowned,
simply because of a change of mind. [19] The position taken by petitioner on
the alleged illegal dismissal was vacillating and indecisive, as correctly
found by the labor arbiter who provided a ratiocination on the matter as
follows:
Thus, after a careful perusal of the evidence on hand, we are of the opinion
that the position taken by the respondent corporation is more credible than
that of complainant. This is evident from the fact that the complaint filed
by complainant on June 14, 1996, or more than two (2) years from his
alleged dismissal on December 7, 1993, was only payment of separation
pay. It was only on August 1, 1996 when complainant abandoned his claim
for separation pay and instead filed an amended complaint claiming that
he was, illegally dismissed.

145

To our mind, therefore, the foregoing coupled with the fact that there is
practically no evidence on record which shows that complainant was
pressured and made to sign a resignation letter and Release and Quitclaim
against his will [and] better judgment only shows that his claim of illegal
dismissal is unsubstantiated and is a mere afterthought.
Moreover, if indeed complainant was illegally dismissed, he should have
pursued his claim against the respondent corporation by immediately filing
a complaint for illegal dismissal. As it is, however, complainant filed a
complaint for separation pay against the respondent corporation only after
two (2) years from his alleged dismissal which complaint was amended for
the purpose of claiming illegal dismissal almost two (2) months thereafter.

facts and applicable law and doctrine. [22] An employee who resigns and
executes a quitclaim in favor of the employer isgenerally estopped from
filing any further money claims against the employer arising from the
employment.[23]
However, private respondent has not complied with its obligation to
give petitioners separation pay in the amount of P8,542.50. It was this
deliberate withholding of monetary benefits that necessitated the long,
litigious and lethargic proceedings in this case. Had private respondent
simply paid the measly amount of P8,452.50 as separation pay to
petitioner, this legal controversy could have been avoided and the court
dockets unclogged.

[20]

Voluntary resignation is defined as the act of an employee, who finds


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

WHEREFORE, the Petition is hereby DENIED and the assailed


Decision of the Court of Appeals AFFIRMED, with the modification that
private respondent is directed to pay petitioner P8,452.50 plus legal
interest thereon, computed from December 7, 1993, until fully paid,
representing the unpaid separation pay benefit agreed upon by the parties.
SO ORDERED.

146

G.R. No. 81087

June 19, 1991

INTERTROD
MARITIME,
INC.
and
TROODOS
SHIPPING
CO., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ERNESTO DE LA
CRUZ, respondents.
Del Rosario & Del Rosario for petitioners.

PADILLA, J.:
This petition seeks the annulment and/or modification of the resolution * of
the First Division of the National Labor Relations Commission promulgated
on 11 December 1987 in NSB Case No. 3997-82 entitled "Ernesto de la
Cruz vs. Intertrod Maritime, Inc. and Troodos Shipping Company," which
reversed the decision of then POEA Administrator Patricia Sto. Tomas dated
20 December 1983.
On 10 May 1982, private respondent Ernesto de la Cruz signed a shipboard
employment contract with petitioner Troodos Shipping Company as
principal and petitioner Intertrod Maritime, Inc., as agent to serve as Third
Engineer on board the M/T "BREEDEN" for a period of twelve (12) months
with a basic monthly salary of US$950.00.1
Private respondent eventually boarded a sister vessel, M/T "AFAMIS" and
proceeded to work as the vessel's Third Engineer under the same terms
and conditions of his employment contract previously referred to. 2
On 26 August 1982, while the ship (M/T "Afamis") was at Port Pylos,
Greece, private respondent requested for relief, due to "personal
reason."3 The Master of the ship approved his request but informed private
respondent that repatriation expenses were for his account and that he
had to give thirty (30) days notice in view of the Clause 5 of the
employment contract so that a replacement for him (private respondent)
could be arranged.4
On 30 August 1982, while the vessel was at Port Said in Egypt and despite
the fact that it was only four (4) days after private respondent's request for
relief, the Master "signed him off" and paid him in cash all amounts due
him less the amount of US$780.00 for his repatriation expenses, as
evidenced by the wages account signed by the private respondent. 5

On his return to the Philippines, private respondent filed a complaint with


the National Seamen Board (NSB)(now POEA) charging petitioners for
breach of employment contract and violation of NSB rules and
regulations.6 Private respondent alleged that his request for relief was
made in order to take care of a Filipino member of the crew of M/T
"AFAMIS" who was hospitalized on 25 August 1982 in Athens, Greece.
However, the Master of the ship refused to let him immediately disembark
in Greece so that the reason for his request for relief ceased to exist.
Hence, when the Master of the ship forced him to step out in Egypt despite
his protestations to the contrary, there being no more reason to request for
relief, an illegal dismissal occurred and he had no other recourse but to
return to the Philippines at his own expense.7
In its Answer to the complaint, petitioners denied the allegations of the
complainant and averred that the contract was cut short because of
private respondent's own request for relief so that it was only proper that
he should pay for his repatriation expenses in accordance with the
provisions of their employment contract.8
The sole issue to be resolved in this case is whether or not complainant's
termination is illegal.
POEA rendered a decision dismissing the complaint for lack of merit. 9 On
appeal to the NLRC, the decision was reversed.
The dispositive portion of the NLRC decision reads:
WHEREFORE, the appealed decision is hereby SET ASIDE and
another one entered, directing respondents-appellees to: (1) pay
complainant-appellant the amount of US$780.00 representing his
plane fare from Egypt to Manila; and (2) pay complainant-appellant
the amount of US$6,300.00 representing his unearned salary for
nine (9) months, the unexpired portion of the contract.
Foreign exchange conversions shall be paid in Philippine currency
at the rate of exchange at the actual payment thereof.
SO ORDERED.10
Hence, this petition.
Article 21(c) of the Labor Code requires that the Philippine Overseas
Employment Administration (formerly NSB) should approve and verify a
contract for overseas Employment.11 A contract, which is approved by the
National Seamen Board, such as the one in this case, is the law between

147

the contracting parties; and where there is nothing in it which is contrary


to law, morals, good customs, public policy or public order, the validity of
said contract must be sustained.12

of work would be involved by reason of the resignation. This practice has


been recognized because "every business enterprise endeavors to increase
its profits by adopting a device or means designed towards that goal." 17

In its resolution, the NLRC held that the immediate approval of private
respondent's request for relief should have resulted in his disembarkation
in Port Pylos, Greece; that failure of the Master to allow disembarkation in
Greece nullified the request for relief and its approval, such that private
respondent's subsequent disembarkation in Egypt is no longer his doing
but rather an illegal dismissal on the part of the Master. 13 We cannot
support such a ruling for it fails to consider the clear import of the
provisions of the employment contract between petitioners and private
respondent.

Resignations, once accepted and being the sole act of the employee, may
not be withdrawn without the consent of the employer. In the instant case,
the Master had already accepted the resignation and, although the private
respondent was being required to serve the thirty (30) days notice
provided in the contract, his resignation was already approved. Private
respondent cannot claim that his resignation ceased to be effective
because he was not immediately discharged in Port Pylos, Greece, for he
could no longer unilaterally withdraw such resignation. When he later
signified his intention of continuing his work, it was already up to the
petitioners to accept his withdrawal of his resignation. The mere fact that
they did not accept such withdrawal did not constitute illegal dismissal for
acceptance of the withdrawal of the resignation was their (petitioners') sole
prerogative.

Paragraph 5 of the Employment Contract between petitioners and private


respondent Ernesto de la Cruz provides as follows:
5. That, if the seaman decide to terminate his contract prior to the
expiration of the service period as stated and defined in paragraph
4 of this Employment Contract, without due cause, he will give the
Master thirty (30) days notice and agree to allow his repatriation
expenses to be deducted from wages due him.14
Clearly, therefore, private respondent Ernesto de la Cruz was required by
the employment contract not only to pay his own repatriation expenses but
also to give thirty (30) days notice should he decide to terminate his
employment prior to the expiration of the period provided in the contract.
When the Master approved his request for relief, the Master emphasized
that private respondent was required to give thirty (30) days notice and to
shoulder his own repatriation expenses. Approval of his request for relief,
therefore, did not constitute a waiver by petitioners of the provisions of the
contract, as private respondent would have us believe, for it was made
clear to him that the provisions of the contract, insofar as the thirty (30)
days notice and repatriation expenses were concerned, were to be
enforced.
Private respondent claims that his request for relief was only for the reason
of taking care of a fellow member of the crew so much so that when he
was not allowed to disembark in Port Pylos, Greece, the reason no longer
existed and, therefore, when he was forced to "sign off" at Port Said, Egypt
even when he signified intentions of continuing his work, he was illegally
dismissed.15 We sympathize with the private respondent; however, we
cannot sustain such contention. Resignation is the voluntary act of an
employee who "finds himself in a situation where he believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, then
he has no other choice but to disassociate himself from his
employment."16 The employer has no control over resignations and so, the
notification requirement was devised in order to ensure that no disruption

Once an employee resigns and his resignation is accepted, he no longer


has any right to the job. If the employee later changes his mind, he must
ask for approval of the withdrawal of his resignation from his employer, as
if he were re-applying for the job. It will then be up to the employer to
determine whether or not his service would be continued. If the employer
accepts said withdrawal, the employee retains his job. If the employer does
not, as in this case, the employee cannot claim illegal dismissal for the
employer has the right to determine who his employees will be. To say that
an employee who has resigned is illegally dismissed, is to encroach upon
the right of employers to hire persons who will be of service to them.
Furthermore, the employment contract also provides as follows:
4. That all terms and conditions agreed herein are for a service
period of twelve (12) months provided the vessel is in a convenient
port for his repatriation, otherwise at Master's discretion, on
vessel's arrival at the first port where repatriation is practicable
provided that such continued service shall not exceed three
months.18
Under the terms of the employment contract, it is the ship's Master who
determines where a seaman requesting relief may be "signed off." It is,
therefore, erroneous for private respondent to claim that his resignation
was effective only in Greece and that because he was not immediately
allowed to disembark in Greece (as the employer wanted compliance with
the contractual conditions for termination on the part of the employee), the
resignation was to be deemed automatically withdrawn.
The decision of the NLRC is therefore set aside. To sustain it would be to
authorize undue oppression of the employer.1wphi1 After all, "the law, in

148

protecting the rights of the laborer, authorizes neither oppression nor selfdestruction of the employer."19
WHEREFORE, the petition is GRANTED. The questioned resolution of the
National Labor Relations Commission dated 11 December 1987 is hereby
REVERSED and SET ASIDE and the decision of then POEA Administrator
Patricia Sto. Tomas dated 20 December 1983 is REVIVED. No
pronouncement as to costs.
SO ORDERED.

149

G.R. No. 161196

July 28, 2008

BLUE ANGEL MANPOWER AND SECURITY SERVICES, INC., Petitioner,


vs.
HON. COURT OF APPEALS, ROMEL CASTILLO, WILSON CIRIACO,
GARY GARCES, and CHESTERFIELD MERCADER, Respondents.
DECISION
VELASCO, JR., J.:
In this petition for review under Rule 45, petitioner Blue Angel Manpower
and Security Services, Inc. (Blue Angel) assails and seeks to reverse the
Decision1 dated February 26, 2003 of the Court of Appeals (CA) in CA-G.R.
SP No. 67478, in part setting aside the Decision dated May 9, 2001 of the
National Labor Relations Commission (NLRC).
The facts are as found by the CA.
Blue Angel, a messengerial and security agency, hired private respondents
Romel Castillo, Wilson Ciriaco, Gary Garces, and Chesterfield Mercader as
security guards and detailed them at the National College of Business and
Arts (NCBA) in Cubao, Quezon City.
On April 20, 1999, Castillo and Mercader, later joined by Ciriaco and
Garces, filed a complaint for illegal deductions and other money claims
against Blue Angel. Eventually, they amended their complaint to include
illegal dismissal. According to the four guards, they were required, while
still with Blue Angel, to work from 7:00 a.m. to 7:00 p.m. without overtime
and premium holiday pay, among other benefits. They also alleged
receiving only PhP 5,000 a month or PhP 166 per day and, from this
amount, Blue Angel deducted PhP 100 as cash bond. They further averred
that Blue Angel, when apprised of their original complaint, illegally
terminated Garces and Ciriaco on April 11 and 12, 1999, respectively, and
Castillo and Mercader on April 28, 1999. The four guards prayed for (1)
payment of backwages, wage differentials, premium and overtime pay for
holidays, and 13th month pay; (2) reimbursement of their cash bond; (3)
reinstatement or separation pay; and (4) damages.
Blue Angel, for its part, denied the charges of illegal dismissal. It alleged
that, on two occasions, the officer-in-charge (OIC) of the Security Force of
NCBA, Reynaldo Dayag, reported that the four complaining guards had,
while on guard duty detail with the school, committed several infractions,
among them: insubordination, sleeping while on duty, and absence without
leave (AWOL). When summoned to explain their side on the derogatory
report, only Castillo, Ciriaco, and Garces, according to Blue Angel, showed

up, but not Mercader who had since stopped reporting for work and thus
considered on AWOL. Continuing, Blue Angel alleged that when told that
they would be subjected to an investigation, Castillo, Ciriaco, and Garces
pleaded that they be allowed to resign instead. The three, so Blue Angel
claimed, then tendered their pro-forma letters of resignation followed by
handwritten resignation letters in the nature of quitclaims. To refute the
guards claims of non-payment of what was due them, Blue Angel
presented the payrolls and vouchers from July 1997 to April 1999 that
showed the four guards respective gross salaries and deductions.
In a Decision2 dated May 31, 2000, the labor arbiter, in part, found for the
guards, Blue Angel being ordered to immediately reinstate them with
backwages. The dispositive portion of the labor arbiters decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
Blue Angel Security and Manpower Services, Inc. to immediately reinstate
the complainants to their former positions pursuant to the ruling in the
Pioneer Texturing case that an order of reinstatement is self-executory
even pending appeal.
Respondent is hereby ordered to pay the backwages of the complainants
tentatively computed as follows:
Rommel Castillo --------

Php 82,971.00

Wilson Ciriaco ----------

Php 86,139.00

Gary Garces -------------

Php 86,337.00

Chesterfield Mercader

Php 82,971.00

SO ORDERED.
Dissatisfied, Blue Angel, on one hand, and Castillo, et al., on the other,
interposed separate appeals to the NLRC, the former faulting the labor
arbiter mainly for his finding that the four guards in question were illegally
dismissed. The guards, for their part, took exception to the arbiters
holding that some items of their money claim had already been paid.
By the Decision dated May 9, 2001, the NLRC affirmed with modification
that of the labor arbiter. The NLRC predicated its modificatory action on the
finding that Castillo, Ciriaco, and Garces were not terminated from the
service as they had indeed voluntarily resigned, and that only Mercader
was illegally dismissed. In net effect, the NLRC ruled that, of the four
complaining guards, only Mercader deserved to be reinstated with

150

backwages as he was the only one dismissed illegally. The dispositive


portion of the NLRC Decision reads:

x x x HOLDING THAT PRIVATE RESPONDENTS WERE ILLEGALLY


DISMISSED.

WHEREFORE, in light of the foregoing, the appealed Decision is hereby


AFFIRMED with the modification only in so far as the dismissal of the
complaints filed by Romel Castillo, [Wilson] Ciriaco and Gary Garces; the
judgment arrived at in the case of complainant Chesterfield Mercader is
hereby Affirmed.

II.
x x x IN NOT HOLDING THAT PRIVATE RESPONDENTS ARE NOT
ENTITLED TO THEIR CLAIMS FOR BACKWAGES OR ANY OTHER
MONETARY BENEFIT AS THEY HAVE ALREADY RECEIVED ALL THE
SALARIES AND BENEFITS THAT THEY ARE ENTITLED TO.

All other reliefs herein sought and prayed for are DENIED for lack of merit.
SO ORDERED.3
According to the NLRC, the two sets of letters of resignation, the pro-forma
resignations and the handwritten resignations, were never disputed.
Besides, the NLRC reasoned, the fact that the later resignation letters were
handwritten in Pilipino, a dialect known to them, militated against the
claims of Castillo, Ciriaco, and Garces that they were coerced and
pressured to writing the letters.
On certiorari before the CA, the CA first noted that Blue Angel did not
appeal the portion of the NLRC Decision affirming the labor arbiters ruling
that Mercader was illegally dismissed; hence, said portion of the decision
of the labor arbiter became final and binding on Blue Angel.
Now to the case of Castillo, Ciriaco, and Garces. In its February 26, 2003
Decision, the CA found incredulous the claim of Blue Angel that the guards
pleaded that they be allowed to resign and had voluntarily resigned after
they were told that an investigation would ensue. The CA concluded that
Blue Angel had illegally terminated Castillo, Ciriaco, and Garces. The fallo
of its Decision reads:
WHEREFORE, THE PETITION is hereby GRANTED. The decision of the
National Labor Relations Commission dated May 9, 2001 is ANNULLED AND
SET ASIDE except insofar as it sustained the labor arbiters ruling that
petitioner Chesterfield Mercader was illegally dismissed, with the result
that the decision of the labor arbiter dated May 31, 2000 is reinstated.
SO ORDERED.
Now before us, petitioner Blue Angel raises that the CA committed
palpable and reversible error of law in:
I.

It is to be stressed, as a preliminary consideration, that the illegality of


Mercaders dismissal and his entitlement to reinstatement with backwages
is now a settled issue, the NLRCs holding on that regard being conclusive
on Blue Angel when it failed, as the CA aptly observed, to appeal that
portion of the NLRCs decision. It is a settled rule that no questions will be
entertained on appeal unless they have been raised below. 4 Accordingly,
any disposition henceforth made herein bearing on the illegality of
dismissal shall be limited only to the case of private respondents Castillo,
Ciriaco, and Garces. When mention, therefore, is hereinafter made of
private respondents or respondents-guards, the reference is to Castillo,
Ciriaco and Garces only, unless the context indicates that it shall include
Mercader.
The question of whether or not private respondents were illegally
dismissed hinges on the determination of whether or not they freely and
voluntarily resigned as shown by the two sets of resignation letters.
We rule that the resignations were involuntary and the termination of
private respondents was illegal.
Blue Angel insists that the guards had pleaded to be allowed to resign
when they were told of the pending investigation, and that they eventually
tendered their pro-forma resignation letters followed by their own
handwritten resignation letters. Our review of the circumstances
surrounding these resignation letters does not support Blue Angels
contentions that these letters are indications that private respondents had
voluntarily resigned. We agree with the labor arbiter when he pointed out
that the undated, similarly worded resignation letters tended to show that
the guards were made to copy the pro-forma letters, in their own hand, to
make them appear more convincing that the guards had voluntarily
resigned. As the labor arbiter noted, the element of voluntariness of the
resignations is even more suspect considering that the second set of
resignation letters were pre-drafted, similarly worded, and with blank
spaces filled in with the effectivity dates of the resignations. 5 In their
Comment, private respondents claimed being forced to sign and copy the
pro-forma resignation letters and quitclaims on pain that they would not
get their remaining compensations.6

151

We are more inclined to believe the dismissed guards. Other circumstances


have been aptly pointed out by respondents-guards in their Comment that
we are wont to agree that they were forced into a situation where to refuse
to sign the resignation letters and quitclaims meant loss of money for the
immediate and urgent basic needs of their family. To buttress the
conclusion that the resignation letters were involuntary on the part of the
guards, we find convincing the circumstances mentioned in the Comment
of respondents-guards. For one, it seemed unlikely and improbable that
Garces and Ciriaco would voluntarily resign on April 26, 1999 when they
had 15 and 12 days earlier, or on April 11 and 12, 1999, already been
terminated. Then again, it was likewise inconsistent and implausible that
Castillo would voluntarily tender his resignation and sign a quitclaim on
April 28, 1999, when Mercader and he had in fact already filed a complaint
against Blue Angel with the NLRC regarding illegal deductions of their
salary eight days earlier, or on April 20, 1999. 7 Lastly, there is nothing on
record showing that Blue Angel provided any proof that Castillo, Ciriaco,
and Garces had indeed committed the infractions attributed to them. Blue
Angel merely enumerated the offenses without providing particulars as to
the date and place these infractions were committed. Neither did Blue
Angel present written notices, warnings, and affidavits of the OIC to
support its allegations against the guards.
We are not unaware that the execution of the resignation letters was
undisputed, but the aforementioned circumstances of this case and the
fact that private respondents filed a complaint for illegal dismissal from
employment against Blue Angel completely negate the claim that private
respondents voluntarily resigned. 8 Well-entrenched is the rule that
resignation is inconsistent with the filing of a complaint for illegal
dismissal.9 To constitute resignation, the resignation must be unconditional
with the intent to operate as such. There must be clear intention to
relinquish the position. In this case, private respondents actively pursued
their illegal dismissal case against Blue Angel such that they cannot be
said to have voluntarily resigned from their jobs.
With the finding that private respondents were illegally dismissed, they are
entitled to reinstatement to their positions without loss of their seniority
rights and with full backwages, inclusive of allowances, and to other
benefits or their monetary equivalent computed from the time private
respondents compensation was withheld from them up to the time of their
actual reinstatement as provided for in Article 279 of the Labor Code.
As the law now stands, illegally dismissed employees are entitled to two
reliefs, namely: backwages and reinstatement.lawph!l They are entitled to
reinstatement, if viable, or separation pay, if reinstatement is no longer
feasible, and backwages.10 The award of one does not preclude the other
as the Court had, in proper cases, ordered the payment of both. 11 Where an
employee would have been entitled to reinstatement with full backwages,
but circumstances, i.e., strained relationships, make reinstatement
impossible, the more equitable disposition would be to award separation

pay equivalent to at least one month pay, or one month pay for every year
of service, whichever is higher, in addition to full backwages, inclusive of
allowances, and benefits or their monetary equivalent, computed from the
time the employees compensation was withheld up to the time of the
employees actual reinstatement.12
As to the other money claims of private respondents, the
vouchers,13 payrolls,14 and other documentary evidence15 show that the
other monetary benefits being claimed by private respondents have
already been duly paid.
WHEREFORE, the petition is DISMISSED for lack of merit. The Decision of
the CA in CA-G.R. SP No. 67478 reinstating the Decision dated May 31,
2000 of the labor arbiter is AFFIRMED with the MODIFICATION that
petitioner Blue Angel Security and Manpower Services, Inc. is ordered to
reinstate complainants Romel Castillo, Wilson Ciriaco, and Gary Garces to
their former positions without loss of seniority rights and other privileges
and with full backwages, inclusive of allowances and other benefits or their
monetary equivalent computed from the time their compensations were
withheld from them up to the time of their actual reinstatements. In the
event reinstatement is not feasible, they shall be paid separation pay in
the amount equivalent to at least one month pay or one month pay for
every year of service whichever is higher.
With respect to Chesterfield Mercader, the NLRC Decision dated May 9,
2001, affirming the labor arbiters Decision dated May 31, 2000 which
ordered petitioner to reinstate him to his former position and pay him
backwages of PhP 82,971, had become final on November 2, 2001, in the
absence of an appeal thereon to the CA.
SO ORDERED.

152

MA. FININA E. VICENTE, G.R. No. 175988


Petitioner,
Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,

declared that petitioner was not constructively dismissed but voluntarily


resigned from her employment.
The antecedent facts are as follows:
Chico-Nazario,
Nachura, and
Petitioner Finina E. Vicente was employed by respondent Cinderella

Reyes, JJ.

Marketing Corporation (Cinderella) as Management Coordinator in January


THE HON. COURT OF APPEALS,
Former Seventeenth Division and
CINDERELLA MARKETING Promulgated:
CORPORATION,

1990. Prior to her resignation in February 2000, she held the position of
Consignment Operations Manager with a salary of P27,000.00 a month.
[5]

She was tasked with the oversight, supervision and management of the

Consignment Department dealing directly with Cinderellas consignors. [6]

Respondents. August 24, 2007


Petitioner alleged that it has been a practice among the employees
x ---------------------------------------------------------------------------------------- x

of Cinderella to obtain cash advances by charging the amount from the net
sales of Cinderellas suppliers/consignors. Mr. Miguel Tecson (AVP-Finance)

DECISION

approves the requests for cash advances, Mr. Arthur Coronel (AVPMerchandising) issues the memos instructing the accounting department

YNARES-SANTIAGO, J.:

to issue the corporate checks and finally, Ms. Theresa Santos (General
Manager) rediscounts them by issuing her personal checks. [7]

This Petition for Review on Certiorari assails the Decision and

After some time, one of Cinderellas suppliers complained about the

Resolution of the Court of Appeals dated August 18, 2006 [1] and December

unauthorized deductions from the net sales due them. Accordingly, an

13, 2006,[2] respectively, in CA-G.R. SP No. 88140 which reversed and set

investigation was conducted and upon initial review of respondents

aside the Decision of the National Labor Relations Commission (NLRC)

business records, it appears that petitioner was among those involved in

dated June 21, 2004[3] and its Resolution dated October 14, 2004, [4] and

the irregular and fraudulent preparation and encashment of respondents


corporate checks amounting to at least P500,000.00.[8]

153

the resignation was fabricated and without evidentiary weight since it does
Petitioner alleged that Mr. Tecson demanded her resignation on
several occasions. On February 15, 2000, Mr. Tecson allegedly told her
MAG-RESIGN KANA AGAD KASI MAIIPIT KAMI, in the presence of Lizz
Villafuerte, the Accounting Manager.[9] As a result of this alleged force and
intimidation, petitioner tendered her resignation letter.

not bear petitioners signature; that there was no basis to terminate


petitioner on the ground of loss of confidence since her involvement in the
fraudulent transactions was doubtful as shown by the Confidential Memo
clearing her of any liability. The dispositive portion of the Labor Arbiters
decision reads:
WHEREFORE, premises all considered, judgment is hereby
rendered ordering respondent Cinderella Marketing
Corporation to:

On January 13, 2003, or three years after her resignation,


petitioner filed a complaint against Cinderella alleging that her severance
from employment was involuntary amounting to constructive dismissal.

[10]

Cinderella denied the charge of constructive dismissal. It claimed


that petitioner voluntarily resigned from office before the internal audit was

1. pay complainant separation pay in lieu of reinstatement


computed at one (1) month for every year of service in the
amount of P270,000.00; and

2. pay complainant full backwages from the time she filed


this complaint in the amount of P270,000.00.

completed and before any formal investigation was initiated. She tendered
her resignation on February 7, 2000, then submitted another resignation

SO ORDERED.[13]

letter on February 15, 2000 where she confirmed the first resignation
letter. Respondent alleged that the complaint for constructive dismissal
was a mere afterthought demonstrated by the long delay of filing the
same.[11]

On appeal, the NLRC affirmed the decision of the Labor Arbiter. It


held that the statement of Mr. Tecson informing petitioner, to wit: MAGRESIGN KANA AGAD KASI MAIIPIT KAMI, was the proximate cause for
petitioners decision to resign. Thus, the resignation cannot be deemed

On
Decision

[12]

October
finding

21,

that

2003,

petitioner

the
was

Labor

Arbiter

constructively

rendered
and

illegally

dismissed. The Labor Arbiter ruled that Cinderella was not able to
controvert petitioners assertion that she was forced to resign; that the
resignation letter relied upon by respondent to show the voluntariness of

voluntary notwithstanding the execution of the two resignation letters.

154

Respondent companys motion for reconsideration was denied


hence, it filed a Petition for Certiorari under Rule 65 with the Court of

Petitioners motion for reconsideration was denied hence, the


present petition for review on certiorari raising the following issues:

Appeals.
I.
On August 18, 2006, the Court of Appeals rendered its decision
finding that the totality of evidence on record showed that petitioner

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR


IN REVERSING THE FACTUAL FINDINGS OF THE LABOR
ARBITER AND THE NLRC.

voluntarily resigned from her employment; that the subsequent acts of


petitioner belie the claim of constructive dismissal; that after the alleged
forced resignation, petitioner attended the meetings concerning her
involvement in the anomalous transactions and even arranged for the
settlement of her consequent liabilities as may be determined during the

II.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN RULING THAT PETITIONER VOLUNTARILY RESIGNED
FROM PRIVATE RESPONDENT.[15]

investigation; that the belated filing of the complaint militates against


petitioner because it is hardly expected from an aggrieved employee to
wait three years before instituting the case.

Petitioner asserts the following: (1) The factual findings of the


Labor Arbiter and the NLRC are not correctible by certiorari and are binding
on the Supreme Court in the absence of any showing that they are

The dispositive portion of the Decision provides:

completely without any support in the evidence on record. (2) In


termination cases, the employer has the burden of proof that the

WHEREFORE, the foregoing considered, the petition


is GRANTED and the assailed Decision REVERSED and SET
ASIDE. Private respondents complaint a quo is hereby
dismissed.No costs.

resignation is voluntary and not the product of coercion, intimidation or


other factors that vitiate the free will. (3) The NLRC correctly gave
credence

to

petitioners

allegation

that

Mr.

Tecson

demanded

her

resignation. (4) The delay in filing the complaint for illegal dismissal cannot
be taken against her as the same was filed within the prescriptive period

SO ORDERED.

[14]

allowed by law to file such actions.

The petition lacks merit.

155

general rule on the conclusiveness of the factual findings of the Court of


The primary issue in the case at bar is factual: whether petitioner
was constructively dismissed. Petitioner claims that her separation from
employment was a case of constructive dismissal. On the other hand,
respondent argues that petitioner voluntarily resigned.

Petitioner faults the Court of Appeals for reversing the factual


findings of the Labor Arbiter as affirmed by the NLRC that she was
constructively

dismissed

relying

on

the

principle

of

finality

and

conclusiveness of the decisions of the labor tribunals. However, it is wellsettled that for want of substantial basis, in fact or in law, factual findings
of an administrative agency, such as the NLRC, cannot be given the stamp
of finality and conclusiveness normally accorded to it, as even decisions of
administrative agencies which are declared final by law are not exempt
from the judicial review when so warranted.[16]

In administrative proceedings, the quantum of proof required is


substantial evidence, which is more than a mere scintilla of evidence, but
such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion.[17] The Court of Appeals may review the
factual findings of the NLRC and reverse its ruling if it finds that the
decision of the NLRC lacks substantial basis.

Appeals is also subject to well-recognized exceptions such as where the


Court of Appeals findings of facts contradict those of the lower court, or the
administrative bodies, as in this case.[18] All these considered, we are
compelled to make a further calibration of the evidence at hand.

Petitioner argues that the employer bears the burden of proof that
the

resignation is

voluntary and not the product

of

coercion or

intimidation. We agree that in termination cases, burden of proof rests


upon the employer to show that the dismissal is for a just and valid cause
and failure to do so would necessarily mean that the dismissal was illegal.
[19]

In Mobile Protective & Detective Agency v. Ompad,[20] the Court ruled

that should an employer interpose the defense of resignation, as in the


present case, it is still incumbent upon respondent company to prove that
the employee voluntarily resigned.

From

the

totality

of

evidence

on

record,

it

was

clearly

demonstrated that respondent Cinderella has sufficiently discharged its


burden to prove that petitioners resignation was voluntary. In voluntary
resignation,

the

employee

is

compelled

by

personal

reason(s)

to

disassociate himself from employment. It is done with the intention of


relinquishing an office, accompanied by the act of abandonment. [21] To
determine whether the employee indeed intended to relinquish such
employment, the act of the employee before and after the alleged
resignation must be considered.[22]

In the same vein, factual findings of the Court of Appeals are


generally not subject to this Courts review under Rule 45. However, the

156

Petitioner relinquished her position when she submitted the letters

Hence, petitioner cannot take refuge in the argument that it is the

of resignation. The resignation letter submitted on February 15, 2000

employer who bears the burden of proof that the resignation is voluntary

confirmed the earlier resignation letter she submitted on February 7, 2000.

and not the product of coercion or intimidation. Having submitted a

The resignation letter contained words of gratitude which can hardly come

resignation letter, it is then incumbent upon her to prove that the

from an employee forced to resign.[23]

resignation was not voluntary but was actually a case of constructive


dismissal[25] with clear, positive, and convincing evidence. [26] Petitioner
failed to substantiate her claim of constructive dismissal.

The NLRC cannot disregard the resignation letter dated February


15, 2000 on the allegation that its submission was a product of an
unintelligent and confused decision due to the disdain shown by Mr. Tecson

Petitioner contends there was an orchestrated plan to intimidate

absent any sufficient proof of force or intimidation. Likewise, it was

her into resigning to exculpate other officers of the company from the

erroneous for the Labor Arbiter not to give evidentiary weight on the

anomaly; and that in the course of the internal investigation, Mr. Tecson

resignation letter on the ground that it was fabricated as it was not signed

forced her to resign by saying, Mag-resign ka na. Maiipit kami. Allegedly,

by petitioner. A careful scrutiny of the said letter shows that it bears the

this caused confusion and fear which led to her uninformed decision of

signature of petitioner. More importantly, petitioner admitted having

tendering the resignation letter on February 15, 2000.

submitted the said letter, albeit, due to an alleged intimidation.

We agree with the Court of Appeals that it was grave error on the
Subsequently, petitioner stopped reporting for work although she

part of the NLRC to rely on the allegation that Mr. Tecson threatened and

met with the officers of the corporation to settle her accountabilities but

forced petitioner to resign.Other than being unsubstantiated and self-

never raised the alleged intimidation employed on her. Also, though the

serving, the allegation does not suffice to support the finding of force,

complaint was filed within the 4-year prescriptive period, its belated filing

intimidation, and ultimately constructive dismissal.

supports the contention of respondent that it was a mere afterthought.


[24]

Taken

together,

these

circumstances

petitioners resignation was voluntary.

are

substantial

proof

that
Bare allegations of constructive dismissal, when uncorroborated by
the evidence on record, cannot be given credence. [27] In St. Michael
Academy v. National Labor Relations Commission,[28] we ruled that mere
allegations of threat or force do not constitute substantial evidence to

157

support a finding of forced resignation. We enumerated the requisites for

Appeals that petitioner voluntarily resigned and was not constructively

intimidation to vitiate consent as follows:

dismissed by respondent.

(1) that the intimidation caused the consent to be given;


(2) that the threatened act be unjust or unlawful; (3) that
the threat be real or serious, there being evident
disproportion between the evil and the resistance which all
men can offer, leading to the choice of doing the act which
is forced on the person to do as the lesser evil; and (4) that
it produces a well-grounded fear from the fact that the
person from whom it comes has the necessary means or
ability to inflict the threatened injury to his person or
property. x x x[29]

WHEREFORE, the petition is DENIED. The Decision of the Court of


Appeals dated August 18, 2006 in CA-G.R. SP No. 88140 which reversed
and set aside the Decision of the NLRC and declared that petitioner
voluntarily resigned and was not constructively dismissed from her
employment, and consequently ordered the dismissal of the complaint for
constructive dismissal, as well as the Resolution dated December 13, 2006
denying the motion for reconsideration, are AFFIRMED.

None of the above requisites was established by petitioner. Other


than the allegation that Mr. Tecson intimidated petitioner into resigning,
there were no other proofs presented to support a finding of forced
resignation to stand against respondents denial and proof against
dismissal. Neither can we consider the conduct of audits and other internal
investigations

as

form

of

harassment

against

petitioner. Said

investigation was legitimate and justified, conducted in view of the


discovery of the anomalous transaction involving the employees of the
respondent including petitioner.

Moreover, we note that petitioner is holding a managerial position


with a salary of P27,000.00 a month. Hence, she is not an ordinary
employee with limited understanding such that she would be easily
maneuvered or coerced to resign against her will.[30] Thus, we find no
compelling reason to disturb the findings and conclusions of the Court of

SO ORDERED.

158

G.R. No. 157633, September 10, 2014


NORTHWEST AIRLINES, INC., Petitioner, v. MA. CONCEPCION M. DEL
ROSARIO, Respondent.
DECISION
BERSAMIN, J.:
Under review is the decision promulgated on June 21, 2002, 1 whereby the
Court of Appeals (CA) dismissed the petition for certiorari filed by
Northwest Airlines, Inc. to assail on the ground of grave abuse of discretion
amounting to lack or excess of jurisdiction the adverse decision of the
National Labor Relations Commission (NLRC).
Antecedents
Petitioner Northwest Airlines, Inc. employed respondent Ma. Concepcion M.
Del Rosario on December 10, 1994 as one of its Manila-based flight
attendants. On May 18, 1998, Del Rosario was assigned at the Business
Class Section of Northwest Flight NW 26 bound for Japan. During the
boarding preparations, Kathleen Gamboa, another flight attendant
assigned at the First Class Section of Flight NW 26, needed to borrow a
wine bottle opener from her fellow attendants because her wine bottle
opener was dull. Vivien Francisco, Gamboas runner, went to the Business
Class Section to borrow a wine bottle opener from Del Rosario, but the
latter remarked that any flight attendant who could not bring a wine bottle
opener had no business working in the First Class Section. Upon hearing
this, Aliza Ann Escao, another flight attendant, offered her wine bottle
opener to Francisco. Apparently, Gamboa overheard Del Rosarios remarks,
and later on verbally confronted her. Their confrontation escalated into a
heated argument. Escao intervened but the two ignored her, prompting
her to rush outside the aircraft to get Maria Rosario D. Morales, the
Assistant
Base
Manager,
to
pacify
them.
The parties differed on what happened thereafter. Del Rosario claimed that
only an animated discussion had transpired between her and Gamboa, but
Morales insisted that it was more than an animated discussion, recalling
that Del Rosario had even challenged Gamboa to a brawl (sabunutan).
Morales asserted that she had tried to pacify Del Rosario and Gamboa, but
the two did not stop; that because the two were still arguing although the
Business Class passengers were already boarding, she ordered them out of
the plane and transfer to another nearby Northwest aircraft; that she
inquired from them about what had happened, and even asked if they were
willing to fly on the condition that they would have to stay away from each
other during the entire flight; that because Del Rosario was not willing to
commit herself to do so, she decided not to allow both of them on Flight

NW 26, and furnished them a Notice of Removal from Service (effectively


informing Del Rosario of her dismissal from the service pending an
investigation of the fighting incident between her and Gamboa).
On May 19, 1998, Morales sent a letter to Del Rosario telling her that
Northwest would conduct an investigation of the incident involving her and
Gamboa. The investigation was held on May 28, 1998 before Atty. Ceazar
Veneracion III, Northwests Legal Counsel and Head of its Human Resources
Department.
All
the
parties
attended
the
investigation
On June 19, 1998, Del Rosario was informed of her termination from the
service. Northwest stated that based on the results of the investigation,
Del Rosario and Gamboa had engaged in a fight on board the aircraft, even
if there had been no actual physical contact between them; and that
because fighting was strictly prohibited by Northwest to the point that
fighting could entail dismissal from the service even if committed for the
first time, Northwest considered her dismissal from the service justified
and in accordance with the Rules of Conduct for Employees, as follows:
Section

1,

General

x x x. Rule infractions will be dealt with according to the seriousness of the


offense and violators will be subjected to appropriate disciplinary action up
to and including discharge. Some acts of misconduct, even if committed
for the first time, are so serious that, standing alone, they justify
immediate discharge. Some examples of these offenses are violations of
rules regarding theft, alcohol and drugs, insubordination, dishonesty,
fighting, falsification of records, sleeping on the job, failure to cooperate or
lying in a Company investigation, intentional destruction or abuse of
property, threatening, intimidating or interfering with other employees,
abuse of nonrevenue and reduced rate travel privileges and unauthorized
use
of
Company
communications
systems.
x
Section

x
24

(c),

Disturbing

x
Others,

which

x
states

that:

Harassing, threatening, intimidating, assaulting, fighting or provoking a


fight or similar interference with other employees at any time, on or off
duty is prohibited. (Italics supplied)
Del Rosario subsequently filed her complaint for illegal dismissal against
Northwest.2
Decision of the Labor Arbiter
In her decision dated January 18, 1999, 3 Labor Arbiter Teresita D. CastillonLora ruled in favor of Northwest, holding that the dismissal of Del Rosario

159

had been justified and valid upon taking into account that Northwest had
been engaged in the airline business in which a good public image had
been demanded, and in which flight attendants had been expected to
maintain an image of sweetness and amiability; that fighting among its
employees even in the form of heated arguments or discussions were very
contradictory to that expected image;4 and that it could validly dismiss its
employees like the respondent because it had been entitled to protect its
business interests by putting up an impeccable image to the public.
Ruling of the NLRC
Upon appeal, the NLRC reversed the decision of the Labor Arbiter, and
ruled in favor of Del Rosario, declaring that the incident between her and
Gamboa could not be considered as synonymous with fighting as the
activity prohibited by Northwests Rules of Conduct; that based on Blacks
Law Dictionary, fight referred to a hostile encounter, affray, or altercation;
a physical or verbal struggle for victory, pugilistic combat; that according
to Bouviers Law Dictionary, fighting did not necessarily imply that both
parties should exchange blows, for it was sufficient that they voluntarily
put their bodies in position with that intent; 5 and that the incident between
Del Rosario and Gamboa could not be held similar to the fight that
Northwest
penalized
under
its
Rules
of
Conduct.

Aggrieved, Northwest elevated the adverse decision of the NLRC to the CA


on certiorari, averring that the NLRC thereby committed grave abuse of
discretion in reversing the decision of the Labor Arbiter, and submitting
that Del Rosarios dismissal from the service had been for a just cause,
with the evidence presented against her being more than sufficient to
substantiate its position that there had really been a fight between her and
Gamboa; and that the NLRC likewise gravely abused its discretion in
ordering the reinstatement of Del Rosario and the payment of her
backwages
and
attorneys
fees.
As stated, the CA sustained the NLRC through its decision promulgated on
June 21, 2002, observing that Northwest did not discharge its burden to
prove not merely reversible error but grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of the NLRC; and that, indeed,
the NLRC had correctly held that Del Rosarios conduct did not constitute
serious misconduct, because the NLRC, in determining the usual, ordinary
and commonly understood meaning of the word fighting, had resorted to
authoritative lexicons that supported its conclusion that the exchange of
words between Del Rosario and Gamboa did not come within the definition
of
the
word fighting. 7
The CA disposed thusly:

The NLRC further ratiocinated as follows:


Evident in the definition of fighting is the existence of an underlying
hostility between the parties which is so intense that there is an imminent
danger of a physical conflict (if there is none yet). In other words, when we
say two people are fighting, at the very least, they should project a general
appearance of wanting to physically strike each other. Was this the image
that appellant and FA Gamboa projected when they were facing each other
during the incident of May 18, 1998[?] We do not think so.
x x x Almost unanimously, the witnesses of NWA refer to the incident as
arguing or a serious or animated discussion. An argument is an effort
to establish belief by a course of reasoning (Bouvier's Law Dictionary). In
ordinary parlance, arguing is merely talking or debating about a certain
issue. There are no underpinnings of animosity in the discussion nor (sic)
between the parties. These witnesses never saw any hostility between the
appellant and FA Gamboa. Neither did they see these two ladies wanting to
strike each other. What they saw were two FAs engaged in an animated
verbal exchange, arguing but not fighting. 6

WHEREFORE,
for
lack
of
merit,
the
instant
petition
is DISMISSED. Accordingly, the decision of the NLRC dated January 11,
2000, is hereby AFFIRMED with theMODIFICATION that in lieu of
reinstatement, petitioner is ordered to pay private respondent separation
pay equivalent to one month's salary for every year of service plus full
backwages without deduction or qualification, counted from the date of
dismissal until finality of this decision including other benefits to which she
is entitled under the law. Petitioner is likewise ordered to pay respondent
Del Rosario attorneys fees consisting of five (5%) per cent of the adjudged
relief.
SO ORDERED.

Issues
The issues are the following, namely: (1) Was Del Rosarios dismissal from
the service valid?; and (2) Were the monetary awards appropriate?
Ruling

The NLRC ordered the reinstatement of Del Rosario to her former position
without loss of seniority rights and with payment of backwages, per diems,
other lost income and benefits from June 19, 1998; as well as the payment
of attorneys fees equivalent to 10% of the monetary award.
Decision of the CA

The

Court AFFIRMS the

decision

of

the

CA.

As provided in Article 282 of the Labor Code, an employer may terminate


an employee for a just cause, to wit:

160

Art.

282. TERMINATION

BY

EMPLOYER

not just a merely verbal tussle but a physical combat between two
opposing parties, to wit:

An employer may terminate an employee for any of the following causes:


(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or 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
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

Well into their second bottle of gin, at about eleven o'clock that morning,
Fernando Aquino and Peregrino had a verbal tussle. Fernando Aquino
declared that he was going to run for councilor of Alcala, Pangasinan.
Peregrino countered by saying: If you will run for that post, cousin, I
will fight you. After a brief exchange of words, Fernando Aquino, laughing,
went to sit beside Abagat. As Aquino continued with his mirth, Abagat
stared
at
Peregrino
with
contempt.
xxx. A few minutes later, he heard a commotion in the plantation some two
hundred meters away. He claims to have seen several people fighting each
other with pieces of wood but did not go to the field to check what was
happening.13 (Italics supplied.)

(e) Other causes analogous to the foregoing.


Northwest argues that Del Rosario was dismissed on the grounds of serious
misconduct and willful disobedience. Misconduct refers to the improper or
wrong conduct that transgresses some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. But misconduct or
improper behavior, to be a just cause for termination of employment,
must: (a) be serious; (b) relate to the performance of the employees
duties; and (c) show that the employee has become unfit to continue
working
for
the
employer. 9
There is no doubt that the last two elements of misconduct were present in
the case of Del Rosario. The cause of her dismissal related to the
performance of her duties as a flight attendant, and she became unfit to
continue working for Northwest. Remaining to be determined is, therefore,
whether the misconduct was serious as to merit Del Rosarios dismissal. In
that respect, the fight between her and Gamboa should be so serious that
it entailed the termination of her employment even if it was her first
offense. Northwest insists that what transpired on May 18, 1998 between
her and Gamboa was obviously a form of fight that it strictly prohibited,
but Del Rosario disputes this by contending that it was only an animated
discussion between her and Gamboa. She argues that as settled in
American jurisprudence fight pertained to combat or battle, like the hostile
encounter or engagement between opposing forces, suggesting primarily
the notion of a brawl or unpremeditated encounter, or of a pugilistic
combat;10 while argument was a connected discourse based upon reason,
or a course of reasoning tending and intended to establish a position and
to
induce
belief.11
In several rulings where the meaning of fight was decisive, the Court has
observed that the termfight was considered to be different from the term
argument. In People v. Asto,12 for instance, the Court characterized fight as

Similarly, in Pilares, Sr. v. People,14fight was held to be more than just an


exchange of words that usually succeeded the provocation by either party,
thus:
When the petitioner was about to hand over the bottles of beer to the
private complainant, the latter called him coward and dared him to get
out for a fight.Insulted, the petitioner went out of his store and chased the
private complainant. (Italics supplied.)
Based on the foregoing, the incident involving Del Rosario and Gamboa
could not be justly considered as akin to the fight contemplated by
Northwest. In the eyes of the NLRC, Del Rosario and Gamboa were arguing
but not fighting. The understanding of fight as one that required physical
combat was absent during the incident of May 18, 1998. Moreover, the
claim of Morales that Del Rosario challenged Gamboa to a brawl
(sabunutan) could not be given credence by virtue of its being self-serving
in favor of Northwest, and of its being an apparent afterthought on the part
of Morales during the investigation of the incident, without Del Rosario
having the opportunity to contest Morales statement. In that context, the
investigation then served only as Northwests means to establish that the
grounds of a valid dismissal based on serious misconduct really existed.
Moreover, even assuming arguendo that the incident was the kind
of fight prohibited by Northwests Rules of Conduct, the same could not be
considered as of such seriousness as to warrant Del Rosarios dismissal
from the service. The gravity of the fight, which was not more than a
verbal argument between them, was not enough to tarnish or diminish
Northwests
public
image.
Under the circumstances, therefore, the CA properly ruled that the NLRC
did not gravely abuse its discretion amounting to lack or excess of

161

jurisdiction by declaring Del Rosarios dismissal unjustified. Northwest as


the petitioner for certiorari must demonstrate grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the NLRC. Grave
abuse of discretion, according to De los Santos v. Metropolitan Bank and
Trust Company,15 must be grave, which means either that the judicial or
quasi-judicial power was exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, or that the respondent judge,
tribunal or board evaded a positive duty, or virtually refused to perform the
duty enjoined or to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi-judicial powers acted in a
capricious or whimsical manner as to be equivalent to lack of jurisdiction.
Alas, Northwest did not show how the NLRC could have abused its
discretion, let alone gravely, in ruling adversely against it.
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals
promulgated on June 21, 2002; and ORDERS the petitioner to pay the
costs
of
suit.
SO ORDERED

162

[G.R. No. 137795. March 26, 2003]


COLEGIO DE SAN JUAN DE LETRAN CALAMBA, petitioner, vs. BELEN
P. VILLAS, respondent.
DECISION
CORONA, J.:
This is a petition for review on certiorari of the decision[1] of the former
Eleventh Division[2] of the Court of Appeals affirming the decision [3] of
Voluntary Arbitrator (VA) Apolonio S. Mayuga that respondent Belen P.
Villas was illegally dismissed by petitioner Colegio de San Juan de Letran
(School) and thus, entitled to reinstatement and full backwages.
The antecedent facts show that respondent Belen Villas was employed
by the petitioner School as high school teacher in September 1985. On
May 15, 1995, she applied for a study leave for six months, from June to
December 31, 1995. In a letter dated June 2, 1995, Mrs. Angelina
Quiatchon, principal of the high school department, told Villas that her
request for study leave was granted for one school year subject to the
following conditions:
1. The requested study leave takes effect on June 5, 1995 and
ends on March 31, 1996;
2. The requested study leave involves no remuneration on the
part of the School;
3. The documents that justify the requested study leave should
be submitted upon return on April 1, 1996;
4. Faculty Manual Section 40 Special Provisions on the Granting of
Leave of Absence should be observed:
a. Once proven beyond reasonable doubt during the period
of the approved leave of absence that the faculty
member shall engage himself in employment outside the
institution, the administration shall regard the faculty
member on leave as resigned;

b. The maximum length of leave of absence that may be


applied for by the faculty member and granted by
administration is twelve (12) months. If, at the lapse of
the period, the faculty member fails to return for work,
the administration shall regard the faculty member as
resigned.[4]
Respondent alleged that she intended to utilize the first semester of
her study leave to finish her masteral degree at the Philippine Womens
University (PWU). Unfortunately, it did not push through so she took up an
Old Testament course in a school of religion and at the same time utilized
her free hours selling insurance and cookware to augment her familys
income. However, during the second semester of her study leave, she
studied and passed 12 units of education subjects at the Golden Gate
Colleges in Batangas City. In response to the letters sent her by petitioner
to justify her study leave, she submitted a certification from Golden Gate
Colleges and a letter explaining why she took up an Old Testament course
instead of enrolling in her masteral class during the first semester.
On June 3, 1996, the President and Rector of the School, Fr.
Ramonclaro G. Mendez, O. P., wrote her, stating that her failure to enroll
during the first semester was a violation of the conditions of the study
leave and that the reasons she advanced for failure to enroll during the
first semester were not acceptable, thus:
In the first place, prudence dictates that you should have ascertained first
that you are still eligible to study at PWU to finish your masteral degree
before applying and securing the approval of your leave by the School. In
the second place, you should have informed the School at once that you
could not enroll in the first semester so that your leave could have been
adjusted for only one-half (1/2) year. Thirdly, your engaging in some parttime business instead of studying in the first semester of your leave is
sufficient justification for the School to consider you as resigned under the
Faculty Manual. And lastly, your failure to study in the first semester of
your study leave without informing the School beforehand constitutes
deception, to say the least, which is not a good example to the other
teachers.[5]
Her case was subsequently referred to the grievance committee, as
provided for in the collective bargaining agreement, and the report was
submitted on July 12, 1996, both to the union and the School. However,

163

since the grievance committee could not reach a decision, the case was
referred for voluntary arbitration.

In the case at bar, the requirements for both substantive and


procedural aspects were not satisfied.

Respondent then filed a case for illegal dismissal and the case was
assigned to VA Mayuga who found that respondent was illegally dismissed,
thus:

According to petitioner, respondent violated the following conditions


of her study leave: (a) she failed to report for work on April 1, 1996, the
day after the lapse of her leave period, which was violative of Section 40 of
the Faculty Manual; (b) she failed to submit proof of her studies during the
first semester of her leave period, suggesting that she was not enrolled
during this period; and (c) she engaged in employment outside the School.
In sum, petitioner School argues that the conduct of respondent breached
not only the provisions of the study grant (which was a contractual
obligation) but also the Faculty Manual. Respondent was thus guilty of
serious misconduct which was a ground for termination.

WHEREFORE premises considered, we rule that complainant Mrs. BELEN P.


VILLAS was illegally dismissed from her employment by respondent, and as
prayed for, respondent COLEGIO DE SAN JUAN DE LETRAN-CALAMBA is
hereby ordered to reinstate Mrs. Belen P. Villas to her former position or job
in said school without loss of seniority and with full backwages and other
monetary benefits effective the start of school year 1996-1997 up to the
time she is reinstated.[6]
Upon denial of its motion for reconsideration, petitioner filed a petition
for review with the Court of Appeals. This was denied. Thus, this petition
for review. The sole issue is whether or not respondents alleged violation of
the conditions of the study grant constituted serious misconduct which
justified her termination from petitioner School.
Petitioner alleges that the dismissal of respondent was lawful
inasmuch as (a) the requirements of due process were followed and (b) she
not only violated several lawful regulations but also breached her
contractual obligations to the School. All this constituted a valid ground for
her dismissal. In assailing the decision of the Court of Appeals, petitioner
School basically questions the court a quos findings of fact on respondents
alleged violation of petitioner Schools policy on study leave grants.
The petition has no merit.
Under the Labor Code, there are twin requirements to justify a valid
dismissal from employment: (a) the dismissal must be for any of the
causes provided in Article 282 of the Labor Code (substantive aspect) and
(b) the employee must be given an opportunity to be heard and to defend
himself (procedural aspect).[7] The procedural aspect requires that the
employee be given two written notices before she is terminated consisting
of a notice which apprises the employee of the particular acts/omissions
for which the dismissal is sought and the subsequent notice which informs
the employee of the employers decision to dismiss him. [8]

We affirm the findings of the Court of Appeals that there was no


violation of the conditions of the study leave grant. Thus, respondent could
not be charged with serious misconduct warranting her dismissal as a
teacher in petitioner School. Petitioner has failed to convince us that the
three alleged violations of the study leave grant constituted serious
misconduct which justified the termination of respondents employment.
Misconduct is improper or wrongful 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 mere error
of judgment.[9] Under Article 282 of the Labor Code, the misconduct, to be
a just cause for termination, must be serious. This implies that it must be
of such grave and aggravated character and not merely trivial or
unimportant.[10] Examples of serious misconduct justifying termination, as
held in some of our decisions, include: sexual harassment (the managers
act of fondling the hands, massaging the shoulder and caressing the nape
of a secretary);[11] fighting within company premises;[12] uttering obscene,
insulting or offensive words against a superior; [13] misrepresenting that a
student is his nephew and pressuring and intimidating a co-teacher to
change that students failing grade to passing.[14]
In this light, the alleged infractions of the respondent could hardly be
considered serious misconduct.
With regard to respondents alleged failure to report for work on April
1, 1996 and failure to enroll during the first semester, the Court of Appeals
and the Voluntary Arbitrator found that she did in fact report for work on
April 1, 1996 and that she was in fact enrolled during the first
semester. Wellsettled is the rule that the factual findings of the Court of

164

Appeals are conclusive on the parties and are not reviewable by the
Supreme Court. And they carry even more weight when the Court of
Appeals affirms the factual findings of a lower fact-finding body, in this
case the Voluntary Arbitrator.[15] Likewise, findings of fact of administrative
agencies and quasi-judicial bodies which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not
only great respect but even finality. They are binding upon this Court
unless there is a showing of grave abuse of discretion or where it is clearly
shown that they were arrived at arbitrarily or in utter disregard of the
evidence on record.[16]
Assuming arguendo that she did fail to report for work on April 1, 1996
and enroll during the first semester, the most respondent could be charged
with was simple misconduct. In both instances, there was evidence of
substantial compliance by respondent.
Her alleged failure to report for work exactly on April 1, 1996 is not
equivalent to failure to return for work, a sanctionable offense under the
Faculty Manual. As correctly pointed out by the VA, petitioner failed to
establish that there was a distinct and definite assignment that needed to
be done personally by respondent, and specifically on April 1, 1996, which
she failed to do on said date. Although we give credence to
petitioners argument that a private high school teacher still has work at
the end of the schoolyear to assist in the graduation preparations and in
the beginning of the school year to assist in the enrollment such tasks
cannot be considered a teachers main duties, the failure to perform which
would be tantamount to dereliction of duty or abandonment. Besides, there
is no disagreement that respondent reported for work on May 15, 1996 at
which time petitioner School could have asked her to assist in the
enrollment period. At most, respondent failed to help out during the
preparations for graduation and this, to us, was not a significant reason for
terminating or dismissing her from her job.
With regard to her alleged failure to enroll during the first semester,
although we agree with the President and Rector, Fr. Mendez, that
respondent should have first ascertained whether she was still eligible to
study at the PWU before applying for a study leave, [17] such lapse was more
of an error in judgment rather than an act of serious misconduct. If
respondent intended to use her study leave for other unauthorized
purposes, as petitioner would like us to believe, she would not have
enrolled at the Golden Gate Colleges during the second semester. Yet she
did, as borne out by the certification [18] prepared by the Registrar of Golden
Gate Colleges.

Furthermore, we find that respondent did not violate the prohibition on


engaging in employment outside the school as specified in her study leave
grant and as provided in the Faculty Manual. Section 40 (a) of the
Manual[19] states:
a. Once proven beyond reasonable doubt during the period of the
approved leave of absence that the faculty member shall engage himself
in employment outside the institution, the administration shall regard
the faculty member on leave resigned. (Emphasis supplied)
We find the provision of the Faculty Manual ambiguous as the term
employment connotes a number of meanings. Employment in its general
sense connotes any work or service rendered in exchange for money. The
loose connotation of employment may therefore cover jobs without an
employer-employee relationship. However, inasmuch as in this case,
petitioner School drafted the said policy, the term employment should be
strictly construed against it. [20] Moreover, it is a settled rule that in
controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writings
should be resolved in the formers favor. [21] The act of respondent in selling
insurance and cookware was not the employment prohibited by the Faculty
Manual. The prohibition against outside employment was enacted to
prevent the teacher from using the study leave period for unsanctioned
purposes since the School pays the teacher while pursuing further studies.
That rationale was not violated by respondent for the reason that her parttime activity of selling insurance and cookware could not have prevented
her in any way from studying and, more importantly, she was not being
paid by the School while on leave. How did the school expect her and her
family to survive without any income for one whole year?
Petitioner also failed to comply with the procedural requirements for a
valid dismissal. As earlier noted, the law requires the employer to give the
worker to be dismissed two written notices before terminating his
employment. Considering that these notices are mandatory, the absence
of one renders any management decision to terminate null and
void. Petitioner failed to give respondent the first notice which should have
informed the latter of the formers intention to dismiss her. Petitioner
argues that it complied with this requirement as there were several
exchanges of communication between the School and respondent
regarding the cause of her termination. However, we find that these letters
did not apprise respondent that her dismissal was being sought by
petitioner School as said letters only required respondent to submit proof

165

of enrollment. The letter of Principal Angelina Q. Quiatchon dated April 17,


1996[22] was worded as follows:
In accordance with the terms of your study leave from June 5, 1995 to
March 31, 1996, you must submit credentials/proofs of your study to justify
the approved leave.
To this date, April 17, this office has not received your credentials. Please
do so within the next three days from receipt hereof so that this office can
act accordingly.
Similarly, the May 10, 1996 letter [23] of the Academic Affairs Director, Dr.
Rhodora G. Odejar, was worded thus:
The Academic Affairs Office has received your certification of graduate
studies completed in the second semester of Schoolyear 1995-1996.
However, there is no report as to how you utilized your leave in the first
semester. You are therefore instructed to submit your report on the matter
within three days from receipt hereof.
The next letter from the petitioner, dated June 3, 1996, already informed
respondent that she was considered resigned effective schoolyear 19961997.
These letters did not comply with the requirements of the law that the
first written notice must apprise the employee that his termination is being
considered due to a certain act or omission. These letters merely required
petitioner to submit proof of her studies and respondent could not have
reasonably inferred from them that her dismissal was being considered by
the petitioner. The fact that there was a hearing conducted by the
grievance committee pursuant to the collective bargaining agreement did
not work in petitioners favor because this was done after petitioner had
informed respondent that she was already considered resigned from her
teaching job. Besides, the rights of an employee to be informed of his
proposed dismissal are personal to him[24] and, therefore, the notice to the
union was not notice to the employee.
With regard to the respondents claim for the six-month study leave
and vacation pay, we affirm the decision [25] of the Voluntary Arbitrator that
respondent is not entitled to such benefits:

While it is true that the collective bargaining agreement between


respondent and complainants union provides for six months pay for
qualified teachers who will go on sabbatical or study leave, the same was
expressly waived by complainant when she signed conforme to the letter
dated June 2, 1995 approving her study leave which states among others,
to wit: 2. The requested study leave involves no remuneration on the part
of the school. And considering that her leave of absence for the whole
school year 1995-1996 was presumed to be a leave of absence without
pay, then she did not earn her vacation leave incentive for the next coming
summer. We find it just, fair and reasonable to grant vacation pay on April
and May of every calendar as additional incentive only to those teachers
who rendered continuous service to the Collegio the preceding school year.
We similarly affirm the Voluntary Arbitrators decision that respondent
is not entitled to moral and exemplary damages and attorneys fees
because there is no evidence showing that bad faith or malice attended
the dismissal of respondent. Moral damages are recoverable only where
the dismissal is attended by bad faith or fraud, or constitutes an act
oppressive to labor, or is done in a manner contrary to morals, good
customs or public policy. A dismissal may be contrary to law but, by itself
alone, it does not necessarily establish bad faith. [26]
WHEREFORE, the petition is DENIED.
SO ORDERED.

166

G.R. No. 187226, January 28, 2015


CHERYLL SANTOS LEUS, Petitioner, v. ST. SCHOLASTICAS COLLEGE
WESTGROVE AND/OR SR. EDNA QUIAMBAO, OSB, Respondents.
DECISION
REYES, J.:
Cheryll Santos Leus (petitioner) was hired by St. Scholasticas College
Westgrove (SSCW), a Catholic educational institution, as a non-teaching
personnel, engaged in pre-marital sexual relations, got pregnant out of
wedlock, married the father of her child, and was dismissed by SSCW, in
that order. The question that has to be resolved is whether the petitioners
conduct
constitutes
a
ground
for
her
dismissal.
Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to annul and set aside the Decision 1 dated
September 24, 2008 and Resolution 2 dated March 2, 2009 issued by the
Court of Appeals (CA) in CA-G.R. SP No. 100188, which affirmed the
Resolutions dated February 28, 20073 and May 21, 20074 of the National
Labor Relations Commission (NLRC) in NLRC CA No. 049222-06.
The Facts
SSCW is a catholic and sectarian educational institution in Silang, Cavite. In
May 2001, SSCW hired the petitioner as an Assistant to SSCWs Director of
the
Lay
Apostolate
and
Community
Outreach
Directorate.
Sometime in 2003, the petitioner and her boyfriend conceived a child out
of wedlock. When SSCW learned of the petitioners pregnancy, Sr. Edna
Quiambao (Sr. Quiambao), SSCWs Directress, advised her to file a
resignation letter effective June 1, 2003. In response, the petitioner
informed Sr. Quiambao that she would not resign from her employment
just because she got pregnant without the benefit of marriage. 5
On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain
in writing why she should not be dismissed for engaging in pre-marital
sexual relations and getting pregnant as a result thereof, which amounts to
serious misconduct and conduct unbecoming of an employee of a Catholic
school.6
In a letter7 dated May 31, 2003, the petitioner explained that her
pregnancy out of wedlock does not amount to serious misconduct or
conduct unbecoming of an employee. She averred that she is unaware of
any school policy stating that being pregnant out of wedlock is considered
as a serious misconduct and, thus, a ground for dismissal. Further, the

petitioner requested a copy of SSCWs policy and guidelines so that she


may
better
respond
to
the
charge
against
her.
On June 2, 2003, Sr. Quiambao informed the petitioner that, pending the
promulgation of a Support Staff Handbook, SSCW follows the 1992
Manual of Regulations for Private Schools (1992 MRPS) on the causes for
termination of employments; that Section 94(e) of the 1992 MRPS cites
disgraceful or immoral conduct as a ground for dismissal in addition to
the just causes for termination of employment provided under Article 282
of
the
Labor
Code.8
On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a
letter,9 which, in part, reads:
To us, pre-marital sex between two consenting adults without legal
impediment to marry each other who later on married each other does not
fall within the contemplation of disgraceful or immoral conduct and
serious misconduct of the Manual of Regulations for Private Schools and
the
Labor
Code
of
the
Philippines.
Your argument that what happened to our client would set a bad example
to the students and other employees of your school is speculative and is
more imaginary than real. To dismiss her on that sole ground constitutes
grave
abuse
of
management
prerogatives.
Considering her untarnished service for two years, dismissing her with her
present condition would also mean depriving her to be more secure in
terms of financial capacity to sustain maternal needs. 10
In a letter11 dated June 6, 2003, SSCW, through counsel, maintained that
pre-marital sexual relations, even if between two consenting adults without
legal impediment to marry, is considered a disgraceful and immoral
conduct or a serious misconduct, which are grounds for the termination of
employment under the 1992 MRPS and the Labor Code. That SSCW, as a
Catholic institution of learning, has the right to uphold the teaching of the
Catholic Church and expect its employees to abide by the same. They
further asserted that the petitioners indiscretion is further aggravated by
the fact that she is the Assistant to the Director of the Lay Apostolate and
Community Outreach Directorate, a position of responsibility that the
students look up to as role model. The petitioner was again directed to
submit a written explanation on why she should not be dismissed.
On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her
counsels letter dated June 4, 2003 as her written explanation. 12
Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informed
the petitioner that her employment with SSCW is terminated on the ground
of serious misconduct. She stressed that pre-marital sexual relations

167

between two consenting adults with no impediment to marry, even if they


subsequently married, amounts to immoral conduct. She further pointed
out that SSCW finds unacceptable the scandal brought about by the
petitioners pregnancy out of wedlock as it ran counter to the moral
principles that SSCW stands for and teaches its students.
Thereupon, the petitioner filed a complaint for illegal dismissal with the
Regional Arbitration Branch of the NLRC in Quezon City against SSCW and
Sr. Quiambao (respondents). In her position paper, 14 the petitioner claimed
that SSCW gravely abused its management prerogative as there was no
just cause for her dismissal. She maintained that her pregnancy out of
wedlock cannot be considered as serious misconduct since the same is a
purely private affair and not connected in any way with her duties as an
employee of SSCW. Further, the petitioner averred that she and her
boyfriend eventually got married even prior to her dismissal.
For their part, SSCW claimed that there was just cause to terminate the
petitioners employment with SSCW and that the same is a valid exercise
of SSCWs management prerogative. They maintained that engaging in
pre-marital sex, and getting pregnant as a result thereof, amounts to a
disgraceful or immoral conduct, which is a ground for the dismissal of an
employee
under
the
1992
MRPS.
They pointed out that SSCW is a Catholic educational institution, which
caters exclusively to young girls; that SSCW would lose its credibility if it
would maintain employees who do not live up to the values and teachings
it inculcates to its students. SSCW further asserted that the petitioner,
being an employee of a Catholic educational institution, should have
strived to maintain the honor, dignity and reputation of SSCW as a Catholic
school.15

adherence to the same is called for and where the reputation of the school
is at stake. x x x.17
The LA further held that teachers and school employees, both in their
official and personal conduct, must display exemplary behavior and act in
a
manner
that
is
beyond
reproach.
The petitioner appealed to the NLRC, insisting that there was no valid
ground for the termination of her employment. She maintained that her
pregnancy out of wedlock cannot be considered as serious misconduct
under Article 282 of the Labor Code since the same was not of such a
grave and aggravated character. She asserted that SSCW did not present
any evidence to establish that her pregnancy out of wedlock indeed eroded
the moral principles that it teaches its students.18
The Ruling of the NLRC
On February 28, 2007, the NLRC issued a Resolution, 19 which affirmed the
LA Decision dated February 28, 2006. The NLRC pointed out that the
termination of the employment of the personnel of private schools is
governed by the 1992 MRPS; that Section 94(e) thereof cites disgraceful
or immoral conduct as a just cause for dismissal, in addition to the
grounds for termination of employment provided for under Article 282 of
the Labor Code. The NLRC held that the petitioners pregnancy out of
wedlock is a disgraceful or immoral conduct within the contemplation of
Section 94(e) of the 1992 MRPS and, thus, SSCW had a valid reason to
terminate
her
employment.
The petitioner sought reconsideration 20 of the Resolution dated February
28, 2007 but it was denied by the NLRC in its Resolution 21 dated May 21,
2007.

The Ruling of the Labor Arbiter


On February 28, 2006, the Labor Arbiter (LA) rendered a Decision, in
NLRC Case No. 6-17657-03-C which dismissed the complaint filed by the
petitioner. The LA found that there was a valid ground for the petitioners
dismissal; that her pregnancy out of wedlock is considered as a
disgraceful and immoral conduct. The LA pointed out that, as an
employee of a Catholic educational institution, the petitioner is expected to
live up to the Catholic values taught by SSCW to its students. Likewise, the
LA opined that:
16

Further, a deep analysis of the facts would lead us to disagree with the
complainant that she was dismissed simply because she violate[d] a
Catholic [teaching]. It should not be taken in isolation but rather it should
be analyzed in the light of the surrounding circumstances as a whole. We
must also take into [consideration] the nature of her work and the nature
of her employer-school. For us, it is not just an ordinary violation. It was
committed by the complainant in an environment where her strict

Unperturbed, the petitioner filed a petition 22 for certiorari with the CA,
alleging that the NLRC gravely abused its discretion in ruling that there was
a valid ground for her dismissal. She maintained that pregnancy out of
wedlock cannot be considered as a disgraceful or immoral conduct; that
SSCW failed to prove that its students were indeed gravely scandalized by
her pregnancy out of wedlock. She likewise asserted that the NLRC erred in
applying Section 94(e) of the 1992 MRPS.
The Ruling of the CA
On September 24, 2008, the CA rendered the herein assailed
Decision,23 which denied the petition forcertiorari filed by the petitioner.
The CA held that it is the provisions of the 1992 MRPS and not the Labor
Code which governs the termination of employment of teaching and nonteaching personnel of private schools, explaining that:

168

It is a principle of statutory construction that where there are two statutes


that apply to a particular case, that which was specially intended for the
said case must prevail. Petitioner was employed by respondent private
Catholic institution which undeniably follows the precepts or norms of
conduct set forth by the Catholic Church. Accordingly, the Manual of
Regulations for Private Schools followed by it must prevail over the Labor
Code, a general statute. The Manual constitutes the private schools
Implementing Rules and Regulations of Batas Pambansa Blg. 232 or the
Education Act of 1982. x x x.24
The CA further held that the petitioners dismissal was a valid exercise of
SSCWs management prerogative to discipline and impose penalties on
erring employees pursuant to its policies, rules and regulations. The CA
upheld the NLRCs conclusion that the petitioners pregnancy out of
wedlock is considered as a disgraceful and immoral conduct and, thus, a
ground for dismissal under Section 94(e) of the 1992 MRPS. The CA
likewise opined that the petitioners pregnancy out of wedlock is
scandalous per se given the work environment and social milieu that she
was in, viz:
Under Section 94 (e) of the [MRPS], and even under Article 282 (serious
misconduct) of the Labor Code, disgraceful and immoral conduct is a
basis
for
termination
of
employment.
x

Petitioner contends that her pre-marital sexual relations with her boyfriend
and her pregnancy prior to marriage was not disgraceful or immoral
conduct sufficient for her dismissal because she was not a member of the
schools faculty and there is no evidence that her pregnancy scandalized
the
school
community.
We are not persuaded. Petitioners pregnancy prior to marriage is
scandalous in itself given the work environment and social milieu she was
in. Respondent school for young ladies precisely seeks to prevent its
students from situations like this, inculcating in them strict moral values
and standards. Being part of the institution, petitioners private and public
life could not be separated. Her admitted pre-marital sexual relations was a
violation of private respondents prescribed standards of conduct that
views pre-marital sex as immoral because sex between a man and a
woman must only take place within the bounds of marriage.
Finally, petitioners dismissal is a valid exercise of the employer-schools
management prerogative to discipline and impose penalties on erring
employees pursuant to its policies, rules and regulations. x x x. 25 (Citations
omitted)
The petitioner moved for reconsideration26 but it was denied by the CA in
its
Resolution27 dated
March
2,
2009.

Hence, the instant petition.


Issues
Essentially, the issues set forth by the petitioner for this Courts decision
are the following: first,whether the CA committed reversible error in ruling
that it is the 1992 MRPS and not the Labor Code that governs the
termination of employment of teaching and non-teaching personnel of
private schools; and second, whether the petitioners pregnancy out of
wedlock constitutes a valid ground to terminate her employment.
The Ruling of the Court
The Court grants the petition.
First Issue: Applicability of the 1992 MRPS
The petitioner contends that the CA, in ruling that there was a valid ground
to dismiss her, erred in applying Section 94 of the 1992 MRPS. Essentially,
she claims that the 1992 MRPS was issued by the Secretary of Education
as the revised implementing rules and regulations of Batas Pambansa
Bilang 232 (BP 232) or the Education Act of 1982. That there is no
provision in BP 232, which provides for the grounds for the termination of
employment of teaching and non-teaching personnel of private schools.
Thus, Section 94 of the 1992 MRPS, which provides for the causes of
terminating an employment, is invalid as it widened the scope and
coverage
of
BP
232.
The

Court

does

not

agree.

The Court notes that the argument against the validity of the 1992 MRPS,
specifically Section 94 thereof, is raised by the petitioner for the first time
in the instant petition for review. Nowhere in the proceedings before the
LA, the NLRC or the CA did the petitioner assail the validity of the
provisions
of
the
1992
MRPS.
It is well established that issues raised for the first time on appeal and not
raised in the proceedings in the lower court are barred by estoppel. Points
of law, theories, issues, and arguments not brought to the attention of the
trial court ought not to be considered by a reviewing court, as these cannot
be raised for the first time on appeal. To consider the alleged facts and
arguments belatedly raised would amount to trampling on the basic
principles
of
fair
play,
justice,
and
due
process. 28
In any case, even if the Court were to disregard the petitioners belated
claim of the invalidity of the 1992 MRPS, the Court still finds the same
untenable.

169

The 1992 MRPS, the regulation in force at the time of the instant
controversy, was issued by the Secretary of Education pursuant to BP 232.
Section 7029 of BP 232 vests the Secretary of Education with the authority
to issue rules and regulations to implement the provisions of BP 232.
Concomitantly, Section 5730 specifically empowers the Department of
Education to promulgate rules and regulations necessary for the
administration, supervision and regulation of the educational system in
accordance
with
the
declared
policy
of
BP
232.
The qualifications of teaching and non-teaching personnel of private
schools, as well as the causes for the termination of their employment, are
an integral aspect of the educational system of private schools.
Indubitably, ensuring that the teaching and non-teaching personnel of
private schools are not only qualified, but competent and efficient as well
goes hand in hand with the declared objective of BP 232 establishing and
maintaining relevant quality education. 31 It is thus within the authority of
the Secretary of Education to issue a rule, which provides for the dismissal
of teaching and non-teaching personnel of private schools based on their
incompetence,
inefficiency,
or
some
other
disqualification.
Moreover, Section 69 of BP 232 specifically authorizes the Secretary of
Education to prescribe and impose such administrative sanction as he
may deem reasonable and appropriate in the implementing rules and
regulations for the [g]ross inefficiency of the teaching or non-teaching
personnel of private schools. 32 Accordingly, contrary to the petitioners
claim, the Court sees no reason to invalidate the provisions of the 1992
MRPS, specifically Section 94 thereof.
Second Issue: Validity of the Petitioners Dismissal
The validity of the petitioners dismissal hinges on the determination of
whether pregnancy out of wedlock by an employee of a catholic
educational institution is a cause for the termination of her employment.
In resolving the foregoing question, the Court will assess the matter from a
strictly neutral and secular point of view the relationship between SSCW
as employer and the petitioner as an employee, the causes provided for by
law in the termination of such relationship, and the evidence on record.
The ground cited for the petitioners dismissal, i.e., pre-marital sexual
relations and, consequently, pregnancy out of wedlock, will be assessed as
to whether the same constitutes a valid ground for dismissal pursuant to
Section 94(e) of the 1992 MRPS.

correctness, the Court has to view the CA decision in the same context that
the petition forcertiorari it ruled upon was presented to it; the Court has to
examine the CA decision from the prism of whether it correctly determined
the presence or absence of grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC decision on the merits of
the case was correct.33
The phrase grave abuse of discretion is well-defined in the Courts
jurisprudence. It exists where an act of a court or tribunal is performed with
a capricious or whimsical exercise of judgment equivalent to lack of
jurisdiction.34 The determination of the presence or absence of grave abuse
of discretion does not include an inquiry into the correctness of the
evaluation of evidence, which was the basis of the labor agency in
reaching its conclusion.35
Nevertheless, while a certiorari proceeding does not strictly include an
inquiry as to the correctness of the evaluation of evidence (that was the
basis of the labor tribunals in determining their conclusion), the
incorrectness of its evidentiary evaluation should not result in negating the
requirement of substantial evidence. Indeed, when there is a showing
that the findings or conclusions, drawn from the same pieces of
evidence, were arrived at arbitrarily or in disregard of the
evidence on record, they may be reviewed by the courts. In
particular, the CA can grant the petition for certiorari if it finds that the
NLRC, in its assailed decision or resolution, made a factual finding not
supported by substantial evidence. A decision that is not supported by
substantial evidence is definitely a decision tainted with grave abuse of
discretion.36
The labor tribunals respective
conclusions that the petitioners pregnancy
is a disgraceful or immoral conduct
were arrived at arbitrarily.
The CA and the labor tribunals affirmed the validity of the petitioners
dismissal pursuant to Section 94(e) of the 1992 MRPS, which provides that:
Sec. 94. Causes of Terminating Employment In addition to the just causes
enumerated in the Labor Code, the employment of school personnel,
including faculty, may be terminated for any of the following causes:
xxxx
e. Disgraceful or immoral conduct;

The standard of review in a Rule 45


petition from the CA decision in labor
cases.
In a petition for review under Rule 45 of the Rules of Court, such as the
instant petition, where the CAs disposition in a labor case is sought to be
calibrated, the Courts review is quite limited. In ruling for legal

xxxx
The labor tribunals concluded that the petitioners pregnancy out of
wedlock, per se, is disgraceful and immoral considering that she is
employed in a Catholic educational institution. In arriving at such
conclusion, the labor tribunals merely assessed the fact of the petitioners

170

pregnancy vis--vis the totality of the circumstances surrounding the same.


However, the Court finds no substantial evidence to support the
aforementioned conclusion arrived at by the labor tribunals. The fact of the
petitioners pregnancy out of wedlock, without more, is not enough to
characterize the petitioners conduct as disgraceful or immoral. There must
be substantial evidence to establish that pre-marital sexual relations and,
consequently, pregnancy out of wedlock, are indeed considered disgraceful
or immoral.
The totality of the circumstances
surrounding the conduct alleged to be
disgraceful or immoral must be assessed
against the prevailing norms of conduct.
In Chua-Qua v. Clave,37 the Court stressed that to constitute immorality,
the circumstances of each particular case must be holistically considered
and evaluated in light of the prevailing norms of conduct and
applicable laws.38 Otherwise stated, it is not the totality of the
circumstances surrounding the conduct per se that determines whether the
same is disgraceful or immoral, but the conduct that is generally accepted
by society as respectable or moral. If the conduct does not conform to
what society generally views as respectable or moral, then the conduct is
considered as disgraceful or immoral. Tersely put, substantial evidence
must be presented, which would establish that a particular conduct,
viewed in light of the prevailing norms of conduct, is considered disgraceful
or immoral.
Thus, the determination of whether a conduct is disgraceful or immoral
involves a two-step process:first, a consideration of the totality of the
circumstances surrounding the conduct; and second, an assessment of the
said circumstances vis--vis the prevailing norms of conduct, i.e., what the
society generally considers moral and respectable.
That the petitioner was employed by a Catholic educational institution per
se does not absolutely determine whether her pregnancy out of wedlock is
disgraceful or immoral. There is still a necessity to determine whether the
petitioners pregnancy out of wedlock is considered disgraceful or immoral
in accordance with the prevailing norms of conduct.
Public and secular morality should
determine the prevailing norms of conduct,
not religious morality.
However, determining what the prevailing norms of conduct are considered
disgraceful or immoral is not an easy task. An individuals perception of
what is moral or respectable is a confluence of a myriad of influences, such
as religion, family, social status, and a cacophony of others. In this regard,
the Courts ratiocination in Estrada v. Escritor39 is instructive.

In Estrada, an administrative case against a court interpreter charged with


disgraceful and immoral conduct, the Court stressed that in determining
whether a particular conduct can be considered as disgraceful and
immoral, the distinction between public and secular morality on the one
hand, and religious morality, on the other, should be kept in mind. 40 That
the distinction between public and secular morality and religious morality
is important because the jurisdiction of the Court extends only to public
and secular morality.41 The Court further explained that:
The morality referred to in the law is public and necessarily
secular, not religious x x x. Religious teachings as expressed in public
debate may influence the civil public order but public moral disputes may
be resolved only on grounds articulable in secular terms. Otherwise, if
government relies upon religious beliefs in formulating public
policies and morals, the resulting policies and morals would
require conformity to what some might regard as religious
programs or agenda. The non-believers would therefore be compelled to
conform to a standard of conduct buttressed by a religious belief, i.e., to a
compelled religion, anathema to religious freedom. Likewise, if
government based its actions upon religious beliefs, it would tacitly
approve or endorse that belief and thereby also tacitly disapprove contrary
religious or non-religious views that would not support the policy. As a
result, government will not provide full religious freedom for all its citizens,
or even make it appear that those whose beliefs are disapproved are
second-class citizens. Expansive religious freedom therefore requires that
government be neutral in matters of religion; governmental reliance upon
religious justification is inconsistent with this policy of neutrality.
In other words, government action, including its proscription of
immorality as expressed in criminal law like concubinage, must
have a secular purpose. That is, the government proscribes this
conduct because it is detrimental (or dangerous) to those
conditions upon which depend the existence and progress of
human society and not because the conduct is proscribed by the
beliefs of one religion or the other. Although admittedly, moral
judgments based on religion might have a compelling influence on those
engaged in public deliberations over what actions would be considered a
moral disapprobation punishable by law. After all, they might also be
adherents of a religion and thus have religious opinions and moral codes
with a compelling influence on them; the human mind endeavors to
regulate the temporal and spiritual institutions of society in a uniform
manner, harmonizing earth with heaven. Succinctly put, a law could be
religious or Kantian or Aquinian or utilitarian in its deepest roots,
but it must have an articulable and discernible secular purpose
and justification to pass scrutiny of the religion clauses. x x
x.42(Citations omitted and emphases ours)
Accordingly, when the law speaks of immoral or, necessarily, disgraceful
conduct, it pertains to public and secular morality; it refers to those
conducts which are proscribed because they are detrimental to

171

conditions upon which depend the existence and progress of


human society. Thus, inAnonymous v. Radam,43 an administrative case
involving a court utility worker likewise charged with disgraceful and
immoral conduct, applying the doctrines laid down in Estrada, the Court
held that:
For a particular conduct to constitute disgraceful and immoral
behavior under civil service laws, it must be regulated on account
of the concerns of public and secular morality. It cannot be judged
based on personal bias, specifically those colored by particular
mores. Nor should it be grounded on cultural values not
convincingly demonstrated to have been recognized in the realm
of public policy expressed in the Constitution and the laws. At the
same time, the constitutionally guaranteed rights (such as the right to
privacy) should be observed to the extent that they protect behavior that
may
be
frowned
upon
by
the
majority.
Under these tests, two things may be concluded from the fact that an
unmarried woman gives birth out of wedlock:
(1) if the father of the child is himself unmarried, the woman is not
ordinarily administratively liable for disgraceful and immoral
conduct. It may be a not-so-ideal situation and may cause
complications for both mother and child but it does not give cause for
administrative sanction. There is no law which penalizes an
unmarried mother under those circumstances by reason of her
sexual conduct or proscribes the consensual sexual activity
between two unmarried persons. Neither does the situation
contravene any fundamental state policy as expressed in the
Constitution, a document that accommodates various belief
systems irrespective of dogmatic origins.
(2) if the father of the child born out of wedlock is himself married
to a woman other than the mother, then there is a cause for
administrative sanction against either the father or the mother.
In such a case, the disgraceful and immoral conduct consists
of having extramarital relations with a married person. The
sanctity of marriage is constitutionally recognized and likewise affirmed
by our statutes as a special contract of permanent union. Accordingly,
judicial employees have been sanctioned for their dalliances with
married persons or for their own betrayals of the marital vow of fidelity.
In this case, it was not disputed that, like respondent, the father of her
child was unmarried. Therefore, respondent cannot be held liable for
disgraceful and immoral conduct simply because she gave birth to the
child Christian Jeon out of wedlock.44(Citations omitted and emphases ours)
Both Estrada and Radam are administrative cases against employees in
the civil service. The Court, however, sees no reason not to apply the
doctrines
enunciated
in Estrada and Radam in
the
instant

case. Estrada and Radam also required the Court to delineate what
conducts are considered disgraceful and/or immoral as would constitute a
ground for dismissal. More importantly, as in the said administrative cases,
the instant case involves an employees security of tenure; this case
likewise concerns employment, which is not merely a specie of property
right, but also the means by which the employee and those who depend on
him
live.45
It bears stressing that the right of an employee to security of tenure is
protected by the Constitution. Perfunctorily, a regular employee may not
be dismissed unless for cause provided under the Labor Code and other
relevant laws, in this case, the 1992 MRPS. As stated above, when the law
refers to morality, it necessarily pertains to public and secular morality and
not religious morality. Thus, the proscription against disgraceful or
immoral conduct under Section 94(e) of the 1992 MRPS, which is made as
a cause for dismissal, must necessarily refer to public and secular morality.
Accordingly, in order for a conduct to be considered as disgraceful or
immoral, it must be detrimental (or dangerous) to those conditions upon
which depend the existence and progress of human society and not
because the conduct is proscribed by the beliefs of one religion or the
other.
Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher who
had an extra-marital affair with his co-teacher, who is likewise married, on
the ground of disgraceful and immoral conduct under Section 94(e) of the
1992 MRPS. The Court pointed out that extra-marital affair is considered as
a disgraceful and immoral conduct is an afront to the sanctity of marriage,
which is a basic institution of society, viz:
We cannot overemphasize that having an extra-marital affair is an afront to
the sanctity of marriage, which is a basic institution of society. Even our
Family Code provides that husband and wife must live together, observe
mutual love, respect and fidelity. This is rooted in the fact that both our
Constitution and our laws cherish the validity of marriage and unity of the
family. Our laws, in implementing this constitutional edict on marriage and
the family underscore their permanence, inviolability and solidarity. 47
The petitioners pregnancy out of
wedlock is not a disgraceful or immoral
conduct since she and the father of her
child have no impediment to marry each
other.
In stark contrast to Santos, the Court does not find any circumstance in
this case which would lead the Court to conclude that the petitioner
committed a disgraceful or immoral conduct. It bears stressing that the
petitioner and her boyfriend, at the time they conceived a child, had no
legal impediment to marry. Indeed, even prior to her dismissal, the
petitioner married her boyfriend, the father of her child. As the Court held
in Radam, there is no law which penalizes an unmarried mother by reason

172

of her sexual conduct or proscribes the consensual sexual activity between


two unmarried persons; that neither does such situation contravene any
fundamental state policy enshrined in the Constitution.
Admittedly, the petitioner is employed in an educational institution where
the teachings and doctrines of the Catholic Church, including that on premarital sexual relations, is strictly upheld and taught to the students. That
her indiscretion, which resulted in her pregnancy out of wedlock, is
anathema to the doctrines of the Catholic Church. However, viewed
against the prevailing norms of conduct, the petitioners conduct cannot be
considered as disgraceful or immoral; such conduct is not denounced by
public and secular morality. It may be an unusual arrangement, but it
certainly is not disgraceful or immoral within the contemplation of the law.
To stress, pre-marital sexual relations between two consenting adults who
have no impediment to marry each other, and, consequently, conceiving a
child out of wedlock, gauged from a purely public and secular view of
morality, does not amount to a disgraceful or immoral conduct under
Section 94(e) of the 1992 MRPS.
Accordingly, the labor tribunals erred in upholding the validity of the
petitioners dismissal. The labor tribunals arbitrarily relied solely on the
circumstances surrounding the petitioners pregnancy and its supposed
effect on SSCW and its students without evaluating whether the
petitioners conduct is indeed considered disgraceful or immoral in view of
the prevailing norms of conduct. In this regard, the labor tribunals
respective haphazard evaluation of the evidence amounts to grave abuse
of discretion, which the Court will rectify.
The labor tribunals finding that the petitioners pregnancy out of wedlock
despite the absence of substantial evidence is not only arbitrary, but a
grave abuse of discretion, which should have been set right by the CA.
There is no substantial evidence to
prove that the petitioners pregnancy out of
wedlock caused grave scandal to SSCW
and its students.
SSCW claimed that the petitioner was primarily dismissed because her
pregnancy out of wedlock caused grave scandal to SSCW and its students.
That the scandal brought about by the petitioners indiscretion prompted
them to dismiss her. The LA upheld the respondents claim, stating that:
In this particular case, an objective and rational evaluation of the facts
and circumstances obtaining in this case would lead us to focus our
attention x x x on the impact of the act committed by the
complainant. The act of the complainant x x xeroded the moral
principles being taught and project[ed] by the respondent
[C]atholic school to their young lady students.48 (Emphasis in the
original)

On the other hand, the NLRC opined that:


In the instant case, when the complainant-appellant was already
conceiving a child even before she got married, such is considered a
shameful and scandalous behavior, inimical to public welfare and policy. It
eroded the moral doctrines which the respondent Catholic school,
an exclusive school for girls, is teaching the young girls. Thus,
when the respondent-appellee school terminated complainantappellants services, it was a valid exercise of its management
prerogative. Whether or not she was a teacher is of no moment. There is
no separate set of rules for non-teaching personnel. Respondentsappellees uphold the teachings of the Catholic Church on pre-marital sex
and that the complainant-appellant as an employee of the school was
expected to abide by this basic principle and to live up with the standards
of their purely Catholic values. Her subsequent marriage did not take away
the fact that she had engaged in pre-marital sex which the respondentappellee school denounces as the same is opposed to the teachings and
doctrines it espouses.49 (Emphasis ours)
Contrary to the labor tribunals declarations, the Court finds that SSCW
failed to adduce substantial evidence to prove that the petitioners
indiscretion indeed caused grave scandal to SSCW and its students. Other
than the SSCWs bare allegation, the records are bereft of any evidence
that would convincingly prove that the petitioners conduct indeed
adversely affected SSCWs integrity in teaching the moral doctrines, which
it stands for. The petitioner is only a non-teaching personnel; her
interaction with SSCWs students is very limited. It is thus quite impossible
that her pregnancy out of wedlock caused such a grave scandal, as
claimed by SSCW, as to warrant her dismissal.
Settled is the rule that in termination cases, the burden of proving that the
dismissal of the employees was for a valid and authorized cause rests on
the employer. It is incumbent upon the employer to show by substantial
evidence that the termination of the employment of the employees was
validly made and failure to discharge that duty would mean that the
dismissal is not justified and therefore illegal. 50 Substantial evidence is
more than a mere scintilla of evidence. It means such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion, even
if other minds equally reasonable might conceivably opine otherwise. 51
Indubitably, bare allegations do not amount to substantial evidence.
Considering that the respondents failed to adduce substantial evidence to
prove their asserted cause for the petitioners dismissal, the labor tribunals
should not have upheld their allegations hook, line and sinker. The labor
tribunals respective findings, which were arrived at sans any substantial
evidence, amounts to a grave abuse of discretion, which the CA should
have rectified. Security of tenure is a right which may not be denied on
mere speculation of any unclear and nebulous basis. 52

173

The petitioners dismissal is not a


valid exercise of SSCWs management
prerogative.
The CA belabored the management prerogative of SSCW to discipline its
employees. The CA opined that the petitioners dismissal is a valid exercise
of management prerogative to impose penalties on erring employees
pursuant to its policies, rules and regulations.
The Court does not agree.
The Court has held that management is free to regulate, according to its
own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers and discipline,
dismissal and recall of workers. The exercise of management prerogative,
however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor. Management cannot exercise its prerogative
in a cruel, repressive, or despotic manner.53
SSCW, as employer, undeniably has the right to discipline its employees
and, if need be, dismiss them if there is a valid cause to do so. However, as
already explained, there is no cause to dismiss the petitioner. Her conduct
is not considered by law as disgraceful or immoral. Further, the
respondents themselves have admitted that SSCW, at the time of the
controversy, does not have any policy or rule against an employee who
engages in pre-marital sexual relations and conceives a child as a result
thereof. There being no valid basis in law or even in SSCWs policy and
rules, SSCWs dismissal of the petitioner is despotic and arbitrary and,
thus, not a valid exercise of management prerogative.
In sum, the Court finds that the petitioner was illegally dismissed as there
was no just cause for the termination of her employment. SSCW failed to
adduce substantial evidence to establish that the petitioners conduct, i.e.,
engaging in pre-marital sexual relations and conceiving a child out of
wedlock, assessed in light of the prevailing norms of conduct, is considered
disgraceful or immoral. The labor tribunals gravely abused their discretion
in upholding the validity of the petitioners dismissal as the charge against
the petitioner lay not on substantial evidence, but on the bare allegations
of SSCW. In turn, the CA committed reversible error in upholding the
validity of the petitioners dismissal, failing to recognize that the labor
tribunals gravely abused their discretion in ruling for the respondents.
The petitioner is entitled to
separation pay, in lieu of actual
reinstatement, full backwages and
attorneys fees, but not to moral
and exemplary damages.

Having established that the petitioner was illegally dismissed, the Court
now determines the reliefs that she is entitled to and their extent. Under
the law and prevailing jurisprudence, an illegally dismissed employee is
entitled to reinstatement as a matter of right.54 Aside from the instances
provided under Articles 28355 and 28456 of the Labor Code, separation pay
is, however, granted when reinstatement is no longer feasible because of
strained relations between the employer and the employee. In cases of
illegal dismissal, the accepted doctrine is that separation pay is available in
lieu of reinstatement when the latter recourse is no longer practical or in
the best interest of the parties.57
In Divine Word High School v. NLRC,58 the Court ordered the employer
Catholic school to pay the illegally dismissed high school teacher
separation pay in lieu of actual reinstatement since her continued presence
as a teacher in the school may well be met with antipathy and
antagonism by some sectors in the school community. 59
In view of the particular circumstances of this case, it would be more
prudent to direct SSCW to pay the petitioner separation pay in lieu of
actual reinstatement. The continued employment of the petitioner with
SSCW would only serve to intensify the atmosphere of antipathy and
antagonism between the parties. Consequently, the Court awards
separation pay to the petitioner equivalent to one (1) month pay for every
year of service, with a fraction of at least six (6) months considered as one
(1) whole year, from the time of her illegal dismissal up to the finality of
this judgment, as an alternative to reinstatement.
Also, employees who are illegally dismissed are entitled to full backwages,
inclusive of allowances and other benefits or their monetary equivalent,
computed from the time their actual compensation was withheld from
them up to the time of their actual reinstatement but if reinstatement is no
longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. 60 Accordingly, the
petitioner is entitled to an award of full backwages from the time she was
illegally dismissed up to the finality of this decision.
Nevertheless, the petitioner is not entitled to moral and exemplary
damages. A dismissed employee is entitled to moral damages when the
dismissal is attended by bad faith or fraud or constitutes an act oppressive
to labor, or is done in a manner contrary to good morals, good customs or
public policy. Exemplary damages may be awarded if the dismissal is
effected in a wanton, oppressive or malevolent manner. 61
Bad faith, under the law, does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, or a breach of a known duty through some
motive or interest or ill will that partakes of the nature of fraud. 62
It must be noted that the burden of proving bad faith rests on the one
alleging it63 since basic is the principle that good faith is presumed and he

174

who alleges bad faith has the duty to prove the same. 64Allegations of bad
faith and fraud must be proved by clear and convincing evidence.65
The records of this case are bereft of any clear and convincing evidence
showing that the respondents acted in bad faith or in a wanton or
fraudulent manner in dismissing the petitioner. That the petitioner was
illegally dismissed is insufficient to prove bad faith. A dismissal may be
contrary to law but by itself alone, it does not establish bad faith to entitle
the dismissed employee to moral damages. The award of moral and
exemplary damages cannot be justified solely upon the premise that the
employer dismissed his employee without cause. 66
However, the petitioner is entitled to attorneys fees in the amount of 10%
of the total monetary award pursuant to Article 11167 of the Labor Code. It
is settled that where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorneys fees is
legally and morally justifiable.68
Finally, legal interest shall be imposed on the monetary awards herein
granted at the rate of six percent (6%) per annum from the finality of this
judgment until fully paid.69
WHEREFORE, in consideration of the foregoing disquisitions, the petition
is GRANTED. The Decision dated September 24, 2008 and Resolution
dated March 2, 2009 of the Court of Appeals in CA-G.R. SP No. 100188 are
hereby REVERSED and SET ASIDE.
The respondent, St. Scholasticas College Westgrove, is hereby declared
guilty of illegal dismissal and is hereby ORDERED to pay the petitioner,
Cheryll Santos Leus, the following: (a) separation pay in lieu of actual
reinstatement equivalent to one (1) month pay for every year of service,
with a fraction of at least six (6) months considered as one (1) whole year
from the time of her dismissal up to the finality of this Decision; (b) full
backwages from the time of her illegal dismissal up to the finality of this
Decision; and (c) attorneys fees equivalent to ten percent (10%) of the
total monetary award. The monetary awards herein granted shall earn
legal interest at the rate of six percent (6%) per annum from the date of
the finality of this Decision until fully paid. The case is REMANDED to the
Labor Arbiter for the computation of petitioners monetary awards.
SO ORDERED.

175

G.R. No. 208163, April 20, 2015

connection

ROQUE B. BENITEZ AND SANTA FE LABOR UNION-FEDERATION OF


FREE WORKERS,Petitioners, v. SANTA FE MOVING AND RELOCATION
SERVICES/VEDIT KURANGIL, Respondent.

The company and Kurangil denied liability. They maintained that the
company has developed a world-renowned reputation for unsurpassed
customer service and quality in its line of business. They averred that
during the Christmas Party on December 18, 2010, Benitez berated and
maligned Kurangil by throwing foul and offensive words at him, such as
"putang ina mo ka VK, gago ka!" Benitez's tirade, they added, included the
company and it officers. Moreover, the incident happened in front of the
company's employees, their families, as well as company clients and
guests.

DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 which seeks to
annul the November 7, 2012 decision 2 and July 10, 2013 resolution 3 of the
Court of Appeals in CA-G.R. SP No. 126213.
The Antecedents
On February 8, 2011, petitioners Roque V. Benitez (Benitez) and Santa Fe
Labor Union (union) filed a complaint for unfair labor practice and illegal
dismissal, with money claims,4 against respondents Santa Fe Moving and
Relocation Services (company) and its Managing Director, Vedit Kurangil
(Kurangil), an Australian citizen. The company is engaged in providing
relocation and moving services, including visa, immigration and real estate
services. Benitez (the union's Vice-President at the time), was its former
packing and moving operator (crew leader) since June 2001.5
Benitez alleged that on December 20, 2010, the company served him a
memorandum6 advising him not to report for work effective immediately,
thereby terminating his employment, supposedly on grounds of serious
misconduct or willful disobedience. He allegedly uttered abusive words
against Kurangil during the company's Christmas Party on December 18,
2010. He bewailed that he was not given the opportunity to defend
himself.
Benitez claimed that during the party, he noticed that the raffle committee
members were putting back the names of those who were already drawn,
giving them more chances of winning. He appealed to the committee to
put a stop to what they were doing, but they replied they would not "in the
spirit of Christmas." He denied having verbally abused Kurangil. He
presented the affidavits of co-employees Jhun Bulan, Romualdo Elib,
Carlos Morata and Raul Ramirez,7 attesting that Benitez, who was with
them at one table, did not commit the offense which led to his dismissal.
Benitez argued that his dismissal constituted an unfair labor practice as he
was a union officer and that it was undertaken to derail the conclusion of a
collective bargaining agreement with the company. He further argued that
the penalty of dismissal is disproportionate to his alleged offense,
considering that it was committed during a casual gathering and had no

to

his

work.

The company confirmed Benitez's claim that the incident involved the
conduct of the Christmas raffle. However, they differed on what triggered
his unruly behavior. It alleged that while the raffle was going on, Benitez
climbed up the stage and questioned the management's decision to allow
contractual employees to join the raffle. This resulted in only 80% of the
employees winning raffle prizes. Benitez then started hurling invectives
and foul language while still on stage, mostly directed at Kurangil.
The company further alleged that even when Benitez stormed out of the
stage, he kept on berating Kurangil, such that people he passed by
overheard him cursing Kurangil and the company and that he even
attempted to a throw a beer bottle at Kurangil, but he was restrained by
other
employees.
The
respondents
presented
in
evidence
the
affidavits
of
Kurangil,8 Reynaldo Delavin (Delavin),9 a company driver, and Diana Claros
Urmeneta10 (Urmeneta),11 a guest at the party. Their statements were
corroborated by the depositions 12 of company employees Jim Robert Afos
(Afos) and Marciano Atienza, Jr. (Atienza). The two disputed the
statements13 of Bulan, Elib, Morata and Ramirez witnesses for Benitez
that they were seated together with Benitez at one table and that he
caused no disturbance during the Christmas Party. Afos and Atienza stated
that they were the ones who were seated with Benitez, not Bulan, Elib,
Morata and Ramirez who were at a separate table with another group of
employees.
Afos and Atienza added that Benitez's tirade started when the raffle for the
grand prize was being conducted. All of a sudden, Benitez, who had not yet
won a prize at that time, stood up and proceeded to the stage, fuming mad
and
complaining
about
the
conduct
of
the
raffle. 14
The company required Benitez to explain in writing why he should not be
disciplined for serious misconduct and willful disobedience of its lawful
orders in connection with the incident. Benitez failed to comply and neither
did
he
show
remorse
for
what
he
did.

176

In view of Benitez's failure to explain his side, the company issued a


memorandum15 dated December 20, 2010 to Benitez (signed by Kurangil),
terminating his employment effective on the same day, for clear violation
of "Santa Fe Policy and Procedure under Conduct and Behavior as well
as Labor Code of the Philippines under Art. 282 - Serious misconduct or
willful disobedience by the employee of the lawful orders of his employer x
x x."
The Compulsory Arbitration Rulings
In her decision16 of September 14, 2011, Labor Arbiter Fatima JambaroFranco (LA Franco) dismissed the complaint for lack of merit. LA Franco
found that Benitez, who was holding a position of trust and confidence as
packing and moving operator, committed a serious misconduct at the
company's Christmas Party on December 18, 2010 by "hurling obscene,
insulting or offensive language against a superior,"17 thereby losing the
trust
and
confidence
of
his
employer.

expenses. They submit in the main that the CA committed grave and
palpable error in misappreciating the facts and applicable jurisprudence in
this
case,
especially
the Samson
v.
NLRC24 ruling.
They contend that contrary to the appellate court's opinion, Benitez was
not liable for serious misconduct. They insist that Benitez did not malign
Kurangil, during the Christmas Party and that if he indeed became unruly
on that day, the company guards should have restrained him and made a
report about it, but there was no such intervention from the guards.
At any rate, they argue, Benitez should not have been dismissed for the
serious misconduct he allegedly committed since it was not in connection
with his work as moving and relocation operator. Moreover, for misconduct
to be serious, it must be of such a grave and aggravated character and not
merely trivial and unimportant as the Court declared in Samson which,
they claim, has factual similarities with the present case.
The Respondents' Case

Benitez and the union appealed, reiterating that his dismissal is illegal.
Moreover, they claimed, he was denied due process as he was not given
the
opportunity
to
explain
his
side.
The National Labor Relations Commission (NLRC) dismissed the appeal,
likewise for lack of merit, in its decision 18 of March 15, 2012. It sustained LA
Franco's finding that Benitez was validly dismissed for serious misconduct.
However, it noted "that the respondents failed to comply with the twonotice requirement as mandated by the Labor Code in validly dismissing an
employee."19 Accordingly, it affirmed LA Franco's ruling with modification
by awarding Benitez nominal damages of P50,000.00 for the violation of
his
right
to
procedural
due
process.
Benitez and the union moved for reconsideration, to no avail. The NLRC
denied the motion,20prompting them to file a petition for certiorari21 with
the CA.

In their Comment (on the Petition), 25 the respondents pray that the petition
be dismissed and the assailed CA rulings modified through a deletion of the
award of nominal damages to Benitez and the reinstatement of LA Franco's
September 14, 2011 decision. In the alternative, they ask that the nominal
damages
award
be
tempered.
They argue that the petitioners have not made out a case showing that
there are special and compelling reasons requiring the exercise by this
Court of its discretionary power of judicial review. They submit that the
petition virtually raises the same arguments that had already been duly
resolved, based on evidence supporting Benitez's dismissal for cause.
Thus, the petition should be rejected outright for it raises only questions of
facts and not of law.
The Court's Ruling

The CA Decision

The procedural question

In its decision22 under review, the CA found no grave abuse of discretion in


the NLRC's affirmation of LA Franco's ruling that Benitez was validly
dismissed. It stressed that "the findings of the NLRC which adopted those
of the Labor Arbiter were in accord with the evidence on record." 23 It
dismissed the petition and denied Benitez's subsequent motion for
reconsideration.

Are the questions raised by the petitioners factual in nature, or are they of
law? The respondents contend that they are questions of fact and are
therefore not allowed in a petition for review oncertiorari under Rule 45,
Section 1 of the Rules of Court. Thus, they ask for an outright dismissal of
the petition as the Court is not a trier of facts.26

The Petition
Benitez and the union now ask the Court to reverse his dismissal and order
his reinstatement with full backwages, grant his money claims, award him
moral and exemplary damages, attorney's fees, as well as litigation

The respondents' arguments failed to persuade us. The labor arbiter,


the NLRC and the CA uniformly ruled that there is substantial evidence to
warrant Benitez's dismissal for serious misconduct. Although up to this
stage of the proceedings Benitez insists that he did not commit a serious
misconduct, he argues lengthily that the penalty of dismissal is not
commensurate to the offense as defined by law.

177

regarding the incident.


As we see matters, the question before us is what the law is on the offense
Benitez committed based on the facts of the case, which we find to be
clearly a question of law.27 It does not involve the probative value of the
evidence adduced, which is a question of fact.28 We thus find no procedural
infirmity in the petition.

Again, we find this argument unpersuasive. There was no need for the
guards to intervene because Benitez was restrained by people near the
stage and who escorted him outside the premises where the party was
going on as attested to by Kurangil himself,37 as well as by Afos and
Atienza.38

The substantive aspect of the case


Serious misconduct is a just cause for termination of employment under
the law.29 Article 282 of the Labor Code provides: "An employer may
terminate an employment for any of the following causes: (a)
Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with
his work, x x x."
Benitez and his union stand firm on their position that he was not liable for
serious misconduct on account of his display of unruly behavior during the
company's Christmas Party on December 18, 2010 for reasons earlier
discussed. On the other hand, the respondents maintain that he committed
a serious misconduct that warranted his dismissal.

Under the circumstances, we believe that Benitez's tirade against Kurangil,


the company and other company officers indeed happened. Significantly,
the Christmas Party was attended not only by company officers and
employees and their families, but also by company clients and guests. With
such a big audience in front of him, we cannot imagine how Benitez could
get away with his claim that he did not malign and disrespect Kurangil and
the others.
The petitioners assert that even if Benitez committed the offense for which
he was charged, it was not a serious misconduct that would warrant his
dismissal under the law. They cite Samson v. NLRC39as authority for their
submission that "misconduct, however serious, must nevertheless be in
connection with the employee's work to constitute just cause for his
separation.40

We find the petition unmeritorious.


They further cite the following excerpt in the Samson case:
Despite his denial, there is substantial evidence that Benitez maligned the
company's managing director and the company itself during their
Christmas Party on December 18, 2010. Substantial evidence is such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise.30
Benitez presented the affidavits31 of four company employees Bulan,
Elib, Morata and Ramirez who stated under oath that Benitez was seated
with them at one table and that he did not cause any disturbance during
the party. The testimony of these four employees were belied by their coemployees Afos and Atienza who executed a joint affidavit, 32 stating that
Benitez was seated with them at a different table and that they witnessed
him going to the stage where he lost his temper and verbally abused
Kurangil in connection with the conduct of the Christmas raffle.
Delavin,33 a company employee and guest Urmeneta34 corroborated
Kurangil's statement35regarding Benitez's outburst on the stage,
particularly the invectives he threw at him "Putang ina mo ka VK, gago ka."
Urmeneta, for instance, deposed that when Benitez left the stage angrily
and walked past her and others sitting at the table, she heard him
say "Putang-ina mo ka VK, gago ka.36
Benitez further contends that the company guards could have noticed the
incident and therefore could have stepped in to maintain order, but
nothing of this sort took place as there was even no report from the guards

xxxx
1. On or about 17 December 1993, during the Sales and Marketing
Christmas gathering, you made utterances of obscene, insulting,
and offensive words, referring to or directed against SPC's
Management Committee, in the presence of several co-employees.
2. On that same occasion, and again in the presence of several coemployees,you uttered obscene, insulting and offensive words,
and made malicious and lewd gestures, all of which referred to or
were directed against Mr. Epitacio D. Titong, Jr., President and
General
Manager
of
SPC.
3. Also on that occasion, you repeated your malicious utterances
and threatened to disrupt or otherwise create violence during
SPC's forthcoming National Sales Conference, and enjoined your
co- employees not to prepare for the said conference.
4. Subsequently, on or about 3 January 1994, you repeated your
threats to some co-employees, advising them to watch out for
some disruptive actions to happen during the National Sales
Conference. (Emphasis ours.)
xxxx

178

The petitioners submit that the C A misappreciated the facts of Samson


and the present case when it ruled that "[In the case of Samson v. NLRC] x
x x the alleged offensive words were not uttered by petitioner in the
presence of respondent company's president and general manager. In
contrast, petitioner was with Mr. Kurangil when he uttered the foul words in
the presence of the employees, their families and guests."41
We disagree. The CA committed no reversible error in not applying
the Samson ruling in this case. Samson's outburst occurred during an
informal Christmas gathering of company sales officials and staff and his
maligned
superior
was
not
present
during
the
gathering.
On the other hand, Benitez went up the stage and confronted his superior
with a verbal abuse. Also, the petitioners cited Samson selectively and
concealed its real thrust, thus:
The instant case should be distinguished from the previous cases
where we held that the use of insulting and offensive language
constituted gross misconduct justifying an employee's dismissal.
In De la Cruz vs. NLRC, the dismissed employee shouted "saying
ang pagka-professional mo!" and "putang ina mo" at the company
physician when the latter refused to give him a referral slip.
In Autobus Workers' Union (AWU) v. NLRC, the dismissed employee
called his supervisor "gago ka" and taunted the latter by saying
"bakit anong gusto mo tang ina mo." In these cases, the dismissed
employees personally subjected their respective superiors to the
foregoing verbal abuses. The utter lack of respect for their
superiors was patent. In contrast, when petitioner was heard to
have uttered the alleged offensive words against respondent
company's president and general manager, the latter was not
around. (Emphases and underscoring ours.)42
Further, it appears that in Samson, the company was ambivalent for a
while on what to do with Samson's offense as it took several weeks after
the last incident on January 3, 1994 before it asked him to explain.
Moreover, the company official maligned merely admonished Samson
during a meeting on January 4, 1994.
In contrast, the company acted swiftly and decisively in Benitez's case,
obviously and understandably, because of the gravity and high visibility of
his offense, which not only constituted a frontal verbal, and nearly physical
(the attempted beer bottle throwing), assault against Kurangil. Needless to
say, Benitez's outburst also caused grave embarrassment for the audience
who witnessed the incident, including company officials whom he likewise
maligned, as well as company clients and guests.
Under the foregoing circumstances, we are convinced - as the Labor
Arbiter, the NLRC and the CA had been - that Benitez's offense
constituted a serious misconduct as defined by law. His display of insolent

and disrespectful behavior, in utter disregard of the time and place of its
occurrence, had very much to do with his work. He set a bad example as a
union officer and as a crew leader of a vital division of the company. His
actuations during the company's Christmas Party on December 18, 2010,
to our mind, could have had negative repercussions for his employer had
he been allowed to stay on the job. His standing before those clients who
witnessed the incident and those who would hear of it would surely be
diminished, to the detriment of the company.
Finally, we agree with the NLRC ruling that the company failed to observe
the two-notice requirement in employee dismissals as Benitez was
dismissed on the same day that the memorandum was served on him. The
verbal directive for him to explain why he should not be dismissed,
assuming that there was indeed such a directive, clearly was not in
compliance with the law. Nonetheless, considering the gravity of Benitez's
offense, we deem it reasonable to award him P30,000.00 in nominal
damages for violation of his right to procedural due process.
WHEREFORE, premises considered, the petition is DISMISSED for lack of
merit. The assailed decision and resolution of the Court of Appeals
are AFFIRMED, with modification. The award of nominal damages to
Benitez is reduced from P50,000.00 to P30,000.00. The complaint is
DISMISSED.
SO ORDERED.
G.R. No. 208908, March 11, 2015
THE COFFEE BEAN AND TEA LEAF PHILIPPINES, INC. AND WALDEN
CHU, Petitioners, v. ROLLY P. ARENAS, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the
Court of Appeals (CA) decision 2 dated March 26, 2013 and
resolution3 dated August 30, 2013 in CA-G.R. SP No. 117822. These
assailed CA rulings affirmed the National Labor Relations Commissions
(NLRC) decision4 dated August 13, 2010, which also affirmed the Labor
Arbiters (LA) February 28, 2010 decision.
The Antecedent Facts
On April 1, 2008, the Coffee Bean and Tea Leaf Philippines, Inc. (CBTL)
hired Rolly P. Arenas (Arenas) to work as a barista at its Paseo Center
Branch. His principal functions included taking orders from customers and
preparing their ordered food and beverages.5 Upon signing the
employment contract,6 Arenas was informed of CBTLs existing

179

employment

policies.

To ensure the quality of its crews services, CBTL regularly employs a


mystery guest shopper who poses as a customer, for the purpose of
covertly
inspecting
the
baristas
job
performance. 7
In April 2009, a mystery guest shopper at the Paseo Center Branch
submitted a report stating that on March 30, 2009, Arenas was seen eating
non-CBTL products at CBTLs al fresco dining area while on duty. As a
result, the counter was left empty without anyone to take and prepare the
customers
orders.8
On another occasion, or on April 28, 2009, Katrina Basallo (Basallo), the
duty manager of CBTL, conducted a routine inspection of the Paseo Center
Branch. While inspecting the stores products, she noticed an iced tea
bottle being chilled inside the bin where the ice for the customers drinks is
stored; thus, she called the attention of the staff on duty. When asked,
Arenas muttered, kaninong iced tea? and immediately picked the bottle
and
disposed
it
outside
the
store. 9
After inspection, Basallo prepared a store managers report which listed
Arenas recent infractions, as follows:
1.

Leaving the counter unattended and eating


unauthorized area while on duty (March 30, 2009);

chips

in

an

2.

Reporting late for work on several occasions (April 1, 3 and 22);


and

3.

Placing an iced tea bottle in the ice bin despite having knowledge
of company policy prohibiting the same (April 28, 2009). 10

Based on the mystery guest shopper and duty managers reports, Arenas
was required to explain his alleged violations. However, CBTL found
Arenas written explanation unsatisfactory, hence CBTL terminated his
employment.11
Arenas filed a complaint for illegal dismissal. After due proceedings, the LA
ruled in his favor, declaring that he had been illegally dismissed. On
appeal,
the
NLRC
affirmed
the
LAs
decision.
CBTL filed a petition for certiorari under Rule 65 before the CA. CBTL
insisted that Arenas infractions amounted to serious misconduct or willful
disobedience, gross and habitual neglect of duties, and breach of trust and
confidence. To support these allegations, CBTL presented Arenas
letter12 where he admitted his commission of the imputed violations.

On March 26, 2013, the CA issued its decision dismissing the petition. The
CA ruled that Arenas offenses fell short of the required legal standards to
justify his dismissal; and that these do not constitute serious misconduct or
willful disobedience, and gross negligence, to merit his termination from
service. The CA denied CBTLs motion for reconsideration opening the way
for this present appeal via a petition for review on certiorari.
The main issue before us is whether CBTL illegally dismissed Arenas from
employment.
The Petition
CBTL argues that under the terms and conditions of the employment
contract, Arenas agreed to abide and comply with CBTLs policies,
procedures, rules and regulations, as provided for under CBTLs table
of
offenses
and
penalties and/or employee handbook. 13 CBTL
cites serious misconduct as the primary reason for terminating Arenas
employment. CBTL also imputes dishonesty on the part of Arenas for not
immediately admitting that he indeed left his bottled iced tea inside the ice
bin.
Our Ruling
We

DENY

the

petition.

As a rule, in certiorari proceedings under Rule 65 of the Rules of Court, the


CA does not assess and weigh each piece of evidence introduced in the
case. The CA only examines the factual findings of the NLRC to determine
whether its conclusions are supported by substantial evidence, whose
absence points to grave abuse of discretion amounting to lack or excess of
jurisdiction.14 In the case ofMercado v. AMA Computer College,15 we
emphasized that:
As a general rule, in certiorari proceedings under Rule 65 of the Rules of
Court, the appellate court does not assess and weigh the sufficiency of
evidence upon which the Labor Arbiter and the NLRC based their
conclusion. The query in this proceeding is limited to the determination of
whether or not the NLRC acted without or in excess of its jurisdiction or
with grave abuse of discretion in rendering its decision. x x x 16 [Italics
supplied]
Our review of the records shows that the CA did not err in affirming the LA
and the NLRCs rulings. No grave abuse of discretion tainted these rulings,
thus, the CAs decision also warrants this Courts affirmation. The
infractions which Arenas committed do not justify the application of the
severe
penalty
of
termination
from
service.
First, Arenas was found eating non-CBTL products inside the stores
premises while on duty. Allegedly, he left the counter unattended without

180

anyone to entertain the incoming customers. Second, he chilled his bottled


iced tea inside the ice bin, in violation of CBTLs sanitation and hygiene
policy. CBTL argues that these violations constitute willful disobedience,
thus
meriting
dismissal
from
employment.
We

disagree

with

CBTL.

For willful disobedience to be a valid cause for dismissal, these two


elements must concur: (1) the employees assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude;
and (2) the order violated must have been reasonable, lawful, made known
to the employee, and must pertain to the duties which he had been
engaged
to
discharge.17
Tested against these standards, it is clear that Arenas alleged infractions
do not amount to such a wrongful and perverse attitude. Though Arenas
may have admitted these wrongdoings, these do not amount to a wanton
disregard of CBTLs company policies. As Arenas mentioned in his written
explanation, he was on a scheduled break when he was caught eating at
CBTLs al fresco dining area. During that time, the other service crews were
the one in charge of manning the counter. Notably, CBTLs employee
handbook imposes only the penalty of written warning for the offense of
eating
non-CBTL
products
inside
the
stores
premises.

continue

working

for

the

employer. 22

However, the facts on record reveal that there was no active dishonesty on
the part of Arenas. When questioned about who placed the bottled iced tea
inside the ice bin, his immediate reaction was not to deny his mistake, but
to remove the bottle inside the bin and throw it outside. More importantly,
when he was asked to make a written explanation of his action, he
admitted
that
the
bottled
iced
tea
was
his.
Thus, even if there was an initial reticence on Arenas part, his subsequent
act of owing to his mistake only shows the absence of a deliberate intent to
lie or deceive his CBTL superiors. On this score, we conclude that Arenas
action
did
not
amount
to
serious
misconduct.
Moreover, the imputed violations of Arenas, whether taken singly or as a
whole, do not necessitate the imposition of the strict and harsh penalty of
dismissal from service. The LA, NLRC and the CA all consistently
ruled that these offenses are not grave enough to qualify as just causes
for dismissal.Factual findings of the labor tribunals especially if
affirmed by the CA must be given great weight, and merit the
Courts
respect.

CBTL also imputes gross and habitual neglect of duty to Arenas for coming
in
late
in
three
separate
instances.

As a final remark, we note that petitioner Walden Chu (Chu) should not be
held jointly and severally liable with CBTL for Arenas adjudged monetary
awards. The LA and the NLRC ruled for their solidary liability but the CA
failed
to
dispose
this
issue
in
its
decision.

Gross negligence implies a want or absence of, or failure to exercise even a


slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them.18 There is habitual neglect if based on the circumstances, there is a
repeated failure to perform ones duties for a period of time. 19

A corporation is a juridical entity with a legal personality separate and


distinct from those acting for and in its behalf and, in general, from the
people comprising it.23 Thus, as a general rule, an officer may not be held
liable for the corporations labor obligations unless he acted with evident
malice
and/or
bad
faith
in
dismissing
an
employee. 24

In light of the foregoing criteria, we rule that Arenas three counts of


tardiness cannot be considered as gross and habitual neglect of duty. The
infrequency of his tardiness already removes the character of habitualness.
These late attendances were also broadly spaced out, negating the
complete absence of care on Arenas part in the performance of his duties.
Even CBTL admitted in its notice to explain that this violation does not
merit yet a disciplinary action and is only an aggravating circumstance to
Arenas
other
violations.20

In the present case, there was no showing of any evident malice or bad
faith on Chus part as CBTLs president. His participation in Arenas
termination was not even sufficiently alleged and argued. Hence, he
cannot be held solidarily liable for CBTLs liabilities to Arenas.

To further justify Arenas dismissal, CBTL argues that he committed serious


misconduct when he lied about using the ice bin as cooler for his bottled
iced tea. Under CBTLs employee handbook, dishonesty, even at the first
instance, warrants the penalty of termination from service. 21

WHEREFORE, in light of these considerations, we hereby DENY the


petition for lack of merit. The Court of Appeals committed no grave abuse
of discretion in its decision of March 26, 2013 and its resolution of August
30, 2013 in CA-G.R. SP No. 117822, except with respect to the liability of
petitioner Walden Chu. We thus absolve petitioner Walden Chu from
paying in his personal capacity the monetary awards of respondent Rolly P.
Arenas.
No
costs.
SO ORDERED.

For misconduct or improper behavior to be a just cause for dismissal, (a) it


must be serious; (b) it must relate to the performance of the employees
duties; and (c) it must show that the employee has become unfit to

181

G.R. No. 212054, March 11, 2015


ST. LUKES MEDICAL CENTER, INC., Petitioner, v. MARIA THERESA V.
SANCHEZ, Respondent.
DECISION

po. Taos-puso po akong humihingi ng tawad sa aking pagkakasala, Alam


ko po na ako ay nagkamali. Hindi ko po dapat dinala yung mga gamit sa
hospital. Hindi ko po alam kung [paano] ako magsisimulang humingi ng
patawad. Kahit alam kong bawal ay nagawa kong makapag uwi ng gamit.
Marami pang gamit dahil sa naipon po. Paisa-isa nagagawa kong
makakuha pag nakakalimutan kong isoli. Hindi ko na po naiwan sa nurse
station dahil naisip kong magagamit ko rin po pag minsang
nagkakaubusan
ng
stocks
at
talagang
may
kailangan.

PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated
November 21, 2013 and the Resolution 3 dated April 4, 2014 of the Court of
Appeals (CA) in CA-G.R. SP No. 129108 which affirmed the Decision 4 dated
November 19, 2012 and the Resolution 5 dated January 14, 2013 of the
National Labor Relations Commission (NLRC) in NLRC LAC No. 06-00185812, declaring the dismissal of respondent Maria Theresa V. Sanchez
(Sanchez) illegal.
The Facts
On June 29, 2009, Sanchez was hired by petitioner St. Lukes Medical
Center, Inc. (SLMC) as a Staff Nurse, and was eventually assigned at SLMC,
Quezon Citys Pediatric Unit until her termination on July 6, 2011 for her
purported violation of SLMCs Code of Discipline, particularly Section 1,
Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft, Pilferage, and
Misappropriation
of
Funds. 6
Records reveal that at the end of her shift on May 29, 2011, Sanchez
passed through the SLMC Centralization Entrance/Exit where she was
subjected to the standard inspection procedure by the security personnel.
In the course thereof, the Security Guard on-duty, Jaime Manzanade (SG
Manzanade), noticed a pouch in her bag and asked her to open the
same.7 When opened, said pouch contained the following assortment of
medical stocks which were subsequently confiscated: (a) Syringe 10cl [4
pieces]; (b) Syringe 5cl [3 pieces]; (c) Syringe 3cl [3 pieces]; (d) Micropore
[1 piece]; (e) Cotton Balls [1 pack]; (f) Neoflon g26 [1 piece]; (g) Venofix 25
[2 pieces]; and (h) Gloves [4 pieces] (questioned items). 8 Sanchez asked
SG Manzanade if she could just return the pouch inside the treatment
room; however, she was not allowed to do so. 9 Instead, she was brought to
the SLMC In-House Security Department (IHSD) where she was directed to
write an Incident Report explaining why she had the questioned items in
her possession.10 She complied11 with the directive and also submitted an
undated handwritten letter of apology 12 (handwritten letter) which reads as
follows:
To

In-House

Security,

I am very sorry for bringing things from [SLMC] inside my bag. Pasensya na

Humihingi po ako ng tawad sa aking ginawa. Isinakripisyo ko ang hindi


pagiging toxic sa pagkuha ng gamit para sa bagay na alam kong mali.
Inaamin ko na akoy naging madamot, pasuway at makasalanan. Inuna ko
ang comfort ko keysa gumawa ng tama. Manikluhod po akong humihingi
ng
tawad.
Sorry po. Sorry po. Sorry po talaga.13
In a memorandum14 of even date, the IHSD, Customer Affairs Division,
through Duty Officer Hernani R. Janayon, apprised SLMC of the incident,
highlighting that Sanchez expressly admitted that she intentionally brought
out
the
questioned
items.
An initial investigation was also conducted by the SLMC Division of
Nursing15 which thereafter served Sanchez a notice to explain. 16
On May 31, 2011, Sanchez submitted an Incident Report Addendum 17 (May
31, 2011 letter), explaining that the questioned items came from the
medication drawers of patients who had already been discharged, and, as
similarly practiced by the other staff members, she started saving these
items as excess stocks in her pouch, along with other basic items that she
uses during her shift.18She then put the pouch inside the lowest drawer of
the bedside table in the treatment room for use in immediate procedures
in case replenishment of stocks gets delayed. However, on the day of the
incident, she failed to return the pouch inside the medication drawer upon
getting her tri-colored pen and calculator and, instead, placed it inside her
bag. Eventually, she forgot about the same as she got caught up in work,
until it was noticed by the guard on duty on her way out of SMLCs
premises.
Consequently, Sanchez was placed under preventive suspension effective
June 3, 2011 until the conclusion of the investigation by SLMCs Employee
and Labor Relations Department (ELRD) 19 which, thereafter, required her to
explain why she should not be terminated from service for acts of
dishonesty due to her possession of the questioned items in violation of
Section 1, Rule I of the SLMC Code of Discipline. 20 In response, she
submitted a letter21 dated June 13, 2011, which merely reiterated her
claims in her previous May 31, 2011 letter. She likewise requested for a
case conference,22 which SLMC granted.23 After hearing her side, SLMC, on

182

July 4, 2011, informed Sanchez of its decision to terminate her employment


effective closing hours of July 6, 2011. 24 This prompted her to file a
complaint for illegal dismissal before the NLRC, docketed as NLRC NCR
Case
No.
07-11042-11.

The NLRC Ruling

In her position paper,25 Sanchez maintained her innocence, claiming that


she had no intention of bringing outside the SLMCs premises the
questioned items since she merely inadvertently left the pouch containing
them in her bag as she got caught up in work that day. She further
asserted that she could not be found guilty of pilferage since the
questioned items found in her possession were neither SLMCs nor its
employees property. She also stressed the fact that SLMC did not file any
criminal charges against her. Anent her supposed admission in her
handwritten letter, she claimed that she was unassisted by counsel when
she executed the same and, thus, was inadmissible for being
unconstitutional.26

The NLRC declared that the alleged violation of Sanchez was a unique
case, considering that keeping excess hospital stocks or hoarding was an
admitted practice amongst nurses in the Pediatric Unit which had been
tolerated by SLMC management for a long time. 40 The NLRC held that while
Sanchez expressed remorse for her misconduct in her handwritten letter,
she manifested that she only hoarded the questioned items for future
use in case their medical supplies are depleted, and not for her personal
benefit.41 It further held that SLMC failed to establish that Sanchez was
motivated by ill-will when she brought out the questioned items, noting: (a)
the testimony of SG Manzanade during the conference before the ELRD of
Sanchezs demeanor when she was apprehended, i.e., [d]i naman siya
masyado nataranta,42 and her consequent offer to return the pouch; 43 and
(b) that the said pouch was not hidden underneath the bag. 44 Finally, the
NLRC concluded that the punishment of dismissal was too harsh and the
one (1) month preventive suspension already imposed on and served by
Sanchez was the appropriate penalty. 45 Accordingly, the NLRC ordered her
reinstatement, and the payment of backwages, other benefits, and
attorneys
fees.46

For its part,27 SLMC contended that Sanchez was validly dismissed for just
cause as she had committed theft in violation of Section 1, 28 Rule I of the
SLMC Code of Discipline, 29 which punishes acts of dishonesty, i.e., robbery,
theft, pilferage, and misappropriation of funds, with termination from
service.
The LA Ruling
In a Decision dated May 27, 2012, the Labor Arbiter (LA) ruled that
Sanchez was validly dismissed 31 for intentionally taking the property of
SLMCs clients for her own personal benefit, 32which constitutes an act of
dishonesty
as
provided
under
SLMCs
Code
of
Discipline.
30

According to the LA, Sanchezs act of theft was evinced by her attempt to
bring the questioned items that did not belong to her out of SLMCs
premises; this was found to be analogous to serious misconduct which is a
just cause to dismiss her. 33 The fact that the items she took were neither
SLMCs nor her co-employees property was not found by the LA to be
material since the SLMC Code of Discipline clearly provides that acts of
dishonesty committed to SLMC, its doctors, its employees, as well as its
customers, are punishable by a penalty of termination from service. 34 To
this, the LA opined that [i]t is rather illogical to distinguish the persons
with whom the [said] acts may be committed as SLMC is also answerable
to the properties of its patients. 35 Moreover, the LA observed that Sanchez
was aware of SLMCs strict policy regarding the taking of hospital/medical
items as evidenced by her handwritten letter, 36 but nonetheless committed
the said misconduct. Finally, the LA pointed out that SLMCs non-filing of a
criminal case against Sanchez did not preclude a determination of her
serious misconduct, considering that the filing of a criminal case is entirely
separate and distinct from the determination of just cause for termination
of
employment.37
Aggrieved, Sanchez appealed38 to the NLRC.

In a Decision39 dated November 19, 2012, the NLRC reversed and set aside
the LA ruling, and held that Sanchez was illegally dismissed.

Unconvinced, SLMC moved for reconsideration 47 which was, however,


denied in a Resolution48 dated January 14, 2013. Thus, it filed a petition
for certiorari49 before the CA.
The CA Ruling
In a Decision50 dated November 21, 2013, the CA upheld the NLRC, ruling
that the latter did not gravely abuse its discretion in finding that Sanchez
was
illegally
dismissed.
It ruled that Sanchezs offense did not qualify as serious misconduct, given
that: (a) the questioned items found in her possession were not SLMC
property since said items were paid for by discharged patients, thus
discounting any material or economic damage on SLMCs part; (b) the
retention of excess medical supplies was an admitted practice amongst
nurses in the Pediatric Unit which was tolerated by SLMC; (c) it was illogical
for Sanchez to leave the pouch in her bag since she would be subjected to
a routine inspection; (d) Sanchezs lack of intention to bring out the pouch
was manifested by her composed demeanor upon apprehension and offer
to return the pouch to the treatment room; and (e) had SLMC honestly
believed that Sanchez committed theft or pilferage, it should have filed the
appropriate criminal case, but failed to do so. 51 Moreover, while the CA
recognized that SLMC had the management prerogative to discipline its
erring employees, it, however, declared that such right must be exercised
humanely. As such, SLMC should only impose penalties commensurate with
the degree of infraction. Considering that there was no indication that

183

Sanchezs actions were perpetrated for self-interest or for an unlawful


objective, the penalty of dismissal imposed on her was grossly oppressive
and
disproportionate
to
her
offense. 52
Dissatisfied, SLMC sought for reconsideration,53 but was denied in a
Resolution54 dated April 4, 2014, hence, this petition.
The Issue Before the Court
The core issue to be resolved is whether or not Sanchez was illegally
dismissed by SLMC.
The Courts Ruling
The petition is meritorious.
The right of an employer to regulate all aspects of employment, aptly
called management prerogative, gives employers the freedom to
regulate, according to their discretion and best judgment, all aspects of
employment, including work assignment, working methods, processes to
be followed, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of
workers.55 In this light, courts often decline to interfere in legitimate
business decisions of employers. In fact, labor laws discourage
interference in employers judgment concerning the conduct of their
business.56
Among the employers management prerogatives is the right to prescribe
reasonable rules and regulations necessary or proper for the conduct of its
business or concern, to provide certain disciplinary measures to implement
said rules and to assure that the same would be complied with. At the
same time, the employee has the corollary duty to obey all reasonable
rules, orders, and instructions of the employer; and willful or intentional
disobedience thereto, as a general rule, justifies termination of the
contract of service and the dismissal of the employee. 57 Article 296
(formerly Article 282) of the Labor Code provides:58
Article 296. Termination by Employer. - An employer may terminate an
employment
for
any
of
the
following
causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or his representative in connection
with
his
work;ChanRoblesVirtualawlibrary
xxxx
Note that for an employee to be validly dismissed on this ground, the
employers orders, regulations, or instructions must be: (1) reasonable
and lawful, (2) sufficiently known to the employee, and (3) in

connection with the duties which the employee has been engaged
to
discharge.59
Tested against the foregoing, the Court finds that Sanchez was validly
dismissed by SLMC for her willful disregard and disobedience of Section 1,
Rule I of the SLMC Code of Discipline, which reasonably punishes acts of
dishonesty, i.e., theft, pilferage of hospital or co-employee property, x x x
or its attempt in any form or manner from the hospital, co-employees,
doctors, visitors, [and] customers (external and internal) with termination
from employment.60 Such act is obviously connected with Sanchezs work,
who, as a staff nurse, is tasked with the proper stewardship of medical
supplies. Significantly, records show that Sanchez made a categorical
admission61 in her handwritten letter62 i.e., [k]ahit alam kong bawal ay
nagawa kong [makapag-uwi] ng gamit63 that despite her knowledge of
its express prohibition under the SLMC Code of Discipline, she still
knowingly brought out the subject medical items with her. It is apt to clarify
that SLMC cannot be faulted in construing the taking of the questioned
items as an act of dishonesty (particularly, as theft, pilferage, or its
attempt in any form or manner) considering that the intent to gain may be
reasonably presumed from the furtive taking of useful property
appertaining to another.64 Note that Section 1, Rule 1 of the SLMC Code of
Discipline is further supplemented by the company policy requiring the
turn-over of excess medical supplies/items for proper handling 65 and
providing a restriction on taking and bringing such items out of the SLMC
premises without the proper authorization or pass from the official
concerned,66 which Sanchez was equally aware thereof.67Nevertheless,
Sanchez failed to turn-over the questioned items and, instead, hoarded
them, as purportedly practiced by the other staff members in the Pediatric
Unit. As it is clear that the company policies subject of this case are
reasonable and lawful, sufficiently known to the employee, and evidently
connected with the latters work, the Court concludes that SLMC dismissed
Sanchez
for
a
just
cause.
On a related point, the Court observes that there lies no competent basis
to support the common observation of the NLRC and the CA that the
retention of excess medical supplies was a tolerated practice among the
nurses at the Pediatric Unit. While there were previous incidents of
hoarding, it appears that such acts were in similar fashion furtively
made and the items secretly kept, as any excess items found in the
concerned nurses possession would have to be confiscated. 68 Hence, the
fact that no one was caught and/or sanctioned for transgressing the
prohibition therefor does not mean that the so-called hoarding practice
was tolerated by SLMC. Besides, whatever maybe the justification behind
the violation of the company rules regarding excess medical supplies is
immaterial since it has been established that an infraction was deliberately
committed.69 Doubtless, the deliberate disregard or disobedience of rules
by the employee cannot be countenanced as it may encourage him or her
to do even worse and will render a mockery of the rules of discipline that
employees
are
required
to
observe. 70

184

Finally, the Court finds it inconsequential that SLMC has not suffered any
actual damage. While damage aggravates the charge, its absence does not
mitigate nor negate the employees liability. 71Neither is SLMCs non-filing of
the appropriate criminal charges relevant to this analysis. An employees
guilt or innocence in a criminal case is not determinative of the existence
of a just or authorized cause for his or her dismissal. 72 It is well-settled that
conviction in a criminal case is not necessary to find just cause for
termination of employment,73 as in this case. Criminal and labor cases
involving an employee arising from the same infraction are separate and
distinct proceedings which should not arrest any judgment from one to the
other.
As it stands, the Court thus holds that the dismissal of Sanchez was for a
just cause, supported by substantial evidence, and is therefore in order. By
declaring otherwise, bereft of any substantial bases, the NLRC issued a
patently and grossly erroneous ruling tantamount to grave abuse of
discretion, which, in turn, means that the CA erred when it affirmed the
same. In consequence, the grant of the present petition is warranted.
WHEREFORE, the petition is GRANTED. The Decision dated November
21, 2013 and the Resolution dated April 4, 2014 of the Court of Appeals in
CA-G.R. SP No. 129108 are REVERSED and SET ASIDE. The Labor
Arbiters Decision dated May 27, 2012 in NLRC Case No. NCR 07-11042-11
finding respondent Maria Theresa V. Sanchez to have been validly
dismissed
by
petitioner
St.
Lukes
Medical
Center,
Inc.
is
hereby REINSTATED.
SO ORDERED

185

MANSION
PRINTING
CLEMENT CHENG,
Petitioners,

CENTER

-versus-

DIOSDADO BITARA, JR.


Respondent.

and

G.R. No. 168120

Reconsideration of the Decision. The assailed decision of the Court of


Appeals

reversed

the

findings

of

the

National

Labor

Relations

Present:

Commission3 and the Labor Arbiter4 that respondent was validly dismissed

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

from the service.

Promulgated:
January 25, 2012

The Antecedents

Petitioner Mansion Printing Center is a single proprietorship


registered under the name of its president and co-petitioner Clement
Cheng. It is engaged in the printing of quality self-adhesive labels,
brochures, posters, stickers, packaging and the like. 5

Sometime in August 1998, petitioners engaged the services of


respondent as a helper (kargador). Respondent was later promoted as the
companys sole driver tasked to pick-up raw materials for the printing
business, collect account receivables and deliver the products to the
x-----------------------------------------------------------------------------------------x

2. D E C I S I O N

clients within the delivery schedules.6

Petitioners aver that the timely delivery of the products to the


clients is one of the foremost considerations material to the operation of

PEREZ, J.:

the business.7 It being so, they closely monitored the attendance of


respondent. They noted his habitual tardiness and absenteeism.

Before us is a petition for review on certiorari seeking to reverse


and set aside the issuances of the Court of Appeals in CA-GR. SP No.
70965, to wit: (a) the Decision1 dated 18 March 2004 granting the petition
for certiorari under Rule 65 of herein respondent Diosdado Bitara, Jr.; and
(b) the Resolution2 dated 10 May 2005 denying the petitioners Motion for

Thus,

as

early

as

23

June

1999,

petitioners

issued

Memorandum8 requiring respondent to submit a written explanation why


no administrative sanction should be imposed on him for his habitual
tardiness.

186

Several months after, respondents attention on the matter was


again called to which he replied:

Explain to respondent but the latter, after reading the directive, refused to
acknowledge receipt thereof.13 He did not submit any explanation and,
thereafter, never reported for work.

29 NOV. 1999
MR. CLEMENT CHENG

On 21 March 2000, Davis Cheng personally served another

SIR:

Memorandum14 (Notice of Termination) upon him informing him that the

I UNDERSTAND MY TARDINESS WHATEVER REASON I HAVE


AFFECTS SOMEHOW THE DELIVERY SCHEDULE OF THE
COMPANY, THUS DISCIPLINARY ACTION WERE IMPOSED TO
ME BY THE MANAGEMENT. AND ON THIS END, ACCEPT MY
APOLOGIES AND REST ASSURED THAT I WILL COME ON TIME
(ON OR BEFORE 8:30 AM) AND WILLINGNESS TO EXTEND MY
SERVICE AS A COMPANY DRIVER. WHATEVER HELP NEEDED.
(sic)
RESPECTFULLY YOURS,
(SGD.) DIOSDADO BITARA, JR.9

company found him grossly negligent of his duties, for which reason, his
services were terminated effective 1 April 2000.

On even date, respondent met with the management requesting


for reconsideration of his termination from the service. However, after
hearing his position, the management decided to implement the 21 March
2000 Memorandum. Nevertheless, the management, out of generosity,

Despite respondents undertaking to report on time, however, he

offered respondent financial assistance in the amount of P6,110.00

continued to disregard attendance policies. His weekly time record for the

equivalent to his one month salary. Respondent demanded that he be

first quarter of the year 200010revealed that he came late nineteen (19)

given the amount equivalent to two (2) months salary but the

times out of the forty-seven (47) times he reported for work. He also

management declined as it believed it would, in effect, reward respondent

incurred nineteen (19) absences out of the sixty-six (66) working days

for being negligent of his duties.15

during the quarter. His absences without prior notice and approval from
March 11-16, 2000 were considered to be the most serious infraction of

On 27 April 2000, respondent filed a complaint 16 for illegal


dismissal against the petitioners before the Labor Arbiter. He prayed for his

all11 because of its adverse effect on business operations.

reinstatement and for the payment of full backwages, legal holiday pay,
Consequently, Davis Cheng, General Manager of the company and
son

of

petitioner

Cheng,

issued

on

17

March

2000

service incentive leave pay, damages and attorneys fees. 17

another

Memorandum12 (Notice to Explain) requiring respondent to explain why his

In his Position Paper18 filed with the Labor Arbiter, respondent

services should not be terminated. He personally handed the Notice to

claimed that he took a leave of absence from March 17-23, 2000 19 due to
an urgent family problem. He returned to work on 24 March 2000 20 but

187

Davis Cheng allegedly refused him admission because of his unauthorized

WHEREFORE, finding no cogent reason to modify,


alter, much less reverse the decision appealed from, the
same is AFFIRMED en toto and the instant appeal
DISMISSED for lack of merit.26

absences.21 On 1 April 2000, respondent was summoned by Davis Cheng


who introduced him to a lawyer, who, in turn, informed him that he will no
longer be admitted to work because of his 5-day unauthorized absences.
Respondent explained that he was compelled to immediately leave for the
province on 17 March 200022 due to the urgency of the matter and his wife

It likewise denied respondents

Motion

for

Reconsideration

of

the

Resolution on 21 February 2002.27

informed the office that he will be absent for a week. The management
Before the Court of Appeals, respondent sought the annulment of

found his explanation unacceptable and offered him an amount equivalent


to his one (1) month salary as separation pay but respondent refused the
offer because he wanted to keep the job. 23 In his Reply to Respondents
Position Paper,24 however, respondent averred that he rejected the offer

the Commissions Resolution dated 29 June 2001 and Order dated 21


February 2002 on the ground that they were rendered with grave abuse of
discretion and/or without or in excess of jurisdiction. 28

because he wanted an amount equivalent to one and a half months pay.


The Court of Appeals found for the respondent and reversed the
On 21 December 2000, the Labor Arbiter dismissed the complaint
for lack of merit.25

findings of the Commission. The dispositive portion of its Decision dated 18


March 2004 reads:
WHEREFORE, the petition is GRANTED. In lieu of the
assailed Resolution and Order of the respondent NLRC, a
NEW DECISION is hereby rendered declaring petitioner
Diosdado Bitara, Jr. to have been Illegally Dismissed and,
thus, entitled to the following:

On appeal to the National Labor Relations Commission (hereinafter referred


to as the Commission), the findings of the Labor Arbiter was AFFIRMED en
toto. Thus, in its Resolution of 29 June 2001 in NLRC NCR CA No. 027871-

1.

Reinstatement or if no longer feasible, Separation Pay to be


computed from the commencement of his employment in
August 1988 up to the time of his termination on April 1,
2000, including his imputed service from April 1, 2000 until
the finality of this decision, based on the salary rate
prevailing at the said finality;

2.

Backwages, inclusive of allowances and other benefits,


computed from April 1, 2000 up to the finality of this
decision, without qualification or deduction; and

3.

5-day Service Incentive Leave Pay for every year of service


from the commencement of his employment in August 1988
up to its termination on April 1, 2000.29

01, the Commission declared:


Upon Our review of the record of the case, We
perceive no abuse of discretion as to compel a reversal.
Appellant failed to adduce convincing evidence to show that
the Labor Arbiter in rendering the assailed decision has
acted in a manner inconsistent with the criteria set forth in
the foregoing pronouncement.
Neither are we persuaded to disturb the factual
findings of the Labor Arbiter a quo. The material facts as
found are all in accordance with the evidence presented
during the hearing as shown by the record.

188

xxx [J]udicial review does not go as far as to


evaluate the sufficiency of evidence upon which the Labor
Arbiter and NLRC based their determinations, the inquiry
being limited essentially to whether or not said public
respondents had acted without or in excess of its
jurisdiction or with grave abuse of discretion. 34 The said
rule directs us to merely determine whether there is basis
established on record to support the findings of a tribunal
and such findings meet the required quantum of proof,
which in this case, is substantial evidence. Our deference
to the expertise acquired by quasi-judicial agencies and the
limited scope granted to us in the exercise of
certiorari jurisdiction restrain us from going so far as to
probe into the correctness of a tribunals evaluation of
evidence, unless there is palpable mistake and complete
disregard thereof in which case certiorari would be
proper.35

On 10 May 2005, the Court of Appeals denied respondents Motion


for Reconsideration of the decision for lack of merit. 30
Hence, the instant petition.31
Issue

The core issue in this case is whether or not the Court of Appeals
correctly found that the Commission acted without and/or in excess of
jurisdiction and with grave abuse of discretion amounting to lack or excess
of jurisdiction (a) in upholding the termination of respondents employment
and (b) in affirming the denial of his claim for non-payment of holiday pay,
service incentive leave pay, moral and exemplary damages.

It is on the alleged lack of substantial evidence that the Court of


Appeals found for the respondents, thereby reversing the decision of the
Commission.

Our Ruling
We hold otherwise.
The petition is meritorious.
Upon examination of the documents presented by the parties, we
The special civil action for certiorari seeks to correct errors of
jurisdiction and not errors of judgment.

32

xxx The raison detre for the rule is when a court


exercises its jurisdiction, an error committed while so
engaged does not deprive it of the jurisdiction being
exercised when the error is committed. If it did, every
error committed by a court would deprive it of its
jurisdiction and every erroneous judgment would be a void
judgment. xxx Hence, where the issue or question
involved affects the wisdom or legal soundness of
the decision not the jurisdiction of the court to
render said decision the same is beyond the
province of a special civil action for certiorari. xxx33

are convinced that the finding of facts on which the conclusions of the
Commission and the Labor Arbiter were based was actually supported
by substantial evidence that amount of relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even
if other minds, equally reasonable, might conceivably opine
otherwise.36 (Emphasis supplied.)

189

In order to validly dismiss an employee, the employer is required to

Necessarily, he was considered for termination of employment

observe both substantive and procedural aspects the termination of

because of his previous infractions capped by his recent unauthorized

employment must be based on a just or authorized cause of dismissal and

absences from March 11-16, 2000.

the dismissal must be effected after due notice and hearing. 37


That the recent absences were unauthorized were satisfactorily
Substantive Due Process

established by petitioners. Two (2) employees of the company belied the


claim of respondents wife Mary Ann Bitara that she called the office on 11

We cannot agree with the Court of Appeals that the sole basis of
the termination of respondents employment was his absences from March
11-16, 2000.
Indeed, the Notice to Explain

March 2000, and, through a certain Delia, as allegedly later identified by


respondent, informed petitioners that her husband would take a leave of
absence for a week because he went to the province.39

38

clearly stated:

We are seriously considering your termination


from service, and for this reason you are directed to
submit a written explanation, within seventy-two hours
from your receipt of this notice, why you should not be
terminated from service for failure to report for work
without verbal or written notice or permission on March 11,
13, 14, 15 and 16, 2000. xxx (Emphasis supplied.)

Delia Abalos, a binder/finisher of the company, stated in her


Affidavit that she never received a call from respondent nor his wife
regarding his absences from March 11-16 and 17-23 during the month of
March 2000.40 On the other hand, Ritchie Distor, a messenger of the
company,

To give full meaning and substance to the Notice to Explain, however, the
paragraph should be read together with its preceding paragraph, to wit:

narrated

in

his

Affidavit

that,

upon

instruction

of

the

Management, he went to respondents house on 13 March 2000 to require


him to report for work. Instead of relaying the message to him, as
respondent would have it, the wife informed him that respondent had

We have time and again, verbally and


formally, called your attention to your negligence
from your tardiness and your frequent absences
without any notice but still, you remain to ignore our
reminder. As you know, we are in need of a regular driver
and your action greatly affected the operation of our
company. (Emphasis supplied.)

already left the house but that she did not know where he was going. 41

The Court of Appeals relied heavily on our ruling in Stellar


Industrial Services, Inc. vs. NLRC,42 which is not on all fours with the
present case. In that case, the employer dismissed respondent for nonobservance of company rules and regulations. On the basis of the facts
presented, this Court honored the questioned medical certificate justifying
the absences he incurred. It further ratiocinated:

190

xxx [P]rivate respondents absences, as already


discussed, were incurred with due notice and compliance
with company rules and he had not thereby committed a
similar offense as those he had committed in the past [to
wit: gambling, for which he was preventively suspended;
habitual tardiness for which he received several warnings;
and violation of company rules for carrying three sacks of
rice, for which he was required to explain.] xxx To refer to
those earlier violations as added grounds for dismissing him
is doubly unfair to private respondent. 43 (Emphasis
supplied.)

xxx It bears stressing that petitioners absences and


tardiness were not isolated incidents but manifested a
pattern of habituality. xxx The totality of infractions or the
number of violations committed during the period of
employment shall be considered in determining the penalty
to be imposed upon an erring employee. The offenses
committed by him should not be taken singly and
separately but in their totality. Fitness for continued
employment cannot be compartmentalized into tight little
cubicles of aspects of character, conduct, and ability
separate and independent of each other.46

In the present case, however, petitioners have repeatedly called

There is likewise no merit in the observation of the Court of

the attention of respondent concerning his habitual tardiness. The

Appeals that the petitioners themselves are not certain of the official time

Memorandum dated 23 June 1999 of petitioner Cheng required him to

of their employees after pointing out the seeming inconsistencies between

explain his tardiness. Also in connection with a similar infraction,

the statement of the petitioners that there is no need for written rules

respondent even wrote petitioner Cheng a letter dated 29 November 1999

since even the [respondent] is aware that his job starts from 8 am to 5

where he admitted that his tardiness has affected the delivery schedules of

pm47 and its Memorandum of 23 June 1999, where it was mentioned that

the company, offered an apology, and undertook to henceforth report for

respondents official time was from 8:30 a.m. to 5:30 p.m. On the contrary,

duty on time. Despite this undertaking, he continued to either absent

it was clearly stated in the Memorandum that the Management adjusted

himself from work or report late during the first quarter of 2000.

his official time from 8:00 a.m. to 5:00 p.m. to 8:30 a.m. to 5:30 p.m. to
hopefully solve the problem on his tardiness.48

We, therefore, agree with the Labor Arbiters findings, to wit:


Neither is there basis to hold that the company tolerates the
The imputed absence and tardiness of the
complainant are documented. He faltered on his
attendance 38 times of the 66 working days. His last
absences on 11, 13, 14, 15 and 16 March 2000 were
undertaken
without
even
notice/permission
from
management. These attendance delinquencies may be
characterized as habitual and are sufficient justifications to
terminate the complainants employment.44

offsetting of undertime with overtime services. The Weekly Time Record


relied upon by respondent does not conclusively confirm the alleged
practice.

In Valiao,49 we defined gross negligence as want of care in the


On this score, Valiao v. Court of Appeals45 is instructive:

performance of ones duties50 and habitual neglect as repeated failure


to perform ones duties for a period of time, depending upon the

191

circumstances.51 These are not overly technical terms, which, in the first
place, are expressly sanctioned by the Labor Code of the Philippines, to
wit:
ART. 282. Termination by employer. - An employer may
terminate an employment for any of the following causes:
(a) xxx
(b) Gross and habitual neglect by the employee of
his duties;
xxx

Clearly, even in the absence of a written company rule defining gross and

While it is true that compassion and human


consideration should guide the disposition of cases involving
termination of employment since it affects one's source or
means of livelihood, it should not be overlooked that the
benefits accorded to labor do not include compelling an
employer to retain the services of an employee who has
been shown to be a gross liability to the employer. The law
in protecting the rights of the employees authorizes neither
oppression nor self-destruction of the employer. 54 It should
be made clear that when the law tilts the scale of justice in
favor of labor, it is but a recognition of the inherent
economic inequality between labor and management. The
intent is to balance the scale of justice; to put the two
parties on relatively equal positions. There may be cases
where the circumstances warrant favoring labor over the
interests of management but never should the scale be so
tilted if the result is an injustice to the employer.Justitia
nemini neganda est (Justice is to be denied to none).55

habitual neglect of duties, respondents omissions qualify as such


warranting his dismissal from the service.

Procedural Due Process


Procedural due process entails compliance with the two-notice rule

We cannot simply tolerate injustice to employers if only to protect


the welfare of undeserving employees. As aptly put by then Associate
Justice Leonardo A. Quisumbing:
Needless to say, so irresponsible an employee like
petitioner does not deserve a place in the workplace, and it
is within the managements prerogative xxx to terminate his
employment. Even as the law is solicitous of the welfare of
employees, it must also protect the rights of an employer to
exercise what are clearly management prerogatives. As long
as the companys exercise of those rights and prerogative is
in good faith to advance its interest and not for the purpose
of defeating or circumventing the rights of employees under
the laws or valid agreements, such exercise will be upheld. 52

And, in the words of then Associate Justice Ma. Alicia AustriaMartinez in Philippine Long Distance and Telephone Company, Inc. v.
Balbastro:

53

in dismissing an employee, to wit: (1) the employer must inform the


employee of the specific acts or omissions for which his dismissal is
sought; and (2) after the employee has been given the opportunity to be
heard, the employer must inform him of the decision to terminate his
employment.56
Respondent claimed that he was denied due process because the
company did not observe the two-notice rule. He maintained that the
Notice of Explanation and the Notice of Termination, both of which he
allegedly refused to sign, were never served upon him. 57

The Court of Appeals favored respondent and ruled in this wise:


Furthermore, We believe that private respondents
failed to afford petitioner due process. The allegation of
private respondents that petitioner refused to sign the
memoranda dated March 17 and 21, 2000 despite receipt
thereof is not only lame but also implausible. First, the said

192

allegation is self-serving and unsubstantiated. Second, a


prudent employer would simply not accept such mere
refusal, but would exert effort to observe the mandatory
requirement of due process. We cannot accept the selfserving claim of respondents that petitioner refused to sign
both memoranda. Otherwise, We would be allowing
employers to do away with the mandatory twin-notice rule in
the termination of employees. We find more credible the
claim of petitioner that he was illegally dismissed on April 1,
2000 when the lawyer of the company informed him,
without prior notice and in derogation of his right to due
process, of his termination by offering him a 1-month salary
as separation pay. The petitioners immediate filing of a
complaint for illegal dismissal on April 27, 2000 reinforced
Our belief that petitioner was illegally dismissed and was
denied due process.58 (Emphasis in the original.)

July 2000 stating that: (1) he is the General Manager of the company; (2)
he personally served each notice upon respondent, when respondent went
to the office/factory on 17 March 2000 and 21 March 2000, respectively;
and (3) on both occasions, after reading the contents of the memoranda,
respondent refused to acknowledge receipt thereof. We are, thus,
convinced that the notices have been validly served.
Premises considered, we find that respondent was accorded both
substantive and procedural due process.

II
We rule otherwise.
In Bughaw v. Treasure Island Industrial Corporation,59 this Court, in

As to respondents monetary claims, petitioners did not deny

verifying the veracity of the allegation that respondent refused to receive

respondents entitlement to service incentive leave pay as, indeed, it is

the Notice of Termination, essentially looked for the following: (1) affidavit

indisputable that he is entitled thereto. InFernandez v. NLRC,62 this Court

of service stating the reason for failure to serve the notice upon the

elucidated:

recipient; and (2) a notation to that effect, which shall be written on the
notice itself.60 Thus:
xxx Bare and vague allegations as to the manner of
service and the circumstances surrounding the same would
not suffice. A mere copy of the notice of termination
allegedly sent by respondent to petitioner, without proof of
receipt, or in the very least, actual service thereof upon
petitioner, does not constitute substantial evidence. It was
unilaterally prepared by the petitioner and, thus, evidently
self-serving and insufficient to convince even an
unreasonable mind.61

Davis Cheng, on the other hand, did both. First, he indicated in the
notices the notation that respondent refused to sign together with the
corresponding dates of service. Second,he executed an Affidavit dated 29

The clear policy of the Labor Code is to grant


service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2,
Rule V, Book III of the Implementing Rules and
Regulations63 provides that [e]very employee who has
rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.
Service incentive leave is a right which accrues to every
employee who has served within 12 months, whether
continuous or broken reckoned from the date the employee
started working, including authorized absences and paid
regular holidays unless the working days in the
establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12
months, in which case said period shall be considered as
one year.64 It is also commutable to its money equivalent
if not used or exhausted at the end of the year. 65 In other
words, an employee who has served for one year is entitled
to it. He may use it as leave days or he may collect its
monetary value. xxx66 (Emphasis supplied.)

193

pay for every year of service from the commencement of his employment
Be that as it may, petitioners failed to establish by evidence that
respondent had already used the service incentive leave when he incurred

in August 1988 up to its termination on 1 April 2000. The Labor Arbiter


shall compute the corresponding amount.

numerous absences notwithstanding that employers have complete control


over the records of the company so much so that they could easily show

WHEREFORE, the Resolution dated 29 June 2001 and the Order

payment of monetary claims against them by merely presenting vouchers

dated 21 February 2002 of the National Labor Relations Commission in

or payrolls,67 or any document showing the off-setting of the payment of

NLRC

service incentive leave with the absences, as acknowledged by the

the MODIFICATION that petitioners are ORDERED to pay respondent the

absentee, if such is the company policy. Petitioners presented none.

money equivalent of the five-day service incentive leave for every year of

NCR

CASE

No.

027871-01are

hereby REINSTATED with

service covering his employment period from August 1988 to 1 April 2000.
We thus quote with approval the findings of the Court of Appeals
on the following:
[P]rivate respondents bear the burden to prove that
employees have received these benefits in accordance with
law. It is incumbent upon the employer to present the
necessary documents to prove such claim. Although private
respondents labored to show that they paid petitioner his
holiday pay, no similar effort was shown with regard to his
service incentive leave pay. We do not agree with the Labor
Arbiters conclusion that petitioners service incentive leave
pay has been used up by his numerous absences, there
being no proof to that effect.68

As to the payment of holiday pay, we are convinced that


respondent had already received the same based on the cash vouchers on
record.

Accordingly, we affirm the ruling of the National Labor Relations


Commission that the dismissal was valid. However, respondent shall be
entitled to the money equivalent of the five-day service incentive leave

This case is hereby REMANDED to the Labor Arbiter for the computation
of respondents service incentive leave pay.

SO ORDERED.

194

ARMANDO ALILING,
Petitioner,

G.R. No. 185829


Present:

- versus JOSE B. FELICIANO, MANUELBERSAMIN, JJ.


F. SAN MATEO III, JOSEPH R.
LARIOSA, and WIDE WIDEPromulgated:
WORLD EXPRESS CORPORATION,
Respondents.

allowance of PhP 3,000, clothing allowance of PhP 800, cost of living


allowance of PhP 500, each payable on a per month basis and a 14 th month

VELASCO, JR., J., Chairperson


pay depending on the profitability and availability of financial resources of
PERALTA,
the company. The offer came with a six (6)-month probation period
ABAD,
MENDOZA, and
condition with this express caveat: Performance during [sic] probationary
PERLAS-BERNABE, JJ.
period shall be made as basis for confirmation to Regular or Permanent
Promulgated:

Status.

April 25, 2012


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

On

DECISION

Contract

VELASCO, JR., J.:


The Case

This Petition for Review on Certiorari under Rule 45 assails and

June
[7]

11,

2004,

Aliling

and

WWWEC

inked

an Employment

under the following terms, among others:


Conversion to regular status shall be determined on the basis
of work performance; and
Employment services may, at any time, be terminated for just
cause or in accordance with the standards defined at the time
of engagement.[8]

seeks to set aside the July 3, 2008 Decision [1] and December 15, 2008
Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No. 101309,
entitled Armando Aliling v. National Labor Relations Commission, Wide
Wide World Express Corporation, Jose B. Feliciano, Manuel F. San Mateo III
and Joseph R. Lariosa. The assailed issuances modified the Resolutions
dated May 31, 2007[3] and August 31, 2007[4] rendered by the National

Training then started. However, instead of a Seafreight Sale


assignment, WWWEC asked Aliling to handle Ground Express (GX), a new
company product launched on June 18, 2004 involving domestic cargo
forwarding service for Luzon. Marketing this product and finding daily
contracts for it formed the core of Alilings new assignment.

Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-10-111662004, affirming the Decision dated April 25, 2006[5] of the Labor Arbiter.
The Facts

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC
Sales and Marketing Director, emailed Aliling [9] to express dissatisfaction
with the latters performance, thus:

Via a letter dated June 2, 2004,[6] respondent Wide Wide World Express

Armand,

Corporation (WWWEC) offered to employ petitioner Armando Aliling

My expectations is [sic] that GX Shuttles should be 80% full


by the 3rd week (August 5) after launch (July 15). Pls. make
that happen. It has been more than a month since you
came in. I am expecting sales to be pumping in by now.
Thanks.

(Aliling) as Account Executive (Seafreight Sales), with the following


compensation package: a monthly salary of PhP 13,000, transportation

195

PhP 6,975.46 Total


Nonong
Earlier, however, or on October 4, 2004, Aliling filed a Complaint [17] for
Thereafter, in a letter of September 25, 2004, [10] Joseph R. Lariosa (Lariosa),
Human Resources Manager of WWWEC, asked Aliling to report to the
Human Resources Department to explain his absence taken without leave
from September 20, 2004.

illegal dismissal due to forced resignation, nonpayment of salaries as well


as damages with the NLRC against WWWEC. Appended to the complaint
was Alilings Affidavit dated November 12, 2004, [18] in which he stated: 5. At
the time of my engagement, respondents did not make known to me the
standards under which I will qualify as a regular employee.

Aliling responded two days later. He denied being absent on the days in
question, attaching to his reply-letter [11] a copy of his timesheet[12] which
showed that he worked from September 20 to 24, 2004. Alilings
explanation came with a query regarding the withholding of his salary
corresponding to September 11 to 25, 2004.

Refuting Alilings basic posture, WWWEC stated in its Position Paper


dated November 22, 2004[19] that, in addition to the letter-offer and
employment contract adverted to, WWWEC and Aliling have signed a letter
of appointment[20] on June 11, 2004 containing the following terms of
engagement:

In a separate letter dated September 27, 2004, [13] Aliling wrote San
Mateo stating: Pursuant to your instruction on September 20, 2004, I
hereby tender my resignation effective October 15, 2004. While WWWEC
took no action on his tender, Aliling nonetheless demanded reinstatement
and a written apology, claiming in a subsequent letter dated October 1,
2004[14] to management that San Mateo had forced him to resign.

Lariosas response-letter of October 1, 2004, [15] informed Aliling that his

Additionally, upon the effectivity of your probation,


you and your immediate superior are required to
jointly define your objectives compared with the job
requirements of the position. Based on the pre-agreed
objectives, your performance shall be reviewed on
the 3rd month to assess your competence and work
attitude. The 5th month Performance Appraisal shall
be the basis in elevating or confirming your
employment status from Probationary to Regular.
Failure to meet the job requirements during the probation
stage means that your services may be terminated without
prior notice and without recourse to separation pay.

case was still in the process of being evaluated. On October 6, 2004,


[16]

Lariosa again wrote, this time to advise Aliling of the termination of his

services

effective

as

of

that

date

owing

to

his non-satisfactory

performance during his probationary period. Records show that Aliling, for
the period indicated, was paid his outstanding salary which consisted of:

WWWEC also attached to its Position Paper a memo dated September 20,
2004[21] in which San Mateo asked Aliling to explain why he should not be
terminated for failure to meet the expected job performance, considering
that the load factor for the GX Shuttles for the period July to September
was only 0.18% as opposed to the allegedly agreed upon load of 80%

PhP 4,988.18 (salary for the September 25, 2004 payroll)


1,987.28 (salary for 4 days in October 2004)
-------------

targeted for August 5, 2004. According to WWWEC, Aliling, instead of


explaining himself, simply submitted a resignation letter.

196

In a Reply-Affidavit dated December 13, 2004, [22] Aliling denied having


received a copy of San Mateos September 20, 2004 letter.

Issues having been joined, the Labor Arbiter issued on April 25, 2006

[23]

Decision declaring Alilings termination as unjustified. In its pertinent parts,


the decision reads:
The grounds upon which complainants dismissal was based
did not conform not only the standard but also the
compliance required under Article 281 of the Labor Code,
Necessarily, complainants termination is not justified for
failure to comply with the mandate the law requires.
Respondents should be ordered to pay salaries
corresponding to the unexpired portion of the
contract of employment and all other benefits
amounting to a total of THIRTY FIVE THOUSAND EIGHT
HUNDRED ELEVEN PESOS (P35,811.00) covering the period
from October 6 to December 7, 2004, computed as follows:
Unexpired Portion of the Contract:

WHEREFORE, judgment is hereby rendered ordering


respondent company to pay complainant Armando Aliling
the sum of THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) representing his salaries and
other benefits as discussed above.
Respondent company is likewise ordered to pay said
complainant the amount of TEN THOUSAND SEVEN
HUNDRED SIXTY SIX PESOS AND 85/100 ONLY (10.766.85)
representing his proportionate 13 th month pay for 2004
plus 10% of the total judgment as and by way of attorneys
fees.
Other claims are hereby denied for lack of merit. (Emphasis
supplied.)
The labor arbiter gave credence to Alilings allegation about not receiving
and, therefore, not bound by, San Mateos purported September 20, 2004
memo. The memo, to reiterate, supposedly apprised Aliling of the sales
quota he was, but failed, to meet. Pushing the point, the labor arbiter
explained that Aliling cannot be validly terminated for non-compliance with
the quota threshold absent a prior advisory of the reasonable standards
upon which his performance would be evaluated.

Basic Salary P13,000.00


Transportation 3,000.00
Clothing Allowance 800.00
ECOLA 500.00
-------------P17,300.00

Both parties appealed the above decision to the NLRC, which affirmed the
Decision in toto in its Resolution dated May 31, 2007. The separate
motions for reconsideration were also denied by the NLRC in its Resolution

10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00

dated August 31, 2007.

Complainants 13th month pay proportionately for 2004 was


not shown to have been paid to complainant, respondent
be made liable to him therefore computed at SIX
THOUSAND FIVE HUNDRED THIRTY TWO PESOS AND
50/100 (P6,532.50).

Therefrom, Aliling went on certiorari to the CA, which eventually rendered

For engaging the services of counsel to protect his interest,


complainant is likewise entitled to a 10% attorneys fees of
the judgment amount. Such other claims for lack of basis
sufficient to support for their grant are unwarranted.

the assailed Decision, the dispositive portion of which reads:


WHEREFORE, the petition is PARTLY GRANTED. The assailed
Resolutions of respondent (Third Division) National Labor
Relations Commission are AFFIRMED, with the following
MODIFICATION/CLARIFICATION: Respondents Wide Wide
World Express Corp. and its officers, Jose B. Feliciano,
Manuel F. San Mateo III and Joseph R. Lariosa, are jointly
and severally liable to pay petitioner Armando Aliling:
(A) the sum of Forty Two Thousand Three Hundred Thirty

197

Three & 50/100 (P42,333.50) as the total money judgment,


(B) the sum of Four Thousand Two Hundred Thirty Three &
35/100 (P4,233.35) as attorneys fees, and (C) the
additional sum equivalent to one-half (1/2) month of
petitioners salary as separation pay.

petitioner was dismissed to prevent the acquisition of his


regular status) is contrary to law and applicable
jurisprudence.[25]

In their Comment,[26] respondents reiterated their position that

SO ORDERED.[24] (Emphasis supplied.)

WWWEC hired petitioner on a probationary basis and fired him before he


The CA anchored its assailed action on the strength of the following
premises: (a) respondents failed to prove that Alilings dismal performance
constituted gross and habitual neglect necessary to justify his dismissal;
(b) not having been informed at the time of his engagement of the
reasonable standards under which he will qualify as a regular employee,
Aliling was deemed to have been hired from day one as a regular

became a regular employee.

The Courts Ruling

The petition is partly meritorious.


Petitioner is a regular employee

employee; and (c) the strained relationship existing between the parties
On a procedural matter, petitioner Aliling argues that WWWEC, not

argues against the propriety of reinstatement.

having appealed from the judgment of CA which declared Aliling as a


Alilings motion for reconsideration was rejected by the CA through the
assailed Resolution dated December 15, 2008.

regular employee from the time he signed the employment contract, is


now precluded from questioning the appellate courts determination as to
the nature of his employment.

Hence, the instant petition.


Petitioner errs. The Court has, when a case is on appeal, the
The Issues

authority to review matters not specifically raised or assigned as error if


their consideration is necessary in reaching a just conclusion of the

Aliling raises the following issues for consideration:

case. We said as much in Sociedad Europea de Financiacion, SA v. Court of


Appeals,[27] It is axiomatic that an appeal, once accepted by this Court,

A. The failure of the Court of Appeals to order


reinstatement (despite its finding that petitioner was
illegally dismissed from employment) is contrary to law
and applicable jurisprudence.

throws the entire case open to review, and that this Court has the authority

B. The failure of the Court of Appeals to award


backwages (even if it did not order reinstatement) is
contrary to law and applicable jurisprudence.
C. The failure of the Court of Appeals to award
moral and exemplary damages (despite its finding that

case.

to review matters not specifically raised or assigned as error by the parties,


if their consideration is necessary in arriving at a just resolution of the

198

The issue of whether or not petitioner was, during the period


material, a probationary or regular employee is of pivotal import. Its
resolution is doubtless necessary at arriving at a fair and just disposition of
the controversy.

Petitioner was regularized from the time of the


execution of the employment contract on June 11, 2004,
although respondent company had arbitrarily shortened his
tenure. As pointed out, respondent company did not
make known the reasonable standards under which
he will qualify as a regular employee at the time of
his engagement. Hence, he was deemed to have
been hired from day one as a regular employee.
[30]
(Emphasis supplied.)

The Labor Arbiter cryptically held in his decision dated April 25,
2006 that:

WWWEC, however, excepts on the argument that it put Aliling on

Be that as it may, there appears no showing that


indeed the said September 20, 2004 Memorandum
addressed to complainant was received by him. Moreover,
complainants tasked where he was assigned was a new
developed service. In this regard, it is noted:
Due process dictates that an employee be
apprised beforehand of the conditions of his
employment and of the terms of advancement
therein. Precisely, implicit in Article 281 of the
Labor Code is the requirement that reasonable
standards be previously made known by the
employer to the employee at the time of his
engagement (Ibid, citing Sameer Overseas
Placement Agency, Inc. vs. NLRC, G.R. No. 132564,
October 20, 1999).[28]

From our review, it appears that the labor arbiter, and later the
NLRC, considered Aliling a probationary employee despite finding that he
was not informed of the reasonable standards by which his probationary
employment was to be judged.

The CA, on the other hand, citing Cielo v. National Labor Relations
Commission,[29] ruled that petitioner was a regular employee from the
outset inasmuch as he was not informed of the standards by which his
probationary employment would be measured. The CA wrote:

notice that he would be evaluated on the 3 rd and 5th months of his


probationary employment. To WWWEC, its efforts translate to sufficient
compliance with the requirement that a probationary worker be apprised of
the reasonable standards for his regularization. WWWEC invokes the
ensuing holding in Alcira v. National Labor Relations Commission [31] to
support its case:
Conversely,
an
employer
is
deemed
to
substantially comply with the rule on notification of
standards if he apprises the employee that he will be
subjected to a performance evaluation on a particular date
after his hiring. We agree with the labor arbiter when he
ruled that:
In the instant case, petitioner cannot
successfully say that he was never informed by
private respondent of the standards that he must
satisfy in order to be converted into regular
status. This
rans
(sic)
counter
to
the
agreement between the parties that after
five months of service the petitioners
performance would be evaluated. It is only but
natural that the evaluation should be made vis--vis
the performance standards for the job. Private
respondent Trifona Mamaradlo speaks of such
standard in her affidavit referring to the fact that
petitioner did not perform well in his assigned work
and his attitude was below par compared to the
companys standard required of him. (Emphasis
supplied.)

WWWECs contention is untenable.

199

Article 281 of the Labor Code


Alcira is cast under a different factual setting. There, the labor
arbiter, the NLRC, the CA, and even finally this Court were one in their
findings that the employee concerned knew, having been duly informed
during his engagement, of the standards for becoming a regular employee.
This is in stark contrast to the instant case where the element of being
informed

of

the

regularizing

standards

does

not

obtain.

As

such, Alcira cannot be made to apply to the instant case.

To note, the June 2, 2004 letter-offer itself states that the


regularization standards or the performance norms to be used are still to
be agreed upon by Aliling and his supervisor. WWWEC has failed to
prove that an agreement as regards thereto has been reached. Clearly
then, there were actually no performance standards to speak of. And lest it
be overlooked, Aliling was assigned to GX trucking sales, an activity
entirely different to the Seafreight Sales he was originally hired and trained
for. Thus, at the time of his engagement, the standards relative to his
assignment with GX sales could not have plausibly been communicated to
him as he was under Seafreight Sales. Even for this reason alone, the
conclusion reached in Alcira is of little relevant to the instant case.

ART. 281. Probationary employment. - Probationary


employment shall not exceed six (6) months from the date
the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in
accordance with reasonable standards made known
by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular
employee. (Emphasis supplied.)
Section 6(d) of the Implementing Rules of Book VI,
Rule VIII-A of the Labor Code
Sec. 6. Probationary employment. There is
probationary employment where the employee, upon his
engagement, is made to undergo a trial period where the
employee determines his fitness to qualify for regular
employment, based on reasonable standards made known
to him at the time of engagement.
Probationary employment shall be governed by the
following rules:
xxxx
(d) In all cases of probationary employment, the
employer shall make known to the employee the
standards under which he will qualify as a regular
employee at the time of his engagement. Where no
standards are made known to the employee at that
time,
he shall
be deemed
a
regular
employee. (Emphasis supplied.)

Based on the facts established in this case in light of extant


jurisprudence, the CAs holding as to the kind of employment petitioner

To repeat, the labor arbiter, NLRC and the CA are agreed, on the

enjoyed is correct. So was the NLRC ruling, affirmatory of that of the labor

basis of documentary evidence adduced, that respondent WWWEC did not

arbiter. In the final analysis, one common thread runs through the holding

inform petitioner Aliling of the reasonable standards by which his probation

of the labor arbiter, the NLRC and the CA, i.e., petitioner Aliling, albeit hired

would be measured against at the time of his engagement. The Court is

from managements standpoint as a probationary employee, was deemed a

loathed to interfere with this factual determination. As We have held:

regular employee by force of the following self-explanatory provisions:


Settled is the rule that the findings of the
Labor Arbiter, when affirmed by the NLRC and the

200

Court of Appeals, are binding on the Supreme Court,


unless patently erroneous.It is not the function of the
Supreme Court to analyze or weigh all over again the
evidence already considered in the proceedings below. The
jurisdiction of this Court in a petition for review on
certiorari is limited to reviewing only errors of law, not of
fact, unless the factual findings being assailed are not
supported by evidence on record or the impugned
judgment is based on a misapprehension of facts. [32]

Respondents further allege that San Mateos email dated July 16,
2004 shows that the standards for his regularization were made known to
petitioner Aliling at the time of his engagement. To recall, in that email
message, San Mateo reminded Aliling of the sales quota he ought to meet
as a condition for his continued employment, i.e., that the GX trucks should

The more recent Peafrancia Tours and Travel Transport, Inc., v.


Sarmiento[33] has reaffirmed the above ruling, to wit:
Finally, the CA affirmed the ruling of the NLRC and
adopted as its own the latter's factual findings. Longestablished is the doctrine that findings of fact of quasijudicial bodies x x x are accorded respect, even finality, if
supported by substantial evidence. When passed upon and
upheld by the CA, they are binding and conclusive upon
this Court and will not normally be disturbed. Though this
doctrine is not without exceptions, the Court finds that
none are applicable to the present case.

already be 80% full by August 5, 2004. Contrary to respondents


contention, San Mateos email cannot support their allegation on Aliling
being informed of the standards for his continued employment, such as the
sales quota, at the time of his engagement. As it were, the email
message was sent to Aliling more than a month after he signed his
employment contract with WWWEC. The aforequoted Section 6 of the
Implementing Rules of Book VI, Rule VIII-A of the Code specifically requires
the employer to inform the probationary employee of such reasonable
standards at the time of his engagement, not at any time later; else,

WWWEC also cannot validly argue that the factual findings

the latter shall be considered a regular employee. Thus, pursuant to the

being assailed are not supported by evidence on record or the

explicit provision of Article 281 of the Labor Code, Section 6(d) of the

impugned judgment is based on a misapprehension of facts. Its

Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled

very own letter-offer of employment argues against its above posture.

jurisprudence, petitioner Aliling is deemed a regular employee as of June

Excerpts of the letter-offer:

11, 2004, the date of his employment contract.

Additionally, upon the effectivity of your


probation, you and your immediate superior are
required to jointly define your objectives compared
with the job requirements of the position. Based on
the pre-agreed objectives, your performance shall be
reviewed on the 3rd month to assess your competence and
work attitude. The 5th month Performance Appraisal shall
be the basis in elevating or confirming your employment
status from Probationary to Regular.
Failure to meet the job requirements during the
probation stage means that your services may be
terminated without prior notice and without recourse to
separation pay. (Emphasis supplied.)

Petitioner was illegally dismissed

To justify fully the dismissal of an employee, the employer must, as


a rule, prove that the dismissal was for a just cause and that the employee
was afforded due process prior to dismissal. As a complementary principle,

201

the employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.

[34]

Article 282 of the Labor Code considers any of the following acts or
omission on the part of the employee as just cause or ground for
terminating employment:

WWWEC had failed to discharge its twin burden in the instant case.

First off, the attendant circumstances in the instant case aptly


show that the issue of petitioners alleged failure to achieve his quota, as a
ground for terminating employment, strikes the Court as a mere
afterthought on the part of WWWEC. Consider: Lariosas letter of

(a) Serious misconduct or willful disobedience by


the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and
employee of his duties;

habitual

neglect

by

the

(c) Fraud or willful breach by the employee of the


trust reposed in him by his employer or duly authorized
representative;

September 25, 2004 already betrayed managements intention to dismiss


the petitioner for alleged unauthorized absences. Aliling was in fact made
to explain and he did so satisfactorily. But, lo and behold, WWWEC
nonetheless proceeded with its plan to dismiss the petitioner for nonsatisfactory performance, although the corresponding termination letter

(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
representatives; and
(e)
Other
causes
foregoing. (Emphasis supplied)

analogous

to

the

dated October 6, 2004 did not even specifically state Alilings nonsatisfactory performance, or that Alilings termination was by reason of his
failure to achieve his set quota.

In Lim

v.

National

Labor

Relations

Commission,[35] the

considered inefficiency as an analogous just cause for termination of


employment under Article 282 of the Labor Code:

What WWWEC considered as the evidence purportedly showing it


gave Aliling the chance to explain his inability to reach his quota was a
purported September 20, 2004 memo of San Mateo addressed to the latter.
However, Aliling denies having received such letter and WWWEC has failed
to refute his contention of non-receipt. In net effect, WWWEC was at a loss
to explain the exact just reason for dismissing Aliling.

At any event, assuming for argument that the petitioner indeed


failed to achieve his sales quota, his termination from employment on that
ground would still be unjustified.

Court

We cannot but agree with PEPSI that gross


inefficiency falls within the purview of other causes
analogous to the foregoing, this constitutes,
therefore, just cause to terminate an employee
under Article 282 of the Labor Code. One is analogous
to another if it is susceptible of comparison with the latter
either in general or in some specific detail; or has a close
relationship with the latter. Gross inefficiency is closely
related to gross neglect, for both involve specific acts of
omission on the part of the employee resulting in damage
to the employer or to his business. In Buiser vs. Leogardo,
this Court ruled that failure to observed prescribed
standards to inefficiency may constitute just cause for
dismissal. (Emphasis supplied.)

202

It

did

so

anew

in Leonardo

v.

National

Labor

Relations

Commission
on the following rationale:
An employer is entitled to impose productivity
standards for its workers, and in fact, non-compliance may
be visited with a penalty even more severe than demotion.
Thus,
[36]

[t]he practice of a company in laying off


workers because they failed to make the
work quota has been recognized in this
jurisdiction. (Philippine American Embroideries
vs. Embroidery and Garment Workers, 26 SCRA
634, 639). In the case at bar, the petitioners'
failure to meet the sales quota assigned to each of
them constitute a just cause of their dismissal,
regardless of the permanent or probationary status
of
their
employment. Failure
to
observe
prescribed
standards
of
work,
or
to
fulfill reasonable work assignments due to
inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to
mean failure to attain work goals or work quotas,
either by failing to complete the same within the
allotted reasonable period, or by producing
unsatisfactory
results. This
management
prerogative of requiring standards may be
availed of so long as they are exercised
in good faith for the advancement of the
employer's interest. (Emphasis supplied.)

matter is that the alleged imposition of the quota was a desperate attempt
to lend a semblance of validity to Alilings illegal dismissal. It must be
stressed that even WWWECs sales manager, Eve Amador (Amador), in an
internal e-mail to San Mateo, hedged on whether petitioner performed
below or above expectation:
Could not quantify level of performance as he as was
tasked to handle a new product (GX). Revenue report is not
yet administered by IT on a month-to-month basis.
Moreover, this in a way is an experimental activity.
Practically you have a close monitoring with Armand with
regards to his performance. Your assessment of him would
be more accurate.

Being an experimental activity and having been launched for the


first time, the sales of GX services could not be reasonably quantified. This
would explain why Amador implied in her email that other bases besides
sales figures will be used to determine Alilings performance. And yet,
despite such a neutral observation, Aliling was still dismissed for his dismal
sales of GX services. In any event, WWWEC failed to demonstrate the
reasonableness and the bona fides on the quota imposition.

In fine, an employees failure to meet sales or work quotas falls

Employees must be reminded that while probationary employees

under the concept of gross inefficiency, which in turn is analogous to gross

do not enjoy permanent status, they enjoy the constitutional protection of

neglect of duty that is a just cause for dismissal under Article 282 of the

security of tenure. They can only be terminated for cause or when they

Code. However, in order for the quota imposed to be considered a valid

otherwise fail to meet the reasonable standards made known to them by

productivity standard and thereby validate a dismissal, managements

the employer at the time of their engagement. [37] Respondent WWWEC

prerogative of fixing the quota must be exercised in good faith for the

miserably failed to prove the termination of petitioner was for a just cause

advancement of its interest. The duty to prove good faith, however, rests

nor was there substantial evidence to demonstrate the standards were

with WWWEC as part of its burden to show that the dismissal was for a just

made known to the latter at the time of his engagement. Hence,

cause. WWWEC must show that such quota was imposed in good faith. This

petitioners right to security of tenure was breached.

WWWEC failed to do, perceptibly because it could not. The fact of the

203

Alilings right to procedural due process was violated

which includes the two-notice rule, x x x one, of the intention to dismiss,


indicating therein his acts or omissions complained against, and two,

As earlier stated, to effect a legal dismissal, the employer must


show not only a valid ground therefor, but also that procedural due process

notice of the decision to dismiss; and an opportunity to answer and rebut


the charges against him, in between such notices.

has properly been observed. When the Labor Code speaks of procedural
due process, the reference is usually to the two (2)-written notice rule

King of Kings Transport, Inc. v. Mamac[39] expounded on this procedural

envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules

requirement in this manner:

Implementing the Labor Code, which provides:


Section 2. Standard of due process: requirements
of notice. In all cases of termination of employment, the
following standards of due process shall be substantially
observed.
I. For termination of employment based on just
causes as defined in Article 282 of the Code:
(a) A written notice served on the
employee specifying the ground or grounds for
termination, and giving to said employee
reasonable opportunity within which to explain his
side;
(b) A hearing or conference during which
the employee concerned, with the assistance of
counsel if the employee so desires, is given
opportunity to respond to the charge, present his
evidence or rebut the evidence presented against
him; and
(c) A written notice [of] termination served
on the employee indicating that upon due
consideration of all the circumstance, grounds have
been established to justify his termination.
In case of termination, the foregoing notices shall
be served on the employees last known address.

MGG Marine Services, Inc. v. NLRC

[38]

tersely described the

mechanics of what may be considered a two-part due process requirement

(1) The first written notice to be served on the


employees should contain the specific causes or grounds
for termination against them, and a directive that the
employees are given the opportunity to submit their
written explanation within a reasonable period. Reasonable
opportunity under the Omnibus Rules means every kind of
assistance that management must accord to the
employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least
five calendar days from receipt of the notice xxxx
Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the
employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the
grounds under Art. 288 [of the Labor Code] is being
charged against the employees
(2) After serving the first notice, the employees
should
schedule
and
conduct
a hearing or conference wherein the employees will be
given the opportunity to (1) explain and clarify their
defenses to the charge against them; (2) present evidence
in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the
hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a
representative or counsel of their choice x x x.
(3) After determining that termination is justified,
the employer shall serve the employees a written notice
of termination indicating that: (1) all the circumstances
involving the charge against the employees have been
considered; and (2) grounds have been established to

204

justify the severance of their employment. (Emphasis in


the original.)

As may be noted, the CA found Alilings dismissal as having been


illegally effected, but nonetheless concluded that his employment ceased

Here, the first and second notice requirements have not been
properly observed, thus tainting petitioners dismissal with illegality.

at the end of the probationary period. Thus, the appellate court merely
affirmed the monetary award made by the NLRC, which consisted of the
payment of that amount corresponding to the unserved portion of the

The adverted memo dated September 20, 2004 of WWWEC

contract of employment.

supposedly informing Aliling of the likelihood of his termination and


directing him to account for his failure to meet the expected job

The case disposition on the award is erroneous.

performance would have had constituted the charge sheet, sufficient to


answer for the first notice requirement, but for the fact that there is no

As earlier explained, Aliling cannot be rightfully considered as a

proof such letter had been sent to and received by him. In fact, in his

mere probationary employee. Accordingly, the probationary period set in

December 13, 2004 Complainants Reply Affidavit, Aliling goes on to tag

the contract of employment dated June 11, 2004 was of no moment. In net

such letter/memorandum as fabrication. WWWEC did not adduce proof to

effect, as of that date June 11, 2004, Aliling became part of the WWWEC

show that a copy of the letter was duly served upon Aliling. Clearly enough,

organization as a regular employee of the company without a fixed term of

WWWEC did not comply with the first notice requirement.

employment. Thus, he is entitled to backwages reckoned from the time he


was illegally dismissed on October 6, 2004, with a PhP 17,300.00 monthly

Neither was there compliance with the imperatives of a hearing or


conference. The Court need not dwell at length on this particular breach of
the due procedural requirement. Suffice it to point out that the record is
devoid of any showing of a hearing or conference having been conducted.
On the contrary, in its October 1, 2004 letter to Aliling, or barely five (5)
days after it served the notice of termination, WWWEC acknowledged that
it was still evaluating his case. And the written notice of termination itself
did not indicate all the circumstances involving the charge to justify
severance of employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement

salary, until the finality of this Decision. This disposition hews with the
Courts ensuing holding in Javellana v. Belen:[40]
Article 279 of the Labor Code, as amended by
Section 34 of Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of
regular employment, the employer shall not
terminate the services of an employee except for a
just cause or when authorized by this Title. An
employee who is unjustly dismissed from
work shall be entitled to reinstatement
without loss of seniority rights and other
privileges and to his full backwages, inclusive
of allowances, and to his other benefits or
their monetary equivalent computed from the
time his compensation was withheld from
him
up
to
the
time
of
his
actual
reinstatement. (Emphasis supplied)

205

Clearly, the law intends the award of backwages


and similar benefits to accumulate past the date of the
Labor Arbiters decision until the dismissed employee is
actually reinstated. But if, as in this case, reinstatement is
no longer possible, this Court has consistently ruled
that backwages shall be computed from the time of
illegal dismissal until the date the decisionbecomes
final. (Emphasis supplied.)

Additionally, Aliling is entitled to separation pay in lieu of


reinstatement on the ground of strained relationship.

In Golden Ace Builders v. Talde,[41] the Court ruled:


The basis for the payment of backwages is
different from that for the award of separation pay.
Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the
employee and the employer. Backwages represent
compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for
computing backwages is usually the length of the
employee's service while that for separation pay is the
actual period when the employee was unlawfully prevented
from working.
As
to
how
computed, Macasero
v.
Philippines instructs:

both
awards
should
be
Southern
Industrial
Gases

[T]he award of separation pay is


inconsistent with a finding that there was no illegal
dismissal, for under Article 279 of the Labor Code
and as held in a catena of cases, an employee who
is dismissed without just cause and without due
process is entitled to backwages and reinstatement
or payment of separation pay in lieu thereof:
Thus, an illegally dismissed
employee is entitled to two reliefs:
backwages and reinstatement. The
two reliefs provided are separate and
distinct.
In
instances
where
reinstatement is no longer feasible
because of strained relations between
the employee and the employer,

separation pay is granted. In effect,


an illegally dismissed employee is
entitled to either reinstatement, if
viable,
or
separation
pay
if
reinstatement is no longer viable, and
backwages.
The
normal
consequences
of
respondents illegal dismissal, then, are
reinstatement without loss of seniority
rights, and payment of backwages
computed from the time compensation was
withheld up to the date of actual
reinstatement. Where reinstatement is no
longer viable as an option, separation pay
equivalent to one (1) month salary for
every year of service should be awarded as
an alternative. The payment of separation
pay is in addition to payment of
backwages. x x x
Velasco
v.
National
Labor
Relations
Commission emphasizes:
The accepted doctrine is that separation
pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best
interest of the parties. Separation pay in lieu of
reinstatement may likewise be awarded if the
employee decides not to be reinstated. (emphasis
in the original; italics supplied)
Under the doctrine of strained relations, the
payment of separation pay is considered an
acceptable alternative to reinstatement when the
latter option is no longer desirable or viable. On one
hand, such payment liberates the employee from what
could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a
worker it could no longer trust.
Strained relations must be demonstrated as
a fact, however, to be adequately supported by evidence
substantial evidence to show that the relationship between
the employer and the employee is indeed strained as a
necessary consequence of the judicial controversy.
In the present case, the Labor Arbiter found
that actual animosity existed between petitioner
Azul and respondent as a result of the filing of the

206

illegal dismissal case. Such finding, especially when


affirmed by the appellate court as in the case at bar,
is binding upon the Court, consistent with the
prevailing rules that this Court will not try facts
anew and that findings of facts of quasi-judicial
bodies
are
accorded
great
respect,
even
finality. (Emphasis supplied.)

Finally, Aliling is entitled to an award of PhP 30,000 as nominal


damages in consonance with prevailing jurisprudence [44] for violation of due
process.

Petitioner is not entitled to moral and exemplary damages


As the CA correctly observed, To reinstate petitioner [Aliling] would
only create an atmosphere of antagonism and distrust, more so that he
had only a short stint with respondent company. [42] The Court need not
belabor the fact that the patent animosity that had developed between
employer and employee generated what may be considered as the
arbitrary dismissal of the petitioner.

Following the pronouncements of this Court Sagales v. Rustans


Commercial Corporation,[43] the computation of separation pay in lieu of
reinstatement includes the period for which backwages were awarded:
Thus, in lieu of reinstatement, it is but proper to
award petitioner separation pay computed at onemonth salary for every year of service, a fraction of
at least six (6) months considered as one whole
year. In the computation of separation pay, the
period where backwages are awarded must be
included. (Emphasis supplied.)

Thus, Aliling is entitled to both backwages and separation pay (in


lieu of reinstatement) in the amount of one (1) months salary for every
year of service, that is, from June 11, 2004 (date of employment contract)
until the finality of this decision with a fraction of a year of at least six (6)
months to be considered as one (1) whole year. As determined by the labor
arbiter, the basis for the computation of backwages and separation pay will
be Alilings monthly salary at PhP 17,300.

In Nazareno v. City of Dumaguete,[45] the Court expounded on the


requisite elements for a litigants entitlement to moral damages, thus:
Moral damages are awarded if the following
elements exist in the case: (1) an injury clearly sustained
by the claimant; (2) a culpable act or omission factually
established; (3) a wrongful act or omission by the
defendant as the proximate cause of the injury sustained
by the claimant; and (4) the award of damages predicated
on any of the cases stated Article 2219 of the Civil Code. In
addition, the person claiming moral damages must prove
the existence of bad faith by clear and convincing evidence
for the law always presumes good faith. It is not enough
that one merely suffered sleepless nights, mental anguish,
and serious anxiety as the result of the actuations of the
other party. Invariably such action must be shown to have
been willfully done in bad faith or with ill motive. Bad
faith, under the law, does not simply connote bad
judgment or negligence. It imports a dishonest
purpose or some moral obliquity and conscious
doing of a wrong, a breach of a known duty through
some motive or interest or ill will that partakes of
the nature of fraud. (Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden
of proof to present evidence in support of his claim, as ruled in Culili v.
Eastern Telecommunications Philippines, Inc.:[46]
According to jurisprudence, basic is the principle
that good faith is presumed and he who alleges bad faith
has the duty to prove the same. By imputing bad faith to
the actuations of ETPI, Culili has the burden of proof to
present substantial evidence to support the allegation of

207

unfair labor practice. Culili failed to discharge this burden


and his bare allegations deserve no credit.

The CA held the president of WWWEC, Jose B. Feliciano, San


Mateo and Lariosa jointly and severally liable for the monetary awards of

This was reiterated in United Claimants Association of NEA


(UNICAN) v. National Electrification Administration (NEA),[47] in this wise:

Aliling on the ground that the officers are considered employers acting in
the interest of the corporation. The CA cited NYK International Knitwear
Corporation Philippines (NYK) v. National Labor Relations Commission [50] in

It must be noted that the burden of proving bad


faith rests on the one alleging it. As the Court ruled in Culili
v.
Eastern
Telecommunications,
Inc., According
to
jurisprudence, basic is the principle that good faith is
presumed and he who alleges bad faith has the duty to
prove the same. Moreover, in Spouses Palada v. Solidbank
Corporation, the Court stated, Allegations of bad faith and
fraud must be proved by clear and convincing evidence.

Similarly, Aliling has failed to overcome such burden to prove bad


faith on the part of WWWEC. Aliling has not presented any clear and
convincing evidence to show bad faith. The fact that he was illegally
dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled
that [t]here was no sufficient showing of bad faith or abuse of
management prerogatives in the personal action taken against petitioner.
[48]

In Lambert Pawnbrokers and Jewelry Corporation v. Binamira,[49] the

Court ruled:
A dismissal may be contrary to law but by itself
alone, it does not establish bad faith to entitle the
dismissed employee to moral damages. The award of
moral and exemplary damages cannot be justified solely
upon the premise that the employer dismissed his
employee without authorized cause and due process.

support of its argument. Notably, NYK in turn cited A.C. Ransom Labor
Union-CCLU v. NLRC.[51]

Such ruling has been reversed by the Court in Alba v. Yupangco,


[52]

where the Court ruled:


By Order of September 5, 2007, the Labor Arbiter
denied respondents motion to quash the 3rd alias writ.
Brushing aside respondents contention that his liability is
merely joint, the Labor Arbiter ruled:
Such issue regarding the personal liability of the
officers of a corporation for the payment of wages and
money claims to its employees, as in the instant case, has
long been resolved by the Supreme Court in a long list of
cases [A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA
269) and reiterated in the cases of Chua vs. NLRC (182
SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the
aforementioned cases, the Supreme Court has expressly
held that the irresponsible officer of the corporation (e.g.
President) is liable for the corporations obligations to its
workers. Thus, respondent Yupangco, being the president
of the respondent YL Land and Ultra Motors Corp., is
properly jointly and severally liable with the defendant
corporations for the labor claims of Complainants Alba and
De Guzman. x x x
xxxx
As reflected above, the Labor Arbiter held that
respondents liability is solidary.

The officers of WWWEC cannot be held


jointly and severally liable with the company

There is solidary liability when the obligation


expressly so states, when the law so provides, or when the
nature of the obligation so requires. MAM Realty
Development Corporation v. NLRC, on solidary liability of
corporate officers in labor disputes, enlightens:

208

x x x A corporation being a juridical entity,


may act only through its directors, officers and
employees. Obligations incurred by them, acting as
such corporate agents are not theirs but the direct
accountabilities of the corporation they represent.
True solidary liabilities may at times be incurred
but only when exceptional circumstances warrant
such as, generally, in the following cases:

the

Labor

Code

and

following

Construction Corporation v. Biscocho,

our
[53]

ruling

in Exodus

International

to wit:

1. When directors and trustees or,


in appropriate cases, the officers of a
corporation:

In Rutaquio v. National Labor Relations Commission, this


Court held that:
It is settled that in actions for recovery of wages or
where an employee was forced to litigate and,
thus, incur expenses to protect his rights and
interest, the award of attorneys fees is legally and
morally justifiable.

(a) vote for or assent to patently


unlawful acts of the corporation;

In Producers Bank of the Philippines v. Court of


Appeals this Court ruled that:

(b) act in bad faith or with gross


negligence in directing the corporate
affairs;

Attorneys fees may be awarded when a party is


compelled to litigate or to incur expenses to
protect his interest by reason of an unjustified act
of the other party.

xxxx
In labor cases, for instance, the Court has held
corporate directors and officers solidarily liable with the
corporation for the termination of employment of
employees done with malice or in bad faith.

A review of the facts of the case does not reveal ample and
satisfactory proof that respondent officers of WWEC acted in bad faith or
with malice in effecting the termination of petitioner Aliling. Even
assuming arguendo that the actions of WWWEC are ill-conceived and

While in Lambert Pawnbrokers and Jewelry Corporation,[54] the


Court specifically ruled:
However, the award of attorneys fee is warranted
pursuant to Article 111 of the Labor Code. Ten (10%)
percent of the total award is usually the reasonable
amount of attorneys fees awarded. It is settled that where
an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of
attorneys fees is legally and morally justifiable.

erroneous, respondent officers cannot be held jointly and solidarily with


it. Hence, the ruling on the joint and solidary liability of individual
respondents must be recalled.

Finally, legal interest shall be imposed on the monetary awards


herein granted at the rate of 6% per annum from October 6, 2004 (date of
termination) until fully paid.

Aliling is entitled to Attorneys Fees and Legal Interest


WHEREFORE, the petition is PARTIALLY GRANTED. The July 3,
Petitioner Aliling is also entitled to attorneys fees in the amount of
ten percent (10%) of his total monetary award, having been forced to
litigate in order to seek redress of his grievances, pursuant to Article 111 of

2008 Decision of the Court of Appeals in CA-G.R. SP No. 101309 is


hereby MODIFIED to read:

209

WHEREFORE, the
petition
is PARTIALLY
GRANTED. The assailed Resolutions of respondent (Third
Division)
National
Labor
Relations
Commission
are AFFIRMED,
with
the
following MODIFICATION/CLARIFICATION:
Respondent
Wide Wide World Express Corp. is liable to pay Armando
Aliling the following: (a) backwages reckoned from October
6, 2004 up to the finality of this Decision based on a salary
of PhP 17,300 a month, with interest at 6% per annum on
the principal amount from October 6, 2004 until fully paid;
(b) the additional sum equivalent to one (1) month salary
for every year of service, with a fraction of at least six (6)
months considered as one whole year based on the period
from June 11, 2004 (date of employment contract) until the
finality of this Decision, as separation pay; (c) PhP 30,000
as nominal damages; and (d) Attorneys Fees equivalent to
10% of the total award.
SO ORDERED.

210

G.R. No. 174893

July 11, 2012

FLORDELIZA
MARIA
REYES-RAYEL, Petitioner,
vs.
PHILIPPINE
LUEN
THAI
HOLDINGS,
CORPORATION/L&T
INTERNATIONAL GROUP PHILIPPINES, INC.,Respondents.
DECISION

The most deleterious to the Company has been your pronouncements


against the Human Resource Information System (HRIS) or HR2 Program, a
corporate initiative that is at the core and is crucial to the enhancement of
personnel management for the global operations of the Company. On
numerous occasions, in the presence of colleagues and subordinates, you
made statements that serve to undermine the Companys efforts at
pursuing the HR2 Program. You ought to have realized that when leveled
by an officer of your rank, no less than a Director of the Corporate Human
Resources Division, such remarks are highly inflammatory and their
negative impact is magnified.

DEL CASTILLO, J.:


The law is fair and just to both labor and management. Thus, while the
Constitution accords an employee security or tenure, it abhors oppression
to an employer who cannot be compelled to retain an employee whose
continued employment would he patently inimical to its interest.
This Petition for Review on Certiorari 1 assails the July IR, 2006 Decision 2 or
the Court of Appeals (CA) in CJ\-G.R. SP No. 86937, which (I) reversed the
National Labor Relations Commission (NLRC) March 23, 2004
Resolution3 and in effect, its July 21, 2004 4 Resolution as well, (2) declared
petitioner Flordeliza Maria Reyes-Rayels (petitioner) dismissal from
employment valid, and (3) ordered respondents Philippine Luen Thai
Holdings, Corp. (PLTHC)/L&T International Group Phils., Inc. (L&T)
(respondents) to pay petitioner an amount equivalent to three months
salary pursuant to the termination provision of the employment contract.
Factual Antecedents
In February 2000, PLTHC hired petitioner as Corporate Human Resources
(CHR) Director for Manufacturing for its subsidiary/affiliate company, L&T.
In the employment contract, 5 petitioner was tasked to perform functions in
relation to administration, recruitment, benefits, audit/compliance, policy
development/ structure, project plan, and such other works as may be
assigned by her immediate superior, Frank Sauceda (Sauceda), PLTHCs
Corporate Director for Human Resources.
On September 6, 2001, petitioner received a Prerequisite Notice 6 from
Sauceda and the Corporate Legal Counsel of PLTHC, Ma. Lorelie T. Edles
(Edles), which reads:
This has reference to your failure to perform in accordance with
management directives in various instances, which collectively have
resulted in loss of confidence in your capability to promote the interests of
the Company.

Just as flagrant is your inability to incite collaboration and harmony within


the Corporate Human Resources Division. Instead, colleagues and
subordinates complain of your negative attitude towards the Company, its
officers and people. You have established notoriety for your temper and
have alienated most members of your division. You ought to have realized
that when exhibited by an officer of your rank, no less than a Director of
the Corporate Human Resources Division, poor interpersonal skills and the
lack of moral suasion are extremely damaging.
The foregoing have, in fact, manifested in your own unsatisfactory
performance rating, and in the departure of promising employees who
could not work with you.
In view of the above, we afford you the opportunity to submit your written
reply to this memorandum within forty-eight (48) hours from its receipt.
Failure to so submit shall be construed as waiver of your right to be heard.
Consequently, the Company shall immediately decide on this matter.
xxx

In petitioners written response 8 dated September 10, 2001, she explained


that her alleged failure to perform management directives could be
attributed to the lack of effective communication with her superiors due to
malfunctioning email system. This caused her to miss certain directives
coming from her superiors and likewise, for her superiors to overlook the
reports she was submitting. She denied uttering negative comments about
the HR2 Program and instead claimed to have intimated her support for it.
She further denied causing disharmony in her division. Petitioner
emphasized that in June 2001, she received a relatively good rating of
80.2% in her overall performance appraisal 9 which meant that she
displayed dependable work level performance as well as good corporate
relationship with her superiors and subordinates.
In a Termination Notice 10 dated September 12, 2001, respondents, through
Sauceda and Edles, dismissed petitioner from the service for loss of

211

confidence on her ability to promote the interests of the company. This led
petitioner to file a Complaint 11 for illegal dismissal, payment of separation
pay, 13th month pay, moral and exemplary damages, attorneys fees, and
other unpaid company benefits against respondents and its officers,
namely, Sauceda, Edles and Willie
Tan (Tan), the Executive Vice-President of PLTHC.
Proceedings before the Labor Arbiter
In her Position Paper, 12 petitioner argued that her dismissal was without
valid or just cause and was effected without due process. According to her,
the causes for her dismissal as stated in the Prerequisite Notice and Notice
of Termination are not proper grounds for termination under the Labor
Code and the same do not even pertain to any willful violation of the
companys code of discipline or any other company policy. Even the
alleged loss of confidence was not supported by any evidence of
wrongdoing on her part. She likewise claimed that due process was not
observed since she was not afforded a hearing, investigation and right to
appeal as per company procedure for disciplining employees. Furthermore,
respondents were guilty of violating the termination provision under the
employment contract which stipulated that employment after probationary
period shall be terminated by giving the employee a three-month notice in
writing or by paying three months salary in lieu of notice. Petitioner also
accused respondents of having acted in bad faith by subjecting her to
public humiliation and embarrassment when she was ordered to
immediately turn over the company car, vacate her office and remove all
her belongings on the same day she received the termination notice, in full
view of all the other employees.