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Republic of the Philippines

Supreme Court


versus -

G.R. No. 177114

CARPIO, J., Chairperson,
ABAD, and

Finance Manager, and PAUL U. LEE,
January 21, 2010
x ------------------------------------------------------------------------------------------x

Petitioner Manolo A. Peaflor (Peaflor) seeks the reversal of the Court of Appeals
(CA) decision[1] dated December 29, 2006 and its resolution[2] dated March 14,
2007, through the present petition for review on certiorari filed under Rule 45 of
the Rules of Court. The assailed CA decision affirmed the September 24,
2002 decision[3] of the National Labor Relations Commission (NLRC) that in turn
reversed the August 15, 2001 decision[4] of the Labor Arbiter.[5]


Peaflor was hired on September 2, 1999 as probationary Human Resource
Department (HRD) Manager of respondent Outdoor Clothing Manufacturing
Corporation (Outdoor Clothing or the company). As HRD head, Peaflor was
expected to (1) secure and maintain the right quality and quantity of people needed
by the company; (2) maintain the harmonious relationship between the employees
and management in a role that supports organizational goals and individual
aspirations; and (3) represent the company in labor cases or proceedings. Two staff
members were assigned to work with him to assist him in undertaking these
Peaflor claimed that his relationship with Outdoor Clothing went well during the
first few months of his employment; he designed and created the companys Policy
Manual, Personnel Handbook, Job Expectations, and Organizational Set-Up during
this period. His woes began when the companys Vice President for Operations,
Edgar Lee (Lee), left the company after a big fight between Lee and Chief
Corporate Officer Nathaniel Syfu (Syfu). Because of his close association with Lee,
Peaflor claimed that he was among those who bore Syfus ire.
When Outdoor Clothing began undertaking its alleged downsizing program due to
negative business returns, Peaflor alleged that his department had been singled out.
On the pretext of retrenchment, Peaflors two staff members were dismissed,
leaving him as the only member of Outdoor Clothings HRD and compelling him to
perform all personnel-related work. He worked as a one-man department, carrying
out all clerical, administrative and liaison work; he personally went to various
government offices to process the companys papers.
When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a
bombing incident, the company required Peaflor to attend to her hospitalization
needs; he had to work outside office premises to undertake this task. As he was
acting on the companys orders, Peaflor considered himself to be on official
business, but was surprised when the company deducted six days salary
corresponding to the time he assisted Padilla. According to Finance Manager
Medylene Demogena (Demogena), he failed to submit his trip ticket, but Peaflor
belied this claim as a trip ticket was required only when a company vehicle was
used and he did not use any company vehicle when he attended to his off-premises

After Peaflor returned from his field work on March 13, 2000, his officemates
informed him that while he was away, Syfu had appointed Nathaniel Buenaobra
(Buenaobra) as the new HRD Manager. This information was confirmed by Syfus
memorandum of March 10, 2000 to the entire office stating that Buenaobra was the
concurrent HRD and Accounting Manager.[7] Peaflor was surprised by the news;
he also felt betrayed and discouraged. He tried to talk to Syfu to clarify the matter,
but was unable to do so. Peaflor claimed that under these circumstances, he had no
option but to resign. He submitted a letter to Syfu declaring his irrevocable
resignation from his employment with Outdoor Clothing effective at the close of
office hours on March 15, 2000.[8]
Peaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming
that he had been constructively dismissed. He included in his complaint a prayer
for reinstatement and payment of backwages, illegally deducted salaries, damages,
attorneys fees, and other monetary claims.
Outdoor Clothing denied Peaflors allegation of constructive dismissal. It posited
instead that Peaflor had voluntarily resigned from his work. Contrary to Peaflors
statement that he had been dismissed from employment upon Syfus appointment of
Buenaobra as the new HRD Manager on March 10, 2000, Peaflor had in fact
continued working for the company until his resignation on March 15, 2000. The
company cited as evidence the security report that Peaflor himself prepared and
signed on March 13, 2000.[9]
Outdoor Clothing disclaimed liability for any of Peaflors monetary claims. Since
Peaflor had voluntarily resigned, Outdoor Clothing alleged that he was not entitled
to any backwages and damages. The company likewise denied making any illegal
deduction from Peaflors salary; while deductions were made, they were due to
Peaflors failure to report for work during the dates the company questioned. As a
probationary employee, he was not yet entitled to any leave credit that would offset
his absences.
In his August 15, 2001 decision, the labor arbiter found that Peaflor had been
illegally dismissed.[10] Outdoor Clothing was consequently ordered to reinstate
Peaflor to his former or to an equivalent position, and to pay him his illegally
deducted salary for six days, proportionate 13th month pay, attorneys fees, moral
and exemplary damages.
Outdoor Clothing appealed the labor arbiters decision with the NLRC. It insisted
that Peaflor had not been constructively dismissed, claiming that Peaflor tendered

his resignation on March 1, 2000 because he saw no future with the corporation
due to its dire financial standing. Syfu alleged that he was compelled to appoint
Buenaobra as concurrent HRD Manager through a memorandum dated March 1,
2000 to cover the position that Peaflor would soon vacate.[11] The appointment
was also made to address the personnel matters that had to be taken cared of while
Peaflor was on unauthorized leave. Incidentally, Outdoor Clothing alleged that
Peaflor had already been given two notices, on March 6 and 11, 2000 (absence
without official leave memoranda or the AWOL memoranda), for his unauthorized
absences. In a memorandum dated March 3, 2000 addressed to Syfu, Buenaobra
accepted the appointment.[12]
Peaflor contested Syfus March 1, 2000 memorandum, Buenaobras March 3,
2000 memorandum, and the AWOL memoranda, claiming these pieces of evidence
were fabricated and were never presented before the labor arbiter. He pointed out
that nothing in this resignation letter indicated that it was submitted to and received
by Syfu on March 1, 2000. He claimed that it was submitted on March 15, 2000,
the same date he made his resignation effective. The AWOL memoranda could not
be relied on, as he was never furnished copies of these. Moreover, he could not be
on prolonged absence without official leave, as his residence was just a few meters
away from the office.
The NLRC apparently found Outdoor Clothings submitted memoranda sufficient
to overturn the labor arbiters decision.[13] It characterized Peaflors resignation as a
response, not to the allegedly degrading and hostile treatment that he was subjected
to by Syfu, but to Outdoor Clothings downward financial spiral. Buenaobras
appointment was made only after Peaflor had submitted his resignation letter, and
this was made to cover the vacancy Peaflors resignation would create. Thus,
Peaflor was not eased out from his position as HRD manager. No malice likewise
was present in the companys decision to dismiss Peaflors two staff members; the
company simply exercised its management prerogative to address the financial
problems it faced. Peaflor, in fact, drafted the dismissal letters of his staff
members. In the absence of any illegal dismissal, no basis existed for the monetary
awards the labor arbiter granted.
Peaflor anchored his certiorari petition with the CA on the claim that the NLRC
decision was tainted with grave abuse of discretion, although he essentially
adopted the same arguments he presented before the labor arbiter and the NLRC.
In a decision dated December 29, 2006,[14] the CA affirmed the NLRCs decision,
stating that Peaflor failed to present sufficient evidence supporting his claim that he
had been constructively dismissed.The CA ruled that Peaflors resignation was

knowingly and voluntarily made. Accordingly, it dismissed

Peaflors certiorari petition. It likewise denied the motion for reconsideration that
Peaflor subsequently filed.[15] Faced with these CA actions, Peaflor filed with us
the present petition for review on certiorari.
Peaflor insists that, contrary to the findings of the NLRC and the CA, he had been
constructively dismissed from his employment with Outdoor Clothing. He alleges
that the dismissal of his two staff members, the demeaning liaison work he had to
perform as HRD Manager, the salary deduction for his alleged unauthorized
absences, and the appointment of Buenaobra as the new HRD manager even before
he tendered his resignation, were clear acts of discrimination that made his
continued employment with the Outdoor Clothing unbearable. He was thus forced
to resign.
Outdoor Clothing claims that Peaflor voluntarily resigned from his work and his
contrary allegations were all unsubstantiated. The HRD was not singled out for
retrenchment, but was simply the first to lose its staff members because the
company had to downsize. Thus, all HRD work had to be performed by
Peaflor. Instead of being grateful that he was not among those immediately
dismissed due to the companys retrenchment program, Peaflor unreasonably felt
humiliated in performing work that logically fell under his department; insisted on
having a full staff complement; absented himself from work without official leave;
and demanded payment for his unauthorized absences.
The Court finds the petition meritorious.
A preliminary contentious issue is Outdoor Clothings argument that we should
dismiss the petition outright because it raises questions of facts, not the legal
questions that should be raised in a Rule 45 petition.[16]
We see no merit in this argument as the rule that a Rule 45 petition deals only with
legal issues is not an absolute rule; it admits of exceptions. In the labor law setting,
we wade into factual issues when conflict of factual findings exists among the
labor arbiter, the NLRC, and the CA. This is the exact situation that obtains in the
present case since the labor arbiter found facts supporting the conclusion that there
had been constructive dismissal, while the NLRCs and the CAs factual findings
contradicted the labor arbiters findings.[17] Under this situation, the conflicting

factual findings below are not binding on us, and we retain the authority to pass on
the evidence presented and draw conclusions therefrom.[18]
The petition turns on the question of whether Peaflors undisputed resignation was a
voluntary or a forced one, in the latter case making it a constructive dismissal
equivalent to an illegal dismissal. A critical fact necessary in resolving this issue
is whether Peaflor filed his letter of resignation before or after the appointment
of Buenaobra as the new/concurrent HRD manager. This question also gives rise
to the side issue of when Buenaobras appointment was made. If the resignation
letter was submitted before Syfus appointment of Buenaobra as new HRD
manager, little support exists for Peaflors allegation that he had been forced to
resign due to the prevailing abusive and hostile working environment. Buenaobras
appointment would then be simply intended to cover the vacancy created by
Peaflors resignation.On the other hand, if the resignation letter was
submitted after the appointment of Buenaobra, then factual basis exists indicating
that Peaflor had been constructively dismissed as his resignation was a response to
the unacceptable appointment of another person to a position he still occupied.
The question of when Peaflor submitted his resignation letter arises because this
letter undisputably made was undated. Despite Peaflors claim of having impressive
intellectual and academic credentials,[19] his resignation letter, for some reason,
was undated. Thus, the parties have directly opposing claims on the matter. Peaflor
claims that he wrote and filed the letter on the same date he made his resignation
effectiveMarch 15, 2000. Outdoor Clothing, on the other hand, contends that the
letter was submitted on March 1, 2000, for which reason Syfu issued a
memorandum of the same date appointing Buenaobra as the concurrent HRD
manager; Syfus memorandum cited Peaflors intention to resign so he could devote
his time to teaching. The company further cites in support of its case
Buenaobras March 3, 2000memorandum accepting his appointment. Another piece
of evidence is the Syfu memorandum of March 10, 2000, which informed the
office of the appointment of Buenaobra as the concurrent Head of HRD the
position that Peaflor occupied. Two other memoranda are alleged to exist, namely,
the AWOL memoranda of March 6 and 11, 2000, allegedly sent to Penaflor.
Several reasons arising directly from these pieces of evidence lead us to conclude
that Peaflor did indeed submit his resignation letter on March, 15, 2000, i.e., on the
same day that it was submitted.
First, we regard the Syfu memorandum of March 1, 2000 and the memorandum of
Buenaobra of March 3, 2000 accepting the position of HRD Head to be highly
suspect. In our view, these memoranda, while dated, do not constitute conclusive

evidence of their dates of preparation and

communication. Surprisingly, Peaflor was never informed about these memoranda
when they directly concerned him, particularly the turnover of responsibilities to
Buenaobra if indeed Peaflor had resigned on March 1, 2000 and a smooth turnover
to Buenaobra was intended. Even the recipients of these communications do not
appear to have signed for and dated their receipt. The AWOL memoranda, to be
sure, should have been presented with proof of service if they were to have any
binding effect on Peaflor.
Second,we find it surprising that these pieces of evidence pointing to a March 1,
2000 resignation specifically, Syfus March 1, 2000 memorandum to Buenaobra
about Penaflors resignation and Buenaobras own acknowledgment and acceptance
were only presented to the NLRC on appeal, not before the labor arbiter. The
matter was not even mentioned in the companys position paper filed with the labor
arbiter.[20] While the presentation of evidence at the NLRC level on appeal is not
unheard of in labor cases,[21] still sufficient explanation must be adduced to
explain why this irregular practice should be allowed. In the present case, Outdoor
Clothing totally failed to explain the reason for its omission. This failure, to us, is
significant, as these were the clinching pieces of evidence that allowed the NLRC
to justify the reversal of the labor arbiters decision.
Third, the circumstances and other evidence surrounding Peaflors resignation
support his claim that he was practically compelled to resign from the company.
Foremost among these is the memorandum of March 10, 2000 signed by Syfu
informing the whole office (To: All concerned) about the designation of Buenaobra
as concurrent Accounting and HRD Manager. In contrast with the suspect
memoranda we discussed above, this memorandum properly bore signatures
acknowledging receipt and dates of receipt by at least five company officials,
among them the readable signature of Demogene and one Agbayani; three of them
acknowledged receipt on March 13, 2000, showing that indeed it was only on that
day that the appointment of Buenaobra to the HRD position was disclosed. This
evidence is fully consistent with Peaflors position that it was only in the afternoon
of March 13, 2000 that he was told, informally at that, that Buenaobra had taken
over his position. It explains as well why as late as March 13, 2000, Peaflor still
prepared and signed a security report,[22] and is fully consistent with his position
that on that day he was still working on the excuse letter of certain sales personnel
of the company.[23]
We note that the company only belatedly questioned the motivation that Peaflor
cited for his discriminatory treatment, i.e., that he was caught in the bitter fight

between Syfu and Lee, then Vice President for Operations, that led the latter to
leave the company.[24] After Lee left, Peaflor alleged that those identified with
Lee were singled out for adverse treatment, citing in this regard the downsizing of
HRD that occurred on or about this time and which resulted in his one-man HRD
operation. We say this downsizing was only alleged as the company totally failed
despite Penaflors claim of discriminatory practice to adduce evidence showing that
there had indeed been a legitimate downsizing. Other than its bare claim that it was
facing severe financial problems, Outdoor Clothing never presented any evidence
to prove both the reasons for its alleged downsizing and the fact of such
downsizing. No evidence was ever offered to rebut Peaflors claim that his staff
members were dismissed to make his life as HRD Head difficult.To be sure,
Peaflors participation in the termination of his staff members employment cannot
be used against him, as the termination of employment was a management decision
that Peaflor, at his level, could not have effectively contested without putting his
own job on the line.
Peaflors own service with the company deserves close scrutiny. He started working
for the company on September 2, 1999 so that by March 1, 2000, his probationary
period would have ended and he would have become a regular employee. We find
it highly unlikely that Peaflor would resign on March 1, 2000 and would then
simply leave given his undisputed record of having successfully worked within his
probationary period on the companys Policy Manual, Personnel Handbook, Job
Expectations, and Organizational Set-up. It does not appear sound and logical to us
that an employee would tender his resignation on the very same day he was
entitled by law to be considered a regular employee, especially when a downsizing
was taking place and he could have availed of its benefits if he would be separated
from the service as a regular employee. It was strange, too, that he would submit
his resignation on March 1, 2000 and keep completely quiet about this
development until its effective date on March 15, 2000.In the usual course, the
turnover alone of responsibilities and work loads to the successor in a small
company would have prevented the matter from being completely under wraps for
10 days before any announcement was ever made. That Peaflor was caught by
surprise by the turnover of his post to Buenaobra is in fact indicated by the
companys own evidence that Peaflor still submitted a security report onMarch 13,
2000. On the whole, Peaflors record with the company is not that of a company
official who would simply and voluntarily tender a precipitate resignation on the
excuse that he would devote his time to teaching a lame excuse at best considering
that March is the month the semester usually ends and is two or three months away
from the start of another school year.

In our view, it is more consistent with human experience that Peaflor indeed
learned of the appointment of Buenaobra only on March 13, 2000 and reacted to
this development through his resignation letter after realizing that he would only
face hostility and frustration in his working environment. Three very basic labor
law principles support this conclusion and militate against the companys case.
The first is the settled rule that in employee termination disputes, the employer
bears the burden of proving that the employees dismissal was for just and valid
cause.[25] That Peaflor did indeed file a letter of resignation does not help the
companys case as, other than the fact of resignation, the company must still prove
that the employee voluntarily resigned.[26] There can be no valid resignation
where the act was made under compulsion or under circumstances approximating
compulsion, such as when an employees act of handing in his resignation was a
reaction to circumstances leaving him no alternative but to resign.[27] In sum, the
evidence does not support the existence of voluntariness in Peaflors resignation.
Another basic principle is that expressed in Article 4 of the Labor Code that all
doubts in the interpretation and implementation of the Labor Code should be
interpreted in favor of the workingman. This principle has been extended by
jurisprudence to cover doubts in the evidence presented by the employer and the
employee.[28] As shown above, Peaflor has, at very least, shown serious doubts
about the merits of the companys case, particularly in the appreciation of the
clinching evidence on which the NLRC and CA decisions were based. In such
contest of evidence, the cited Article 4 compels us to rule in Peaflors favor. Thus,
we find that Peaflor was constructively dismissed given the hostile and
discriminatory working environment he found himself in, particularly evidenced
by the escalating acts of unfairness against him that culminated in the appointment
of another HRD manager without any prior notice to him. Where no less than the
companys chief corporate officer was against him, Peaflor had no alternative but to
resign from his employment.[29]
Last but not the least, we have repeatedly given significance in abandonment and
constructive dismissal cases to the employees reaction to the termination of his
employment and have asked the question: is the complaint against the employer
merely a convenient afterthought subsequent to an abandonment or a voluntary
resignation? We find from the records that Peaflor sought almost immediate
official recourse to contest his separation from service through a complaint for
illegal dismissal.[30] This is not the act of one who voluntarily resigned; his
immediate complaints characterize him as one who deeply felt that he had been

WHEREFORE, we GRANT the petitioners petition for review on certiorari,

and REVERSE the decision and resolution of the Court of Appeals in CA-G.R. SP
No. 87865 promulgated on December 29, 2006 and March 14, 2007,
respectively. We REINSTATE the decision of the labor arbiter dated August 15,
2001, with the MODIFICATION that, due to the strained relations between the
parties, respondents are additionally ordered to pay separation pay equivalent to
the petitioners one months salary.
Costs against the respondents.